With its Q4 results , CVR Partners, LP ( UAN ) highlighted the risk of owning a variable distribution partnership consisting of only two manufacturing sites. The partnership reported a loss of ($0.97) per unit andI retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I al ...

Group 1 - CVR Partners, LP (UAN) reported a loss of ($0.97) per unit in its Q4 results, highlighting the risks associated with owning a variable distribution partnership with only two manufacturing sites [1] - The company emphasizes the potential volatility and income risks tied to its limited operational footprint [1] Group 2 - The article reflects the author's long-term investment strategy, focusing on matching S&P 500 returns with lower volatility and higher income [1] - The author has been managing their own portfolio since 1998, indicating a preference for long-term holdings unless compelling reasons to sell arise [1]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported consolidated net income of $90 million and EBITDA of $591 million [4] - The fourth quarter consolidated net loss was $116 million, with EBITDA of $51 million, impacted by accelerated depreciation and extended downtime [4][5] - The net loss attributable to CVI shareholders for Q4 2025 was $110 million, with losses per share of $1.10 and adjusted EBITDA of $91 million [7] Business Segment Data and Key Metrics Changes - In the petroleum segment, EBITDA for Q4 2025 was $73 million, a significant increase from $9 million in Q4 2024, driven by higher crack spreads and increased throughput [7] - The fertilizer segment reported adjusted EBITDA of $20 million for Q4 2025, down from $50 million in the prior year, affected by ammonia utilization rates and operational issues [11] - The renewable segment experienced a breakeven adjusted EBITDA for Q4 2025, a decline from $9 million in Q4 2024, due to loss of tax credits and reduced throughput [10] Market Data and Key Metrics Changes - Combined total throughput for Q4 2025 was approximately 218,000 barrels per day, with a utilization rate of 97% [8] - Benchmark cracks for Q4 softened to an average of $22.70 per barrel, with realized margins adjusted for various liabilities at $9.92 per barrel [8][9] - RINs prices declined approximately 18 cents per barrel from Q3 2025, averaging $6.05 per barrel for Q4 [9] Company Strategy and Development Direction - The company aims to focus on safe and reliable operations, reevaluating commercial optimization opportunities to improve margin capture in the petroleum segment [18][19] - Plans include expanding asset footprint and pursuing geographic diversity while maintaining disciplined capital allocation [20] - The company is optimistic about refining sector fundamentals, anticipating steady demand growth for refined products and a slowdown in global refining capacity additions [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding RINs and the potential for full or partial SRE grants for Wynnewood Refining Company [23] - In the fertilizer segment, strong demand for nitrogen fertilizers is expected due to anticipated corn planting increases [24] - The company is optimistic about the Midcontinent market, expecting improved dynamics with new pipeline developments [49] Other Important Information - Cash flow from operations for Q4 2025 was breakeven, with free cash flow usage of $55 million [12] - Total consolidated capital spending for 2025 was $197 million, with projections for 2026 estimated at $200 million to $240 million [13] - The company ended the quarter with a consolidated cash balance of $511 million [14] Q&A Session Summary Question: Expansion plans and asset acquisition strategy - The company is looking for proactive engagement in M&A discussions, focusing on both refining and fertilizer sectors while maintaining financial discipline [28][29] Question: Dividend return expectations - Management indicated that a clear path to further debt reduction is necessary before considering a modest dividend return, emphasizing sustainability in any future dividend [31][33] Question: Ramping up WCS runs at Coffeyville refinery - The company is prepared to increase WCS processing due to favorable market conditions and has upgraded its facilities to handle increased throughput [38][39] Question: RIN prices and blending strategies - Management acknowledged the steep costs associated with RINs and is exploring options to blend more barrels and acquire additional blending capacity [42][43] Question: Capture rates and pipeline projects - The company is optimistic about improving margin capture rates and sees potential benefits from new pipeline infrastructure in the Midcontinent region [46][49]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported consolidated net income of $90 million and EBITDA of $591 million [4] - The fourth quarter consolidated net loss was $116 million, with EBITDA of $51 million, impacted by accelerated depreciation and extended downtime [4] - The net loss attributable to CVI shareholders for Q4 2025 was $110 million, with losses per share of $1.10 and adjusted EBITDA of $91 million [7] Business Segment Data and Key Metrics Changes - In the petroleum segment, EBITDA for Q4 2025 was $73 million, a significant increase from $9 million in Q4 2024, driven by higher crack spreads and increased throughput [7] - The fertilizer segment reported adjusted EBITDA of $20 million for Q4 2025, down from $50 million in the prior year, affected by ammonia utilization rates and operational issues [11] - The renewable segment experienced a breakeven adjusted EBITDA for Q4 2025, a decline from $9 million in Q4 2024, due to loss of tax credits and reduced throughput [10] Market Data and Key Metrics Changes - Combined total throughput for Q4 2025 was approximately 218,000 bbl per day, with a utilization rate of 97% [8] - RINs prices averaged $6.05 per bbl for Q4 2025, a decline from previous levels, impacting the company's capture rate [9] - The estimated accrued RFS obligation on the balance sheet was $72 million at year-end, representing 59 million RINs [9] Company Strategy and Development Direction - The company aims to focus on safe and reliable operations, reevaluating commercial optimization opportunities to improve margin capture in the petroleum segment [18][19] - Plans include expanding asset footprint and pursuing geographic diversity while maintaining a disciplined approach to capital allocation [20] - The company is optimistic about refining sector fundamentals, anticipating steady demand growth for refined products [21] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding RINs and the potential for SRE grants, emphasizing the economic harm caused by compliance with the RFS [23] - In the fertilizer segment, strong demand for nitrogen fertilizers is expected due to anticipated corn planting increases [24] - The company is optimistic about the Midcontinent market, expecting improved dynamics with new pipeline developments [49] Other Important Information - Cash flow from operations for Q4 2025 was breakeven, with free cash flow usage of $55 million [12] - Total consolidated capital spending for 2025 was $197 million, with projections for 2026 estimated at $200 million-$240 million [13] - The company completed a $1 billion senior notes offering to extend debt maturity profiles and improve financial flexibility [15][16] Q&A Session Summary Question: Expansion plans and asset acquisition strategy - The company is looking for proactive engagement in M&A discussions, focusing on both refining and fertilizer sectors while maintaining financial discipline [28][29] Question: Dividend return expectations - Management indicated that a clear path to further debt reduction is necessary before considering a return to dividends, emphasizing sustainability [32][33] Question: Ramping up WCS runs at Coffeyville refinery - The company is increasing WCS processing due to favorable market conditions and upgraded facility capabilities [38][39] Question: RIN prices and mitigation strategies - Management acknowledged rising RIN prices and is exploring blending more barrels and acquiring additional blending capacity to mitigate exposure [41][42] Question: Capture rates and pipeline projects - The company is optimistic about improving capture rates and sees potential benefits from new pipeline infrastructure in the Midcontinent [48][49]

Financial Data and Key Metrics Changes - For the full year 2025, the company reported consolidated net income of $90 million and EBITDA of $591 million [4] - The fourth quarter consolidated net loss was $116 million, with EBITDA of $51 million, impacted by accelerated depreciation and extended downtime at the fertilizer facility [4][6] - Adjusted EBITDA for the fourth quarter was $91 million, with adjusted losses per share of $0.80 [6] Business Segment Data and Key Metrics Changes - Petroleum segment generated EBITDA of $411 million for the full year, with adjusted EBITDA of $73 million for Q4 2025, up from $9 million in Q4 2024 due to higher crack spreads and increased throughput [4][6] - Fertilizer segment EBITDA was $211 million for the full year, with Q4 adjusted EBITDA of $20 million, down from $50 million in the prior year due to planned turnaround and startup issues [4][11] - Renewable segment reported a loss of $22 million for the full year, with breakeven adjusted EBITDA for Q4 2025, down from $9 million in Q4 2024 [4][10] Market Data and Key Metrics Changes - Combined total throughput for Q4 2025 was approximately 218,000 barrels per day, with throughput utilization at 97% of nameplate capacity [7] - Benchmark cracks for Q4 softened to an average of $22.70 per barrel, with realized margin adjusted for various liabilities at $9.92 per barrel, representing a 44% capture rate [8] - RINs prices declined approximately 18 cents per barrel from Q3 2025 levels, averaging $6.05 per barrel for Q4 [9] Company Strategy and Development Direction - The company aims to focus on safe and reliable operations, reevaluating commercial optimization opportunities to improve margin capture in the petroleum segment [18][19] - Plans to expand asset footprint with a disciplined approach to capital allocation, targeting growth in both refining and fertilizer segments [20] - The company is optimistic about refining sector fundamentals, anticipating steady demand growth for refined products and a slowdown in global refining capacity additions [21] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the refining margins despite RINs pressures, expecting continued support from EPA actions regarding SRE petitions [22] - In the fertilizer segment, strong demand for nitrogen fertilizers is anticipated due to projected corn planting increases [23] - The company is optimistic about the Midcontinent market dynamics with new pipeline developments expected to enhance operational opportunities [49] Other Important Information - Cash flow from operations for Q4 was breakeven, with free cash flow usage of $55 million [12] - Total consolidated capital spending for 2025 was $197 million, with an estimated $200 million-$240 million for 2026 [13] - The company completed a $1 billion senior notes offering to extend debt maturity profiles and improve financial flexibility [14][15] Q&A Session Summary Question: Expansion plans and asset acquisition strategy - The company is looking for proactive engagement in M&A discussions, focusing on both refining and fertilizer sectors while maintaining financial discipline [26][27] Question: Dividend return expectations - Management indicated that a clear path to further debt reduction is necessary before considering a modest dividend return, emphasizing sustainability in any future dividend [30][31][32] Question: Ramping up WCS runs at Coffeyville refinery - The company is increasing WCS processing due to favorable market conditions and upgraded facility capabilities, aiming for throughput of 20,000 barrels per day [36][37] Question: RIN prices and blending strategies - Management acknowledged rising RIN prices and is exploring options to blend more barrels and acquire additional blending capacity to mitigate exposure [39][40][41] Question: Capture rates and pipeline projects - The company is optimistic about improving capture rates and sees potential benefits from new pipeline projects enhancing market dynamics in the Midcontinent [45][48]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net sales of $131 million, a net loss of $10 million, and EBITDA of $20 million [4] - For the full year 2025, net sales were $606 million, with an EBITDA of $211 million and a net income of $99 million, or $9.33 per common unit [8] - The fourth quarter EBITDA decreased primarily due to lower production and sales volumes and higher direct operating costs associated with a planned turnaround [8] Business Line Data and Key Metrics Changes - Total ammonia production for Q4 was 140,000 gross tons, with 62,000 net tons available for sale, and UAN production was 169,000 tons [9] - UAN sales volumes were lower due to the planned turnaround and startup issues, but prices for UAN increased approximately 55% and ammonia prices increased approximately 32% compared to Q4 2024 [9] Market Data and Key Metrics Changes - The company noted strong pricing for nitrogen fertilizers throughout the quarter, with expectations for continued strong demand due to anticipated planting levels [6][14] - The USDA estimates a record crop year for 2025, with corn yields of nearly 187 bushels per acre on nearly 99 million acres planted [13] Company Strategy and Development Direction - The company is focused on improving reliability and production rates through debottlenecking projects and is planning for ammonia expansion at the Coffeyville facility [16] - The board has elected to reserve capital for future projects, which are expected to be funded from reserves accumulated over the past several years [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the spring planting season, citing strong demand for nitrogen fertilizers and tight global inventory levels [14] - Geopolitical tensions and natural gas supply issues in Europe are seen as risks that could impact fertilizer supplies [15] Other Important Information - Direct operating expenses for Q4 were $81 million, including turnaround expenses of approximately $14 million [10] - The company ended the quarter with total liquidity of $117 million, consisting of $69 million in cash and $48 million available under the ABL facility [11] Q&A Session Summary Question: What are you seeing in terms of UAN imports? - Management noted that UAN imports from Trinidad are lower due to a Nutrien plant being down, keeping the market tight for UAN [23] Question: Does the decrease in deferred revenue indicate less product pre-sold this year? - Management clarified that it was a timing issue, with more activity expected in January and February rather than December [25] Question: Will ammonia and UAN pricing increase sequentially heading into Q1 2026? - Management confirmed that pricing is expected to see an uptick from Q4 to Q1, based on the current book of business [26] Question: Is the air separator issue at Coffeyville resolved? - Management expressed confidence that the issues have been addressed and is in discussions with the service provider about future operations [27] Question: How does the acreage decrease for corn affect demand? - Management remains optimistic about demand due to the need for nitrogen replenishment in the soil, despite a slight decrease in acreage [29][30]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net sales of $131 million, a net loss of $10 million, and EBITDA of $20 million [4][8] - For the full year 2025, net sales were $606 million, with an EBITDA of $211 million and a net income of $99 million, or $9.33 per common unit [8] - The fourth quarter EBITDA decreased compared to Q4 2024 primarily due to lower production and sales volumes and higher direct operating costs [8] Business Line Data and Key Metrics Changes - Total ammonia production for Q4 was 140,000 gross tons, with 62,000 net tons available for sale, and UAN production was 169,000 tons [9] - UAN sales volumes were lower due to planned turnaround and startup issues, but prices for UAN increased by approximately 55% and ammonia prices by approximately 32% compared to the prior year [9] Market Data and Key Metrics Changes - The company noted strong pricing for nitrogen fertilizers throughout the quarter, with expectations for continued strong demand due to a projected record crop year [6][13] - The USDA estimates corn yields of nearly 187 bushels per acre on 99 million acres planted, with soybean yields estimated at 53 bushels per acre on over 81 million acres [13] Company Strategy and Development Direction - The company is focused on improving reliability and production rates through debottlenecking projects and plans to expand DEF production and load-out capacity [17] - A feedstock diversification and ammonia expansion project at the Coffeyville facility is underway, allowing for optimal use of natural gas and third-party petcoke [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the spring planting season, citing strong demand for nitrogen fertilizers despite potential acreage reductions for corn [13][32] - Geopolitical tensions and natural gas supply issues in Europe are seen as risks that could impact nitrogen fertilizer supplies [15][16] Other Important Information - Direct operating expenses for Q4 2025 were $81 million, including turnaround expenses of approximately $14 million [10] - The company ended the quarter with total liquidity of $117 million, consisting of $69 million in cash and $48 million available under the ABL facility [11] Q&A Session Summary Question: What are you seeing in terms of UAN imports? - Management noted a decrease in imports from Trinidad due to a plant being down, keeping the UAN market tight [24] Question: Is current deferred revenue down due to less product pre-sold? - Management clarified it was a timing issue, with more activity expected in January and February [26] Question: Will ammonia and UAN pricing increase sequentially heading into Q1 2026? - Management confirmed that prices are expected to increase slightly from Q4 to Q1 [27] Question: Is the air separator issue at Coffeyville resolved? - Management expressed confidence that issues have been addressed and is in discussions with the service provider for future operations [28][29] Question: How does the acreage reduction for corn affect demand? - Management indicated that despite acreage reductions, strong demand is expected due to nitrogen depletion in the soil from previous planting seasons [31][32]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net sales of $131 million, a net loss of $10 million, and EBITDA of $20 million [4][8] - For the full year 2025, net sales were $606 million, with an operating income of $129 million and net income of $99 million, translating to $9.33 per common unit [8] - EBITDA for the full year was $211 million, with a distribution of $10.54 per common unit [5][8] Business Line Data and Key Metrics Changes - Total ammonia production for Q4 was 140,000 gross tons, with 62,000 net tons available for sale, and UAN production was 169,000 tons [9] - UAN sales volumes were lower due to planned turnaround and startup issues, but prices increased by approximately 55% compared to Q4 2024, while ammonia prices rose by approximately 32% [9] Market Data and Key Metrics Changes - The company noted strong pricing for nitrogen fertilizers throughout Q4, despite lower production and sales volumes [5][9] - The USDA estimates a record crop year for 2025, with corn yields of nearly 187 bushels per acre on approximately 99 million acres planted [13] - U.S. inventory carryout levels for corn are expected to be above the 10-year average, while soybean levels are below [13] Company Strategy and Development Direction - The company is focused on improving reliability and production rates through debottlenecking projects at both plants, aiming for utilization rates above 95% [16][17] - Plans include expanding DEF production and load-out capacity, and a feedstock diversification project at the Coffeyville facility [17] - The board has reserved capital for future projects, expecting to spend over the next two years [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the spring planting season, anticipating strong demand for nitrogen fertilizers due to depleted soil nitrogen levels [13][30] - Geopolitical tensions and natural gas supply issues in Europe are seen as risks that could impact nitrogen fertilizer supplies [14][15] - The company expects ammonia utilization rates to be between 95% and 100% in Q1 2026, with direct operating expenses projected at $57 million to $62 million [11][12] Other Important Information - Direct operating expenses for Q4 2025 were $81 million, including $14 million in turnaround expenses [10] - The company ended the quarter with total liquidity of $117 million, consisting of $69 million in cash and $48 million available under the ABL facility [11] Q&A Session Summary Question: What are you seeing in terms of UAN imports? - Management noted a decrease in imports from Trinidad due to a plant being down, keeping the UAN market tight [22] Question: Is current deferred revenue down due to less product pre-sold? - Management clarified it was a timing issue, with more activity expected in January and February [25] Question: Will ammonia and UAN pricing increase sequentially heading into Q1 2026? - Management confirmed an uptick in prices based on the current book of business [26] Question: Is the air separator issue at Coffeyville resolved? - Management expressed confidence that issues have been addressed and is in discussions with the service provider for future operations [27][28] Question: How does acreage down for corn affect demand? - Management remains optimistic about demand due to nitrogen depletion in soil and supply constraints [29][30]

Market Risks and Commodity Prices - The company reported significant exposure to market risks due to potential changes in prices for fertilizer products, pet coke, and natural gas, which are critical raw materials for production [286]. - The company anticipates potential impacts from changes in market conditions, including fluctuations in fertilizer and natural gas prices, which could affect profitability [23]. - A $1.00 per MMBtu change in natural gas prices affects the production cost of ammonia and UAN by approximately $14.29 and $5.86 per ton, respectively [287]. - A $1.00 per ton change in pet coke prices impacts the production cost of ammonia and UAN by approximately $0.66 and $0.27 per ton, respectively [287]. Operational Risks - The company faces risks related to the volatile, cyclical, and seasonal nature of its business, which could impact cash distributions and financial performance [23]. - The company is dependent on a few third-party suppliers for feedstocks and transportation services, which poses risks to operational stability [23]. - The company acknowledges the potential for significant operational hazards and interruptions, including unscheduled maintenance or downtime, which could affect production levels [33]. - The company may face challenges in obtaining or renewing necessary permits and approvals for operations, impacting business continuity [33]. Competition and Market Position - The company is subject to intense competition in the nitrogen fertilizer market, which may affect pricing and market share [33]. - The company is reliant on the natural gas market, and volatility in natural gas prices could impact its competitive position [33]. Environmental and Regulatory Risks - The company is exposed to risks from environmental regulations and compliance, which could adversely affect operations and financial results [33]. Financial Risks - As of December 31, 2025, there were no outstanding borrowings under the ABL Credit Facility or other variable rate borrowings, indicating a low exposure to interest rate risk [288]. - A hypothetical 50-basis point fluctuation in market interest rates would have resulted in a $25.6 million change in the fair value of the company's fixed-rate debt as of December 31, 2025 [289]. - Fixed-rate debt exposes the company to refinancing risks, potentially requiring new debt at higher rates upon maturity [289]. Raw Material Cost Management - The company has commitments to purchase pet coke and natural gas through short-term, fixed price, and index price purchase contracts, indicating a strategy to manage raw material costs [286]. - The company produces nitrogen-based fertilizer products year-round to meet customer demand during high-delivery-volume seasons, with inventory value subject to market risk from commodity price fluctuations [287].

Financial Projections - Preliminary estimated net income for Q4 2025 is projected to be between $(14) million and $(7) million, while full-year 2025 net income is expected to range from $95 million to $102 million[2]. - Estimated EBITDA for Q4 2025 is expected to be between $15 million and $25 million, with full-year 2025 EBITDA projected to be between $206 million and $216 million[2]. - Cash and cash equivalents are estimated to be between $65 million and $75 million for both Q4 and full-year 2025[2]. - Total long-term debt and finance lease obligations are projected to be between $550 million and $600 million for both Q4 and full-year 2025[2]. Operational Performance - Ammonia utilization rate for Q4 2025 is estimated to be between 60% and 65%, while the full-year 2025 rate is expected to be between 87% and 89%[2]. - Strong demand for nitrogen fertilizers was noted in Q4 2025, with robust pricing amid tight inventories[2]. - The planned turnaround at the Coffeyville facility was completed as scheduled, although startup was delayed by several weeks due to third-party unit downtime[2]. Risk and Uncertainty - The company emphasizes that these preliminary estimates are subject to final adjustments and may differ from actual results[3]. - Forward-looking statements indicate potential risks and uncertainties that may affect future performance[10]. Business Focus - CVR Partners focuses on the production, marketing, and distribution of nitrogen fertilizer products, primarily urea ammonium nitrate (UAN) and ammonia[11].