CVR Partners’ Earnings Call: UAN Benchmark Discrepancy, Shifting Supply-Demand Narrative Clash

Date of Call: Jul 30, 2026

Financials Results

• Revenue: $202 million
• EPS: $7.33 per common unit

Guidance:

• Ammonia utilization for Q3 2026 estimated between 75% and 80%, impacted by a planned turnaround.
• Direct operating expenses (excl. inventory/turnaround) estimated between $57 and $62 million.
• Turnaround expenses estimated between $30 and $35 million.
• Total capital spending for Q3 2026 estimated between $40 and $49 million.

Business Commentary:

Strong Financial Performance in Q2 2026:

• CVR Partners LP reported net sales of $202 million, operating income of $85 million, net income of $78 million, and EBITDA of $107 million for Q2 2026.
• The increase in EBITDA was primarily due to higher UAN and ammonia sales pricing.

High Ammonia Plant Utilization:

• The ammonia plant utilization for Q2 2026 was 99%, with minimal downtime.
• This high utilization was supported by steady demand for product across the system.

Impact of Geopolitical Conflicts on Prices:

• Second quarter prices for UAN increased approximately 24%, and ammonia prices increased approximately 33% relative to the prior year period.
• The ongoing conflicts in the Middle East tightened global supplies of nitrogen fertilizers, driving prices higher.

Cash Reserves and Capital Spending:

• CVR Partners LP ended the quarter with total liquidity of $187 million, including $137 million in cash.
• The company anticipates a significant portion of the 2026 capital spending will be funded through cash reserves.

Strategic Focus on Feedstock Diversification:

• At the Coffeeville facility, plans are underway to utilize natural gas as an alternative feedstock, aiming to achieve feedstock diversification at a significantly reduced capital spend.
• This strategy is part of a broader initiative to improve reliability and production rates, supporting high utilization targets.

Sentiment Analysis:

Overall Tone: Positive

• "we had another strong quarter of operations with ammonia utilization of 99%" and "we believe unit holders will see the benefits of these investments in the coming years as these projects are completed and brought online."

Q&A:

• Question from Rob McGuire (Granite Research): With the recent management changes, is CVR Partners still interested in making potential acquisitions? And if so, can you comment on strategic criteria for an acquisition?
  Response: Management is open to various options (acquisition, merger, joint venture, sale) but expects a challenging environment, emphasizing the need for quick cash flow and creative deals.

• Question from Rob McGuire (Granite Research): Could you comment further on your summer fill programs completed in late June and early July? how much of your third quarter 2026 or second half 2026 ammonia and UAM production did you pre-sell and any detail you can give to us along the lines of either percentages or if it's in line or below or above historical averages?
  Response: Demand slowed in June due to price premiums but buyers returned for fill; sales were roughly in line with historical averages, with more fall prepay on ammonia earlier than last year.

• Question from Rob McGuire (Granite Research): Could you provide color on inventory levels for UAN and ammonia at the distributor, retailer? And I don't know if you've got it at the farmer level, but anything you can give to us along those lines?
  Response: Downstream inventories were higher earlier in the year, but strong fill demand indicates product movement; recent buying uptick suggests potential availability concerns are driving behavior.

• Question from Rob McGuire (Granite Research): You're expected to proceed with Coffeyville and you had some comments in the opening market comments, but can you kind of give us an idea of? How long that project is going to last? Will the conversion required, you know, like what's going to be required in terms of the conversion, taking that plan offline, you know, and will it have to be offline entirely? And then do you have any updated cost estimates?
  Response: Project expected to complete in second half of 2027 with no production downtime; cost will be less than half the original estimate, staying within existing reserves.

• Question from Rob McGuire (Granite Research): Producers appear to be taking a more disciplined approach to FIDS and on new facilities. And we saw Air Products in Yarra back away from their Louisiana Clean Energy Complex project. And just curious what your thoughts are and what would have to change for the industry to feel confident that it could achieve the necessary returns to build new plants?
  Response: New facilities are expensive with high execution and pricing visibility risks; government backing, long-term customer commitments, or equity participation could help de-risk projects.

Contradiction Point 1

Strategic Criteria for Acquisitions

It involves a change in the description of required cash flow generation for acquisitions, which is a key strategic criterion.

Rob McGuire (Granite Research) - Rob McGuire (Granite Research)

2026Q2: The strategic criteria for acquisitions would require a creative way to generate very quick cash flow. - [Dane Newman](CFO)

Is CVR Partners still interested in potential acquisitions, and what are the strategic criteria for such acquisitions? - Rob McGuire (Granite Research)

2026Q2: The acquisition environment is expected to be challenging, with a preference for opportunities that generate creative cash flow very quickly. - [Dane Neumann](CFO)

Contradiction Point 2

Summer Fill Program Price Reset Description

It pertains to a discrepancy in the benchmark used to describe the price reset for UAN, impacting market understanding of pricing strategy.

What did Rob McGuire (Granite Research) mention in the earnings call? - Rob McGuire (Granite Research)

2026Q2: A normal price reset occurred, with UAN tracking the NOB benchmark and ammonia prices performing better. - [Dane Newman](CFO)

Could you comment on your summer fill programs completed in late June and early July, and provide details on the percentage of your Q3 2026 or H2 2026 ammonia and UAN production that was pre-sold, including whether it's in line with, below, or above historical averages? - Rob McGuire (Granite Research)

2026Q2: A normal price reset occurred, with UAN tracking the NOLA benchmark and ammonia prices performing better. - [Dane Neumann](CFO)

Contradiction Point 3

Strategic Growth and Capacity Expansion

It reflects a shift from an aggressive expansion target to a more cautious stance on asset holding, indicating a strategic pivot.

Rob McGuire (Granite Research) - Rob McGuire (Granite Research)

2026Q2: CVR Partners is open to various options, including acquisitions, mergers, joint ventures, or even a sale if there is an attractive offer... The company will continue to look for attractive opportunities but is also comfortable holding its current assets. - [Dane Newman](CFO)

Given recent management changes, is CVR Partners still pursuing potential acquisitions, and if so, what are the strategic criteria guiding these efforts? - General Participant

20260430-2026 Q1: The company is executing debottlenecking projects at both plants... These projects aim to support the target of operating plants at utilization rates above 95% of nameplate capacity (excluding turnarounds). If completed, the two brownfield expansion projects would increase consolidated ammonia production capacity by approximately 7%. - [Mark Pytosh](CEO)

Contradiction Point 4

Capital Expenditure and Funding Outlook

It involves inconsistent messaging on 2026 capital spend estimates and funding sources, affecting financial planning and investor expectations.

What were Granite Research's earnings for the quarter? - Rob McGuire (Granite Research)

2026Q2: The updated cost estimate is for less than half of the original capital expenditure due to scope optimization... - [Mike Wright](CFO)

How long will the Coffeeville facility conversion to natural gas take, will it require taking the plant offline entirely, and do you have updated cost estimates? - General Participant

20260430-2026 Q1: 2026 capital spending is estimated at $60 million to $75 million... A significant portion of planned profit and growth capital spending will be funded from cash reserves. - [Dane Neumann](CFO)

Contradiction Point 5

UAN Supply-Demand Balance Characterization

It involves a contradiction on the tightness of the UAN market between quarters, impacting market analysis and strategic pricing.

Rob McGuire (Granite Research) - Rob McGuire (Granite Research)

2026Q2: Demand slowed slightly in June due to UAN prices trading at a wide premium relative to other fertilizers. - [Dane Newman](CFO)

Could you provide an update on your summer fill programs completed in late June and early July, including how much of your Q3 or H2 2026 ammonia and UAN production was pre-sold, along with percentages and comparisons to historical averages? - Robert McGuire (Granite Research, LLC)

2025Q4: Overall, the UAN supply-demand balance is tight. - [Mark Pytosh](CEO)