CVR Partners (UAN) Q4 2025 Earnings Transcript

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DATE

Thursday, February 19, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Mark A. Pytosh
• Chief Financial Officer — Dane J. Neumann
• Chief Operating Officer — Mike Wright
• Vice President, Investor Relations — Richard Roberts

TAKEAWAYS

• Net Sales -- $131 million for the quarter, with full-year net sales of $606 million.
• Net Loss -- $10 million, or $0.97 per common unit, reported for the quarter.
• EBITDA -- $20 million for the quarter and $211 million for the full year.
• Operating Loss -- $3 million for the quarter; operating income was $129 million for the year.
• Distribution Declared -- $0.37 per common unit for the quarter, totaling $10.54 per common unit for the year.
• Ammonia Plant Utilization -- 64% in the quarter, impacted by a Coffeyville turnaround and delayed startup; 88% for the full year.
• UAN Production -- 169,000 tons produced; 182,000 tons sold at an average price of $355 per ton.
• Ammonia Production -- 140,000 gross tons with 62,000 net tons available for sale; 81,000 tons sold at an average price of $626 per ton.
• Price Increases -- UAN prices rose approximately 55% and ammonia prices 32% compared to the prior-year quarter.
• Direct Operating Expenses -- $81 million, with $14 million from Coffeyville turnaround costs; underlying direct operating expenses rose by $9 million, mainly due to higher repairs and personnel.
• Capital Spending -- $27 million in the quarter ($17 million maintenance); $57 million for the year ($35 million maintenance).
• Liquidity -- $117 million at quarter end, including $69 million cash and $48 million ABL facility availability.
• Deferred Revenue -- $23 million at year end, down from $51 million the prior year due to timing, with a larger spring order book expected by management.
• 2026 Guidance -- Ammonia utilization projected at 95%-100%; estimated 2026 direct operating expenses of $57 million-$62 million; capital spending guidance of $25 million-$30 million.
• Supply Commentary -- CEO Pytosh stated, “there is less tonnage coming in from Trinidad” and “the market is watching closely” recent disruptions in Russia, with UAN supply described as “on the tight end of the curve.”

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RISKS

• CEO Pytosh highlighted reliance on a third-party air separation plant, noting The contract does have penalties, and there were some penalties paid for that, but it is a fraction of our lost production level at the facility. He described the issue as a thorn in the side, and disclosed ongoing efforts to change the approach to improve operational reliability.
• Management emphasized elevated exposure to geopolitical and supply risks, stating, Geopolitical tensions remain a key risk to nitrogen fertilizer supplies given significant production capacity residing in countries across the Middle East, North Africa, and Russia.
• CEO Pytosh noted, The supply side has been even a bigger issue. Demand has been very solid, but the supply side is not able to keep up with the demand side. signaling sustained risk of supply constraints.
• Fourth quarter results were adversely impacted by lower production and sales volumes, and higher direct operating costs associated with the planned turnaround at Coffeyville.

SUMMARY

Management confirmed that fourth quarter financial performance was constrained by both scheduled and unscheduled downtime at the Coffeyville facility, resulting in reduced sales volumes and a net loss. Executives indicated that market pricing for UAN and ammonia increased sharply, with further sequential uptick expected based on the company’s current book of business. Liquidity remained substantial at $117 million, enabling funding for ongoing reliability and plant improvement initiatives which are expected to raise utilization rates. Capital allocation priorities center on plant reliability, supply chain flexibility, and margin improvement, with a portion of growth CapEx targeted to come from previously reserved funds.

• Management expects higher direct operating expenses in 2026, projecting a range of $57 million-$62 million as part of forward guidance.
• Deferred revenue timing differences led to a lower year-end balance, but management asserted the spring pre-sales order book maybe a little bigger than usual due to activity shifting into January and February.
• Pytosh said the company is pursuing an amended business plan, with its air separation unit provider to address operational and contractual reliability.
• Company’s long-term strategy includes continued investment in debottlenecking, feedstock flexibility projects, and DEF capacity expansion to improve resilience and adaptability.

INDUSTRY GLOSSARY

• UAN: Urea Ammonium Nitrate, a liquid nitrogen fertilizer product commonly used in agriculture.
• DEF: Diesel Exhaust Fluid, a urea-based liquid used in emissions reduction for diesel engines.
• ABL facility: Asset-based lending facility, a revolving credit line secured by company assets.
• Turnaround: A scheduled shutdown of a plant or facility to perform maintenance, repairs, or upgrades.

Full Conference Call Transcript

Richard Roberts: We appreciate your participation in today's call. With me today are Mark Pytosh, our Chief Executive Officer, Dane Neumann, our Chief Financial Officer, and other members of management. Prior to discussing our 2025 fourth quarter and full-year results, let me remind you that this conference call may contain forward-looking statements as that term is defined under federal securities laws. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. You are cautioned that these statements may be affected by important factors set forth in our filings with the Securities and Exchange Commission and in our latest earnings release.

As a result, actual operations or results may differ materially from the results discussed in the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except to the extent required by law. This call also includes various non-GAAP financial measures. Disclosures related to such non-GAAP measures, including reconciliation to the most directly comparable GAAP financial measures, are included in our 2025 fourth quarter earnings release that we filed with the SEC, and Form 10-Ks for the period will be discussed during the call. Let me remind you that we are a variable distribution MLP.

We will review our previously established reserves and current cash usage, evaluate future anticipated cash needs, and may reserve amounts for other future cash needs as determined by our general partner's board. As a result, our distributions, if any, vary from quarter to quarter due to several factors, including, but not limited to, operating performance, fluctuations in the prices received for finished products, capital expenditures, and cash reserves deemed necessary or appropriate by the board of directors of our general partner. That said, I will now turn the call over to Mark Pytosh, our Chief Executive Officer. Mark?

Mark A. Pytosh: Thank you, Richard. Good morning, everyone, and thank you for joining us for today's call. Before we get into the results, I would like to introduce our new Chief Operating Officer, Mike Wright. Mike also serves as COO of CVR Energy, a position he has held since January 2022. Mike has nearly 35 years of experience in the refining and petrochemicals industries in a variety of operations and commercial roles, and we are excited to have him leading our fertilizer operations teams. Turning to the results for the 2025 fourth quarter, we reported net sales of $131 million, a net loss of $10 million, and EBITDA of $20 million.

The board of directors declared a fourth quarter distribution of $0.37 per common unit, which will be paid on March 9 to unitholders of record at the close of the market on March 2. For the full year 2025, we reported EBITDA of $211 million and distributions of $10.54 per common unit. We had another year of solid operations from our facilities, with an ammonia utilization rate of 88% for the year. For the fourth quarter of 2025, our ammonia plant utilization was 64%, which was impacted by the plant turnaround and subsequent delayed startup at the Coffeyville facility.

While the turnaround was completed in early November as scheduled, we experienced additional downtime following approximately three weeks of startup issues at the third-party air separation plant. Although production and sales volumes were lower than we expected, pricing for nitrogen fertilizers remained strong throughout the quarter, and we continue to be optimistic about the spring planting season, which I will discuss further in my closing remarks. I will now turn the call over to Dane to discuss our financial results.

Dane J. Neumann: Thank you, Mark.

Dane J. Neumann: Turning to our results for the full year 2025, we reported net sales of $606 million and operating income of $129 million. Net income for the year was $99 million, or $9.33 per common unit, and EBITDA was $211 million. For the fourth quarter of 2025, we reported net sales of $131 million and an operating loss of $3 million. Net loss for the fourth quarter was $10 million, or $0.97 per common unit, and EBITDA was $20 million. Relative to the fourth quarter of 2024, EBITDA decreased primarily due to lower production and sales volumes, and higher direct operating costs associated with the planned turnaround at Coffeyville.

Total ammonia production for the fourth quarter was 140,000 gross tons, of which 62,000 net tons were available for sale, and UAN production was 169,000 tons. During the quarter, we sold approximately 182,000 tons of UAN at an average price of $355 per ton, and approximately 81,000 tons of ammonia at an average price of $626 per ton. Relative to the fourth quarter of 2024, UAN and ammonia sales volumes were lower as a result of the planned turnaround and subsequent startup issues at Coffeyville that Mark discussed previously. Fourth quarter prices for UAN increased approximately 55% and ammonia prices increased approximately 32% relative to the prior-year period.

Direct operating expenses for the fourth quarter of 2025 were $81 million, which included turnaround expenses of approximately $14 million. Excluding inventory and turnaround impacts, direct operating expenses increased by approximately $9 million from the fourth quarter of 2024, primarily related to higher repair and maintenance and personnel expenses. Capital spending for the fourth quarter was $27 million, of which $17 million was for maintenance capital. Capital spending for the full year 2025 was $57 million, of which $35 million was maintenance capital. We estimate 2026 maintenance capital spending to be $35 million to $45 million and growth capital spending to be $25 million to $30 million.

As a reminder, we expect a significant portion of the 2026 growth capital spending will be funded from the cash the board elected to reserve over the past several years. We ended the quarter with total liquidity of $117 million, which consisted of $69 million in cash and availability under the ABL facility of $48 million. Within our cash balance of $69 million, we had approximately $3 million related to customer prepayments for the future delivery of product. Assessing our cash available for distribution, we generated EBITDA of $20 million and had net cash needs of approximately $16 million for interest costs, maintenance CapEx, and other reserves.

As a result, there was $4 million of cash available for distribution, and the board of directors of our general partner declared a distribution of $0.37 per common unit. Looking ahead to 2026, we estimate our ammonia utilization rate to be between 95% and 100%. We expect direct operating expenses to be $57 million to $62 million, excluding inventory impacts, and total capital spending to be between $25 million and $30 million. With that, I will turn the call back over to Mark. Thanks, Dane. In summary, although we were disappointed about the extended downtime associated with the third-party air separation unit during the quarter, nitrogen fertilizer market conditions continue to be constructive and prices remained robust.

With the 2025 harvest complete, the USDA is now estimating a record crop year with corn yields of nearly 187 bushels per acre on nearly 99 million acres of corn planted. Soybean yields are estimated to be 53 bushels per acre on over 81 million planted acres. U.S. inventory carryout levels are expected to be above the ten-year average for corn, and below for soybeans. Despite the record harvest, May corn prices remain around $4.45 per bushel, and current expectations are for approximately 95 million acres of corn to be planted in 2026. At this level of planting, we expect to see continued strong demand for nitrogen fertilizers through the spring.

On the supply side of the equation, inventory levels around the world continue to appear tight. Geopolitical tensions remain a key risk to nitrogen fertilizer supplies given significant production capacity residing in countries across the Middle East, North Africa, and Russia. We continue to monitor developments in the Middle East that could impact energy and fertilizer markets, and we expect 2026 will likely be a continued period of higher-than-historical volatility in the business. Natural gas prices in the U.S. saw a sharp increase earlier this year due to extreme cold weather across several regions of the country. However, prices have since declined and have been trending between $3 and $4 per MMBtu.

Meanwhile, natural gas prices in Europe averaged over $10 per MMBtu for the fourth quarter and have been over $13 since the beginning of the year. The cost to produce ammonia in Europe has remained durably at the high end of the global cost curve, and production remains below historical levels, which creates opportunities for U.S. Gulf Coast producers to export ammonia to Europe for upgrade. We continue to believe Europe faces structural natural gas supply issues that will likely remain in effect through 2026. We continue to execute certain debottlenecking projects at both plants that are expected to improve reliability and production rates.

The goal of these projects is to support our target of operating our plants at utilization rates above 95% of nameplate capacity, excluding the impact of turnarounds. For 2026, we are focused on water and electricity reliability and quality at both plants, and expanding our DEF production and load-out capacity, among other projects. We also continue working on construction and design plans for the feedstock and ammonia expansion project at the Coffeyville facility. As a reminder, this project should provide us the ability to choose the optimal mix of natural gas and third-party pet coke depending on prevailing prices.

The board elected to continue reserving capital for these projects in the fourth quarter that we expect to spend over the next two years. Our focus is on improving reliability and redundancy at the two plants in efforts to provide better production rates and lower downtime in the future. The funds needed for the 2026 projects are coming from the reserves taken over the last several years. The fourth quarter demonstrated the benefits of focusing on reliability and performance.

During the quarter, we continued to focus on all of the critical elements of our business plan, which include safely and reliably operating our plants with a keen focus on the health and safety of our employees, contractors, and communities; verbally managing cost; being judicious with capital; maximizing our marketing and logistics capabilities; and targeting opportunities to reduce our carbon footprint. In closing, I would like to thank our employees for all their hard work during the Coffeyville turnaround and for continuing to deliver on our marketing and logistics plans, resulting in a distribution of $0.37 per common unit for the fourth quarter. With that, we are ready to take any questions.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star with the number one on your telephone keypad. We will pause for just a moment. Your first question comes from the line of Rob McGuire with Planet Research. Your line is now open. Please go ahead.

Rob McGuire: Morning, Mark, Dane, and Richard. Hi. Just a few questions. One is, what are you seeing in terms of UAN imports out there? Are you seeing a dearth of imports from Trinidad? And in particular, what are you seeing from Russia? And any other color you can give to us.

Mark A. Pytosh: I would not say that we are seeing anything outside the norm. We are still importing some tonnage. The one big item in Trinidad is obviously the Nutrien plant is down, and Upgrader is down. So there is less tonnage coming in from Trinidad. I think that is keeping the market tight for UAN, in particular, in the States. I have seen some of the commentary from Nutrien, and it does not feel like that plant is likely to return to service soon. So there is a combination of ammonia and UAN tightness that was a product that was being imported here.

The Russian product has been pretty consistently falling, and I would not say there is any new up or down. The market is watching closely. There have been some drone strikes on either Russian fertilizer plants or export terminals, and so the market is watching that to see. But I would say, generally, it feels like the supply-demand balance in UAN is on the tight end of the curve.

Rob McGuire: Thank you.

Mark A. Pytosh: Switching topics, current deferred revenue is $23 million at year-end, and that was down from $51 million year over year. Does that mean there was less product presold this year relative to last year?

Mark A. Pytosh: Yes. I would just say it was a timing issue. We typically would see more activity in December for tax planning purposes by the customer base, but we did not see as much this year. But that has all been picked up in January and February here. So I would say normal, if anything, maybe a little bigger book for the spring than we typically see. It just did not fall in December like normal, but the customers were in buying product, and we got a big book on for the spring.

Rob McGuire: Thank you.

Mark A. Pytosh: And then, is it safe to assume that ammonia and UAN pricing will increase sequentially heading into 2026?

Mark A. Pytosh: If you look at our book of business today, it is at higher prices than the fourth quarter. So there will be an uptick. It will not be dramatic, but there will be an uptick from the fourth quarter to the first quarter. Do you feel confident about the air separator issue at Coffeyville being resolved at this point? And might you receive compensation from the operator for downtime and related shortfall on that? Let me start. I am confident that the issues that caused the delayed startup have been dealt with. We are not happy with the performance, and we are in discussions with that service provider about the go-forward strategy for the operations and maintenance of that facility.

We are working on, I would call it, not an amended contract, but an amended business plan, which would involve us being more active with the ongoing activities there. We are not going to just sit by and accept those events. We are going to engage and work on a different approach than what happened in November. The contract does have penalties, and there were some penalties paid for that, but it is a fraction of our lost production level at the facility. It is a thorn in the side, and it is meant to incentivize the provider to provide us really good service and onstream, but it cannot make up for the shortfall of lost production.

We are revisiting how we do business together and, in coming quarters, we will talk more about what the go-forward strategy is there, but it will not be status quo. I appreciate that. And then last question, Mark. I always appreciate your commentary on the market. Acreage is supposed to be down for corn this year, as you mentioned in your opening remarks. I would think that would hurt demand just a little bit. Then again, there are more supply constraints. Can you give us how you feel the spring is going to work out and why you are feeling so optimistic about it?

Mark A. Pytosh: Sure. If you had asked me three years ago if it was going to be 95 million acres of corn, we would be thrilled. Ninety-five million acres is really at the top end of the range except for last year, and that is a large amount of acreage. Because of the 99 million acres and how much we planted, corn consumes nitrogen from the soil, and you have to replenish it. The soil has been depleted of nitrogen, and you have to come back in and fertilize it. To your point, it is going to be a really good demand season.

Last year was peak, and I would say even when 99 million acres are planted, sometimes the application rates can be lower. It is not apples to apples. You cannot just take 99 and 95 and compare them, because if you plant more productive acreage and you want higher yields, you are going to put more fertilizer on. It is hard to make an apples-to-apples comparison. The supply side of the equation continues to be constrained. We could talk about every region of the world; there are reasons why the supply is constrained. There have been natural gas availability issues in certain countries. There are ongoing conflicts in certain areas. We are watching what is going to happen with Iran.

Iran is a big producer of nitrogen and a big exporter. If there is some activity in the Strait of Hormuz, or some activity that constrains Iran's ability to produce, that could have a significant impact. We are right on top of the spring coming up here in six weeks, so we have to keep our eye on that. The supply side has been even a bigger issue. Demand has been very solid, but the supply side is not able to keep up with the demand side. I would suggest we are seeing early movement.

I know it was cold a few weeks ago, but if you look in the Midwest, we are already seeing ammonia movement across a pretty broad swath, up into Iowa and Illinois to a degree, and all the way down into the Southern Plains. That is a good omen for the spring when we have the ammonia running this early. We are only in February, so generally the optimism is high for the spring, and we have a good jump on it. When you get a good start to it, it really could lead to a much better spring. We feel really good about where we are. We have a good book of business for the company.

We have a good order book, and we just need to run like we normally have, except for the last quarter. We will run at a high utilization and move the product for our customers.

Rob McGuire: That was really helpful. And just one other follow-on is, with product moving at this point, is there a change in trend in terms of the farmer living hand-to-mouth? Or are they starting to plan early at this point in time? Or is it just that the application is starting earlier given the weather opportunity?

Mark A. Pytosh: I think it is your last comment there. The conditions have come into place here in February rather than March. I would say it has probably pulled up by maybe a couple of weeks or three weeks. It does not seem like a lot, but in farming, that is a lot. If you are a farmer and you can get a jump on your ammonia application, that really helps you get prepared for the spring. That always makes everybody feel better when the ammonia run starts earlier, because then you can have a longer process of getting it applied and planting behind it. There is a lot of optimism around conditions.

We started the year super cold everywhere, all the way to the Canadian border, but we have turned the corner here from a weather perspective. We have been able to move product from our plants out to the field.

Rob McGuire: Thank you for answering all my questions.

Mark A. Pytosh: Thanks, Rob.

Operator: There are no questions at this time. I will now turn the call back over to Mark Pytosh for closing remarks.

Mark A. Pytosh: Again, I would like to thank all of you for your interest in CVR Partners and for being on the call today, and our employees for their hard work and commitment towards safe, reliable, and environmentally responsible operations. We look forward to reviewing our first quarter results here in a couple of months. Thank you for being here tonight. Thanks.

Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.

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