CVR Partners (UAN) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our operations are, and nitrogen fertilizer and feedstock prices are, cyclical and highly volatile, which could have a material adverse effect on our results of operations, financial condition and cash flows
2. 02Nitrogen fertilizer products and our business face intense competition
3. 03The dynamic pricing environment for nitrogen fertilizer products, as well as any changes to government policy regarding fertilizer pricing in response thereto, could negatively affect our results of operations
4. 04Our business is geographically concentrated and is therefore subject to regional economic downturns and seasonal variations for us or our customers, which may affect our production levels and inventory and working capital levels
5. 05Our sales volumes depend on significant customers, and the loss of several significant customers may have a material adverse impact on our results of operations, financial condition and cash flows
6. 06Any decline in U.S. agricultural production or limitations on the use of nitrogen fertilizer for agricultural purposes could have a material adverse effect on the sales of nitrogen fertilizer, and on our results of operations, financial condition and cash flows
7. 07Compliance with and changes in environmental laws, rules and regulations, including those related to climate change, could result in increased operating costs and capital expenditures and adversely affect our performance
8. 08operating restrictions, injunctive relief, permit revocations and/or facility shutdowns, which may have a material adverse effect on our ability to operate our Facilities and accordingly our financial performance
9. 09Public health crises have had, and may continue to have, adverse impacts on our business, financial condition, results of operations and liquidity
10. 10We are subject to cybersecurity risks and may experience cyber incidents resulting in disruption or harm to our business
11. 11Inflation could have adverse effects on our results of operations
12. 12The acquisition and expansion strategy of our business involves significant risks that could have a material adverse effect on our results of operations, financial condition and cash flows
13. 13Internally generated cash flows and other sources of liquidity may not be adequate for our capital needs

Risks Related to Our Facility Operations

1. 14Any interruption or change in the supply of feedstocks to our Facilities could have a material adverse effect on our results of operations and financial condition
2. 15If licensed technology were no longer available or able to be licensed economically or at all, our business may be adversely affected
3. 16Our operations are dependent on third-party suppliers, which could have a material adverse effect on our results of operations, financial condition and cash flows
4. 17We rely on third-party providers of transportation services, which subjects us to risks and uncertainties beyond our control and that may have a material adverse effect on our results of operations, financial condition and ability to make distributions
5. 18Any liability for accidents involving ammonia or other products we produce or transport that cause severe damage to property or injury to the environment and human health could have a material adverse effect on our results of operations, financial condition and ability to make cash distributions
6. 19We could incur significant costs in cleaning up contamination
7. 20We may be unable to obtain or renew permits or approvals necessary for our operations, which could inhibit our ability to do business
8. 21Acts of terror or sabotage, threats of war, armed conflict or war or trade wars may have an adverse impact on our business, our future results of operations and our overall financial performance
9. 22Adverse weather conditions or other unforeseen developments could damage our Facilities or logistics assets and impair our ability to produce and deliver our nitrogen fertilizer products
10. 23Our Facilities face significant risks due to physical damage hazards, environmental liability risk exposure, and unplanned or emergency partial or total facility shutdowns, which could cause property damage or injuries and a material decline in production which are not fully insured
11. 24occurrence to impact both our Coffeyville Facility and CVR Energy’s Coffeyville refinery in which case the insurance limits and applicable sub-limits would apply to all damages combined
12. 25We are subject to strict laws and regulations regarding employee and process safety, and failure to comply with these laws and regulations could have a material adverse effect on our results of operations, financial condition and profitability
13. 26Our business may suffer due to the departure of any of our key senior executives or other key employees, and a shortage of skilled labor may make it difficult for us to maintain labor productivity
14. 27A portion of our workforce is unionized, and we are subject to the risk of labor disputes, slowdowns or strikes, which may disrupt our business and increase our costs

Risks Related to Our Capital Structure

1. 28Instability and volatility in the capital, credit and commodity markets in the global economy could negatively impact our business, financial condition, results of operations and cash flows
2. 29Our level of indebtedness may affect our ability to operate our business and may have a material adverse effect on our financial condition and results of operations
3. 30Covenants in our debt agreements could limit our ability to incur additional indebtedness and engage in certain transactions, as well as limit operational flexibility, which could adversely affect our liquidity and ability to pursue our business strategies
4. 31An increase in interest rates may cause our debt service obligations to increase

Risks Related to Our Limited Partnership Structure

1. 32We may not have sufficient “available cash” to pay any quarterly distribution on common units, or the Board may elect to take reserves or distribute less than all of our available cash
2. 33Our partnership agreement has limited our general partner’s liability, replaces default fiduciary duties, and restricts the remedies available to common unitholders for actions that, without these limitations and reductions, might otherwise constitute breaches of fiduciary duty
3. 34Our general partner, an indirect wholly owned subsidiary of CVR Energy, has fiduciary duties to CVR Energy and its stockholders, and the interests of CVR Energy and its stockholders may differ significantly from, or conflict with, the interests of our public common unitholders
4. 35As a publicly traded partnership we qualify for and rely upon certain exemptions from many of the NYSE’s corporate governance requirements
5. 36Our public common unitholders have limited voting rights and are not entitled to elect our general partner or our general partner’s directors and do not have sufficient voting power to remove our general partner without CVR Energy’s consent
6. 37Common unitholders may have liability to repay distributions
7. 38If the IRS were to treat us as a corporation for U.S. federal income tax purposes or we become subject to entity-level taxation for state tax purposes, our cash available for distribution to our common unitholders would be substantially reduced, likely causing a substantial reduction in the value of our common units
8. 39Our unitholders are required to pay income taxes on their share of our taxable income even if they do not receive any cash distributions from us
9. 40Common unitholders may be subject to limitation on their ability to deduct interest expense incurred by us
10. 41Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences
11. 42The IRS may challenge our treatment of each purchaser of our common units as having the same tax benefits without regard to the common units actually purchased, which could adversely affect the value of our common units
12. 43Our proration methods may be challenged by the IRS, which could change the allocation of items of income, gain, loss, and deduction among our common unitholders
13. 44IRS challenge of certain valuation methodologies we have adopted to determine a unitholder’s allocations of income, gain, loss, and deduction, could adversely affect the value of our common units
14. 45Our common unitholders will likely be subject to state and local taxes, as well as income tax return filing requirements, in jurisdictions where they do not live as a result of investing in our common units