CVR PARTNERS, LP (UAN) stock intrinsic value fair value estimate & owner earnings analysis

CVR Partners is a limited partnership that makes nitrogen fertilizer at two plants: Coffeyville, Kansas (1,300 tons per day of ammonia and 3,100 tons per day of UAN, a liquid nitrogen fertilizer) and East Dubuque, Illinois (1,075 tons per day of ammonia and 950 tons per day of UAN). Coffeyville is the only nitrogen fertilizer plant in North America that makes its hydrogen from petroleum coke; in 2025 about 36% of that coke came from the neighbouring refinery owned by CVR Energy, with the rest bought from third parties. East Dubuque runs on pipeline natural gas and ships substantially all of its product within 100 miles. UAN was about 67% of 2025 sales and ammonia about 24%, sold wholesale to retailers, distributors and industrial users in the United States; the top two customers took 28% of 2025 sales. CVR Energy owns about 36.8% of the units and controls the general partner, and Icahn Enterprises owns about 70% of CVR Energy, so unitholders are minority partners in a controlled entity. This is a commodity business. Farmers must reapply nitrogen every year, so volumes are steady, but prices swing with grain prices and global gas costs. The record shows it: the partnership lost money every year from 2016 through 2020 (including a $41 million goodwill write-down in 2020), then earned very large profits in 2021 to 2023, and settled into a middle range in 2024 and 2025. We measure owner earnings as operating cash flow with working-capital swings stripped out, less unit-based pay and less the capital spending needed to keep the plants running. Per unit that came to -$0.69 in 2017, $0.73 in 2018, $3.19 in 2019, $0.52 in 2020, $14.35 in 2021, $32.33 in 2022, $21.80 in 2023, $10.67 in 2024 and $12.86 in 2025. We use the 2017 to 2025 period, the first full year with both plants through a complete down-and-up cycle, and take the middle value, $10.67 per unit. Two judgement calls matter here. First, interest cost fell from about $60 million a year when the partnership carried $645 million of 9.25% notes to about $37 million after it refinanced into $550 million of 6.125% notes due June 2028; putting the weak years on today's interest bill lifts them by about $2 a unit but does not change the middle value. Second, our estimate of maintenance spending ($46 million in 2025) is higher than the $35 million the company itself labels maintenance, which makes our figure more conservative. Plant turnarounds are expensed as they happen ($16.7 million at Coffeyville in 2025; about $30 million budgeted for East Dubuque's six-week turnaround starting August 2026) and are already inside these numbers. Base case ($140.66 per unit): owner earnings hold at the $10.67 middle-of-cycle level with no growth credited, because capacity is fixed and fertilizer prices are not something the business controls. Owner earnings rose about 20% in 2025, but we start the first year flat rather than carry that forward. When the notes mature in June 2028 we assume they are refinanced at about one point more interest, costing roughly $0.52 a unit a year. We run the plants for 30 years, since nitrogen must be replaced every year and the maintenance spending that keeps the plants running is already deducted, and stop there rather than assume anything further. Bear case ($75.97 per unit): the next decade repeats the 2016 to 2020 experience for half its years. Those trough years averaged about $3 a unit even on today's lower interest bill; blended with middle-of-cycle years that gives about $6.83 a unit. The 2028 refinancing costs two points more, about $1.04 a unit a year, and we cut the story off after 25 years to reflect Coffeyville's reliance on a neighbouring refinery for part of its feedstock and the concentration in a handful of customers. The $550 million of debt, about five times middle-of-cycle owner earnings, is what makes a long downturn hurt. Bull case ($188.96 per unit): the strong pricing now visible continues for three years. In the first half of 2026 net sales were $382 million against $311 million a year earlier and net income was $127 million against $66 million, with realized ammonia prices up 33% and UAN up 24% in the second quarter and ammonia plants running at 99% of capacity. We credit about $17.33 a unit for three years, halfway between 2025 and 2023 results, then the 2025 level of $12.86 for the rest of 30 years, with the notes refinanced at today's rate. Left out of every case: the planned ammonia expansion of about 5% and the option to run Coffeyville on natural gas, because the board has approved only the early stages, subject to engineering and final cost estimates. Nothing is credited for fertilizer demand growth or higher prices beyond what the business has already earned. The margin-of-safety price of $80 sits near the bear case and about 43% below the base case, a wide margin that reflects commodity prices, the 2028 debt maturity and minority status in a controlled partnership. The value would be wrong if fertilizer prices return to 2016 to 2020 levels for most of a decade, if the 2028 notes can only be refinanced on much harsher terms, or if Coffeyville loses its low-cost coke supply without a working alternative.