Greetings and welcome to CVR Partners LP Second Quarter 2016 Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Wes Harris, Vice President of Business Analysis. Thank you. Please go ahead.

Well thanks, Brenda, and good morning everyone. We appreciate your participation on today’s call. With me today are Chief Executive Officer, Mark Pytosh; and Chief Financial Officer, Susan Ball. Before Mark and Susan discuss our recent results, I will provide the following Safe Harbor statements. In accordance with Federal Securities Laws, statements in this earnings call relating to matters that are not historical facts are considered forward-looking statements. These forward-looking statements are based on management’s beliefs and assumptions using currently available information and expectations as of today. These forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties including those noted in our filings with the SEC. In addition, today’s presentation includes various non-GAAP financial measures. The disclosures related to such non-GAAP financial measures, including reconciliations to the most directly comparable GAAP financial measures, are included in our 2016 second quarter results press release that was put out this morning. Adjusted EBITDA is an example of such non-GAAP financial measures. Adjusted EBITDA represents net income adjusted for depreciation, amortization, net interest expense, and other financing costs, income tax expense, major scheduled turnaround expenses, non-cash share-based compensation, , loss on extinguishment of debt and expenses associated with the East Dubuque acquisition. So with that out of the way, I’ll turn it over to Mark.

Thank you, Wes, and good morning, everyone. Thanks for joining us for today’s call. The 2016 second quarter marked a significant milestone in the history of CVR Partners as it included the operating results of the East Dubuque facility. We acquired the plant through our purchase of Rentech Nitrogen Partners, which closed on April 1. I am pleased with our progress in integrating East Dubuque with CVR Partners and I want to thank all of our employees for their continued hard work to ensure the success of the transition. During the quarter we also put in place a long-term capital structure through the completion of a $645 million bond offering. The offering was primarily utilized to refinance the interim debt facilities used to complete the acquisition and debt obligations assumed in that acquisition of which a substantial majority were repurchased. Summarizing the financial highlights for the second quarter of 2016, revenue of $119.8 million, adjusted EBITDA of $29.1 million and a net loss of $17 million. Contributing to the loss were inventory valuation and deferred revenue purchase price accounting adjustments related to our acquisition of Rentech Nitrogen. Also impacting this year’s second quarter results were turnaround expenses for East Dubuque and a loss on extinguishment of debt. In today’s press release we also announced a 2016 second quarter distribution of $0.17 per common unit which will be paid on August 15th to the unitholders of record on August 8th. The reconciliation of adjusted EBITDA to available cash for distribution in our press release includes a few adjustments of particular interest. First is the net $13 million add back for the impact of purchase accounting related to the acquisition. Second, available cash for distribution was reduced by East Dubuque’s scheduled plant turnaround including $6.6 million of related expense. Combined with the…

Thank you, Mark, and good morning, everyone. As Mark mentioned, our consolidated financial results for the second quarter of 2016 is the first reporting period to include the operations of the East Dubuque facility. As such, this has a significant impact on our year-over-year comparability of line items reported in our financials. Consolidated net sales for the 2016 second quarter were $119.8 million as compared to $80.8 million in 2015. The increase was attributable to the inclusion of East Dubuque. Excluding East Dubuque net sales as compared to the prior year would have decreased by $20.7 million. The substantial majority of this decrease was related to lower year-over-year pricing of UAN and to a lesser extent ammonia. The increase in cost to products sold for the 2016 second quarter to $36 million as compared to $15.4 million in 2015 also was attributable to the inclusion of East Dubuque. Excluding East Dubuque cost products would have decreased from the prior year by $2.4 million, primarily due to lower pricing for pet coke received from the CVR Refining adjacent refinery. Direct operating expenses for the 2016 second quarter increased to $54.2 million from $25.1 million in the prior year period. This increase was attributable to the inclusion of East Dubuque, which also incurred expenses of $6.6 million related to its turnaround. Excluding East Dubuque direct operating expenses would have decreased by $2.6 million which primarily was due to lower net utility cost. Selling, general and administrative expenses for the 2016 second quarter were $8.3 million as compared to $4.6 million for the second quarter of 2015. The increase was associated with inclusion of East Dubuque and $1.2 million of acquisition related expenses in the second quarter of 2016. The increase in depreciation expense to $17.6 million from $7 million from 2015 was…

Thanks Susan, The spring corn planting season in the US is now complete. The USDA's most recent WASDE report estimates of 94 million acres of corn were planted this year versus 88 million acres in 2015. The USDA is estimating a yield of approximately 168 bushels per harvested acre for 2016. This is similar to the yield estimate for last year despite an anticipated 7% increase in harvested acre. Key to achieving these higher yield levels is the amount of moisture in the soil and temperatures during the next few weeks during the critical pollination period. As such all eyes are focused on how the crop will do through the next few weeks, while nitrogen fertilizer prices improved in the spring following the volatility seen over the winter, once planting and related application concluded we began to see prices move lower. This is not unusual for this time of year, as prices typically come down after the spring as dealers and distributors focus on clearing out their inventory in advance of the fill season. The good news is that with the large corn planting season most nitrogen nitrogen fertilizer was applied in the spring planting season and side dress so industry inventory levels were very low as of June 30 including at both of our plants. As a refresher, the fill season typically been when dealers and distributors placed orders with producers for product to fill their storage tanks in anticipation of fall application and the next spring of planting season. The orders have typically been at a set price where dealers and distributors taking delivery of the product over a period of as long as six or seven months. The fill season is expected soon but later than normal this year due to – for a couple of reasons.…

[Operator Instructions] Our first question comes from the line of Adam Samuelson with Goldman Sachs. Please go ahead with your questions.

Great thanks, good morning, everyone.

Good morning.

Good morning Adam.

So I guess first I wanted to maybe on your last points, Mark, there start on summer fill and the how delayed that has been. I mean CF did I believe post some prices last week and so I am wondering if you’ve seen traction really start to pick up in the last couple days or if you’re still seeing some pretty significant buyer resistance to volume commitments at this point.

It’s probably not a great time to be discussing. There is price discussion out there. We think people are going to step up and order but we’re in those discussions as we speak but my sense is that the customers are going to step up and buy, maybe not 100% of what they have historically but they will buy a big chunk in the next week or two is kind of our sense of things.

Got it, okay and that’s helpful. And then as you think about the competitive environment obviously I mean CF has got the big plants coming on. Are you or have you sensed in the market the Weaver tons actually being marketed at this point or is there some uncertainty about when that plant is actually starting up and I am wondering if you’re seeing that competitively changing some of the internal domestic flows?

I would say that we haven’t heard a lot of I’d say active marketing of the capacity so haven’t seen that, although I think that some customers will probably buy a little less than a full position just if they think that that plant will come on but I don’t think that it will have a great effect, at least for the second half. I don’t think there’s enough certainty that they can produce at high levels and so I don’t see that in the customer base at this stage.

Okay and then on as you think about spring, the spring being over, do you think that the distribution part, is part of the reason why it’s taken longer for fill to get started that the distribution chain had too much, maybe had a little bit too much product to come June or is do you think inventory levels are at normal levels for this time of year?

That was actually the opposite. I mean the inventory, the system was basically empty if you could call practically speaking empty at June 30th. I think the difference is that this year that the customers are going to be buying a more significant position in domestically produced so the transportation element is different and you can buy in stages as opposed to if you were going to buy barges in the fall you would have to be looking forward and basically starting to make commitments and I think that what the – since they’re buying the tons domestically, they’re going to buy a block here and then come back in the fall probably for another block. So it would be – it actually will function more like a ratable sale as opposed to a block sale if that makes sense.

No it does. And then maybe the final one was in your prepared remarks you alluded to still thinking there’s going to be consolidation in the industry over the next one to three years. In the past you’ve said hey we want to create value for shareholders and whether that be as a consolidator or a consolidee we will look at all options. You’ve done some consolidation. I just wanted to think about was your comment intended to say look, we’re open to anything?

I think we haven’t changed our position. We think that the industry is undergoing consolidation and it’s across the board. You can start at the farm level, the distribution channel and ultimately producer. The market is consolidating and they’re economies of scale to being larger and so we would expect to participate in that and we’re open minded. We’re value driven so we’ll make the decisions based on value as we look forward but we continue to see and we’ve seen it in particular in the retail and wholesale distribution channel. That market continues to consolidate and we think that will pull the producers along as well.

And if I could squeeze one more, one final one in, any comment on gas hedging position at East Dubuque if any?

We haven’t gone out in the curb and done any significant gas hedging and that hasn’t been a big part of the East Dubuque but I think as we watch the market unfold in the next few months we’ll probably do some level of hedging going forward.

Okay, that’s helpful. I’ll pass it along, thanks.

Our next question comes from the line of John Gibbons with Credit Suisse. Please proceed with your questions.

Hi good morning. Thanks for taking the question. In terms of the downturn at the East Dubuque facility obviously you’ve laid out some of the costs. Are you able to give any EBIT guide impact in terms of sort of downturn and missed revenue and follow-up on that minus the CapEx that you mentioned that would be carryover from the ammonia synthesis converter? Is there any other impact in terms of downturn or is that plant is fully up and running for Q3 now?

It’s at full, first of all, I’ll answer the latter question. The plant is fully up and running for Q3 and at higher rates of ammonia production because of that converter so we’re actually producing more product on a daily basis there. I think what I’ve said in my prepared remarks is that we thought in the quarter that turnaround costs us in total about $10 million. That’s the expenses for the actual turnaround itself plus the lost sales of product that we missed in the quarter because we didn’t produce for 28 days so the combined number was $10 million.

Got it. Thank you for the clarification. And one more just to follow up on the acquisitions comment, is that something, you know, are you guys seeing opportunities today or is that something that more on the longer time frame two, three years as you had mentioned on the call? Thank you.

Yes I wouldn’t say there is anything on the immediate horizon that we’re ready to announce today but I think that with the evolving marketplace in the U.S. becoming much more of a domestically produced market and again, a consolidation in our customer base, we do expect that companies will be examining their position and where the market is going and expect that change over the next year or two or three. So it’s not front and center but it’s not that far off on the horizon either.

Great thank you.

Our next question comes from the line of Brent Rystrom with Feltl & Company. Please go ahead with your questions.

Yes thank you and good morning. On following-up on that last kind of theme there on East Dubuque, how should we think about the kind of a nameplate production of ammonia and UAN then at East Dubuque going forward?

So the name plate ammonia production is going to be probably on the order of 1,000, 50,075. I mean that’s real production.

And is that a seasonal number? Is there an opportunity to peak it a lot higher than that or is that actually the year-end average you’re targeting?

That’s sort of the average. I don’t think we would be cycling it seasonally. I think we’d be looking at full production.

No what I am thinking is in the winter you’re going to get better production out of it with the cooler temps and I am just curious are you going to be running 900 tons per day during the summer and 1,200 in the winter?

It doesn’t swing that much. I mean I think it would swing 50 tons or 75 tons on up or down, call it 75 on the ups and so it might be producing 1,000 or something like that in the summer, hard when it’s 90 degrees in East Dubuque and then can produce 75 tons higher in the middle of the winter.

How about UAN, where do you think UAN production will run then?

We're not – we're going to keep it running at roughly the same. The incremental ammonia, we're not going to be upgrading that to UAN so we've been producing around 300,000 tons there UAN plus or minus so that will stay the same.

And then following up on the Weaver impact, Weaver is not on the pipeline is it?

Weaver is not on the pipeline no.

All right. So the impact is basically going to be primarily to the southern truckable portion of East Dubuque.

Yes it will be there will be some truck activity coming into that marketplace.

Okay and then I am just curious if you would clarify thoughts, particularly coming out of the southwestern couple weeks ago any particular thoughts you wanted to share kind of on where third quarter pricing, what sort of contract talk there was?

I really don't want to because we're kind of the in middle of the action right now I really don't want to negotiate against myself, Brent, but what I would tell you is that there's – I think there's going to be good demand for product, not as great as it's been historically and that's again what in Adam's question the customers feel like they can buy sort of ratably or buy in a couple or three steps as opposed to buying setting a price for the whole, the next six months, and that doesn't mean – I think that we'll – we're still going to have very strong demand for product. And I think we'll come back later, probably around application time in the fall for another wave to refill what's going to be taken out of the system so the system was empty. It needs to be replenished. Maybe it won't be 100% replenished in the first step but it will be replenished and I expect to see good movement of product here in the coming weeks. The good news is we were basically almost empty at the two plants and so despite the fact that fill has been late, that hasn't had any bearing on our ability to produce and sell tonnage so we're in a good comfortable position right now.

Your backs aren't against the wall with inventory, right?

No and the hope, no producer is back in that. Everyone was sort of in the same. The season went beyond June 30 because it was such – the growing conditions were so good. We were continuing to take orders and ship product in July, more than we normally would and so the system remained empty and it wasn't just for us. It was the same for CF and Coke and the others so the system, the demand was very strong and of course you would expect that with 94 million acres planted this year.

How do you guys think right now if you do think about this, but how do you think about the farmer economics for the corn grower? You know, when you look at last year's corn crop and you look at the last WASDE, which is pinning the pricing for last year's crop at 360 to 370 so call it 365. That's implying the value of that corn crop is about $49 billion, maybe $50 billion. If you take the midpoint of WASDE on this year's crop and you buy into the 14.5 billion bushels, you're looking at about $50 billion, $51 billion of value, maybe a little less, maybe a little more. If you look at where the curve is right now in corn it's actually about $51 billion. Do you view the corn market as one that's maybe starting a process of bottoming or is your sense from your customers that there's still pressure that the corn market may be going down after three previous years going down?

I think that – I think people are concerned because the crop looks really good so far and so I think that's probably what's holding the customers back on the margin a bit from the volume of purchasing is they look out the window and they see a really nice looking corn crop and this will be the fourth year in a row. If in fact it comes in strong, it will be the fourth year in a row with good corn crop. In probability of theory would suggest at some point we will have a bad weather year but I just think people are a little hesitant to say I don't think that they're very negative but they're also not very positive about where corn is right now. I'd say it's probably in a bottoming phase but also not with a lot of optimism of immediate upside on the horizon.

Thank you very much.

Thanks, Brent.

Our next question comes from the line of Charles Neivert with Cowen and Company. Please go ahead with your questions.

Good morning, guys.

Good morning, Charles.

Good morning.

Just one question is you guys are looking at the lineup of import stuff coming into New Orleans; how does that look right now and how might that impact things over the next few months, especially with the fill coming up? Are there a lot of ships coming in, whether it's urea, UAN in particular or does it look like sort of a light load and give you guys a much more open field to look at?

Charlie, what I would say is on – I read, I think when you read all the trade press like I do on the where urea looks like, it does look like things have firmed a little bit there in urea and that the tonnage is down, especially from China. In UAN we definitely see lesser movement coming in our direction, the States, and I think that's because of the new capacity in Donaldsonville and the expected capacity at Weaver. We're not seeing as much movement of product there, a little bit on the West Coast so that's been light and what we're detecting also on the ammonia market is that some of the tonnage that traditionally came from Trinidad into the States also is beginning to move either to Latin America or Asia or elsewhere so it feels like the trade flows are beginning to take hold a bit and I think as we look out in the next six to 12 months we'd start to see, expect to see lesser barge activity coming into the States really for all three products and so I think we're starting to see that into the fall and it will pick up some momentum as we get into the spring application period.

Okay one other question, sorry. One other quick question on – I know that it's not the biggest component of cost for you guys but the pet coke numbers, is there any ability – do they get – when is, is there a particular time when they might be adjusted or what might they be adjusted against? I mean it gets rats, it maybe goes down a little bit or it goes up. I mean is there any chance to get some better cost structure out of the Coffeeville operations going forward and I know that's not the key is it's more that you have the buyer itself but anything else?

Yes I mean pet coke pricing was pretty low in the quarter. It's tied to the price of oil and so I think pet coke is going to stay low for a while because I won't jump in front of the other side of the house but it doesn't look like oil prices are going to rocket upwards any time soon and so that product is priced off of the barrel of oil so we would expect that to stay low and, as you said, the key to Coffeeville is a combination of lower pet coke plus running at high production rates, which we've been consistently seeing in the last couple of years, and so that combined makes us very competitive with gas at $3 or $3.50, so we're in a good position there in Coffeeville right now. That plant is very cost – we're very efficient compared to the natural gas plants in the U.S.

Great. Okay. Well, that's all I need. Thanks very much.

All right. Thanks, Charles.

Our next question comes from the line of Lynn Chen with Hedge Asset Management. Please go ahead with your questions.

Good morning. Thanks for taking my question. Two questions, first of all, can you remind me when will be the next turnaround for both facility?

Yes, so we just completed the East Dubuque turnaround. We're on a two-year cycle there, so there will be a turnaround probably in the second half of next year in Coffeeville. And then in 2018 we'll have another turnaround in East Dubuque, again, probably in the second half of that year. So we're doing a one plant per year on a rotation.

Great. And also if I remember it correctly, you guys – the management we're talking about there could be some – after the acquisition for Rentech there should be some synergy about maybe $12 million or so? I am just wondering whether you see the synergy cost cutting there and when shall we maybe expect the full realization for their synergy?

Yes. So we had three components there and what I would tell you is that the corporate overhead was the easiest part because on the first day of the acquisition we de-coupled the East Dubuque facility from their parent company so we were able to reduce those corporate costs and that was in the second quarter results and then we expected savings in marketing and in plant production. Post turnaround we should – we expect to see production rates in the plants that we should over the next 12 months see the savings from better production. And then on the marketing side we're starting to see some of the benefits in the second quarter and that will carry through the rest of the year. But we still feel very comfortable with the $12 million and I think that we feel very good about it and the transition has been very smooth so we're comfortable with our ability to extract those cost savings.

Great, thank you very much.

Thank you.

Our next question comes from the line of Christopher Miller with Global Credit Advisors. Please go ahead with your questions.

Thank you, just a couple of follow-up questions. It was asked earlier in terms of hedge plans on natural gas at East Dubuque. I just want to make sure I understood that correctly, you don't have any hedges in place today but is it something that you considered on an ongoing basis or it's just not something that you think is useful at this juncture?

It's something that we're going to consider. We're pretty new to how we're thinking about and we're developing our own strategy for how we think about that plant and so we'll probably do some hedging over the next six months and just try to get our handle on our views on the market and what it means from a product costing and stuff like that so it's not that we're opposed to it, we're just – we're trying to figure out what makes sense for where we are and especially when we combine it with our Coffeeville facility, what's our overall exposure there on gas so you probably will see is again in the next six months doing some proactive hedging but it won't – the overall dollar amount and exposure is not that significant where it's going to move our financials around to a great extent so it won't create, unless there's some extraordinary activity it won't be a significant event for the Company. It would be a nice way for us to try to keep our cost as low as we can.

That's helpful and then I think you made some comments about CapEx mostly on the maintenance level but have you given what you expect full-year CapEx will be for 2016?

Well, we're saying for the two plants on a regular basis for maintenance capital is about $20 million and we say $10 million per plant but in a turnaround year it will be a little heavier for the plant that's going through the turnaround and a little lighter for the plant that's not going through the turnaround and so and I think that's consistent with what we see this year on maintenance capital. It's about $20 million to maintain the two plants.

And maybe just a housekeeping, I don't know if you can provide this. Do you have what would be essentially a comparable pro forma adjusted EBITDA for the third and fourth quarters of 2015 so we can think about comps going forward?

We haven't put that out there. We probably could do that off line to – because obviously we're two public companies so you can stitch them together.

Okay and then I guess maybe another way to ask it is you think about leverage at the end of the year on a net leverage basis kind of what would you kind of target at this point for the end of 2016?

We haven't. We don't provide guidance on a go forward basis so I wouldn't want to say because I’m sort of be giving you guidance on the EBITDA number which we haven't done.

Okay. Do you have a June, a comparable June pro forma LTM EBITDA that you can give similar to what the at the time you did the bond deal what you marketed off of, what the comparable number would be at the end of June?

I would say again, we did provide the bond deal. I think we're still around a 2.6 level for the pro forma LTM.

Okay is that something you think you'll be able to provide on an ongoing basis?

Yes, absolutely.

Yes, we will.

Okay.

We're getting used to having our new model older. Sorry, it's newer for us.

No understood, no problem. Okay thank you very much.

Okay. Thank you.

Our next question comes from the line of Jed Nussbaum with Nut Tree Capital. Please go ahead with your questions.

Hi, good morning. Just one quick clarification question regarding he purchase accounting adjustments. T looks like these purchase accounting adjustments were not added back in the presentation of adjusted EBITDA and I just wanted to confirm the number which nets out to $13 million as an add back to available cash for distribution. Am I right to understand that had East Dubuque been acquired a few quarters earlier the adjusted EBITDA number wouldn't have had that $13 million hit to it and it would have been $13 million higher or $42 million?

No you're correct. At the purchase of East Dubuque we did have to step up the inventory values in conjunction with that, the whole fair market valuation. We also stepped up the deferred revenue so you'll see that it was an $18.3 million basically hit because of that fair market step up to the cost of products sold for inventory step and then $5.3 million on the deferred revenue so that net impact was $13 million. You're correct. We didn't adjust it for adjusted EBITDA but obviously we did provide that in the adjustment for the available cash as really an item to be paid out.

Got it. Okay thank you.

Thank you.

Thank you. This concludes today's question-and-answer session. I'd like to turn the floor back over to management.

Okay. Well, thanks everybody for being on the call. We look forward to talking to you next quarter. Thank you very much.