CHS reports fiscal 2019 net income of $829.9 Million

Energy, Nitrogen production increases helped drive 7 percent growth in net income

machinery harvesting soybeans

CHS reported net income of $829.9 million for the fiscal year ended Aug. 31, 2019. The results reflect an increase of $54.0 million — or 7 percent — compared to fiscal year 2018.

Key financial drivers for fiscal year 2019 include:

  • Consolidated revenues of $31.9 billion for fiscal year 2019 compared to $32.7 billion for fiscal year 2018.
  • Net income of $829.9 million for fiscal year 2019 compared to $775.9 million for fiscal year 2018.
  • Improved market conditions in our refined fuels business, primarily driven by favorable purchasing of Canadian crude oil.
  • Increased equity earnings from investments, including a $53.5 million increase related to CF Nitrogen. In addition, the CF Nitrogen investment distributed $186.5 million of cash to CHS Inc. in fiscal year 2019.
  • Acquisition of the remaining 75 percent interest in West Central Distribution, LLC, that was not previously owned by CHS.
  • Pressure on the volumes and margins of grain and agronomy products, including increased costs of operations due to ongoing weather- and trade-related issues.
  • A combination of recoveries on previously recorded reserves, impairment charges and gain contingencies, which more than offset additional reserves and impairment charges taken during the year.

“We are pleased with our results on behalf of our owners in fiscal year 2019. We focused on our priorities, built on our strategies, continued to improve our control environment and leveraged the strength of our supply chain to deliver value to the farmers and co-ops that own us,” said Jay Debertin, president and CEO of CHS. “Improving customer experience and innovations led to better results including increased diesel production at our refinery in McPherson, Kansas. Our acquisition of the remaining 75 percent interest in West Central Distribution that we previously didn’t own expanded our distribution channels and grew market access in agronomy.

“When flooding made major riverways impassable, we leveraged our supply chain to reposition fertilizer to ensure our cooperatives and customers had the crop nutrients they needed for spring planting,” he said. “We identified new markets for our owners’ grain to help them navigate the difficult trade situation. And we began construction on a fertilizer storage facility in North Dakota and a grain shuttle loader in Minnesota. In each of these, the driving force was to be our customers’ first choice.

“We know the headwinds agriculture faced in fiscal year 2019 have carried over to fiscal year 2020, and CHS feels those same challenges. No one, however, feels them more and understands the impact more than the farmers and cooperatives that own us,” Debertin continued. “We remain focused on delivering value to our owners and creating connections to empower agriculture. And we’re committed to continuing to raise our owners’ voices to policymakers and elected officials and identifying opportunities to continue to build our business, leveraging our supply chain and helping our owners navigate fluctuating markets.”

Fiscal Year 2019 Business Segment Results

The fiscal year 2019 segment results are:

Energy

Pretax earnings of $618.2 million represent a $166.1 million increase versus the prior year and reflect:

  • Improved market conditions in our refined fuels business driven primarily by favorable pricing on heavy Canadian crude oil, which is processed by our refineries in Laurel, Montana, and McPherson, Kansas.
  • Positive resolution of a gain contingency.
  • The increase was partially offset by gains associated with the sale of the Council Bluffs pipeline and terminal and 34 Zip Trip stores located in the Pacific Northwest during fiscal year 2018 that did not recur during fiscal year 2019.

Ag

Pretax earnings of $43.0 million represent a $31.3 million decrease versus prior year and reflect:

  • Poor weather conditions – including flooding during the spring of 2019 that prevented and delayed planting of crops – and ongoing global trade issues between the United States and foreign trading partners resulted in generally decreased margins and volumes across most of our Ag segment.
  • The decrease was partially offset by gains associated with fiscal year 2019 acquisition of the remaining 75 percent interest in West Central Distribution that CHS previously did not own.
  • The net positive impact of recoveries on previously recorded reserves and impairment charges more than offset additional impairment charges taken during fiscal year 2019.

Nitrogen Production

Pretax earnings of $72.9 million represent a $34.1 million increase versus prior year and reflect:

  • Improved market pricing of urea and UAN, which are produced and sold by CF Nitrogen, of which CHS has partial ownership.

Corporate and Other

Pretax earnings of $81.5 million represent a $24.5 million decrease versus prior year and reflect:

  • A gain from the sale of CHS Insurance during fiscal year 2018 that did not recur in fiscal year 2019.
  • The decrease was partially offset by higher earnings from our investment in Ventura Foods, LLC, and from our financing business.

Read the full press release.

CHS income by segment chart

4 essential lubricant tips for winterizing farm equipment

Farm equipment sitting in storage

By Jon Woetzel, Manager Technical Services, Energy Lubricants, CHS from the Cenexperts blog

Harvest is tough. Once you’ve made it through some of the hardest weeks of the year, both you and your equipment deserve some R&R. But before your machines take a long winter’s nap, it’s important to get them ready for sitting dormant in the cold.

Even when your equipment isn’t running, lubricants play an essential role in keeping it protected. That’s why, as part of your yearly winterizing routine, you’ll want to assess your equipment’s fluids. Use these four lubricant tasks to protect your rigs all the way to spring.

1. Get a used oil analysis

Throughout harvest, your machines work overtime to meet the grueling demands of a farm’s busiest time of year. By the end of the season, all that wear and tear can take a toll on an engine, and seemingly small issues at this point can lead to bigger problems come spring.

A used oil analysis is an easy way to catch early warning signs of major issues that could be brewing inside your engine. This is because oil is the lifeblood of your equipment, touching nearly every part inside the engine.

Used oil analysis works by detecting any trace elements present in a sample of used oil from inside your rig. Based on the elements that turn up, lab technicians can identify a number of issues that may be waiting to happen in specific areas of your engine. Fix any issues before putting your equipment away, and you’ll set yourself up for success come time for planting. To get started, you can purchase a used oil analysis kit from your local CHS energy specialist.

2. Replace the engine oil

Once you’ve performed a used oil analysis, you may also want to consider an oil change before you put your machines away for winter. This is especially true if the results of your analysis reveal any traces of wear. After you make any repairs recommended by your analysis, give your machines some fresh, clean oil so you don’t leave acids and contaminants festering inside your engine for months on end.

Even if your used oil analysis comes back clean, you may still want to consider replacing your oil before winter. Remember, the longer an oil has been used, the less effective it becomes at protecting against rust and corrosion.

If you’re getting close to your change interval, it’s best to replace oil this season instead of waiting until spring. Just be sure to run the engine for at least 10 minutes before storing your rig to allow the oil to circulate. For protection all winter long, try a high-quality engine oil from Cenex such as MAXTRON® ENVIRO-EDGE® synthetic diesel engine oil, engineered for maximum lifespan and excellent protection against corrosive wear.

3. Top off your hydraulic tank

Another lubricant tip for winterizing your equipment is to top off hydraulic tanks. To function properly, hydraulic systems need to breathe, but since they’re not airtight, they’re prone to letting in moisture as equipment sits all winter. Condensation inside a hydraulic system is bad news due to the harmful corrosion it may cause.

The best way to prevent condensation in your hydraulic system over the winter is to minimize the airspace inside. The less opportunity air has to get in, the lower the chance that moisture will collect. Check your hydraulic fluid level, and if it’s not full, go ahead and top off your tank. Be careful, though, not to overfill. To further minimize condensation, you may also want to consider switching to a hydraulic fluid designed to prolong the life of your system’s seals, like MAXTRON® THF+.

4. Grease up moving parts

Finally, once you’ve taken care of your machines’ other fluids, complete the job by greasing any moving parts. Even though they’ll be sitting still all winter, moving parts can still corrode.Not only will a fresh coat of grease keep your equipment from rusting through the winter but it will also get it moving again easier come spring. For superior protection against rust and corrosion, try a Cenex grease such as MAXTRON® FS.

When the hard work of harvest is over, it can be tempting to overlook details like winterizing your equipment. But the period right after harvest is a valuable opportunity to take care of maintenance tasks that can fall through the cracks during busier times of year. Give your machines some TLC now, and you can both kick back soon for some well-deserved hibernation.

Co-op ownership opens a world of opportunities

A farmer and CHS employee holding a tablet standing together in a wheat field discussing cooperative ownership

When you choose to do business with CHS, you are connected to a world of opportunities powered by local experts.

As the nation’s leading farmer-owned cooperative, CHS creates connections that help its owners build their operations and their communities.

In celebration of National Co-op Month, we dug deep into the cooperative model to reveal seven benefits of being an owner of CHS. Benefits that extend far past the field. Watch a video on the benefits of cooperative ownership.

(more…)

New spray adjuvant powered by CHS farmer-owners

CHS Acuvant - new spray adjuvant made with refined soybean oil

CHS Acuvant made with refined soybean oil

Farmers can take pride in an exclusive new line of high-performance adjuvants from CHS, knowing that they’re formulated with soybean oil refined by CHS, from soybeans grown by farmer-owners.

CHS Acuvant™ is a soy-enhanced spray adjuvant that improves the droplet spectrum of spray solutions without altering the viscosity. Significantly fewer fine droplets in place of more dense droplets results in next-generation drift control and deposition aid to maximize your herbicide, fungicide and insecticide investment.

As compared to crude soybean oil, CHS Acuvant has refined soybean oil, which results in less impurities with superior mixability and cold-weather stability. However, when it comes to the formulation, what’s kept out is just as important. An NPE-free (Nonylphenol Ethoxylates) adjuvant, CHS Acuvant ensures farmers can apply late-season corn fungicides at any postemergence stage without the risk of causing arrested ear syndrome.

Keep your herbicides, fungicides and insecticides on target and support our farmer-owners with soy-enhanced CHS Acuvant.

To learn more about CHS Acuvant, visit your local CHS retailer.

Before you break ground, call 811

call 811 before diggingOn August 11, CHS celebrates 811 Day and encourages you to call 811 before doing any kind of digging. The process is simple: call 811 three days before digging, wait for underground utilities to be marked for free and avoid breaking ground about two feet from the marked utilities.

In the U.S., there are more than 100 billion feet of underground utilities as well as enough pipeline to wrap around the equator 88 times. Many of these are less than a foot underground. CHS owns 2,500 miles of this pipeline to access crude oil and transport finished product to owners across America.

2019 marks the 10-year anniversary of 811 Day, celebrated on August 11. Created by the Common Ground Alliance, the day serves as a reminder to call 811 before digging. 

It’s best to call 811 any time you break ground, even if you think you know where a utility line is located. “In the U.S., an underground utility is hit every nine minutes, causing dangerous consequences,” says Tina Beach, public awareness specialist for CHS. “It takes a lifetime to build a farm, and it takes just one free call to keep it safe.”

New app puts CHS activity at your fingertips

farmer logging in to MyCHS
Time. We never seem to have enough of it. And every new tech tool seems to just add another online destination with a singular purpose. But not for CHS patrons. With a simple single sign-on, producers can see their CHS business activity all in one place, even if they have multiple accounts. Contracts, bookings, prepays, scale tickets, payment history and more for agronomy, energy, grain and seed business can be viewed, sorted – even downloaded – from anywhere, anytime. All from one, web-based app: MyCHS.

The biggest advantage? Saving time. CHS transactions are a touch away – whether in front of a laptop in a farm office, on a tablet in the field or on a phone in the tractor cab.

“I can customize what I can see,” says Lucas Goodwin, Minnesota farmer and MyCHS user. “Filtering is easy. And navigating between all the separate components, like the contracts and the settlements, is logical and quick.”

Lucas was among a group of CHS customers picked to give app feedback in small focus groups and then as a beta user, comparing the new MyCHS with the former Customer Resources tool. Getting customer feedback early and ongoing during the development process was critical to making sure the web-based app fit the way today’s farmer wants to use technology.

“It’s a nice upgrade,” he concludes of MyCHS. He was a user of the former application. The recent upgrade provides all producers doing business with CHS with the data they need to make timely, information-rich decisions.

“Our CHS producers have continued to advance and look for ways to become the best they can be in some of the toughest markets they’ve experienced,” says Megan Schmit, director, Grain Procurement for CHS Country Operations division. “Even our producers who may not have called themselves tech savvy are using more and more tools to better their operation and MyCHS is giving them access to their total business with us, not just grain.”

Megan was part of the CHS team helping connect with farmers and finding out what would serve their information needs.

“I’m excited that we’re not stopping here,” she adds. “We’re going to continually take feedback from our producers and employees to keep improving and enhancing this tool for years to come.”

MyCHS is a free web-based app, available to any farmer or rancher doing business with CHS. It’s easy to register here and start seeing what MyCHS can do to help you.

CHS reports $54.6 million of net income for third quarter of fiscal 2019

Company reports net income of $650.9 million for first nine months of fiscal year

CHS income fiscal 2019
CHS Inc. today announced its financial results for the third quarter and the first nine months of fiscal year 2019.

CHS reported:

  • Net income of $54.6 million for the third quarter of fiscal 2019 compared to $181.8 million for the restated third quarter of fiscal 2018. One-time pre-tax gains of $124.1 million in the restated third quarter of fiscal year 2018 were not realized in the same time period in fiscal 2019. One-time pre-tax gains of $19.2 million related to the purchase of the remaining 75 percent share of West Central Distribution, LLC were realized in the third quarter of fiscal 2019.
  • Consolidated revenues of $8.5 billion for the third quarter of fiscal 2019 compared to $9.1 billion for the restated third quarter of fiscal 2018.
  • Net income of $650.9 million for the first nine months of fiscal 2019 compared to $535.5 million for the restated first nine months of fiscal 2018, an increase of 21.5 percent.

(more…)

Top way to keep water out of your diesel

diesel powered tractor in a corn field

By Steve Hinds, Senior Business Development Manager, CHS Refined Fuels Marketing from the Cenexperts blog

Incompatible people are often said to mix like oil and water. But if you really want to talk about an unfortunate combination, look no further than fuel and water. Water in a machine’s fuel line can be a one-way ticket to trouble.

The good news about water damage is it’s preventable. Here’s what you need to know about diesel fuel water contamination and how to keep it from sinking your operation.

(more…)

Ready for Change

By Annette Bertelsen, from Spring 2019 C magazine

What happens when the world’s biggest buyer suddenly backs away from U.S. soybeans? That’s been a question on everyone’s mind since July 6, 2018, when the United States implemented China-specific tariffs. The move embroiled U.S. farmers and cooperatives in a trade war that hit the soybean world particularly hard. Spring USDA data shows 2018–2019 soybean export inspections down nearly 34 percent from the year before, with farms and cooperatives struggling to handle huge carryover and reduced cash flow.

(more…)

© 2019 CHS Inc.