CHS Inc., the nation’s leading agribusiness cooperative, today released results for its fiscal second quarter ended Feb. 28, 2021. The company reported a net loss of $38.2 million versus net income of $125.4 million in the same quarter in fiscal 2020. Significant year-over-year earnings increases in Ag and Nitrogen Production segments and Corporate and Other businesses were offset primarily by ongoing COVID-19 pandemic-related impacts in Energy. “Improved trade relations between the United States and foreign trade partners combined with our operating efficiency initiatives led to record grain and oilseed volume increases and continued price gains, significantly improving our Ag segment earnings over the prior year,” said Jay Debertin, president and CEO of CHS Inc. “Additionally, favorable growing conditions and overall strength in agriculture, helped drive demand for crop inputs, including crop nutrients and crop protection products and services. “Our Energy segment, while showing improvement over the previous quarter, continues to experience unfavorable refined fuels market conditions related to the COVID-19 pandemic and exceptionally higher costs for renewable energy credits. These factors resulted in volume and margin declines that significantly reduced earnings compared to the prior year.” Fiscal 2021 second-quarter results reflect:

• Revenues of $8.3 billion versus $6.6 billion in fiscal 2020 second quarter, a 26.1% increase.
• Energy segment impacts that include:
  • Continued low refining margins stemming from COVID-19-impacts on global energy demand.
  • Exceptionally high costs of renewable energy credits, which decreased margins.
  • Decreased propane margins and volumes due to warm winter weather conditions across the CHS trade territory during most of the fiscal 2021 second quarter.
  • Modest improvements over fiscal 2021 first quarter as volumes and margins began to rebound.
• Ag segment impacts that include:
  • Favorable weather conditions and improved relations between the U.S. and foreign trade partners, including China, that increased volumes of grain and oilseed commodities as well as feed and farm supplies.
  • Higher margins for certain agricultural products, including processing and food ingredients, which improved because of soybean crush strength.
• Enterprisewide initiatives that include:
  • Focused cost-reduction initiatives launched in fiscal 2021 that helped reduce marketing, general and administrative costs.
  • COVID-19-related working arrangements and increased hygiene and infection-control processes to mitigate risk and support business continuity – all CHS operations were deemed to be essential infrastructure industries by federal and state governments.

For the six-month period ending Feb. 28, 2021, CHS reported net income of $31.4 million versus $303.3 million for the same period in fiscal 2020. Revenues for the first six months of fiscal 2021 rose to $17.0 billion, a $2.8 billion, or 19.8%, increase from $14.2 billion in the same period the previous year. “I am encouraged by the resilience of our employees and their commitment to owners in what continues to be a challenging operating environment,” said Debertin. “We are cautiously optimistic about the rollout of COVID-19 vaccines and other progress being made in response to the pandemic in the U.S. and around the world and the potential impact on our domestic and global businesses. “As we look ahead to the second half of fiscal 2021, we remain committed to protecting the financial health of CHS, adding efficiency throughout our enterprise to benefit owners and customers, and caring for those who depend on us as we continue creating connections to empower agriculture.”

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This document and other CHS Inc. publicly available documents contain, and CHS officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Report Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the “Risk Factors” discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2020. Any forward-looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.

On Jan., 6, 2021, CHS Inc., reported net income of $69.7 million for the first quarter of fiscal year 2021 that ended Nov. 30, 2020. This compares to net income of $177.9 million in the first quarter of fiscal year 2020.

The results for the first quarter of fiscal year 2021 reflect:

• Revenues of $8.7 billion compared to revenues of $7.6 billion for the first quarter of fiscal year 2020.
• Impacts in the CHS Energy segment that included:
  • Exceptionally low crack spreads and other unfavorable market conditions in our refined fuels business, driven primarily by the COVID-19 pandemic, resulted in volume and price declines that significantly reduced earnings in our Energy segment compared to the same period of the prior year.
  • Decreased propane demand that resulted from warmer and drier fall weather during the first quarter of fiscal 2021 compared to the same period of the prior year.
• Impacts in the CHS Ag segment that included:
  • Improved relations between the United States and foreign trading partners that drove increased volumes and margins for grain and oilseed.
  • Favorable weather conditions during fall harvest compared to the prior year that drove increased volumes and margins across much of our Ag segment.

“Our employees’ commitment throughout the first quarter allowed us to consistently deliver products and services to our owners and customers around the world,” said Jay Debertin, president and CEO of CHS Inc. “A good growing season led to a good harvest season, and we saw commodity price rallies from spring and summer carry into fall. Those good weather conditions led to the highest volume fall fertilizer season we’ve seen since 2013 despite volatility in the nitrogen and phosphate markets.

“Improved trade opportunities with China and improved trade activity in Europe and Africa helped drive first quarter improvement in our global grain business. Our animal nutrition volumes also saw growth in the first quarter of fiscal year 2021,” Debertin said. “We saw year-over-year increases in premium diesel sales with rural America continuing to rely on us for their energy needs. However, our overall Energy segment experienced ongoing challenges on refined fuels margins as the pandemic continues to challenge the energy industry. Throughout the remainder of our fiscal year, we will remain focused on our key priorities including protecting the financial health of CHS, caring for those who depend on us and bringing efficiencies to how we run our businesses and deliver products.”

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This document and other CHS Inc. publicly available documents contain, and CHS officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Report Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the “Risk Factors” discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2020. Any forward-looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.

CHS reported net income of $422.4 million for the fiscal year that ended Aug. 31, 2020. This compares to fiscal year 2019 net income of $829.9 million.

Key financial drivers for fiscal year 2020 include:

• Consolidated revenues of $28.4 billion for fiscal year 2020 compared to $31.9 billion for fiscal year 2019.
• Strong supply chain performance in our propane business driven by efficiently sourced propane to customers to meet strong crop drying and home heating demand that contributed to improved results especially during the first half of fiscal year 2020.
• Less advantageous market conditions in our refined fuels business, primarily driven by the COVID-19 pandemic, resulted in volume and price declines that significantly reduced earnings compared to the prior year.
• Poor weather conditions negatively impacted our Ag segment’s operations during the first half of fiscal year 2020, resulting in lower crop yields and poor grain quality following a late harvest and lower crop nutrient sales during fall 2019.
• Improved weather conditions during the 2020 spring planting season drove increased earnings across much of our Ag segment in the second half of fiscal year 2020.

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CHS reported net income of $97.6 million for the third quarter of fiscal year 2020 that ended May 31, 2020. This represents a 78.8 percent increase compared to net income of $54.6 million in the third quarter of fiscal year 2019.

The results for the third quarter of fiscal year 2020 reflect:

• Revenues of $7.2 billion compared to revenues of $8.5 billion for the third quarter of fiscal year 2019.
• Improved margins and volumes across much of the Ag segment as a result of more favorable weather conditions for spring planting compared to third quarter of fiscal year 2019.
• Improved trade relations between the United States and foreign trading partners.
• Decreased selling prices and volumes for refined fuels driven by global market conditions including the impact of COVID-19, which has depressed demand for energy products.
• A $42.0 million noncash charge to reduce our refined fuels inventory to its market value.

“We continue to adapt how we do business to ensure the safety of our employees and our customers. A successfully managed supply chain helped our owners get the products and services they and their customers need to grow their crops. That focus also helped us deliver value to our customers around the world,” said Jay Debertin, president and CEO of CHS Inc. “Improved trade relations benefited us, and, in turn, our owners, and we are eager for that to continue. We are not immune to the market pressures caused by COVID-19, and we will continue to adjust to best serve our owners and customers.”

Third Quarter Fiscal 2020 Business Segment Results
The following segment results were reported for the third quarter of fiscal year 2020 compared to the third quarter of fiscal year 2019.

Energy
Pretax loss of $54.8 million in the third quarter of fiscal year 2020 compared to $1.3 million in pretax earnings for the third quarter of fiscal year 2019 reflects:

• Lower margins due to less advantageous market conditions compared to the third quarter of fiscal year 2019. Those lower margins were the result of decreased refining margins, which were partially offset by improved crude oil differentials for heavy Canadian crude oil processed by our refineries and by improved propane margins.
• Decreased selling prices and volumes for refined fuels driven by global market conditions including the impact of COVID-19 and product mix, which has depressed demand for energy products.
• A $42.0 million noncash charge to reduce our refined fuels inventory to its market value.

Ag
Pretax earnings of $95.4 million in the third quarter of fiscal year 2020 compared to pretax earnings of $21.1 million in the third quarter of fiscal year 2019 reflect:

• Improved trade between the United States and foreign trading partners.
• Improved margins across much of the Ag segment as a result of more favorable weather conditions for spring planting compared to third quarter of fiscal year 2019, which were partially offset by decreased margins and volumes in our renewable fuels and processing and food ingredients businesses. Those decreases are attributable to COVID-19-related demand shocks in food service and transportation sectors.
• Impact of additional loan loss reserves established in the third quarter of fiscal year 2019 that did not reoccur in the third quarter of fiscal year 2020.

Nitrogen Production
Pretax earnings of $23.5 million compared to pretax earnings of $20.2 million in the third quarter of fiscal 2019 reflect:

• Decreased interest expense associated with our CF Nitrogen investment.

Corporate and Other
Pretax earnings of $6.3 million compared to pretax earnings of $19.0 million in the third quarter of fiscal 2019 reflect:

• Lower earnings from our investment in Ventura Foods resulting from decreased demand due to COVID-19-related demand shocks in the food service sector.

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This document contains, and other CHS Inc. internally and publicly available documents contain, and CHS officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Report Act of 1995. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the “Risk Factors” discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2019, and in Item 1A of Part II of CHS Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2020. Any forward-looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.

April 8, 2020

Dear Owners:

We are pleased to share our second quarter results for fiscal year 2020. We reported net income of $125.4 million for the second quarter of fiscal year 2020, which ended Feb. 29, 2020. This compares to net income of $248.8 million in the second quarter of fiscal year 2019.

The company reported revenues of $6.6 billion for the second quarter of fiscal year 2020 compared to revenues of $6.5 billion for the second quarter of fiscal year 2019. In the first six months of fiscal year 2020, CHS reported net income of $303.3 million compared to net income of $596.3 million in the first six months of fiscal year 2019.

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

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.

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

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.

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CHS Inc. reported net income of $248.8 million for the second quarter of fiscal 2019 and $596.3 million for the first six months of fiscal 2019.

“Our strong performance in the second quarter reflects our hard work at serving our owners and other customers better. We’ve refocused on serving our customers and improving our operations, and that has shown positive results in our financials for the first half of fiscal 2019,” said Jay Debertin, CHS president and chief executive officer. “Our performance also reflects the benefit of a diverse platform across business units that serves our cooperative and farmer-owners.”

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CHS Inc. has reported a net income of $347.1 million for the first quarter of fiscal 2019. “Our strong first quarter results position us well as we start our 2019 fiscal year,” said Jay Debertin, CHS president and chief executive officer. “We are focused on making CHS our customers’ first choice by advancing our technology solutions and equipping employees to meet the changing needs of our customers around the world. We will do this while maintaining financial discipline and rigor.”
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