CHS(US:CHSCO)2025-07-09 15:50Earnings Performance - CHS Inc. reported stronger earnings in the Ag segment due to higher volumes and margins in wholesale and retail agronomy products, partially offset by decreased margins in grain and oilseed processing [113]. - The Energy segment experienced lower earnings due to planned major maintenance at the McPherson, Kansas refinery, resulting in reduced sales of higher-margin refined products [113]. - The Energy segment reported a loss before income taxes of $50,088 thousand in 2025, compared to income of $97,850 thousand in 2024, marking a significant decline of 151.2% [125]. - The Ag segment's income before income taxes increased to $151,040 thousand in 2025, up 39.2% from $108,535 thousand in 2024 [131]. - Net income attributable to CHS Inc. was $232,184 thousand (2.4% of revenues) for the three months ended May 31, 2025, down from $297,274 thousand (3.1% of revenues) in 2024, a decrease of 21.9% [120]. - Net income attributable to CHS Inc. for the nine months ended May 31, 2025, was $401,220, a decline of 59.5% from $990,504 in 2024 [163]. Revenue and Profitability - Revenues for the three months ended May 31, 2025, were $9,766,421 thousand, a slight increase from $9,608,983 thousand in 2024, representing a growth of 1.6% [120]. - Revenues for the nine months ended May 31, 2025, were $26,856,724, a decrease of 10.5% from $30,087,121 in 2024 [163]. - Revenues in the Energy segment decreased by $281,429 thousand (13.6%) to $1,785,749 thousand in 2025, primarily due to lower selling prices for refined fuels [137]. - Ag segment revenues increased by $438,598 thousand (5.8%) to $7,962,254 thousand in 2025, driven by higher volumes and margins of agronomy products [142]. - The Ag segment's revenues fell by 9.8% to $21,189,835 from $23,486,932, driven by decreased selling prices across product categories [185]. Cost and Expenses - Gross profit decreased to $329,811 thousand (3.4% of revenues) in 2025 from $467,795 thousand (4.9% of revenues) in 2024, reflecting a decline of 29.4% [120]. - Marketing, general and administrative expenses decreased by $57,585 thousand (18.2%) to $258,850 thousand in 2025, attributed to lower performance-based incentive compensation [157]. - Marketing, general and administrative expenses decreased by 11.2% to $769,968 from $866,721, attributed to lower performance-based incentive compensation [199]. - Interest expense rose by $20,684 thousand (88.3%) to $44,109 thousand in 2025, due to a higher short-term notes payable balance [158]. - Interest expense increased by 23.5% to $96,962 from $78,513, due to a higher short-term notes payable balance [200]. Market Conditions and Outlook - CHS Inc. anticipates continued margin pressure and lower profitability in energy and agricultural commodities through at least the remainder of fiscal 2025 due to macroeconomic factors [111]. - The company expects global economic factors impacting energy and agricultural commodities to be less favorable in fiscal 2025 compared to fiscal 2024 [111]. - CHS Inc. plans to pursue growth through strategic investments and cooperative connections while navigating less favorable market conditions [112]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased to $323.9 million as of May 31, 2025, down from $794.9 million as of August 31, 2024 [205]. - Working capital decreased by $741.2 million to $2.57 billion as of May 31, 2025, driven by increased current liabilities [210]. - Total capital expenditures for fiscal 2025 are expected to be approximately $735.4 million, down from $808.8 million in fiscal 2024 [207]. - Net cash used in operating activities was $635.3 million for the nine months ended May 31, 2025, a decrease of $795.0 million year-over-year [213]. - Preferred stock dividends expected to be approximately $168.7 million during fiscal 2025, with $126.5 million paid during the nine months ended May 31, 2025 [207]. - The company redeemed $271.0 million of member equity during the nine months ended May 31, 2025 [208]. Tax and Other Income - Income tax expense increased to $31,710, up from $21,416, reflecting a higher effective tax rate of 10.5% compared to 4.1% in 2024 [163]. - Income tax expense rose by $10.3 million (48.1%) to $31.7 million for the nine months ended May 31, 2025, attributed to reduced research and development tax credits and changes in state law [204]. - Other income decreased by $31.7 million (29.9%) to $105.8 million for the nine months ended May 31, 2025, primarily due to decreased interest income from a smaller cash balance [201]. - Equity income from investments increased by $52,606 thousand (34.6%) to $204,605 thousand in 2025, primarily due to a gain on the sale of a business by Ventura Foods [160]. - Equity income from investments increased by $45.8 million (12.3%) to $419.0 million for the nine months ended May 31, 2025, mainly due to a gain on the sale of a business by Ventura Foods [202][203]. Production and Pricing - Average market prices for WTI crude oil decreased to $63.99 per barrel in Q3 2025 from $81.14 per barrel in Q3 2024, impacting profitability [118]. - The Ag segment's grain and oilseed throughput reached 604,009 thousand bushels for the three months ended May 31, 2025, compared to 540,067 thousand bushels in the same period of 2024 [119]. - The price of D6 ethanol RINs increased by 85% during the three months ended May 31, 2025, compared to the same period in the prior fiscal year [116]. - The average price of corn was $4.56 per bushel for the three months ended May 31, 2025, compared to $4.43 per bushel in the same period of 2024 [119]. - The Nitrogen Production segment's IBIT decreased by 20.4% to $100,195, primarily due to higher natural gas input costs [178]. Accounting and Risk - No material changes in market risk exposures were experienced for the period ended May 31, 2025 [222]. - The company did not adopt any new accounting standards that would affect the financial presentation [221].