CHS(US:CHSCN)2025-07-09 15:50Financial 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]. - Revenues for the three months ended May 31, 2025, were $9,766,421, a slight increase from $9,608,983 in 2024, representing a growth of 1.6% [120]. - Gross profit decreased to $329,811, down from $467,795 in 2024, reflecting a gross margin decline from 4.9% to 3.4% [120]. - Operating earnings fell to $70,961, a decrease of 53% from $151,360 in the prior year [120]. - Net income attributable to CHS Inc. was $232,184, down 21.8% from $297,274 in 2024 [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]. - Gross profit for the same period was $806,802, representing 3.0% of revenues, down from $1,478,637 or 4.9% in 2024 [163]. - 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]. Segment Performance - 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, a significant decline from income of $97,850 in 2024, marking a change of 151.2% [125]. - Revenues in the Energy segment decreased by 13.6% to $1,785,749, primarily due to lower selling prices for refined fuels [137]. - The Ag segment's income before income taxes increased by 39.2% to $151,040 from $108,535 in 2024 [131]. - Ag segment revenues increased by 5.8% to $7,962,254, driven by higher volumes and favorable market conditions [142]. - The Ag segment's revenues fell by 9.8% to $21,189,835 in 2025 from $23,486,932 in 2024, largely due to decreased selling prices across product categories [188]. Market Conditions - 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 in the Energy segment [118]. - The company 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]. - CHS Inc. expects global economic factors impacting energy and agricultural commodities to be less favorable in fiscal 2025 compared to fiscal 2024 [111]. - The price of D6 ethanol RINs increased by 85% and D4 biodiesel RINs by 97% 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 in Q3 2025, compared to $4.43 per bushel in Q3 2024, indicating slight price increases [119]. Expenses and Cash Flow - Marketing, general and administrative expenses decreased by 18.2% to $258,850, attributed to lower performance-based incentive compensation [157]. - Marketing, general and administrative expenses decreased by 11.2% to $769,968 in 2025 from $866,721 in 2024, attributed to lower performance-based compensation expenses [199]. - Interest expense increased by 23.5% to $96,962 in 2025 from $78,513 in 2024, due to a higher short-term notes payable balance [200]. - 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]. - 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]. Investments and Acquisitions - The company plans to continue executing enterprise priorities for fiscal 2025, focusing on growth through strategic investments and cooperative connections [112]. - The company acquired WCAS for an estimated cash purchase price of $322.1 million, enhancing its grain and agronomy platforms [207]. - Equity income from investments rose by 34.6% to $204,605, 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]. Tax and Regulatory Changes - The effective tax rate increased to 10.5% in 2025 from 4.1% in 2024, primarily due to changes in state law affecting tax credits [162]. - 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]. Capital Expenditures - Total capital expenditures for fiscal 2025 are expected to be approximately $735.4 million, down from $808.8 million in fiscal 2024 [207]. - Major maintenance costs increased to $274.1 million during the nine months ended May 31, 2025, compared to $22.7 million in fiscal 2024 [207]. Risk and Compliance - No material changes in market risk exposures were experienced for the period ended May 31, 2025 [222]. - The quantitative and qualitative disclosures remain consistent with the Annual Report on Form 10-K for the year ended August 31, 2024 [222]. - Recent accounting pronouncements are discussed in Note 1 of the Quarterly Report on Form 10-Q [221].