Financial Performance - CHS Inc. reported strong performance in the Energy segment, driven by strengthened refining margins and record premium diesel sales volumes[124]. - Revenues for the three months ended November 30, 2025, were $8,864,104 thousand, a decrease of 4.6% from $9,294,112 thousand in the same period of 2024[135]. - Gross profit for the same period was $389,352 thousand, representing 4.4% of revenues, compared to $400,676 thousand or 4.3% in 2024[135]. - The Agronomy segment reported revenues of $1,238,005 thousand, a decline of 2.1% from $1,264,034 thousand in 2024, while income before income taxes increased by 30.9% to $36,804 thousand[144]. - The Grains segment experienced a revenue drop of $463,818 thousand, or 8.2%, to $5,215,354 thousand, with income before income taxes decreasing by 78.3% to $36,242 thousand[140]. - The Energy segment's revenues increased by $68,407 thousand, or 3.0%, to $2,364,877 thousand, with income before income taxes rising significantly by 868.9% to $152,347 thousand[138]. Market Dynamics - The Grains segment faced continued headwinds due to global trade factors and commodity market dynamics, impacting profitability[124]. - The Agronomy segment showed solid performance, largely attributed to the CF Nitrogen joint venture, but was partially offset by a weaker U.S. farm economy[124]. - The company anticipates macroeconomic factors, including geopolitical conflicts and fluctuating tariffs, will create uncertainty and instability in global energy and agricultural commodity markets throughout fiscal 2026[120]. - CHS Inc. expects reduced margins for energy and agricultural commodities to persist throughout fiscal 2026 due to ongoing market pressures[121]. Operational Metrics - Refinery throughput volumes for the three months ended November 30, 2025, were 204,504 barrels per day, compared to 198,108 barrels per day in the same period of 2024[126]. - Ethanol production volumes increased to 165,122 thousand gallons, up from 136,747 thousand gallons in the prior year[135]. - The average Group 3 2:1:1 crack spread increased to $26.61 per barrel for the three months ended November 30, 2025, from $16.88 per barrel in the prior year[128]. - The average price of D6 ethanol RINs rose by 51% to $0.9987 during the three months ended November 30, 2025, compared to $0.6632 in the same period of the previous year[126]. - The average price of D4 biodiesel RINs increased by 54% to $1.0190 during the same period, up from $0.6632[126]. Expenses and Cash Flow - Cost of goods sold decreased by $418,684 thousand, or 4.7%, to $8,474,752 thousand, primarily due to lower retail and domestic feed grains margins[147]. - Marketing, general and administrative expenses increased by 2.0% to $268,120 thousand, attributed to depreciation related to the enterprise resource planning system[151]. - Interest expense rose by 35.1% to $37,351 thousand, driven by a higher short-term notes payable balance compared to the previous year[152]. - Cash used in operating activities increased by $43.8 million year-over-year to $337.8 million, primarily due to increased inventories[167]. - Cash used in investing activities rose by $241.2 million to $247.9 million, mainly due to purchases of investments and decreased proceeds from short-term investments[168]. - Cash provided by financing activities increased by $680.3 million to $644.2 million, reflecting higher net cash inflows from notes payable[169]. Investments and Capital Expenditures - Total capital expenditures for fiscal 2026 are expected to be approximately $575.1 million, down from $728.6 million in fiscal 2025, with $116.0 million spent on property, plant, and equipment in the three months ended November 30, 2025[161]. - Other income increased by $8.5 million, or 32.2%, to $34.9 million for the three months ended November 30, 2025, primarily due to unrealized gains on investments and increased interest income[153]. - Equity income from investments rose by $31.2 million, or 25.5%, to $153.5 million, driven by higher equity income from CF Nitrogen due to increased urea and UAN prices and decreased natural gas costs[154][155]. Tax and Working Capital - Income tax expense decreased by $1.5 million, or 11.4%, to $11.7 million, with effective tax rates of 4.3% for the three months ended November 30, 2025, compared to 5.1% in the prior year[156]. - Working capital increased by $128.0 million to $2.9 billion as of November 30, 2025, driven by a $1.8 billion increase in current assets, primarily due to higher inventories[163]. - The current ratio as of November 30, 2025, was 1.4, down from 1.5 as of August 31, 2025, indicating a slight decrease in short-term liquidity[158]. Risk Factors - No material changes in market risk exposures were experienced for the period ended November 30, 2025[178].
CHS(CHSCM) - 2026 Q1 - Quarterly Report