CHS(US:CHSCP)2026-01-07 16:00Financial Performance - 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 Conditions - The company anticipates continued headwinds in fiscal 2026 due to macroeconomic factors, including the ongoing war between Russia and Ukraine and shifts in global trade flows, which could impact profitability[120]. - The company expects reduced margins for energy and agricultural commodities to persist throughout fiscal 2026 due to various market pressures[121]. - The Grains segment's profitability is significantly influenced by throughput and production volumes, as well as commodity price spreads, which are affected by market-driven commodity prices and weather conditions[129]. Cost and Expenses - 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 rose to $268,120 thousand, an increase of 2.0% from $262,850 thousand in 2024[151]. - Interest expense increased by 35.1% to $37,351 thousand, attributed to a higher short-term notes payable balance compared to the previous year[152]. Production and Capacity - The Energy segment reported a total refinery throughput volume of 204,504 barrels per day for the three months ended November 30, 2025, compared to 198,108 barrels per day in the same period of 2024[126]. - Ethanol production volumes increased to 165,122 thousand gallons in 2025, up from 136,747 thousand gallons in 2024, indicating growth in production capacity[135]. - The average market price for urea increased to $381.31 per ton in 2025 from $318.29 in 2024, reflecting a significant rise in commodity prices[133]. Investments and Income - 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]. Cash Flow and Capital Expenditures - Net cash used in operating activities increased by $43.8 million year-over-year to $337.8 million, primarily due to increased inventories[167]. - Net cash used in investing activities rose by $241.2 million to $247.9 million, reflecting increased purchases of investments[168]. - Cash provided by financing activities increased by $680.3 million to $644.2 million, driven by increased net cash inflows from notes payable[169]. - 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]. Working Capital and Dividends - 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 company expects to pay approximately $168.7 million in preferred stock dividends during fiscal 2026, with $42.2 million paid in the three months ended November 30, 2025[161]. - As of November 30, 2025, the company had approximately $2.3 billion of preferred stock outstanding, with various dividend rates and payment frequencies[171]. Risk and Taxation - 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]. - No material changes in market risk exposures were experienced for the period ended November 30, 2025[178].