Loading chart...
ITEM 1. BUSINESS
THE COMPANY
CHS Inc. (referred to herein as "CHS," "company," "we," "us" or "our") is the nation's leading integrated agricultural cooperative, providing grain, food, agronomy and energy resources to businesses and consumers on a global basis. As a cooperative, we are owned by farmers and ranchers and member cooperatives (referred to herein as "members") across the United States. We also have preferred shareholders who own shares of our five series of preferred stock, all of which are listed and traded on the Global Select Market of The Nasdaq Stock Market LLC ("Nasdaq"). We buy commodities from and provide products and services to individual agricultural producers, local cooperatives and other companies (including our members and other nonmember customers), both domestically and internationally. We provide a wide variety of products and services, ranging from initial agricultural inputs such as fuels, farm supplies, crop nutrients and crop protection products to agricultural outputs that include grain and oilseed, processed grain and oilseed, renewable fuels and food products. A portion of our operations are conducted through equity investments and joint ventures whose operating results are not fully consolidated with our results; rather, our share of the income or loss from those equity investments and joint ventures is included as a component of our net income using the equity method of accounting. For the year ended August 31, 2025, our total revenues were $35.5 billion and net income attributable to CHS was $597.9 million.
We have aligned our segments based on an assessment of how our businesses operate and the products and services they sell. Our Energy segment derives its revenues through refining, wholesaling and retailing of petroleum products. Our Ag segment derives its revenues through origination and marketing of grain, including service activities conducted at export terminals; through wholesale agronomy sales of crop nutrient and crop protection products; from sales of soybean meal, refined soy oil and soyflour products; through the production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, processed sunflowers, feed and farm supplies. Our Ag segment also records equity income from our grain export joint venture and other investments. Our Nitrogen Production segment consists of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and allocated expenses. Our other business operations, primarily our financing and hedging businesses, are included in Corporate and Other because of the nature of their products and services, as well as the relative amounts of revenue from those businesses. In addition, our nonconsolidated food production and distribution joint
venture, Ventura Foods, LLC ("Ventura Foods"), and our nonconsolidated wheat milling joint venture, Ardent Mills, LLC
("Ardent Mills"), are included in Corporate and Other.
As required under our bylaws and Minnesota cooperative law, our earnings from cooperative business are allocated to our members and to a limited extent to nonmembers with which we have agreed to do business on a patronage basis based on the volume of business they do with us. We allocate these earnings to our patrons in the form of patronage refunds, which are also called patronage dividends, and which may be in cash, patrons' equities in the form of capital equity certificates or both. Patrons' equities may be redeemed over time solely at the discretion of our Board of Directors. Earnings derived from nonmembers, which are not treated as patronage, are taxed at federal and state statutory corporate rates and are retained by us as unallocated capital reserves. We also receive patronage refunds from the cooperatives in which we are a member, if those cooperatives have earnings to distribute and if we qualify for patronage refunds from them.
Our origins date back to the late 1920s with the founding of our predecessor companies, which became Cenex, Inc., and Harvest States Cooperatives. CHS Inc. emerged as the result of the merger of Cenex and Harvest States Cooperative in 1998 and is headquartered in Inver Grove Heights, Minnesota.
Our website address is www.chsinc.com. Our periodic and current reports on Form 10-K, 10-Q, 8-K and other filings, including exhibits and supplemental schedules filed therewith, and amendments to those reports, filed with the Securities and Exchange Commission ("SEC") are available on our website free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The information contained on our website is not part of, and is not incorporated into, this Annual Report on Form 10-K or any other report we file with or furnish to the SEC. In addition, the SEC maintains a website that contains reports and other information regarding issuers, where you may obtain a copy of all information we file publicly with the SEC. The SEC website address is www.sec.gov.
1
ENERGY
Overview
We are the nation's largest cooperative energy company based on revenues and identifiable assets, with operations that include petroleum refining and pipelines; supply, marketing and distribution of refined fuels (gasoline, diesel fuel and other energy products); blending, sale and distribution of lubricants; and wholesale supply of propane and other natural gas liquids. Our Energy segment processes crude oil into refined petroleum products at our refineries in Laurel, Montana, and McPherson, Kansas, and sells those products under the Cenex® brand to member cooperatives and other independent retailers through a network of nearly 1,200 sites, the majority of which are convenience stores marketing Cenex brand fuels and owned by our member cooperatives. For fiscal 2025, our Energy revenues, after elimination of intersegment revenues, were $7.6 billion and were primarily from gasoline, diesel fuel and propane.
Operations
Laurel refinery. Our Laurel, Montana, refinery processes medium- and high-sulfur crude oil into refined petroleum products that primarily include gasoline, diesel fuel, asphalt and petroleum coke. Our Laurel refinery sources approximately 96% of its crude oil supply from Canada, with the remaining balance obtained from domestic sources. We have access to Canadian and northwest Montana crude oil through our wholly-owned Front Range Pipeline, LLC, and other common carrier pipelines. Our Laurel refinery also has access to Wyoming crude oil via common carrier pipelines from the south.
Our Laurel refinery processes approximately 65,000 barrels of crude oil per day to produce refined products that consist of approximately 38% gasoline, 43% diesel fuel and other distillates, 12% asphalt, 6% petroleum coke and 1% other products. Refined fuels produced at our Laurel refinery are available via railcars and via the Yellowstone Pipeline to western Montana terminals and to Spokane, Washington; south via common carrier pipelines to Wyoming terminals and Denver, Colorado; and east via our wholly-owned Cenex Pipeline, LLC, to Glendive, Montana, and to Minot, Prosper and Fargo, North Dakota.
McPherson refinery. Our McPherson, Kansas, refinery processes approximately 60% low- and medium-sulfur crude oil and approximately 40% heavy-high-sulfur crude oil into gasoline, diesel fuel and other distillates, petroleum coke and other products. The refinery sources its crude oil through its own pipelines, as well as through joint venture and common carrier pipelines. Low- and medium-sulfur crude oil is sourced from Kansas, Colorado, North Dakota, Oklahoma and Texas, and heavy-high-sulfur crude oil is sourced from Canada and Wyoming.
Our McPherson refinery processes approximately 115,000 barrels of crude oil per day to produce refined products that consist of approximately 50% gasoline, 43% diesel fuel and other distillates, 5% petroleum coke and 2% other products. These products are loaded into trucks at the McPherson refinery or shipped via common carrier pipelines to other markets.
Other energy operations. We operate 10 refined product terminals, nine propane terminals, three asphalt terminals and one lubricants blending and packaging facility. We also own and lease a fleet of liquid and pressure trailers and tractors, which transport refined fuels, propane, anhydrous ammonia and other products.
Products and Services
Our Energy segment produces and sells (primarily wholesale) gasoline, diesel fuel, propane, asphalt, lubricants and other related products, and also provides transportation services. In addition to selling products refined at our Laurel and McPherson refineries, we purchase refined petroleum products from third parties as the need arises. For fiscal 2025, approximately 75% of the refined petroleum products we sold were produced at our Laurel and McPherson refineries and approximately 25% were obtained from third parties. The percentage of refined petroleum products we obtain from third parties is dependent on refinery production volumes and varies from year to year, primarily based on our planned major maintenance schedule.
Sales and Marketing: Customers
We market approximately 75% of our refined fuel products to members, with the balance sold to nonmembers. Sales are made wholesale to member cooperatives and through a network of independent retailers that operate convenience stores under the Cenex brand. We sold approximately 1.5 billion gallons of gasoline and approximately 1.7 billion gallons of diesel fuel in fiscal 2025. We also blend, package and wholesale auto and farm equipment lubricants to members and nonmembers. We are one of the nation's largest propane wholesalers based on revenues. Most of the propane sold in rural areas is for heating and agricultural use. Annual sales volumes of propane vary greatly depending on weather patterns and crop conditions.
2
Industry: Competition
The petroleum business is highly cyclical. Demand for crude oil and energy products is driven by the condition of local and worldwide economies, local and regional weather patterns and taxation relative to other energy sources, which can significantly affect the price of refined fuel products. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined fuel products in the spring, summer and early fall when gasoline and diesel fuel use by our agricultural customers is highest and is subject to domestic supply and demand forces. Other energy products, such as propane, generally experience higher volumes and revenues during the winter heating and crop-drying seasons. More fuel-efficient equipment, reduced crop tillage, depressed prices for crops, weather conditions and government programs that encourage idle acres may all reduce demand for our energy products.
Regulation. Governmental regulations and policies, particularly in the areas of taxation, energy and the environment, have a significant impact on our Energy segment. Our Energy segment operations are subject to laws and related regulations and rules designed to protect the environment that are administered by the U.S. Environmental Protection Agency ("EPA"), the U.S. Department of Transportation ("DOT"), the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration, the Federal Energy Regulatory Commission and similar government agencies. These laws, regulations and rules govern, among other things, discharge of materials into the environment, including air and water; reporting storage of hazardous wastes and other hazardous materials; transportation, handling and disposal of wastes and other materials; labeling of pesticides and similar substances; and investigation and remediation of the release of hazardous materials. Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible product recalls. Our hedging transactions and activities are subject to the rules and regulations of the exchanges we use and to governing bodies, such as the Chicago Mercantile Exchange ("CME"), the New York Mercantile Exchange ("NYMEX") and the U.S. Commodity Futures Trading Commission ("CFTC").
Competition. The petroleum refining and wholesale fuels business is highly competitive. Among our competitors are some of the world's largest integrated petroleum companies, which have their own crude oil supplies and distribution and marketing systems. We also compete with smaller domestic refiners and marketers in the midwestern and northwestern United States, with foreign refiners who import products into the United States and with producers and marketers in other industries supplying other forms of energy and fuels to consumers. Given the commodity nature of the end products, profitability in the industry depends largely on margins, operating efficiency, product mix and costs of product distribution and transportation. Our retail gasoline competitors are much larger than CHS and have greater brand recognition and distribution outlets throughout the country and world than we do. We also are experiencing increased competition from regional and unbranded retailers.
We market refined fuel products in five principal geographic regions. The first region includes the Midwest and Northern Plains. Competition at the wholesale level in this area includes major oil companies, as well as independent refiners and wholesale brokers and/or suppliers. This region has a robust spot market and is influenced by the large refinery center along the Gulf Coast. A second unique marketing region centers near Chicago, Illinois, and includes Illinois, Indiana and eastern Wisconsin. In this region, we principally compete with the major oil companies, as well as independent refiners and wholesale brokers and/or suppliers. Another market region includes Arkansas, Missouri and northern Texas. Competition in this region includes the major oil companies and independent refiners. This region is principally supplied by the Gulf Coast refinery center and is also driven by a strong spot market that reacts quickly to changes in the international and national supply balance. The fourth geographic region includes Colorado, Idaho, Montana, western North Dakota, western South Dakota, Utah and Wyoming. Competition at the wholesale level in this region includes the major oil companies and independent refiners. The fifth region includes much of Oregon and Washington. We compete with the major oil companies in this region, which is known for volatile prices and an active spot market.
AG
Overview
Our Ag segment includes global grain and processing, ag retail and wholesale agronomy businesses. These businesses work together to facilitate production, purchase, sale and eventual use of grain and other agricultural products within the United States and internationally. In fiscal 2025, revenues in our Ag segment were $27.7 billion after elimination of intersegment revenues.
Operations
Global grain and processing. We are the nation's largest cooperative marketer of grain and oilseed based on grain sales. Our global grain marketing operations purchase grain directly from agricultural producers and elevator operators primarily in the midwestern and western United States and indirectly through our ag retail business. Purchased grain is typically
3
contracted for sale for future delivery at a specified location, and we are responsible for handling the grain and either arranging for or facilitating its transportation to that location. We own and operate export terminals, river terminals and elevators throughout the United States to handle and transport grain and grain products. We also maintain locations in Europe, the Pacific Rim, Latin America and South America for marketing, merchandising and/or sourcing grains and crop nutrients. We primarily conduct our global grain marketing operations directly, but do conduct some of our operations through joint ventures, including TEMCO, LLC ("TEMCO"), a 50%-owned joint venture with Cargill, Incorporated ("Cargill"), that focuses on exports, primarily to Asia.
Our processing business includes our oilseed processing and renewable fuels production businesses. Oilseed processing is conducted at facilities that crush approximately 147 million bushels of soybeans and canola on an annual basis, producing approximately 3.1 million short tons of meal and flour and 1.9 billion pounds of edible and inedible oil annually. We purchase oilseeds to be processed from members, other CHS businesses and third parties that have tightly integrated connections with our global grain marketing operations and ag retail business. Our renewable fuels business annually produces 267 million gallons of fuel-grade ethanol, 71 million pounds of inedible corn oil and 645,000 tons of dried distillers grains with solubles ("DDGS"). Renewable fuels produced by our production plants are marketed by our global grain business, along with more than 300 million gallons of ethanol and 5.1 million tons of DDGS annually under marketing agreements with ethanol production plants.
Ag retail. Our ag retail business operates approximately 400 agri-operations locations through 28 business units dispersed throughout the midwestern and western United States. Most of these locations purchase grain from farmers and sell agronomy, energy, feed and seed products to those same producers and others, although not all locations provide every product and service. We also manufacture animal feed through nine owned plants and three limited liability companies.
Wholesale agronomy. Our wholesale agronomy business includes our wholesale crop nutrients and wholesale crop protection businesses. Our wholesale crop nutrients business delivers products directly to our customers and our ag retail business from the manufacturer or through our 11 warehouse terminals and other nonowned storage facilities located throughout the United States. To supplement what is purchased domestically, our Galveston, Texas, deepwater port and terminal receives fertilizer from vessels originating in Europe and Asia where significant volumes of urea are produced. The fertilizer is then shipped by rail to destinations within crop-producing regions of the United States. Our wholesale crop protection business operates out of our network of 28 warehouses from which we deliver products directly to our member cooperatives and independent retailers. We also operate a bulk chemical rail terminal in Brooten, Minnesota, where we handle and store crop protection products for some of the crop protection industry's largest chemical manufacturers. This facility has more than 6 million gallons of chemical storage capacity.
Products and Services
Loading financial statements...
Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
| Line item |
|---|
| Period ending |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management regarding our financial condition and results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:
•Overview
•Business Strategy
•Fiscal 2026 Third Quarter Highlights
•Fiscal 2026 Trends Update
•Operating Metrics
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies
•Recent Accounting Pronouncements
Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, 2025 (including the information presented therein under Risk Factors), as well as the condensed consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Overview
CHS Inc. is a diversified company that provides grain, food, agronomy and energy resources to businesses and consumers on a global scale. As a cooperative, we are owned by farmers, ranchers and member cooperatives across the United States. We also have preferred shareholders who own our five series of preferred stock, all of which are listed and traded on the Global Select Market of The Nasdaq Stock Market LLC ("Nasdaq").
Effective September 1, 2025, we changed the internal financial information reviewed by our chief operating decision maker ("CODM"), our Chief Executive Officer, to evaluate performance and allocate resources to our operating segments. As a result of this change, all prior period segment information has been recast to conform to the current year presentation. We have three reportable segments: Energy, Grains and Agronomy.
•The Energy segment consists of our wholesale and retail activities within the refined fuels, propane and lubricants product lines. The refined fuels product line includes petroleum refining, pipelines and terminals and markets gasoline, diesel fuel and renewable fuels under the Cenex® brand to member cooperatives and other independent retailers. The lubricants product line includes the blending, sale and distribution of primarily Cenex® brand lubricants, and the propane product line markets propane and other natural gas liquids through wholesale and retail market channels. Previously, this segment included our transportation services business, which is now reported under Corporate and Services.
•The Grains segment comprises our global grain marketing and processing activities as part of the feed grains, oilseeds, wheat, specialty grains and animal nutrition product lines. The Grains segment connects producers to domestic and global grain markets through a broad origination and distribution network. It markets commodities such as wheat, corn, ethanol, soybeans, oilseeds and specialty grains. The segment operates grain facilities and trading offices across five continents, serving processors, food manufacturers and renewable fuel producers. Further, the Grains segment produces ethanol and is one of the nation's largest suppliers of ethanol inputs into gasoline products, while also specializing in soybean and canola processing. These results were previously included within the former Ag segment.
•The Agronomy segment consists of our wholesale and retail agronomy activities within the crop nutrients and crop protection product lines. The Agronomy segment provides crop inputs and agronomy services to farmers, member cooperatives and other retailers. It offers crop nutrients, crop protection products and seed, including both proprietary and third-party brands. The Agronomy segment also includes our Nitrogen Production business consisting of our equity method investment in CF Nitrogen. Our supply agreement with CF Nitrogen requires us to purchase a specified quantity of granular urea and urea ammonium nitrate annually from CF Nitrogen. These results were previously included within the former Ag and Nitrogen Production segments.
•Our ag retail business, which was included in our former Ag segment, is now incorporated into the Energy, Grains and Agronomy segments based on the specific products sold and their relevant product lines.
24
The Company's remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified within Corporate and Services. Corporate and Services primarily represents our financing and hedging businesses, which provide services to our members and consist of a financial services business and a U.S. Commodity Futures Trading Commission-regulated futures commission merchant ("FCM") for agricultural commodities hedging. Our nonconsolidated investments in Ventura Foods, LLC ("Ventura Foods"), and Ardent Mills, LLC ("Ardent Mills"), are also included in our Corporate and Services category. All other nonconsolidated investments are included in our Energy, Grains and Agronomy segments.
Management's Focus. When evaluating our operating performance, management focuses on gross profit and income before income taxes ("IBIT"). As a company that operates heavily in global commodities, there is significant unpredictability and volatility in pricing, costs and global trade volumes. Consequently, we focus on managing the margin we can earn and the resulting IBIT. We also focus on ensuring balance sheet strength through appropriate management of financial liquidity, leverage, capital allocation and cash flow optimization.
Seasonality. Many of our business activities are highly seasonal and our operating results vary throughout the year. Our revenues and IBIT generally trend lower during the second fiscal quarter and increase in the third fiscal quarter. For example, in our Grains segment, our retail business generally experiences higher volumes and revenues during the fall harvest, which generally corresponds to our first fiscal quarter, and our global grain and processing operations within Grains are subject to fluctuations in volumes and revenues based on producer harvests, world grain prices, global demand and international trade relationships. Our Agronomy segment generally experiences higher volumes and revenues during the spring planting season. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined fuel products, in the spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, generally experience higher volumes and revenues during the winter heating and fall crop-drying seasons. The tables below demonstrate the historical trend of seasonality inherent in our businesses.
| Quarterly revenues as a percentage of annual total | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | 3-Year Average | ||||||||||||||||
| Q1 | 26 | % | 29 | % | 28 | % | 28 | % | ||||||||||||
| Q2 | 22 | % | 23 | % | 25 | % | 23 | % | ||||||||||||
| Q3 | 28 | % | 25 | % | 26 | % | 26 | % | ||||||||||||
| Q4 | 24 | % | 23 | % | 21 | % | 23 | % | ||||||||||||
| Quarterly IBIT as a percentage of annual total | Fiscal Year 2025 | Fiscal Year 2024 | Fiscal Year 2023 | 3-Year Average | ||||||||||||||||
| Q1 | 42 | % | 47 | % | 41 | % | 43 | % | ||||||||||||
| Q2 | (14) | % | 17 | % | 16 | % | 6 | % | ||||||||||||
| Q3 | 42 | % | 28 | % | 28 | % | 33 | % | ||||||||||||
| Q4 | 30 | % | 8 | % | 15 | % | 18 | % | ||||||||||||
Pricing and Volumes. Our revenues, assets and cash flows can be significantly affected by global market prices and sales volumes of commodities such as petroleum products, natural gas, grain, oilseed products and agronomy products. Changes in market prices for commodities we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Similarly, increased or decreased sales volumes without a corresponding change in the purchase and selling prices of those products can affect revenues and operating earnings. Commodity prices and sales volumes are affected by a wide range of factors beyond our control, including weather; crop damage due to plant disease or insects; drought; availability/adequacy of supply of a commodity; availability of reliable rail, river, truck and ocean transportation networks; disease outbreaks; government regulations and policies; global trade disputes; global competition; wars and civil unrest; and general political and/or economic conditions.
Business Strategy
Our business strategies focus on an enterprisewide effort to create an experience that empowers customers to make CHS their first choice, expand market access to add value for our owners and transform and evolve our core businesses by capitalizing on changing market dynamics. To execute these strategies, we are focused on implementing agile, efficient and sustainable technology platforms; building robust and efficient supply chains; hiring, developing and retaining high-performing, diverse and passionate teams; achieving operational excellence and continuous improvement; and maintaining a strong balance sheet.
25
Fiscal 2026 Third Quarter Highlights
•Our Energy segment benefited from strong crack spreads driven by global market dynamics, which were mostly offset by record-high expenses for renewable energy credits.
•Grains performance was driven by continued global headwinds affecting grain margins, partially offset by strong oilseed crush margins.
•Continued strong performance by our CF Nitrogen equity method investment was partially offset by lower sales volumes of agronomy products, due to higher prices and ongoing weakness in the U.S. farm economy.
Fiscal 2026 Trends Update
Our segments operate in cyclical environments in which market conditions can change rapidly with significant positive or negative impacts on our results. We anticipate various macroeconomic factors will continue to drive uncertainty and instability in global energy and agricultural commodity markets, as well as global financial markets, which could have a significant impact on each of our segments during fiscal 2026 and beyond. These factors include, among others, the ongoing war between Russia and Ukraine and conflict in the Middle East and other regions; shifts in global trade flows for commodities, including global economic impacts from supply disruptions associated with access to the Strait of Hormuz; global competitiveness giving rise to a weak export market for U.S.-sourced agricultural products; potential changes in U.S. trade policy, including increased or fluctuating tariffs; a changing interest rate environment; and continued pricing pressures impacting costs of labor, freight and materials. These factors, or any form of them, could cause significant margin pressure and lower profitability. To mitigate these impacts, we evaluate the economic environment and adjust our operations and business strategies to help improve our position in the market. In addition to these broad macroeconomic factors, other factors could impact demand and pricing for agricultural inputs and outputs, as well as our ability to supply those inputs and outputs while remaining profitable. These include the cost of renewable energy credits, the price of which has been volatile in recent years and could positively or negatively impact our profitability. For example, the U.S. Environmental Protection Agency ("EPA") issued a renewable volume obligation ("RVO") in March 2026, which, as discussed in the MD&A Operating Metrics section, creates price uncertainty and volatility, while also significantly increasing the cost of our compliance with the program. Given the nature of our business, market dynamics and other mechanisms, it is possible the potential RVO compliance costs may be partially or wholly offset by certain other opportunities in our Energy and Grains businesses, but it is unknown if those opportunities will materialize. Additional factors that could impact demand and pricing of agricultural inputs and outputs include a weaker farm economy and regional factors, such as unpredictable weather conditions, including those due to climate change. We currently expect global economic factors impacting energy and agricultural commodities to be volatile and have the potential to be headwinds and/or tailwinds dependent on future global market conditions as they evolve throughout the remainder of fiscal 2026 and into fiscal 2027. Further, in light of uncertainty in the markets we serve, we are unable to predict how long the current environment will last or the significance of the financial and operational impacts to us; however, we currently expect the trend of volatile energy and agricultural commodities to persist throughout fiscal 2026 and into fiscal 2027. Refer to Item 1A of our Annual Report on Form 10-K for the year ended August 31, 2025, for additional considerations these and other risks may have on our business operations and financial performance.
We will continue to execute our enterprise priorities for fiscal 2026, including maximizing our segments through our integrated supply chains and capitalizing on domestic and global opportunities, as we navigate uncertain market conditions for energy and agricultural commodities.
Operating Metrics
Energy
Our Energy segment operations primarily include our refineries in Laurel, Montana, and McPherson, Kansas, which process crude oil to produce refined products, including gasoline, distillates and other products. To ensure the reliability of our refineries, we perform major maintenance activities every two to five years, which require a temporary shutdown of operations. These planned shutdowns allow us to extend the life, increase the capacity and improve the safety and efficiency of our refinery processing assets. They also minimize unplanned business interruptions and are essential to the long-term reliability and profitability of our Energy segment.
During periods of maintenance, utilization rates, throughput volumes and refined fuel yields are lower, and we may purchase refined petroleum products from third parties to meet the needs of our customers. These third-party purchases may result in lower margins than for products produced by our refineries, which reduces our profitability.
26
The following table provides information about our consolidated refinery operations.
| Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||
| Refinery throughput volumes* | (Barrels per day) | ||||||||||||||||||||||||||||||
| Heavy, high-sulfur crude oil | 92,204 | 82,160 | 105,357 | 99,637 | |||||||||||||||||||||||||||
| All other crude oil | 72,752 | 30,767 | 72,008 | 55,682 | |||||||||||||||||||||||||||
| Other feedstocks and blendstocks | 13,186 | 3,560 | 16,852 | 12,002 | |||||||||||||||||||||||||||
| Total refinery throughput volumes | 178,142 | 116,487 | 194,217 | 167,321 | |||||||||||||||||||||||||||
| Refined fuel yields* | |||||||||||||||||||||||||||||||
| Gasolines | 79,915 | 50,506 | 89,705 | 77,114 | |||||||||||||||||||||||||||
| Distillates | 80,851 | 50,226 | 86,287 | 73,146 | |||||||||||||||||||||||||||
*Lower refinery throughput and refined fuels yields experienced during 2025 and 2026 are primarily due to planned major maintenance at our McPherson, Kansas, and Laurel, Montana, refineries, respectively.
We are subject to the Renewable Fuel Standard that requires refiners to blend renewable fuels (e.g., ethanol and biodiesel) into their finished transportation fuels or purchase renewable energy credits, known as renewable identification numbers ("RINs"), in lieu of blending. The EPA generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year. In March 2026, the EPA issued a final RVO for calendar years 2026 and 2027 that increased the renewable fuel percentage standards compared with the previous RVO. The new RVO represents the highest blending obligation ever issued by the EPA.
We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity; therefore, RINs must be purchased on the open market. The price of RINs can be volatile, with prices for D6 ethanol RINs and D4 biodiesel RINs increasing by 95% and 85%, respectively, during the three months ended May 31, 2026, compared to the same period during the prior fiscal year. The final RVO has impacted the demand for RINs, and we expect continued price volatility along with elevated and potentially increasing RINs prices for the remainder of fiscal 2026 and into fiscal 2027. Estimates of our RINs expense are calculated using an average of RINs prices each month.
In addition to our internal operational reliability, the profitability of our Energy segment is largely driven by crack spreads (i.e., the price differential between refined products and crude oil inputs) and Western Canadian Select ("WCS") crude oil discounts (i.e., the price discount for WCS crude oil relative to West Texas Intermediate ("WTI") crude oil), which are driven by supply and demand of refined products. Supply and demand dynamics in the global and North American refined product markets resulted in increased crack spreads during both the three and nine months ended May 31, 2026, compared to the same periods of the prior year. The table below provides information about average market reference prices and differentials that impacted our Energy segment.
| Three Months Ended May 31, | Nine Months Ended May 31, | |||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||
| Market indicators | ||||||||||||||||||||||||||||||
| WTI crude oil (dollars per barrel) | $ | 96.03 | $ | 63.99 | $ | 72.63 | $ | 68.71 | ||||||||||||||||||||||
| WTI - WCS crude oil discount (dollars per barrel) | $ | 14.36 | $ | 11.69 | $ | 12.87 | $ | 12.28 | ||||||||||||||||||||||
| Group 3 2:1:1 crack spread (dollars per barrel)* | $ | 39.03 | $ | 23.88 | $ | 27.56 | $ | 18.35 | ||||||||||||||||||||||
| Group 3 5:3:2 crack spread (dollars per barrel)* | $ | 36.19 | $ | 23.40 | $ | 25.26 | $ | 17.66 | ||||||||||||||||||||||
| D6 ethanol RIN (dollars per RIN) | $ | 1.7985 | $ | 0.9242 | $ | 1.3349 | $ | 0.7633 | ||||||||||||||||||||||
| D4 biodiesel RIN (dollars per RIN) | $ | 1.8339 | $ | 0.9899 | $ | 1.3688 | $ | 0.7935 | ||||||||||||||||||||||
*Group 3 refers to the oil refining and distribution system serving Midwest markets from the Gulf Coast through the Plains states.
Grains
Our Grains segment is primarily composed of our global grain marketing, processing and retail grains activities for our feed grains, oilseeds, wheat, specialty grains and animal nutrition product lines. The Grains segment connects producers to domestic and global grain markets through a broad origination and distribution network and markets commodities such as wheat, corn, soybeans, oilseeds and specialty grains. We operate grain facilities and trading offices across five continents, serving processors, food manufacturers and renewable fuel producers. Profitability in our Grains segment is largely driven by throughput and production volumes, as well as commodity price spreads; however, revenues and cost of goods sold ("COGS") are largely affected by market-driven commodity prices and weather-related conditions outside our control.
27
The table below provides information about average market prices for agricultural commodities, as well as sales and throughput volumes that impacted our Grains segment.
| Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||||||||||||||||
| Market Source* | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Commodity prices | |||||||||||||||||||||||||||||||||||
| Corn (dollars per bushel) | Chicago Board of Trade | $ | 4.56 | $ | 4.56 | $ | 4.40 | $ | 4.47 | ||||||||||||||||||||||||||
| Soybeans (dollars per bushel) | Chicago Board of Trade | $ | 11.80 | $ | 10.30 | $ | 11.15 | $ | 10.19 | ||||||||||||||||||||||||||
| Wheat (dollars per bushel) | Chicago Board of Trade | $ | 6.17 | $ | 5.28 | $ | 5.62 | $ | 5.47 | ||||||||||||||||||||||||||
| Ethanol (dollars per gallon) | Chicago Platts | $ | 1.99 | $ | 1.73 | $ | 1.84 | $ | 1.68 | ||||||||||||||||||||||||||
| Volumes | |||||||||||||||||||||||||||||||||||
| Grain and oilseed (thousands of bushels) | 654,971 | 604,009 | 1,961,042 | 1,805,800 | |||||||||||||||||||||||||||||||
| North American grain and oilseed port throughput (thousands of bushels) | 252,136 | 190,979 | 771,562 | 576,610 | |||||||||||||||||||||||||||||||
| Ethanol (thousands of gallons) | 153,826 | 138,254 | 478,556 | 418,266 | |||||||||||||||||||||||||||||||
*Market source information represents the average week-end or month-end price during the period.
Agronomy
Our Agronomy segment is primarily composed of our wholesale and retail agronomy activities within our crop nutrients and crop protection product lines. This segment provides innovative agriculture solutions to farmers, cooperatives and other retailers. Dedicated to supporting farmer success with effective agronomy practices, we offer crop nutrients, crop protection products and seed, including both proprietary and third-party brands. Our Agronomy segment includes our Nitrogen Production business consisting of our equity method investment in CF Nitrogen. Products in the Agronomy segment are supported by wholesale and retail channels from investment in domestic manufacturing and strategic relationships with suppliers around the world. Profitability in our Agronomy segment is largely driven by the relationship between global and regional supply and demand for the underlying products and raw materials, costs of inputs used in the fertilizer manufacturing process and strength of the agricultural industry throughout the trade territories in which we operate. The table below provides information about average market prices for agricultural commodities, as well as sales and throughput volumes for our Agronomy segment.
| Three Months Ended May 31, | Nine Months Ended May 31, | ||||||||||||||||||||||||||||||||||
| Market Source* | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||
| Commodity prices | |||||||||||||||||||||||||||||||||||
| Urea (dollars per ton) | Green Markets NOLA | $ | 598.92 | $ | 397.00 | $ | 463.71 | $ | 355.93 | ||||||||||||||||||||||||||
| Urea ammonium nitrate (dollars per ton) | Green Markets NOLA | $ | 465.60 | $ | 326.95 | $ | 369.92 | $ | 267.40 | ||||||||||||||||||||||||||
| Volumes | |||||||||||||||||||||||||||||||||||
| Wholesale crop nutrients (thousands of tons) | 2,177 | 2,316 | 5,372 | 5,802 | |||||||||||||||||||||||||||||||
*Market source information represents the average week-end or month-end price during the period.
28
Results of Operations
Three Months Ended May 31, 2026 and 2025
| Three Months Ended May 31, | |||||||||||||||||||||||
| 2026 | % of Revenues* | 2025 | % of Revenues* | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 11,582,089 | 100.0 | % | $ | 9,766,421 | 100.0 | % | |||||||||||||||
| Cost of goods sold | 11,171,469 | 96.5 | 9,436,610 | 96.6 | |||||||||||||||||||
| Gross profit | 410,620 | 3.5 | 329,811 | 3.4 | |||||||||||||||||||
| Marketing, general and administrative expenses | 302,283 | 2.6 | 258,850 | 2.7 | |||||||||||||||||||
| Operating earnings | 108,337 | 0.9 | 70,961 | 0.7 | |||||||||||||||||||
| Interest expense | 49,725 | 0.4 | 44,109 | 0.5 | |||||||||||||||||||
| Other income | (21,775) | (0.2) | (27,398) | (0.3) | |||||||||||||||||||
| Equity income from investments | (201,826) | (1.7) | (204,605) | (2.1) | |||||||||||||||||||
| Income before income taxes | 282,213 | 2.4 | 258,855 | 2.7 | |||||||||||||||||||
| Income tax expense | 14,717 | 0.1 | 27,175 | 0.3 | |||||||||||||||||||
| Net income | 267,496 | 2.3 | 231,680 | 2.4 | |||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | 130 | — | (504) | — | |||||||||||||||||||
| Net income attributable to CHS Inc. | $ | 267,366 | 2.3 | % | $ | 232,184 | 2.4 | % | |||||||||||||||
*Amounts less than 0.1% are shown as zero percent. Percentage totals may differ due to rounding.
The table below details revenues, net of intersegment revenues, and IBIT by segment for the three months ended May 31, 2026.
| Energy | Grains | Agronomy | Corporate and Services | Total | |||||||||||||||||||||||||||||
| Three Months Ended May 31, 2026 | (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Revenues | $ | 3,307,979 | $ | 5,660,619 | $ | 2,566,264 | $ | 47,227 | $ | 11,582,089 | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | 10,099 | $ | (33,564) | $ | 275,044 | $ | 30,634 | $ | 282,213 | |||||||||||||||||||||||
29
Operating Segments
Energy
| Three Months Ended May 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 3,307,979 | $ | 1,915,096 | $ | 1,392,883 | 72.7 | % | |||||||||||||||
| Income (loss) before income taxes | $ | 10,099 | $ | (56,515) | $ | 66,614 | 117.9 | % | |||||||||||||||
The following commentary presents the changes in our Energy segment for the three months ended May 31, 2026, compared to the three months ended May 31, 2025.
| Revenues | IBIT | ||||||||||
| For the three months ended May 31, 2026: | (Dollars in thousands) | ||||||||||
| Volume | $ | 597,018 | $ | 1,147 | |||||||
| Price impact on revenues and margin impact on IBIT | 795,865 | 77,542 | |||||||||
| Other IBIT | — | (12,075) | |||||||||
| Total change | $ | 1,392,883 | $ | 66,614 | |||||||
Total Energy segment revenues increased $1,392.9 million, or 72.7%, during the three months ended May 31, 2026, compared to the three months ended May 31, 2025, primarily due to the following:
•Higher market prices for refined fuels products, due to geopolitical events in the current quarter, improved Energy segment revenues.
•Strong bulk refined fuels and propane sales volumes also drove revenues growth.
Energy segment IBIT increased $66.6 million, or 117.9%, during the three months ended May 31, 2026, compared to the three months ended May 31, 2025, primarily due to the following:
•Improved sales mix of higher-margin refined fuels products, higher crack spreads and favorable WCS discounts contributed to an increase in IBIT.
•These benefits were largely offset by significantly higher RINs expense and unrealized hedging losses.
Grains
| Three Months Ended May 31, | Change | ||||||||||||||||||||
| 2026 | 2025 | Dollars | |||||||||||||||||||
Next expected filings
- ~2026-11-04 10-K expected by 2026-11-13 (in 118 days)
- ~2027-01-06 10-Q expected by 2027-01-07 (in 181 days)
- ~2027-04-07 10-Q expected by 2027-04-08 (in 272 days)
- ~2027-07-07 10-Q expected by 2027-07-08 (in 363 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-08 8-K Other Events
- 2026-07-08 10-Q Quarterly Report
- 2026-07-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-08 10-Q Quarterly Report
- 2026-04-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-07 8-K Other Events
- 2026-04-03 8-K Officer/Director Change
- 2026-01-07 10-Q Quarterly Report
- 2026-01-07 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-06 8-K Other Events
- 2025-12-08 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-05 10-K Annual Report
- 2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-04 8-K Other Events
- 2025-09-03 8-K Other Events