Chs Inc 8-K, filed Dec 6, 2024
Chs Inc (CHSCP)
8-K
2024-12-06
For: 2024-12-06
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Added on
April 09, 2026
About this 8-K
Chs Inc filed this 8-K on December 6, 2024.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 6, 2024
(Exact Name of Registrant as Specified in its Charter)
Commission File Number: 001 -36079
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Item 7.01 Regulation FD Disclosure.
On December 6, 2024, Olivia Nelligan, Executive Vice President, Chief Financial Officer and Chief Strategy Officer of CHS Inc. (the “Company”), gave a speech along with a related slide presentation at the Company’s 2024 Annual Meeting. Copies of Ms. Nelligan’s speech and related slide presentation are attached hereto as Exhibits 99.1 and 99.2, respectively. Each such copy is incorporated herein by reference.
Pursuant to General Instruction B.2. to Form 8-K, the information set forth and incorporated by reference in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description | |||||||
| Speech of Olivia Nelligan | ||||||||
| Slide Presentation Related to Speech of Olivia Nelligan | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CHS Inc. | ||||||||||||||
| Date: December 6, 2024 | By: | /s/ Olivia Nelligan | ||||||||||||
| Olivia Nelligan | ||||||||||||||
| Executive Vice President, Chief Financial Officer and Chief Strategy Officer | ||||||||||||||
Fiscal Year 2024 Annual Meeting CFO Report
•Hello & good morning. A warm welcome to all our owners and partners joining us here today in person and to those online. It is my pleasure to present our CHS financial report for fiscal year 2024.
•Please review this safe harbor statement. Some of the content in this financial report may be forward-looking. Future results may differ from those implied because of risks or uncertainties in our business, including those described in our most recent annual report, which is on file with the SEC.
•It was another good year for CHS with solid financial performance, although down from the record-setting results we delivered last year. Both energy and agriculture markets at a macro level have been going through a more challenging period, with margin pressure because of market forces.
•Notwithstanding this, we are happy with the results we have been able to achieve, by working together as a strong and committed cooperative system, despite the tougher commodity environment.
Revenues
•Our reported revenues for fiscal year 2024 were $39.3 billion compared to $45.6 billion for fiscal year 2023 – a 14% decline resulting from lower commodity prices.
Net Income
•We delivered net income of $1.1 billion in fiscal year 2024. While below the historic record earnings of $1.9 billion the previous year, our business segments performed well.
Energy
•Our Energy segment includes refined fuels, propane, lubricants, and transportation.
•This segment reported pretax earnings of $429 million, a decrease of $646 million compared to the prior year, which was a record year for our energy business. Reasons for the decline include:
oLower refining margins due to industry supply and demand dynamics.
oLess favorable pricing of the Canadian crude oil that we process at our refineries.
oUnseasonably warm weather across our trade territory last winter, leading to weaker propane and refined fuels volumes.
However, we saw a partial offset based on reduced costs for renewable energy credits, known as RINs.
•During fiscal year 2024, our Energy results were strengthened by significant investments that have:
a)increased diesel output and optimized efficiency and yields at our CHS refineries; and
b)enhanced our network of fuel terminals to improve our reliability and customer experience.
Ag
•Our Ag segment includes wholesale agronomy, global grain & processing and ag retail.
•Our Ag segment delivered pretax earnings of $343 million in fiscal year 2024, a $69 million decrease versus the prior year.
oOn the positive side, we experienced improved margins and higher volumes for wholesale and retail agronomy products. Investment in our Galveston, Texas, deep-water import facility and key river terminals have provided crucial flexibility to accommodate shifts in crop nutrient demand to meet owners’ needs.
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oIn terms of challenges, we saw weaker crush margins in our oilseed processing business year-over-year, although still considerably higher than historical norms. The lower crush margins in fiscal year 2024 were due to an increased global supply of canola and soybean meal and oil, partially offset by operational and logistical efficiencies at our plants.
oWe also experienced compressed margins in the grain and oilseed product categories due to a more competitive global marketplace. However, volumes have been strong, helped by additional export market access capacity through our expanded Myrtle Grove, Louisiana, terminal and the TEMCO grain terminal at the Port of Houston, which was a 2023 addition to our supply chain.
Nitrogen Production
•Nitrogen Production represents our equity method investment in CF Nitrogen, a joint venture with CF Industries. This investment enables CHS owners to participate in the fertilizer production value stream, while helping ensure a reliable long-term supply of crop nutrients for growers.
•The Nitrogen Production segment contributed $151 million in pretax income in fiscal year 2024, compared to $261 million the previous year.
oThe unfavorable variance of $110 million in earnings is due to decreased market prices for urea and UAN, partially offset by lower natural gas costs.
Corporate and Other
•Our Corporate and Other category includes CHS Hedging, our brokerage business which helps members with their commodity hedging needs, and CHS Capital, which provides financing to members.
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•The Corporate and Other category also includes our joint venture investments in Ventura Foods, a leading producer and distributor of oil-based food products, and Ardent Mills, a premier US flour miller, which purchases a large share of its wheat from CHS and the cooperative system. Both joint ventures add value back to the acre by enhancing the soybean and wheat patronage pools respectively.
•Overall, Corporate and Other delivered pretax income of $175 million in fiscal year 2024, a decrease of $85 million year-over-year. The reduction in earnings was primarily due to lower equity income from Ventura Foods, as a gain on the sale of certain assets in fiscal year 2023 did not recur in the current year.
Tax Benefit
•Our tax benefit for the year, almost $5 million, represents a positive change of $113 million compared to fiscal year 2023 tax expense. This improvement is due to both lower income and strategic tax planning.
Segment Wrap Up
•In total, net income of $1.1 billion for fiscal year 2024 is a solid result for CHS, the fifth highest in our nearly 100-year history.
•We are proud of the results CHS was able to accomplish together with our owners’ support. We remain financially strong with ample liquidity which is vital given the capital-intensive nature of our business. We are well-positioned to continue investing in the future, creating long-term value for the farmers, ranchers and member cooperatives that own CHS.
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Returns to Owners
•As you all know, it takes a co-op to deliver a business model of true, lasting, and shared success. Our CHS purpose of creating connections to empower agriculture becomes even more meaningful when the cash returns from CHS, through cash patronage and equity redemptions, go back to the rural communities that we work with every day to feed the world.
•In making equity management decisions, the CHS Board of Directors considers:
oWhat is in the best interests of both CHS and our owners.
oWhat CHS can afford based on cash available and our evaluation of market dynamics looking forward.
oThe need to continue to have a strong balance sheet so we can invest for growth and future value-creation for owners.
•Based on fiscal year 2024 results, CHS intends to return $600 million in cash to the country during fiscal year 2025:
o$300 million in cash patronage, based on business done with CHS in fiscal year 2024, and
o$300 million in equity redemptions.
•Of the $300 million in equity redemptions:
o$240 million will be distributed to associations based on age of equity. Payments will be made in the spring.
o$60 million is set aside to fulfill requests from eligible individual owners based on age of patron and from their estates.
•With this latest commitment, CHS cash returns based on patronage and redemptions will be approximately $3.5 billion dollars over a 10-year period, including more than $2.3 billion to owners in just three years.
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•Additionally, CHS will issue $360 million of new equity to patrons based on business done in fiscal year 2024. Of that, $77 million will be qualified equity and $283 million will be non-qualified equity.
•This year, CHS will not have any unused DPAD tax deductions available to distribute to owners.
•Shown on the screen are estimated wholesale patronage rates, split between cash patronage and total patronage. I will highlight three examples:
oBulk fertilizer total patronage is $18.24 per ton with a cash portion of $8.30 per ton.
oSoybeans total patronage is 16 cents per bushel with a cash portion of over 7 cents per bushel.
oRefined fuels total patronage is 10 cents per gallon with a cash portion of just under 5 cents per gallon.
•These cash returns speak to the enduring value of CHS and our owners working together. This is part of the ongoing investment that we make in empowering farmers, ranchers, cooperatives, and the rural communities at the heart of agricultural production.
Fiscal 2025 Outlook
•Looking ahead, we anticipate continued uncertainty and margin pressure in the global energy and agricultural commodity markets given evolving supply & demand dynamics, rising tensions geopolitically and an increasingly more protectionist stance by many countries on a range of issues including global trade, with the possibility of increasing tariffs and other barriers to trade.
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•While these factors certainly present challenges for agriculture, CHS is confident in our ability to navigate changing conditions by leveraging the inherent strengths in our business model.
oKey overseas investments and the development of new strategic demand centers ensure that US farmers will have access to global markets and CHS can remain relevant even as trade flows shift.
oSignificant investments domestically in both retail and wholesale assets to enhance speed, space, and efficiency on behalf of our owners become even more critical in a competitive global environment.
oOur connected and transparent end-to-end supply chain allows us to take a macro view to make smart choices on how to trade and move grain efficiently and cost effectively.
oOur diversified portfolio helps to insulate us from the effects of commodity swings and volatility.
oWe are highly accustomed to navigating the economic cycles of agriculture; it is as much a part of our DNA as it is of the farmers that own us. As always, we are putting considerable focus on financial vigilance and cost control to support appropriate decision-making.
•During tough times, our cooperative model is more important than ever. Our collective power is amplified when we work together with the common goal of creating long-term sustainable value for the US farmer. This is the secret sauce of being a cooperative – our objectives are aligned, and our collaboration generates mutual strength; this gives us a competitive advantage on the global stage.
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Close
•In closing, I want to sincerely thank each of you for your ongoing trust and your continued support. We appreciate your business. In fact, we need your business to continue to invest and grow on your behalf today and for the future. And we will work hard every day to earn your business. Because we depend on each other and are stronger together. It takes a co-op to achieve true, lasting, and shared success. Thank you.
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Olivia Nelligan Executive vice president, chief financial officer and chief strategy officer
Forward-looking statements This document and other CHS Inc. publicly available documents contain, and CHS officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on CHS current beliefs, expectations and assumptions regarding the future of its businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of CHS control. CHS actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause CHS actual results and financial condition to differ materially from those indicated in the forward- looking statements are discussed or identified in CHS filings made with the U.S. Securities and Exchange Commission, including in the "Risk Factors" discussion in Item 1A of CHS Annual Report on Form 10-K for the fiscal year ended August 31, 2024. These factors may include: changes in commodity prices; the impact of government policies, mandates, regulations and trade agreements; global and regional political, economic, legal and other risks of doing business globally; the ongoing war between Russia and Ukraine; the escalation of conflict in the Middle East; the impact of inflation; the impact of epidemics, pandemics, outbreaks of disease and other adverse public health developments; the impact of market acceptance of alternatives to refined petroleum products; consolidation among our suppliers and customers; nonperformance by contractual counterparties; changes in federal income tax laws or our tax status; the impact of compliance or noncompliance with applicable laws and regulations; the impact of any governmental investigations; the impact of environmental liabilities and litigation; actual or perceived quality, safety or health risks associated with our products; the impact of seasonality; the effectiveness of our risk management strategies; business interruptions, casualty losses and supply chain issues; the impact of workforce factors; our funding needs and financing sources; financial institutions’ and other capital sources’ policies concerning energy-related businesses; technological improvements that decrease the demand for our agronomy and energy products; our ability to complete, integrate and benefit from acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary course-of-business events; security breaches or other disruptions to our information technology systems or assets; the impact of our environmental, social and governance practices, including failures or delays in achieving our strategies or expectations related to climate change or other environmental matters; the impairment of long-lived assets; the impact of bank failures; and other factors affecting our businesses generally. Any forward- looking statements made by CHS in this document are based only on information currently available to CHS and speak only as of the date on which the statement is made. CHS undertakes no obligation to update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise except as required by applicable law.
$0 $10 $20 $30 $40 $50 FY2020 FY2021 FY2022 FY2023 FY2024 Revenue $39.3 ($ in billions)
$0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 FY2020 FY2021 FY2022 FY2023 FY2024 $1,102 Net Income ($ in millions)
CHS Pretax Income Fiscal year ended Aug. 31, 2024 ($ in thousands) 2024 2023 CHANGE Energy $429,053 $1,075,443 ($646,390)
CHS Pretax Income Fiscal year ended Aug. 31, 2024 ($ in thousands) 2024 2023 CHANGE Energy 429,053 1,075,443 (646,390) Ag $342,677 $411,808 ($69,131)
CHS Pretax Income Fiscal year ended Aug. 31, 2024 ($ in thousands) 2024 2023 CHANGE Energy 429,053 1,075,443 (646,390) Ag 342,677 411,808 (69,131) Nitrogen production $151,235 $260,760 ($109,525)
CHS Pretax Income Fiscal year ended Aug. 31, 2024 ($ in thousands) 2024 2023 CHANGE Energy 429,053 1,075,443 (646,390) Ag 342,677 411,808 (69,131) Nitrogen production 151,235 260,760 (109,525) Corporate and other $174,822 $259,768 ($84,946)
($ in thousands) 2024 2023 CHANGE Energy 429,053 1,075,443 (646,390) Ag 342,677 411,808 (69,131) Nitrogen production 151,235 260,760 (109,525) Corporate and other 174,822 259,768 (84,946) Pretax income 1,097,787 2,007,779 (909,992) CHS Net Income Fiscal year ended Aug. 31, 2024 Income tax (benefit) expense ($4,872) $107,655 ($112,527)
($ in thousands) 2024 2023 CHANGE Energy 429,053 1,075,443 (646,390) Ag 342,677 411,808 (69,131) Nitrogen production 151,235 260,760 (109,525) Corporate and other 174,822 259,768 (84,946) Pretax income 1,097,787 2,007,779 (909,992) Income tax (benefit) expense (4,872) 107,655 (112,527) Noncontrolling interests 340 (314) 654 CHS Net Income Fiscal year ended Aug. 31, 2024 Net income $1,102,319 $1,900,438 ($798,119)
cash returns* $300 million cash patronage $300 million equity redemptions *estimated
cash returns to owners last 3 years
equity certificates $77 million qualified equity $283 million nonqualified equity
Cash Total Bulk fertilizer (tons) $8.30 $18.24 Focused crop protection (dollars) $0.10 $0.21 Canola (hundredweight) $1.28 $2.81 Corn (bushels) $0.02 $0.04 Soybean (bushels) $0.07 $0.16 Soybean meal (tons) $2.50 $5.49 Refined fuels (gallons) $0.05 $0.10 Premium diesel (gallons) $0.06 $0.12 Propane (gallons) $0.01 $0.03 Commissions – CHS Hedging (dollars) $0.18 $0.40 *estimated FY24 Wholesale patronage rates*
