2024 CHS Annual Report
IT TAKES
A CO-OP.
TM
Integrity
We set high standards
and hold ourselves
accountable.
Inclusion
We believe excellence
and growth stem from
diverse thinking.
Our purpose
Our values
Creating connections to
empower agriculture
Safety
We put the well-being of
our people, customers and
communities first every day.
Cooperative spirit
We work together for shared
success and to strengthen
our communities.
1
2024 CHS Annual Report
We are pleased to share our fi scal year 2024
results, which demonstrate another year of solid
performance across all our segments. They
exemplify the strength of the cooperative system,
farmers, ranchers and cooperatives working
together to achieve shared success.
Those results were made possible by your belief in
the value your cooperative provides. Thank you for
turning that belief into action, helping CHS record
one of the best years in this cooperative’s history.
We are leveraging that strength to enhance and
expand our supply chain capabilities in the U.S.
and around the world.
Our updated, more effi cient Myrtle Grove, La.,
export terminal is handling grain, oilseed and
byproducts more quickly to send more American-
grown products to customers around the world.
The expanded Galveston, Texas, deep-water port
is moving fertilizer off ships and into railcars at
greater speed so crop nutrients will reach co-op
warehouses and farm fi elds more quickly.
The TEMCO grain-export joint venture, which now
includes a terminal at the Port of Houston, is giving
us opportunities to fi nd new markets for grain from
the Southern Plains, while we continue to enjoy
signifi cant market share through our TEMCO ports
in the Pacifi c Northwest.
Expanding our soy processing capacity means we
are in position to take full advantage of demand
for soy oil, soybean meal and soy fl our for food
and fuel in the U.S. and around the globe.
CHS refi neries continue to fi nd ways to produce
more diesel from every barrel of crude oil to power
farms, ranches and fl eets across rural America.
We are expanding our grain origination and export
footprint in Brazil, Australia and the Black Sea
region to help meet customer needs year-round,
ensuring this farmer-owned cooperative is relevant
in the global marketplace. That presence will help
build a steady market for U.S. grain and oilseeds to
create even more value for our owners.
Our priorities for fi scal year 2025 focus on
continuing our momentum, while building
strength across the CHS enterprise. In the year
ahead, we will:
• Leverage our progress to unlock growth
through strategic investments and cooperative
connections.
• Own our fi nancial strength and resilience through
personal accountability.
• Employ our framework of CHS capabilities to live
our values and deliver excellence as one team.
Thank you for your business and for your
commitment to the cooperative system and
CHS. Together, we are creating connections
to empower agriculture.
Jay Debertin
President and Chief
Executive Offi cer
Dan Schurr
Chair, Board
of Directors
From left, Schurr, Debertin
The cooperative
diff erence
2 2024 CHS Annual Report
Opening new markets
Farmers in the Southern Plains
are experts at growing grain
sorghum, a low-input crop
that thrives in dry conditions.
Customers in China depend
on sorghum for food and feed.
CHS and its member co-ops
are meeting that need, now
supplying about 17% of China’s
sorghum imports through
the Port of Houston terminal
recently added to the TEMCO
joint venture.
It takes a co-op to connect
owners to a world of
opportunity.
3
2024 CHS Annual Report
Year in review
Expansion and upgrades at the CHS export
terminal in Myrtle Grove, La., are enabling faster,
more efficient handling of wheat, soybeans
and corn, as well as soybean meal and DDGS
(distillers dried grains with solubles), valuable
feed ingredients and byproducts of soy
processing and ethanol manufacturing,
respectively. The 30% increase in capacity and
greater ability to fill oceangoing vessels with
multiple products helps make CHS a more
valuable supplier to customers in Latin America
and other regions around the world.
The TEMCO grain export terminal at the Port
of Houston on the Texas Gulf, added in 2023, is
helping CHS and member cooperatives serve
owners in the Southern Plains, exporting more
than 50 million bushels in fiscal year 2024 and
increasing market access for grain sorghum and
other crops. The growing CHS network of U.S.
grain-handling facilities and export capabilities
has helped make CHS a key supplier of sorghum
to China for livestock and human consumption.
Combining the Houston terminal with other
TEMCO export terminals in the Pacific Northwest
allows CHS to originate and market grain grown
across the U.S. to supply customers in Asia, the
Middle East, Europe and Latin America.
Marking two decades of grain origination in South
America, CHS operations in Brazil continued to
add strength to the supply chain as we enhanced
our ability to be a year-round supplier of grain
to global customers. Our transshipment facilities
at Marialva and Alvorada are located along key
rail corridors that connect the terminals to ports
at Itaqui, Paranaguá and Santos. Through a joint
venture with Brazilian railway operator Rumo, CHS
will be 50% owner of a grain and fertilizer terminal
to be built at the Port of Santos with completion
expected in 2027. The facility will service a key
grain export corridor and enhance CHS end-
to-end supply chain capabilities in Brazil. The
terminal is expected to move up to 350 million
bushels of grain and 3.5 million tons of fertilizer
per year.
Expansion of the CHS Silotrans terminal at
Constanta, Romania, on the Black Sea progressed
during fiscal year 2024. When complete, which
is expected in 2025, the 35% increase in terminal
capacity and increased speed will help move grain
from this critical grain-producing region to CHS
customers around the world.
A 1.5 million ton grain export terminal is under
construction at Geelong in Victoria, Australia.
The joint venture between CHS and Broadbent
Grain will accept truck and rail shipments, then fill
export vessels destined for the Asia Pacific region
using high-speed technology. The terminal will
have capacity to export 59 million bushels per
year and is expected to be completed in 2025.
New domestic grain-handling facilities at Erskine,
Minn., and Worthing, S.D., and CHS acquisition of
key grain assets in Illinois, Colorado, Minnesota
and Nebraska added strength to the CHS grain
supply chain. The ability to assemble and ship
greater volumes helps secure market access
opportunities for CHS owners and ensures global
CHS customers of dependable supplies of high-
quality grain with desired characteristics through
the farmer-owned cooperative system.
CHS soy processing facilities in Fairmont and
Mankato, Minn., and canola processing operations
in Hallock, Minn., exceeded anticipated production
volumes to help meet demand for food, energy
feedstocks and feed, despite softening of global
soy oil demand in fiscal year 2024 compared
with the previous year’s historically high levels.
Upgrades to the Mankato facility completed mid-
year increased refined soy oil production capacity
by 35%. CHS is a major U.S. supplier of refined soy
oil, soybean meal and soy flour.
4 2024 CHS Annual Report
Growing consumer demand for alternative
plant-based proteins is providing additional
market opportunities for growers of dry edible
beans and pulse crops. CHS responded to those
opportunities in 2024 by acquiring an additional
facility that allowed expansion of the CHS bean
processing operation at Othello, Wash. The added
facility will enhance rail-receiving and storage
capacity for crops grown in Montana and Idaho
and shipped through Pacific Northwest markets.
Evolving its business model to bring an elevated
level of service to business-to-business clients,
CHS Hedging navigated a challenging and
changing economic environment while meeting
the needs of commercial agribusiness customers.
Ongoing focus on risk management strategies
and compliance coupled with superior service
and expert advice helped deliver value and
confidence in the competitive commodity market
services sector.
The CHS refineries at McPherson, Kan., and
Laurel, Mont., continued to employ high-efficiency
equipment and processes to optimize production
of the diesel fuel used by CHS owners and
customers. While overall refined fuels volumes
declined due to reduced industrywide demand,
upgrades made to the CHS refineries in recent
turnarounds helped maintain high levels of
production, including record volumes at the
Laurel refinery and an industry-leading proportion
of diesel fuel to other products. The McPherson
refinery earned Energy Star certification from
the U.S. Environmental Protection Agency in
early 2024 in recognition of exceptional energy
efficiency as compared to similar facilities.
Supply chain enhancements to energy terminals
and pipelines have reduced travel time and costs
required for customers to access needed fuel,
especially during peak demand seasons. Over the
past 10 years, CHS has invested $250 million in
pipeline upgrades to maintain and increase fuel
supply to customers in North Dakota and other
northern-tier states.
Backed by decades of proven performance,
Cenex® premium diesel fuels continue to evolve
to meet the demands of new, high-performance
engines. Side-by-side tests in real-world
conditions comparing Cenex diesel fuel with
its precisely formulated additive package to
standard diesel fuel showed better fuel economy,
less maintenance and reduced emissions when
using Cenex diesel fuel. These results help build
preference for the Cenex brand among owners of
ag and other heavy-duty equipment and led to
one of the strongest premium diesel sales results
in company history in fiscal year 2024.
Fiscal year 2024 saw completion of a multi-year
initiative to update exterior branding and lighting
at Cenex® branded retail locations to bring
consistency and visual appeal to store exteriors
for a more compelling brand experience. Retailers
were also able to access low-interest financing
through CHS Capital to initiate new Cenex brand
retail store construction or enhance store interiors.
In a highly competitive marketplace, these
programs have invested more than $65 million to
help grow customer preference and boost store
revenues. During the fiscal year, 27 retail sites
were added to the Cenex brand, boosting refined
fuels volumes by 27 million gallons annually.
Helping to strengthen the energy supply chain and
capitalizing on opportunities to build customer
loyalty, major upgrades and rebuilding projects
were completed at several CHS-owned Cenex
Zip Trip® convenience stores in Montana and
Colorado during fiscal year 2024, with additional
projects planned for fiscal year 2025.
The lubricants business continued to grow
volume and market share, despite declining
industrywide demand driven by extended drain
intervals and increased equipment efficiency.
The company’s grease sales volumes increased
22% and overall branded lubricant product sales
increased 2% over the previous year.
5
2024 CHS Annual Report
Powering agriculture
Agriculture depends on diesel
fuel. As the nation’s largest
co-op refiner, CHS produces
as much diesel as possible
from every barrel of crude
oil and develops premium
diesel additive packages to
improve performance and
reduce emissions compared
to standard diesel fuel.
It takes a co-op to energize
rural America.
6 2024 CHS Annual Report
Leveraging global
connections
An extensive supply chain
including global and domestic
supply and a network of CHS and
member cooperative terminals
and warehouses means farmers
have the fertilizers they need when
they need them to feed growing
crops. Investment in our deep-
water port at Galveston, Texas, and
strategically located river terminals
helps the cooperative system
keep crop nutrients flowing while
controlling costs.
It takes a co-op to harness global
resources to feed hungry crops.
7
2024 CHS Annual Report
Record warm temperatures and minimal crop-
drying needs for the 2023 harvest season
resulted in reduced propane demand and volume,
partially offset by greater efficiency and cost
management. A new 360,000-gallon propane rail
terminal was added in Yuma, Colo., in early fiscal
year 2024 to serve customers in the region.
Continued strategic alignment across the
enterprise enhanced energy equipment market
presence and efficiency, especially in the Pacific
Northwest, where co-warehousing with CHS
agronomy businesses made more effective use
of existing assets and distribution capabilities
and broadened available services for customers.
Sales volumes grew for rolling stock, monitoring
equipment and direct-shipping equipment,
while supply chain rationalization put downward
pressure on propane tank demand.
Growing customer interest and satisfaction in the
CHS automated fuel delivery (AFD) program and
deeper collaboration between CHS energy teams
resulted in a record-high volume of refined fuels
flowing through AFD. The program leverages
tank monitoring and remote communications to
ensure customers always have the fuel they need
when they need it.
Declining market prices for crop nutrients in
fiscal year 2024 and a lengthy postharvest
season helped increase fertilizer volumes,
although reduced prices affected revenues.
Capital investment in the Galveston, Texas, deep-
water import facility and key river terminals have
optimized those assets to allow exceptional
flexibility in distribution to accommodate shifts
in demand, react to shipping disruptions and
manage transportation costs for crop nutrients
destined for wholesale and retail customers.
The CHS Crop Science Research and
Development Center began operation in
early calendar year 2024. The cutting-edge
center has the ability to simulate up to six
environments to replicate a range of growing
regions, which will significantly accelerate crop
protection product development and testing in
a controlled environment. The resulting product
enhancements will fast-track the rate of new
solutions available to growers to increase yields
as they address on-farm challenges.
Several new crop protection products were
introduced in fiscal year 2024, including Trivar®
EZ, a granular micronutrient fertilizer blend that
features the patented Levesol® chelating agent
to help improve micronutrient availability to
crops for enhanced performance and return on
crop input investments. Strategic collaboration
across retail and wholesale business segments
helped increase overall crop protection sales and
stabilized margins despite overall category price
declines.
The Allegiant® seed business maintained market
share in the competitive corn and soybean
genetics marketplace while controlling and
reducing operating costs. Local expertise and
access to leading traits helped customers
optimize their return on input investments amid
declining commodity market prices.
Ongoing optimization of the CHS ag supply
chain benefited from an enterprisewide strategic
planning focus that brought increased efficiency
and alignment across trading, sales, operations
and supply chain, coordinating expectations and
volumes from origination to delivery to global
customers. The standardized end-to-end process,
including application of robust information
systems for greater visibility to supply chain
throughput, delivers value to owners and
customers alike.
Growth of the Accolade Producer financing
program continued through strategic
collaboration between CHS Capital and CHS
agronomy teams. As the number of participating
retailers grew, the best-in-class program helped
farmer-owners manage operating cost risk and
cash flow variability.
8 2024 CHS Annual Report
The CHS animal nutrition product line aligned
across operations and sales in fiscal year 2024
to scale and improve sourcing feed ingredients,
manufacturing efficiency and customer
experience. A renewed strategy related to key
market segments is making more effective use of
resources and positioning the business for growth
in target geographies as it serves ag, lifestyle
and commercial customers with its Payback®
and Equis® feed brands. Consumers Supply
Distributing, LLC, a joint venture with CSD Inc.,
remains a strategic investment for CHS.
Ventura Foods, LLC, a joint venture between CHS
and Mitsui, Inc., provides foodservice customers
in more than 60 countries with dressings, sauces,
mayonnaises, shortenings and other oil-based
ingredients. In 2024, Ventura Foods completed
its acquisition of DYMA Brands, a leader in liquid
portion control and bulk condiments, seasonings
and dry blend mixes for the foodservice
industry, gaining more than 500 employees
and manufacturing facilities in Bremen and
Duluth, Ga.; Bondurant, Iowa; and Visalia, Calif.
Ardent Mills, LLC, a CHS joint venture with Cargill
and Conagra Brands, continued to accelerate its
long-term growth strategy across its traditional
flour and alternative grain portfolios, including
naming Sheryl Wallace as CEO and Tiago Darocha
as chief operating officer. CHS remains the largest
wheat supplier to Ardent Mills, providing more
than 48 million bushels in fiscal year 2024.
Continued emphasis on sustainable practices
across the enterprise marked completion of
the company’s first scope 1 and 2 emissions
inventories for core businesses. Focusing on
climate, reducing deforestation risk, supporting
people and communities and engaging
stakeholders, CHS has instilled a sustainability
mindset in investment and other decision-making
protocols as we work with our owners and
customers to feed a growing world population.
CHS is supporting farmer-owners in sustainable
nitrogen management by providing local
agronomic expertise to help optimize nitrogen
fertilizer applications and enhanced efficiency
fertilizers, including the N-Edge® family of
nitrogen stabilizers to help ensure nitrogen
remains in the root zone for effective crop
uptake. CHS is also partnering with CF Industries
to support production and distribution of low-
carbon nitrogen fertilizers.
The company continued its emphasis on
leveraging innovation to enhance efficiency and
improve the experience for CHS stakeholders.
Cooperative Ventures, a joint corporate
venture capital fund created with Growmark
in 2023, announced its third investment,
which is in Traction Ag, Inc., a leader in cloud-
based accounting solutions for farmers. A
CHS innovation council was empowered to
consolidate innovation efforts for more effective
implementation across the enterprise.
Advanced technology portals used for retail
and wholesale customers streamlined inventory
management, product selection, order tracking
and invoicing to speed response times and
improve customer service. To further those efforts,
CHS announced an industry-leading partnership
with AgVend, the leading provider of agribusiness
digital solutions, to enable CHS wholesale crop
protection customers to connect seamlessly to
order and account information. We expect to
expand the tool to include other CHS ag, energy
and financing businesses as we continue to build
a more resilient, technology-enabled supply chain.
Continued application of artificial intelligence is
boosting efficiency and productivity and drone
technologies are improving operational efficiency
and safety across the enterprise.
Continued focus on cybersecurity and data
protection in light of ongoing cyber threats
included securing operational assets in key CHS
facilities, providing ongoing employee education
and strengthening technology investments and
practices where needed. SEC cybersecurity
reporting rules, including a risk management
structure, have been integrated into CHS protocols.
9
2024 CHS Annual Report
Cultivating answers
Using real-world input from
farmers and agronomists, CHS
agronomy products and services
are developed to meet on-farm
challenges. Our state-of-the-
art Crop Science Research
and Development Center can
simulate up to six growing
environments to replicate
conditions across regions and
seasons. The answers discovered
there are tested in field plots,
then commercialized to help
farmers optimize yield while
gaining the most value from their
crop input investments.
It takes a co-op to deliver
grower-focused solutions.
10 2024 CHS Annual Report
Growing ag talent
To help meet the need for
skilled technicians on farms
and at co-ops, CHS Foundation
grants equipped classrooms
with hydraulic and electronic
equipment at Bismarck
(N.D.) State College, a two-
year polytechnic institution.
The foundation partners
with colleges across the U.S.
to encourage students to
complete ag degrees and
pursue careers in agriculture.
It takes a co-op to inspire
next-generation leaders.
11
2024 CHS Annual Report
CHS teams continued to demonstrate safety
as a core value by implementing critical risk
evaluations to help prevent serious injuries and
fatalities, launching an annual CHS Safety Week
campaign and creating a Safety Excellence Award
to recognize innovative safety solutions that
substantially reduce or eliminate safety risk.
Since 2021, CHS has consistently ranked in the top
5% for lowest crash rates among similar carriers,
as compiled monthly by the Federal Motor Carrier
Safety Administration. We introduced a new
vice president of environment, health and safety,
Tom Brower, who will continue to develop and
implement an enterprisewide safety culture.
Continuous learning and development is critical
for maintaining a compliant, effective and
empowered workforce. In fiscal year 2024, 95%
of CHS employees received at least two hours of
education on safety, compliance and integrity
risk management. Based on individual roles and
development goals, they also had access to
educational resources on product use, equipment
and software, as well as Lean protocols and
continuous improvement strategies, decision-
making processes, and communications and
leadership skills.
Focusing on people and culture is critical to the
success of CHS and the cooperative system. To
help ensure all voices are heard, our inclusion
efforts include regularly gathering employee
feedback to help make CHS a place where people
can build rewarding careers and make a positive
difference in their communities. Employee survey
responses in fiscal year 2024 indicated increased
employee engagement, confidence in reporting
concerns, growing pride in working at CHS and
greater willingness to recommend CHS as a good
place to work. Evolution of the CHS competency
model was completed in fiscal year 2024 to provide
a foundation for growth, including establishing
the core capabilities that will help meet current
and future needs of CHS, build a pipeline of future
leaders and shape how employees work together.
Speaking up for agriculture and cooperatives by
growing relationships with federal, state and local
policymakers, the CHS government affairs team
advocated for the company and its stakeholders on
key issues including energy policy and liquid fuels
requirements, tax policies, international trade and
the farm bill.
Completion of a multiyear interior renovation
of CHS headquarters at Inver Grove Heights,
Minn., resulted in a technology-enabled, inviting
workplace for more than 10% of CHS employees.
CHS finalized the purchase of the building and
surrounding campus in early calendar 2024. The
building has been home to CHS since 1982.
In fiscal year 2024, CHS and the CHS Foundation
combined to invest $8.2 million in promoting ag
safety, developing future leaders and building
strong communities. The foundation’s three-
year commitment to National FFA supported ag
teacher recruitment and retention, access to FFA
experiential learning programs and cooperative
business model education. The CHS Seeds for
Stewardship matching grants program partnered
with member cooperatives to invest more than
$500,000 in projects that strengthened more
than 200 communities. The CHS Employee
Giving Campaign benefited nearly 750 nonprofit
organizations through employee contributions
matched by CHS to reach a combined commitment
of $1.3 million in charitable donations and 850-plus
employees participated in the annual CHS Spirit
of Service Days, making a positive difference in
41 communities. A global employee support fund
was also created to assist CHS employees affected
by natural disasters, personal hardships and other
challenges.
Raising awareness of the value of CHS and the
cooperative system to rural America, a multimedia
CHS brand campaign was launched in late fiscal
year 2024. The enduring campaign adds synergy
and depth to ongoing sports sponsorships in the
upper Midwest with the Minnesota Twins, St. Paul
Saints and Minnesota Wild to celebrate pride
in cooperative ownership and attract potential
employees and business partners to join CHS in
creating connections to empower agriculture.
12 2024 CHS Annual Report
Revenues ($ in billions)
Net income ($ in millions)
cash
patronage
equity
redemption
preferred
stock dividends
Cash patronage is distributed in the fiscal year shown
and based on amounts using financial statements
earnings from the prior fiscal year.
2020
28.4
2020
422.4
2021
38.4
2021
554.0
2022
47.8
2022
1,678.8
2023
45.6
2023
1,900.4
2024
39.3
2024
1,102.3
0
50
45
40
35
30
25
20
15
10
5
0
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
Fiscal 2024 financial highlights
Cash returns
($ in millions)
2020
355.2
2021
278.1
2022
331.5
2023
1,167.5
2024
890.6
0
1,200
1,000
800
600
400
200
13
2024 CHS Annual Report
Net income of $1.1 billion reflects cyclical world
ag and energy markets; CHS intends to return
$600 million in cash to owners in fiscal year 2025
Financial performance was solid across all segments in fiscal year 2024, although performance declined
from historically strong results and record earnings in fiscal year 2023. Consolidated net income
decreased, primarily as a result of lower margins in our commodity-focused businesses. Less favorable
refining margins and other evolving market conditions led to lower Energy segment earnings compared
with the previous fiscal year. A decline in Ag segment earnings was attributed to softer oilseed crush
margins and global conditions that resulted in lower margins for U.S. grain exports. Our equity method
investments continued to perform well, led by our CF Nitrogen investment.
CHS reported net income of $1.1 billion for fiscal year 2024 (Sept. 1, 2023, through Aug. 31, 2024)
compared with $1.9 billion in net income in fiscal year 2023 (Sept. 1, 2022, through Aug. 31, 2023).
Consolidated revenues for fiscal year 2024 were $39.3 billion, compared with $45.6 billion in fiscal year
2023. The company reported income before income taxes of $1.1 billion for fiscal 2024, compared with
$2.0 billion in pretax income in fiscal 2023.
Energy
Energy segment pretax earnings for fiscal year
2024 were $429.1 million, a $646.4 million
decrease over fiscal 2023. Our refined fuels
earnings were reduced substantially from
previous year results due to the negative impact
of industry trends on refining margins and less
favorable pricing for Canadian crude oil processed
at our refineries in Laurel, Mont., and McPherson,
Kan. The unfavorable market conditions were
partially offset by reduced costs for renewable
energy credits.
Ag
The Ag segment, which includes our global grain
marketing, processing, wholesale agronomy and
ag retail businesses, recorded pretax earnings
of $342.7 million in fiscal year 2024, a decrease
of $69.1 million from fiscal year 2023. Increased
supply of canola and soybean meal and oil in
global markets put downward pressure on crush
margins, although the impact was partially offset
by enhanced operational and logistical efficiency
at our oilseed crush facilities. Improved margins
and higher volumes for wholesale and retail
agronomy products, including crop protection
products and fertilizer, contributed to earnings,
while global market conditions resulted in
compressed margins for our grain and oilseed
product category.
Nitrogen Production
The Nitrogen Production segment, consisting of
our investment in CF Nitrogen, reported pretax
earnings of $151.2 million in fiscal year 2024,
a decrease of $109.5 million from fiscal year
2023. The reduction in equity method income
corresponds to lower global prices for urea
and UAN, which are produced and sold by CF
Nitrogen, our strategic venture with CF Industries.
The lower market prices were partially offset by
reduced costs for natural gas.
The Corporate and Other category recorded
pretax earnings of $174.8 million in fiscal year
2024, an $84.9 million decrease versus fiscal year
2023. The decrease reflects less favorable market
conditions for oil-based food products produced
by our Ventura Foods, LLC, joint venture. This
category also includes our investment in the
Ardent Mills, LLC, wheat-milling joint venture;
CHS Capital, LLC, our wholly-owned financing
subsidiary; and CHS Hedging, LLC, our wholly-
owned brokerage subsidiary.
Based on fiscal year 2024 earnings, CHS intends
to distribute $600 million in cash returns to
owners in fiscal year 2025, including $300
million in cash patronage and $300 million in
equity redemptions to member cooperatives and
individual owners.
14 2024 CHS Annual Report
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of CHS Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CHS Inc. and its subsidiaries (the
"Company") as of August 31, 2024 and 2023, and the related consolidated statements of operations, of
comprehensive income, of changes in equities and of cash flows for each of the three years in the
period ended August 31, 2024, including the related notes (collectively referred to as the "consolidated
financial statements"). In our opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of the Company as of August 31, 2024 and 2023, and the results of its
operations and its cash flows for each of the three years in the period ended August 31, 2024 in
conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on the Company’s consolidated financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight
Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain
an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.
15
2024 CHS Annual Report
Valuation of Grain and Oilseed Inventories and Grain and Oilseed Forward Commodity Purchase and
Sales Contracts
As described in Notes 4, 15, and 16 to the consolidated financial statements, the Company’s grain and
oilseed inventories were $888.8 million as of August 31, 2024, and commodity derivatives in an asset
and liability position were $165.7 million and $221.8 million, respectively, as of August 31, 2024, of which
grain and oilseed make up the majority of forward commodity purchase and sales contracts.
Management enters into various derivative instruments to manage the Company’s exposure to
movements primarily associated with agricultural and energy commodity prices. The net realizable
value of grain and oilseed inventories and fair value of grain and oilseed forward commodity purchase
and sales contracts are determined using inputs that are generally based on exchange traded prices
and/or recent market bids and offers, including location-specific adjustments. Location-specific inputs
are driven by local market supply and demand and are generally based on broker or dealer quotations
or market transactions in either listed or over-the-counter markets.
The principal considerations for our determination that performing procedures relating to the valuation
of grain and oilseed inventories and grain and oilseed forward commodity purchase and sales contracts
is a critical audit matter are (i) the significant judgment by management to determine the net realizable
value of grain and oilseed inventories and the fair value of grain and oilseed forward commodity
purchase and sales contracts and (ii) a high degree of auditor judgment, subjectivity and effort in
performing procedures and evaluating management’s inputs related to exchange traded prices and/or
recent market bids and offers, including location-specific adjustments.
Addressing the matter involved performing procedures and evaluating audit evidence in connection
with forming our overall opinion on the consolidated financial statements. These procedures included,
among others, (i) testing management’s process for determining the net realizable value of grain and
oilseed inventories and the fair value of grain and oilseed forward commodity purchase and sales
contracts; (ii) evaluating the appropriateness of the valuation models; (iii) testing the accuracy of the
underlying data used in the valuations; and (iv) evaluating the reasonableness of inputs used by
management related to the exchange traded prices and/or recent market bids and offers, including
location-specific adjustments. Evaluating management’s inputs related to the exchange traded prices
and/or recent market bids and offers, including location-specific adjustments involved (i) comparing
the exchange traded prices and/or recent market bids and location-specific inputs to third-party
information; and (ii) comparing the location-specific adjustments to broker or dealer quotations or
market transactions in either listed or over-the- counter markets.
Minneapolis, Minnesota
November 6, 2024
We have served as the Company's auditor since 1998.
16 2024 CHS Annual Report
CONSOLIDATED BALANCE SHEETS
August 31,
2024
2023
(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents
$
794,865
$ 1,765,286
Receivables
3,549,917
3,105,811
Inventories
3,067,415
3,215,179
Other current assets
1,296,586
1,042,373
Total current assets
8,708,783
9,128,649
Investments
3,780,967
3,828,872
Property, plant and equipment
5,177,355
4,869,373
Other assets
1,047,970
1,130,524
Total assets
$ 18,715,075
$ 18,957,418
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable
$
306,831
$
547,923
Current portion of long-term debt
337,266
7,839
Accounts payable
2,697,290
2,930,607
Accrued expenses
783,945
773,054
Other current liabilities
1,275,482
1,639,771
Total current liabilities
5,400,814
5,899,194
Long-term debt
1,824,194
1,819,819
Other liabilities
728,143
786,016
Commitments and contingencies (Note 17)
Equities:
Preferred stock
2,264,038
2,264,038
Equity certificates
5,982,369
5,911,649
Accumulated other comprehensive loss
(296,542)
(265,395)
Capital reserves
2,805,526
2,537,486
Total CHS Inc. equities
10,755,391
10,447,778
Noncontrolling interests
6,533
4,611
Total equities
10,761,924
10,452,389
Total liabilities and equities
$ 18,715,075
$ 18,957,418
The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
17
2024 CHS Annual Report
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended August 31,
2024
2023
2022
(Dollars in thousands)
Revenues
$ 39,261,229 $ 45,590,004 $ 47,791,666
Cost of goods sold
37,509,902
43,213,739 45,664,745
Gross profit
1,751,327
2,376,265
2,126,921
Marketing, general and administrative expenses
1,166,969
1,032,765
997,835
Operating earnings
584,358
1,343,500
1,129,086
Interest expense
104,064
137,442
114,156
Other income
(137,630)
(112,131)
(23,760)
Equity income from investments
(479,863)
(689,590)
(771,327)
Income before income taxes
1,097,787
2,007,779
1,810,017
Income tax (benefit) expense
(4,872)
107,655
132,116
Net income
1,102,659
1,900,124
1,677,901
Net income (loss) attributable to noncontrolling interests
340
(314)
(861)
Net income attributable to CHS Inc.
$
1,102,319 $ 1,900,438 $
1,678,762
The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended August 31,
2024
2023
2022
(Dollars in thousands)
Net income
$ 1,102,659
$ 1,900,124
$ 1,677,901
Other comprehensive (loss) income, net of tax:
Pension and other postretirement benefits
(22,048)
(5,285)
(27,255)
Cash flow hedges
(255)
(6,811)
4,019
Foreign currency translation adjustment
(8,844)
2,036
(15,708)
Other comprehensive loss, net of tax
(31,147)
(10,060)
(38,944)
Comprehensive income
1,071,512
1,890,064
1,638,957
Comprehensive income (loss) attributable to
noncontrolling interests
340
(314)
(861)
Comprehensive income attributable to CHS Inc.
$
1,071,172
$ 1,890,378
$ 1,639,818
The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
18 2024 CHS Annual Report
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITIES
Years Ended August 31, 2024, 2023 and 2022
Equity Certificates
Accumulated
Other
Comprehensive
Loss
Capital
Equity
Certificates
Nonpatronage
Equity
Certificates
Nonqualified
Equity
Certificates
Preferred
Stock
Capital
Reserves
Noncontrolling
Interests
Total
Equities
(Dollars in thousands)
Balances, August 31, 2021
$ 3,583,911
$
28,431
$ 1,634,896
$ 2,264,038
$
(216,391) $ 1,713,976
$
8,465
$ 9,017,326
Reversal of prior year
patronage and redemption
estimates
100,000
—
(230,290)
—
—
280,290
—
150,000
Distribution of 2021
patronage refunds
—
—
235,576
—
—
(286,602)
—
(51,026)
Redemptions of equities
(101,420)
(501)
(9,897)
—
—
—
—
(111,818)
Preferred stock dividends
—
—
—
—
—
(168,668)
—
(168,668)
Other, net
(4,163)
3
(7,971)
—
—
585
(1,959)
(13,505)
Net income (loss)
—
—
—
—
—
1,678,762
(861)
1,677,901
Other comprehensive loss,
net of tax
—
—
—
—
(38,944)
—
—
(38,944)
Estimated 2022 patronage
refunds
508,803
—
153,858
—
—
(1,162,661)
—
(500,000)
Estimated 2022 equity
redemptions
(500,000)
—
—
—
—
—
—
(500,000)
Balances, August 31, 2022
3,587,131
27,933
1,776,172
2,264,038
(255,335) 2,055,682
5,645
9,461,266
Reversal of prior year
patronage and redemption
estimates
(8,803)
—
(153,858)
—
—
1,162,661
—
1,000,000
Distribution of 2022
patronage refunds
516,415
—
154,548
—
—
(1,174,020)
—
(503,057)
Redemptions of equities
(482,662)
(331)
(12,797)
—
—
—
—
(495,790)
Preferred stock dividends
—
—
—
—
—
(168,668)
—
(168,668)
Other, net
(1,821)
(44)
(518)
—
—
1,677
(720)
(1,426)
Net income (loss)
—
—
—
—
—
1,900,438
(314) 1,900,124
Other comprehensive loss,
net of tax
—
—
—
—
(10,060)
—
—
(10,060)
Estimated 2023 patronage
refunds
706,125
—
169,159
—
—
(1,240,284)
—
(365,000)
Estimated 2023 equity
redemptions
(365,000)
—
—
—
—
—
—
(365,000)
Balances, August 31, 2023
3,951,385
27,558
1,932,706
2,264,038
(265,395) 2,537,486
4,611
10,452,389
Reversal of prior year
patronage and redemption
estimates
(341,125)
—
(169,159)
—
—
1,240,284
—
730,000
Distribution of 2023
patronage refunds
708,106
—
169,232
—
—
(1,243,350)
—
(366,012)
Redemptions of equities
(342,298)
(288)
(13,339)
—
—
—
—
(355,925)
Preferred stock dividends
—
—
—
—
—
(168,668)
—
(168,668)
Other, net
13
(9)
(106)
—
—
(2,852)
1,582
(1,372)
Net income
—
—
—
—
—
1,102,319
340
1,102,659
Other comprehensive loss,
net of tax
—
—
—
—
(31,147)
—
—
(31,147)
Estimated 2024 patronage
refunds
77,262
—
282,431
—
—
(659,693)
—
(300,000)
Estimated 2024 equity
redemptions
(300,000)
—
—
—
—
—
—
(300,000)
Balances, August 31, 2024
$ 3,753,343
$
27,261
$ 2,201,765
$ 2,264,038
$
(296,542) $ 2,805,526
$
6,533
$ 10,761,924
The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
19
2024 CHS Annual Report
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended August 31,
2024
2023
2022
(Dollars in thousands)
Cash flows from operating activities:
Net income
$
1,102,659
$
1,900,124
$
1,677,901
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization, including amortization of deferred major
maintenance
569,891
539,521
536,493
Equity income from investments, net of distributions received
64,332
(81,272)
(48,847)
Provision for current expected credit losses
5,631
(15,624)
19,920
Gain/recovery on sale of business
—
300
(13,083)
Deferred taxes
(109,846)
(6,429)
39,548
Other, net
(35,427)
(44,546)
(17,833)
Changes in operating assets and liabilities, net of acquisitions:
Receivables
(335,974)
645,781
(547,564)
Inventories
147,764
437,692
(317,918)
Accounts payable and accrued expenses
(213,788)
(127,399)
555,446
Other, net
77,638
36,034
62,455
Net cash provided by operating activities
1,272,880
3,284,182
1,946,518
Cash flows from investing activities:
Acquisition of property, plant and equipment
(808,763)
(564,522)
(354,444)
Proceeds from disposition of property, plant and equipment
15,819
29,645
14,318
Expenditures for major maintenance
(22,748)
(217,413)
(24,768)
Proceeds from sale of business
—
64
73,152
Purchases of investments
(500,179)
—
—
Changes in CHS Capital notes receivable, net
(100,184)
(203,843)
(161,340)
Other investing activities, net
(15,533)
5,878
(4,002)
Net cash used in investing activities
(1,431,588)
(950,191)
(457,084)
Cash flows from financing activities:
Proceeds from notes payable and long-term debt
3,842,339
7,183,395
20,730,750
Payments on notes payable, long-term debt and finance lease obligations
(3,768,121)
(7,385,813)
(21,515,920)
Preferred stock dividends paid
(168,668)
(168,668)
(168,668)
Redemptions of equities
(355,925)
(495,790)
(111,818)
Cash patronage dividends paid
(366,012)
(503,057)
(51,026)
Other financing activities, net
2,134
(25,535)
2,994
Net cash used in financing activities
(814,253)
(1,395,468)
(1,113,688)
Effect of exchange rate changes on cash and cash equivalents
2,236
2,590
(14,756)
(Decrease) increase in cash and cash equivalents and restricted cash
(970,725)
941,113
360,990
Cash and cash equivalents and restricted cash at beginning of period
1,844,587
903,474
542,484
Cash and cash equivalents and restricted cash at end of period
$
873,862
$
1,844,587
$
903,474
Supplemental cash flow information:
Cash paid for interest
$
100,542
$
139,424
$
113,726
Cash paid for income taxes, net of refunds
129,065
184,444
19,712
Other significant noncash investing and financing transactions:
Capital expenditures and major maintenance incurred but not yet paid
$
54,807
$
66,492
$
55,214
Finance lease obligations incurred
8,772
16,505
18,875
Accrual of patronage dividends and equity redemptions
600,000
730,000
1,000,000
The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries
CONSOLIDATED FINANCIAL STATEMENTS
20 2024 CHS Annual Report
NOTE 1
Organization, Basis of Presentation and Significant Accounting Policies
Organization
CHS Inc. (referred to herein as "CHS," "company," "we," "us" or "our") is the nation's leading
integrated agricultural cooperative. As a cooperative, CHS is owned by farmers and ranchers and
member cooperatives ("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 ("The Nasdaq"). See Note 12, Equities, for more detailed
information.
We buy commodities from and provide products and services to individual agricultural producers,
local cooperatives and other companies (including member and other nonmember customers), both
domestically and internationally. Those products and services include initial agricultural inputs such as
fuels, farm supplies, crop nutrients and crop protection products, as well as agricultural outputs that
include grains and oilseeds, processed grains and oilseeds, 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, a proportionate share of the income or loss from those
entities is included as a component in our net income under the equity method of accounting.
Basis of Presentation
The consolidated financial statements include the accounts of CHS and all our subsidiaries and
limited liability companies in which we have control. The effects of all significant intercompany
transactions have been eliminated.
The notes to our consolidated financial statements refer to our Energy, Ag and Nitrogen
Production reportable segments, as well as our Corporate and Other category, which represents an
aggregation of individually immaterial operating segments. The Nitrogen Production reportable segment
consists of our investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and allocated expenses. See
Note 14, Segment Reporting, for more information.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. We base our estimates on assumptions that are
believed to be reasonable, the results of which form the basis for making judgments about the carrying
values of assets and liabilities. Due to the inherent uncertainty involved in making estimates, actual results
could differ from those estimates. We evaluate our estimates and assumptions on an ongoing basis.
Significant Accounting Policies
Significant accounting policies are summarized below or within the related notes to our
consolidated financial statements.
Cash and Cash Equivalents and Restricted Cash
Cash equivalents include short-term, highly liquid investments with original maturities of three
months or less at the date of acquisition. The carrying value of cash and cash equivalents approximates
the fair value due to the short-term nature of the instruments.
Restricted cash is included in our Consolidated Balance Sheets within other current assets and
primarily relates to customer deposits for futures and option contracts associated with regulated
commodities held in separate accounts as required under federal and other regulations. Pursuant to the
requirements of the Commodity Exchange Act, such funds must be carried in separate accounts that are
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21
2024 CHS Annual Report
designated as segregated customer accounts, as applicable. Restricted cash also includes funds held in
escrow pursuant to applicable regulations limiting their use.
The following table provides a reconciliation of cash and cash equivalents and restricted cash as
reported within our Consolidated Balance Sheets that aggregates to the amount presented in our
Consolidated Statements of Cash Flows.
August 31,
2024
2023
2022
(Dollars in thousands)
Cash and cash equivalents
$ 794,865
$ 1,765,286
$ 793,957
Restricted cash included in other current assets
78,997
79,301
109,517
Total cash and cash equivalents and restricted cash
$ 873,862
$ 1,844,587
$ 903,474
Recent Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board (the "FASB") issued Accounting
Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures, which enhances the disclosures required for operating segments in our annual and
interim consolidated financial statements. This ASU is effective on a retrospective basis for our annual
reporting beginning in fiscal 2025 and for interim period reporting beginning in fiscal 2026. We are
currently evaluating the impact of adopting this ASU on our consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to
Income Tax Disclosures, which provides additional transparency for income tax disclosures. This ASU is
effective for our annual reporting for fiscal 2026 on a prospective basis. We are currently evaluating the
impact of adopting this ASU on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive
Income (Topic 220): Expense Disaggregation Disclosures, which requires additional disclosure about
certain costs and expenses in the notes to financial statements. This ASU is effective for our annual
reporting for fiscal 2028 on either a prospective or retrospective basis and for interim reporting periods
beginning in fiscal 2029. We are currently evaluating the impact of adopting this ASU on our
consolidated financial statements.
NOTE 2
Revenues
We provide a wide variety of products and services, from agricultural inputs such as fuels, farm
supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains
and oilseeds and food products, and renewable fuels production and marketing. We primarily conduct
our operations and derive revenues within our Energy and Ag segments. 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 production and marketing of renewable
fuels; and through retail sales of petroleum and agronomy products, processed sunflowers, and feed and
farm supplies. Corporate and Other primarily consists of our financing and hedging businesses.
Revenue is recognized when performance obligations under the terms of a contract with a
customer are satisfied, which generally occurs when control of the goods has transferred to the customer
in accordance with the underlying contract. For the majority of our contracts with customers, control
transfers to customers at a point in time when goods and/or services have been delivered, as that is
generally when legal title, physical possession and risks and rewards of ownership of the goods and/or
services transfer to the customer. In limited arrangements, control transfers over time as the customer
simultaneously receives and consumes the benefits of the service as we complete our performance
obligation(s). Revenue is recognized as the transaction price we expect to be entitled to in exchange for
transferring goods or services to a customer, excluding amounts collected on behalf of third parties. For
physically settled derivative sales contracts that are outside the scope of the revenue guidance, we
22 2024 CHS Annual Report
recognize revenue when control of the inventory is transferred. Revenues arising from our financing
business are recognized in accordance with Accounting Standards Codification ("ASC") Topic 470, Debt
("ASC Topic 470") and fall outside the scope of ASC Topic 606, Revenue from Contracts with Customers
("ASC Topic 606").
Shipping and Handling Costs
Shipping and handling amounts billed to a customer as part of a sales transaction under ASC
Topic 606 are included in revenues, and the related costs are included in cost of goods sold. Shipping
and handling is treated as a fulfillment activity, rather than a promised service, and therefore is not
considered a separate performance obligation.
Taxes Collected from Customers and Remitted to Governmental Authorities
Revenues are recorded net of taxes collected from customers that are remitted to governmental
authorities, with the collected taxes recorded as current liabilities until remitted to the relevant
governmental authority.
Contract Costs
Commissions related to contracts with a duration of less than one year are expensed as incurred.
We recognize incremental costs of obtaining contracts as an expense when incurred if the amortization
period of the assets we otherwise would have recognized is one year or less.
Disaggregation of Revenues
The following table presents revenues recognized under ASC Topic 606, disaggregated by
reportable segment, as well as the amount of revenues recognized under ASC Topic 815, Derivatives and
Hedging ("ASC Topic 815"), and other applicable accounting guidance for the years ended August 31,
2024, 2023 and 2022. Other applicable accounting guidance primarily includes revenues recognized
under ASC Topic 470 and ASC Topic 842, Leases ("ASC Topic 842"), that fall outside the scope of ASC
Topic 606.
Year ended August 31, 2024
Reportable Segment*
ASC Topic 606
ASC Topic 815
Other Guidance
Total Revenues
(Dollars in thousands)
Energy
$ 7,882,666 $
883,829 $
— $ 8,766,495
Ag
8,833,872
21,571,954
11,033 30,416,859
Corporate and Other
24,649
—
53,226
77,875
Total revenues
$ 16,741,187 $ 22,455,783 $
64,259 $ 39,261,229
Year ended August 31, 2023
Reportable Segment*
ASC Topic 606
ASC Topic 815
Other Guidance
Total Revenues
(Dollars in thousands)
Energy
$ 8,996,149 $
1,100,764 $
— $ 10,096,913
Ag
9,808,664 25,606,485
10,055 35,425,204
Corporate and Other
26,001
—
41,886
67,887
Total revenues
$ 18,830,814 $ 26,707,249 $
51,941 $ 45,590,004
Year ended August 31, 2022
Reportable Segment*
ASC Topic 606
ASC Topic 815
Other Guidance
Total Revenues
(Dollars in thousands)
Energy
$ 9,302,400 $
992,374 $
— $ 10,294,774
Ag
10,784,831 26,646,003
29,377
37,460,211
Corporate and Other
16,625
—
20,056
36,681
Total revenues
$ 20,103,856 $ 27,638,377 $
49,433 $ 47,791,666
*Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated
expenses but not revenues.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
23
2024 CHS Annual Report
Less than 1% of revenues accounted for under ASC Topic 606 included within the table above
are recorded over time and relate primarily to service contracts.
Contract Assets and Contract Liabilities
Contract assets relate to unbilled amounts arising from goods that have already been transferred
to the customer where the right to payment is not conditional on the passage of time. This results in
recognition of an asset, as the amount of revenue recognized at a certain point in time exceeds the
amount billed to customers. Contract assets are recorded in receivables within our Consolidated Balance
Sheets and were $34.7 million and $16.2 million as of August 31, 2024 and 2023, respectively.
Contract liabilities relate to advance payments received from customers for goods and services
that we have yet to provide. Contract liabilities of $248.8 million and $240.0 million as of August 31, 2024
and 2023, respectively, are recorded within other current liabilities on our Consolidated Balance Sheets,
and are recognized as revenues within the next respective fiscal year.
NOTE 3
Receivables
Receivables as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Trade accounts receivable
$ 2,232,203
$ 2,010,162
CHS Capital short-term notes receivable
944,861
845,192
Other
452,662
327,084
Gross receivables
3,629,726
3,182,438
Less allowances and reserves
79,809
76,627
Total receivables
$ 3,549,917
$
3,105,811
Trade Accounts Receivable
Trade accounts receivable are recorded at net realizable value, which includes an allowance for
expected credit losses in accordance with ASC Topic 326, Financial Instruments - Credit Losses ("ASC
Topic 326"). The allowance for expected credit losses is based on our best estimate of expected credit
losses in existing receivable balances and is determined using historical write-off experience, adjusted for
various industry and regional data and current expectations of future credit losses. Receivables from
related parties are disclosed in Note 18, Related Party Transactions. No third-party customer accounted
for more than 10% of the total receivables balance as of August 31, 2024 or 2023.
CHS Capital Notes Receivable
Notes Receivable
CHS Capital, LLC ("CHS Capital"), our wholly-owned subsidiary, has short-term notes receivable
from commercial and producer borrowers. The short-term notes receivable have maturity terms of 12
months or less and are reported at their outstanding unpaid principal balances, less an allowance for
expected credit losses, as CHS Capital has the intent and ability to hold the applicable loans for the
foreseeable future or until maturity or payoff. The carrying value of CHS Capital short-term notes
receivable approximates fair value given the notes' short-term duration and use of market pricing
adjusted for risk.
Notes receivable from commercial borrowers are collateralized by various combinations of
mortgages, personal property, accounts and notes receivable, inventories and assignments of certain
regional cooperatives' capital stock. These loans are primarily originated in the states of Minnesota and
North Dakota. CHS Capital also has loans receivable from producer borrowers that are collateralized by
various combinations of growing crops, livestock, inventories, accounts receivable, personal property and
24 2024 CHS Annual Report
supplemental mortgages and are primarily originated in the same states as the commercial notes, as well
as South Dakota.
In addition to the short-term balances included in the table above, CHS Capital had long-term
notes receivable, with durations of generally not more than 10 years, totaling $74.6 million and $61.1
million as of August 31, 2024 and 2023, respectively. The long-term notes receivable are included in other
assets on our Consolidated Balance Sheets. As of August 31, 2024 and 2023, commercial notes
represented 18% and 15%, respectively, and producer notes represented 82% and 85%, respectively, of
total CHS Capital notes receivable.
CHS Capital has commitments to extend credit to customers if there are no violations of any
contractually established conditions. As of August 31, 2024, CHS Capital customers had additional
available credit of $1.2 billion.
Allowance for Loan Losses
CHS Capital maintains an allowance for loan losses that is an estimate of current expected losses
inherent in the loans receivable portfolio. In accordance with ASC Topic 326, the allowance for loan losses
is based on our current expectation for future losses, which takes into consideration historical loss
experience, third-party industry forecasts, as well as other quantitative and qualitative factors addressing
operational risks and industry trends. Additions to the allowance for loan losses are reflected within
marketing, general and administrative expenses in the Consolidated Statements of Operations. The
portion of loans receivable deemed uncollectible is charged off against the allowance for loan losses.
Recoveries of previously charged off amounts increase the allowance for loan losses. No significant
amounts of CHS Capital notes were past due as of August 31, 2024 or 2023, and the allowance for loan
losses related to CHS Capital notes were not material as of either date.
Interest Income
Interest income is recognized on the accrual basis using a method that computes simple interest
on a daily basis. Accrual of interest on commercial loans receivable is discontinued at the time the
receivable is 90 days past due unless the loan is well-collateralized and in process of collection. Past due
status is based on contractual terms of the loan. Producer loans receivable are placed in nonaccrual
status based on estimates and analysis due to the annual debt service terms inherent to CHS Capital
producer loans. In all cases, loans are placed in nonaccrual status or charged off at an earlier date if
collection of principal or interest is considered doubtful.
Troubled Debt Restructurings
Restructuring of a loan constitutes a troubled debt restructuring, or restructured loan, if the
creditor, for economic reasons related to the debtor's financial difficulties, grants a concession to the
debtor that it would otherwise not consider. Concessions vary by program and borrower. Concessions
may include interest rate reductions, term extensions, payment deferrals or the acceptance of additional
collateral in lieu of payments. In limited circumstances, principal may be forgiven. When a restructured
loan constitutes a troubled debt restructuring, CHS includes these loans within its impaired loans. CHS
Capital had no significant troubled debt restructurings during the years ended August 31, 2024, 2023 and
2022, and no third-party borrowers that accounted for more than 10% of the total CHS Capital notes
receivable or total receivables as of August 31, 2024 or 2023.
Loan Participations
For the years ended August 31, 2024 and 2023, CHS Capital sold $47.9 million and $60.8 million of
notes receivable, respectively, to various counterparties under a master participation agreement. The
sales resulted in the removal of notes receivable from the Consolidated Balance Sheets. CHS Capital has
no retained interests in the transferred notes receivable, other than collection and administrative services.
Proceeds from sales of notes receivable have been included in investing activities in the Consolidated
Statements of Cash Flows. Fees received related to the servicing of notes receivable are recorded in
other income in the Consolidated Statements of Operations. We consider the fees received adequate
compensation for services rendered and, accordingly, have recorded no servicing asset or liability.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
25
2024 CHS Annual Report
Other Receivables
Other receivables are comprised of certain other amounts recorded in the normal course of
business, including receivables related to vendor rebates, value-added taxes, certain financing receivables
and pre-crop financing, primarily to Brazilian farmers, to finance a portion of supplier production
costs. We receive volume-based rebates from certain vendors during the year. These vendor rebates are
accounted for in accordance with ASC 705, Cost of Sales and Services, based on the terms of the volume
rebate program. For rebates that meet the definition of a binding arrangement and are both probable
and estimable, we estimate the amount of the rebate we will receive and accrue it as a reduction of the
cost of inventory and cost of goods sold over the period in which the rebate is earned. For pre-crop
financing arrangements, we do not bear costs or operational risks associated with the related growing
crops, although our ability to be paid depends on the crops being produced. The financing is
collateralized by future crops, land and physical assets of the farmers, carries a local market interest rate
and settles when the farmer's crop is harvested and sold. No significant troubled debt restructurings
occurred during the years ended August 31, 2024, 2023 and 2022, and no third-party customer or
borrower accounted for more than 10% of the total receivables balance as of August 31, 2024 or 2023.
NOTE 4
Inventories
Inventories as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Grain and oilseed
$
888,768
$ 1,099,956
Energy
720,636
645,333
Agronomy
1,126,916
1,111,477
Processed grain and oilseed
124,686
141,360
Other
206,409
217,053
Total inventories
$ 3,067,415
$ 3,215,179
Grain, processed grain, oilseed, processed oilseed and other minimally processed soy-based
inventories are accounted for in accordance with ASC Topic 330, Inventory, and are stated at net
realizable value. These inventories are agricultural commodity inventories that are readily convertible to
cash because of their commodity characteristics, widely available markets and international pricing
mechanisms. The net realizable value of agricultural commodity inventories is determined using inputs
that are generally based on exchange traded prices and/or recent market bids and offers, including
location-specific adjustments. Location-specific inputs are driven by local market supply and demand and
are generally based on broker or dealer quotations or market transactions in either listed or over-the-
counter ("OTC") markets. Changes in the net realizable value of agricultural commodity inventories are
recognized in earnings as a component of cost of goods sold.
All other inventories are stated at the lower of cost or net realizable value. Costs for inventories
produced or modified by us through a manufacturing process include fixed and variable production and
raw material costs, and inbound freight costs for raw materials. Costs for inventories purchased for resale
include the cost of products and freight incurred to place the products at our points of sale. The costs of
certain energy inventories (wholesale refined products, crude oil and asphalt) are determined on the last-
in, first-out ("LIFO") method; all other inventories of nongrain products purchased for resale are valued on
the first-in, first-out ("FIFO") and average cost methods.
As of August 31, 2024 and 2023, we valued approximately 18% and 16%, respectively, of
inventories, primarily crude oil and refined fuels within our Energy segment, using the lower of cost,
determined on the LIFO method, or net realizable value. If the FIFO method of accounting had been used,
inventories would have been higher than the reported amount by $456.3 million and $589.0 million as of
August 31, 2024 and 2023, respectively. There were no liquidations of LIFO inventories during fiscal 2024
or fiscal 2023.
26 2024 CHS Annual Report
NOTE 5
Other Current Assets
Other current assets as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Short-term investments
$
500,921
$
—
Derivative assets (Note 15)
177,111
320,119
Margin and related deposits
176,821
342,872
Prepaid expenses
202,392
149,682
Supplier advance payments
133,678
136,304
Restricted cash (Note 1)
78,997
79,301
Other
26,666
14,095
Total other current assets
$ 1,296,586
$ 1,042,373
Short-Term Investments
Our short-term investments balance is comprised of time deposits with a maturity of greater than
90 days and less than 12 months at the date of acquisition.
Margin and Related Deposits
Many of our derivative contracts with futures and options brokers require us to make margin
deposits of cash or other assets. Subsequent margin deposits may also be necessary when changes in
commodity prices result in a loss on the contract value to comply with applicable regulations. Our margin
and related deposit assets are generally held in separate accounts to support the associated derivative
contracts and may be used to fund or partially fund the settlement of those contracts as they expire.
Similar to our derivative financial instruments, margin and related deposits are reported on a gross basis.
Prepaid Expenses and Supplier Advance Payments
Prepaid expenses and supplier advance payments are typically for periods less than 12 months
and include amounts paid in advance for products and services. Supplier advance payments are primarily
for grain purchases from suppliers and amounts paid to crop nutrient and crop protection product
suppliers to lock in future supply, pricing and discounts.
NOTE 6
Investments
Investments as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Equity method investments
CF Industries Nitrogen, LLC
$ 2,544,530
$ 2,577,391
Ventura Foods, LLC
511,231
519,169
Ardent Mills, LLC
234,021
265,146
Other equity method investments
353,413
337,281
Other investments
137,772
129,885
Total investments
$ 3,780,967
$ 3,828,872
Joint ventures and other investments in which we have significant ownership and influence but
not control, are accounted for in our consolidated financial statements using the equity method of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
27
2024 CHS Annual Report
accounting. Our significant equity method investments consist of CF Nitrogen and Ventura Foods, LLC
("Ventura Foods"), which are summarized below. In addition to the recognition of our share of income
from our equity method investments, our equity method investments are evaluated for indicators of
other-than-temporary impairment on an ongoing basis in accordance with U.S. GAAP. We had
approximately $612.2 million of cumulative undistributed earnings from our equity method investees
included in the investments balance as of August 31, 2024.
All equity securities that do not result in consolidation and are not accounted for under the equity
method are measured at fair value with changes therein reflected in net income. We have elected to use
the measurement alternative for equity investments that do not have readily determinable fair values and
measure these investments at cost less impairment plus or minus observable price changes in orderly
transactions. Our share in the income or loss of our equity method investments is recorded within equity
income from investments in the Consolidated Statements of Operations. Other investments consist
primarily of investments in cooperatives without readily determinable fair values and are generally
recorded at cost, unless an impairment or other observable market price change occurs requiring an
adjustment. Investments in other cooperatives are recorded in a manner similar to equity investments
without readily determinable fair values, plus patronage dividends received in the form of capital stock
and other equities. Patronage dividends are recorded as a reduction to cost of goods sold at the time
qualified written notices of allocation are received. Investments in debt and equity instruments are carried
at amounts that approximate fair values.
CF Nitrogen
We have a $2.5 billion investment in CF Nitrogen, a strategic venture with CF Industries Holdings,
Inc. The investment consists of an approximate 8.4% membership interest (based on product tons) in CF
Nitrogen. At the time we entered into the strategic venture, we also entered into a supply agreement that
entitles us to purchase up to 1.1 million tons of granular urea and 580,000 tons of urea ammonium nitrate
("UAN") annually from CF Nitrogen for ratable delivery through fiscal 2096. Our purchases under the
supply agreement are based on prevailing market prices and we receive semiannual cash distributions (in
January and July of each year) from CF Nitrogen via our membership interest. These distributions are
based on actual volumes purchased from CF Nitrogen under the strategic venture and will have the
effect of reducing our investment to zero over 80 years on a straight-line basis. We account for this
investment using the hypothetical liquidation at book value method, recognizing our share of the
earnings and losses of CF Nitrogen as equity income from investments in our Nitrogen Production
segment based on our contractual claims on the entity's net assets pursuant to the liquidation provisions
of the CF Nitrogen Limited Liability Company Agreement, adjusted for the semiannual cash distributions.
Cash distributions received from CF Nitrogen for the years ended August 31, 2024, 2023 and 2022, were
$308.4 million, $458.9 million and $618.7 million, respectively.
The following tables provide aggregate summarized financial information for CF Nitrogen for
balance sheets as of August 31, 2024 and 2023, and statements of operations for the 12 months ended
August 31, 2024, 2023 and 2022:
2024
2023
(Dollars in thousands)
Current assets
$ 604,466
$ 899,246
Noncurrent assets
4,929,772
5,355,732
Current liabilities
244,867
281,153
Noncurrent liabilities
1,935
1,128
2024
2023
2022
(Dollars in thousands)
Net sales
$ 3,588,649
$ 5,070,489
$ 6,609,758
Gross profit
1,232,346
2,194,363
3,318,189
Net earnings
1,186,890
2,173,715
3,249,005
Earnings attributable to CHS Inc.
275,531
394,678
593,182
28 2024 CHS Annual Report
Ventura Foods
We have a 50% interest in Ventura Foods, a joint venture with Mitsui & Co., that produces and
distributes edible oil-based products. We account for Ventura Foods as an equity method investment
and our share of the results of Ventura Foods is included in Corporate and Other.
The following tables provide aggregate summarized financial information for our equity method
investment in Ventura Foods for balance sheets as of August 31, 2024 and 2023, and statements of
operations for the 12 months ended August 31, 2024, 2023 and 2022:
2024
2023
(Dollars in thousands)
Current assets
$
792,468
$ 1,041,799
Noncurrent assets
886,673
609,021
Current liabilities
426,281
335,000
Noncurrent liabilities
256,126
303,209
2024
2023
2022
(Dollars in thousands)
Net sales
$ 3,172,061
$ 3,552,194
$ 3,386,998
Gross profit
468,028
547,107
333,368
Net earnings
216,042
406,271
117,666
Earnings attributable to CHS Inc.
108,021
203,136
58,833
Our investments in other equity method investees are not significant in relation to our
consolidated financial statements, either individually or in the aggregate.
NOTE 7
Property, Plant and Equipment
Major classes of property, plant and equipment, including finance lease assets, are summarized in
the table below as of August 31, 2024 and 2023.
2024
2023
(Dollars in thousands)
Land and land improvements
$ 404,465
$ 350,703
Buildings
1,394,911
1,242,913
Machinery and equipment
8,223,650
7,979,164
Office equipment and other
548,368
498,430
Construction in progress
859,039
630,542
Gross property, plant and equipment
11,430,433
10,701,752
Less accumulated depreciation and amortization
6,253,078
5,832,379
Total property, plant and equipment
$ 5,177,355
$ 4,869,373
Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are provided on the straight-line method by charges to operations at rates
based on the expected useful lives of individual or groups of assets (generally 15 to 20 years for land
improvements, 20 to 40 years for buildings, five to 20 years for machinery and equipment, and three to
10 years for office equipment and other). Expenditures for maintenance and minor repairs and renewals
are expensed. We also capitalize and amortize eligible costs to acquire or develop internal-use software
that are incurred during the application development stage. When assets are sold or otherwise disposed
of, the cost and related accumulated depreciation and amortization are removed from the related
accounts and resulting gains or losses are reflected in operations.
Depreciation expense, including amortization of finance lease assets, for the years ended
August 31, 2024, 2023 and 2022, was $474.8 million, $457.9 million and $458.2 million, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
29
2024 CHS Annual Report
Property, plant and equipment and other long-lived assets are reviewed for impairment when
events or changes in circumstances indicate that the carrying amounts may not be recoverable in
accordance with U.S. GAAP. This evaluation of recoverability is based on various indicators, including the
nature, future economic benefits and geographic locations of the assets, historical or future profitability
measures and other external market conditions. If these indicators suggest the carrying amounts of an
asset or asset group may not be recoverable, potential impairment is evaluated using undiscounted,
estimated future cash flows. Should the sum of the expected future net cash flows be less than the
carrying value, an impairment loss would be recognized. An impairment loss would be measured as the
amount by which the carrying value of the asset or asset group exceeds its fair value. No significant
impairments were identified during fiscal 2024, fiscal 2023 or fiscal 2022.
We have asset retirement obligations with respect to certain of our refineries and other assets due
to various legal obligations to clean and/or dispose of the component parts at the time they are retired.
In most cases, these assets can be used for extended and indeterminate periods of time if they are
properly maintained and/or upgraded. It is our practice and current intent to maintain refineries and
related assets and to continue making improvements to those assets based on technological advances.
As a result, we believe our refineries and related assets have indeterminate lives for purposes of
estimating asset retirement obligations because dates or ranges of dates upon which we would retire a
refinery and related assets cannot reasonably be estimated at this time. When a date or range of dates
can reasonably be estimated for the retirement of any component part of a refinery or other asset, we
estimate the cost of performing the retirement activities and record a liability for the fair value of that
future cost.
We have other assets that we may be obligated to dismantle at the end of corresponding lease
terms subject to the lessor's discretion for which we have recorded asset retirement obligations. Based
on our estimates of timing, cost and probability of removal, these obligations are not material.
NOTE 8
Other Assets
Other assets as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Goodwill
$
179,976
$
179,976
Customer lists, trademarks and other intangible assets
42,105
46,980
Notes receivable (Note 3)
94,325
76,919
Long-term derivative assets (Note 15)
2,853
1,119
Prepaid pension and other benefits (Note 13)
75,935
78,819
Capitalized major maintenance
223,119
289,377
Cash value life insurance
152,772
134,126
Operating lease right of use assets (Note 19)
218,844
254,844
Other
58,041
68,364
Total other assets
$ 1,047,970
$ 1,130,524
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost over the fair value of identifiable assets acquired. Goodwill
is assessed for impairment on an annual basis as of July 31, either by first assessing qualitative factors to
determine whether a quantitative goodwill impairment test is necessary or by proceeding directly to the
quantitative test. The quantitative test may be required more frequently if triggering events or other
circumstances occur that could indicate impairment. Goodwill is assessed for impairment at the reporting
unit level, which has been determined to be our operating segments or one level below our operating
segments in certain instances.
30 2024 CHS Annual Report
There were no changes in the net carrying amount of goodwill during fiscal 2024 or fiscal 2023.
No goodwill has been allocated to our Nitrogen Production segment, which consists of a single
investment accounted for under the equity method of accounting, and allocated expenses.
No goodwill impairments were identified as a result of our annual goodwill analyses performed as
of July 31, 2024, 2023 or 2022. Management will continue to monitor the results and projected cash flows
for each of our businesses to assess whether any reserves or impairments may be necessary in the future.
Intangible assets subject to amortization primarily include customer lists, trademarks and
noncompete agreements, and are amortized over their respective useful lives (ranging from two to
30 years). We have no material intangible assets with indefinite useful lives. All long-lived assets,
including other identifiable intangible assets, are also assessed for impairment in accordance with U.S.
GAAP and evaluated for impairment whenever triggering events or other circumstances indicate the
carrying amount of an asset group or reporting unit may not be recoverable. Information regarding
intangible assets is as follows:
August 31, 2024
August 31, 2023
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Accumulated
Amortization
Net
(Dollars in thousands)
Customer lists
$ 86,389
$ (46,480) $ 39,909
$ 85,341
$ (41,374) $ 43,967
Trademarks and other intangible
assets
11,051
(8,855)
2,196
11,332
(8,319)
3,013
Total intangible assets
$ 97,440
$ (55,335) $ 42,105
$ 96,673
$ (49,693) $ 46,980
Intangible asset amortization expense for the years ended August 31, 2024, 2023 and 2022, was
$6.9 million, $6.7 million and $6.8 million, respectively. The estimated annual amortization expense related
to intangible assets subject to amortization for future years is as follows:
(Dollars in thousands)
2025
$
6,694
2026
6,513
2027
6,458
2028
6,341
2029
4,706
Thereafter
11,393
Total
$
42,105
Capitalized Major Maintenance
Activity related to capitalized major maintenance costs at our refineries for the years ended
August 31, 2024, 2023 and 2022, is summarized below:
Balance at
Beginning
of Year
Cost
Deferred
Amortization
Balance at
End of Year
(Dollars in thousands)
2024
$ 289,377
$
21,909
$ (88,167) $
223,119
2023
147,521
216,762
(74,906)
289,377
2022
196,641
25,401
(74,521)
147,521
Within our Energy segment, major maintenance activities are regularly performed at our Laurel,
Montana, and McPherson, Kansas, refineries. Major maintenance activities are the planned and required
shutdowns of refinery processing units, which include replacement or overhaul of equipment that has
experienced decreased efficiency in resource conversion. Because major maintenance activities are
performed to extend the life, increase the capacity and/or improve the safety or efficiency of refinery
processing assets, we follow the deferral method of accounting for major maintenance activities.
Expenditures for major maintenance activities are capitalized (deferred) when incurred and amortized on
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31
2024 CHS Annual Report
a straight-line basis over a period of two to five years, which is the estimated time lapse between major
maintenance activities. Should the estimated time between major maintenance activities change, we may
be required to amortize the remaining cost of the major maintenance activities over a shorter period,
which would result in higher depreciation and amortization costs. Amortization expense related to the
capitalized major maintenance costs is included in cost of goods sold in our Consolidated Statements of
Operations.
Selection of the deferral method, as opposed to expensing major maintenance activity costs when
incurred, results in deferring recognition of major maintenance activity expenditures. The deferral method
also results in classification of related cash outflows as investing activities in our Consolidated Statements
of Cash Flows, whereas expensing these costs as incurred would result in classifying the cash outflows as
operating activities. Repair, maintenance and related labor costs are expensed as incurred and are
included in operating cash flows.
NOTE 9
Notes Payable and Long-Term Debt
Our notes payable and long-term debt are subject to various restrictive requirements for
maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with
our debt covenants as of August 31, 2024.
Notes Payable
Notes payable as of August 31, 2024 and 2023, consisted of the following:
Weighted-Average Interest
Rate
2024
2023
2024
2023
(Dollars in thousands)
Notes payable
3.64%
5.37%
$
163,136
$ 375,932
CHS Capital notes payable
4.34%
4.24%
143,695
171,991
Total notes payable
$
306,831
$ 547,923
Our primary line of credit is a five-year unsecured revolving credit facility with a syndicate of
domestic and international banks. The credit facility provides a committed amount of $2.8 billion that
expires on April 21, 2028. There were no borrowings outstanding on this facility as of August 31, 2024. We
also maintain certain uncommitted bilateral facilities to support our working capital needs.
In addition to our facilities referenced above, our international subsidiaries have lines of credit with
$162.7 million outstanding as of August 31, 2024.
CHS Capital Notes Payable
We have a receivables and loans securitization facility ("Securitization Facility") with certain
unaffiliated financial institutions ("Purchasers"). Under the Securitization Facility, we and certain of our
subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding,
LLC ("Cofina"), a wholly-owned, bankruptcy-remote, indirect subsidiary of CHS. Cofina in turn transfers
the Receivables to the Purchasers, and this arrangement is accounted for as secured financing. We use
the proceeds from the sale of Receivables under the Securitization Facility for general corporate
purposes, and settlements are made on a monthly basis. The amount available under the Securitization
Facility fluctuates over time based on the total amount of eligible Receivables generated during the
normal course of business. The Securitization Facility consists of a committed portion with a maximum
availability of $850.0 million and an uncommitted portion with a maximum availability of $250.0 million.
As of August 31, 2024, total availability under the Securitization Facility was $778.4 million, of which no
amount was utilized.
We also have a repurchase facility ("Repurchase Facility"). Under the Repurchase Facility, we can
obtain repurchase agreement financing up to $200.0 million for certain eligible receivables and notes
32 2024 CHS Annual Report
receivables of the Originators. No balance was outstanding under the Repurchase Facility as of August 31,
2024.
On August 28, 2024, we amended both the Securitization and Repurchase Facilities to extend the
terms of the facilities to August 27, 2025.
CHS Capital sells loan commitments it has originated to Compeer Financial, PCA, d/b/a
ProPartners Financial on a recourse basis. The total commitments under the program were $100.0 million;
however, no amounts were borrowed under these commitments as of August 31, 2024.
CHS Capital borrows funds under short-term notes issued as part of a surplus funds program.
Borrowings under this program are unsecured and are due upon demand. Borrowings under these notes
totaled $143.7 million as of August 31, 2024.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
33
2024 CHS Annual Report
Long-Term Debt
During the year ended August 31, 2024, we repaid approximately $366.1 million of long-term debt
consisting of scheduled debt maturities and optional prepayments. On April 18, 2024, we entered into a
Note Purchase Agreement to borrow $700.0 million of long-term debt in the form of notes; the funding
of these notes took place on July 16, 2024. Amounts included in long-term debt on our Consolidated
Balance Sheets as of August 31, 2024 and 2023, are presented in the table below:
2024
2023
(Dollars in thousands)
3.85% unsecured notes $80 million face amount, due in fiscal 2025
$
80,000
$
80,000
3.80% unsecured notes $100 million face amount, due in fiscal 2025
100,000
100,000
4.58% unsecured notes $150 million face amount, due in fiscal 2025
150,000
150,000
4.82% unsecured notes $80 million face amount, due in fiscal 2026
80,000
80,000
4.69% unsecured notes $58 million face amount, due in fiscal 2027
58,000
58,000
3.24% unsecured notes $95 million face amount, due in fiscal 2028
95,000
95,000
4.74% unsecured notes $95 million face amount, due in fiscal 2028
95,000
95,000
5.68% unsecured notes $150 million face amount, due in fiscal 2030
150,000
150,000
3.48% unsecured notes $100 million face amount, due in fiscal 2031
100,000
100,000
4.89% unsecured notes $100 million face amount, due in fiscal 2031
100,000
100,000
5.84% unsecured notes $150 million face amount, due in fiscal 2032
150,000
—
3.58% unsecured notes $65 million face amount, due in fiscal 2033
65,000
65,000
4.71% unsecured notes $100 million face amount, due in fiscal 2033
100,000
100,000
5.93% unsecured notes $150 million face amount, due in fiscal 2034
150,000
—
3.73% unsecured notes $115 million face amount, due in fiscal 2036
115,000
115,000
5.40% unsecured notes $125 million face amount, due in fiscal 2036
125,000
125,000
6.05% unsecured notes $150 million face amount, due in fiscal 2037
150,000
—
6.13% unsecured notes $250 million face amount, due in fiscal 2039
250,000
—
Private placement debt
2,113,000
1,413,000
6.85% unsecured term loan from cooperative and other banks, due in
fiscal 2026 (a)
1,000
366,000
Term loan
1,000
366,000
Finance lease liabilities
49,511
49,235
Deferred financing costs
(4,562)
(3,127)
Other, including notes and contracts with interest rates from 3.9% to 9.0%
2,511
2,550
Total long-term debt
2,161,460
1,827,658
Less current portion
337,266
7,839
Long-term portion
$ 1,824,194
$
1,819,819
(a) Borrowings are variable under the agreement and bear interest at a base rate plus an
applicable margin.
As of August 31, 2024, the fair value of our long-term debt is estimated to be $2.1 billion based on
quoted market prices of similar debt (a Level 2 fair value measurement based on the classification
hierarchy of ASC Topic 820, Fair Value Measurement).
On October 29, 2024, we amended our 10-year term loan facility (the “Facility”). The amendment
reduced the size of the Facility to $300.0 million, and converted it into a revolving loan, which can be
paid down and readvanced in an amount up to the referenced $300.0 million until October 29, 2025. On
October 29, 2025, the total funded loan balance outstanding reverts to a nonrevolving term loan that is
payable on October 29, 2029. The Facility does have an option to extend the revolving period for an
additional year at our choosing. Any extension would not change the final payable date of October 29,
2029. There was $1.0 million outstanding under this facility as of August 31, 2024.
34 2024 CHS Annual Report
Long-term debt outstanding as of August 31, 2024, has aggregate maturities, excluding fair value
adjustments and finance leases (see Note 19, Leases, for a schedule of minimum future lease payments
under finance leases), as follows:
(Dollars in
thousands)
2025
$
330,620
2026
81,620
2027
58,621
2028
190,600
2029
150
Thereafter
1,455,000
Total
$
2,116,611
Interest expense for the years ended August 31, 2024, 2023 and 2022, was $104.1 million, $137.4
million and $114.2 million, respectively, net of capitalized interest of $25.7 million, $14.0 million and $6.1
million, respectively.
NOTE 10
Other Current Liabilities
Other current liabilities as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Customer margin deposits and credit balances
$
95,369 $
197,315
Customer advance payments
337,045
356,760
Derivative liabilities (Note 15)
243,068
355,696
Dividends and equity payable (Note 12)
600,000
730,000
Total other current liabilities
$ 1,275,482 $ 1,639,771
NOTE 11
Income Taxes
CHS is a nonexempt agricultural cooperative and files a consolidated federal income tax return
within our tax return period. We are subject to tax on income from nonpatronage sources, nonqualified
patronage distributions and undistributed patronage-sourced income. Income tax expense (benefit) is
primarily the current tax payable for the period and the change during the period in certain deferred tax
assets and liabilities. Deferred income taxes reflect the impact of temporary differences between the
amounts of assets and liabilities recognized under U.S. GAAP and such amounts recognized for federal
and state income tax purposes, based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
35
2024 CHS Annual Report
The provision for (benefit from) income taxes for the years ended August 31, 2024, 2023 and 2022
is as follows:
2024
2023
2022
(Dollars in thousands)
Current:
Federal
$
21,608
$
66,672
$
56,582
State
23,750
36,925
24,224
Foreign
30,338
3,735
9,833
Total current
75,696
107,332
90,639
Deferred:
Federal
(63,605)
7,799
41,710
State
(15,686)
(7,661)
491
Foreign
(1,277)
185
(724)
Total deferred
(80,568)
323
41,477
Total
$
(4,872) $
107,655
$
132,116
Domestic income before income taxes was $1.0 billion, $2.0 billion and $1.8 billion for the years
ended August 31, 2024, 2023 and 2022, respectively. Foreign income (loss) before income taxes was
$66.9 million, $55.4 million and ($4.9) million for the years ended August 31, 2024, 2023 and 2022,
respectively.
Deferred tax assets and liabilities as of August 31, 2024 and 2023, are as follows:
2024
2023
(Dollars in thousands)
Deferred tax assets:
Accrued expenses
$
56,062
$
51,960
Postretirement health care and deferred compensation
58,866
51,635
Tax credit carryforwards
91,114
97,730
Loss carryforwards
88,887
111,963
Nonqualified equity
533,784
467,519
Lease obligations
52,980
62,225
Capitalized research and development
69,556
17,941
Other
19,592
25,223
Deferred tax assets valuation allowance
(166,590)
(182,466)
Total deferred tax assets
804,251
703,730
Deferred tax liabilities:
Pension costs
7,003
10,596
Investments
130,171
129,683
Property, plant and equipment
618,419
625,403
Lease right of use assets
51,872
60,501
Total deferred tax liabilities
807,465
826,183
Net deferred tax liabilities
$
3,214
$
122,453
We had total gross loss carryforwards of $275.5 million, as of August 31, 2024, of which $62.8
million will expire over periods ranging from fiscal 2025 to fiscal 2035. The remainder will carry forward
indefinitely. Based on estimates of future taxable profits and losses in certain foreign tax jurisdictions, as
well as consideration of other factors, we assessed whether a valuation allowance was necessary to
reduce specific foreign loss carryforwards to amounts we believe are more likely than not to be realized
as of August 31, 2024. If our estimates prove inaccurate, adjustments to the valuation allowances may be
required in the future with gains or losses being charged to income in the period such determination is
made. Our McPherson refinery's gross state tax credit carryforwards for income tax were approximately
$115.3 million and $116.6 million as of August 31, 2024 and 2023, respectively. The refinery's valuation
36 2024 CHS Annual Report
allowance on Kansas state credits is necessary due to the limited amount of taxable income generated in
Kansas by the combined group on an annual basis. Our state tax credits of $115.3 million will begin to
expire during fiscal 2025.
The reconciliation of the statutory federal income tax rates to the effective tax rates for the years
ended August 31, 2024, 2023 and 2022 is as follows:
2024
2023
2022
Statutory federal income tax rate
21.0 %
21.0 %
21.0 %
State and local income taxes, net of federal income tax
benefit
0.5
1.1
1.1
Patronage earnings
(12.6)
(13.0)
(13.6)
Domestic production activities deduction
(6.8)
(3.2)
(3.2)
Export activities at rates other than the U.S. statutory rate
1.4
(0.2)
0.4
Intercompany transfer of business assets
0.0
0.0
(0.1)
Increase in unrecognized tax benefits
2.7
0.0
0.0
Valuation allowance
(0.1)
0.0
0.2
Tax credits
(6.2)
0.0
0.0
Other
(0.3)
(0.3)
1.5
Effective tax rate
(0.4) %
5.4 %
7.3 %
Primary drivers of fiscal 2024 income tax benefit were decreased nonpatronage earnings
compared to fiscal 2023, recognition of research and development tax credits and the current Domestic
Production Activities Deduction ("DPAD") benefit. Primary drivers of the fiscal 2023 and 2022 income tax
expense were increased nonpatronage earnings and other nondeductible items, which were partially
offset by the current DPAD benefit.
We file income tax returns in the U.S. federal jurisdiction, as well as various state and foreign
jurisdictions. Our uncertain tax positions are affected by the tax years that are under audit or remain
subject to examination by the relevant taxing authorities. Fiscal years 2017 and 2019 remain subject to
examination for certain issues.
Reserves are recorded against unrecognized tax benefits when we believe certain fully
supportable tax return positions are likely to be challenged and we may or may not prevail. If we
determine that a tax position is more likely than not to be sustained upon audit, based on the technical
merits of the position, we recognize the benefit by measuring the amount that is greater than 50% likely
of being realized. We reevaluate the technical merits of our tax positions and recognize an uncertain tax
benefit, or derecognize a previously recorded tax benefit, when there is (i) completion of a tax audit, (ii)
effective settlement of an issue, (iii) a change in applicable tax law including a tax case or legislative
guidance, or (iv) expiration of the applicable statute of limitations. Significant judgment is required in
accounting for tax reserves. A reconciliation of the gross beginning and ending amounts of unrecognized
tax benefits for the periods is presented as follows:
2024
2023
2022
(Dollars in thousands)
Balance at beginning of period
$
125,853
$
124,959
$
122,149
Additions attributable to current year tax positions
2,027
—
—
Additions attributable to prior year tax positions
32,569
894
2,810
Reductions attributable to prior year tax positions
(85,513)
—
—
Reductions attributable to statute expiration
(9,821)
—
—
Balance at end of period
$
65,115
$
125,853
$
124,959
If we were to prevail on all positions taken in relation to uncertain tax positions, $65.1 million of the
unrecognized tax benefits would ultimately benefit our effective tax rate. It is reasonably possible that the
total amount of unrecognized tax benefits could significantly change in the next 12 months.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
37
2024 CHS Annual Report
We recognize interest and penalties related to unrecognized tax benefits in our provision for
income taxes. We recognized benefits of $2.1 million, $0.8 million and $0.7 million for interest and
penalties related to unrecognized tax benefits in our Consolidated Statements of Operations for the years
ended August 31, 2024, 2023 and 2022, respectively, and a related $6.2 million and $3.7 million interest
payable on our Consolidated Balance Sheets as of August 31, 2024 and 2023, respectively.
NOTE 12
Equities
Patronage and Equity Redemptions
In accordance with our bylaws and by action of the Board of Directors, annual net earnings from
patronage sources are distributed to consenting patrons following the close of each fiscal year and are
based on amounts using financial statement earnings. The cash portion of the qualified patronage
distribution, if any, is determined annually by the Board of Directors, with the balance issued in the form
of qualified and/or nonqualified capital equity certificates. Total patronage distributions for fiscal 2024
are estimated to be $659.7 million, with the qualified cash portion estimated to be $300.0 million,
estimated qualified equity distributions of $77.3 million and estimated nonqualified equity distributions of
$282.4 million.
The following table presents estimated patronage distributions for the year ending August 31,
2024, and actual patronage distributions for the years ended August 31, 2023, 2022 and 2021:
2025
2024
2023
2022
(Dollars in millions)
Patronage distributed in cash
$
300.0
$
366.0
$
503.1
$
51.0
Patronage distributed in equity
359.7
877.3
670.9
235.6
Total patronage distributed
$
659.7
$ 1,243.3
$ 1,174.0
$
286.6
Annual net earnings from patronage or other sources may be added to the unallocated capital
reserve or, upon action by the Board of Directors, may be allocated to members in the form of
nonpatronage equity certificates. The Board of Directors authorized, in accordance with our bylaws, that
10% of the earnings from patronage business for fiscal 2024, 2023 and 2022 be added to our capital
reserves.
Redemptions of outstanding equity are at the discretion of the Board of Directors. Redemptions
of capital equity certificates approved by the Board of Directors are divided into two pools, one for
nonindividuals (primarily member cooperatives) who may participate in an annual redemption program
for qualified equities held by them and another for individual members who are eligible for equity
redemptions at age 70 or upon death. In accordance with authorization from the Board of Directors, we
expect total redemptions related to the year ended August 31, 2024, which will be distributed in fiscal
2025, to be approximately $300.0 million. This amount is classified as a current liability on our August 31,
2024, Consolidated Balance Sheet. During the years ended August 31, 2024, 2023 and 2022, we
redeemed in cash, outstanding owners' equities in accordance with authorization from the Board of
Directors, in the amounts of $355.9 million, $495.8 million and $111.8 million, respectively.
38 2024 CHS Annual Report
Preferred Stock
The following is a summary of our outstanding preferred stock as of August 31, 2024, all shares of
which are listed on the Global Select Market of The Nasdaq:
Nasdaq
Symbol
Issuance
Date
Shares
Outstanding
Redemption
Value
Net
Proceeds
(a)
Dividend
Rate
(b) (c)
Dividend
Payment
Frequency
Redeemable
Beginning
(d)
(Dollars in millions)
8% Cumulative
Redeemable
CHSCP
(e)
12,272,003
$
306.8
$
311.2
8.00 %
Quarterly
7/18/2023
Class B
Cumulative
Redeemable,
Series 1
CHSCO
(f)
21,459,066
536.5
569.3
7.875 %
Quarterly
9/26/2023
Class B Reset
Rate Cumulative
Redeemable,
Series 2
CHSCN
3/11/2014
16,800,000
420.0
406.2
7.10 %
Quarterly
3/31/2024
Class B Reset
Rate Cumulative
Redeemable,
Series 3
CHSCM
9/15/2014
19,700,000
492.5
476.7
6.75 %
Quarterly
9/30/2024
Class B
Cumulative
Redeemable,
Series 4
CHSCL
1/21/2015
20,700,000
517.5
501.0
7.50 %
Quarterly
1/21/2025
(a) Includes patron equities redeemed with preferred stock.
(b) The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 accumulated dividends at a rate of 7.10% per year
until March 31, 2024, and subsequently fixed at a rate of 7.10%, based on the terms of the contract and application of the
Adjustable Rate (LIBOR) Act.
(c) The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 accumulated dividends at a rate of 6.75% per year
until September 30, 2024, and subsequently fixed at a rate of 6.75%,based on the terms of the contract and application of the
Adjustable Rate (LIBOR) Act.
(d) All series of preferred stock are redeemable for cash at our option, in whole or in part, at a per share price equal to the per
share liquidation preference of $25.00 per share, plus all dividends accumulated and unpaid on that share to and including the
date of redemption, beginning on the dates set forth in this column.
(e) The 8% Cumulative Redeemable Preferred Stock was issued at various times from 2003 through 2010.
(f) Shares of Class B Cumulative Redeemable Preferred Stock, Series 1 were issued on September 26, 2013; August 25, 2014; March
31, 2016; and March 30, 2017.
Preferred Stock Dividends
We made dividend payments on our preferred stock of $168.7 million during each of the years
ended August 31, 2024, 2023 and 2022. As of August 31, 2024, the Board of Directors had not authorized
the issuance of any preferred shares that were not outstanding.
The following is a summary of dividends per share by series of preferred stock for the years ended
August 31, 2024 and 2023:
Years Ended August 31,
Nasdaq
Symbol
2024
2023
(Dollars per share)
8% Cumulative Redeemable
CHSCP
$
2.00
$
2.00
Class B Cumulative Redeemable, Series 1
CHSCO
1.97
1.97
Class B Reset Rate Cumulative Redeemable, Series 2
CHSCN
1.78
1.78
Class B Reset Rate Cumulative Redeemable, Series 3
CHSCM
1.69
1.69
Class B Cumulative Redeemable, Series 4
CHSCL
1.88
1.88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
39
2024 CHS Annual Report
Accumulated Other Comprehensive Loss
Changes in accumulated other comprehensive income (loss) by component, for the years ended
August 31, 2024, 2023 and 2022 are as follows:
Pension and
Other
Postretirement
Benefits
Cash Flow
Hedges
Foreign
Currency
Translation
Adjustment
Total
(Dollars in thousands)
Balance as of August 31, 2021, net of tax
$
(141,385) $
4,824
$
(79,830) $
(216,391)
Other comprehensive income (loss), before
tax:
Amounts before reclassifications
(52,163)
(2,161)
(15,809)
(70,133)
Amounts reclassified out
22,240
7,455
—
29,695
Total other comprehensive income (loss),
before tax
(29,923)
5,294
(15,809)
(40,438)
Tax effect
2,668
(1,275)
101
1,494
Other comprehensive income (loss), net of
tax
(27,255)
4,019
(15,708)
(38,944)
Balance as of August 31, 2022, net of tax
(168,640)
8,843
(95,538)
(255,335)
Other comprehensive income (loss), before
tax:
Amounts before reclassifications
(13,596)
(25,024)
1,829
(36,791)
Amounts reclassified out
93
16,044
—
16,137
Total other comprehensive income (loss),
before tax
(13,503)
(8,980)
1,829
(20,654)
Tax effect
8,218
2,169
207
10,594
Other comprehensive income (loss), net of
tax
(5,285)
(6,811)
2,036
(10,060)
Balance as of August 31, 2023, net of tax
(173,925)
2,032
(93,502)
(265,395)
Other comprehensive income (loss), before
tax:
Amounts before reclassifications
(29,445)
14,950
(10,249)
(24,744)
Amounts reclassified out
180
(15,287)
1,227
(13,880)
Total other comprehensive loss, before tax
(29,265)
(337)
(9,022)
(38,624)
Tax effect
7,217
82
178
7,477
Other comprehensive loss, net of tax
(22,048)
(255)
(8,844)
(31,147)
Balance as of August 31, 2024, net of tax
$ (195,973) $
1,777
$ (102,346) $ (296,542)
Amounts reclassified from accumulated other comprehensive income (loss) were related to
pension and other postretirement benefits, cash flow hedges and foreign currency translation
adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss,
prior service credit and transition amounts and are recorded as cost of goods sold and marketing,
general and administrative expenses (see Note 13, Benefit Plans, for further information). As described in
Note 15, Derivative Financial Instruments and Hedging Activities, amounts reclassified from accumulated
other comprehensive loss for cash flow hedges are recorded in cost of goods sold. Gains or losses on
foreign currency translation reclassifications are recorded in other income.
NOTE 13
Benefit Plans
40 2024 CHS Annual Report
We have various pension and other defined benefits as well as defined contribution plans in which
substantially all employees may participate. We also have nonqualified supplemental executive and Board
retirement plans. We provide defined life insurance and health care benefits for certain retired employees
and Board of Directors participants. The plan is contributory based on years of service and family status,
with retiree contributions adjusted annually.
Financial information on changes in projected benefit obligation, plan assets funded and balance
sheet status as of August 31, 2024 and 2023, is as follows:
Qualified
Pension Benefits
Nonqualified
Pension Benefits
Other Benefits
2024
2023
2024
2023
2024
2023
(Dollars in thousands)
Change in benefit obligation:
Projected benefit obligation at
beginning of period
$ 708,511
$ 759,173
$ 20,980
$ 18,257
$ 22,572
$ 24,524
Service cost
37,391
38,579
1,968
1,840
650
670
Interest cost
35,928
30,588
1,043
741
1,144
1,035
Actuarial loss (gain):
Experience study and
mortality updates
2,988
2,573
244
159
—
—
Other demographic
experience*
18,647
5,181
3,217
1,999
1,465
(553)
Discount rate change
21,372
(45,216)
626
(876)
681
(1,312)
Plan amendments
223
490
—
—
—
—
Benefits paid
(64,297) (82,857)
(1,635)
(1,140)
(1,725)
(1,792)
Projected benefit obligation at
end of period
$ 760,763
$ 708,511
$ 26,443
$ 20,980
$ 24,787
$ 22,572
Change in plan assets:
Fair value of plan assets at
beginning of period
$ 736,150
$ 787,422
$
—
$
—
$
—
$
—
Actual (loss) gain on plan
assets
67,559
(8,415)
—
—
—
—
Company contributions
42,000
40,000
1,635
1,140
1,725
1,792
Benefits paid
(64,297) (82,857)
(1,635)
(1,140)
(1,725)
(1,792)
Fair value of plan assets at end
of period
$ 781,412
$ 736,150
$
—
$
—
$
—
$
—
Funded status at end of period
$ 20,649
$ 27,639
$ (26,443) $ (20,980) $ (24,787) $ (22,572)
Amounts recognized on balance
sheet:
Noncurrent assets
$ 20,649
$ 27,639
$
—
$
—
$
—
$
—
Accrued benefit cost:
Current liabilities
—
—
(3,950)
(2,880)
(2,080)
(2,170)
Noncurrent liabilities
—
—
(22,493)
(18,100) (22,707) (20,402)
Ending balance
$ 20,649
$ 27,639
$ (26,443) $ (20,980) $ (24,787) $ (22,572)
Amounts recognized in
accumulated other
comprehensive loss (pretax):
Prior service cost (credit)
$
1,216
$
1,172
$
(47) $
(160) $
(935) $ (1,380)
Net loss (gain)
269,122
247,609
8,001
4,294
(14,335) (18,096)
Ending balance
$ 270,338
$ 248,781
$
7,954
$
4,134
$ (15,270) $ (19,476)
*Other demographic experience is comprised of all demographic experience different than anticipated, including terminations,
retirements, deaths, pay, etc.
The accumulated benefit obligation of the qualified pension plans was $727.9 million and $678.4
million as of August 31, 2024 and 2023, respectively. The accumulated benefit obligation of the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
41
2024 CHS Annual Report
nonqualified pension plans was $26.2 million and $20.9 million as of August 31, 2024 and 2023,
respectively.
Information for the pension plans with an accumulated benefit obligation in excess of plan assets
is set forth below:
Years Ended August 31,
2024
2023
(Dollars in thousands)
Projected benefit obligation
$
26,443
$
20,980
Accumulated benefit obligation
26,173
20,908
Components of net periodic benefit costs for the years ended August 31, 2024, 2023 and 2022,
are as follows:
Qualified
Pension Benefits
Nonqualified
Pension Benefits
Other Benefits
2024
2023
2022
2024
2023
2022
2024
2023
2022
(Dollars in thousands)
Components of net periodic
benefit costs:
Service cost
$ 37,391
$ 38,579
$ 46,275
$ 1,968
$ 1,840
$
926
$
650
$
670
$
996
Interest cost
35,928
30,588
17,167
1,043
741
281
1,144
1,035
503
Expected return on assets
(47,860) (43,129) (43,958)
—
—
—
—
—
—
Prior service cost (credit)
amortization
178
149
174
(114)
(114)
(114)
(445)
(445)
(445)
Actuarial loss (gain) amortization
1,796
1,872
23,406
380
245
478
(1,616)
(1,615) (1,259)
Net periodic benefit cost (benefit)
$ 27,433
$ 28,059
$ 43,064
$ 3,277
$ 2,712
$
1,571
$ (267) $ (355) $ (205)
Components of net periodic benefit costs and amounts recognized in other comprehensive loss
(income) for the years ended August 31, 2024, 2023 and 2022, are as follows:
Qualified
Pension Benefits
Nonqualified
Pension Benefits
Other Benefits
2024
2023
2022
2024
2023
2022
2024
2023
2022
(Dollars in thousands)
Other comprehensive loss
(income):
Prior service cost
$
223
$
490
$
132
$
—
$
—
$
—
$
—
$
—
$
—
Net actuarial loss (gain)
23,309
14,082
59,020
4,087
1,282
(1,537)
2,145
(1,865) (4,243)
Amortization of actuarial (gain)
loss
(1,796)
(1,872) (23,406)
(380)
(245)
(478)
1,616
1,615
1,259
Amortization of prior service
(credit) costs
(178)
(149)
(174)
114
114
114
445
445
445
Settlement of retiree obligations
(a)
—
—
—
—
—
(307)
—
—
—
Total recognized in other
comprehensive loss (income)
$ 21,558
$ 12,551
$ 35,572
$ 3,821
$
1,151
$ (2,208) $ 4,206
$
195
$ (2,539)
(a) Reflects amounts reclassified from accumulated other comprehensive loss (income) to net earnings.
Estimated amortization in fiscal 2025 from accumulated other comprehensive loss into net
periodic benefit cost is as follows:
Qualified
Pension
Benefits
Nonqualified
Pension
Benefits
Other
Benefits
(Dollars in thousands)
Amortization of prior service costs (credit)
$
199
$
(47) $
(445)
Amortization of actuarial loss (gain)
12,815
799
(1,192)
42 2024 CHS Annual Report
Plan assumptions for the years ended August 31, 2024, 2023 and 2022, are as follows:
Qualified
Pension Benefits
Nonqualified
Pension Benefits
Other Benefits
2024
2023
2022
2024
2023
2022
2024
2023
2022
Weighted-average assumptions to
determine the net periodic benefit
cost:
Interest credit rate
4.80 %
4.65 %
4.65 %
4.80 %
4.65 %
4.65 %
N/A
N/A
N/A
Discount rate
5.38 %
4.69 %
2.80 %
5.22 %
4.48 %
2.04 %
5.33 %
4.64 %
2.57 %
Expected return on plan assets
5.64 %
4.88 %
4.88 %
N/A
N/A
N/A
N/A
N/A
N/A
Rate of compensation increase
4.98 %
4.93 %
4.79 %
4.98 %
4.93 %
4.79 %
N/A
N/A
N/A
Weighted-average assumptions to
determine the benefit obligations:
Interest credit rate
4.68 %
4.80 %
4.65 %
4.68 %
4.80 %
4.65 %
N/A
N/A
N/A
Discount rate
5.09 %
5.38 %
4.69 %
4.78 %
5.23 %
4.49 %
5.01 %
5.33 %
4.64 %
Rate of compensation increase
4.98 %
4.98 %
4.93 %
4.98 %
4.98 %
4.93 %
N/A
N/A
N/A
A significant assumption for pension costs and obligations is the discount rate. We use a full-yield
curve approach by applying the specific spot rates along the yield curve used in the determination of the
benefit obligation to the relevant projected cash flows. The discount rate reflects the rate at which the
associated benefits could be effectively settled as of the measurement date. In estimating this rate, we
look at rates of return on fixed-income investments of similar duration to the liabilities in the plans that
receive high investment-grade ratings by recognized ratings agencies.
An annual analysis of the risk versus the return of the investment portfolio is conducted to justify
the expected long-term rate of return assumption. We generally use long-term historical return
information for the targeted asset mix identified in asset and liability studies. Adjustments are made to
the expected long-term rate of return assumption when deemed necessary, based upon revised
expectations of future investment performance of the overall investment markets.
For measurement purposes, an 8.7% annual rate of increase in the per capita cost of covered
health care benefits was assumed for the year ended August 31, 2024. The rate was assumed to decrease
gradually to 4.5% by 2034 and remain at that level thereafter. Assumed health care cost trend rates have
a significant effect on the amounts reported for the health care plans. A one-percentage-point change in
the assumed health care cost trend rates would have the following effects:
1% Increase
1% Decrease
(Dollars in thousands)
Effect on total of service and interest cost components
$
190
$
160
Effect on postretirement benefit obligation
1,600
1,400
Contributions depend primarily on market returns on the pension plan assets and minimum
funding level requirements. During fiscal 2024, we made a discretionary contribution of $42.0 million to
the pension plans. Based on the funded status of the qualified pension plans as of August 31, 2024, we do
not currently believe we will be required to contribute to these plans in fiscal 2025, although we may
voluntarily elect to do so. We expect to pay $6.0 million to participants of the nonqualified pension and
postretirement benefit plans during fiscal 2025.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
43
2024 CHS Annual Report
Our retiree benefit payments, which reflect expected future service, are anticipated to be paid as
follows:
Qualified
Pension Benefits
Nonqualified
Pension Benefits
Other Benefits
(Dollars in thousands)
2025
$
69,800
$
3,950
$
2,080
2026
72,100
4,080
2,020
2027
73,200
3,870
1,990
2028
75,900
3,560
1,870
2029
78,600
3,330
1,780
2030-2034
366,500
14,350
8,690
We have trusts that hold the assets for the defined benefit plans. CHS has a qualified plan
committee that sets investment guidelines with the assistance of external consultants. Investment
objectives for the plans' assets are as follows:
•
Optimize the long-term returns on plan assets at an acceptable level of risk;
•
Maintain broad diversification across asset classes and among investment managers; and
•
Focus on long-term return objectives.
Asset allocation targets promote optimal expected return and volatility characteristics given the
long-term time horizon for fulfilling the obligations of the pension plans. The investment portfolio
contains a diversified portfolio of investment categories, including equities, fixed-income securities and
real estate. Securities are also diversified in terms of domestic and international securities, short- and
long-term securities, growth and value equities, large and small cap stocks, as well as active and passive
management styles. Our pension plans' investment policy strategy is such that liabilities match assets.
This is being accomplished through the asset portfolio mix by reducing volatility and de-risking the plans.
The plans' target allocation percentages range between 45% and 80% for fixed income securities and
range between 20% and 55% for equity securities.
The qualified plan committee believes that with prudent risk tolerance and asset diversification,
the plans should be able to meet pension obligations in the future.
44 2024 CHS Annual Report
Our pension plans' recurring fair value measurements by asset category as of August 31, 2024 and
2023, are presented in the tables below:
2024
Level 1
Level 2
Level 3
Total
(Dollars in thousands)
Cash and cash equivalents
$
12,416
$
—
$
—
$
12,416
Equities:
Common/collective trust at net asset value (1)
—
—
—
156,462
Fixed income securities:
Other investments
31,298
93,763
—
125,061
Common/collective trust at net asset value (1)
—
—
—
464,611
Partnership and joint venture interests
measured at net asset value (1)
—
—
—
22,862
Total
$
43,714
$
93,763
$
—
$
781,412
2023
Level 1
Level 2
Level 3
Total
(Dollars in thousands)
Cash and cash equivalents
$
12,505
$
—
$
—
$
12,505
Equities:
Common/collective trust at net asset value (1)
—
—
—
127,225
Fixed income securities:
Other investments
25,143
86,315
—
111,458
Common/collective trust at net asset value (1)
—
—
—
425,180
Partnership and joint venture interests
measured at net asset value (1)
—
—
—
59,782
Total
$
37,648
$
86,315
$
—
$
736,150
(1) In accordance with ASC Topic 820-10, Fair Value Measurement, certain assets that are measured at fair value using the net
asset value per share (or its equivalent) practical expedient have not been categorized in the fair value hierarchy. The fair value
amounts presented in the tables above are intended to permit reconciliation of the fair value hierarchy to the amounts presented
in the "Financial information on changes in projected benefit obligation, plan assets funded and balance sheet status" table above.
Definitions for valuation levels are found in Note 16, Fair Value Measurements. We use the
following valuation methodologies for assets measured at fair value:
Common/collective trusts. Common/collective trusts primarily consist of equity and fixed income
funds and are valued using other significant observable inputs, including quoted prices for similar
investments, interest rates, prepayment speeds, credit risks, referenced indices, quoted prices in inactive
markets, adjusted quoted prices in active markets, adjusted quoted prices on foreign equity securities
that were adjusted in accordance with pricing procedures approved by the trust, etc. Common/collective
trust investments can be redeemed daily and without restriction. Redemption of the entire investment
balance generally requires a 45- to 60-day notice period. The equity funds provide exposure to large-,
mid- and small-cap U.S. equities, international large- and small-cap equities and emerging market
equities. The fixed income funds provide exposure to U.S., international and emerging market debt
securities.
Other investments. Other investments are comprised primarily of investments in U.S. Treasury
securities which are valued using quoted market prices and classified within Level 1, as well as various
government agency obligations and corporate, foreign government and municipal issue fixed income
marketable securities which are valued using institutional bond or broker quotes along with various other
market and industry inputs and classified within Level 2.
Partnership and joint venture interests. The net asset value of shares held by the plan at year-end
is used to value these assets as a practical expedient for fair value. The net asset value is based on the fair
value of the underlying assets owned by the trust, minus its liabilities, then divided by the number of units
outstanding. Redemptions of these interests generally require a 45- to 60-day notice period.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
45
2024 CHS Annual Report
During fiscal 2024 we ceased our participation in the Co-op Retirement Plan, which is a defined
benefit plan constituting a multiple employer plan under the Internal Revenue Code of 1986, as amended,
and a multiemployer plan under the accounting standards.
We have other contributory defined contribution plans covering substantially all employees. Total
contributions by us to these plans were $43.5 million, $38.7 million and $35.0 million, for the years ended
August 31, 2024, 2023 and 2022, respectively.
NOTE 14
Segment Reporting
We are an integrated agricultural cooperative, providing grain, food, agronomy and energy
resources to businesses and consumers on a global basis. We provide a wide variety of products and
services, 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. We define our operating segments in accordance with ASC Topic 280, Segment
Reporting, to reflect the manner in which our chief operating decision maker, our Chief Executive Officer,
evaluates performance and allocates resources in managing the business. We have aggregated those
operating segments into three reportable segments: Energy, Ag and Nitrogen Production.
Our Energy segment produces and provides primarily for the wholesale distribution of petroleum
products and transportation of those products. Our Ag segment purchases and further processes or
resells grain and oilseed originated by our ag retail (formerly referred to as country operations) business,
by our member cooperatives and by third parties; serves as a wholesaler and retailer of crop inputs; and
produces and markets ethanol. Our Nitrogen Production segment consists of our equity method
investment in CF Nitrogen that records earnings and allocated expenses but not revenues. Our supply
agreement with CF Nitrogen entitles us to purchase up to a specified quantity of granular urea and UAN
annually from CF Nitrogen. Corporate and Other represents our financing and hedging businesses, which
primarily consists of a U.S. Commodity Futures Trading Commission-regulated futures commission
merchant ("FCM") for commodities hedging and financial services related to crop production. Our
nonconsolidated investments in Ventura Foods and Ardent Mills, LLC ("Ardent Mills") are also included in
our Corporate and Other category.
Corporate administrative expenses and interest are allocated to each reportable segment and
Corporate and Other, based on direct use of services, such as information technology and legal, and
other factors or considerations relevant to the costs incurred.
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 Ag segment, our ag retail business generally experiences higher
volumes and revenues during the fall harvest and spring planting seasons, which generally correspond to
our first and third fiscal quarters, respectively. Additionally, our agronomy business generally experiences
higher volumes and revenues during the spring planting season. Our global grain and processing
operations are subject to fluctuations in volume and revenues based on producer harvests, world grain
prices, demand and international trade relationships. Our Energy segment generally experiences higher
volumes and revenues in certain operating areas, such as refined 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.
Our revenues, assets and cash flows can be significantly affected by global market prices for
commodities such as petroleum products, natural gas, grain, oilseed, crop nutrients and flour. Changes in
market prices for commodities that we purchase without a corresponding change in the selling prices of
those products can affect revenues and operating earnings. Commodity prices are affected by a wide
range of factors beyond our control, including weather, crop damage due to plant disease or insects,
drought, availability and adequacy of supply, availability of reliable rail and river transportation networks,
outbreaks of disease, government regulations and policies, global trade disputes, wars and civil unrest,
and general political and economic conditions.
46 2024 CHS Annual Report
While our revenues and operating results are derived primarily from businesses and operations
that are wholly-owned or subsidiaries and limited liability companies in which we have a controlling
interest, a portion of our business operations are conducted through companies in which we hold
ownership interests of 50% or less or do not control the operations. We account for these investments
primarily using the equity method of accounting, wherein we record our proportionate share of income or
loss reported by the entity as equity income from investments, without consolidating the revenues and
expenses of the entity in our Consolidated Statements of Operations. In our Ag segment, this includes our
50% interest in TEMCO, LLC ("TEMCO") and our 50% interest in Producer Ag, LLC ("Producer Ag"). In our
Nitrogen Production segment, this consists of our approximate 8.4% membership interest (based on
product tons) in CF Nitrogen. In Corporate and Other, this principally includes our 50% ownership in
Ventura Foods and our 12% ownership in Ardent Mills. See Note 6, Investments, for more information
related to our equity method investments.
Reconciling amounts represent the elimination of revenues between segments. Such transactions
are executed at market prices to more accurately evaluate the profitability of the individual business
segments.
Segment information for the years ended August 31, 2024, 2023 and 2022, is presented in the
tables below.
Energy
Ag
Nitrogen
Production
Corporate
and Other
Reconciling
Amounts
Total
Year ended August 31, 2024
(Dollars in thousands)
Revenues, including
intersegment revenues
$ 9,339,079
$ 30,432,758
$
—
$
94,113
$ (604,721) $ 39,261,229
Intersegment revenues
(572,584)
(15,899)
—
(16,238)
604,721
—
Revenues, net of
intersegment revenues
$ 8,766,495
$ 30,416,859
$
—
$
77,875
$
—
$ 39,261,229
Operating earnings (loss)
403,854
241,327
(71,530)
10,707
—
584,358
Interest expense
(16,773)
61,982
61,942
22,027
(25,114)
104,064
Other income
(11,283)
(98,142)
(9,176)
(44,143)
25,114
(137,630)
Equity (income) losses from
investments
2,857
(65,190)
(275,531)
(141,999)
—
(479,863)
Income before income taxes
$
429,053
$
342,677
$
151,235
$
174,822
$
—
$
1,097,787
Capital expenditures
$
204,151
$
426,291
$
—
$
178,321
$
—
$
808,763
Depreciation and
amortization
$
255,795
$
178,400
$
—
$
47,529
$
—
$
481,724
Total assets as of August 31,
2024
$ 4,262,974
$ 7,279,846
$ 2,544,530
$ 4,627,725
$
—
$ 18,715,075
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
47
2024 CHS Annual Report
Energy
Ag
Nitrogen
Production
Corporate
and Other
Reconciling
Amounts
Total
Year ended August 31, 2023
(Dollars in thousands)
Revenues, including
intersegment revenues
$ 10,761,503
$ 35,456,969
$
—
$
82,107
$ (710,575) $ 45,590,004
Intersegment revenues
(664,590)
(31,765)
—
(14,220)
710,575
—
Revenues, net of
intersegment revenues
$ 10,096,913
$ 35,425,204
$
—
$
67,887
$
—
$ 45,590,004
Operating earnings (loss)
1,071,492
346,137
(73,828)
(301)
—
1,343,500
Interest expense
7,672
71,115
60,090
31,487
(32,922)
137,442
Other income
(19,456)
(88,061)
—
(37,536)
32,922
(112,131)
Equity (income) losses from
investments
7,833
(48,725) (394,678) (254,020)
—
(689,590)
Income before income taxes
$ 1,075,443
$
411,808
$ 260,760
$ 259,768
$
—
$ 2,007,779
Capital expenditures
$
204,003
$
308,690
$
—
$
51,829
$
—
$
564,522
Depreciation and
amortization
$
254,115
$
166,982
$
—
$
43,518
$
—
$
464,615
Total assets as of August 31,
2023
$ 4,313,240
$ 7,095,283
$ 2,577,391
$ 4,971,504
$
—
$ 18,957,418
Energy
Ag
Nitrogen
Production
Corporate
and Other
Reconciling
Amounts
Total
Year ended August 31, 2022
(Dollars in thousands)
Revenues, including
intersegment revenues
$ 10,964,304
$ 37,489,203
$
—
$
45,278
$ (707,119) $ 47,791,666
Intersegment revenues
(669,530)
(28,992)
—
(8,597)
707,119
—
Revenues, net of
intersegment revenues
$ 10,294,774
$ 37,460,211
$
—
$
36,681
$
—
$ 47,791,666
Operating earnings (loss)
633,832
588,070
(55,600)
(37,216)
—
1,129,086
Interest expense
6,768
59,118
48,110
5,105
(4,945)
114,156
Other (income) expense
(3,474)
(46,277)
11,487
9,559
4,945
(23,760)
Equity (income) losses from
investments
13,987
(82,357)
(593,182)
(109,775)
—
(771,327)
Income before income taxes
$
616,551
$
657,586
$ 477,985
$
57,895
$
—
$
1,810,017
Capital expenditures
$
116,136
$
203,851
$
—
$
34,457
$
—
$
354,444
Depreciation and
amortization
$
250,972
$
173,488
$
—
$
37,512
$
—
$
461,972
We have international sales, which are predominantly in our Ag segment. The following table
presents our sales, based on the geographic location of the subsidiary making the sale, for the years
ended August 31, 2024, 2023 and 2022:
2024
2023
2022
(Dollars in thousands)
North America (a)
$ 36,876,847
$ 43,376,177
$ 45,039,981
South America
515,177
378,021
371,493
Europe, Middle East and Africa (EMEA)
693,454
930,052
1,093,974
Asia Pacific (APAC)
1,175,751
905,754
1,286,218
Total
$ 39,261,229
$ 45,590,004
$ 47,791,666
(a) Revenues in North America are substantially all attributed to revenues from the United States.
48 2024 CHS Annual Report
Tangible long-lived assets include our property, plant and equipment, finance lease assets and
capitalized major maintenance costs. The following table presents tangible long-lived assets by
geographical region based on physical location:
2024
2023
(Dollars in thousands)
United States
$ 5,330,168
$ 5,088,366
International
70,306
70,384
Total
$ 5,400,474
$ 5,158,750
NOTE 15
Derivative Financial Instruments and Hedging Activities
We enter into various derivative instruments to manage our exposure to movements primarily
associated with agricultural and energy commodity prices and, to a lesser degree, foreign currency
exchange rates and interest rates. Except for certain cash-settled swaps related to future crude oil
purchases and refined product sales, which are accounted for as cash flow hedges, our derivative
instruments represent economic hedges of price risk for which hedge accounting under ASC Topic 815 is
not applied. Rather, the derivative instruments are recorded on our Consolidated Balance Sheets at fair
value with changes in fair value being recorded directly to earnings, primarily within cost of goods sold in
our Consolidated Statements of Operations. See Note 16, Fair Value Measurements, for additional
information. The majority of our exchange traded agricultural commodity futures are settled daily
through CHS Hedging, LLC, our wholly-owned FCM.
Derivatives Not Designated as Hedging Instruments
The following tables present the gross fair values of derivative assets, derivative liabilities and
related margin deposits (cash collateral) recorded on our Consolidated Balance Sheets, along with
related amounts permitted to be offset in accordance with U.S. GAAP. Although we have certain netting
arrangements for our exchange-traded futures and options contracts and certain OTC contracts, we have
elected to report our derivative instruments on a gross basis on our Consolidated Balance Sheets under
ASC Topic 210-20, Balance Sheet - Offsetting.
August 31, 2024
Amounts Not Offset on the
Consolidated Balance Sheet
but Eligible for Offsetting
Gross
Amounts
Recognized
Cash
Collateral
Derivative
Instruments
Net Amounts
(Dollars in thousands)
Derivative assets
Commodity derivatives
$
165,709
$
—
$
2,522
$
163,187
Foreign exchange derivatives
9,029
—
7,100
1,929
Total
$
174,738
$
—
$
9,622
$
165,116
Derivative liabilities
Commodity derivatives
$
221,803
$
1,601
$
2,522
$
217,680
Foreign exchange derivatives
24,476
—
7,100
17,376
Total
$ 246,279
$
1,601
$
9,622
$ 235,056
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
49
2024 CHS Annual Report
August 31, 2023
Amounts Not Offset on the
Consolidated Balance Sheet
but Eligible for Offsetting
Gross
Amounts
Recognized
Cash
Collateral
Derivative
Instruments
Net Amounts
(Dollars in thousands)
Derivative assets
Commodity derivatives
$ 280,440
$
—
$
4,866
$ 275,574
Foreign exchange derivatives
32,402
—
12,330
20,072
Total
$
312,842
$
—
$
17,196
$ 295,646
Derivative liabilities
Commodity derivatives
$
349,131
$
1,505
$
4,866
$ 342,760
Foreign exchange derivatives
13,799
—
12,330
1,469
Total
$ 362,930
$
1,505
$
17,196
$ 344,229
Derivative assets and liabilities with maturities of less than 12 months are recorded in other current
assets and other current liabilities, respectively, on our Consolidated Balance Sheets. Derivative assets
and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities,
respectively, on our Consolidated Balance Sheets. The amount of long-term derivative assets recorded on
our Consolidated Balance Sheets as of August 31, 2024 and 2023, was $2.9 million and $1.1 million,
respectively. The amount of long-term derivative liabilities recorded on our Consolidated Balance Sheets
as of August 31, 2024 and 2023, was $6.0 million and $12.6 million, respectively.
The following table sets forth the pretax (losses) gains on derivatives not accounted for as
hedging instruments that have been included in our Consolidated Statements of Operations for the years
ended August 31, 2024, 2023 and 2022:
Derivative Type
Location of
(Loss) Gain
2024
2023
2022
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
$
5,380
$ (360,937) $ (568,877)
Foreign exchange
derivatives
Cost of goods sold
(31,874)
(30,898)
9,587
Foreign exchange
derivatives
Marketing, general and administrative
expenses
(2,897)
(530)
577
Other derivatives
Other income
—
—
2,057
Total
$
(29,391) $ (392,365) $ (556,656)
Commodity Contracts
When we enter into a commodity purchase or sales commitment, we incur risks related to price
changes and performance, including delivery, quality, quantity and shipment period. In the event that
market prices decrease, we are exposed to risk of loss for the market value of inventory and purchase
contracts with fixed or partially fixed prices. Conversely, we are exposed to risk of loss on our fixed- or
partially fixed-price sales contracts in the event that market prices increase.
Our use of hedging reduces exposure to price volatility by protecting against adverse short-term
price movements but also limits the benefits of favorable short-term price movements. To reduce the
price risk associated with fixed-price commitments, we generally enter into commodity derivative
contracts, to the extent practical, to achieve a net commodity position within the formal position limits
we have established and deemed prudent for each commodity. These contracts are primarily transacted
through our FCM on regulated commodity futures exchanges, but may include OTC derivative
instruments when deemed appropriate. These contracts are recorded at fair values based on quotes
listed on regulated commodity exchanges or the market prices of the underlying products listed on the
exchanges, except that certain contracts are accounted for as normal purchase and normal sales
transactions. For commodities where there is no liquid derivative contract, risk is managed through the
use of forward sales contracts, other pricing arrangements and, to some extent, futures contracts in
50 2024 CHS Annual Report
highly correlated commodities. These contracts are economic hedges of price risk, but are not designated
as hedging instruments for accounting purposes. Unrealized gains and losses on these contracts are
recognized in cost of goods sold in our Consolidated Statements of Operations.
When a futures position is established, initial margin must be deposited with the applicable
exchange or broker. The amount of margin required varies by commodity and is set by the applicable
exchange at its sole discretion. If the market price relative to a short futures position increases, an
additional margin deposit would be required. Similarly, a margin deposit would be required if the market
price relative to a long futures position decreases. Conversely, if the market price increases relative to a
long futures position or decreases relative to a short futures position, margin deposits may be returned
by the applicable exchange or broker.
Our policy is to manage our commodity price risk exposure according to internal policies and in
alignment with our tolerance for risk. It is our policy that our profitability should come from operations,
primarily derived from margins on products sold and grain merchandised, not from hedging transactions.
At any one time, inventory and purchase contracts for delivery to us may be substantial. We have risk
management policies and procedures that include established net physical position limits. These limits are
defined for each commodity and business unit, and business units may include both trader and
management limits as appropriate. The limits policy is overseen at a high level by our corporate middle
office and compliance team, with day-to-day monitoring procedures being implemented within each
individual business unit to ensure any limits overage is explained and exposures reduced, or a temporary
limit increase is established if needed. The position limits are reviewed at least annually with our senior
leadership and Board of Directors. We monitor current market conditions and may expand or reduce our
net position limits or procedures in response to changes in those conditions.
The use of hedging instruments does not protect against nonperformance by counterparties to
cash contracts. We evaluate counterparty exposure by reviewing contracts and adjusting the values to
reflect potential nonperformance. Risk of nonperformance by counterparties includes the inability to
perform because of a counterparty's financial condition and the risk that the counterparty will refuse to
perform on a contract during periods of price fluctuations where contract prices are significantly different
from the current market prices. We manage these risks by entering into fixed-price purchase and sales
contracts with preapproved producers and by establishing appropriate limits for individual suppliers.
Fixed-price contracts are entered into with customers of acceptable creditworthiness, as internally
evaluated. Regarding our use of derivatives, we transact in exchange traded instruments or enter into
over-the-counter derivatives that primarily clear through our FCM, which limits our counterparty
exposure relative to hedging activities. Historically, we have not experienced significant events of
nonperformance on open contracts. Accordingly, we only adjust the estimated fair values of specifically
identified contracts for nonperformance. Although we have established policies and procedures, we make
no assurances that historical nonperformance experience will carry forward to future periods.
As of August 31, 2024 and 2023, we had outstanding commodity futures and options contracts
that were used as economic hedges, as well as fixed-price forward contracts related to physical
purchases and sales of commodities. The table below presents the notional volumes for all outstanding
commodity contracts:
2024
2023
Derivative Type
Long
Short
Long
Short
(Units in thousands)
Grain and oilseed (bushels)
385,426
517,883
506,654
630,803
Energy products (barrels)
8,438
5,014
11,839
8,085
Processed grain and oilseed (tons)
3,600
6,193
7,380
9,437
Crop nutrients (tons)
73
14
70
10
Ocean freight (metric tons)
—
—
40
—
Natural gas (MMBtu)
2,350
500
460
—
Foreign Exchange Contracts
We conduct a substantial portion of our business in U.S. dollars, but we are exposed to risks
relating to foreign currency fluctuations primarily due to global grain marketing transactions in South
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
51
2024 CHS Annual Report
America, the Asia Pacific region and Europe, and purchases of products from Canada. We use foreign
currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although CHS has
some risk exposure relating to foreign currency transactions, a larger impact with exchange rate
fluctuations is the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness
of U.S. agricultural products compared to the same products offered by alternative sources of world
supply. The notional amount of our foreign exchange derivative contracts was $1.5 billion and $1.9 billion
as of August 31, 2024 and 2023.
Derivatives Designated as Cash Flow Hedging Strategies
Certain pay-fixed, receive-variable, cash-settled swaps are designated as cash flow hedges of
future crude oil purchases in our Energy segment. We also designate certain pay-variable, receive-fixed,
cash-settled swaps as cash flow hedges of future refined energy product sales. These hedging
instruments and the related hedged items are exposed to significant market price risk and potential
volatility. As part of our risk management strategy, we look to hedge a portion of our expected future
crude oil needs and the resulting refined product output based on prevailing futures prices,
management's expectations about future commodity price changes and our risk appetite. We may also
elect to dedesignate certain derivative instruments previously designated as cash flow hedges as part of
our risk management strategy. Amounts recorded in other comprehensive income for these
dedesignated derivative instruments remain in other comprehensive income and are recognized in
earnings in the period in which the underlying transactions affect earnings. As of August 31, 2024 and
2023, the aggregate notional amount of cash flow hedges was 5.5 million and 4.1 million barrels,
respectively.
The following table presents the fair value of our commodity derivative instruments designated as
cash flow hedges and the line items on our Consolidated Balance Sheets in which they are recorded as of
August 31, 2024 and 2023:
Derivative Assets
Derivative Liabilities
Balance Sheet Location
2024
2023
Balance Sheet Location
2024
2023
(Dollars in thousands)
(Dollars in thousands)
Other current assets
$
5,226
$
8,395
Other current liabilities
$
2,781
$
5,345
The following table presents the pretax losses recorded in other comprehensive income relating
to cash flow hedges for the years ended August 31, 2024, 2023 and 2022:
2024
2023
2022
(Dollars in thousands)
Commodity derivatives
$
(605) $
(12,285) $
(2,071)
The following table presents the pretax gains (losses) relating to our existing cash flow hedges
that were reclassified from accumulated other comprehensive loss into our Consolidated Statements of
Operations for the years ended August 31, 2024, 2023 and 2022:
Location of
Gain (Loss)
2024
2023
2022
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
$
16,454
$
(14,853) $
(6,254)
NOTE 16
Fair Value Measurements
ASC Topic 820, Fair Value Measurement, defines fair value as the price that would be received for
an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the measurement date.
We determine fair values of derivative instruments and certain other assets, based on the fair
value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are
52 2024 CHS Annual Report
inputs that reflect the assumptions market participants would use in pricing the asset or liability based on
the best information available in the circumstances. ASC Topic 820 describes three levels within its
hierarchy that may be used to measure fair value, and our assessment of relevant instruments within
those levels is as follows:
Level 1. Values are based on unadjusted quoted prices in active markets for identical assets or
liabilities. These assets and liabilities may include exchange-traded derivative instruments, rabbi trust
investments, segregated investments and marketable securities.
Level 2. Values are based on quoted prices for similar assets or liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not active or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of the assets
or liabilities. These assets and liabilities include interest rate, foreign exchange and commodity swaps;
forward commodity contracts with a fixed-price component; and other OTC derivatives whose values are
determined with inputs that are based on exchange traded prices, adjusted for location-specific inputs
that are primarily observable in the market or can be derived principally from, or corroborated by,
observable market data.
Level 3. Values are generated from unobservable inputs that are supported by little or no market
activity and that are a significant component of the fair value of the assets or liabilities. These
unobservable inputs would reflect our own estimates of assumptions that market participants would use
in pricing related assets or liabilities. Valuation techniques might include the use of pricing models,
discounted cash flow models or similar techniques.
The following tables present assets and liabilities, included on our Consolidated Balance Sheets,
that are recognized at fair value on a recurring basis and indicate the fair value hierarchy utilized to
determine these fair values. Assets and liabilities are classified in their entirety based on the lowest level
of input that is a significant component of the fair value measurement. The lowest level of input is
considered Level 3. Our assessment of the significance of a particular input to the fair value measurement
requires judgment and may affect the classification of fair value assets and liabilities within the fair value
hierarchy levels.
Recurring fair value measurements as of August 31, 2024 and 2023, are as follows:
2024
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
(Dollars in thousands)
Assets
Commodity derivatives
$
2,454
$
168,481
$
—
$
170,935
Foreign currency derivatives
—
9,029
—
9,029
Segregated investments and
marketable securities
15,069
136,258
—
151,327
Time deposits
—
500,921
—
500,921
Other assets
83,008
—
—
83,008
Total
$
100,531
$
814,689
$
—
$
915,220
Liabilities
Commodity derivatives
$
1,641
$
222,943
$
—
$
224,584
Foreign currency derivatives
—
24,476
—
24,476
Total
$
1,641
$
247,419
$
—
$
249,060
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
53
2024 CHS Annual Report
2023
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
(Dollars in thousands)
Assets
Commodity derivatives
$
5,344
$
283,491
$
—
$
288,835
Foreign currency derivatives
—
32,402
—
32,402
Segregated investments and
marketable securities
225,715
—
—
225,715
Other assets
89,592
—
—
89,592
Total
$
320,651
$
315,893
$
—
$
636,544
Liabilities
Commodity derivatives
$
7,501
$
346,975
$
—
$
354,476
Foreign currency derivatives
—
13,799
—
13,799
Total
$
7,501
$
360,774
$
—
$
368,275
Commodity and foreign currency derivatives. Exchange-traded futures and options contracts are
valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward
commodity purchase and sales contracts with fixed-price components, select ocean freight contracts and
other OTC derivatives are determined using inputs that are generally based on exchange-traded prices
and/or recent market bids and offers, including location-specific adjustments, and are classified within
Level 2. Location-specific inputs are driven by local market supply and demand and are generally based
on broker or dealer quotations or market transactions in either listed or OTC markets. Changes in the fair
values of these contracts are recognized in our Consolidated Statements of Operations as a component
of cost of goods sold.
Segregated investments and marketable securities, time deposits and other assets. Our
segregated investments and marketable securities and other assets are comprised primarily of
investments in U.S. Treasury securities, money market funds, various government agencies, time deposits
and rabbi trust assets. U.S. Treasury securities and money market funds are valued using quoted market
prices and classified within Level 1. Investments in various government agency obligations, time deposits
and rabbit trust assets are valued using quoted prices for similar assets in active markets, quoted prices
for identical or similar assets in markets that are not active or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets and classified within
Level 2.
NOTE 17
Commitments and Contingencies
Environmental
We are required to comply with various environmental laws and regulations incidental to our
normal business operations. To meet our compliance requirements, we establish reserves for future costs
of remediation associated with identified issues that are both probable and can be reasonably estimated.
Estimates of environmental costs are based on current available facts, existing technology, undiscounted
site-specific costs and currently enacted laws and regulations and are included in cost of goods sold and
marketing, general and administrative expenses in our Consolidated Statements of Operations.
Recoveries, if any, are recorded in the period in which recovery is received. Liabilities are monitored and
adjusted as new facts or changes in law or technology occur. The resolution of any such matters may
affect consolidated net income for any fiscal period; however, we currently believe any resulting liabilities,
individually or in the aggregate, will not have a material effect on our consolidated financial position,
results of operations or cash flows during any fiscal year.
54 2024 CHS Annual Report
Other Litigation and Claims
We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal
course of our business. The resolution of any such matters may affect consolidated net income for any
fiscal period; however, we currently believe any resulting liabilities, individually or in the aggregate, will
not have a material effect on our consolidated financial position, results of operations or cash flows
during any fiscal year.
Guarantees
We are a guarantor for lines of credit and performance obligations of related, nonconsolidated
companies. Our bank covenants allow maximum guarantees of $1.1 billion, of which $70.2 million were
outstanding as of August 31, 2024. We have collateral for a portion of these contingent obligations. We
have not recorded a liability related to the contingent obligations as we do not expect to pay out any
cash related to them, and the fair values are considered immaterial. The underlying loans to the
counterparties for which we provide these guarantees are current as of August 31, 2024.
Credit Commitments
CHS Capital has commitments to extend credit to customers if there are no violations of any
contractually established conditions. As of August 31, 2024, CHS Capital customers had additional
available credit of $1.2 billion.
Unconditional Purchase Obligations
Unconditional purchase obligations are commitments to transfer funds in the future for fixed or
minimum amounts or quantities of goods or services at fixed or minimum prices. Our long-term
unconditional purchase obligations primarily relate to pipeline and grain handling take-or-pay and
throughput agreements and are not recorded on our Consolidated Balance Sheets. As of August 31, 2024,
minimum future payments required under long-term commitments that are noncancelable and that third
parties have used to secure financing for facilities that will provide contracted goods, are as follows:
Payments Due by Period
Total
2025
2026
2027
2028
2029
Thereafter
(Dollars in thousands)
Long-term unconditional
purchase obligations
$ 447,231
$ 85,140
$ 79,357
$ 64,942
$ 57,748
$ 55,115
$ 104,929
Total payments under these arrangements were $84.6 million, $77.8 million and $75.2 million for
the years ended August 31, 2024, 2023 and 2022, respectively.
NOTE 18
Related Party Transactions
We purchase and sell grain and other agricultural commodity products from certain equity
investees, primarily CF Nitrogen, Ventura Foods, Ardent Mills, TEMCO and Producer Ag. Sales to and
purchases from related parties for the years ended August 31, 2024, 2023 and 2022, are as follows:
2024
2023
2022
(Dollars in thousands)
Sales
$ 2,396,916
$ 1,653,125
$
1,511,532
Purchases
1,590,955
1,697,780
2,040,357
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
55
2024 CHS Annual Report
Receivables due from and payables due to related parties as of August 31, 2024 and 2023, are as
follows:
2024
2023
(Dollars in thousands)
Due from related parties
$
334,778
$
80,510
Due to related parties
113,081
90,267
As a cooperative, we are owned by farmers and ranchers and member cooperatives, which are
referred to as members. We buy commodities from and provide products and services to our members.
Individually, our members do not have a significant ownership in CHS.
NOTE 19
Leases
We assess arrangements at inception to determine whether they contain a lease. An arrangement
is considered to contain a lease if it conveys the right to control the use of an asset for a period of time in
exchange for consideration. The right to control the use of an asset must include both (i) the right to
obtain substantially all economic benefits associated with an identified asset and (ii) the right to direct
how and for what purpose the identified asset is used. Certain service agreements may provide us with
the right to use an identified asset; however, most of these arrangements are not considered to represent
a lease as we do not control how and for what purpose the identified asset is used.
We lease property, plant and equipment used in our operations primarily under operating lease
agreements and, to a lesser extent, under finance lease agreements. Our leases are primarily for railcars,
equipment, vehicles and office space, many of which contain renewal options and escalation clauses.
Renewal options are included as part of the right of use asset and liability when it is reasonably certain
that we will exercise the renewal option; however, renewal options are generally not included as we are
not reasonably certain to exercise such options.
Right of use assets and liabilities for operating and finance leases are recognized under ASC Topic
842 at the lease commencement date for leases in excess of 12 months based on the present value of
lease payments over the lease term. For measurement and classification of lease agreements, lease and
nonlease components are grouped into a single lease component for all asset classes. Variable lease
payments are excluded from measurement of right of use assets and liabilities and generally include
payments for nonlease components such as maintenance costs, payments for leased assets beyond their
noncancelable lease term and payments for other nonlease components such as sales tax. The discount
rate used to calculate present value is our collateralized incremental borrowing rate or, if available, the
rate implicit in the lease. The incremental borrowing rate is determined for each lease based primarily on
its lease term. Certain lease arrangements include rental payments adjusted annually based on changes in
an inflation index. Our lease arrangements generally do not contain residual value guarantees or material
restrictive covenants.
Lease expense is recognized on a straight-line basis over the lease term. The components of lease
expense recognized in our Consolidated Statements of Operations as of August 31, 2024, 2023 and 2022,
are as follows:
2024
2023
2022
(Dollars in thousands)
Operating lease expense
$
84,826 $
77,588 $
71,209
Finance lease expense:
Amortization of assets
9,506
8,966
8,967
Interest on lease liabilities
1,964
1,646
1,469
Short-term lease expense
25,753
20,068
16,915
Variable lease expense
833
650
1,699
Total net lease expense*
$
122,882 $
108,918 $
100,259
*Income related to sublease activity is not material and has been excluded from the table above.
56 2024 CHS Annual Report
Supplemental balance sheet information related to operating and finance leases as of August 31,
2024 and 2023, is as follows:
Balance Sheet Location
2024
2023
(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets
Other assets
$
218,844 $
254,844
Liabilities
Current operating lease liabilities
Accrued expenses
$
61,796 $
61,094
Long-term operating lease liabilities
Other liabilities
161,494
200,758
Total operating lease liabilities
$
223,290 $
261,852
Finance leases
Assets
Finance lease assets
Property, plant and equipment
$
63,229 $
64,381
Liabilities
Current finance lease liabilities
Current portion of long-term
debt
$
7,116 $
6,797
Long-term finance lease liabilities
Long-term debt
42,395
42,438
Total finance lease liabilities
$
49,511 $
49,235
Information related to the lease term and discount rate for operating and finance leases as of
August 31, 2024 and 2023, is as follows:
2024
2023
Weighted average remaining lease term (in years)
Operating leases
5.1
7.0
Finance leases
8.6
9.6
Weighted average discount rate
Operating leases
3.85 %
3.50 %
Finance leases
3.99 %
3.78 %
Supplemental cash flow and other information related to operating and finance leases as of
August 31, 2024, 2023 and 2022, is as follows:
2024
2023
2022
(Dollars in thousands)
Cash paid for amounts included in measurement of lease
liabilities:
Operating cash flows from operating leases
$
78,614 $
71,798 $
61,750
Operating cash flows from finance leases
1,964
1,646
1,469
Financing cash flows from finance leases
7,716
8,571
9,171
Supplemental noncash information:
Right of use assets obtained in exchange for lease
liabilities
$
73,183 $
69,837 $
54,199
Right of use asset modifications
12,277
28,614
12,887
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
57
2024 CHS Annual Report
Maturities of lease liabilities by fiscal year as of August 31, 2024, were as follows:
August 31, 2024
Finance Leases
Operating Leases
(Dollars in thousands)
2025
$
8,956 $
71,326
2026
8,308
60,192
2027
7,648
43,430
2028
7,037
28,675
2029
6,320
15,907
Thereafter
19,992
27,770
Total maturities of lease liabilities
58,261
247,300
Less amounts representing interest
8,750
24,010
Present value of future minimum lease payments
49,511
223,290
Less current obligations
7,116
61,796
Long-term obligations
$
42,395 $
161,494
59
2024 CHS Annual Report
Board of directors
Lefthand row, from bottom, Johnsrud, Kayser, Fritel, Jones, Clemensen, Stroh, Erickson; middle row, from bottom, Wagner, Rossman, Farrell, Throener;
righthand row, from bottom, Schurr, Cordes, Kehl, Holm; not pictured: Beckman, Blew
Dan Schurr
Chair
LeClaire, Iowa
C.J. Blew
First vice chair
Castleton, Kansas
Russ Kehl
Secretary-treasurer
Quincy, Washington
Scott Cordes
Second vice chair
Wanamingo, Minnesota
Alan Holm
Assistant secretary-treasurer
Sleepy Eye, Minnesota
David Beckman
Elgin, Nebraska
Hal Clemensen
Aberdeen, South Dakota
Jon Erickson
Minot, North Dakota
Mark Farrell
Cross Plains, Wisconsin
Steve Fritel
Barton, North Dakota
David Johnsrud
Starbuck, Minnesota
Tracy Jones
Kirkland, Illinois
David Kayser
Alexandria, South Dakota
Tony Rossman
Oronoco, Minnesota
Jerrad Stroh
Juniata, Nebraska
Kevin Throener
Cogswell, North Dakota
Cortney Wagner
Hardin, Montana
Detailed biographical information on the CHS Board of Directors is available at chsinc.com.
60 2024 CHS Annual Report
Executive team
Front, from left, Smith, Halvorson, Debertin, Nelligan; back, from left, Kaul-Hottinger, Hunhoff, Griffith, Black, Dusek
Jay Debertin
President and chief
executive officer
David Black
Executive vice president,
enterprise transformation, chief
information officer
Rick Dusek
Executive vice president,
ag retail, distribution and
transportation
John Griffith
Executive vice president,
ag business and CHS Hedging
Gary Halvorson
Executive vice president,
enterprise customer
development
Darin Hunhoff
Executive vice president,
energy
Mary Kaul-Hottinger
Executive vice president,
chief human resources officer
Olivia Nelligan
Executive vice president, chief
financial officer, chief strategy
officer
Brandon Smith
Executive vice president
and general counsel
Acknowledgements
Thank you to the following teams and cooperative owners for assisting in creating images for this report and
showing their cooperative spirit: Jim and Sally Diamond, Akron, Colo.; Evan Fust/CHS High Plains and CHS United
Plains Ag teams; Alissa Geske/CHS Crop Research and Development Center team; Chris Guess/CHS SunBasin
Growers team; Harlee Kilber/students/staff of Bismarck State College, Bismarck, N.D.; Mark Mailander, Holyoke,
Colo.; Myrtle Grove, La., export facility team; Dave Manterola, Pasco, Wash.; Todd Reif/CBH Co-op team and
board, Sturgis, S.D.; Rosemount (Minn.) transportation team; Tony and Michelle Rossman, Oronoco, Minn.; Sydney
Swanson, Philip, S.D.; TEMCO team, Port of Houston; Curtis Templeton/Galveston, Texas, import facility team
5500 Cenex Drive
Inver Grove Heights, MN 55077
651-355-6000
chsinc.com
NASDAQ: CHSCP, CHSCO, CHSCN, CHSCM, CHSCL
© 2024 CHS Inc.