CHSCLHIGH SIGNALFINANCIAL10-K

CHS Inc. experienced a dramatic operational deterioration with operating income collapsing 84.5% from $584M to $91M while revenues declined from $39.3B to $35.5B.

The massive operating income decline signals severe margin compression and operational challenges that go beyond normal cyclical pressures in the agricultural cooperative sector. The company appears to have divested its McPherson refinery operations (based on removed language), which likely contributed to the revenue decline but doesn't fully explain the operating performance deterioration.

Comparing 2025-11-05 vs 2024-11-06View on EDGAR →
FINANCIAL ANALYSIS

CHS experienced broad-based financial deterioration with operating income plummeting 84.5%, net income falling 46%, and operating cash flow declining 50% to $636M. While the company reduced total debt by 16% and cut SG&A expenses by 10%, these improvements were overwhelmed by gross profit declining 35% and a severe cash position deterioration of 59%. The combination of massive operating income decline, significant cash burn, and higher interest expenses despite debt reduction signals serious operational challenges that investors should view as a major red flag.

FINANCIAL STATEMENT CHANGES
Operating Income
P&L
-84.5%
$584.4M→$90.8M

Operating income deteriorated sharply — investigate whether driven by one-time charges or structural cost issues.

Cash & Equivalents
Balance Sheet
-58.8%
$794.9M→$327.8M

Cash declined 58.8% — significant cash burn or deployment; verify adequacy of remaining liquidity runway.

Operating Cash Flow
Cash Flow
-50.1%
$1.3B→$635.8M

Operating cash flow fell 50.1% — earnings quality concerns; investigate working capital changes and non-cash items.

Net Income
P&L
-45.8%
$1.1B→$597.9M

Net income declined 45.8% — review whether driven by operations, interest costs, or non-recurring items.

Interest Expense
P&L
+40.4%
$104.1M→$146.1M

Interest expense surged 40.4% — significant debt increase or rising rates materially impacting earnings.

Gross Profit
P&L
-35.1%
$1.8B→$1.1B

Gross margin compression — rising input costs, pricing pressure, or unfavorable product mix shift.

Total Debt
Balance Sheet
-15.7%
$2.1B→$1.8B

Debt reduced 15.7% — deleveraging strengthens balance sheet and reduces financial risk.

SG&A Expense
P&L
-10.4%
$1.2B→$1.0B

SG&A reduced 10.4% — improved cost efficiency or headcount reduction improving operating margins.

LANGUAGE CHANGES
NEW — 2025-11-05
PRIOR — 2024-11-06
ADDED
For the year ended August 31, 2025, our total revenues were $35.5 billion and net income attributable to CHS was $597.9 million.
Our origins date back to the late 1920s with the founding of our predecessor companies, which became Cenex, Inc., and Harvest States Cooperatives.
emerged as the result of the merger of Cenex and Harvest States Cooperative in 1998 and is headquartered in Inver Grove Heights, Minnesota.
For fiscal 2025, our Energy revenues, after elimination of intersegment revenues, were $7.6 billion and were primarily from gasoline, diesel fuel and propane.
Our Laurel refinery sources approximately 96% of its crude oil supply from Canada, with the remaining balance obtained from domestic sources.
We have access to Canadian and northwest Montana crude oil through our wholly-owned Front Range Pipeline, LLC, and other common carrier pipelines.
Our McPherson, Kansas, refinery processes approximately 60% low- and medium-sulfur crude oil and approximately 40% heavy-high-sulfur crude oil into gasoline, diesel fuel and other distillates, petroleum coke and other products.
Our McPherson refinery processes approximately 115,000 barrels of crude oil per day to produce refined products that consist of approximately 50% gasoline, 43% diesel fuel and other distillates, 5% petroleum coke and 2% other products.
We operate 10 refined product terminals, nine propane terminals, three asphalt terminals and one lubricants blending and packaging facility.
For fiscal 2025, approximately 75% of the refined petroleum products we sold were produced at our Laurel and McPherson refineries and approximately 25% were obtained from third parties.
REMOVED
For the year ended August 31, 2024, our total revenues were $39.3 billion and net income attributable to CHS was $1.1 billion.
Our origins date back to the early 1930s with the founding of our predecessor companies, Cenex, Inc., and Harvest States Cooperatives.
emerged as the result of the merger of those two entities in 1998 and is headquartered in Inver Grove Heights, Minnesota.
For fiscal 2024, our Energy revenues, after elimination of intersegment revenues, were $8.8 billion and were primarily from gasoline, diesel fuel and propane.
Our Laurel refinery sources approximately 95% of its crude oil supply from Canada, with the remaining balance obtained from domestic sources, and we have access to Canadian and northwest Montana crude oil through our wholly-owned Front Range Pipeline, LLC, and other common carrier pipelines.
Our McPherson, Kansas, refinery processes approximately 58% low- and medium-sulfur crude oil and approximately 42% heavy-sulfur crude oil into gasoline, diesel fuel and other distillates, petroleum coke and other products.
Our McPherson refinery processes approximately 114,000 barrels of crude oil per day to produce refined products that consist of approximately 49% gasoline, 45% diesel fuel and other distillates, 5% petroleum coke and 1% other products.
We operate nine propane terminals, four asphalt terminals, eight refined product terminals and two lubricants blending and packaging facilities.
For fiscal 2024, we produced approximately 81% of the refined petroleum products we sold at our Laurel and McPherson refineries and obtained approximately 19% from third parties.
Another geographic region includes Colorado, Idaho, Montana, western North Dakota, western South Dakota, Utah and Wyoming.
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