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July 07, 2020 | CHS Inc.
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CHS Reports Q3 Earnings

Company reports net income of $97.6 million, a 78% increase from 2019

CHS Inc., a leading agribusiness cooperative, has reported net income of $97.6 million for the third quarter of fiscal year 2020 that ended May 31, 2020.

This represents a 78.8% increase compared to net income of $54.6 million in the third quarter of fiscal year 2019.

The results for the third quarter of fiscal year 2020 reflect:

  • Revenues of $7.2 billion compared to revenues of $8.5 billion for the third quarter of fiscal year 2019.
  • Improved margins and volumes across much of the Ag segment as a result of more favorable weather conditions for spring planting compared to third quarter of fiscal year 2019.
  • Improved trade relations between the United States and foreign trading partners.
  • Decreased selling prices and volumes for refined fuels driven by global market conditions including the impact of COVID-19, which has depressed demand for energy products.
  • A $42.0 million noncash charge to reduce our refined fuels inventory to its market value.

"We continue to adapt how we do business to ensure the safety of our employees and our customers. A successfully managed supply chain helped our owners get the products and services they and their customers need to grow their crops. That focus also helped us deliver value to our customers around the world," said Jay Debertin, president and CEO of CHS Inc. "Improved trade relations benefited us, and, in turn, our owners, and we are eager for that to continue. We are not immune to the market pressures caused by COVID-19, and we will continue to adjust to best serve our owners and customers."

Third Quarter Fiscal 2020 Business Segment Results
The following segment results were reported for the third quarter of fiscal year 2020 compared to the third quarter of fiscal year 2019.

Energy
Pretax loss of $54.8 million in the third quarter of fiscal year 2020 compared to $1.3 million in pretax earnings for the third quarter of fiscal year 2019 reflects:

Lower margins due to less advantageous market conditions compared to the third quarter of fiscal year 2019. Those lower margins were the result of decreased refining margins, which were partially offset by improved crude oil differentials for heavy Canadian crude oil processed by our refineries and by improved propane margins.
Decreased selling prices and volumes for refined fuels driven by global market conditions including the impact of COVID-19 and product mix, which has depressed demand for energy products.
A $42.0 million noncash charge to reduce our refined fuels inventory to its market value.

Ag
Pretax earnings of $95.4 million in the third quarter of fiscal year 2020 compared to pretax earnings of $21.1 million in the third quarter of fiscal year 2019 reflect:

Improved trade between the United States and foreign trading partners.
Improved margins across much of the Ag segment as a result of more favorable weather conditions for spring planting compared to third quarter of fiscal year 2019, which were partially offset by decreased margins and volumes in our renewable fuels and processing and food ingredients businesses. Those decreases are attributable to COVID-19-related demand shocks in food service and transportation sectors.
Impact of additional loan loss reserves established in the third quarter of fiscal year 2019 that did not reoccur in the third quarter of fiscal year 2020.

Nitrogen Production
Pretax earnings of $23.5 million compared to pretax earnings of $20.2 million in the third quarter of fiscal 2019 reflect:

Decreased interest expense associated with our CF Nitrogen investment.

Corporate and Other
Pretax earnings of $6.3 million compared to pretax earnings of $19.0 million in the third quarter of fiscal 2019 reflect:

Lower earnings from our investment in Ventura Foods resulting from decreased demand due to COVID-19-related demand shocks in the food service sector.

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