CHS Inc. 8% Cumulative Redeemable Prefe (CHSCP, Financial) filed Quarterly Report for the period ended 2009-05-31.
CHS Inc. is a diversified energy grains and food company committed to providing the essential resources that enrich lives around the world. A Fortune 200 company CHS is owned by farmers ranchers and cooperatives along with thousands of preferred stockholders from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. CHS supplies energy crop nutrients livestock feed grain food and food ingredients along with business solutions including insurance financial and risk management services. CHS Inc. 8% Cumulative Redeemable Prefe has a market cap of $237.9 million; its shares were traded at around $26.49 . The dividend yield of CHS Inc. 8% Cumulative Redeemable Prefe stocks is 7.7%.
Our Ag Business segment revenues, after elimination of intersegment revenues, of $4.4 billion, decreased $1.6 billion (27%) during the three months ended May 31, 2009 compared to the three months ended May 31, 2008. Grain revenues in our Ag Business segment totaled $3.0 billion and $4.3 billion during the three months ended May 31, 2009 and 2008, respectively. Of the grain revenues decrease of $1.3 billion (31%), $1.2 billion is due to decreased average grain selling prices and $96.0 million is attributable to decreased volumes during the three months ended May 31, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $3.00 per bushel (29%) over the same three-month period in fiscal 2008. The average month-end market price per bushel of spring wheat, soybeans and corn decreased $4.41, $2.19 and $1.77, respectively. Volumes decreased 2% during the three months ended May 31, 2009 compared with the same period of a year ago. Wheat, barley and corn reflected the largest volume decreases, partially offset by increased volumes of soybeans, compared to the three months ended May 31, 2008. Most of the decline in both price and volumes are attributable to demand deterioration caused by the world-wide economic recession.
Interest, net. Net interest of $16.3 million for the three months ended May 31, 2009 decreased $5.9 million (27%) compared to the same period last fiscal year. Interest expense for the three months ended May 31, 2009 and 2008 was $18.6 million and $24.8 million, respectively. Interest income, generated primarily from marketable securities, was $2.3 million and $2.6 million, for the three months ended May 31, 2009 and 2008, respectively. The interest expense decrease of $6.2 million (25%) was in spite of an increase in interest expense of $1.6 million as the result of the consolidation of Cofina Financial. Through August 31, 2008, we held a 49% ownership interest in Cofina Financial and accounted for our investment using the equity method of accounting. On September 1, 2008, we purchased Cenex Finance Associations 51% ownership interest. During the three months ended May 31, 2009, we experienced significant decreases in our average short-term borrowings compared to the three months ended May 31, 2008, excluding those loans of Cofina Financial. Also, for the three months ended May 31, 2009 and 2008, we capitalized interest of $1.4 million and $0.6 million, respectively, primarily related to construction projects in our Energy segment. The average level of short-term borrowings decreased $597.1 million during the three months ended May 31, 2009, compared to the same three-month period in fiscal 2008. This dramatic reduction in short-term borrowings was the result of the lower commodity prices, which reduced working capital needs. The net decrease in interest income of $0.3 million (13%) was primarily within our Energy segment and relates to marketable securities.
Our Ag Business segment generated income before income taxes of $56.5 million for the nine months ended May 31, 2009 compared to $504.6 million in the nine months ended May 31, 2008, a decrease in earnings of $448.1 million (89%). In our first fiscal quarter of 2008, we sold all of our 1,610,396 shares of CF Industries Holdings stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. Earnings from our wholesale crop nutrients business are $174.8 million less for the first nine months of fiscal 2009 compared with the same period in fiscal 2008. The market prices for crop nutrients products fell significantly during the first nine months of our fiscal 2009 as fertilizer prices, as an input to grain production, followed the declining grain prices. Late fall rains impeded the application of fertilizer during that time period, and as a result, we had a higher quantity of inventories on hand at the end of our first fiscal quarter than is typical at that time of year. Because there are no future contracts or other derivatives that can be used to hedge fertilizer inventories and contracts effectively, a long inventory position with falling prices creates losses. Depreciation in fertilizer prices continued throughout the second and third quarters of our fiscal year which had the affect of dramatically reducing gross margins on this product. In spite of lower fertilizer prices, spring fertilizer volumes declined because of late April rains that delayed the application season, and because producers were reluctant to buy today when the price might be lower tomorrow. The situation was just the opposite during fiscal 2008 when fertilizer prices appreciated rapidly and produced extremely large margins on inventory that had been purchased at relatively low prices. To reflect our wholesale crop nutrients inventories at net-realizable values, we made lower-of-cost or market adjustments in this business of approximately $83 million during the nine months ended May 31, 2009, of which $8.2 million is remaining at the end of the third quarter of fiscal 2009. Reduced performance by Agriliance, an agronomy joint venture in which we hold a 50% interest, partially offset by a net gain on the sale of a Canadian agronomy equity investment, resulted in a $3.1 million net decrease in earnings from these investments, net of allocated internal expenses. Our grain marketing earnings decreased by $142.5 million during the nine months ended May 31, 2009 compared with the same nine-month period in fiscal 2008, primarily as a result of lower grain margins and reduced earnings from our joint ventures.
Our Energy segment revenues, after elimination of intersegment revenues, of $5.5 billion decreased by $2.3 billion (29%) during the nine months ended May 31, 2009 compared to the nine months ended May 31, 2008. During the nine months ended May 31, 2009 and 2008, our Energy segment recorded revenues from our Ag Business segment of $190.0 million and $224.9 million, respectively. The net decrease in revenues of $2.3 billion is comprised of a net decrease of $2.0 billion related to lower prices on refined fuels, propane and renewable fuels marketing products, in addition to $236.0 million related to a net decrease in sales volume. Refined fuels revenues decreased $1.7 billion (32%), of which $1,768.8 million was related to a net average selling price decrease, partially offset by $35.1 million, which was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels decreased $0.89 per gallon (33%), while volumes increased 1% when comparing the nine months ended May 31, 2009 with the same period a year ago. Renewable fuels marketing revenues decreased $422.7 million (52%), mostly from a 43% decrease in volumes and a decrease of $0.32 per gallon (15%), when compared with the same nine-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues increased $56.8 million (9%), of which $125.2 million related to an increase in volumes, partially offset by $68.4 million due to a decrease in the net average selling price, when compared to the same period in the previous year. Propane sales volume increased 20%, while the average selling price of propane decreased $0.13 per gallon (9%) in comparison to the same period of the prior year. The increase in propane volumes primarily reflects increased demand caused by lower prices, a longer home heating season and an improved crop drying season.
Our Ag Business segment revenues, after elimination of intersegment revenues, of $12.7 billion, decreased $1.4 billion (10%) during the nine months ended May 31, 2009 compared to the nine months ended May 31, 2008. Grain revenues in our Ag Business segment totaled $9.5 billion and $10.7 billion during the nine months ended May 31, 2009 and 2008, respectively. Of the grain revenues decrease of $1.2 billion (11%), $949.0 million is attributable to decreased average grain selling prices and $267.9 million is due to a 2% decrease in volumes during the nine months ended May 31, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $0.75 per bushel (9%) over the same nine-month period in fiscal 2008. The Read the The complete Report
CHS Inc. is a diversified energy grains and food company committed to providing the essential resources that enrich lives around the world. A Fortune 200 company CHS is owned by farmers ranchers and cooperatives along with thousands of preferred stockholders from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. CHS supplies energy crop nutrients livestock feed grain food and food ingredients along with business solutions including insurance financial and risk management services. CHS Inc. 8% Cumulative Redeemable Prefe has a market cap of $237.9 million; its shares were traded at around $26.49 . The dividend yield of CHS Inc. 8% Cumulative Redeemable Prefe stocks is 7.7%.
Highlight of Business Operations:
Our Energy segment revenues, after elimination of intersegment revenues, of $1.5 billion decreased by $1.5 billion (49%) during the three months ended May 31, 2009 compared to the three months ended May 31, 2008. During the three months ended May 31, 2009 and 2008, our Energy segment recorded revenues from our Ag Business segment of $48.4 million and $75.6 million, respectively. The net decrease in revenues of $1,466.6 million is comprised of a decrease of $1,210.3 million related to a reduction in prices on refined fuels, propane and renewable fuels marketing products and $256.3 million related to a net decrease in sales volume. Refined fuels revenues decreased $1,129.5 million (52%), of which $1,039.9 million was related to a net average selling price decrease and $89.6 million was due to decreased volumes, compared to the same period in the previous year. The average selling price of refined fuels decreased $1.57 per gallon (50%), and volumes decreased 4% when comparing the three months ended May 31, 2009 with the same period a year ago. Renewable fuels marketing revenues decreased $193.7 million (60%), mostly from a 44% decrease in volumes, in addition to a decrease of $0.68 per gallon (29%), when compared with the same three-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues decreased $32.9 million (25%), of which $46.4 million related to a decrease in the net average selling price, partially offset byOur Ag Business segment revenues, after elimination of intersegment revenues, of $4.4 billion, decreased $1.6 billion (27%) during the three months ended May 31, 2009 compared to the three months ended May 31, 2008. Grain revenues in our Ag Business segment totaled $3.0 billion and $4.3 billion during the three months ended May 31, 2009 and 2008, respectively. Of the grain revenues decrease of $1.3 billion (31%), $1.2 billion is due to decreased average grain selling prices and $96.0 million is attributable to decreased volumes during the three months ended May 31, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $3.00 per bushel (29%) over the same three-month period in fiscal 2008. The average month-end market price per bushel of spring wheat, soybeans and corn decreased $4.41, $2.19 and $1.77, respectively. Volumes decreased 2% during the three months ended May 31, 2009 compared with the same period of a year ago. Wheat, barley and corn reflected the largest volume decreases, partially offset by increased volumes of soybeans, compared to the three months ended May 31, 2008. Most of the decline in both price and volumes are attributable to demand deterioration caused by the world-wide economic recession.
Interest, net. Net interest of $16.3 million for the three months ended May 31, 2009 decreased $5.9 million (27%) compared to the same period last fiscal year. Interest expense for the three months ended May 31, 2009 and 2008 was $18.6 million and $24.8 million, respectively. Interest income, generated primarily from marketable securities, was $2.3 million and $2.6 million, for the three months ended May 31, 2009 and 2008, respectively. The interest expense decrease of $6.2 million (25%) was in spite of an increase in interest expense of $1.6 million as the result of the consolidation of Cofina Financial. Through August 31, 2008, we held a 49% ownership interest in Cofina Financial and accounted for our investment using the equity method of accounting. On September 1, 2008, we purchased Cenex Finance Associations 51% ownership interest. During the three months ended May 31, 2009, we experienced significant decreases in our average short-term borrowings compared to the three months ended May 31, 2008, excluding those loans of Cofina Financial. Also, for the three months ended May 31, 2009 and 2008, we capitalized interest of $1.4 million and $0.6 million, respectively, primarily related to construction projects in our Energy segment. The average level of short-term borrowings decreased $597.1 million during the three months ended May 31, 2009, compared to the same three-month period in fiscal 2008. This dramatic reduction in short-term borrowings was the result of the lower commodity prices, which reduced working capital needs. The net decrease in interest income of $0.3 million (13%) was primarily within our Energy segment and relates to marketable securities.
Our Ag Business segment generated income before income taxes of $56.5 million for the nine months ended May 31, 2009 compared to $504.6 million in the nine months ended May 31, 2008, a decrease in earnings of $448.1 million (89%). In our first fiscal quarter of 2008, we sold all of our 1,610,396 shares of CF Industries Holdings stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. Earnings from our wholesale crop nutrients business are $174.8 million less for the first nine months of fiscal 2009 compared with the same period in fiscal 2008. The market prices for crop nutrients products fell significantly during the first nine months of our fiscal 2009 as fertilizer prices, as an input to grain production, followed the declining grain prices. Late fall rains impeded the application of fertilizer during that time period, and as a result, we had a higher quantity of inventories on hand at the end of our first fiscal quarter than is typical at that time of year. Because there are no future contracts or other derivatives that can be used to hedge fertilizer inventories and contracts effectively, a long inventory position with falling prices creates losses. Depreciation in fertilizer prices continued throughout the second and third quarters of our fiscal year which had the affect of dramatically reducing gross margins on this product. In spite of lower fertilizer prices, spring fertilizer volumes declined because of late April rains that delayed the application season, and because producers were reluctant to buy today when the price might be lower tomorrow. The situation was just the opposite during fiscal 2008 when fertilizer prices appreciated rapidly and produced extremely large margins on inventory that had been purchased at relatively low prices. To reflect our wholesale crop nutrients inventories at net-realizable values, we made lower-of-cost or market adjustments in this business of approximately $83 million during the nine months ended May 31, 2009, of which $8.2 million is remaining at the end of the third quarter of fiscal 2009. Reduced performance by Agriliance, an agronomy joint venture in which we hold a 50% interest, partially offset by a net gain on the sale of a Canadian agronomy equity investment, resulted in a $3.1 million net decrease in earnings from these investments, net of allocated internal expenses. Our grain marketing earnings decreased by $142.5 million during the nine months ended May 31, 2009 compared with the same nine-month period in fiscal 2008, primarily as a result of lower grain margins and reduced earnings from our joint ventures.
Our Energy segment revenues, after elimination of intersegment revenues, of $5.5 billion decreased by $2.3 billion (29%) during the nine months ended May 31, 2009 compared to the nine months ended May 31, 2008. During the nine months ended May 31, 2009 and 2008, our Energy segment recorded revenues from our Ag Business segment of $190.0 million and $224.9 million, respectively. The net decrease in revenues of $2.3 billion is comprised of a net decrease of $2.0 billion related to lower prices on refined fuels, propane and renewable fuels marketing products, in addition to $236.0 million related to a net decrease in sales volume. Refined fuels revenues decreased $1.7 billion (32%), of which $1,768.8 million was related to a net average selling price decrease, partially offset by $35.1 million, which was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels decreased $0.89 per gallon (33%), while volumes increased 1% when comparing the nine months ended May 31, 2009 with the same period a year ago. Renewable fuels marketing revenues decreased $422.7 million (52%), mostly from a 43% decrease in volumes and a decrease of $0.32 per gallon (15%), when compared with the same nine-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues increased $56.8 million (9%), of which $125.2 million related to an increase in volumes, partially offset by $68.4 million due to a decrease in the net average selling price, when compared to the same period in the previous year. Propane sales volume increased 20%, while the average selling price of propane decreased $0.13 per gallon (9%) in comparison to the same period of the prior year. The increase in propane volumes primarily reflects increased demand caused by lower prices, a longer home heating season and an improved crop drying season.
Our Ag Business segment revenues, after elimination of intersegment revenues, of $12.7 billion, decreased $1.4 billion (10%) during the nine months ended May 31, 2009 compared to the nine months ended May 31, 2008. Grain revenues in our Ag Business segment totaled $9.5 billion and $10.7 billion during the nine months ended May 31, 2009 and 2008, respectively. Of the grain revenues decrease of $1.2 billion (11%), $949.0 million is attributable to decreased average grain selling prices and $267.9 million is due to a 2% decrease in volumes during the nine months ended May 31, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $0.75 per bushel (9%) over the same nine-month period in fiscal 2008. The Read the The complete Report
