A message from Jay Debertin: 2020 year-end results
Dear CHS Owners:
We are pleased to share our financial results for fiscal year 2020 and an update on equity management plans. Today we reported net income of $422.4 million for the fiscal year that ended Aug. 31, 2020. This compares to fiscal year 2019 net income of $829.9 million.
Key financial drivers for fiscal year 2020 include:
- Consolidated revenues of $28.4 billion for fiscal year 2020 compared to $31.9 billion for fiscal year 2019.
- Strong supply chain performance in our propane business driven by efficiently sourced propane to customers to meet strong crop drying and home heating demand that contributed to improved results especially during the first half of fiscal year 2020.
- Less advantageous market conditions in our refined fuels business, primarily driven by the COVID-19 pandemic, resulted in volume and price declines that significantly reduced earnings compared to the prior year.
- Poor weather conditions negatively impacted our Ag segment’s operations during the first half of fiscal year 2020, resulting in lower crop yields and poor grain quality following a late harvest and lower crop nutrient sales during fall 2019.
- Improved weather conditions during the 2020 spring planting season drove increased earnings across much of our Ag segment in the second half of fiscal year 2020.
Based on fiscal year 2020 earnings, the CHS Board of Directors made the following equity management decisions: We expect to return an estimated $30 million in cash patronage and $33 million in equity redemptions to member cooperatives and individual owners in fiscal year 2021. CHS will pass through the benefit of its unused IRS Sec. 199/DPAD deduction to eligible owners by mid-December.
We delivered record earnings in propane and benefited from good weather that led to a good planting season. Consistent with our focus on innovation in agriculture, we were awarded a patent for a crop input product that can help plants access more phosphorus and, in turn, have better yield.
Continued work on integration of the West Central acquisition of 2019 and leveraging commercial synergies resulted in strong crop protection sales, and we moved increased volumes of grain because of improved trade relations.
Our continued investment in digital capabilities helps us anticipate and meet owners’ and customers’ needs by leveraging the strength of our supply chain. Enhancing our customers’ experience through solutions using efficient, effective data across our supply chain encourages our customers to make CHS their first choice.
Like many companies, we were not immune to the challenges posed by changes in consumer behavior related to the pandemic. Those challenges were felt especially hard in our refined fuels business and in our Ventura Foods joint venture.
Our focus remains on serving our owners and our customers around the world, keeping our employees safe and ensuring we emerge stronger after the pandemic. Since March, we have been focused on taking care of those who depend on us, maintaining financial strength and planning for the future.
I invite you to attend our virtual annual meeting on Thursday, Dec. 3, 2020. It will be an abbreviated meeting focused on governance. But we will, as always, include time for your questions. You can find the agenda and register here.
Thank you for your business. Be well and stay safe.
President and CEO
CHS Inc. Earnings*
(in thousands $)
|For the Twelve Months Ended Aug. 31,|
|Energy||$ 225,317||$ 618,188|
|Corporate and Other||56,000||81,527|
|Income before income taxes||386,878||815,601|
|Income tax expense (benefit)||(36,731)||(12,456)|
|Net income (loss)||423,609||828,057|
|Net income attributable to non-controlling interests||(1,170)||(1,823)|
|Net income (loss) attributable to CHS Inc.||$ 422,439||$ 829,880|
*Earnings is defined as income (loss) before income taxes.