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About CHS Inc.

CHS is a major cooperative marketer of grain, oilseed, and energy resources in the US. It represents farmers, ranchers, and co-ops from the Great Lakes to Texas, trading grain and selling farm supplies through its stores to members. The group processes soybeans for use in food and animal feeds and grinds wheat into flour. In addition to grain marketing, it operates through joint ventures and a variety of business segments for the sale ofl soybean oil and crop nutrient products. CHS also provides insurance, financial, and risk-management services and operates petroleum refineries that sell Cenex-brand fuels, lubricants, and other energy products. The company does about 90% of its business in North America.

Operations

CHS operates through three segments: Energy, Ag, and Nitrogen Production.

The Ag segment accounts for more than 80% of sales and consists of grain marketing, country operations, crop nutrients, processing and food ingredients, and renewable fuels. The grain marketing business buys up grain from producers and ships it from export and river terminals across the US to specified locations. The country operations business purchases grain through more than 465 locations throughout the midwestern and western US and Canada and sells energy, feed, and seed products to the same producers. Crop nutrients delivers products from approximately 20 inland river warehouse terminals directly to customers. Processing and food ingredients crushes around 120 million bushels of oilseeds into meal or flour and edible oil each year. It also processes soy flour used in the snack industry. Renewable fuels produces fuel-grade ethanol and dried distillers grains and markets ethanol and dried distillers grains for third-party production plants.

The Energy segment generates almost 20% of sales and sells refined petroleum products through retail and wholesale channels. Products include petroleum, lubricants, and propane and other natural gas liquids. It has refineries in Laurel, MO and McPherson, KS, and sells products under the Cenex brand through a network of around 1,500 convenience stores.

The Nitrogen Production segment consists solely of the company's investment in CF Nitrogen and does not contribute revenue to consolidated sales. The investment allows CHS to purchase granular urea and UAN (an ammonium nitrate solution) to produce and distribute nitrogen fertilizer, a commodity chemical.

Revenue from the company's financing and hedging operations, as well as its non-consolidated wheat milling and food production and distribution businesses, is included within the Corporate and Other division.

Geographic Reach

CHS' corporate headquarters is located in Inver Grove Heights, MN. The company's Energy business operates terminals and storage facilities, refineries, pipelines, lubricant plants and warehouses, and convenience stores and gas stations throughout the US. The Ag business runs grain terminals, oilseed processing facilities, and ethanol plants in the US. Outside the US, CHS owns grain terminals in Argentina, Brazil, Hungary, and Romania. The company also leases grain marketing offices worldwide.

North America accounts for approximately 90% of net sales.

Sales and Marketing

CHS makes some 80% of its refined fuel sales to members. The cooperative sells about 1.5 billion gallons of gasoline and about 1.7 billion gallons of diesel fuel each year. Sales are made wholesale to member cooperatives and non-member producers, as well as local cooperatives, grain dealers, and crop nutrient retailers. It also sells its products through independent retailers operating Cenex-branded Zip Trip convenience stores.

Financial Performance

In fiscal 2018 (ended August 31) CHS' revenue increased for the second consecutive year, reversing a recent trend of declining revenue amid low commodity prices. As a company that operates heavily in global commodities, such as petroleum products, natural gas, grains, and oilseed products, there is significant unpredictability and volatility in pricing, costs, and global trade volumes. 

Sales grew 2% in 2018 to $32.7 billion primarily due to volume increases and higher pricing in the Energy segment. The Energy segment grew a substantial $1.4 billion due to favorable crude oil discounts and a higher average selling price resulting in higher margins. Ag segment revenues saw a 3% drop due to lower volumes from the uncertainty around international trade.

Net income recovered in 2018 with a more than $700 million jump to $775.9 million after three consecutive years of decline. The previous fall was almost entirely a result of a series of impairment charges totaling $441.3 million.

Cash at the end of fiscal 2018 was $450.6 million, an increase of $269.2 million from the prior year. Cash from operations contributed $1,072.1 million to the coffers while investing activities used $79.5 million. Investing activities mainly included expenses for property, plant, and equipment and those for major repairs (turnarounds), largely offset by almost $235 million in proceeds from the sale of certain North American assets within its Energy and Corporate and Other segments. Financing activities used another $732.2 million for dividends to stockholders and the company's stock repurchase program.

Strategy

One of CHS's priorities going forward is to improve its internal control environment. The company made misstatements in its 2017 financial report due to misconduct by a former employee in its rail freight trading operations. This resulted in the company having to restate its financial figures in fiscal 2018. The company also plans to incorporate more effective technology solutions, such as better access to data, to create stronger connections between businesses and enhance customer relationships. CHS also believes it needs to better adapt to changes in the market due to new government imposed tarriffs affecting the grain supply chain, specifically in China.

 

 

 

Company Background

To help farmers through the Great Depression, the Farmers Union Terminal Association (a grain marketing association formed in 1926) created the Farmers Union Grain Terminal Association (GTA) in 1938. With loans from the Farmers Union Central Exchange (later known as CENEX) and the Farm Credit Association, the organization operated a grain elevator in St. Paul, MN. By 1939 GTA had 250 grain-producing associations as members.

GTA leased terminals in Minneapolis and Washington and built others in Wisconsin and Montana in the early 1940s. It then took over a Minnesota flour mill and created Amber Milling. GTA also began managing farming insurance provider Terminal Agency. In 1958 the association bought 57 elevators and feed plants from the McCabe Company.

Adding to its operations in 1960, GTA bought the Honeymead soybean plant. The next year the co-op acquired Minnesota Linseed Oil. In 1977 it acquired Jewett & Sherman (later Holsum Foods), which helped transform the company into a provider of jams, jellies, salad dressings, and syrups.

In 1983 GTA combined with North Pacific Grain Growers, a Pacific Northwest co-op incorporated in 1929, to form Harvest States Cooperatives. Harvest States grew in the early and mid-1990s by acquiring salad dressing makers Albert's Foods, Great American Foods, and Saffola Quality Foods; soup stock producer Private Brands; and margarine and dressings manufacturer and distributor Gregg Foods.

The company started a joint venture to operate the Ag States Agency agricultural insurance company in 1995. The next year the co-op's Holsum Foods division and Mitsui & Co.'s edible oils unit, Wilsey Foods, merged to form Ventura Foods, a distributor of margarines, oils, spreads, and other food products.

Harvest States merged in 1998 with Minnesota-based CENEX, a 16-state agricultural supply co-op that had been founded in 1931 as Farmers Union Central Exchange. (Among CENEX's major operations was a farm inputs, services, marketing, and processing joint venture with dairy cooperative Land O'Lakes formed in 1987.) CENEX CEO Noel Estenson took the helm of the resulting co-op, Cenex Harvest States Cooperatives, which soon formed a petroleum joint venture called Country Energy with Farmland Industries.

CHS members rejected a proposed merger with Farmland Industries in 1999. Also that year Cenex/Land O'Lakes Agronomy (it became Agriliance in 2000 when Farmland Industries joined the joint venture) bought Terra Industries' $1.7 billion distribution business (400 farm supply stores, seed and chemical distribution operations, partial ownership of two chemical plants).

CHS bought the wholesale propane marketing operations of Williams Companies in 2000, and the co-op paid $14 million for tortilla and tortilla chip maker Sparta Foods. Additionally, Estenson retired that year and company president John Johnson took over as CEO. CHS launched an agricultural e-commerce site (Rooster.com) in conjunction with Cargill and DuPont in 2000. The site was shut down the next year, however, because of a lack of funds. Also in 2001 the cooperative became the full owner of Country Energy by purchasing Farmland Industries' share.

In 2002 CHS acquired Agway's Grandin, North Dakota-based sunflower business and formed a wheat-milling joint venture (Horizon Milling) with Cargill. In 2003 the company changed its name from Cenex Harvest States Cooperatives to CHS Inc. and began trading on the NASDAQ. 

CHS Inc.

5500 CENEX DR
Inver Grove Heights, MN 55077-1721
Phone: 1 (651) 355-6000

Stats

Employer Type: Publicly Owned
Stock Symbol: CHSCP
Stock Exchange: , NASDAQ
First Vice Chairman: Clinton J. Blew
Second Vice Chairman: Jon Erickson
Chairman: Daniel Schurr
Employees (This Location): 644
Employees (All Locations): 10,495

Major Office Locations

Inver Grove Heights, MN

Other Locations

Burlington, CO
Denver, CO
Holyoke, CO
Idalia, CO
Sterling, CO
Coral Springs, FL
Lauderdale Lakes, FL
Council Bluffs, IA
Davenport, IA
Blackfoot, ID
Cottonwood, ID
Craigmont, ID
Grangeville, ID
Kendrick, ID
Lewiston, ID
Nezperce, ID
Post Falls, ID
Worley, ID
Carrollton, IL
Gurnee, IL
Pekin, IL
Brownsburg, IN
Blue Rapids, KS
Brewster, KS
Chase, KS
Colby, KS
Great Bend, KS
Hill City, KS
Hutchinson, KS
Mcpherson, KS
Ness City, KS
Oberlin, KS
Phillipsburg, KS
Quinter, KS
Selden, KS
Sharon Springs, KS
Wichita, KS
Melbourne, KY
Alexandria, LA
Belle Chasse, LA
Hamilton, MI
Holland, MI
Traverse City, MI
Badger, MN
Bellingham, MN
Brownsdale, MN
Byron, MN
Callaway, MN
Chatfield, MN
Clara City, MN
Claremont, MN
Crookston, MN
Donnelly, MN
Eagan, MN
Elrosa, MN
Fairmont, MN
Fergus Falls, MN
Glyndon, MN
Grand Meadow, MN
Greenbush, MN
Grygla, MN
Hallock, MN
Herman, MN
Hoffman, MN
Inver Grove Heights, MN
Kasson, MN
Kennedy, MN
Luverne, MN
Mahnomen, MN
Mankato, MN
Marshall, MN
Mazeppa, MN
Morris, MN
Oklee, MN
Park Rapids, MN
Plainview, MN
Rochester, MN
Roseau, MN
Rosemount, MN
Russell, MN
Ruthton, MN
Saint Charles, MN
Saint Hilaire, MN
Saint Paul, MN
Savage, MN
South Saint Paul, MN
Stephen, MN
Thief River Falls, MN
Tracy, MN
Twin Valley, MN
Warren, MN
Wendell, MN
Winger, MN
Winona, MN
Kansas City, MO
Greenville, MS
Mount Olive, MS
Vaiden, MS
Big Sandy, MT
Billings, MT
Broadview, MT
Brockton, MT
Chester, MT
Chinook, MT
Columbus, MT
Conrad, MT
Cut Bank, MT
Denton, MT
Drummond, MT
Fort Benton, MT
Geraldine, MT
Glasgow, MT
Glendive, MT
Great Falls, MT
Hardin, MT
Havre, MT
Kalispell, MT
Kevin, MT
Laurel, MT
Lewistown, MT
Livingston, MT
Malta, MT
Miles City, MT
Missoula, MT
Moccasin, MT
Richey, MT
Ronan, MT
Rudyard, MT
Shelby, MT
Sidney, MT
Stevensville, MT
Thompson Falls, MT
Three Forks, MT
Valier, MT
Winifred, MT
Adams, ND
Aneta, ND
Ashley, ND
Belfield, ND
Bottineau, ND
Bowbells, ND
Calvin, ND
Casselton, ND
Coteau, ND
Courtenay, ND
Devils Lake, ND
Dickinson, ND
Drayton, ND
Edgeley, ND
Edmore, ND
Englevale, ND
Fargo, ND
Galchutt, ND
Gladstone, ND
Glasston, ND
Grand Forks, ND
Hampden, ND
Harwood, ND
Hensel, ND
Hettinger, ND
Horace, ND
Kenmare, ND
Kulm, ND
Lakota, ND
Lamoure, ND
Langdon, ND
Lankin, ND
Lansford, ND
Larimore, ND
Lidgerwood, ND
Lignite, ND
Litchville, ND
Mandan, ND
Mantador, ND
Milnor, ND
Milton, ND
Minot, ND
Mohall, ND
Neche, ND
New England, ND
Norma, ND
Pembina, ND
Pisek, ND
Reeder, ND
Regent, ND
Rugby, ND
Ryder, ND
Sarles, ND
Starkweather, ND
Taylor, ND
Valley City, ND
Velva, ND
Wyndmere, ND
Alma, NE
Bertrand, NE
Bladen, NE
Blue Hill, NE
Elm Creek, NE
Holdrege, NE
Lincoln, NE
Loomis, NE
Norfolk, NE
South Sioux City, NE
Tecumseh, NE
Wausa, NE
Manlius, NY
Kenton, OH
Kingfisher, OK
Omega, OK
Harrisburg, OR
Island City, OR
Portland, OR
Tillamook, OR
Brookings, SD
Claire City, SD
Corsica, SD
Corson, SD
Dupree, SD
Eureka, SD
Faith, SD
Gettysburg, SD
Huron, SD
Lemmon, SD
Selby, SD
Sioux Falls, SD
Watertown, SD
Winner, SD
Amarillo, TX
Anton, TX
Friona, TX
Hereford, TX
Lubbock, TX
Muleshoe, TX
Plainview, TX
Richmond, TX
Ropesville, TX
Westminster Station, VT
Auburn, WA
Black Diamond, WA
Chimacum, WA
Everson, WA
Fairfield, WA
Gig Harbor, WA
Kennewick, WA
Lynden, WA
Mead, WA
Moses Lake, WA
Nooksack, WA
Othello, WA
Pasco, WA
Poulsbo, WA
Quincy, WA
Rockford, WA
Royal City, WA
Saint John, WA
Spokane Valley, WA
Tacoma, WA
Yakima, WA
Green Bay, WI
Pittsville, WI
Superior, WI
Beiseker, Canada
Burlington, Canada
Montréal, Canada
Rolling Hills, Canada
Saskatoon, Canada
Standard, Canada
Winnipeg, Canada