CHS INC

Previous wording

Our segments operate in cyclical environments in which market conditions can change rapidly with significant positive or negative impacts on our results. We anticipate various macroeconomic factors will continue to drive uncertainty and instability in global energy and agricultural commodity markets, as well as global financial markets, which could have a significant impact on each of our segments during fiscal 2026. These factors include, among others, the ongoing war between Russia and Ukraine and conflict in the Middle East and other regions; shifts in global trade flows for commodities, including global competitiveness giving rise to a weak export market for U.S.-sourced agricultural products; potential changes in U.S. trade policy, including increased or fluctuating tariffs; a changing interest rate environment; and continued pricing pressures impacting costs of labor, freight and materials. These factors, or any form of them, could cause significant margin pressure and lower profitability. In addition to these broad macroeconomic factors, other factors could impact demand and pricing for agricultural inputs and outputs, as well as our ability to supply those inputs and outputs while remaining profitable. These include the cost of renewable energy credits, the prices of which have been volatile in recent years and could positively or negatively impact our profitability; a weaker farm economy and regional factors, such as unpredictable weather conditions, including those due to climate change. We currently expect global economic factors impacting energy and agricultural commodities to be headwinds for us in fiscal 2026. Further, in light of uncertainty in the markets we serve, we are unable to predict how long the current environment will last or the significance of the financial and operational impacts to us; however, we currently expect the trend of reduced margins for energy and agricultural commodities to persist throughout fiscal 2026. Refer to Item 1A of our Annual Report on Form 10-K for the year ended August 31, 2025, for additional considerations these and other risks may have on our business operations and financial performance.

Current wording

Our segments operate in cyclical environments in which market conditions can change rapidly with significant positive or negative impacts on our results. We anticipate various macroeconomic factors will continue to drive uncertainty and instability in global energy and agricultural commodity markets, as well as global financial markets, which could have a significant impact on each of our segments during fiscal 2026. These factors include, among others, the ongoing war between Russia and Ukraine and conflict in the Middle East, including Iran, and other regions; shifts in global trade flows for commodities, including global economic impacts from supply disruptions associated with the conflict with Iran and access to the Strait of Hormuz; global competitiveness giving rise to a weak export market for U.S.-sourced agricultural products; potential changes in U.S. trade policy, including increased or fluctuating tariffs; a changing interest rate environment; and continued pricing pressures impacting costs of labor, freight and materials. These factors, or any form of them, could cause significant margin pressure and lower profitability. However, to mitigate these impacts, we evaluate the economic environment and adjust our operations and business strategies appropriately to help improve our position in the market. In addition to these broad macroeconomic factors, other factors could impact demand and pricing for agricultural inputs and outputs, as well as our ability to supply those inputs and outputs while remaining profitable. These include the cost of renewable energy credits, the prices of which have been volatile in recent years and could positively or negatively impact our profitability. For example, the U.S. Environmental Protection Agency ("EPA") issued a renewable volume obligation ("RVO") in March 2026, which, as discussed in the MD&AOperating Metrics section, creates price uncertainty and volatility, while also potentially significantly increasing the cost of our compliance with the program. Given the nature of our business, market dynamics and other mechanisms, it is possible the potential RVO compliance costs may be partially or wholly offset by certain other opportunities in both our Energy and Grains businesses, but it is unknown if those opportunities will materialize in the future. Additional factors that could impact demand and pricing of agricultural inputs and outputs include a weaker farm economy and regional factors, such as unpredictable weather conditions, including those due to climate change. We currently expect global economic factors impacting energy and agricultural commodities to be volatile and have the potential to be headwinds or tailwinds dependent on future global market conditions as they evolve throughout the remainder of fiscal 2026. Further, in light of uncertainty in the markets we serve, we are unable to predict how long the current environment will last or the significance of the financial and operational imp…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

We will continue to execute our enterprise priorities for fiscal 2026, including maximizing our segments through our integrated supply chains and capitalizing on domestic and global opportunities, as we navigate less favorable market conditions for energy and agricultural commodities.

Current wording

We will continue to execute our enterprise priorities for fiscal 2026, including maximizing our segments through our integrated supply chains and capitalizing on domestic and global opportunities, as we navigate uncertain market conditions for energy and agricultural commodities.

Previous wording

We are subject to the Renewable Fuel Standard that requires refiners to blend renewable fuels (e.g., ethanol and biodiesel) into their finished transportation fuels or purchase renewable energy credits, known as renewable identification numbers ("RINs"), in lieu of blending. The U.S. Environmental Protection Agency ("EPA") generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year. We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity; therefore, RINs must be purchased on the open market. The price of RINs can be volatile, with prices for D6 ethanol RINs and D4 biodiesel RINs increasing by 51% and 54%, respectively, during the three months ended November 30, 2025, compared to the same period during the prior fiscal year. Estimates of our RIN expenses are calculated using an average RIN price each month.

Current wording

We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity; therefore, RINs must be purchased on the open market. The price of RINs can be volatile, with prices for D6 ethanol RINs and D4 biodiesel RINs both increasing by approximately 72% during the three months ended February 28, 2026, compared to the same period during the prior fiscal year. The final RVO has impacted the demand for RINs, and we expect continued price volatility with the potential for further RINs price increases in fiscal 2026 and beyond. Estimates of our RINs expenses are calculated using an average of RINs prices each month.

Previous wording

In addition to our internal operational reliability, the profitability of our Energy segment is largely driven by crack spreads (i.e., the price differential between refined products and crude oil inputs) and Western Canadian Select ("WCS") crude oil discounts (i.e., the price discount for WCS crude oil relative to West Texas Intermediate ("WTI") crude oil), which are driven by supply and demand of refined products. Supply and demand in the global and North American refined product markets resulted in increased crack spreads during the three months ended November 30, 2025, compared to the same period of the prior year, contributing to higher IBIT for the Energy segment. The table below provides information about average market reference prices and differentials that impacted our Energy segment.

Current wording

In addition to our internal operational reliability, the profitability of our Energy segment is largely driven by crack spreads (i.e., the price differential between refined products and crude oil inputs) and Western Canadian Select ("WCS") crude oil discounts (i.e., the price discount for WCS crude oil relative to West Texas Intermediate ("WTI") crude oil), which are driven by supply and demand of refined products. Supply and demand in the global and North American refined product markets resulted in increased crack spreads during both the three and six months ended February 28, 2026, compared to the same periods of the prior year. The table below provides information about average market reference prices and differentials that impacted our Energy segment.

Previous wording

Our Agronomy segment is primarily composed of our wholesale and retail agronomy activities within our crop nutrients and crop protection product lines. This segment provides innovative agriculture solutions to farmers and retailers across the country. Dedicated to supporting farmer success with effective agronomy practices, we offer crop nutrients, crop protection products and seed, including both proprietary and third-party brands. Our Agronomy segment includes our Nitrogen Production business consisting of our equity method investment in CF Nitrogen. Products in the Agronomy segment are supported by wholesale and retail channels from investment in domestic manufacturing and strategic relationships with suppliers around the world. Profitability in our Agronomy segment is largely driven by the relationship between global and regional supply and demand for the underlying products and raw materials, costs of inputs used in the fertilizer manufacturing process and strength of the agricultural industry throughout the trade territories in which we operate. The table below provides information about average market prices for agricultural commodities, as well as sales and throughput volumes for our Agronomy segment.

Current wording

Our Agronomy segment is primarily composed of our wholesale and retail agronomy activities within our crop nutrients and crop protection product lines. This segment provides innovative agriculture solutions to farmers and retailers. Dedicated to supporting farmer success with effective agronomy practices, we offer crop nutrients, crop protection products and seed, including both proprietary and third-party brands. Our Agronomy segment includes our Nitrogen Production business consisting of our equity method investment in CF Nitrogen. Products in the Agronomy segment are supported by wholesale and retail channels from investment in domestic manufacturing and strategic relationships with suppliers around the world. Profitability in our Agronomy segment is largely driven by the relationship between global and regional supply and demand for the underlying products and raw materials, costs of inputs used in the fertilizer manufacturing process and strength of the agricultural industry throughout the trade territories in which we operate. The table below provides information about average market prices for agricultural commodities, as well as sales and throughput volumes for our Agronomy segment.

Previous wording

Total Energy segment revenues increased $68.4 million, or 3.0%, during the three months ended November 30, 2025, compared to the three months ended November 30, 2024, primarily due to the following:

Current wording

Total Energy segment revenues increased $276.7 million, or 15.2%, during the three months ended February 28, 2026, compared to the three months ended February 28, 2025, primarily due to the following:

Previous wording

•This was partially offset by lower commodity selling prices, driven by refined fuels and propane products.

Current wording

•This benefit was partially offset by lower commodity selling prices for refined fuels and propane products.

Previous wording

•Price/margin was negatively impacted by decreased retail and domestic feed grains margins, partially offset by increased ethanol crush margins; decreased oilseed crush margins; weaker wheat margins due to a challenging spring wheat harvest; and the timing impact of mark-to-market adjustments associated with commodity derivatives.

Current wording

•These impacts were partially offset by higher volumes of feed grains exports, strong retail margins and the timing impact of mark-to-market adjustments associated with commodity derivatives.

Previous wording

•Reduced sales volumes, driven primarily by lower wholesale and retail crop nutrients volumes from a weaker U.S. farm economy, decreased revenues.

Current wording

•This was partially offset by lower sales volumes, driven primarily by deferred demand from a weaker U.S. farm economy, which decreased revenues.

Previous wording

Marketing, general and administrative expenses increased during the three months ended November 30, 2025, primarily due to depreciation associated with our enterprise resource planning system.

Current wording

Marketing, general and administrative expenses increased during the three months ended February 28, 2026, driven primarily by compensation and benefit expenses and amortization related to our enterprise resource planning system.

Previous wording

Interest expense increased during the three months ended November 30, 2025, as a result of a higher short-term notes payable balance compared to the same period in the prior fiscal year.

Current wording

Interest expense increased during the three months ended February 28, 2026, as a result of higher short-term notes payable and long-term debt balances compared to the same period in the prior fiscal year.

Previous wording

Other income increased during the three months ended November 30, 2025, primarily due to unrealized gains on investments and increased interest income compared to the same period in the prior fiscal year.

Current wording

Other income increased during the three months ended February 28, 2026, primarily due to increased gains on investments and interest income compared to the same period in the prior fiscal year.

Previous wording

Decreased income tax expense during the three months ended November 30, 2025, reflects the mix of full-year earnings projected across business units relative to the prior year and current equity assumptions. Effective tax rates for the three months ended November 30, 2025 and 2024, were 4.3% and 5.1%, respectively. Federal and state statutory rates of 24.2% and 24.5% were applied to nonpatronage business activity for the three months ended November 30, 2025 and 2024, respectively. Income tax expense and effective tax rates vary each year based on profitability, changes in tax law, income tax credits and patronage business activity.

Current wording

Increased income tax benefit during the three months ended February 28, 2026, reflects the mix of full-year earnings projected across business units relative to the prior year and current equity assumptions, along with the benefits associated with certain tax credits. Effective tax rates for the three months ended February 28, 2026 and 2025, were (10.8)% and (10.3)%, respectively. Federal and state statutory rates of 24.2% and 24.5% were applied to nonpatronage business activity for the three months ended February 28, 2026 and 2025, respectively. Income tax expense and effective tax rates vary each year based on profitability, changes in tax law, income tax credits and patronage business activity.

Previous wording

•Strong sales volumes of refined fuels and propane products, driven by heavy harvest activity, increased revenues. We experienced record quarterly sales volumes of Cenex® premium diesel.

Current wording

•Strong sales volumes were reflective of refined fuels and propane products, driven by heavy fall harvest activity and higher bulk sales volumes.

Previous wording

Energy segment IBIT increased $136.6 million during the three months ended November 30, 2025, compared to the three months ended November 30, 2024, primarily due to the following:

Current wording

Energy segment IBIT increased $82.4 million, or 129.3%, during the six months ended February 28, 2026, compared to the six months ended February 28, 2025, primarily due to the following:

Previous wording

•Higher crack spreads on refined fuels products, driven by lower crude costs, contributed to an increase in price/margin.

Current wording

•Higher crack spreads and improved sales mix of higher-margin, produced refined fuels products contributed to an increase in IBIT.

Previous wording

Total Grains segment revenues decreased $463.8 million, or 8.2%, during the three months ended November 30, 2025, compared to the three months ended November 30, 2024, primarily as a result of the following:

Current wording

Total Grains segment revenues decreased $262.7 million, or 2.5%, during the six months ended February 28, 2026, compared to the six months ended February 28, 2025, primarily as a result of the following:

Previous wording

•Lower selling prices for oilseed and wheat commodities stemming from global market conditions contributed to the Grains segment price decrease.

Current wording

•Lower selling prices for oilseed and wheat commodities, stemming from continued headwinds due to global trade factors and challenged U.S. soybean markets, contributed to the Grains segment price decrease.

Previous wording

Total Agronomy segment IBIT increased $8.7 million, or 30.9%, during the three months ended November 30, 2025, compared to the three months ended November 30, 2024, primarily due to the following:

Current wording

Total Agronomy segment IBIT increased $8.6 million, or 51.1%, during the six months ended February 28, 2026, compared to the six months ended February 28, 2025, primarily due to the following:

Previous wording

•Strong performance from our investment in CF Nitrogen, driven by increased urea and UAN prices, increased IBIT.

Current wording

•Strong performance from our investment in CF Nitrogen, driven by higher urea and UAN prices, increased IBIT.

Previous wording

•This was partially offset by declines in price/margin across crop nutrients and crop protection products, due to increased crop nutrient per-ton prices and market dynamics.

Current wording

•This increase was partially offset by declines in margin and volumes across crop nutrients and crop protection products, due largely to deferred demand and higher product costs.

Previous wording

Equity income from investments increased during the three months ended November 30, 2025, as compared to the same period during the prior fiscal year, primarily due to higher equity income from our investment in CF Nitrogen as a result of higher urea and UAN prices, as well as decreased natural gas costs.

Current wording

Equity income from investments increased during the six months ended February 28, 2026, as compared to the same period during the prior fiscal year, primarily due to higher equity income from our investment in CF Nitrogen as a result of higher urea and UAN prices, partially offset by natural gas costs.

Previous wording

•Capital expenditures. We expect total capital expenditures for fiscal 2026 to be approximately $575.1 million, compared to capital expenditures of $728.6 million in fiscal 2025, as we continue to invest in capital expenditures for projects to meet the evolving needs of our owners and customers and enhance value for the cooperative system during fiscal 2026. During the three months ended November 30, 2025, we acquired $116.0 million of property, plant and equipment.

Current wording

•Capital expenditures. We expect total capital expenditures for fiscal 2026 to be approximately $522.0 million, compared to capital expenditures of $728.6 million in fiscal 2025, as we continue to invest in capital expenditures for projects to meet the evolving needs of our owners and customers and enhance value for the cooperative system during fiscal 2026. During the six months ended February 28, 2026, we acquired $221.0 million of property, plant and equipment.

Previous wording

•Major maintenance. We expect total major maintenance for fiscal 2026 to be approximately $53.3 million, compared to major maintenance of $271.4 million in fiscal 2025. Decreased major maintenance for fiscal 2026 is due to significantly reduced turnaround activities at our refineries compared to the turnaround at our McPherson refinery during fiscal 2025. During the three months ended November 30, 2025, we had $4.0 million in major maintenance.

Current wording

•Major maintenance. We expect total major maintenance for fiscal 2026 to be approximately $76.3 million, compared to major maintenance of $271.4 million in fiscal 2025. Decreased major maintenance for fiscal 2026 is due to significantly reduced turnaround activities at our refineries compared to the turnaround at our McPherson refinery during fiscal 2025. During the six months ended February 28, 2026, we had $10.9 million in major maintenance.

Previous wording

•Debt and interest. We expect to repay approximately $91.8 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately $105.0 million during fiscal 2026. During the three months ended November 30, 2025, we repaid $3.0 million of scheduled long-term debt maturities and finance lease obligations.

Current wording

•Debt and interest. We expect to repay approximately $91.8 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately $102.7 million during fiscal 2026. During the six months ended February 28, 2026, we repaid $4.7 million of scheduled long-term debt maturities and finance lease obligations.

Previous wording

•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of November 30, 2025. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2026. Dividends paid on our preferred stock during the three months ended November 30, 2025, were $42.2 million.

Current wording

•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of February 28, 2026. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2026. Dividends paid on our preferred stock during the six months ended February 28, 2026, were $84.3 million.

Previous wording

•Patronage. Our Board of Directors authorized approximately $30.0 million of our fiscal 2025 patronage-sourced earnings to be paid to our member-owners during fiscal 2026.

Current wording

•Patronage. Our Board of Directors authorized approximately $30.0 million of our fiscal 2025 patronage-sourced earnings to be paid to our member-owners during fiscal 2026. During the six months ended February 28, 2026, we distributed $19.1 million of cash patronage related to the year ended August 31, 2025, with the remaining amount expected to be distributed in the third quarter of fiscal 2026.

Previous wording

•Equity redemptions. Our Board of Directors authorized approximately $90.0 million of equity redemptions to be distributed in fiscal 2026 in the form of redemptions of qualified and nonqualified equity owned by individual producer-members and association members. During the three months ended November 30, 2025, we redeemed $13.8 million of member equity.

Current wording

•Equity redemptions. Our Board of Directors authorized approximately $90.0 million of equity redemptions to be distributed in fiscal 2026 in the form of redemptions of qualified and nonqualified equity owned by individual producer-members and association members. During the six months ended February 28, 2026, we redeemed $27.9 million of member equity.

Previous wording

As of November 30, 2025, working capital increased by $128.0 million compared to August 31, 2025. Current asset balance changes increased working capital by $1.8 billion, primarily due to increases in inventories, which were driven by seasonality in our business. Current liability balance changes decreased working capital by $1.7 billion, primarily due to increases in accounts payable, which were also driven by seasonality in our business.

Current wording

As of February 28, 2026, working capital increased by $370.6 million compared to August 31, 2025. Current asset balance changes increased working capital by $2.2 billion, primarily due to increases in inventories, which were driven by seasonality in our business. Current liability balance changes decreased working capital by $1.8 billion, primarily due to increases in notes payable, which were also driven by seasonality in our business.

Previous wording

For information regarding our estimated contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended August 31, 2025. No material changes occurred during the three months ended November 30, 2025.

Current wording

For information regarding our estimated contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended August 31, 2025. No material changes occurred during the six months ended February 28, 2026.

Previous wording

The following table presents summarized cash flow data for the three months ended November 30, 2025 and 2024.

Current wording

The following table presents summarized cash flow data for the six months ended February 28, 2026 and 2025:

Previous wording

Cash flows from operating activities can fluctuate significantly from period to period as a result of various factors, including seasonality and timing differences associated with purchases, sales, taxes and other business decisions. The $43.8 million year-over-year increase in cash used in operating activities primarily reflects increased inventories, which were partially offset by increased accounts payable, during the first three months of fiscal 2026 as compared to the same period during fiscal 2025.

Current wording

Cash flows from operating activities can fluctuate significantly from period to period as a result of various factors, including seasonality and timing differences associated with purchases, sales, taxes and other business decisions. The $425.0 million year-over-year decrease in cash used in operating activities primarily reflects increased accounts payable and accrued expenses, which was partially offset by changes in accounts receivable, during the first six months of fiscal 2026 as compared to the same period during fiscal 2025.

Previous wording

The $241.2 million increase in cash used in investing activities primarily reflects purchases of investments and decreased proceeds from the sale of short-term investments during the first three months of fiscal 2026 compared to the same period during fiscal 2025, partially offset by decreased acquisitions of property, plant and equipment.

Current wording

The $159.4 million increase in cash used in investing activities primarily reflects purchases of investments in the current period, along with decreased proceeds from the sale of short-term investments, decreased business acquisitions and decreased acquisitions of property, plant and equipment during the first six months of fiscal 2026 compared to the same period during fiscal 2025.

Previous wording

The $680.3 million increase in cash provided by financing activities primarily reflects increased net cash inflows associated with our notes payable due to increased short-term funding needs for working capital.

Current wording

The $4.1 million increase in cash provided by financing activities primarily reflects net cash inflows associated with our notes payable and short-term funding needs for working capital, along with cash patronage.

Previous wording

Our critical accounting policies as presented in the MD&A in our Annual Report on Form 10-K for the year ended August 31, 2025, have not materially changed during the three months ended November 30, 2025.

Current wording

Our critical accounting policies as presented in the MD&A in our Annual Report on Form 10-K for the year ended August 31, 2025, have not materially changed during the six months ended February 28, 2026.