CHS Inc.
11/04/2026 | Press release | Distributed by Public on 11/04/2026 10:36
Annual Report for Fiscal Year Ending August 31, 2026 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management regarding our financial condition and results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:
•Overview
•Business Strategy
•Fiscal 2026 Highlights
•Fiscal 2027 Outlook
•Operating Metrics
•Results of Operations
•Liquidity and Capital Resources
•Critical Accounting Policies
•Recent Accounting Pronouncements
Our MD&A should be read in conjunction with the accompanying audited financial statements and notes to those financial statements and the Cautionary Statement regarding forward-looking statements found in Part I, Item 1A of this Annual Report on Form 10-K.
Overview
CHS Inc. is a diversified company that provides grain, food, agronomy and energy resources to businesses and consumers on a global scale. As a cooperative, we are owned by farmers, ranchers and member cooperatives across the United States. We also have preferred shareholders who own our five series of preferred stock, all of which are listed and traded on Nasdaq.
Effective September 1, 2025, we changed the internal financial information reviewed by our chief operating decision maker ("CODM"), our Chief Executive Officer, to evaluate performance and allocate resources to our operating segments. As a result of this change, all prior period segment information has been recast to conform to the current year presentation. We have three reportable segments: Energy, Grains and Agronomy.
•The Energy segment consists of our wholesale and retail activities within the refined fuels, propane and lubricants product lines. The refined fuels product line includes petroleum refining, pipelines and terminals and markets gasoline and diesel fuel under the Cenex® brand to member cooperatives and other independent retailers. The lubricants product line includes the blending, sale and distribution of primarily Cenex® brand lubricants, and the propane product line markets propane and other natural gas liquids through wholesale and retail market channels. Previously, this segment included our transportation services, which are now reported under Corporate and Services.
•The Grains segment comprises our global grain marketing and processing activities as part of the feed grains, oilseeds, wheat, specialty grains and animal nutrition product lines. The Grains segment connects producers to domestic and global grain markets through a broad origination and distribution network. It markets commodities such as wheat, corn, ethanol, soybeans, oilseeds and specialty grains. The segment operates grain facilities and trading offices across five continents, serving processors, food manufacturers and renewable fuel producers. Further, the Grains segment produces ethanol and is one of the nation's largest suppliers of ethanol inputs into gasoline products, while also specializing in soybean and canola processing. These results had been included within the former Ag segment.
•The Agronomy segment consists of our wholesale and retail agronomy activities within the crop nutrients and crop protection product lines. The Agronomy segment provides crop inputs and agronomy services to farmers, member cooperatives and retailers. It offers crop nutrients, crop protection products and seed, including both proprietary and third-party brands. The Agronomy segment also includes our nitrogen production business consisting of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"). Our supply agreement with CF Nitrogen requires us to purchase a specified quantity of granular urea and urea ammonium nitrate annually from CF Nitrogen. These results had been included within the former Ag and Nitrogen Production segments.
•Our ag retail business, which was included in our former Ag segment, is now incorporated into the Energy, Grains and Agronomy segments based on the specific products sold and their relevant product lines.
The Company's remaining operations are not reportable segments, as defined by the applicable accounting standard, and are classified within Corporate and Services. Corporate and Services primarily represents our financing and hedging businesses, which provide services to our members and consist of a financial services business and a U.S. Commodity Futures Trading Commission-regulated futures commission merchant ("FCM") for agricultural commodities hedging. Our nonconsolidated investments in Ventura Foods, LLC ("Ventura Foods"), and Ardent Mills, LLC ("Ardent Mills"), are also included in our Corporate and Services operating segment. All other nonconsolidated investments are included in our Energy, Grains and Agronomy segments.
Management's Focus. When evaluating our operating performance, management focuses on gross profit and income before income taxes ("IBIT"). As a company that operates heavily in global commodities, there is significant unpredictability and volatility in pricing, costs and global trade volumes. Consequently, we focus on managing the margin we can earn and the resulting IBIT. We also focus on ensuring balance sheet strength through appropriate management of financial liquidity, leverage, capital allocation and cash flow optimization.
Seasonality. Many of our business activities are highly seasonal and our operating results vary throughout the year. Our revenues and IBIT generally trend lower during the second fiscal quarter and increase in the third fiscal quarter. For example, in our Grains segment, our retail business generally experiences higher volumes and revenues during the fall harvest, which generally corresponds to our first fiscal quarter, and our global grain and processing operations within Grains are subject to fluctuations in volumes and revenues based on producer harvests, weather, world grain prices, global demand and international trade relationships. Our Agronomy segment generally experiences higher volumes and revenues during the spring planting season. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined fuel products, in the spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, generally experience higher volumes and revenues during the winter heating and fall crop-drying seasons. The tables below demonstrate the historical trend of seasonality inherent in our businesses.
| Quarterly revenues as a percentage of annual total | Fiscal Year 2026 | Fiscal Year 2025 | Fiscal Year 2024 | 3-Year Average | |||||||||||||||||||
| Q1 | 23 | % | 26 | % | 29 | % | 26 | % | |||||||||||||||
| Q2 | 21 | % | 22 | % | 23 | % | 22 | % | |||||||||||||||
| Q3 | 30 | % | 28 | % | 24 | % | 27 | % | |||||||||||||||
| Q4 | 26 | % | 24 | % | 24 | % | 25 | % | |||||||||||||||
| Quarterly IBIT as a percentage of annual total | Fiscal Year 2026 | Fiscal Year 2025 | Fiscal Year 2024 | 3-Year Average | |||||||||||||||||||
| Q1 | 24 | % | 42 | % | 47 | % | 38 | % | |||||||||||||||
| Q2 | 15 | % | (14) | % | 17 | % | 6 | % | |||||||||||||||
| Q3 | 25 | % | 42 | % | 28 | % | 32 | % | |||||||||||||||
| Q4 | 36 | % | 30 | % | 8 | % | 24 | % | |||||||||||||||
Pricing and Volumes. Our revenues, assets and cash flows can be significantly affected by global market prices and sales volumes of commodities such as petroleum products, natural gas, grain, oilseed products and agronomy products. Changes in market prices for commodities we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Similarly, increased or decreased sales volumes without a corresponding change in the purchase and selling prices of those products can affect revenues and operating earnings. Commodity prices and sales volumes are affected by a wide range of factors beyond our control, including weather; crop damage due to plant disease or insects; drought; availability/adequacy of supply of a commodity; availability of reliable rail, river, truck and ocean transportation networks; disease outbreaks; government regulations and policies; global trade disputes; global competition; wars and civil unrest; and general political and/or economic conditions.
Business Strategy
Our business strategies focus on an enterprisewide effort to create an experience that empowers customers to make CHS their first choice, expand market access to add value for our owners and transform and evolve our core businesses by capitalizing on changing market dynamics. To execute these strategies, we are focused on implementing agile, efficient and sustainable technology platforms; building robust and efficient supply chains; hiring, developing and retaining high-performing, diverse and passionate teams; achieving operational excellence and continuous improvement; and maintaining a strong balance sheet.
Fiscal 2026 Highlights
•Our Energy segment realized strong refining margins, driven by global market dynamics and high refinery production volumes, which were partially offset by record-high expenses for renewable energy credits (RINs).
•Grains benefited from strong oilseed crush and ethanol margins resulting from renewable energy policy impacts, which were partially offset by global trade headwinds and reduced retail margins.
•Continued strong performance by our CF Nitrogen equity method investment was offset by lower sales volumes of crop nutrients and crop protection products, driven by ongoing weakness in the U.S. farm economy.
Fiscal 2027 Outlook
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 2027 and beyond. 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 economic impacts from supply disruptions associated with 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. To mitigate these impacts, we evaluate the economic environment and adjust our operations and business strategies 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 price of which has 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&A Operating Metrics section, creates price uncertainty and volatility, while also 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 our Energy and Grains businesses, but it is unknown if those opportunities will materialize. 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 and/or tailwinds depending on future global market conditions as they evolve into fiscal 2027. 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 volatile energy and agricultural commodities to persist in fiscal 2027. Refer to Item 1A of this Annual Report on Form 10-K for additional consideration these risks may have on our business operations and financial performance.
Operating Metrics
Energy
Our Energy segment operations primarily include our refineries in Laurel, Montana, and McPherson, Kansas, which process crude oil to produce refined products, including gasolines, diesel fuels, other distillates and other products. To ensure the reliability of our refineries, we perform major maintenance activities every two to five years, which require a temporary shutdown of operations. These planned shutdowns allow us to extend the life, increase the capacity and improve the safety and efficiency of our refinery processing assets. They also minimize unplanned business interruptions and are essential to the long-term reliability and profitability of our Energy segment.
During periods of maintenance, utilization rates, throughput volumes and refined fuel yields are lower, and we may purchase refined petroleum products from third parties to meet the needs of our customers. These third-party purchases may result in lower margins than for products produced by our refineries, which reduces our profitability. The following table provides information about our consolidated refinery operations.
| Years Ended August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Refinery throughput volumes* | (Barrels per day) | ||||||||||
| Heavy, high-sulfur crude oil | 101,701 | 100,029 | |||||||||
| All other crude oil | 77,155 | 61,776 | |||||||||
| Other feedstocks and blendstocks | 16,559 | 13,032 | |||||||||
| Total refinery throughput volumes | 195,415 | 174,837 | |||||||||
| Refined fuel yields | |||||||||||
| Gasolines | 89,645 | 81,030 | |||||||||
| Distillates | 87,269 | 76,297 | |||||||||
*Lower refinery throughput volumes and refined fuel yields experienced during fiscal 2025 were primarily due to a planned shutdown to perform major
maintenance at our McPherson, Kansas, refinery during the third quarter of fiscal 2025.
Renewable Fuel Standard
We are subject to the Renewable Fuel Standard ("RFS") 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 EPA generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year. In March 2026, the EPA issued a final RVO for calendar years 2026 and 2027 that increased the renewable fuel percentage standards compared with the previous RVO. The new RVO represents the highest blending obligation ever issued by the EPA.
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 86% and 82%, respectively, during fiscal 2026, compared to the prior year, which, when combined with the increased RVO compliance obligations, negatively impacted our earnings. The final RVO has increased the demand for RINs, and we expect continued price volatility along with elevated and potentially increasing RINs prices into fiscal 2027.
During the fourth quarters of fiscal 2026 and 2025, we received notices from the EPA that our petitions seeking extensions of the small refinery exemption ("SRE") under the RFS for our Laurel, Montana, refinery were granted. The SRE received in fiscal 2026 was granted in full for compliance year 2025. The SRE received in fiscal 2025 was granted in full or in part for compliance years 2019 through 2024. These actions by the EPA reduced our RVO for production at our Laurel refinery for those specific compliance years, resulting in Energy segment margin benefits of approximately $205.0 million in fiscal 2026 and $90.0 million in fiscal 2025, reflecting RVO relief recognized in the fiscal year the respective SRE notice was received. These benefits only partially offset our total RVO compliance obligation costs.
We may be eligible for exemptions for compliance years 2026 and beyond, but this is highly dependent on average volumes of crude oil throughput at that time and the EPA's evaluation of those potential future petitions. Further, we may incur future liabilities that partially or fully offset those benefits as the EPA is evaluating a reallocation of the RVOs waived through the SRE process by increasing the blending requirements for certain refineries in future years.
Market Indicators
In addition to our internal operational reliability and the RFS, 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. Crack spreads and WCS crude oil discounts both increased in fiscal 2026, compared to the prior year, contributing to significantly improved IBIT for the Energy segment. The table below provides information about average market reference prices and differentials that impacted our Energy segment.
| Years Ended August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Market indicators | |||||||||||
| WTI crude oil (dollars per barrel) | $ | 74.70 | $ | 68.08 | |||||||
| WTI - WCS crude oil discount (dollars per barrel) | $ | 13.17 | $ | 11.57 | |||||||
| Group 3 2:1:1 crack spread (dollars per barrel)* | $ | 35.15 | $ | 19.91 | |||||||
| Group 3 5:3:2 crack spread (dollars per barrel)* | $ | 32.84 | $ | 19.12 | |||||||
| D6 ethanol RIN (dollars per RIN) | $ | 1.5683 | $ | 0.8428 | |||||||
| D4 biodiesel RIN (dollars per RIN) | $ | 1.6060 | $ | 0.8823 | |||||||
*Group 3 refers to the oil refining and distribution system serving the Midwest markets from the Gulf Coast through the Plains states.
Grains
Our Grains segment is primarily composed of our global grain marketing, processing and retail grains activities for our feed grains, oilseeds, wheat, specialty grains and animal nutrition product lines. The Grains segment connects producers to domestic and global grain markets through a broad origination and distribution network and markets commodities such as wheat, corn, soybeans, oilseeds and specialty grains. We operate grain facilities and trading offices across five continents, serving processors, food manufacturers and renewable fuel producers. Profitability in our Grains segment is largely driven by throughput and production volumes, as well as commodity price spreads; however, revenues and cost of goods sold ("COGS") are largely affected by market-driven commodity prices and weather-related conditions outside our control. The table below provides information about average market prices for agricultural commodities, as well as sales and throughput volumes that impacted our Grains segment.
| Years Ended August 31, | |||||||||||||||||
| Market Source* | 2026 | 2025 | |||||||||||||||
| Commodity prices | |||||||||||||||||
| Corn (dollars per bushel) | Chicago Board of Trade | $ | 4.44 | $ | 4.36 | ||||||||||||
| Soybeans (dollars per bushel) | Chicago Board of Trade | $ | 11.33 | $ | 10.16 | ||||||||||||
| Wheat (dollars per bushel) | Chicago Board of Trade | $ | 5.86 | $ | 5.40 | ||||||||||||
| Ethanol (dollars per gallon) | Chicago Platts | $ | 1.87 | $ | 1.70 | ||||||||||||
| Volumes | |||||||||||||||||
| Grain and oilseed (thousands of bushels) | 2,607,895 | 2,433,258 | |||||||||||||||
| North American grain and oilseed port throughput (thousands of bushels) | 910,665 | 770,867 | |||||||||||||||
| Ethanol (thousands of gallons) | 631,168 | 565,835 | |||||||||||||||
*Market source information represents the average week-end or month-end price during the period.
Agronomy
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 crop nutrients, as well as sales volumes for our Agronomy segment.
| Years Ended August 31, | |||||||||||||||||
| Market Source* | 2026 | 2025 | |||||||||||||||
| Commodity prices | |||||||||||||||||
| Urea (dollars per ton) | Green Markets NOLA | $ | 442.75 | $ | 368.95 | ||||||||||||
| Urea ammonium nitrate (dollars per ton) | Green Markets NOLA | $ | 371.20 | $ | 285.44 | ||||||||||||
| Volumes | |||||||||||||||||
| Wholesale crop nutrients (thousands of tons) | 6,789 | 7,311 | |||||||||||||||
*Market source information represents the average week-end or month-end price during the period.
Results of Operations
Consolidated Statements of Operations
| Years Ended August 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||||||||||||||||||||
|
Dollars (In thousands) |
% of Revenues* |
Dollars (In thousands) |
% of Revenues* |
Dollars (In thousands) |
% of Revenues* | ||||||||||||||||||||||||||||||
| Revenues | $ | 39,231,217 | 100.0 | % | $ | 35,462,608 | 100.0 | % | $ | 39,261,229 | 100.0 | % | |||||||||||||||||||||||
| Cost of goods sold | 37,443,360 | 95.4 | 34,325,794 | 96.8 | 37,509,902 | 95.5 | |||||||||||||||||||||||||||||
| Gross profit | 1,787,857 | 4.6 | 1,136,814 | 3.2 | 1,751,327 | 4.5 | |||||||||||||||||||||||||||||
| Marketing, general and administrative expenses | 1,195,975 | 3.0 | 1,046,059 | 2.9 | 1,166,969 | 3.0 | |||||||||||||||||||||||||||||
| Operating earnings | 591,882 | 1.5 | 90,755 | 0.3 | 584,358 | 1.5 | |||||||||||||||||||||||||||||
| Interest expense | 163,633 | 0.4 | 146,079 | 0.4 | 104,064 | 0.3 | |||||||||||||||||||||||||||||
| Other income | (131,239) | (0.3) | (100,431) | (0.3) | (137,630) | (0.4) | |||||||||||||||||||||||||||||
| Equity income from investments | (569,231) | (1.5) | (569,665) | (1.6) | (479,863) | (1.2) | |||||||||||||||||||||||||||||
| Income before income taxes | 1,128,719 | 2.9 | 614,772 | 1.7 | 1,097,787 | 2.8 | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | 32,737 | 0.1 | 16,777 | - | (4,872) | - | |||||||||||||||||||||||||||||
| Net income | 1,095,982 | 2.8 | 597,995 | 1.7 | 1,102,659 | 2.8 | |||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 79 | - | 78 | - | 340 | - | |||||||||||||||||||||||||||||
| Net income attributable to CHS Inc. | $ | 1,095,903 | 2.8 | % | $ | 597,917 | 1.7 | % | $ | 1,102,319 | 2.8 | % | |||||||||||||||||||||||
*Amounts less than 0.1% are shown as zero percent. Percentage subtotals may not sum due to rounding.
The table below details revenues, net of intersegment revenues, and IBIT by segment for the years ended August 31, 2026, 2025 and 2024.
| Energy | Grains | Agronomy | Corporate and Services | Total | |||||||||||||||||||||||||
| Year ended August 31, 2026 | (Dollars in thousands) | ||||||||||||||||||||||||||||
| Revenues | $ | 11,359,955 | $ | 21,584,138 | $ | 6,099,599 | $ | 187,525 | $ | 39,231,217 | |||||||||||||||||||
| Income before income taxes | $ | 554,590 | $ | 127,378 | $ | 354,640 | $ | 92,111 | $ | 1,128,719 | |||||||||||||||||||
| Year ended August 31, 2025 | |||||||||||||||||||||||||||||
| Revenues | $ | 8,198,254 | $ | 20,987,888 | $ | 6,069,112 | $ | 207,354 | $ | 35,462,608 | |||||||||||||||||||
| (Loss) Income before income taxes | $ | (19,015) | $ | 44,003 | $ | 375,283 | $ | 214,501 | $ | 614,772 | |||||||||||||||||||
| Year ended August 31, 2024 | |||||||||||||||||||||||||||||
| Revenues | $ | 9,410,241 | $ | 24,092,806 | $ | 5,568,120 | $ | 190,062 | $ | 39,261,229 | |||||||||||||||||||
| Income before income taxes | $ | 406,658 | $ | 254,570 | $ | 258,577 | $ | 177,982 | $ | 1,097,787 | |||||||||||||||||||
Operating Segments
Energy
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 11,359,955 | $ | 8,198,254 | $ | 3,161,701 | 38.6 | % | |||||||||||||||
| Income (Loss) before income taxes | $ | 554,590 | $ | (19,015) | $ | 573,605 | NM | ||||||||||||||||
The following commentary presents the changes in our Energy segment for the year ended August 31, 2026, compared to the year ended August 31, 2025.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2026: | (Dollars in thousands) | ||||||||||
| Volume | $ | 1,770,017 | $ | (692) | |||||||
| Price impact on revenues and margin impact on IBIT | 1,391,684 | 623,580 | |||||||||
| Other IBIT | - | (49,283) | |||||||||
| Total change | $ | 3,161,701 | $ | 573,605 | |||||||
Total Energy segment revenues increased $3,161.7 million, or 38.6%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Higher bulk sales volumes of lower-margin refined fuels and propane products increased Energy segment revenues.
•Higher commodity selling prices, driven by global conflicts and related supply constraints, further increased revenues.
Energy segment IBIT increased $573.6 million during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Improved refining margins, driven by significantly higher crack spreads and wider WCS discounts, increased Energy IBIT.
•Increased production and sales of higher-margin refined products, following the completion of planned major maintenance activities at our McPherson refinery during fiscal 2025, favorably impacted earnings and more than offset the impacts of major maintenance activities at our Laurel refinery during fiscal 2026.
•Benefits associated with the SRE recognized during fiscal 2026, together with gains from the sale of previously expired RINs that became available as a result of the prior-year SRE, further increased profitability and more than offset the benefit of the SRE recognized in fiscal 2025.
•These benefits were partially offset by significantly increased RINs expense and unrealized hedging losses.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 8,198,254 | $ | 9,410,241 | $ | (1,211,987) | (12.9) | % | |||||||||||||||
| (Loss) Income before income taxes | $ | (19,015) | $ | 406,658 | $ | (425,673) | (104.7) | % | |||||||||||||||
The following commentary presents the changes in our Energy segment for the year ended August 31, 2025, compared to the year ended August 31, 2024.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2025: | (Dollars in thousands) | ||||||||||
| Volume | $ | (1,600) | $ | (1,626) | |||||||
| Price impact on revenues and margin impact on IBIT | (1,210,387) | (427,930) | |||||||||
| Other IBIT | - | 3,883 | |||||||||
| Total change | $ | (1,211,987) | $ | (425,673) | |||||||
Total Energy segment revenues decreased $1,212.0 million, or 12.9%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Lower selling prices for refined fuels products, driven by changing global supply and demand conditions and lower underlying commodity prices.
Energy segment IBIT decreased $425.7 million, or 104.7%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Significantly lower WCS crude oil discounts and crack spreads, resulting from less favorable market conditions including increased global refined fuels production, U.S. refinery capacity utilization and additional export opportunities for Canadian crude oil, reduced refining margins and decreased Energy IBIT.
•Planned major maintenance activities at our McPherson refinery reduced production of higher-margin, refined products and increased sales of lower-margin, purchased products, which unfavorably impacted earnings.
•Increased RINs expense further reduced profitability.
•These impacts were partially offset by a favorable benefit associated with the granting of the SREs for compliance years 2019 through 2024, which reduced our RVO related to production at our Laurel refinery.
Grains
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 21,584,138 | $ | 20,987,888 | $ | 596,250 | 2.8 | % | |||||||||||||||
| Income before income taxes | $ | 127,378 | $ | 44,003 | $ | 83,375 | 189.5 | % | |||||||||||||||
The following commentary presents the changes in our Grains segment for the year ended August 31, 2026, compared to the year ended August 31, 2025.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2026: | (Dollars in thousands) | ||||||||||
| Volume | $ | 481,108 | $ | 716 | |||||||
| Price impact on revenues and margin impact on IBIT | 115,142 | 79,690 | |||||||||
| Other IBIT | - | 2,969 | |||||||||
| Total change | $ | 596,250 | $ | 83,375 | |||||||
Total Grains segment revenues increased $596.3 million, or 2.8%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Higher feed grains sales volumes, driven by increased retail and wholesale Pacific Northwest activity, significantly increased Grains segment revenues. The favorable impact of higher volumes was slightly offset by lower feed grains selling prices.
•Lower oilseeds sales volumes, driven by lower Pacific Northwest volumes and planned downtime at our Fairmont and Mankato, Minnesota, processing facilities, partially offset the increase in revenues. However, this was partially mitigated by higher oilseeds selling prices.
•Higher wheat selling prices and increased sales volumes from our European operations also increased Grains segment revenues.
Grains segment IBIT increased $83.4 million, or 189.5%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Higher oilseed crush margins during the second half of the fiscal year, driven by increased demand resulting from higher biofuels blending obligations, more than offset weaker crush margins during the first half of the fiscal year and increased Grains segment IBIT.
•Higher ethanol margins, driven by U.S. renewable energy policies, and increased feed grains export volumes further increased IBIT.
•These favorable impacts were partially offset by weaker retail and wholesale grain margins and continued volatility in global grain markets.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 20,987,888 | $ | 24,092,806 | $ | (3,104,918) | (12.9) | % | |||||||||||||||
| Income before income taxes | $ | 44,003 | $ | 254,570 | $ | (210,567) | (82.7) | % | |||||||||||||||
The following commentary presents the changes in our Grains segment for the year ended August 31, 2025, compared to the year ended August 31, 2024.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2025: | (Dollars in thousands) | ||||||||||
| Volume | $ | 116,579 | $ | (41,495) | |||||||
| Price impact on revenues and margin impact on IBIT | (3,221,497) | (216,293) | |||||||||
| Other IBIT | - | 47,221 | |||||||||
| Total change | $ | (3,104,918) | $ | (210,567) | |||||||
Total Grains segment revenues decreased $3,104.9 million, or 12.9%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Lower commodity selling prices across oilseed, wheat and feed grain products, resulting from global supply and demand conditions, significantly decreased Grains revenues.
•Higher oilseed sales volumes, driven by increased processing activity, offset lower wheat and renewable fuels product sales volumes.
Grains segment IBIT decreased $210.6 million, or 82.7%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Lower oilseed crush margins, driven by increased global supplies of soybean meal and vegetable oils, significantly reduced profitability and decreased Grains IBIT.
•Lower wheat margins, resulting from unfavorable market conditions in North America, South America and Europe, also negatively impacted earnings.
•Costs associated with the closure of our Superior, Wisconsin, grain facility and the timing impact of mark-to-market adjustments associated with commodity derivatives further reduced profitability.
•These impacts were partially offset by stronger feed grains margins and favorable performance from certain equity method investments.
Agronomy
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 6,099,599 | $ | 6,069,112 | $ | 30,487 | 0.5 | % | |||||||||||||||
| Income before income taxes | $ | 354,640 | $ | 375,283 | $ | (20,643) | (5.5) | % | |||||||||||||||
The following commentary presents the changes in our Agronomy segment for the year ended August 31, 2026, compared to the year ended August 31, 2025.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2026: | (Dollars in thousands) | ||||||||||
| Volume | $ | (430,520) | $ | (28,533) | |||||||
| Price impact on revenues and margin impact on IBIT | 461,007 | (33,766) | |||||||||
| Other IBIT | - | 41,656 | |||||||||
| Total change | $ | 30,487 | $ | (20,643) | |||||||
Total Agronomy segment revenues increased $30.5 million, or 0.5%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Higher crop nutrients selling prices, driven by tightening global commodity supply conditions and favorable market pricing, increased Agronomy segment revenues.
•This favorable impact was partially offset by lower sales volumes across crop nutrients and crop protection products, reflecting delayed or deferred purchasing decisions by U.S. farmers.
Agronomy segment IBIT decreased $20.6 million, or 5.5%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Lower crop nutrients and crop protection volumes and margins, reflecting delayed or deferred purchasing decisions by U.S. farmers, increased competition and unfavorable market conditions decreased Agronomy segment IBIT.
•This was partially offset by strong performance of our equity method investment in CF Nitrogen, driven by higher urea and urea ammonium nitrate prices.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Revenues | $ | 6,069,112 | $ | 5,568,120 | $ | 500,992 | 9.0 | % | |||||||||||||||
| Income before income taxes | $ | 375,283 | $ | 258,577 | $ | 116,706 | 45.1 | % | |||||||||||||||
The following commentary presents the changes in our Agronomy segment for the year ended August 31, 2025, compared to the year ended August 31, 2024.
| Revenues | IBIT | ||||||||||
| For the year ended Aug 31, 2025: | (Dollars in thousands) | ||||||||||
| Volume | $ | 286,272 | $ | 21,846 | |||||||
| Price impact on revenues and margin impact on IBIT | 214,720 | 61,791 | |||||||||
| Other IBIT | - | 33,069 | |||||||||
| Total change | $ | 500,992 | $ | 116,706 | |||||||
Total Agronomy segment revenues increased $501.0 million, or 9.0%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Higher crop nutrient and crop protection products sales volumes, as a result of favorable weather conditions and strategic initiatives to grow the business, increased Agronomy revenues.
•Higher selling prices for crop nutrient and crop protection products, driven primarily by favorable crop nutrient market conditions, further increased revenues.
Agronomy segment IBIT increased $116.7 million, or 45.1%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Improved margins across crop nutrient and crop protection products, driven by favorable market conditions, increased Agronomy segment IBIT.
•Strong performance from our investment in CF Nitrogen, driven primarily by higher urea and urea ammonium nitrate prices, further increased IBIT.
•Additionally, higher crop nutrient and crop protection sales volumes increased earnings.
Corporate and Services
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Corporate and Services revenues | $ | 187,525 | $ | 207,354 | $ | (19,829) | (9.6) | % | |||||||||||||||
| Corporate and Services IBIT | $ | 92,111 | $ | 214,501 | $ | (122,390) | (57.1) | % | |||||||||||||||
During the year ended August 31, 2026, compared to the year ended August 31, 2025, lower transportation volumes negatively impacted Corporate and Services revenues, while IBIT decreased due to performance from our equity method investments and the gain on the sale of a business by our equity investment, Ventura Foods, during the prior fiscal year which did not reoccur in the current year.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Corporate and Services revenues | $ | 207,354 | $ | 190,062 | $ | 17,292 | 9.1 | % | |||||||||||||||
| Corporate and Services IBIT | $ | 214,501 | $ | 177,982 | $ | 36,519 | 20.5 | % | |||||||||||||||
During the year ended August 31, 2025, compared to the year ended August 31, 2024, higher transportation volumes positively impacted Corporate and Services revenues, while IBIT increased largely as a result of a gain on the sale of a business, recognized by our equity investment Ventura Foods.
Cost of Goods Sold
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Cost of goods sold | $ | 37,443,360 | $ | 34,325,794 | $ | 3,117,566 | 9.1 | % | |||||||||||||||
Consolidated cost of goods sold increased $3,117.6 million, or 9.1%, during the year ended August 31, 2026, compared to the year ended August 31, 2025, primarily due to the following:
•Higher bulk sales volumes and commodity costs for refined fuels increased COGS in our Energy segment. Increased RINs expense further increased COGS, but was partially offset by benefits associated with the SRE recognized during fiscal 2026.
•Higher feed grains sales volumes and commodity costs increased COGS in our Grains segment. These impacts were partially offset by lower oilseeds sales volumes, including the impacts of planned downtime at our Fairmont and Mankato processing facilities.
•Higher crop nutrients product costs increased COGS in our Agronomy segment, partially offset by lower sales volumes across crop nutrients and crop protection products.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Cost of goods sold | $ | 34,325,794 | $ | 37,509,902 | $ | (3,184,108) | (8.5) | % | |||||||||||||||
Consolidated cost of goods sold decreased $3,184.1 million, or 8.5%, during the year ended August 31, 2025, compared to the year ended August 31, 2024, primarily due to the following:
•Lower refined fuels commodity costs, driven by lower crude oil prices and changing market conditions, and the granting of SREs for compliance years 2019 through 2024 reduced COGS in our Energy segment. This decrease was partially offset by increased RINs expense and propane product costs.
•Lower commodity prices across oilseed, wheat and feed grain products reduced COGS in our Grains segment. This decrease was partially offset by higher oilseed processing activity.
•Higher crop nutrient and crop protection product costs and increased sales volumes increased COGS in our Agronomy segment.
Marketing, General and Administrative Expenses
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Marketing, general and administrative expenses | $ | 1,195,975 | $ | 1,046,059 | $ | 149,916 | 14.3 | % | |||||||||||||||
Marketing, general and administrative expenses increased during fiscal 2026 primarily driven by the year-over-year increase in incentive-based compensation, along with amortization related to our enterprise resource planning system.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Marketing, general and administrative expenses | $ | 1,046,059 | $ | 1,166,969 | $ | (120,910) | (10.4) | % | |||||||||||||||
Marketing, general and administrative expenses decreased during fiscal 2025 primarily driven by the year-over-year decrease in incentive-based compensation and benefit expenses.
Interest Expense
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Interest expense | $ | 163,633 | $ | 146,079 | $ | 17,554 | 12.0 | % | |||||||||||||||
Interest expense increased during fiscal 2026, as a result of a higher average daily balance of short-term debt and lower capitalized interest when compared to the prior fiscal year.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Interest expense | $ | 146,079 | $ | 104,064 | $ | 42,015 | 40.4 | % | |||||||||||||||
Interest expense increased during fiscal 2025, as a result of a higher short-term notes payable balance, along with higher weighted-average interest rates, compared to the prior fiscal year.
Other Income
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Other income | $ | 131,239 | $ | 100,431 | $ | 30,808 | 30.7 | % | |||||||||||||||
Other income increased during fiscal 2026 primarily due to the sale of carbon credit assets and increased interest income, but was partially offset by decreased unrealized gains on investments during the current year compared to the prior fiscal year.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Other income | $ | 100,431 | $ | 137,630 | $ | (37,199) | (27.0) | % | |||||||||||||||
Other income decreased during fiscal 2025 primarily due to decreased interest income as a result of a smaller cash balance compared to the prior fiscal year.
Equity Income from Investments
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Equity income from investments* | $ | 569,231 | $ | 569,665 | $ | (434) | (0.1) | % | |||||||||||||||
*See Note 6, Investments, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.
Equity income from investments was flat during fiscal 2026 compared to the prior year, primarily due to strong performance from our investment in CF Nitrogen that was offset by a gain on the sale of a business, recognized by our equity investment Ventura Foods, during the prior fiscal year that did not reoccur in the current year.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Equity income from investments* | $ | 569,665 | $ | 479,863 | $ | 89,802 | 18.7 | % | |||||||||||||||
*See Note 6, Investments, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.
Equity income from investments increased during fiscal 2025 compared to the prior year, primarily due to a gain on the sale of a business, recognized by our equity investment Ventura Foods, and strong performance from our investment in CF Nitrogen.
Income Tax Expense (Benefit)
2026 Compared to 2025
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Income tax expense | $ | 32,737 | $ | 16,777 | $ | 15,960 | 95.1 | % | |||||||||||||||
Increased income tax expense during fiscal 2026 resulted primarily from increased pre-tax book income, partially offset by clean fuel production tax credits, which are discussed in Note 11, Income Taxes, and increased patronage earnings. Effective tax rates for the years ended August 31, 2026 and 2025, were 2.9% and 2.7%, respectively. Federal and state statutory rates of 24.0% and 24.3% were applied to nonpatronage business activity for the years ended August 31, 2026 and 2025, respectively. Income taxes and effective tax rates vary each year based on profitability and nonpatronage business activity.
2025 Compared to 2024
| Years Ended August 31, | Change | ||||||||||||||||||||||
| 2025 | 2024 | Dollars | Percent | ||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||
| Income tax expense (benefit) | $ | 16,777 | $ | (4,872) | $ | 21,649 | (444.4) | % | |||||||||||||||
Increased income tax expense during fiscal 2025 resulted primarily from lower research and development tax credits, a change in a state law and a fluctuation between taxable and nontaxable patronage income. Effective tax rates for the years ended August 31, 2025 and 2024, were 2.7% and (0.4)%, respectively. Federal and state statutory rates of 24.3% and 24.5% were applied to nonpatronage business activity for the years ended August 31, 2025 and 2024, respectively. Income taxes and effective tax rates vary each year based on profitability and nonpatronage business activity.
Liquidity and Capital Resources
In assessing our financial condition, we consider factors such as working capital, internal benchmarking related to our applicable covenants and other financial information. The following financial information is used when assessing our liquidity and capital resources to meet our capital allocation priorities, which include maintaining the safety and compliance of our operations, paying interest on debt and preferred stock dividends, returning cash to our member-owners in the form of cash patronage and equity redemptions, and taking advantage of strategic opportunities that benefit our member-owners:
| August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Dollars in thousands) | |||||||||||
| Cash and cash equivalents | $ | 263,603 | $ | 327,826 | |||||||
| Notes payable | 449,002 | 1,152,457 | |||||||||
| Long-term debt including current maturities | 2,052,723 | 1,835,833 | |||||||||
| Total equities | 11,644,845 | 11,080,174 | |||||||||
| Working capital | 3,792,719 | 2,803,865 | |||||||||
| Current ratio* | 1.7 | 1.5 | |||||||||
*Current ratio is defined as current assets divided by current liabilities.
Summary of Our Major Sources of Cash and Cash Equivalents
We fund our current operations primarily through our cash flows from operations and with short-term borrowings through our committed and uncommitted revolving credit facilities, including our securitization facility with certain unaffiliated financial institutions ("Securitization Facility"). We fund certain of our long-term capital needs, primarily those related to acquisitions of property, plant and equipment, with cash flows from operations, our revolving term loan facility and by issuing long-term debt. See Note 9, Notes Payable and Long-Term Debt, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information on our short-term borrowings and long-term debt, including tables with summarized long-term debt outstanding. We will continue to consider opportunities to further diversify and enhance our sources and amounts of liquidity.
Summary of Our Major Uses of Cash and Cash Equivalents
Annually, our Board of Directors approves our capital expenditure budget. Our fiscal 2027 capital expenditure priorities include maintaining our assets through repairs and maintenance; complying with environmental, health and safety requirements; enhancing information technology capabilities; improving productivity; and growth. Our refining business requires continued investment in our refining process to maintain its safety, operational reliability and profitability. In addition, our Board of Directors approved our cash patronage and equity redemptions to be paid in fiscal 2027, based on fiscal 2026 financial performance. The following is a summary of our primary expected cash requirements for fiscal 2027:
•Capital expenditures. We expect total capital expenditures for fiscal 2027 to be approximately $850.8 million, compared to capital expenditures of $463.3 million in fiscal 2026, as we continue to invest in capital projects to meet the evolving needs of our owners and customers and enhance value for the cooperative system. The fiscal 2027 projection includes amounts for our recently announced soybean processing facility in Evansville, Wisconsin.
•Investments in joint ventures. We recently announced a proposed joint venture with OCP North America, a subsidiary of the OCP Group, to develop a phosphate fertilizer production facility in Louisiana. We expect to incur related development costs in fiscal 2027, pending project-related approvals.
•Major maintenance. We expect total major maintenance for fiscal 2027 to be approximately $41.8 million, compared to major maintenance of $68.3 million in fiscal 2026. Decreased major maintenance for fiscal 2027 is due to reduced turnaround activities at our refineries compared to the turnaround at our Laurel refinery during fiscal 2026.
•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of August 31, 2026. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2027.
•Patronage. Our Board of Directors authorized approximately $150.0 million of our fiscal 2026 patronage-sourced earnings to be paid to our member-owners as cash patronage during fiscal 2027 based on business done with CHS during fiscal 2026.
•Equity redemptions. Our Board of Directors authorized approximately $150.0 million of equity redemptions to be distributed in fiscal 2027, in the form of redemptions of qualified and nonqualified equity owned by individual producer-members and association members. The Board of Directors periodically evaluates the level of equity redemption activity relative to the amounts it has authorized for redemption.
We believe cash generated by operating and investing activities, along with available borrowing capacity under our credit facilities, will be sufficient to support our short-term (the next 12 months) and long-term (beyond the next 12 months) operations. However, we may from time to time issue long-term debt to fund growth projects or otherwise manage our liquidity and capital structure. Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with all our debt covenants and restrictions as of August 31, 2026. Based on our current 2027 projections, we expect continued covenant compliance.
Working Capital
We measure working capital as current assets, less current liabilities as each amount appears on our Consolidated Balance Sheets. We believe this information is meaningful to investors as a measure of operational efficiency and short-term financial health. Working capital is not defined under U.S. GAAP and may not be computed the same as similarly titled measures used by other companies. Working capital as of August 31, 2026 and 2025, was as follows:
| 2026 | 2025 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Current assets | $ | 9,399,971 | $ | 8,086,351 | $ | 1,313,620 | |||||||||||
| Less current liabilities | 5,607,252 | 5,282,486 | 324,766 | ||||||||||||||
| Working capital | $ | 3,792,719 | $ | 2,803,865 | $ | 988,854 | |||||||||||
As of August 31, 2026, working capital increased by $988.9 million compared with August 31, 2025. Current asset balance changes increased working capital by $1.3 billion, primarily driven by an increase in inventory levels at the end of fiscal year 2026 compared to fiscal year 2025. Current liabilities balance changes decreased working capital by $324.8 million, primarily due to an increase in dividends and equity payable for higher cash patronage and equity redemptions expected to be distributed during fiscal year 2027 compared to fiscal year 2026.
We finance our working capital needs through committed and uncommitted lines of credit with domestic and international banks. We believe our current cash balances and available capacity on our committed and uncommitted lines of credit will provide adequate liquidity to meet our working capital needs.
Contractual Obligations
Below is a summary of our estimated future contractual obligations as of August 31, 2026, that are expected to be paid within the next year (short-term) and thereafter (long-term).
| Payments Due by Period | |||||||||||||||||
| Short-Term | Long-Term | Total | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Long-term debt | $ | 58,562 | $ | 1,945,750 | $ | 2,004,312 | |||||||||||
|
Interest payments related to long-term debt (1)
|
101,271 | 706,320 | 807,591 | ||||||||||||||
|
Finance lease (2)
|
14,550 | 45,756 | 60,306 | ||||||||||||||
|
Operating lease (2)
|
79,261 | 171,973 | 251,234 | ||||||||||||||
|
Purchase obligations (3)
|
6,500,640 | 1,103,551 | 7,604,191 | ||||||||||||||
| Total | $ | 6,754,284 | $ | 3,973,350 | $ | 10,727,634 | |||||||||||
(2) Finance and operating lease obligations are described in Note 19, Leases, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K. Operating and finance lease obligations reflected in this table include related interest expense.
(3) Purchase obligations are legally binding and enforceable agreements to purchase goods or services that specify all significant terms, including fixed or minimum quantities to be purchased and fixed or estimated prices to be paid at the time of settlement.
Cash Flows
| Years Ended August 31, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Net cash provided by operating activities | $ | 1,584,009 | $ | 635,787 | $ | 948,222 | |||||||||||
| Net cash used in investing activities | (802,366) | (880,595) | 78,229 | ||||||||||||||
| Net cash used in financing activities | (796,854) | (230,567) | (566,287) | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 2,771 | 773 | 1,998 | ||||||||||||||
| Net decrease in cash and cash equivalents and restricted cash | $ | (12,440) | $ | (474,602) | $ | 462,162 | |||||||||||
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 $948.2 million increase in cash provided by operating activities in fiscal 2026 primarily reflects increased cash provided by accounts payable and accrued expenses, as well as increased net income during fiscal 2026.
The $78.2 million decrease in cash used in investing activities in fiscal 2026 reflects lower expenditures for property, plant and equipment, business acquisitions and major maintenance, offset by decreased proceeds from the sale and maturity of investments, increased purchases of short-term investments and increases in CHS Capital notes receivable during fiscal 2026 compared to fiscal 2025.
The $566.3 million increase in cash used in financing activities in fiscal 2026 primarily reflects lower net borrowings, partially offset by lower cash payments for patronage dividends and equity redemptions, compared to fiscal 2025.
Critical Accounting Policies
Our consolidated financial statements are prepared in conformity with U.S. GAAP. Preparation of these consolidated financial statements requires use of estimates, as well as management's judgments and assumptions regarding matters that are subjective, uncertain or involve a high degree of complexity, all of which affect the results of operations and financial condition for the periods presented. We believe the following accounting policies are critical to our consolidated financial statements and may involve a higher degree of estimates, judgments and complexity.
Inventory Valuation and Reserves
Grain, processed grain, oilseed, processed oilseed and other minimally processed soy-based inventories are stated at net realizable value. All other inventories are stated at the lower of cost or net realizable value. The costs of certain energy inventories (wholesale refined products, crude oil and asphalt) are determined on the last-in, first-out ("LIFO") method; all other inventories of nongrain products purchased for resale are valued on the first-in, first-out ("FIFO") and average cost methods. Estimates are used in determining the net realizable values of grain and oilseed and processed grain and oilseed inventories. These estimates include using inputs that are generally based on exchange-traded prices and/or recent market bids and offers, including location-specific adjustments. If estimates regarding the valuation of inventories are less favorable than management's assumptions, write-downs of inventories may be required.
Derivative Financial Instruments
We enter into exchange-traded commodity futures and options contracts to hedge our exposure to price fluctuations on energy, grain and oilseed transactions to the extent considered practicable for minimizing risk. Futures and options contracts used for hedging are purchased and sold through regulated commodity exchanges. We also use over-the-counter instruments to hedge our exposure on fixed-price contracts. Fluctuations in inventory valuations, however, may not be completely hedged due in part to the absence of satisfactory hedging facilities for certain commodities and geographical areas and in part to our assessment of our exposure from expected price fluctuations. We also manage our risks by entering into fixed-price purchase contracts with preapproved producers and establishing appropriate limits for individual suppliers. Fixed-price sales contracts are entered into with customers of acceptable creditworthiness, as internally evaluated. The fair values of futures and options contracts are determined primarily from quotes listed on regulated commodity exchanges. Fixed-price purchase and sales contracts are with various counterparties, and the fair values of such contracts are determined from the market price of the underlying product. We are exposed to loss in the event of nonperformance by the counterparties to the contracts and, therefore, contract values are reviewed and adjusted to reflect potential nonperformance. Risk of nonperformance by counterparties includes the inability to
perform because of a counterparty's financial condition and a risk that the counterparty will refuse to perform on a contract during periods of price fluctuations where contract prices are significantly different from current market prices.
Pension and Other Postretirement Benefits
Pension and other postretirement benefits costs and obligations depend on assumptions used in calculating such amounts. These assumptions include discount rates, health care cost trend rates, benefits earned, interest costs, expected return on plan assets, mortality rates and other factors. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and therefore generally affect recognized expenses and the recorded obligations in future periods. While our management believes the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect our pension and other postretirement obligations and future expenses.
Deferred Tax Assets and Uncertain Tax Positions
We assess whether a valuation allowance is necessary to reduce our deferred tax assets to the amount we believe is more likely than not to be realized. While we have considered future taxable income, as well as other factors, in assessing the need for the valuation allowance, in the event that we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to our deferred tax assets would be charged to income in the period such determination was made. We are also significantly impacted by utilization of tax credits, some of which were passed to us from the McPherson refinery, related to refinery upgrades that enable us to produce ultra-low-sulfur fuels. Our tax credit carryforwards are available to offset future federal and state tax liabilities with the tax credits becoming unavailable to us if not used by their expiration date. Our net operating loss carryforwards for tax purposes are available to offset future taxable income. If our loss carryforwards are not used, they will expire.
Tax benefits related to uncertain tax positions are recognized in our financial statements if it is more likely than not the position would be sustained upon examination by a tax authority that has full knowledge of all relevant information. The benefits are measured using a cumulative probability approach. Under this approach, we record in our financial statements the greatest amount of tax benefits that have a more than 50% probability of being realized upon final settlement with the tax authorities. In determining these tax benefits, we assign probabilities to a range of possible outcomes using all relevant facts and information available at the reporting date. Due to the complexity of these uncertainties, the ultimate resolution may result in a benefit that is materially different than our current estimate.
Long-Lived Assets
Property, plant and equipment is depreciated or amortized over the expected useful lives of individual or groups of assets based on the straight-line method. Economic circumstances or other factors may cause management's estimates of expected useful lives to differ from actual useful lives.
All long-lived assets, including property, plant and equipment, goodwill, investments in unconsolidated affiliates and other identifiable intangibles, are evaluated for impairment in accordance with U.S. GAAP, at least annually for goodwill, and whenever events or changes in circumstances indicate the carrying amount of a long-lived asset or asset group may not be recoverable. For goodwill, our annual impairment testing occurs in our fourth quarter. An impaired asset is written down to its estimated fair value based on the best information available. Fair value is generally measured by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows and our estimates may differ from actual results.
We have other assets that we may be obligated to dismantle at the end of the corresponding lease terms subject to the lessor's discretion for which we have recorded an asset retirement obligation. Based on our estimates of the timing, cost and probability of removal, this obligation is not material.
Recent Accounting Pronouncements
See Note 1, Organization, Basis of Presentation and Significant Accounting Policies, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for information concerning new accounting standards and the impact of implementation of those standards on our financial statements.
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