UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☑	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended	~~May 31,~~November 30, 2021
or
☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission file number: 001-36079

CHS Inc.

(Exact name of Registrant as specified in its charter)

Minnesota

41-0251095

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

~~5500 Cenex Drive~~

~~Inver Grove Heights,~~

~~Minnesota~~

~~55077~~

~~(Address of principal executive offices, including zip code)~~

~~(651)~~

~~355-6000~~

~~(Registrant’s~~

5500 Cenex Drive

Inver Grove Heights, Minnesota 55077

(Address of principal executive offices, including zip code)

(651) 355-6000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading symbol(s)	Name of each exchange on which registered
8% Cumulative Redeemable Preferred Stock	CHSCP	The Nasdaq Stock Market LLC
Class B Cumulative Redeemable Preferred Stock, Series 1	CHSCO	The Nasdaq Stock Market LLC
Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2	CHSCN	The Nasdaq Stock Market LLC
Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3	CHSCM	The Nasdaq Stock Market LLC
Class B Cumulative Redeemable Preferred Stock, Series 4	CHSCL	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer

☑

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

The issuer has no common stock outstanding.

TABLE OF CONTENTS



	PART I. FINANCIAL INFORMATION	Page No.
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of ~~May 31~~November 30 , 2021, and August 31, ~~2020~~202 1	2
	Condensed Consolidated Statements of Operations for the ~~three and~~ ~~nine~~T ~~months ended~~hree ~~May 31~~M onths E nded November 30 , 2021 and 2020	3
	Condensed Consolidated Statements of Comprehensive Income for the ~~three and~~ ~~nine~~T hree ~~months ended~~ ~~May 31,~~M onths E nded November 30 , 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the ~~nine~~T ~~months ended~~hree ~~May 31, 2021~~M onths E nded ~~and~~November 30 , 2021 and 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2621
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5336
Item 4.	Controls and Procedures	5336
	PART II. OTHER INFORMATION	5437
Item 1.	Legal Proceedings	5437
Item 1A.	Risk Factors	5437
Item 6.	Exhibits	5537
Signatures		5638

Unless the context otherwise requires, for purposes of this Quarterly Report on Form 10-Q, the words "CHS," "we," "us" and "our" refer to CHS Inc., a Minnesota cooperative corporation, and its subsidiaries as of ~~May 31,~~November 30, 2021.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains, and our other publicly available documents may contain, and our officers, directors and other representatives may from time to time make "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in our public filings made with the U.S. Securities and Exchange Commission, including in the "Risk Factors" discussion in Item 1A of our Annual Report on Form 10-K for the year ended August 31, ~~2020, and Item 1A of Part II of CHS Quarterly Report on Form 10-Q for the quarterly period ended May 31,~~ 2021. These factors may ~~include:~~include changes in commodity prices; the impact of government policies, mandates, regulations and trade agreements; global and regional political, economic, legal and other risks of doing business globally; the impact of the ongoing ~~COVID–19~~COVID-19 outbreak or other similar outbreaks; the impact of market acceptance of alternatives to refined petroleum products; consolidation among our suppliers and customers; nonperformance by contractual counterparties; changes in federal income tax laws or our tax status; the impact of compliance or noncompliance with applicable laws and regulations; the impact of any governmental investigations; the impact of environmental ~~liabilities;~~liabilities and litigation; actual or perceived quality, safety or health risks associated with our products; the impact of seasonality; the effectiveness of our risk management strategies; business interruptions and casualty losses; the impact of workforce factors; our funding needs and financing sources; ~~changes in~~financial institutions' and other capital sources' policies concerning energy-related businesses; uncertainty regarding the ~~method of determining, or~~transition away from LIBOR and the replacement of ~~LIBOR;~~LIBOR with an alternative reference rate; technological improvements that decrease the demand for our agronomy and energy products; our ability to complete, integrate and benefit from acquisitions, strategic alliances, joint ventures, divestitures and other nonordinary ~~course–of–business~~course-of-business events; security breaches or other disruptions to our information technology systems or assets; the impact of our environmental, social and governance practices; the impairment of ~~long–lived~~long-lived assets; and other factors affecting our businesses generally. Any forward-looking statements made by us in this Quarterly Report on Form 10-Q are based only on information currently available to us and speak only as of the date on which the statement is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		(Dollars in thousands)					(Dollars in thousands)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	301,230	$	140,874	Cash and cash equivalents	$	310,002	$	413,159
Receivables	Receivables	3,191,478		2,366,047		Receivables	3,579,417		2,860,884
Inventories	Inventories	3,513,871		2,742,138		Inventories	4,608,816		3,334,675
Other current assets	Other current assets	1,896,796		1,017,488		Other current assets	1,498,883		1,390,233
Total current assets	Total current assets	8,903,375		6,266,547		Total current assets	9,997,118		7,998,951
Investments	Investments	3,763,936		3,630,033		Investments	3,809,509		3,669,111
Property, plant and equipment	Property, plant and equipment	4,827,076		4,957,938		Property, plant and equipment	4,738,246		4,810,005
Other assets	Other assets	1,106,239		1,139,429		Other assets	1,070,105		1,098,208
Total assets	Total assets	$	18,600,626	$	15,993,947	Total assets	$	19,614,978	$	17,576,275
LIABILITIES AND EQUITIES	LIABILITIES AND EQUITIES					LIABILITIES AND EQUITIES
Current liabilities:	Current liabilities:					Current liabilities:
Notes payable	Notes payable	$	2,776,812	$	1,575,491	Notes payable	$	1,905,371	$	1,740,859
Current portion of long-term debt	Current portion of long-term debt	198,147		189,287		Current portion of long-term debt	38,343		38,450
Accounts payable	Accounts payable	2,378,812		1,724,516		Accounts payable	4,219,458		2,616,052
Accrued expenses	Accrued expenses	595,660		501,904		Accrued expenses	475,729		622,723
Other current liabilities	Other current liabilities	1,444,716		928,843		Other current liabilities	1,466,985		1,307,929
Total current liabilities	Total current liabilities	7,394,147		4,920,041		Total current liabilities	8,105,886		6,326,013
Long-term debt	Long-term debt	1,571,644		1,601,836		Long-term debt	1,576,769		1,579,911
Other liabilities	Other liabilities	683,642		652,897		Other liabilities	682,397		653,025
Commitments and contingencies (Note 13)	Commitments and contingencies (Note 13)	0		0		Commitments and contingencies (Note 13)	0		0
Equities:	Equities:					Equities:
Preferred stock	Preferred stock	2,264,038		2,264,038		Preferred stock	2,264,038		2,264,038
Equity certificates	Equity certificates	5,133,465		5,161,610		Equity certificates	5,166,786		5,247,238
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(215,343)		(233,924)		Accumulated other comprehensive loss	(231,809)		(216,391)
Capital reserves	Capital reserves	1,760,468		1,618,147		Capital reserves	2,043,305		1,713,976
Total CHS Inc. equities	Total CHS Inc. equities	8,942,628		8,809,871		Total CHS Inc. equities	9,242,320		9,008,861
Noncontrolling interests	Noncontrolling interests	8,565		9,302		Noncontrolling interests	7,606		8,465
Total equities	Total equities	8,951,193		8,819,173		Total equities	9,249,926		9,017,326
Total liabilities and equities	Total liabilities and equities	$	18,600,626	$	15,993,947	Total liabilities and equities	$	19,614,978	$	17,576,275

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020		2021		2020					2021		2020
		(Dollars in thousands)								(Dollars in thousands)
Revenues	Revenues	$	10,929,976	$	7,241,031	$	27,965,778	$	21,460,742			Revenues	$	10,880,757	$	8,715,643
Cost of goods sold	Cost of goods sold	10,615,348		7,022,672		27,371,326		20,601,785				Cost of goods sold	10,360,849		8,537,539
Gross profit	Gross profit	314,628		218,359		594,452		858,957				Gross profit	519,908		178,104
Marketing, general and administrative expenses	Marketing, general and administrative expenses	186,703		180,439		518,875		548,340				Marketing, general and administrative expenses	204,934		170,661
Operating earnings	Operating earnings	127,925		37,920		75,577		310,617				Operating earnings	314,974		7,443

Interest expense	Interest expense	28,992		26,661		82,897		95,043				Interest expense	23,432		25,050
Other income	Other income	(10,748)		(8,076)		(41,219)		(32,926)				Other income	(23,776)		(12,624)
Equity income from investments	Equity income from investments	(146,522)		(51,114)		(260,654)		(135,174)				Equity income from investments	(151,345)		(50,023)
Income before income taxes	Income before income taxes	256,203		70,449		294,553		383,674				Income before income taxes	466,663		45,040
Income tax benefit		(17,469)		(27,052)		(10,130)		(18,258)
Income tax expense (benefit)												Income tax expense (benefit)	14,720		(24,329)
Net income	Net income	273,672		97,501		304,683		401,932				Net income	451,943		69,369
Net income (loss) attributable to noncontrolling interests		81		(147)		(350)		955
Net loss attributable to noncontrolling interests												Net loss attributable to noncontrolling interests	(18)		(302)
Net income attributable to CHS Inc.	Net income attributable to CHS Inc.	$	273,591	$	97,648	$	305,033	$	400,977			Net income attributable to CHS Inc.	$	451,961	$	69,671

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020		2021		2020					2021		2020
		(Dollars in thousands)								(Dollars in thousands)
Net income	Net income	$	273,672	$	97,501	$	304,683	$	401,932			Net income	$	451,943	$	69,369
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income, net of tax:												Other comprehensive (loss) income, net of tax:
Pension and other postretirement benefits	Pension and other postretirement benefits	3,888		3,490		11,402		12,309				Pension and other postretirement benefits	3,768		3,645

Cash flow hedges	Cash flow hedges	(4,991)		6,817		(3,881)		(4,867)				Cash flow hedges	(9,141)		1,669
Foreign currency translation adjustment	Foreign currency translation adjustment	8,218		(12,316)		11,060		(21,674)				Foreign currency translation adjustment	(10,045)		3,603
Other comprehensive income (loss), net of tax		7,115		(2,009)		18,581		(14,232)
Other comprehensive (loss) income, net of tax												Other comprehensive (loss) income, net of tax	(15,418)		8,917
Comprehensive income	Comprehensive income	280,787		95,492		323,264		387,700				Comprehensive income	436,525		78,286
Comprehensive income (loss) attributable to noncontrolling interests		81		(147)		(350)		955
Comprehensive loss attributable to noncontrolling interests												Comprehensive loss attributable to noncontrolling interests	(18)		(302)
Comprehensive income attributable to CHS Inc.	Comprehensive income attributable to CHS Inc.	$	280,706	$	95,639	$	323,614	$	386,745			Comprehensive income attributable to CHS Inc.	$	436,543	$	78,588

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020			2021		2020
		(Dollars in thousands)					(Dollars in thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	304,683	$	401,932	Net income	$	451,943	$	69,369
Adjustments to reconcile net income to net cash (used in) provided by operating activities:	Adjustments to reconcile net income to net cash (used in) provided by operating activities:					Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization, including amortization of deferred major maintenance	Depreciation and amortization, including amortization of deferred major maintenance	401,657		408,613		Depreciation and amortization, including amortization of deferred major maintenance	132,772		134,692
Equity income from investments, net of distributions received	Equity income from investments, net of distributions received	(128,635)		1,339		Equity income from investments, net of distributions received	(140,387)		(40,842)
Provision for doubtful accounts		3,353		7,692
Provision for current expected credit losses						Provision for current expected credit losses	1,472		1,564
Deferred taxes	Deferred taxes	17,379		(11,811)		Deferred taxes	11,856		477
Other, net	Other, net	(24,420)		67,625		Other, net	(8,556)		(5,263)
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Receivables	Receivables	(885,496)		25,290		Receivables	(696,984)		(430,234)
Inventories	Inventories	(763,675)		(5,602)		Inventories	(1,274,141)		(967,637)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	775,825		(185,503)		Accounts payable and accrued expenses	1,420,237		773,776
Other, net	Other, net	(333,049)		(183,732)		Other, net	(81,799)		(209,355)
Net cash (used in) provided by operating activities		(632,378)		525,843
Net cash used in operating activities						Net cash used in operating activities	(183,587)		(673,453)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Acquisition of property, plant and equipment	Acquisition of property, plant and equipment	(238,774)		(316,506)		Acquisition of property, plant and equipment	(74,878)		(85,680)
Proceeds from disposition of property, plant and equipment	Proceeds from disposition of property, plant and equipment	17,039		28,257		Proceeds from disposition of property, plant and equipment	2,822		3,350
Expenditures for major maintenance	Expenditures for major maintenance	(42,466)		(10,414)		Expenditures for major maintenance	(5,541)		(6,313)
Proceeds from sale of business	Proceeds from sale of business	39,567		694		Proceeds from sale of business	55,546		42,585
Changes in CHS Capital notes receivable, net	Changes in CHS Capital notes receivable, net	31,543		219,173		Changes in CHS Capital notes receivable, net	(31,509)		(79,045)
Financing extended to customers	Financing extended to customers	(1,890)		(5,139)		Financing extended to customers	(456)		(617)
Payments from customer financing	Payments from customer financing	6,110		21,341		Payments from customer financing	3,833		3,875

Other investing activities, net	Other investing activities, net	11,362		14,061		Other investing activities, net	(2,013)		7,534
Net cash used in investing activities	Net cash used in investing activities	(177,509)		(48,533)		Net cash used in investing activities	(52,196)		(114,311)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from notes payable and long-term debt	Proceeds from notes payable and long-term debt	26,618,429		19,841,762		Proceeds from notes payable and long-term debt	4,952,834		6,620,876
Payments on notes payable, long-term debt and finance lease obligations	Payments on notes payable, long-term debt and finance lease obligations	(25,381,437)		(19,805,609)		Payments on notes payable, long-term debt and finance lease obligations	(4,792,770)		(5,752,925)
Preferred stock dividends paid	Preferred stock dividends paid	(126,501)		(126,501)		Preferred stock dividends paid	(42,167)		(42,167)
Redemptions of equities	Redemptions of equities	(37,809)		(86,272)		Redemptions of equities	(12,221)		(7,726)
Cash patronage dividends paid		(30,042)		(90,112)

Other financing activities, net	Other financing activities, net	(30,634)		(25,475)		Other financing activities, net	50,326		(9,167)
Net cash provided by (used in) financing activities		1,012,006		(292,207)
Net cash provided by financing activities						Net cash provided by financing activities	156,002		808,891
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(451)		(786)		Effect of exchange rate changes on cash and cash equivalents	(3,550)		2,324
Increase in cash and cash equivalents and restricted cash		201,668		184,317
(Decrease) increase in cash and cash equivalents and restricted cash						(Decrease) increase in cash and cash equivalents and restricted cash	(83,331)		23,451
Cash and cash equivalents and restricted cash at beginning of period	Cash and cash equivalents and restricted cash at beginning of period	216,993		299,675		Cash and cash equivalents and restricted cash at beginning of period	542,484		216,993
Cash and cash equivalents and restricted cash at end of period	Cash and cash equivalents and restricted cash at end of period	$	418,661	$	483,992	Cash and cash equivalents and restricted cash at end of period	$	459,153	$	240,444

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).

Table of Contents

CHS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 Basis of Presentation and Significant Accounting Policies

Basis of Presentation

These unaudited condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary for a fair statement of our financial position, results of operations and cash flows for the periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of the seasonal nature of our businesses, among other things. Our unaudited condensed consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, ~~2020,~~2021, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC").

Significant Accounting Policies

~~The following~~ No significant accounting ~~policy was~~policies were updated or changed since our Annual Report on Form 10-K for the year ended August 31, ~~2020.~~

~~Receivables~~

~~As described in the "Recent Accounting Pronouncements" section, we adopted Accounting Standards Update ("ASU") No. 2016-13,~~ ~~Financial Instruments - Credit Losses~~ ~~("ASC Topic 326"):~~ ~~Measurement of Credit Losses on Financial Instruments, on September 1, 2020, using the modified retrospective approach. Our accounting policies with respect to ASC Topic 326 are included in Note 3,~~ ~~Receivables~~.2021.

Recent Accounting Pronouncements

~~Except for the recent accounting pronouncement described below, other~~No recent accounting pronouncements are ~~not~~ expected to have a material impact on our condensed consolidated financial statements.

~~Adopted~~

In June 2016, the Financial Accounting Standards Board issued ASC Topic 326. The amendments in this ASU introduce a new approach, based on expected losses, to estimate credit losses on certain types of financial instruments. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses associated with most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to the opening balance of capital reserves as of the beginning of the first reporting period in which the guidance is adopted. As part of our adoption efforts, we performed various data-gathering activities, developed a credit losses model, performed data analyses and made accounting policy election determinations. The impact of adoption did not have a material impact on our condensed consolidated financial statements.

~~Not Yet Adopted~~

~~None.~~

~~Table of Contents~~

Note 2 Revenues

The following table presents revenues recognized under Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), and other applicable accounting guidance for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic ~~842,~~470, ~~Leases~~Debt, and ASC Topic ~~470,~~842, ~~Debt~~Leases, that fall outside the scope of ASC Topic 606.


		ASC Topic 606		ASC Topic 815		Other Guidance		Total Revenues			ASC Topic 606		ASC Topic 815		Other Guidance		Total Revenues
Three Months Ended May 31, 2021		(Dollars in thousands)
Three Months Ended November 30, 2021										Three Months Ended November 30, 2021	(Dollars in thousands)
Energy	Energy	$	1,533,643	$	171,155	$	0	$	1,704,798	Energy	$	2,047,277	$	256,710	$	—	$	2,303,987
Ag	Ag	2,810,389		6,389,677		16,138		9,216,204		Ag	2,531,956		6,029,260		8,043		8,569,259
Corporate and Other	Corporate and Other	3,929		0		5,045		8,974		Corporate and Other	3,590		—		3,921		7,511
Total revenues	Total revenues	$	4,347,961	$	6,560,832	$	21,183	$	10,929,976	Total revenues	$	4,582,823	$	6,285,970	$	11,964	$	10,880,757

Three Months Ended May 31, 2020
Three Months Ended November 30, 2020										Three Months Ended November 30, 2020
Energy	Energy	$	762,053	$	128,866	$	0	$	890,919	Energy	$	1,064,963	$	192,884	$	—	$	1,257,847
Ag	Ag	2,026,588		4,290,627		20,686		6,337,901		Ag	1,344,508		6,087,241		13,653		7,445,402
Corporate and Other	Corporate and Other	6,027		0		6,184		12,211		Corporate and Other	6,460		—		5,934		12,394
Total revenues	Total revenues	$	2,794,668	$	4,419,493	$	26,870	$	7,241,031	Total revenues	$	2,415,931	$	6,280,125	$	19,587	$	8,715,643

Nine Months Ended May 31, 2021
Energy		$	3,841,678	$	493,125	$	0	$	4,334,803
Ag		5,324,396		18,232,235		43,187		23,599,818
Corporate and Other		14,925		0		16,232		31,157
Total revenues		$	9,180,999	$	18,725,360	$	59,419	$	27,965,778

Nine Months Ended May 31, 2020
Energy		$	3,831,806	$	415,586	$	0	$	4,247,392
Ag		4,446,097		12,681,108		46,753		17,173,958
Corporate and Other		16,910		0		22,482		39,392
Total revenues		$	8,294,813	$	13,096,694	$	69,235	$	21,460,742

Less than 1% of revenues accounted for under ASC Topic 606 included within the table above are recorded over ~~time; these revenues are~~time and relate primarily ~~related~~ to service contracts.

Contract Assets and Contract Liabilities

Contract assets relate to unbilled amounts arising from goods that have already been transferred to ~~the customer~~customers where the right to payment is not conditional on the passage of time. This results in the recognition of an asset, as the amount of revenue recognized at a certain point in time exceeds the amount billed to ~~the customer.~~customers. Contract assets are recorded in receivables within our Condensed Consolidated Balance Sheets and were ~~not material~~$40.1 million and $29.0 million as of ~~May~~November 30, 2021, and August 31, 2021, ~~or August 31, 2020.~~respectively.

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Contract liabilities relate to advance payments from customers for goods and services that we have yet to provide. Contract liabilities of ~~$318.8~~$419.5 million and ~~$139.1~~$213.9 million as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, respectively, are recorded within other current liabilities on our Condensed Consolidated Balance Sheets. For the three months ended ~~May 31,~~November 30, 2021 and 2020, we recognized revenues of ~~$34.2~~$107.2 million and ~~$50.5 million related to contract liabilities, respectively. For the nine months ended May 31, 2021 and 2020, we recognized revenues of $126.2 million and $182.0~~$60.7 million related to contract liabilities, respectively. These amounts were included in the other current liabilities balance at the beginning of the respective ~~periods.~~period.

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Note 3 Receivables


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		(Dollars in thousands)					(Dollars in thousands)
Trade accounts receivable	Trade accounts receivable	$	2,364,709	$	1,476,585	Trade accounts receivable	$	2,577,018	$	2,047,198
CHS Capital short-term notes receivable	CHS Capital short-term notes receivable	512,750		563,934		CHS Capital short-term notes receivable	529,376		505,778
Other	Other	458,760		491,068		Other	623,088		451,630
Gross receivables	Gross receivables	3,336,219		2,531,587		Gross receivables	3,729,482		3,004,606
Less: allowances and reserves	Less: allowances and reserves	144,741		165,540		Less: allowances and reserves	150,065		143,722
Total receivables	Total receivables	$	3,191,478	$	2,366,047	Total receivables	$	3,579,417	$	2,860,884

Receivables are composed of trade accounts receivable, short-term notes receivable in our wholly-owned subsidiary, CHS Capital, LLC ("CHS Capital"), and other receivables, less an allowance for expected credit losses. The allowance for expected credit losses is based on our best estimate of expected credit losses in existing receivable balances and is determined using historical write-off experience, adjusted for various industry and regional data and current expectations of future credit losses.

Notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of ~~capital stock from~~ certain regional ~~cooperatives.~~cooperatives' capital stock. These loans are primarily originated in ~~various~~the states ~~primarily in the Upper Midwest region~~ of ~~the United States, the most significant of which include~~Minnesota, North Dakota and ~~Minnesota.~~South Dakota. CHS Capital also has loans receivable from producer borrowers that are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages and are originated ~~primarily~~ in the same states as the commercial notes.

In addition to the short-term balances included in the table above, CHS Capital had long-term notes receivable, with durations of generally not more than 10 years, totaling ~~$68.3~~$66.1 million and ~~$101.5~~$55.4 million as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, respectively. Long-term notes receivable are included in other assets on our Condensed Consolidated Balance Sheets. As of ~~May 31,~~November 30, 2021, and August 31, ~~2020, the~~2021, commercial notes represented ~~53%~~43% and ~~33%~~28%, respectively, and ~~the~~ producer notes represented ~~47%~~57% and ~~67%~~72%, respectively, of total CHS Capital notes receivable.

CHS Capital has commitments to extend credit to customers if there are no violations of contractually established conditions. As of ~~May 31,~~November 30, 2021, CHS Capital customers had additional available credit of ~~$684.2~~$740.0 million. No significant troubled debt restructuring activity occurred and no third-party customer or borrower accounted for more than 10% of the total receivables balance as of ~~May 31,~~November 30, 2021, or August 31, ~~2020.~~2021.

Note 4 Inventories


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		(Dollars in thousands)					(Dollars in thousands)
Grain and oilseed	Grain and oilseed	$	1,689,408	$	1,064,079	Grain and oilseed	$	2,290,770	$	1,435,544
Energy	Energy	758,765		696,858		Energy	926,801		762,317
Agronomy	Agronomy	836,974		822,535		Agronomy	1,176,564		958,548
Processed grain and oilseed	Processed grain and oilseed	187,132		126,022		Processed grain and oilseed	156,281		140,975
Other	Other	41,592		32,644		Other	58,400		37,291
Total inventories	Total inventories	$	3,513,871	$	2,742,138	Total inventories	$	4,608,816	$	3,334,675

As of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, we valued approximately ~~15%~~11% and ~~16%~~13%, respectively, of inventories, primarily crude oil and refined fuels within our Energy segment, using the lower of cost, determined on the ~~LIFO~~last in, first out ("LIFO") method, or net realizable value. If the ~~FIFO~~first in, first out ("FIFO") method of accounting had been used, inventories would have been higher than the reported amount by ~~$313.3~~$402.2 million and ~~$93.5~~$359.2 million as of ~~May~~November 30, 2021, and

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August 31, 2021, ~~and August 31, 2020,~~ respectively. Actual valuation of inventory under the LIFO method can be made only at the end of each year based on inventory levels and costs at that time. Interim LIFO calculations are based on management's estimates of expected year-end inventory levels and values and are subject to final year-end LIFO inventory valuation.

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Note 5 Investments


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		(Dollars in thousands)					(Dollars in thousands)
Equity method investments:	Equity method investments:					Equity method investments:
CF Industries Nitrogen, LLC	CF Industries Nitrogen, LLC	$	2,717,270	$	2,662,618	CF Industries Nitrogen, LLC	$	2,783,637	$	2,667,164
Ventura Foods, LLC	Ventura Foods, LLC	418,571		381,351		Ventura Foods, LLC	389,818		388,612
Ardent Mills, LLC	Ardent Mills, LLC	218,822		208,927		Ardent Mills, LLC	225,889		220,132

TEMCO, LLC						TEMCO, LLC	44,319		31,464
Other equity method investments	Other equity method investments	279,020		253,182		Other equity method investments	235,511		232,923
Other investments	Other investments	130,253		123,955		Other investments	130,335		128,816
Total investments	Total investments	$	3,763,936	$	3,630,033	Total investments	$	3,809,509	$	3,669,111

Joint ventures and other investments, in which we have significant ownership and influence but not control, are accounted for in our condensed consolidated financial statements using the equity method of accounting. Our significant equity method investments consist of CF Industries Nitrogen, LLC ("CF Nitrogen");, Ventura Foods, LLC ("Ventura Foods");, Ardent Mills, LLC ("Ardent Mills");, and TEMCO, LLC ("TEMCO"), which are summarized below. In addition to the recognition of our share of income from equity method investments, our equity method investments are evaluated for indicators of other-than-temporary impairment on an ongoing basis in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Other investments consist primarily of investments in cooperatives without readily determinable fair values and are generally ~~measured~~recorded at cost, unless an impairment or other observable market price change occurs requiring an adjustment. ~~Approximately $552.6~~We have approximately $575.2 million of cumulative undistributed earnings from our equity method investees ~~are~~ included in the investments balance as of ~~May 31,~~November 30, 2021.

CF Nitrogen

We have ~~an approximate $2.7~~a $2.8 billion investment in CF Nitrogen, a strategic venture with CF Industries Holdings, Inc. ("CF Industries"). The investment consists of an approximate 10% membership interest (based on product tons) in CF Nitrogen. We account for this investment using the hypothetical liquidation at book value method, recognizing our share of the earnings and losses of CF Nitrogen as equity income from investments in our Nitrogen Production segment based on our contractual claims on the entity's net assets pursuant to the liquidation provisions of the CF Nitrogen Limited Liability Company Agreement, adjusted for ~~the semi-annual~~semiannual cash ~~distributions we receive as a result of our membership interest in CF Nitrogen.~~distributions.

The following table provides summarized unaudited financial information for our equity method investment in CF Nitrogen for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020:


		Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020			2021		2020
		(Dollars in thousands)					(Dollars in thousands)
Net sales	Net sales	$	2,116,040	$	1,954,660	Net sales	$	1,316,899	$	606,340
Gross profit	Gross profit	565,067		481,711		Gross profit	575,571		94,068
Net earnings	Net earnings	524,071		452,859		Net earnings	562,593		81,173
Earnings attributable to CHS Inc.	Earnings attributable to CHS Inc.	118,477		104,021		Earnings attributable to CHS Inc.	116,473		21,688

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Ventura Foods, Ardent Mills and TEMCO

We have a 50% interest in Ventura Foods, a joint venture with Mitsui & Co., that produces and distributes primarily ~~vegetable-oil-based~~edible oil-based products. We ~~account for Ventura Foods as an equity method investment, and our share of the results of this equity method investment are included in Corporate and Other.~~

~~The following table provides aggregate summarized unaudited financial information for our equity method investment in Ventura Foods for the nine months ended May 31, 2021 and 2020:~~

Nine Months Ended May 31,
2021 2020
(Dollars in thousands)
Net sales $ 1,807,997 $ 1,693,097
Gross profit 304,720 450,510
Net earnings 154,384 39,175
Earnings attributable to CHS Inc. 77,192 19,588

~~Ardent Mills and TEMCO~~

Wealso have a 12% interest in Ardent Mills, which is a joint venture with Cargill, Incorporated ("Cargill") and Conagra Brands, Inc., and is the largest flour miller in the United States. Additionally, we have a 50% interest in TEMCO, which is a joint venture with Cargill focused on export elevation, primarily to Asia. We account for Ventura Foods, Ardent Mills and TEMCO as equity method ~~investments, and our~~investments. Our shares of the results of ~~these equity method investments~~Ventura Foods and Ardent Mills are included in Corporate and Other and our share of the results of TEMCO is included in our Ag ~~segment, respectively.~~segment.

The following table provides aggregate summarized unaudited financial information for our equity method investments in Ventura Foods, Ardent Mills and TEMCO for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020:


		Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020			2021		2020
		(Dollars in thousands)					(Dollars in thousands)
Net sales	Net sales	$	5,663,762	$	4,524,569	Net sales	$	2,313,761	$	3,375,014
Gross profit	Gross profit	436,741		269,901		Gross profit	238,883		204,426
Net earnings	Net earnings	209,604		67,483		Net earnings	112,641		89,656
Earnings attributable to CHS Inc.	Earnings attributable to CHS Inc.	39,244		(3,875)		Earnings attributable to CHS Inc.	26,737		25,178

Our investments in other equity method investees are not significant in relation to our condensed consolidated financial statements, either individually or in the aggregate.

Note 6 Notes Payable and Long-Term Debt

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 our debt covenants as of ~~May 31,~~November 30, 2021. The table below summarizes our notes payable as of ~~May 31,~~November 30, 2021, and August 31, ~~2020.~~2021:


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		(Dollars in thousands)					(Dollars in thousands)
Notes payable	Notes payable	$	2,019,880	$	763,215	Notes payable	$	1,011,825	$	864,147
CHS Capital notes payable	CHS Capital notes payable	756,932		812,276		CHS Capital notes payable	893,546		876,712
Total notes payable	Total notes payable	$	2,776,812	$	1,575,491	Total notes payable	$	1,905,371	$	1,740,859

As of ~~May 31,~~November 30, 2021, our primary line of credit was a five-year, unsecured revolving credit facility with a syndicate of domestic and international banks. The credit facility provides a committed amount of $2.75 billion that expires on July 16, 2024. As of ~~May 31,~~November 30, 2021, there was $200.0 million outstanding under this facility, and no borrowings outstanding as of August 31, ~~2020, the outstanding balance on this facility was $1.2 billion and $345.0 million, respectively.~~2021.

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We have a receivables and loans securitization facility ("Securitization Facility") with certain unaffiliated financial institutions ("Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, and this arrangement is accounted for as a secured borrowing. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business. The Securitization Facility consists of a committed portion with a maximum availability of $700.0 million and an uncommitted portion with a maximum availability of $250.0 million. As of ~~May 31,~~November 30, 2021, total availability under the Securitization Facility was ~~$600.0~~$777.0 million, ~~all~~ of which $700.0 million had been utilized.

We also have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150.0 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, the outstanding balance under the Repurchase Facility was $150.0 million.

~~On August 14, 2020, we entered into a Note Purchase Agreement to borrow $375.0 million~~

Table of debt in the form of notes. The notes under this Note Purchase Agreement are structured in four series with maturities ranging from 7 to 15 years and interest accruing at rates ranging from 3.24% to 3.73%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow and whether the notes have an investment grade rating from a nationally recognized statistical rating organization. The funding of these notes took place on November 2, 2020. This funding is being used to pay debt maturities and manage liquidity.Contents

On September 24, 2020, the Securitization Facility and Repurchase Facility were amended, increasing the maximum availability under the Securitization Facility to $600.0 million from $500.0 million and extending their respective termination dates to July 30, 2021.

On February 19, 2021, we amended our 10-year term loan facility to convert the entire $366.0 million aggregate principle amount outstanding thereunder into a revolving loan, which can be paid down and readvanced in an amount up to the referenced $366.0 million until February 19, 2022. On February 19, 2022, the total funded loan balance outstanding reverts to a nonrevolving term loan that is payable on September 4, 2025. There was no balance outstanding under this facility as of ~~May 31,~~November 30, 2021.

The following table presents summarized long-term debt (including current portion) as of November 30, 2021, and August 31, 2021:


	November 30, 2021		August 31, 2021
	(Dollars in thousands)
Private placement debt	$	1,552,059	$	1,552,974

Finance lease obligations	34,051		36,034
Other notes and contracts payable	32,950		33,443
Deferred financing costs	(3,948)		(4,090)
Total long-term debt	1,615,112		1,618,361
Less current portion	38,343		38,450
Long-term portion	$	1,576,769	$	1,579,911

Interest expense for the three months ended ~~May 31,~~November 30, 2021 and 2020, was ~~$29.0~~$23.4 million and ~~$26.7~~$25.1 million, respectively, net of capitalized interest of ~~$3.9~~$2.3 million and ~~$2.7 million, respectively. Interest expense for the nine months ended May 31, 2021 and 2020, was $82.9 million and $95.0 million, respectively, net of capitalized interest of $6.0 million and $8.9~~$2.1 million, respectively.

Note 7 Income Taxes

Our effective tax rate for the three months ended ~~May 31,~~November 30, 2021, was ~~(6.8)%,~~3.2% compared to ~~(38.4)~~(54.0)% for the three months ended ~~May 31, 2020. Our effective tax rate for the nine months ended May 31, 2021, was (3.4)%, compared to (4.8)% for the nine months ended May 31,~~November 30, 2020. Our income tax ~~benefit~~expense for the ~~nine~~three months ended ~~May 31,~~November 30, 2021, reflects the mix of full-year earnings projected across business units and current equity management ~~assumptions, including tax benefits related to an intercompany transfer of assets for tax planning.~~assumptions. Income taxes and effective tax ~~rate~~rates vary each year based on profitability and nonpatronage business activity during ~~each of~~ the ~~comparable years.~~year.

Our uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. Reserves are recorded against unrecognized tax benefits when we believe certain fully supportable tax return positions are likely to be challenged, and we may not prevail. If we were to prevail on all positions taken in relation to uncertain tax positions, ~~$136.1~~$114.5 million and ~~$111.3~~$114.3 million of the unrecognized tax benefits would ultimately benefit our effective tax rate as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, respectively. It is reasonably possible that the total amount of unrecognized tax benefits could significantly change in the next 12 months.

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Note 8 Equities

Changes in Equities

Changes in equities for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020, are as follows:

Equity Certificates Accumulated
Other
Comprehensive
Loss
Capital
Equity
Certificates Nonpatronage
Equity
Certificates Nonqualified Equity Certificates Preferred
Stock Capital
Reserves Noncontrolling
Interests Total
Equities
(Dollars in thousands)
Balances, August 31, 2020 $ 3,724,187 $ 28,727 $ 1,408,696 $ 2,264,038 $ (233,924) $ 1,618,147 $ 9,302 $ 8,819,173
Reversal of prior year redemption estimates 7,726 0 0 — — 0 — 7,726
Redemptions of equities (6,539) (31) (1,156) 0 — — — (7,726)
Preferred stock dividends — — — — — (84,334) — (84,334)
Other, net (654) (47) (197) — — (7,798) 35 (8,661)
Net income (loss) — — — — — 69,671 (302) 69,369
Other comprehensive income, net of tax — — — — 8,917 — — 8,917
Estimated 2021 cash patronage refunds — — — — — (9,304) — (9,304)
Estimated 2021 equity redemptions (9,304) — — — — — — (9,304)
Balances, November 30, 2020 $ 3,715,416 $ 28,649 $ 1,407,343 $ 2,264,038 $ (225,007) $ 1,586,382 $ 9,035 $ 8,785,856
Reversal of prior year patronage and redemption estimates 4,760 0 (211,970) — — 233,345 — 26,135
Distribution of 2020 patronage refunds — — 214,720 — — (236,136) — (21,416)
Redemptions of equities (4,177) (35) (548) 0 — — — (4,760)
Preferred stock dividends — — — — — (42,167) — (42,167)
Other, net (26) — (15) — — 1,068 (361) 666
Net loss — — — — — (38,229) (129) (38,358)
Other comprehensive income, net of tax — — — — 2,549 — — 2,549
Estimated 2021 cash patronage refunds — — — — — 5,639 — 5,639
Estimated 2021 equity redemptions 5,639 — — — — — — 5,639
Balances, February 28, 2021 $ 3,721,612 $ 28,614 $ 1,409,530 $ 2,264,038 $ (222,458) $ 1,509,902 $ 8,545 $ 8,719,783
Reversal of prior year redemption estimates 15,514 0 5,000 — — 8,625 — 29,139
Distribution of 2020 patronage refunds — — 7 — — (8,632) — (8,625)
Redemptions of equities (19,275) (35) (6,013) 0 — — — (25,323)
Other, net (298) 43 58 — — (1,726) (61) (1,984)
Net income — — — — — 273,591 81 273,672
Other comprehensive income, net of tax — — — — 7,115 — — 7,115
Estimated 2021 cash patronage refunds — — — — — (21,292) — (21,292)
Estimated 2021 equity redemptions (21,292) — — — — — — (21,292)
Balances, May 31, 2021 $ 3,696,261 $ 28,622 $ 1,408,582 $ 2,264,038 $ (215,343) $ 1,760,468 $ 8,565 $ 8,951,193


	Equity Certificates								Accumulated Other Comprehensive Loss
	Capital Equity Certificates		Nonpatronage Equity Certificates		Nonqualified Equity Certificates		Preferred Stock				Capital Reserves		Noncontrolling Interests		Total Equities
	(Dollars in thousands)
Balances, August 31, 2021	$	3,583,911	$	28,431	$	1,634,896	$	2,264,038	$	(216,391)	$	1,713,976	$	8,465	$	9,017,326
Reversal of prior year redemption estimates	12,221		—		—		—		—		—		—		12,221

Redemptions of equities	(9,824)		(318)		(2,079)		—		—		—		—		(12,221)
Preferred stock dividends	—		—		—		—		—		(84,334)		—		(84,334)
Other, net	(1,023)		17		(64)		—		—		1,393		(841)		(518)
Net income (loss)	—		—		—		—		—		451,961		(18)		451,943
Other comprehensive loss, net of tax	—		—		—		—		(15,418)		—		—		(15,418)
Estimated 2022 cash patronage refunds	—		—		—		—		—		(39,691)		—		(39,691)
Estimated 2022 equity redemptions	(79,382)		—		—		—		—		—		—		(79,382)
Balances, November 30, 2021	$	3,505,903	$	28,130	$	1,632,753	$	2,264,038	$	(231,809)	$	2,043,305	$	7,606	$	9,249,926

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Equity Certificates Accumulated
Other
Comprehensive
Loss
Capital
Equity
Certificates Nonpatronage
Equity
Certificates Nonqualified Equity Certificates Preferred
Stock Capital
Reserves Noncontrolling
Interests Total
Equities
(Dollars in thousands)
Balances, August 31, 2019 $ 3,753,493 $ 29,074 $ 1,206,310 $ 2,264,038 $ (226,933) $ 1,584,158 $ 7,390 $ 8,617,530
Reversal of prior year redemption estimates 5,447 0 0 — — 0 — 5,447
Redemptions of equities (4,721) (54) (672) 0 — — — (5,447)
Preferred stock dividends — — — — — (84,334) — (84,334)
ASC Topic 842 cumulative-effect adjustment 0 0 0 0 0 33,707 0 33,707
Other, net (8) — (39) — — (1,312) 410 (949)
Net income — — — — — 177,882 855 178,737
Other comprehensive loss, net of tax — — — — (1,638) — — (1,638)
Estimated 2020 cash patronage refunds — — — — — (28,504) — (28,504)
Estimated 2020 equity redemptions (91,633) — — — — — — (91,633)
Balances, November 30, 2019 $ 3,662,578 $ 29,020 $ 1,205,599 $ 2,264,038 $ (228,571) $ 1,681,597 $ 8,655 $ 8,622,916
Reversal of prior year patronage and redemption estimates 3,387 0 (472,398) — — 562,398 — 93,387
Distribution of 2019 patronage refunds — — 474,066 — — (564,096) — (90,030)
Redemptions of equities (2,998) (20) (369) 0 — — — (3,387)
Preferred stock dividends — — — — — (42,167) — (42,167)
Other, net (201) — 3 — — 10 (324) (512)
Net income — — — — — 125,447 247 125,694
Other comprehensive loss, net of tax — — — — (10,585) — — (10,585)
Estimated 2020 cash patronage refunds — — — — — (22,206) — (22,206)
Estimated 2020 equity redemptions (49,154) — — — — — — (49,154)
Balances, February 29, 2020 $ 3,613,612 $ 29,000 $ 1,206,901 $ 2,264,038 $ (239,156) $ 1,740,983 $ 8,578 $ 8,623,956
Reversal of prior year redemption estimates 67,438 0 10,000 — — — — 77,438
Distribution of 2019 patronage refunds — — 327 — — (409) — (82)
Redemptions of equities (64,273) (91) (13,074) 0 — — — (77,438)
Other, net (1,544) (7) (116) — — 1,053 8 (606)
Net income (loss) — — — — — 97,648 (147) 97,501
Other comprehensive loss, net of tax — — — — (2,009) — — (2,009)
Estimated 2020 cash patronage refunds — — — — — 13,551 — 13,551
Estimated 2020 equity redemptions 47,975 — — — — — — 47,975
Balances, May 31, 2020 $ 3,663,208 $ 28,902 $ 1,204,038 $ 2,264,038 $ (241,165) $ 1,852,826 $ 8,439 $ 8,780,286


	Equity Certificates								Accumulated Other Comprehensive Loss
	Capital Equity Certificates		Nonpatronage Equity Certificates		Nonqualified Equity Certificates		Preferred Stock				Capital Reserves		Noncontrolling Interests		Total Equities
	(Dollars in thousands)
Balances, August 31, 2020	$	3,724,187	$	28,727	$	1,408,696	$	2,264,038	$	(233,924)	$	1,618,147	$	9,302	$	8,819,173
Reversal of prior year redemption estimates	7,726		—		—		—		—		—		—		7,726

Redemptions of equities	(6,539)		(31)		(1,156)		—		—		—		—		(7,726)
Preferred stock dividends	—		—		—		—		—		(84,334)		—		(84,334)
Other, net	(654)		(47)		(197)		—		—		(7,798)		35		(8,661)
Net income (loss)	—		—		—		—		—		69,671		(302)		69,369
Other comprehensive income, net of tax	—		—		—		—		8,917		—		—		8,917
Estimated 2021 cash patronage refunds	—		—		—		—		—		(9,304)		—		(9,304)
Estimated 2021 equity redemptions	(9,304)		—		—		—		—		—		—		(9,304)
Balances, November 30, 2020	$	3,715,416	$	28,649	$	1,407,343	$	2,264,038	$	(225,007)	$	1,586,382	$	9,035	$	8,785,856

Preferred Stock Dividends

The following is a summary of dividends per share by series of preferred stock for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and ~~2020. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2021 or the third quarter of fiscal 2020.~~2020:


			Nine Months Ended May 31,							Three Months Ended November 30,
		Nasdaq symbol			2021		2020			Nasdaq symbol	2021		2020
Series of preferred stock:	Series of preferred stock:			(Dollars per share)					Series of preferred stock:		(Dollars per share)
8% Cumulative Redeemable	8% Cumulative Redeemable	CHSCP			$	1.50	$	1.50	8% Cumulative Redeemable	CHSCP	$	1.00	$	1.00
Class B Cumulative Redeemable, Series 1	Class B Cumulative Redeemable, Series 1	CHSCO			$	1.48	$	1.48	Class B Cumulative Redeemable, Series 1	CHSCO	$	0.98	$	0.98
Class B Reset Rate Cumulative Redeemable, Series 2	Class B Reset Rate Cumulative Redeemable, Series 2	CHSCN			$	1.33	$	1.33	Class B Reset Rate Cumulative Redeemable, Series 2	CHSCN	$	0.88	$	0.88
Class B Reset Rate Cumulative Redeemable, Series 3	Class B Reset Rate Cumulative Redeemable, Series 3	CHSCM			$	1.27	$	1.27	Class B Reset Rate Cumulative Redeemable, Series 3	CHSCM	$	0.84	$	0.84
Class B Cumulative Redeemable, Series 4	Class B Cumulative Redeemable, Series 4	CHSCL			$	1.41	$	1.41	Class B Cumulative Redeemable, Series 4	CHSCL	$	0.94	$	0.94

~~Table of Contents~~

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, ~~are as follows~~ for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~2020:~~2020, are as follows:

Pension and Other Postretirement Benefits Cash Flow Hedges Foreign Currency Translation Adjustment Total
(Dollars in thousands)
Balance as of August 31, 2020, net of tax $ (159,680) $ 10,886 $ (85,130) $ (233,924)
Other comprehensive income (loss), before tax:
Amounts before reclassifications (125) 14,506 3,629 18,010
Amounts reclassified 4,977 (12,284) 0 (7,307)
Total other comprehensive income, before tax 4,852 2,222 3,629 10,703
Tax effect (1,207) (553) (26) (1,786)
Other comprehensive income, net of tax 3,645 1,669 3,603 8,917
Balance as of November 30, 2020, net of tax $ (156,035) $ 12,555 $ (81,527) $ (225,007)
Other comprehensive income (loss), before tax:
Amounts before reclassifications 0 2,929 (587) 2,342
Amounts reclassified 5,151 (3,673) 0 1,478
Total other comprehensive income (loss), before tax 5,151 (744) (587) 3,820
Tax effect (1,282) 185 (174) (1,271)
Other comprehensive income (loss), net of tax 3,869 (559) (761) 2,549
Balance as of February 28, 2021, net of tax $ (152,166) $ 11,996 $ (82,288) $ (222,458)
Other comprehensive income (loss), before tax:
Amounts before reclassifications 112 (4,725) 8,398 3,785
Amounts reclassified 5,064 (1,919) — 3,145
Total other comprehensive income (loss), before tax 5,176 (6,644) 8,398 6,930
Tax effect (1,288) 1,653 (180) 185
Other comprehensive income (loss), net of tax 3,888 (4,991) 8,218 7,115
Balance as of May 31, 2021, net of tax $ (148,278) $ 7,005 $ (74,070) $ (215,343)


	Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
	(Dollars in thousands)
Balance as of August 31, 2021, net of tax	$	(141,385)	$	4,824	$	(79,830)	$	(216,391)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(83)		870		(9,983)		(9,196)
Amounts reclassified	5,064		(12,954)		—		(7,890)
Total other comprehensive income (loss), before tax	4,981		(12,084)		(9,983)		(17,086)
Tax effect	(1,213)		2,943		(62)		1,668
Other comprehensive income (loss), net of tax	3,768		(9,141)		(10,045)		(15,418)

Balance as of November 30, 2021, net of tax	$	(137,617)	$	(4,317)	$	(89,875)	$	(231,809)

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		Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total			Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
		(Dollars in thousands)									(Dollars in thousands)
Balance as of August 31, 2019, net of tax		$	(172,478)	$	15,297	$	(69,752)	$	(226,933)
Balance as of August 31, 2020, net of tax										Balance as of August 31, 2020, net of tax	$	(159,680)	$	10,886	$	(85,130)	$	(233,924)
Other comprehensive income (loss), before tax:	Other comprehensive income (loss), before tax:									Other comprehensive income (loss), before tax:
Amounts before reclassifications	Amounts before reclassifications	(85)		(3,331)		(2,411)		(5,827)		Amounts before reclassifications	(125)		14,506		3,629		18,010
Amounts reclassified	Amounts reclassified	4,977		(4,473)		0		504		Amounts reclassified	4,977		(12,284)		—		(7,307)
Total other comprehensive income (loss), before tax		4,892		(7,804)		(2,411)		(5,323)
Total other comprehensive income, before tax										Total other comprehensive income, before tax	4,852		2,222		3,629		10,703
Tax effect	Tax effect	181		1,932		1,572		3,685		Tax effect	(1,207)		(553)		(26)		(1,786)
Other comprehensive income (loss), net of tax		5,073		(5,872)		(839)		(1,638)
Balance as of November 30, 2019, net of tax		$	(167,405)	$	9,425	$	(70,591)	$	(228,571)
Other comprehensive income (loss), before tax:
Amounts before reclassifications		0		(5,975)		(8,540)		(14,515)
Amounts reclassified		4,977		(1,747)		0		3,230
Total other comprehensive income (loss), before tax		4,977		(7,722)		(8,540)		(11,285)
Tax effect		(1,231)		1,910		21		700
Other comprehensive income (loss), net of tax		3,746		(5,812)		(8,519)		(10,585)
Balance as of February 29, 2020, net of tax		$	(163,659)	$	3,613	$	(79,110)	$	(239,156)
Other comprehensive income (loss), before tax:
Amounts before reclassifications		(340)		7,795		(12,515)		(5,060)
Amounts reclassified		4,977		1,263		0		6,240
Total other comprehensive income (loss), before tax		4,637		9,058		(12,515)		1,180
Tax effect		(1,147)		(2,241)		199		(3,189)
Other comprehensive income (loss), net of tax		3,490		6,817		(12,316)		(2,009)
Balance as of May 31, 2020, net of tax		$	(160,169)	$	10,430	$	(91,426)	$	(241,165)
Other comprehensive income, net of tax										Other comprehensive income, net of tax	3,645		1,669		3,603		8,917
Balance as of November 30, 2020, net of tax										Balance as of November 30, 2020, net of tax	$	(156,035)	$	12,555	$	(81,527)	$	(225,007)

Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges and foreign currency translation adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts and are recorded as cost of goods sold and marketing, general and administrative expenses ~~and other income~~ (see Note 9, Benefit Plans, for further information). Gains or losses associated with cash flow hedges are recorded as cost of goods sold (see Note 11, Derivative Financial Instruments and Hedging Activities, for further information). Gains or losses on foreign currency translation reclassifications related to sales of businesses are recorded as other income.

Note 9 Benefit Plans

We have various pension and other defined benefit and defined contribution plans, in which substantially all employees may participate. We also have nonqualified supplemental executive and Board retirement plans.

~~Table of Contents~~

Components of net periodic benefit costs for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020, are as follows:


		Three Months Ended May 31,													Three Months Ended November 30,
		Qualified Pension Benefits				Nonqualified Pension Benefits				Other Benefits					Qualified Pension Benefits				Nonqualified Pension Benefits				Other Benefits
		2021		2020		2021		2020		2021		2020			2021		2020		2021		2020		2021		2020
Components of net periodic benefit costs:	Components of net periodic benefit costs:	(Dollars in thousands)												Components of net periodic benefit costs:	(Dollars in thousands)
Service cost	Service cost	$	11,307	$	10,538	$	108	$	101	$	297	$	262	Service cost	$	11,569	$	11,307	$	232	$	108	$	249	$	297
Interest cost	Interest cost	4,141		5,431		68		107		123		187		Interest cost	4,292		4,141		70		68		126		123
Expected return on assets	Expected return on assets	(10,910)		(11,671)		0		0		0		0		Expected return on assets	(10,990)		(10,910)		—		—		—		—
Prior service cost (credit) amortization	Prior service cost (credit) amortization	45		45		(28)		(28)		(111)		(111)		Prior service cost (credit) amortization	44		45		(29)		(28)		(111)		(111)
Actuarial loss (gain) amortization	Actuarial loss (gain) amortization	5,447		5,396		53		25		(341)		(348)		Actuarial loss (gain) amortization	5,852		5,447		120		53		(315)		(341)

Net periodic benefit cost (benefit)	Net periodic benefit cost (benefit)	$	10,030	$	9,739	$	201	$	205	$	(32)	$	(10)	Net periodic benefit cost (benefit)	$	10,767	$	10,030	$	393	$	201	$	(51)	$	(32)

		Nine Months Ended May 31,
		Qualified Pension Benefits				Nonqualified Pension Benefits				Other Benefits
		2021		2020		2021		2020		2021		2020
Components of net periodic benefit costs:		(Dollars in thousands)
Service cost		$	33,921	$	31,613	$	325	$	304	$	890	$	787
Interest cost		12,422		16,292		205		322		369		560
Expected return on assets		(32,731)		(35,013)		0		0		0		0
Prior service cost (credit) amortization		134		134		(85)		(85)		(334)		(334)
Actuarial loss (gain) amortization		16,342		16,187		159		74		(1,024)		(1,044)

Net periodic benefit cost (benefit)		$	30,088	$	29,213	$	604	$	615	$	(99)	$	(31)

The service cost component of defined benefit net periodic benefit cost is recorded in cost of goods sold and marketing, general and administrative expenses. The other components of net periodic benefit cost are recorded in other income.

Employer Contributions

Any contributions made during fiscal ~~2021~~2022 will depend primarily on market returns on the pension plan assets and minimum funding level requirements. No contributions were made to the pension plans during the ~~nine~~three months ended ~~May 31,~~November 30, 2021, and we do not currently anticipate being required to make contributions for our pension plans in fiscal ~~2021.~~2022.

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Note 10 Segment Reporting

We are an integrated agricultural ~~enterprise,~~cooperative, providing grain, foods and energy resources to businesses and consumers on a global basis. We provide a wide variety of products and services, from initial agricultural inputs such as fuels, farm supplies, crop nutrients and crop protection products, to agricultural outputs that include grains and oilseeds, ~~grain~~processed grains and ~~oilseed processing~~oilseeds, renewable fuels and food ~~products, and the production and marketing of ethanol.~~products. We define our operating segments in accordance with ASC Topic 280, Segment Reporting, to reflect the manner in which our chief operating ~~decision-maker,~~decision maker, our Chief Executive Officer, evaluates performance and allocates resources in managing ~~our businesses.~~the business. We have aggregated those operating segments into three reportable segments: Energy, Ag and Nitrogen Production.

Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag segment purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties; serves as a wholesaler and retailer of crop inputs; and produces and markets ethanol. Our Nitrogen Production segment consists ~~solely~~ of our equity method investment in CF Nitrogen and allocated expenses, which entitles us, pursuant to aour supply agreement ~~that we entered into~~ with CF Nitrogen, to purchase up to a specified quantity of granular urea and urea ammonium nitrate ("UAN") annually from CF Nitrogen. Corporate and Other represents our financing and hedging businesses, which primarily consist ~~primarily~~ of ~~financial services related to crop production and~~ a U.S. Commodity Futures Trading Commission-regulated futures commission merchant ("FCM") for commodities ~~hedging.~~hedging and financial services related to crop production. Our nonconsolidated investments in Ventura ~~Foods~~Food and Ardent Mills are also included in our Corporate and Other category.

~~Table of Contents~~

Corporate administrative expenses and interest are allocated to each reportable segment and Corporate and Other, based on direct use of services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and our operating results vary throughout the year. Our revenues generally trend lower during the second and fourth fiscal quarters and higher during the first and third fiscal quarters; however, our income ~~(loss)~~ before income taxes does not necessarily follow the same trend due to weather and other events that can impact profitability. For example, in our Ag segment, our country operations business generally experiences higher volumes and revenues during the fall harvest and spring planting seasons, which generally correspond to our first and third fiscal quarters, respectively. Additionally, our agronomy business generally experiences higher volumes and revenues during the spring planting season. Our global grain ~~marketing~~and processing operations are subject to fluctuations in volume and ~~income~~revenues based on producer harvests, world grain prices, demand and ~~global~~international trade ~~volumes.~~relationships. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined 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.

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including weather, crop damage due to plant disease or insects, drought, availability and adequacy of supply, availability of a reliable rail and river transportation ~~network,~~networks, outbreaks of disease, government regulations and policies, global trade disputes, and general political and economic conditions.

While our revenues and operating results are derived primarily from businesses and operations that are wholly-owned or subsidiaries and limited liability companies in which we have a controlling interest, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less or do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without ~~consolidation of~~consolidating the revenues and expenses of the entity in our Condensed Consolidated Statements of Operations. In our Ag segment, this includes our 50% interest in TEMCO. In our Nitrogen Production segment, this consists of our approximate 10% membership interest (based on product tons) in CF Nitrogen. In Corporate and Other, this principally includes our 50% ownership in Ventura Foods and our 12% ownership in Ardent Mills. See Note 5, Investments, for more information on these entities.

Reconciling amounts ~~primarily~~ represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of individual business segments.

~~Segment information for the three and nine months ended May 31, 2021 and 2020, is presented in the tables below.~~

Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
Three Months Ended May 31, 2021 (Dollars in thousands)
Revenues, including intersegment revenues $ 1,815,077 $ 9,222,597 $ 0 $ 10,842 $ (118,540) $ 10,929,976
Intersegment revenues (110,279) (6,393) 0 (1,868) 118,540 —
Revenues, net of intersegment revenues $ 1,704,798 $ 9,216,204 $ 0 $ 8,974 $ 0 $ 10,929,976
Operating earnings (loss) 2,955 134,606 (8,799) (837) 0 127,925
Interest expense (333) 17,661 10,318 390 956 28,992
Other income (636) (6,331) (308) (2,517) (956) (10,748)
Equity income from investments (1,035) (16,855) (65,444) (63,188) 0 (146,522)
Income before income taxes $ 4,959 $ 140,131 $ 46,635 $ 64,478 $ 0 $ 256,203

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Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
Three Months Ended May 31, 2020 (Dollars in thousands)
Revenues, including intersegment revenues $ 960,352 $ 6,340,386 $ 0 $ 13,515 $ (73,222) $ 7,241,031
Intersegment revenues (69,433) (2,485) 0 (1,304) 73,222 —
Revenues, net of intersegment revenues $ 890,919 $ 6,337,901 $ 0 $ 12,211 $ 0 $ 7,241,031
Operating earnings (loss) (56,792) 95,328 (7,936) 7,320 0 37,920
Interest expense (145) 16,261 10,176 1,810 (1,441) 26,661
Other income (614) (8,294) (355) (254) 1,441 (8,076)
Equity income from investments (1,269) (7,999) (41,264) (582) 0 (51,114)
Income (loss) before income taxes $ (54,764) $ 95,360 $ 23,507 $ 6,346 $ 0 $ 70,449
Segment information for the three months ended November 30, 2021 and 2020, is presented in the tables below:


		Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total			Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Nine Months Ended May 31, 2021		(Dollars in thousands)
Three Months Ended November 30, 2021														Three Months Ended November 30, 2021	(Dollars in thousands)
Revenues, including intersegment revenues														Revenues, including intersegment revenues	$	2,468,343	$	8,577,403	$	—	$	10,204	$	(175,193)	$	10,880,757
Intersegment revenues														Intersegment revenues	(164,356)		(8,144)		—		(2,693)		175,193		—
Revenues, net of intersegment revenues														Revenues, net of intersegment revenues	$	2,303,987	$	8,569,259	$	—	$	7,511	$	—	$	10,880,757
Operating earnings (loss)														Operating earnings (loss)	67,850		259,773		(10,183)		(2,466)		—		314,974
Interest expense														Interest expense	488		13,661		11,254		(1,820)		(151)		23,432
Other income														Other income	(728)		(20,579)		(1,547)		(1,073)		151		(23,776)
Equity income from investments														Equity income from investments	(1,100)		(19,734)		(116,473)		(14,038)		—		(151,345)
Income before income taxes														Income before income taxes	$	69,190	$	286,425	$	96,583	$	14,465	$	—	$	466,663
Total assets as of November 30, 2021														Total assets as of November 30, 2021	$	4,315,331	$	9,335,801	$	2,796,671	$	3,167,175	$	—	$	19,614,978

															Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Three Months Ended November 30, 2020														Three Months Ended November 30, 2020	(Dollars in thousands)
Revenues, including intersegment revenues	Revenues, including intersegment revenues	$	4,643,387	$	23,615,087	$	0	$	38,370	$	(331,066)	$	27,965,778	Revenues, including intersegment revenues	$	1,357,845	$	7,450,305	$	—	$	15,481	$	(107,988)	$	8,715,643
Intersegment revenues	Intersegment revenues	(308,584)		(15,269)		0		(7,213)		331,066		—		Intersegment revenues	(99,998)		(4,903)		—		(3,087)		107,988		—
Revenues, net of intersegment revenues	Revenues, net of intersegment revenues	$	4,334,803	$	23,599,818	$	—	$	31,157	$	—	$	27,965,778	Revenues, net of intersegment revenues	$	1,257,847	$	7,445,402	$	—	$	12,394	$	—	$	8,715,643
Operating earnings (loss)	Operating earnings (loss)	(120,879)		212,223		(24,661)		8,894		0		75,577		Operating earnings (loss)	(68,385)		75,524		(7,623)		7,927		—		7,443
Interest expense	Interest expense	492		48,796		33,721		1,536		(1,648)		82,897		Interest expense	(238)		14,505		11,163		1,138		(1,518)		25,050
Other income	Other income	(2,108)		(29,784)		(2,175)		(8,800)		1,648		(41,219)		Other income	(482)		(11,817)		(1,566)		(277)		1,518		(12,624)
Equity income from investments	Equity income from investments	(2,355)		(43,974)		(118,477)		(95,848)		0		(260,654)		Equity income from investments	(489)		(10,174)		(21,688)		(17,672)		—		(50,023)
Income (loss) before income taxes	Income (loss) before income taxes	$	(116,908)	$	237,185	$	62,270	$	112,006	$	0	$	294,553	Income (loss) before income taxes	$	(67,176)	$	83,010	$	4,468	$	24,738	$	—	$	45,040
Total assets as of May 31, 2021		$	4,451,203	$	8,388,074	$	2,733,443	$	3,027,906	$	—	$	18,600,626

		Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Nine Months Ended May 31, 2020		(Dollars in thousands)
Revenues, including intersegment revenues		$	4,550,155	$	17,183,820	$	0	$	43,514	$	(316,747)	$	21,460,742
Intersegment revenues		(302,763)		(9,862)		0		(4,122)		316,747		—
Revenues, net of intersegment revenues		$	4,247,392	$	17,173,958	$	—	$	39,392	$	—	$	21,460,742
Operating earnings (loss)		241,594		88,102		(26,318)		7,239		0		310,617
Interest expense		43		57,761		34,277		8,680		(5,718)		95,043
Other income		(2,516)		(31,142)		(2,272)		(2,714)		5,718		(32,926)
Equity (income) loss from investments		(2,242)		830		(104,021)		(29,741)		0		(135,174)
Income before income taxes		$	246,309	$	60,653	$	45,698	$	31,014	$	0	$	383,674

Note 11 Derivative Financial Instruments and Hedging Activities

We enter into various derivative instruments to manage our exposure to movements primarily associated with agricultural and energy commodity prices and, to a lesser degree, foreign currency exchange rates and interest rates. Except for certain ~~interest rate swaps and certain pay-fixed, receive-variable,~~ cash-settled swaps related to future crude oil purchases and refined product sales, which are accounted for as ~~fair value hedges and~~ cash flow hedges, ~~respectively,~~ our derivative instruments represent economic hedges of price risk for which hedge accounting under ASC Topic 815 is not applied. Rather, the derivative instruments are recorded on our Condensed Consolidated Balance Sheets at fair value with changes in fair value being recorded directly to earnings, primarily within cost of goods sold in our Condensed Consolidated Statements of Operations. See Note 12, Fair Value Measurements, for additional information. The majority of our exchange traded agricultural commodity futures are settled daily through CHS Hedging, LLC, our wholly-owned ~~futures commission merchant.~~FCM.

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Derivatives Not Designated as Hedging Instruments

The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) recorded on our Condensed Consolidated Balance Sheets, along with related amounts permitted to be offset in accordance with U.S. GAAP. Although we have certain netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter ("OTC") contracts, we have elected to report our derivative instruments on a gross basis on our Condensed Consolidated Balance Sheets under ASC Topic 210-20, Balance ~~Sheet -~~ Sheet—Offsetting. The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) recorded on our Condensed Consolidated Balance Sheets, along with related amounts permitted to be offset in accordance with U.S. GAAP:


	November 30, 2021
			Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
	Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount
	(Dollars in thousands)
Derivative Assets
Commodity derivatives	$	445,798	$	—	$	3,629	$	442,169
Foreign exchange derivatives	8,483		—		4,045		4,438
Embedded derivative asset	13,034		—		—		13,034
Total	$	467,315	$	—	$	7,674	$	459,641
Derivative Liabilities
Commodity derivatives	$	293,629	$	1,478	$	4,297	$	287,854
Foreign exchange derivatives	27,463		—		4,045		23,418

Total	$	321,092	$	1,478	$	8,342	$	311,272

May 31, 2021
Amounts Not Offset on Condensed Consolidated Balance Sheet But Eligible for Offsetting
Gross Amount Recognized Cash Collateral Derivative Instruments Net Amount
(Dollars in thousands)
Derivative Assets
Commodity derivatives $ 843,728 $ — $ 8,226 $ 835,502
Foreign exchange derivatives 29,332 — 7,386 21,946
Embedded derivative asset 16,173 — 0 16,173
Total $ 889,233 $ — $ 15,612 $ 873,621
Derivative Liabilities
Commodity derivatives $ 585,658 $ 2,809 $ 8,226 $ 574,623
Foreign exchange derivatives 9,907 0 7,386 2,521
Total $ 595,565 $ 2,809 $ 15,612 $ 577,144


		August 31, 2020									August 31, 2021
				Amounts Not Offset on Condensed Consolidated Balance Sheet But Eligible for Offsetting									Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
		Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount			Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount
		(Dollars in thousands)									(Dollars in thousands)
Derivative Assets	Derivative Assets									Derivative Assets
Commodity derivatives	Commodity derivatives	$	327,493	$	—	$	2,980	$	324,513	Commodity derivatives	$	532,832	$	—	$	4,174	$	528,658
Foreign exchange derivatives	Foreign exchange derivatives	11,809		—		9,385		2,424		Foreign exchange derivatives	19,429		—		5,582		13,847
Embedded derivative asset	Embedded derivative asset	18,998		—		0		18,998		Embedded derivative asset	16,488		—		—		16,488
Total	Total	$	358,300	$	—	$	12,365	$	345,935	Total	$	568,749	$	—	$	9,756	$	558,993
Derivative Liabilities	Derivative Liabilities									Derivative Liabilities
Commodity derivatives	Commodity derivatives	$	343,343	$	956	$	5,578	$	336,809	Commodity derivatives	$	444,861	$	2,485	$	4,174	$	438,202
Foreign exchange derivatives	Foreign exchange derivatives	69,466		0		9,385		60,081		Foreign exchange derivatives	8,506		—		5,582		2,924
Total	Total	$	412,809	$	956	$	14,963	$	396,890	Total	$	453,367	$	2,485	$	9,756	$	441,126

Derivative assets and liabilities with maturities of 12 months or less are recorded in other current assets and other current liabilities, respectively, on our Condensed Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The amount of long-term derivative assets recorded on our Condensed Consolidated Balance Sheets as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, was ~~$18.8~~$21.3 million and ~~$21.2~~$21.6 million, respectively. The amount of long-term derivative liabilities recorded on our Condensed Consolidated Balance Sheets as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, was ~~$6.7~~$1.6 million and ~~$5.4~~$4.8 million, respectively.

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The majority of our derivative instruments have not been designated as hedging instruments. The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~2020.~~2020:


			Three Months Ended May 31,				Nine Months Ended May 31,						Three Months Ended November 30,
		Location of Gain (Loss)	2021		2020		2021		2020			Location of Gain (Loss)	2021		2020
			(Dollars in thousands)										(Dollars in thousands)
Commodity derivatives	Commodity derivatives	Cost of goods sold	$	(552,985)	$	85,259	$	(945,631)	$	228,201	Commodity derivatives	Cost of goods sold	$	31,598	$	(201,362)
Foreign exchange derivatives	Foreign exchange derivatives	Cost of goods sold	35,567		(129,699)		27,327		(177,008)		Foreign exchange derivatives	Cost of goods sold	(32,494)		22,641
Foreign exchange derivatives	Foreign exchange derivatives	Marketing, general and administrative expenses	838		(2,553)		1,011		(615)		Foreign exchange derivatives	Marketing, general and administrative expenses	(1,194)		608
Embedded derivative	Embedded derivative	Other income	308		355		2,174		2,272		Embedded derivative	Other income	1,546		1,564
Total	Total		$	(516,272)	$	(46,638)	$	(915,119)	$	52,850	Total		$	(544)	$	(176,549)

Commodity Contracts

As of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, we had outstanding commodity futures and options contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity ~~contracts.~~contracts:


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
		Long	Short	Long	Short		Long	Short	Long	Short
		(Units in thousands)					(Units in thousands)
Grain and oilseed (bushels)	Grain and oilseed (bushels)	808,152	1,008,593	664,673	892,303	Grain and oilseed (bushels)	884,816	961,591	666,726	851,582
Energy products (barrels)	Energy products (barrels)	10,346	9,211	10,028	6,570	Energy products (barrels)	6,585	6,234	9,881	7,656
Processed grain and oilseed (tons)	Processed grain and oilseed (tons)	579	2,468	657	3,304	Processed grain and oilseed (tons)	1,550	4,299	559	3,418
Crop nutrients (tons)	Crop nutrients (tons)	36	32	74	127	Crop nutrients (tons)	52	35	66	12
Ocean freight (metric tons)	Ocean freight (metric tons)	225	0	1,140	95	Ocean freight (metric tons)	155	—	210	—

Foreign Exchange Contracts

We conduct a substantial portion of our business in U.S. dollars, but we are exposed to risks relating to foreign currency fluctuations primarily due to global grain marketing transactions in South America, the Asia Pacific region and Europe, and purchases of products from Canada. We use foreign currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although we have some risk exposure related to foreign currency transactions, a larger impact with exchange rate fluctuations is the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. The notional ~~amounts~~amount of our foreign exchange derivative contracts ~~were $1.4 billion and~~was $1.2 billion as of ~~May 31,~~November 30, 2021, and August 31, ~~2020, respectively.~~2021.

Embedded Derivative Asset

Under the terms of our strategic investment in CF Nitrogen, if the CF Industries credit rating is reduced below certain levels by two of three specified credit ratings agencies, we are entitled to receive a nonrefundable annual payment of $5.0 million from CF Industries. These payments will continue on an annual basis until the date that the CF Industries credit rating is upgraded to or above certain levels by two of the three specified credit ratings agencies or February 1, 2026, whichever is earlier.

Since the CF Industries credit rating was reduced below the specified levels during fiscal 2017, we have received an annual payment of $5.0 million from CF Industries. Gains totaling ~~$2.2~~$1.5 million and ~~$2.3~~$1.6 million were recognized in other income in our Condensed Consolidated Statements of Operations for the ~~nine~~three months ended ~~May 31,~~November 30, 2021 and 2020, respectively. The fair value of the embedded derivative asset recorded on our Condensed Consolidated Balance ~~Sheet~~Sheets as of ~~May 31,~~November 30, 2021, was equal to ~~$16.2~~$13.0 million. The current and long-term portions of the embedded derivative asset are included in other current assets and other assets on our Condensed Consolidated Balance Sheets, respectively. See Note 12, Fair Value Measurements, for additional information regarding valuation of the embedded derivative asset.

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Derivatives Designated as Cash Flow Hedging Strategies

Certain pay-fixed, receive-variable, cash-settled swaps are designated as cash flow hedges of future crude oil purchases in our Energy segment. We also designate certain pay-variable, receive-fixed, cash-settled swaps as cash flow hedges of future refined product sales. These hedging instruments and the related hedged items are exposed to significant market price risk and potential volatility. As part of our risk management strategy, we look to hedge a portion of our expected future crude oil needs and the resulting refined product output based on prevailing futures prices, management's expectations about future commodity price changes and our risk appetite. We may also elect to dedesignate certain derivative instruments previously designated as cash flow hedges as part of our risk management strategy. Amounts recorded in other comprehensive income for these dedesignated derivative instruments remain in other comprehensive income and are recognized in earnings in the period in which the underlying transactions affect earnings. As of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, the aggregate notional amount of cash flow hedges was ~~5.1~~3.4 million and ~~9.7~~2.7 million barrels, respectively.

The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Condensed Consolidated Balance Sheets in which they are ~~recorded.~~recorded:

Derivative Assets

Derivative Liabilities

Derivative Assets

Derivative Liabilities

Balance Sheet Location

May 31,
2021

August 31,
2020

Balance Sheet Location

May 31,
2021

August 31,
2020

Balance Sheet Location

November 30,
2021

August 31,
2021

Balance Sheet Location

November 30,
2021

August 31,
2021

(Dollars in thousands)

Other current assets

11,243

34,052

Other current liabilities

6,761

8,821

Other current assets

6,571

11,874

Other current liabilities

3,836

1,001

The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020:

Three Months Ended May 31, Nine Months Ended May 31,
2021 2020 2021 2020
(Dollars in thousands)
Commodity derivatives $ (7,590) $ 11,081 $ (7,700) $ (4,153)


	Three Months Ended November 30,
	2021		2020
	(Dollars in thousands)
Commodity derivatives	$	(13,296)	$	1,974

The following table presents the pretax gains relating to our existing cash flow hedges that were reclassified from accumulated other comprehensive loss into our Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and 2020:

Three Months Ended May 31, Nine Months Ended May 31,
Location of Gain 2021 2020 2021 2020
(Dollars in thousands)
Commodity derivatives Cost of goods sold $ 2,329 $ 884 $ 19,084 $ 7,862


		Three Months Ended November 30,
	Location of Gain	2021		2020
		(Dollars in thousands)
Commodity derivatives	Cost of goods sold	$	13,254	$	12,673

Note 12 Fair Value Measurements

ASC Topic 820, Fair Value ~~Measurements,~~Measurement, defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

We determine fair values of derivative instruments and certain other assets, based on the fair value hierarchy established in ASC Topic 820, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on the best information available ~~under~~in the circumstances. ASC Topic 820 describes three levels within its hierarchy that may be used to measure fair ~~value, and our assessment of relevant instruments within those levels is as follows:~~value. Level 1 inputs are unadjusted quoted prices ~~(unadjusted)~~ in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other inputs ~~(other than quoted prices)~~ that are observable or can be corroborated by observable market data for substantially the ~~asset~~full term of the assets or ~~liability, either directly or indirectly.~~liabilities. Level 3 inputs are unobservable inputs that are supported by little or no market activity for the ~~asset~~assets or ~~liability.~~liabilities. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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Recurring fair value measurements as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, are as follows:


		May 31, 2021									November 30, 2021
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(Dollars in thousands)									(Dollars in thousands)
Assets	Assets									Assets
Commodity derivatives	Commodity derivatives	$	2,349	$	852,622	$	0	$	854,971	Commodity derivatives	$	2,841	$	449,528	$	—	$	452,369
Foreign exchange derivatives	Foreign exchange derivatives	0		29,332		0		29,332		Foreign exchange derivatives	—		8,483		—		8,483

Deferred compensation assets	Deferred compensation assets	50,660		0		0		50,660		Deferred compensation assets	51,113		—		—		51,113

Embedded derivative asset	Embedded derivative asset	0		16,173		0		16,173		Embedded derivative asset	—		13,034		—		13,034
Segregated investments and marketable securities	Segregated investments and marketable securities	195,197		0		0		195,197		Segregated investments and marketable securities	96,447		—		—		96,447
Other assets	Other assets	6,563		0		0		6,563		Other assets	6,616		—		—		6,616
Total	Total	$	254,769	$	898,127	$	0	$	1,152,896	Total	$	157,017	$	471,045	$	—	$	628,062
Liabilities	Liabilities									Liabilities
Commodity derivatives	Commodity derivatives	$	1,037	$	591,382	$	0	$	592,419	Commodity derivatives	$	3,860	$	293,605	$	—	$	297,465
Foreign exchange derivatives	Foreign exchange derivatives	0		9,907		0		9,907		Foreign exchange derivatives	—		27,463		—		27,463

Total	Total	$	1,037	$	601,289	$	0	$	602,326	Total	$	3,860	$	321,068	$	—	$	324,928


		August 31, 2020									August 31, 2021
		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
		(Dollars in thousands)									(Dollars in thousands)
Assets	Assets									Assets
Commodity derivatives	Commodity derivatives	$	5,762	$	355,783	$	0	$	361,545	Commodity derivatives	$	2,453	$	542,253	$	—	$	544,706
Foreign exchange derivatives	Foreign exchange derivatives	0		11,523		0		11,523		Foreign exchange derivatives	—		19,429		—		19,429

Deferred compensation assets	Deferred compensation assets	47,669		0		0		47,669		Deferred compensation assets	51,940		—		—		51,940

Embedded derivative asset	Embedded derivative asset	0		18,998		0		18,998		Embedded derivative asset	—		16,488		—		16,488
Segregated investments and marketable securities	Segregated investments and marketable securities	85,950		0		0		85,950		Segregated investments and marketable securities	99,837		—		—		99,837
Other assets	Other assets	5,276		0		0		5,276		Other assets	6,052		—		—		6,052
Total	Total	$	144,657	$	386,304	$	0	$	530,961	Total	$	160,282	$	578,170	$	—	$	738,452
Liabilities	Liabilities									Liabilities
Commodity derivatives	Commodity derivatives	$	6,037	$	346,126	$	0	$	352,163	Commodity derivatives	$	1,615	$	444,247	$	—	$	445,862
Foreign exchange derivatives	Foreign exchange derivatives	0		69,467		0		69,467		Foreign exchange derivatives	—		8,506		—		8,506

Total	Total	$	6,037	$	415,593	$	0	$	421,630	Total	$	1,615	$	452,753	$	—	$	454,368

Commodity and foreign exchange derivatives. Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts with fixed-price components, select ocean freight contracts and other OTC derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, ~~adjusted for~~including location-specific ~~inputs,~~adjustments, and are classified within Level 2. Location-specific inputs are driven by local market supply and demand and are generally based on broker or dealer quotations or market transactions in either ~~the~~ listed or OTC markets. Changes in the fair values of these contracts are recognized in our Condensed Consolidated Statements of Operations as a component of cost of goods sold.

Deferred compensation and other assets. Our deferred compensation investments consist primarily of rabbi trust assets that are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Condensed Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

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Embedded derivative asset. The embedded derivative asset relates to contingent payments inherent to our investment in CF Nitrogen. The inputs used in the fair value measurement include the probability of future upgrades and downgrades of the CF Industries credit rating based on historical credit rating movements of other public companies and the discount rates applied to potential annual payments based on applicable historical and current yield coupon rates. Based on these observable inputs, our fair value measurement is classified within Level 2. See Note 11, Derivative Financial Instruments and Hedging Activities, for additional information.

Segregated investments and marketable securities. Our segregated investments and marketable securities are comprised of investments in various government agencies and U.S. Treasury securities, which are valued using quoted market prices and classified within Level 1.

Note 13 Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business operations. To meet our compliance requirements, we establish reserves for ~~the~~ future costs of remediation ofassociated with identified issues that are both probable and can be reasonably ~~estimated, which~~estimated. Estimates of environmental costs are based on current available facts, existing technology, undiscounted site-specific costs and currently enacted laws and regulations and are included in cost of goods sold and marketing, general and administrative expenses in our Condensed Consolidated Statements of Operations. Recoveries, if any, are recorded in the period in which recovery is received. Liabilities are monitored and adjusted as new facts or changes in law or technology occur. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we currently believe any resulting liabilities, individually or in aggregate, will not have a material effect on our ~~condensed~~ consolidated financial ~~statements~~position, results of operations or cash flows during any fiscal year.

Other Litigation and Claims

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect net income for any fiscal period; however, we currently believe any resulting liabilities, individually or in aggregate, will not have a material effect on our ~~condensed~~ consolidated financial ~~statements~~position, results of operations or cash flows during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related, nonconsolidated companies. Our bank covenants allow maximum guarantees of $1.0 billion, of which ~~$188.8~~$134.0 million were outstanding on ~~May 31,~~November 30, 2021. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide these guarantees were current as of ~~May 31,~~November 30, 2021.

~~Note 14 Leases~~

We assess arrangements at inception to determine whether they contain a lease. An arrangement is considered to contain a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration. The right to control the use of an asset must include both (a) the right to obtain substantially all economic benefits associated with an identified asset and (b) the right to direct how and for what purpose the identified asset is used. Certain arrangements provide us with the right to use an identified asset; however, most of these arrangements are not considered to represent a lease, as we do not control how and for what purpose the identified asset is used. For example, our supply agreements, warehousing and distribution services agreements, and transportation services agreements generally do not contain leases.

We lease property, plant and equipment used in our operations primarily under operating lease agreements and, to a lesser extent, under finance lease agreements. Our operating leases are primarily for railcars, equipment, vehicles and office space, many of which contain renewal options and escalation clauses. Renewal options are included as part of the right of use asset and liability when it is reasonably certain that we will exercise the renewal option; however, renewal options are generally not included as we are not reasonably certain to exercise such options.

Operating lease right of use assets and liabilities for operating leases are recognized at the lease commencement date for leases in excess of 12 months based on the present value of lease payments over the lease term. For measurement and classification of lease agreements, lease and nonlease components are grouped into a single lease component for all asset classes. Variable lease payments are excluded from measurement of right of use assets and liabilities and generally include payments for nonlease components such as maintenance costs, payments for leased assets beyond their noncancelable lease term and payments for other nonlease components such as sales tax. The discount rate used to calculate present value is our

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collateralized incremental borrowing rate or, if available, the rate implicit in the lease. The incremental borrowing rate is determined for each lease based primarily on its lease term. Certain lease arrangements include rental payments adjusted annually based on changes in an inflation index. Our lease arrangements generally do not contain residual value guarantees or material restrictive covenants.

~~Lease expense is recognized on a straight-line basis over the lease term. The components of lease expense recognized in our Condensed Consolidated Statements of Operations are as follows:~~

Three Months Ended May 31, Nine Months Ended May 31,
2021 2020 2021 2020
(Dollars in thousands)
Operating lease expense $ 18,534 $ 17,057 $ 54,508 $ 53,155
Finance lease expense:
Amortization of assets 1,974 1,908 5,919 5,170
Interest on lease liabilities 218 257 694 742
Short-term lease expense 3,970 3,108 12,394 12,768
Variable lease expense 668 1,176 2,209 2,089
Total net lease expense* $ 25,364 $ 23,506 $ 75,724 $ 73,924

*Income related to sub-lease activity is not material and has been excluded from the table above.

~~Supplemental balance sheet information related to operating and finance leases is as follows:~~

Balance Sheet Location May 31,
2021 August 31,
2020
(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets Other assets $ 262,737 $ 257,834
Liabilities
Current operating lease liabilities Accrued expenses 58,767 57,200
Long-term operating lease liabilities Other liabilities 207,513 203,691
Total operating lease liabilities $ 266,280 $ 260,891
Finance leases
Assets
Finance lease assets Property, plant and equipment $ 39,393 $ 44,860
Liabilities
Current finance lease liabilities Current portion of long-term debt 7,152 7,993
Long-term finance lease liabilities Long-term debt 19,307 23,467
Total finance lease liabilities $ 26,459 $ 31,460
Weighted average remaining lease term (in years)
Operating leases 7.9 8.3
Finance leases 5.7 6.0
Weighted average discount rate
Operating leases 2.99 % 3.11 %
Finance leases 3.34 % 3.33 %

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~~Supplemental cash flow and other information related to operating and finance leases are as follows:~~

Nine Months Ended May 31,
2021 2020
(Dollars in thousands)
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases $ 56,448 $ 45,718
Operating cash flows from finance leases 694 742
Financing cash flows from finance leases 6,426 5,239
Supplemental noncash information:
Right of use assets obtained in exchange for lease liabilities 37,284 32,567
Right of use asset modifications 23,886 6,507

~~Maturities of lease liabilities as of May 31, 2021, were as follows:~~

May 31, 2021
Finance Leases Operating Leases
(Dollars in thousands)
Remainder of fiscal 2021 $ 2,004 $ 18,002
Fiscal 2022 7,787 65,469
Fiscal 2023 6,206 51,946
Fiscal 2024 3,487 41,945
Fiscal 2025 2,078 31,211
After fiscal 2025 8,071 108,601
Total maturities of lease liabilities 29,633 317,174
Less amounts representing interest 3,174 50,894
Present value of future minimum lease payments 26,459 266,280
Less current lease liabilities 7,152 58,767
Long-term lease liabilities $ 19,307 $ 207,513

Note 1514 Other Current Assets and Liabilities

Other current assets and liabilities as of ~~May 31,~~November 30, 2021, and August 31, ~~2020,~~2021, are as follows:


		May 31, 2021		August 31, 2020			November 30, 2021		August 31, 2021
Other current assets	Other current assets	(Dollars in thousands)				Other current assets	(Dollars in thousands)
Derivative assets (Note 11)	Derivative assets (Note 11)	$	881,636	$	371,195	Derivative assets (Note 11)	$	452,555	$	559,056
Margin and related deposits	Margin and related deposits	430,336		194,097		Margin and related deposits	286,196		336,397
Supplier advance payments	Supplier advance payments	214,147		198,699		Supplier advance payments	446,979		194,706
Restricted cash						Restricted cash	149,151		129,325
Other	Other	370,677		253,497		Other	164,002		170,749
Total other current assets	Total other current assets	$	1,896,796	$	1,017,488	Total other current assets	$	1,498,883	$	1,390,233
Other current liabilities	Other current liabilities					Other current liabilities
Customer margin deposits and credit balances	Customer margin deposits and credit balances	$	276,344	$	149,539	Customer margin deposits and credit balances	$	252,266	$	269,114
Customer advance payments	Customer advance payments	522,804		300,100		Customer advance payments	592,388		439,293
Derivative liabilities (Note 11)	Derivative liabilities (Note 11)	595,654		416,204		Derivative liabilities (Note 11)	323,313		449,522
Dividends and equity payable	Dividends and equity payable	49,914		63,000		Dividends and equity payable	299,018		150,000
Total other current liabilities	Total other current liabilities	$	1,444,716	$	928,843	Total other current liabilities	$	1,466,985	$	1,307,929

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ITEM 2. 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 onregarding 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 ~~2021 Third~~2022 First Quarter Highlights

•Fiscal ~~2021~~2022 Trends Update

•Operating Metrics

•Results of Operations

•Liquidity and Capital Resources

•~~Off-Balance Sheet Financing Arrangements~~

•Critical Accounting Policies

•Recent Accounting Pronouncements

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, ~~2020~~2021 (including the information presented therein under Risk Factors), as well as the condensed consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

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 the Global Select Market of The Nasdaq Stock Market LLC. We operate in the following three reportable segments:

•Energy. Produces and provides primarily for the wholesale distribution and transportation of petroleum products.

•Ag. Purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties; it also serves as a wholesaler and retailer of agronomy products.

•Nitrogen Production. ~~Consists solely~~Produces and distributes nitrogen fertilizer. It consists of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and ~~produces and distributes nitrogen fertilizer.~~allocated expenses.

In addition, our financing and hedging businesses, along with our nonconsolidated ~~wheat milling and~~ food production and distribution and wheat milling joint ventures, have been aggregated within Corporate and Other.

The condensed consolidated financial statements include the accounts of CHS and all subsidiaries and limited liability companies in which we have a controlling interest. The effects of all significant intercompany transactions have been eliminated.

Corporate administrative expenses and interest are allocated to each reporting segment ~~along with~~and Corporate and Other, based on direct use of services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

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. Management also focuses 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 generally trend lower during the second and fourth fiscal quarters and higher during the first and third fiscal quarters; however, our IBIT does not necessarily follow the same trend due to weather and other events that can impact profitability. For example, in our Ag segment, our country operations business generally experiences higher volumes and revenues during the fall harvest and spring planting seasons, which generally correspond to our first and third fiscal quarters, respectively. Additionally, our agronomy business generally experiences higher volumes and revenues during the spring planting season. Our global grain and processing operations are subject to fluctuations in volume and revenues based on

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~~global grain marketing operations are subject to fluctuations in volume and income based on~~ producer harvests, world grain prices, demand and ~~global~~international trade ~~volumes.~~relationships. Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined 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 graphs below depict the seasonality inherent in our ~~businesses.~~businesses:

*The COVID-19 pandemic started during the second quarter of fiscal 2020.

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, grains, 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 and river transportation ~~network,~~networks, outbreaks of disease, government regulations and policies, global trade disputes and general ~~political/~~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 on these strategies, we are focused on implementing agile, efficient and sustainable new technology platforms; building robust and efficient supply chains; hiring, developing and retaining high-

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performing, diverse and passionate teams; achieving operational excellence and continuous improvement; and maintaining a strong balance sheet.

Fiscal ~~2021 Third~~2022 First Quarter Highlights

•~~Strong~~Robust global demand drove commodity prices higher and provided favorable market conditions for improved ~~trade relations between the United States and foreign trade partners led to continued higher volumes for~~margins across our Ag segment. As a result, our global grain and ~~oilseed, which~~processing and wholesale agronomy businesses experienced significantly improved earnings ~~in our Ag segment~~ compared to the same period of the prior year.

•~~Improved~~Refining margins were higher in our Energy segment as a result of improved crack spreads inand more favorable pricing for Canadian crude oil, which is processed by our ~~refined fuels business resulted in increased margins as the demand shocks that occurred during the COVID-19 pandemic began to subside.~~

•~~Improved margins in our refined fuels business were partially offset by exceptionally high costs for renewable energy credits.~~refineries.

•Equity earnings from ~~investments were~~our CF Nitrogen investment improved as a ~~significant source~~result of ~~pretax earnings during the fiscal 2021 third quarter.~~

•~~Although a significant portion of our~~increased urea and urea ammonium nitrate ("UAN") pricing due to strong global employees continued with remote working arrangements through the end of the third quarter, we began efforts to bring employees back to our offices in either full or hybrid capacities as COVID-19 restrictions were being lifted. The costs of these activities were not material during the third quarter of fiscal 2021demand and ~~are not expected to be material for the remainder of fiscal 2021.~~global supply disruptions.

Fiscal ~~2021~~2022 Trends Update

Our Energy and Ag segments operate in cyclical environments in which unforeseen market conditions can have significant positive or negative impacts. WeFor example, we have experienced and anticipate continued effects of inflation on costs such as labor, freight and materials. Additionally, we expect there to be continued uncertainty during fiscal 2022 that could have significant impacts on our results as we continue to navigate the lingering effects of the COVID-19 pandemic. Most of our operations are considered to be essential; however, periods of depressed demand and margins could result in decreased profitability and the need to assess for potential impairments. Easing of measures taken to mitigate the spread of COVID-19, the ~~rollout~~effectiveness of vaccines and other efforts to respond to the pandemic in the United States and globally could also impact the profitability of our businesses. Refer to Item 1A of our Annual Report on Form 10-K for the year ended August 31, ~~2020,~~2021, for additional considerations of risks the COVID-19 pandemic may continue to have on our business, liquidity, capital resources and financial results.

~~Although improving from~~The energy industry continued to experience improved margins and maintain higher volumes compared to the lows experienced during the ~~prior fiscal year,~~early stages of the ~~energy industry continued to experience volume~~COVID-19 pandemic; however, the volumes and ~~margin reductions compared to~~margins remain lower than historical levels. These ~~reductions~~lower volumes and margins are primarily the result of the COVID-19 pandemic, which began in our second quarter of fiscal 2020 and significantly reduced our profitability. In addition, the cost of renewable energy credits ~~has increased~~remains significantly higher than historical levels, which continued to negatively ~~impacted~~impact our profitability during the first quarter of fiscal ~~2021.~~2022. We are unable to predict how long the current environment will last or the severity of the financial and operational impacts; however, we expect uncertainty and volatility to ~~drive unfavorable market conditions~~continue in the energy industry ~~that will negatively~~during fiscal 2022, which could significantly impact our ~~profitability through the remainder of fiscal 2021.~~earnings.

Although challenges remain, the U.S. agricultural industry has experienced ~~increased~~continued strong demand for grain and oilseed commodities following the Phase One trade agreement with China, which has resulted in ~~increased volumes and~~ improved commodity prices. ~~Unforeseen~~In addition, due to decreased global supply and strong global demand for fertilizer and related products, the current improved profitability will likely continue in our Ag and Nitrogen Production segments until supply becomes more balanced with the current strong demand. However, unforeseen global market conditions can positively or negatively impact agricultural commodity prices and volumes sold. We are unable to predict these conditions or the severity of the impact such conditions could have on our pricing and volumes. In addition to global supply and demand impacts, regional factors such as unpredictable weather conditions, including those due to climate change, could impact our operations. AsFor example, unfavorable weather events and conditions experienced in fiscal 2021, including the effects of ~~May 31, 2021, much~~Hurricane Ida on our grain export terminal in Myrtle Grove, Louisiana, and drought conditions experienced in portions of our trade territory, ~~was experiencing drought conditions. If these conditions persist through the remainder of the summer, we would expect~~have negatively impacted our fourth quarter Ag business to be impacted through lower volumes and margins on our Ag products. However, if timely rainfall were to occur, we would expect crops to mostly recover and the impact to our business to be minimal. Nonetheless, we expect revenues, margins and cash flows from core operations during fiscal 2022. As with others in our ~~Ag segment~~industry, we are seeing significantly higher freight costs that are the result of inflation and logistical challenges in the shipping industry, and we expect these challenges to ~~potentially fluctuate through the remainder of~~continue during fiscal ~~2021.~~2022. Additionally, unforeseen global market conditions with negative impacts remain a risk that could put pressure on asset valuations in our Ag segment.

In addition to market conditions that impact our businesses, we will continue to take actions to protect our financial health during fiscal 2022, while continuing to deliver on our enterprise resource planning system implementation and ~~advance~~advancing our ~~target~~ operating model, with actions that include implementing plans to substantially reduce budgeted costs and improving cash flow management with the objective of generating substantial additional operating cash flows.model.

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Operating Metrics

Energy

Our Energy segment operations primarily include our refineries in Laurel, Montana, and McPherson, Kansas, ~~refineries,~~ which process crude oil to produce refined products, including ~~gasolines,~~gasoline, distillates and other products. The following table provides information about our consolidated refinery ~~operations.~~operations:


		Three Months Ended May 31,		Nine Months Ended May 31,			Three Months Ended November 30,
		2021	2020	2021	2020		2021	2020
Refinery throughput volumes	Refinery throughput volumes	(Barrels per day)				Refinery throughput volumes	(Barrels per day)
Heavy, high-sulfur crude oil	Heavy, high-sulfur crude oil	94,854	90,118	94,758	90,976	Heavy, high-sulfur crude oil	102,340	92,594
All other crude oil	All other crude oil	69,156	61,328	61,893	71,730	All other crude oil	70,327	60,082
Other feedstocks and blendstocks	Other feedstocks and blendstocks	12,917	6,657	13,496	12,184	Other feedstocks and blendstocks	18,338	15,815
Total refinery throughput volumes	Total refinery throughput volumes	176,927	158,103	170,147	174,890	Total refinery throughput volumes	191,005	168,491
Refined fuel yields	Refined fuel yields					Refined fuel yields
Gasolines	Gasolines	89,297	73,196	83,723	84,837	Gasolines	92,886	84,263
Distillates	Distillates	65,841	68,920	66,859	73,172	Distillates	78,924	65,853

We are subject to the Renewable ~~Fuels~~Fuel Standard, which requires refiners to blend renewable fuels (e.g., ethanol, 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, although standards have not yet been established~~year. In December 2021, the EPA issued a proposal for the renewable volume obligation ("RVO") for calendar years 2020 through 2022. As proposed, the RVO for calendar year ~~2021.~~2020 is lower than previously issued, and calendar year 2021 is lower than anticipated as a result of lower demand for refined fuels due to the COVID-19 pandemic. We generate RINs through our blending activities, but we cannot generate enough RINs to meet the needs of our refining capacity, and RINs must be purchased on the open market. The price of RINs can be volatile, with prices for D6 ethanol RINs and D4 ethanol RINs rising by ~~295%~~114% and ~~180%~~81%, respectively, during the ~~third~~first quarter of fiscal ~~2021~~2022 compared to the same period of the prior year, which negatively impacted our profitability during the ~~third~~first quarter of fiscal ~~2021.~~2022. Estimates of our RIN expense are based on past practice and are calculated using an average RIN price each month.

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 inputs such as crude oil) and Western Canadian Select ("WCS") crude oil differentials (i.e., the price differential between West Texas Intermediate ("WTI") crude oil and WCS crude oil), which are driven by the supply and demand of refined ~~product markets.~~product. Crack spreads and WCS crude oil differentials both increased during the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior year, contributing to improved IBIT for the Energy segment. ~~However, WCS crude oil differentials decreased during the three months ended May 31, 2021, which partially offset the positive impact of improved crack spreads.~~ The table below provides information about average market reference prices and differentials that impact our Energy ~~segment.~~segment:


		Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended November 30,
		2021		2020		2021		2020			2021		2020
Market indicators	Market indicators									Market indicators
WTI crude oil (dollars per barrel)	WTI crude oil (dollars per barrel)	$	63.07	$	25.22	$	52.00	$	45.76	WTI crude oil (dollars per barrel)	$	77.14	$	40.18
WTI - WCS crude oil differential (dollars per barrel)	WTI - WCS crude oil differential (dollars per barrel)	$	11.00	$	15.89	$	10.90	$	16.81	WTI - WCS crude oil differential (dollars per barrel)	$	12.95	$	9.79
Group 3 2:1:1 crack spread (dollars per barrel)*	Group 3 2:1:1 crack spread (dollars per barrel)*	$	20.27	$	9.38	$	13.49	$	13.69	Group 3 2:1:1 crack spread (dollars per barrel)*	$	18.04	$	7.65
Group 3 5:3:2 crack spread (dollars per barrel)*	Group 3 5:3:2 crack spread (dollars per barrel)*	$	20.38	$	8.26	$	13.28	$	12.69	Group 3 5:3:2 crack spread (dollars per barrel)*	$	17.56	$	7.38
D6 ethanol RIN (dollars per RIN)	D6 ethanol RIN (dollars per RIN)	$	1.3496	$	0.3414	$	0.9242	$	0.2342	D6 ethanol RIN (dollars per RIN)	$	1.1760	$	0.5485
D4 ethanol RIN (dollars per RIN)	D4 ethanol RIN (dollars per RIN)	$	1.4342	$	0.5131	$	1.0928	$	0.5112	D4 ethanol RIN (dollars per RIN)	$	1.4648	$	0.8105

*Group 3 refers to the oil refining and distribution system serving Midwest markets from the Gulf Coast through the Plains states.

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Our Ag segment operations work together to facilitate production, purchase, sale and eventual use of grain and other agricultural commodities within the United States and internationally. Profitability in our Ag 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 that are outside our control. The table below provides information about average market prices for agricultural commodities and our sales/throughput volumes that impacted our Ag segment for the three ~~and nine~~ months ended ~~May 31,~~November 30, 2021 and ~~2020.~~2020:


			Three Months Ended May 31,				Nine Months Ended May 31,						Three Months Ended November 30,
		Market Source*	2021		2020		2021		2020			Market Source*	2021		2020
Commodity prices	Commodity prices										Commodity prices
Corn (dollars per bushel)	Corn (dollars per bushel)	Chicago Board of Trade	$	6.54	$	3.26	$	5.27	$	3.63	Corn (dollars per bushel)	Chicago Board of Trade	$	5.57	$	4.20
Soybeans (dollars per bushel)	Soybeans (dollars per bushel)	Chicago Board of Trade	$	15.13	$	8.59	$	13.20	$	8.86	Soybeans (dollars per bushel)	Chicago Board of Trade	$	12.36	$	11.69
Wheat (dollars per bushel)	Wheat (dollars per bushel)	Chicago Board of Trade	$	6.75	$	5.22	$	6.38	$	5.26	Wheat (dollars per bushel)	Chicago Board of Trade	$	7.57	$	5.80
Urea (dollars per ton)	Urea (dollars per ton)	Green Markets NOLA	$	376.00	$	239.00	$	298.00	$	228.00	Urea (dollars per ton)	Green Markets NOLA	$	676.00	$	225.00
Urea ammonium nitrate (dollars per ton)	Urea ammonium nitrate (dollars per ton)	Green Markets NOLA	$	295.68	$	145.00	$	189.76	$	145.00	Urea ammonium nitrate (dollars per ton)	Green Markets NOLA	$	456.64	$	119.32
Ethanol (dollars per gallon)	Ethanol (dollars per gallon)	Chicago Platts	$	2.16	$	1.03	$	1.72	$	1.29	Ethanol (dollars per gallon)	Chicago Platts	$	2.81	$	1.33

Volumes	Volumes										Volumes
Grain and oilseed (thousands of bushels)	Grain and oilseed (thousands of bushels)		685,761		621,775		2,099,623		1,825,064		Grain and oilseed (thousands of bushels)		564,112		746,584
North American grain and oilseed port throughput (thousands of bushels)	North American grain and oilseed port throughput (thousands of bushels)		199,246		145,789		736,612		409,739		North American grain and oilseed port throughput (thousands of bushels)		172,987		219,707
Crop nutrients (thousands of tons)			2,857		2,319		6,265		5,645
Wholesale crop nutrients (thousands of tons)											Wholesale crop nutrients (thousands of tons)		1,823		1,875
Ethanol (thousands of gallons)	Ethanol (thousands of gallons)		221,125		171,034		660,043		618,834		Ethanol (thousands of gallons)		224,246		220,771

*Market source information represents the average month-end price during the period.

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Results of Operations

Three months ended ~~May 31,~~November 30, 2021 and 2020


		Three Months Ended May 31,								Three Months Ended November 30,
		2021		% of Revenues		2020		% of Revenues				2021		% of Revenues*		2020		% of Revenues*
		(Dollars in thousands)								(Dollars in thousands)
Revenues	Revenues	$	10,929,976	100.0	%	$	7,241,031	100.0	%		Revenues	$	10,880,757	100.0	%	$	8,715,643	100.0	%
Cost of goods sold	Cost of goods sold	10,615,348		97.1		7,022,672		97.0			Cost of goods sold	10,360,849		95.2		8,537,539		98.0
Gross profit	Gross profit	314,628		2.9		218,359		3.0			Gross profit	519,908		4.8		178,104		2.0
Marketing, general and administrative expenses	Marketing, general and administrative expenses	186,703		1.7		180,439		2.5			Marketing, general and administrative expenses	204,934		1.9		170,661		2.0
Operating earnings	Operating earnings	127,925		1.2		37,920		0.5			Operating earnings	314,974		2.9		7,443		0.1

Interest expense	Interest expense	28,992		0.3		26,661		0.4			Interest expense	23,432		0.2		25,050		0.3
Other income	Other income	(10,748)		(0.1)		(8,076)		(0.1)			Other income	(23,776)		(0.2)		(12,624)		(0.1)
Equity income from investments	Equity income from investments	(146,522)		(1.3)		(51,114)		(0.7)			Equity income from investments	(151,345)		(1.4)		(50,023)		(0.6)
Income before income taxes	Income before income taxes	256,203		2.3		70,449		1.0			Income before income taxes	466,663		4.3		45,040		0.5
Income tax benefit		(17,469)		(0.2)		(27,052)		(0.4)
Income tax expense (benefit)											Income tax expense (benefit)	14,720		0.1		(24,329)		(0.3)
Net income	Net income	273,672		2.5		97,501		1.3			Net income	451,943		4.2		69,369		0.8
Net income (loss) attributable to noncontrolling interests		81		—		(147)		—
Net loss attributable to noncontrolling interests											Net loss attributable to noncontrolling interests	(18)		—		(302)		—
Net income attributable to CHS Inc.	Net income attributable to CHS Inc.	$	273,591	2.5	%	$	97,648	1.3	%		Net income attributable to CHS Inc.	$	451,961	4.2	%	$	69,671	0.8	%

*Amounts less than 0.1% are shown as zero percent. Percentage totals may differ due to rounding.

The charts below detail revenues, net of intersegment revenues, and IBIT by reportable segment for the three months ended ~~May 31,~~November 30, 2021. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

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Income (Loss) Before Income Taxes by Segment

Energy

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ 4,959 $ (54,764) $ 59,723 109.1 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Income (loss) before income taxes	$	69,190	$	(67,176)	$	136,366	203.0	%

The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

*See commentary related to these changes in the marketing, general and administrative expenses, interest expense, other income and equity income from investments sections of this Results of Operations.

The change in Energy segment IBIT reflects the following:

•~~Improved~~Higher crack spreads and increased WCS crude oil differentials reflect improved market conditions in our refined fuels business ~~resulted in increased margins as the demand shocks that occurred during the COVID-19 pandemic began~~and contributed to ~~subside and~~ a ~~$42.0~~$165.6 million ~~noncash charge to reduce our refined fuels inventories to their market value during the third quarter~~increase of ~~fiscal 2020 that did not reoccur during the third quarter of fiscal 2021.~~IBIT.

•Improved margins in our refined fuels business were partially offset by ~~significantly~~ higher RIN prices ~~that negatively impacted margins~~due to market conditions driven by ~~approximately $82.0 million and decreased WCS crude oil differentials and lower~~the regulatory environment.

•Lower propane margins ~~due to~~resulting from global market conditions and the reversal of unrealized hedging gains ~~recognized~~ during the ~~prior year.~~first quarter of fiscal 2022 also partially offset the improved earnings in our refined fuels business.

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Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ 140,131 $ 95,360 $ 44,771 46.9 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Income before income taxes	$	286,425	$	83,010	$	203,415	245.0	%

The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

The change in Ag segment IBIT reflects the following:

•Increased margins ~~on feed and farm supplies,~~across all our Ag segment businesses, including an $85.6 million increase for grain and oilseed ~~renewable fuels~~that resulted primarily from mark-to-market changes associated with our commodity derivatives, including the reversal of unrealized losses and agronomy resulted from improved global commodity market conditions during the third quarter of fiscal 2021. The increased margins were partially offset by mark-to-market losses for certain processing and food ingredients products, whichunrealized gains that we expect to reverse ~~over time.~~in future periods; a $78.0 million increase for wholesale agronomy products, which resulted from strong global market demand and global supply disruptions during the first quarter of fiscal 2022; and a $38.0 million increase for oilseed processing as a result of strong meal and oil demand.

•Decreased volumes of feed and farm supplies were partially offset by increased volumes of agronomy products that resulted from strong demand due to favorable weather conditions for the spring planting and application season. Increased volumes of grain and oilseed resulted from ~~improved~~a combination of factors, including the comparable period of the prior year experiencing elevated volumes following the Phase One trade ~~relations between~~agreement with China, which have since plateaued, the ~~United States~~lower crop yields due to drought conditions experienced in portions of our trade territory and ~~foreign trade partners.~~the impact of Hurricane Ida on our grain export terminal in Myrtle Grove, Louisiana, during the first quarter of fiscal 2022.

All Other Segments


		Three Months Ended May 31,				Change				Three Months Ended November 30,		Change
		2021		2020		Dollars		Percent				2021		2020		Dollars		Percent
		(Dollars in thousands)										(Dollars in thousands)
Nitrogen Production IBIT*	Nitrogen Production IBIT*	$	46,635	$	23,507	$	23,128	98.4	%		Nitrogen Production IBIT*	$	96,583	$	4,468	$	92,115	2,061.7	%
Corporate and Other IBIT	Corporate and Other IBIT	$	64,478	$	6,346	$	58,132	916.0	%		Corporate and Other IBIT	$	14,465	$	24,738	$	(10,273)	(41.5)	%

*~~See~~For additional information, see Note 5, Investments, of the notes to the unaudited condensed consolidated financial statements that are included in this Quarterly Report on Form ~~10-Q for additional information.~~10-Q.

Our Nitrogen Production segment IBIT increased as a result of higher equity ~~method~~ income attributed to increased sale prices of urea and ~~urea ammonium nitrate ("UAN"),~~UAN, which ~~are produced and sold~~was partially offset by ~~CF Nitrogen.~~increased natural gas costs. Corporate and Other IBIT ~~increased~~decreased primarily due to ~~our~~lower equity ~~method~~income from our investment in Ventura Foods, ~~LLC ("Ventura Foods"),~~ which ~~had significantly increased income as a result of~~experienced less favorable market conditions for ~~oils~~edible oil-based products, and ~~a recovery of sales volumes compared~~higher performance-based incentive compensation expenses associated with improved results in comparison to the ~~early stages of the COVID-19 pandemic.~~prior year.

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Revenues by Segment

Energy

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Revenues $ 1,704,798 $ 890,919 $ 813,879 91.4 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	2,303,987	$	1,257,847	$	1,046,140	83.2	%

The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

The change in Energy segment revenues reflects the following:

•Increased selling prices and volumes for refined fuels ~~as a result of~~contributed to $852.1 million and $38.0 million increases in revenues, respectively. Increased refined fuels selling prices resulted from global market conditions ~~including improved~~and increased volumes resulted from a continued improvement in demand following the initial demand shocks associated with the COVID-19 ~~pandemic, contributed to $724.8 million and $33.8 million increases in revenues, respectively.~~pandemic.

•Increased selling prices for propane as a result of global market conditions during the ~~third~~first quarter of fiscal ~~2021~~2022 positively impacted revenue by ~~$53.2~~$136.9 million.

•Increased revenues were partially offset by lower volumes of propane driven by lower demand as a result of warm and dry weather conditions during most of the ~~third~~first quarter of fiscal ~~2021.~~2022.

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Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Revenues $ 9,216,204 $ 6,337,901 $ 2,878,303 45.4 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	8,569,259	$	7,445,402	$	1,123,857	15.1	%

The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

The change in Ag segment revenues reflects the following:

•Higher pricing for grain and oilseed was driven by increased global demand and contributed to a ~~$1.5~~$1.2 billion increase in revenues. The remaining price increase was attributed to a combination of market-driven price increases and product mix across our other Ag segment businesses, including wholesale agronomy, feed and farm supplies, renewable fuels ~~agronomy,~~ and ~~processing and food ingredients.~~processing.

•~~Improved trade relations between the United States and foreign trade partners drove increased~~Decreased volumes of grain and oilseed ~~volumes that~~ contributed to a ~~$473.6 million increase~~$1.4 billion decrease in revenues. The ~~increased~~decreased volumes resulted from a combination of factors, including the comparable period of the prior year experiencing elevated volumes following the Phase One trade agreement with China, which have since plateaued; a business model change at our TEMCO, LLC ("TEMCO") equity method investment during the second quarter of fiscal 2021 that resulted in reduced revenues and COGS during the current period on certain transactions associated with TEMCO; the lower crop yields due to drought conditions experienced in portions of our trade territory and the impact of Hurricane Ida on our grain export terminal in Myrtle Grove, Louisiana, during the first quarter of fiscal 2022.

•Decreased grain and oilseed volumes were partially offset by the net impact of ~~decreased~~volume increases and decreases across our other Ag segment businesses, including a $112.9 million increase in volumes ~~of feed and farm supplies and increased volumes of agronomy products and~~for renewable fuels ~~that were driven by global market conditions.~~

•~~Due to~~and a ~~planned business model change at our TEMCO LLC ("TEMCO") equity method investment to~~$95.0 million increase ~~its operational efficiency, we reduced our revenues~~in volumes for oilseed processing as a result of strong demand in the ethanol and ~~COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during the three months ended May 31, 2021.~~edible oil markets, respectively.

All Other Segments

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Corporate and Other revenues* $ 8,974 $ 12,211 $ (3,237) (26.5) %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Corporate and Other revenues*	$	7,511	$	12,394	$	(4,883)	(39.4)	%

*Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

Corporate and Other revenues decreased during the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior year primarily as a result of ~~lower~~decreased revenues in our ~~financing and~~ hedging ~~businesses~~business due to ~~market-driven interest rate reductions and decreased~~lower commissions from hedging ~~activities, respectively.~~activities.

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Cost of Goods Sold by Segment

Energy

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 1,649,905 $ 893,922 $ 755,983 84.6 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	2,179,625	$	1,281,042	$	898,583	70.1	%

The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

The change in Energy segment COGS reflects the following:

•Increased costs and volumes for refined fuels contributed to ~~$631.4~~$686.2 million and ~~$35.8~~$39.5 million increases of COGS, respectively. Increased refined fuels costs resulted from global market conditions ~~including the impact of significantly higher RIN prices,~~ and increased volumes resulted from ~~improved~~a continued improvement in demand following the initial demand shocks associated with the COVID-19 pandemic.

•Increased costs for propane as a result of global market conditions and ~~increased distribution costs~~the reversal of unrealized hedging gains resulted in ~~an $80.8~~a $154.0 million increase of COGS.

•Increased COGS was partially offset by lower volumes of propane driven by lower demand as a result of warm and dry weather conditions during most of the ~~third~~first quarter of fiscal ~~2021.~~2022.

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Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 8,967,297 $ 6,129,293 $ 2,838,004 46.3 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	8,183,993	$	7,260,342	$	923,651	12.7	%

The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior ~~year.~~year:

The change in Ag segment COGS reflects the following:

•Higher ~~pricing for~~costs of grain and oilseed ~~was~~were driven by increased global demand and contributed to a ~~$1.5~~$1.1 billion increase in COGS. The remaining ~~price~~cost increase was attributed to a combination of price increases and product mix across our ~~other~~remaining Ag segment businesses, including wholesale agronomy, feed and farm supplies, renewable fuels ~~agronomy,~~ and ~~processing and food ingredients.~~processing.

•~~Improved trade relations between the United States and foreign trade partners drove increased~~Decreased volumes of grain and oilseed ~~volumes that~~ contributed to a ~~$474.0 million increase~~$1.4 billion decrease in COGS. The ~~increased~~decreased volumes resulted from a combination of factors, including the comparable period of the prior year experiencing elevated volumes following the Phase One trade agreement with China which have since plateaued; a business model change at our TEMCO equity method investment during the second quarter of fiscal 2021 that resulted in reduced revenues and COGS during the current period on certain transactions associated with TEMCO; the lower crop yields due to drought conditions experienced in portions of our trade territory and COGS during the current period on certain transactions associated with TEMCO and the impact of Hurricane Ida on our grain export terminal in Myrtle Grove, Louisiana, during the first quarter of fiscal 2022.

•Decreased grain and oilseed volumes were partially offset by the net impact of ~~decreased volumes of feed~~volume increases and ~~farm supplies and increased volumes of agronomy products and~~decreases across our other Ag segment businesses, including a $109.3 million increase for renewable fuels ~~that were driven by global market conditions.~~

•~~Due to~~and a ~~planned business model change at our TEMCO equity method investment to~~$91.6 million increase ~~its operational efficiency, we reduced our revenues~~for oilseed processing as a result of strong demand in the ethanol and ~~COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during the three months ended May 31, 2021.~~edible oil markets, respectively.

All Other Segments


		Three Months Ended May 31,				Change			Three Months Ended November 30,		Change
		2021		2020		Dollars		Percent			2021		2020		Dollars		Percent
		(Dollars in thousands)									(Dollars in thousands)
Nitrogen Production COGS	Nitrogen Production COGS	$	425	$	430	$	(5)	(1.2)%		Nitrogen Production COGS	$	414	$	421	$	(7)	(1.7)%
Corporate and Other COGS	Corporate and Other COGS	$	(2,279)	$	(973)	$	(1,306)	(134.2)%		Corporate and Other COGS	$	(3,183)	$	(4,266)	$	1,083	25.4%

There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior year.

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Marketing, General and Administrative Expenses

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Marketing, general and administrative expenses $ 186,703 $ 180,439 $ 6,264 3.5 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Marketing, general and administrative expenses	$	204,934	$	170,661	$	34,273	20.1	%

Marketing, general and administrative expenses increased during the three months ended ~~May 31,~~November 30, 2021, ~~compared to the three months ended May 31, 2020,~~ primarily due to ~~increased variable~~higher performance-based incentive compensation ~~resulting from~~expenses driven by improved ~~earnings across our Ag segment businesses, which was partially offset by various cost reduction initiatives launched during~~results in comparison to the ~~current~~prior year.

Interest Expense

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Interest expense $ 28,992 $ 26,661 $ 2,331 8.7 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Interest expense	$	23,432	$	25,050	$	(1,618)	(6.5)	%

Interest expense ~~increased~~decreased during the three months ended ~~May 31,~~November 30, 2021, as a result of ~~higher~~lower notes payable and long-term debt balances compared to the same period of the prior year.

Other Income

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Other income $ 10,748 $ 8,076 $ 2,672 33.1 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Other income	$	23,776	$	12,624	$	11,152	88.3	%

Other income increased during the three months ended ~~May 31,~~November 30, 2021, primarily due to ~~investment gains~~a gain on the sale of a business in our Ag segment that did not occur during the same period of the prior year.

Equity Income from Investments

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Equity income from investments* $ 146,522 $ 51,114 $ 95,408 186.7 %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Equity income from investments*	$	151,345	$	50,023	$	101,322	202.6	%

*~~See~~For additional information, see Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form ~~10-Q for additional information.~~10-Q.

We record equity income or loss for investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Condensed Consolidated Statements of Operations. Equity income from investments increased during the three months ended ~~May 31,~~November 30, 2021, compared to the same period during the prior year, primarily due to increased income associated with our equity method ~~investments~~investment in ~~Ventura Foods and~~ CF Nitrogen. ~~Ventura Foods experienced favorable market conditions for oils and a recovery of sales volumes compared with the early stages of the COVID-19 pandemic, and~~ CF Nitrogen experienced increased sale prices of urea and ~~UAN.~~UAN due to strong global demand and decreased global supply.

~~Table of Contents~~

Income Tax ~~Benefit~~Expense (Benefit)

Three Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income tax benefit $ 17,469 $ 27,052 $ (9,583) (35.4) %


	Three Months Ended November 30,				Change
	2021		2020		Dollars		Percent
	(Dollars in thousands)
Income tax expense (benefit)	$	14,720	$	(24,329)	$	39,049	160.5	%

The ~~lower~~increased income tax ~~benefit~~expense during the three months ended ~~May 31,~~November 30, 2021, primarily ~~reflected changes in~~resulted from increased earnings during the ~~mix~~first quarter of ~~full-year earnings projected across business units and equity management assumptions.~~fiscal 2022. Effective tax rates for the three months ended ~~May 31,~~November 30, 2021 and 2020, were ~~(6.8)%~~3.2% and ~~(38.4)~~(54.0)%, respectively. Federal and state statutory rates applied to nonpatronage business activity were ~~24.9%~~24.4% and ~~24.7%~~24.9% for the three months ended ~~May 31,~~November 30, 2021 and 2020, respectively. Income taxes and effective tax ~~rate~~rates vary each year based on profitability and nonpatronage business ~~activity during each of the comparable years.~~

~~Table of Contents~~

~~Nine months ended May 31, 2021 and 2020~~

Nine Months Ended May 31,
2021 % of Revenues 2020 % of Revenues
(Dollars in thousands)
Revenues $ 27,965,778 100.0 % $ 21,460,742 100.0 %
Cost of goods sold 27,371,326 97.9 20,601,785 96.0
Gross profit 594,452 2.1 858,957 4.0
Marketing, general and administrative expenses 518,875 1.9 548,340 2.6
Operating earnings 75,577 0.3 310,617 1.4
Interest expense 82,897 0.3 95,043 0.4
Other income (41,219) (0.1) (32,926) (0.2)
Equity income from investments (260,654) (0.9) (135,174) (0.6)
Income before income taxes 294,553 1.1 383,674 1.8
Income tax benefit (10,130) — (18,258) (0.1)
Net income 304,683 1.1 401,932 1.9
Net (loss) income attributable to noncontrolling interests (350) — 955 —
Net income attributable to CHS Inc. $ 305,033 1.1 % $ 400,977 1.9 %

The charts below detail revenues, net of intersegment revenues, and IBIT by reportable segment for the nine months ended May 31, 2021. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

activity.

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~~Income (Loss) Before Income Taxes by Segment~~

~~Energy~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ (116,908) $ 246,309 $ (363,217) (147.5) %

~~The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Energy segment IBIT reflects the following:~~

•Less advantageous market conditions in our refined fuels business compared to the same period of the prior year resulted in significantly lower margins and volumes. These market conditions were driven by continued impact of the demand shocks occurring during the COVID-19 pandemic during the first three quarters of fiscal 2021, which resulted in a combination of decreased WCS crude oil differentials experienced on heavy Canadian crude oil processed by our refineries and decreased crack spreads.

•~~Significantly higher RIN prices negatively impacted margins by approximately $145.0 million.~~

•Lower propane margins due to the reversal of hedging gains recognized during the prior year and reduced propane volumes as a result of warmer and drier weather conditions during fiscal 2021 reduced income compared to the same period during the prior year.

~~Table of Contents~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ 237,185 $ 60,653 $ 176,532 291.1 %

~~The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Ag segment IBIT reflects the following:~~

•Favorable weather conditions for the fall harvest and spring planting seasons and improved trade relations between the United States and foreign trade partners during fiscal 2021 compared to the prior year contributed to increased volumes and margins across most of our Ag segment. These improved margins were partially offset by decreased grain and oilseed and processing and food ingredients margins, including mark-to-market losses that we expect to reverse over time.

•~~We experienced decreased marketing, general and administrative expenses associated with focused cost-reduction initiatives and increased equity income from our investment in TEMCO.~~

~~All Other Segments~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Nitrogen Production IBIT* $ 62,270 $ 45,698 $ 16,572 36.3 %
Corporate and Other IBIT $ 112,006 $ 31,014 $ 80,992 261.1 %

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

Our Nitrogen Production segment experienced increased IBIT due to increased equity method income attributed to higher sale prices of urea and UAN, which were partially offset by increased natural gas costs. Corporate and Other IBIT increased primarily due to increased income from our equity method investments in Ventura Foods and Ardent Mills as a result of favorable market conditions for oils and a recovery of sales volumes compared with the early stages of the COVID-19 pandemic; decreased marketing, general and administrative expenses as a result of focused cost reduction efforts; and decreased interest expense due to lower interest rates.

~~Table of Contents~~

~~Revenues by Segment~~

~~Energy~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Revenues $ 4,334,803 $ 4,247,392 $ 87,411 2.1 %

~~The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Energy segment revenues reflects the following:~~

•Increased selling prices for propane and refined fuels as a result of global market conditions, including improved demand following the initial demand shocks associated with the COVID-19 pandemic, resulted in increased revenues of $126.7 million and $99.3 million, respectively.

•Decreased volumes of propane and refined fuels contributed to $89.9 million and $47.7 million decreases in revenues, respectively. Decreased propane volumes resulted from lower demand due to warmer and drier weather conditions during fiscal 2021 and the decreased volumes of refined fuels resulted from global market conditions, including the continued impact of the demand shocks occurring during the COVID-19 pandemic, as well as product mix.

~~Table of Contents~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Revenues $ 23,599,818 $ 17,173,958 $ 6,425,860 37.4 %

~~The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Ag segment revenues reflects the following:~~

•Trade relations improved between the United States and foreign trade partners and weather conditions were more favorable compared to the same period of the prior year. Stronger grain and oilseed shipments contributed to a $2.1 billion increase in revenues with the remaining increase being composed primarily of improved sales volumes of feed and farm supplies and agronomy products.

•Due to a planned business model change at our TEMCO equity method investment to increase its operational efficiency, we reduced our revenues and COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during fiscal 2021.

•Higher pricing for grain and oilseed was driven by increased global demand and contributed to a $3.2 billion increase in revenues. The remaining price increase was attributed to a combination of price increases and product mix across our other businesses, including feed and farm supplies, renewable fuels, agronomy and processing and food ingredients.

~~All Other Segments~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Corporate and Other revenues* $ 31,157 $ 39,392 $ (8,235) (20.9) %

*Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

Corporate and Other revenues decreased during the nine months ended May 31, 2021, compared to the same period during the prior year as a result of lower revenues in our financing business due to market-driven interest rate reductions.

~~Table of Contents~~

~~Cost of Goods Sold by Segment~~

~~Energy~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 4,310,992 $ 3,850,176 $ 460,816 12.0 %

~~The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Energy segment COGS reflects the following:~~

•Increased refined fuel prices resulted from global market conditions and contributed to a $375.2 million increase of COGS, including the impact of significantly higher costs for RINs of approximately $145.0 million.

•~~Global market conditions, the reversal of hedging gains recognized during the prior year and increased distribution costs contributed to a $201.7 million increase of COGS for propane.~~

•Lower volumes of propane and refined fuels contributed to $73.2 million and $44.2 million decreases of COGS, respectively. Decreased propane volumes were driven by lower demand that resulted from warmer and drier weather conditions during fiscal 2021, and lower volumes of refined fuels resulted from global market conditions, including the continued impact of demand shocks occurring during the COVID-19 pandemic.

~~Table of Contents~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 23,068,732 $ 16,752,073 $ 6,316,659 37.7 %

~~The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~The change in Ag segment COGS reflects the following:~~

•Improved trade relations between the United States and foreign trade partners and favorable weather conditions compared to the same period of the prior year drove volumes higher. Stronger grain and oilseed shipments contributed to a $2.0 billion increase of COGS with the remaining increase being composed primarily of improved volumes of agronomy products and feed and farm supplies.

•Higher prices for grain and oilseed resulted from increased global demand and contributed to a $3.3 billion increase of COGS. The remaining price increase was driven by a combination of global market conditions and product mix, which increased costs for renewable fuels, agronomy products, and processing and food ingredients, as well as partially offsetting price decreases for feed and farm supplies.

~~All Other Segments~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Nitrogen Production COGS $ 1,268 $ 1,964 $ (696) (35.4)%
Corporate and Other COGS $ (9,666) $ (2,428) $ (7,238) (298.1)%

~~There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the nine months ended May 31, 2021, compared to the same period during the prior year.~~

~~Table of Contents~~

~~Marketing, General and Administrative Expenses~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Marketing, general and administrative expenses $ 518,875 $ 548,340 $ (29,465) (5.4) %

Marketing, general and administrative expenses decreased during the nine months ended May 31, 2021, compared to the nine months ended May 31, 2020, due to lower employee-related expenses, lower bad debt expenses and focused cost reduction initiatives launched during the current year.

~~Interest Expense~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Interest expense $ 82,897 $ 95,043 $ (12,146) (12.8) %

~~Interest expense decreased during the nine months ended May 31, 2021, as a result of lower interest rates compared to the same period of the prior year.~~

~~Other Income~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Other income $ 41,219 $ 32,926 $ 8,293 25.2 %

~~Other income increased during the nine months ended May 31, 2021, primarily due to investment gains that did not occur during the same period of the prior year.~~

~~Equity Income from Investments~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Equity income from investments* $ 260,654 $ 135,174 $ 125,480 92.8 %

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

We record equity income or loss for investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Condensed Consolidated Statements of Operations. Equity income from investments increased during the nine months ended May 31, 2021, compared to the same period during the prior year, primarily due to increased income associated with our equity method investments in Ventura Foods and TEMCO. Ventura Foods experienced increased volumes and profitability as a result of favorable market conditions for oils and a recovery of sales volumes compared with the early stages of the COVID-19 pandemic, and TEMCO experienced a significant increase in volumes and profitability with increased trade flows to China. In addition, TEMCO changed its business model during the nine months ended May 31, 2021, which has improved its operating efficiency.

~~Table of Contents~~

~~Income Tax Benefit~~

Nine Months Ended May 31, Change
2021 2020 Dollars Percent
(Dollars in thousands)
Income tax benefit $ 10,130 $ 18,258 $ (8,128) (44.5) %

The lower income tax benefit during the nine months ended May 31, 2021, primarily reflects changes in the mix of full-year earnings projected across business units and equity management assumptions, which were partially offset by tax benefits related to an intercompany transfer of assets for tax planning. Effective tax rates for the nine months ended May 31, 2021 and 2020, were (3.4)% and (4.8)%, respectively. Federal and state statutory rates applied to nonpatronage business activity were 24.9% and 24.7% for the nine months ended May 31, 2021 and 2020, respectively. Income taxes and effective tax rate vary each year based on profitability and nonpatronage business activity during each of the comparable years.

Liquidity and Capital Resources

~~Summary~~

In assessing our financial condition, we consider factors such as working capital, ~~and~~ internal benchmarking related to our applicable covenants and other financial ~~criteria. We fund~~information. The following financial information is used when assessing our ~~operations primarily through a combination of cash flows from operations supplemented with borrowings under our revolving credit facility. We fund~~liquidity and capital resources to meet our capital ~~expenditures and growth primarily through cash, operating cash flow and long-term debt financing.~~

On May 31, 2021, we had working capital, defined as current assets less current liabilities, of $1.5 billion, and a current ratio, defined as current assets divided by current liabilities, of 1.2 compared to working capital of $1.3 billion and a current ratio of 1.3 on August 31, 2020. On May 31, 2020, we had working capital of $1.4 billion and a current ratio of 1.3 compared to working capital of $1.1 billion and a current ratio of 1.2 on August 31, 2019. Working capital and the current ratio may not be computed the same as similarly titled measures used by other companies. We believe this information is meaningful to investors as a measure of operational efficiency and short-term financial health.

As of May 31, 2021, we had cash and cash equivalents of $301.2 million, total equities of $9.0 billion, long-term debt (including current maturities) of $1.8 billion and notes payable of $2.8 billion. 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 them:


	November 30, 2021		August 31, 2021
	(Dollars in thousands)
Cash and cash equivalents	$	310,002	$	413,159
Notes payable	1,905,371		1,740,859
Long-term debt including current maturities	1,615,112		1,618,361
Total equities	9,249,926		9,017,326
Working capital	1,891,232		1,672,938
Current ratio*	1.2		1.3

*Current ratio is defined as current assets divided by current liabilities.

Summary of Our Major Sources of Cash and Cash Equivalents

We fund our ~~owners.~~current operations primarily through a combination of cash flows from operations supplemented with short-term borrowings through our committed and uncommitted revolving credit facilities, including our securitization facility, with certain unaffiliated financial institutions ("Securitization Facility") and our repurchase facility relating thereto ("Repurchase 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 and by issuing long-term debt. See Note 6, Notes Payable and Long-Term Debt, of the notes to the unaudited condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information on our short-term borrowings and long-term debt. 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

The following is a summary of our primary cash requirements for fiscal 2022:

•Capital expenditures. We expect total capital expenditures for fiscal 2022 to be approximately $669.7 million, compared to capital expenditures of $317.8 million in fiscal 2021. During the three months ended November 30, 2021, we acquired $74.9 million of property, plant and equipment.

•Debt and interest. We expect to repay approximately $38.5 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately $70.7 million during fiscal 2022. During the three months ended November 30, 2021, we repaid $0.2 million of scheduled long-term debt maturities.

•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of November 30, 2021. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2022. Dividends paid on our preferred stock during the three months ended November 30, 2021, were $42.2 million.

•Patronage. Our Board of Directors authorized approximately $50.0 million of our fiscal 2021 patronage-sourced earnings to be paid to our member-owners during fiscal 2022.

•Equity redemptions. Our Board of Directors has authorized equity redemptions of $100.0 million to be distributed in fiscal 2022 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, 2021, we redeemed $12.2 million of member equity.

We believe cash generated by operating and investing activities, along with available borrowing capacity under our credit facilities, will be sufficient to support our operations for the foreseeable ~~future~~future. Our notes payable and ~~we expect~~long-term debt are subject to ~~remain~~various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with all our ~~loan covenants.~~

~~As we navigate the lingering impact~~debt covenants and restrictions as of ~~COVID-19~~November 30, 2021. Based on our ~~business and operations,~~current fiscal 2022 projections, we continue to strengthen our liquidity through a variety of means, including curtailing certain spending and reprioritizing capital expenditures. We are also actively managing our short-term and long-term liquidity.

~~Fiscal 2021 and 2020 Activity~~

On August 14, 2020, we entered into a Note Purchase Agreement to borrow $375.0 million of debt in the form of notes. The notes under this Note Purchase Agreement are structured in four series with maturities ranging from 7 to 15 years and interest accruing at rates ranging from 3.24% to 3.73%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow and whether the notes have an investment grade rating from a nationally recognized statistical rating organization. The funding of these notes took place on November 2, 2020. This funding is being used to pay debt maturities and manage liquidity.expect continued covenant compliance.

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We have a receivables and loans securitization facility ("Securitization Facility") with certain unaffiliated financial institutions ("Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers and this arrangement is accounted for as a secured borrowing. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business. As of May 31, 2021, and August 31, 2020, total availability under the Securitization Facility was $600.0 million and $423.0 million, respectively, all of which had been utilized.

We also have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150.0 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of May 31, 2021, and August 31, 2020, the outstanding balance under the Repurchase Facility was $150.0 million.

~~Cash Flows~~

~~The following table presents summarized cash flow data for the nine months ended May 31, 2021 and 2020:~~

Nine Months Ended May 31, Change
2021 2020 Dollars
(Dollars in thousands)
Net cash (used in) provided by operating activities $ (632,378) $ 525,843 $ (1,158,221)
Net cash used in investing activities (177,509) (48,533) (128,976)
Net cash provided by (used in) financing activities 1,012,006 (292,207) 1,304,213
Effect of exchange rate changes on cash and cash equivalents (451) (786) 335
Increase in cash and cash equivalents and restricted cash $ 201,668 $ 184,317 $ 17,351

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 $1.2 billion decrease in cash provided by operating activities reflects decreased net income during fiscal 2021 compared to the same period of the prior fiscal year and working capital increases, primarily associated with increased receivables and inventories.

~~The $129.0 million increase in cash used in investing activities primarily reflects timing differences associated with borrowings and payments for CHS~~Working Capital ~~notes receivable balances during fiscal 2021 compared to the same period during fiscal 2020.~~

The $1.3 billion increase in cash provided by financing activities primarily reflects increased net cash inflows associated with our notes payable and long-term debt facilities, including the $375.0 million Note Purchase Agreement funding during the first quarter of fiscal 2021.

~~Future Uses of Cash~~

We ~~expect~~measure working capital as current assets less current liabilities and believe this information is meaningful to ~~utilize cash~~investors as a measure of operational efficiency and ~~cash equivalents, cash generated~~short-term financial health. Working capital is not defined under U.S. generally accepted accounting principles ("U.S. GAAP") and may not be computed the same as similarly titled measures used by ~~operating activities~~other companies. Working capital as of November 30, 2021, and ~~cash raised through the Note Purchase Agreement to fund capital expenditures, major maintenance, debt and interest payments, preferred stock dividends, patronage and equity redemptions. The following~~August 31, 2021, is ~~a summary of our primary cash requirements for fiscal 2021:~~as follows:


	November 30, 2021		August 31, 2021		Change
	(Dollars in thousands)
Current assets	$	9,997,118	$	7,998,951	$	1,998,167
Less current liabilities	8,105,886		6,326,013		1,779,873
Working capital	$	1,891,232	$	1,672,938	$	218,294

•~~Capital expenditures.~~ ~~We expect total~~As of November 30, 2021, working capital ~~expenditures for fiscal 2021 to be approximately $415.1~~increased by $218.3 million compared ~~to capital expenditures of $418.4 million in fiscal 2020. During the nine months ended May 31, 2021, we acquired property, plant and equipment of $238.8 million.~~

•~~Debt and interest.~~ We expect to repay approximately $555.3 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately $73.7 million during fiscal 2021. During the

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~~nine months ended May 31, 2021, we repaid $20.0 million of scheduled long-term debt maturities and an additional $366.0 million of long-term debt maturities.~~

•~~Preferred stock dividends.~~ ~~We had approximately $2.3 billion of preferred stock outstanding on May~~with August 31, 2021. ~~We expect~~Current asset balance changes increased working capital by $2.0 billion, primarily driven by increases in receivables and inventories, which were driven by higher commodity prices. Current liabilities balance changes decreased working capital by $1.8 billion, primarily due to ~~pay dividends on our preferred stock of approximately $168.7 million during fiscal 2021.~~

•~~Patronage. Our Board of Directors authorized approximately $30.0 million of our fiscal 2020 patronage-sourced earnings to be paid to our member-owners during fiscal 2021.~~

•~~Equity redemptions. Our Board of Directors has authorized equity redemptions of $83.0 million to be distributed~~increases in ~~fiscal 2021 in the form of redemptions of qualified~~accounts payable and ~~nonqualified equity owned~~notes payable, which were also driven by ~~individual producer members and association members. During the nine months ended May 31, 2021, we redeemed $37.8 million of member equity.~~higher commodity prices.

~~Future Sources of Cash~~

We fund our current operations primarily through a combination of cash flows from operations and committed and uncommitted revolving credit facilities, including our Securitization Facility and Repurchase Facility. We believe these sources will provide adequate liquidity to meet our working capital needs. We fund certain of our long-term capital needs, primarily those related to acquisitions of property, plant and equipment, with cash flows from operations and by issuing long-term debt and term loans. In addition, our wholly-owned subsidiary, CHS Capital, makes loans to member cooperatives, businesses and individual producers of agricultural products included in our cash flows from investing activities and has financing sources as detailed below in "CHS Capital Financing."

~~Working Capital Financing~~

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.

~~Our primary line~~Contractual Obligations

For information regarding our estimated contractual obligations, see the MD&A discussion included in Item 7 of ~~credit is a five-year unsecured revolving credit facility with a syndicate~~Part II of ~~domestic and international banks that expires~~our Annual Report on July 16, 2024. The credit facility provides a committed amount of $2.75 billion of which $1.2 billion was outstanding as of May 31, 2021. We also maintain certain uncommitted bilateral facilities to support our working capital needs with borrowings outstanding of $330.0 million as of MayForm 10-K for the year ended August 31, 2021.

In addition to our facilities above, our wholly-owned subsidiaries CHS Europe S.a.r.l. and CHS Agronegocio Industria e Comercio Ltda have lines of credit with $325.5 million outstanding as of May 31, 2021, and our other international subsidiaries have lines of credit with $119.2 million outstanding as of May 31, 2021.

~~Long-term Debt Financing~~Cash Flows

The following table presents summarized cash flow data for the three months ended November 30, 2021 and 2020:


	Three Months Ended November 30,
	2021		2020		Change
	(Dollars in thousands)
Net cash used in operating activities	$	(183,587)	$	(673,453)	$	489,866
Net cash used in investing activities	(52,196)		(114,311)		62,115
Net cash provided by financing activities	156,002		808,891		(652,889)
Effect of exchange rate changes on cash and cash equivalents	(3,550)		2,324		(5,874)
(Decrease) increase in cash and cash equivalents and restricted cash	$	(83,331)	$	23,451	$	(106,782)

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 $489.9 million decrease in cash used in operating activities primarily reflects increased net income during the first quarter of fiscal 2022 compared to the same period of the prior year.

The $62.1 million decrease in cash used in investing activities primarily reflects timing differences associated with borrowings and payments for CHS Capital notes receivable balances during the first quarter of fiscal 2022 compared to the same period during fiscal 2021 and decreased acquisitions of property, plant and equipment.

The $652.9 million decrease in cash provided by financing activities primarily reflects decreased net cash inflows associated with our notes payable and long-term debt ~~data (including current maturities)~~facilities as the funding of ~~May 31, 2021, and August 31, 2020:~~a $375.0 million Note Purchase Agreement occurred during the first quarter of fiscal 2021.

May 31,
2021 August 31,
2020
(Dollars in thousands)
Private placement debt $ 1,713,949 $ 1,363,725
Bank financing — 366,000
Finance lease obligations 26,459 31,460
Other notes and contract payable 33,661 34,709
Deferred financing costs (4,278) (4,771)
$ 1,769,791 $ 1,791,123

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~~CHS Capital Financing~~

~~For a description of the Securitization Facility and the Repurchase Facility, see above in "Fiscal 2021 and 2020 Activity."~~

CHS Capital sells loan commitments it has originated to Compeer Financial, PCA, d/b/a ProPartners Financial on a recourse basis. Total outstanding commitments under the program were $150.0 million as of May 31, 2021, of which $11.3 million was borrowed.

CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and are due upon demand. Borrowings under these notes totaled $64.4 million as of May 31, 2021.

~~Covenants~~

Our long-term debt is mostly unsecured; however, restrictive covenants under various debt agreements require maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with all debt covenants and restrictions as of May 31, 2021. Based on our current fiscal 2021 projections, we expect continued covenant compliance.

All outstanding private placement notes conform to financial covenants applicable to those of our amended and restated five-year unsecured revolving credit facility. The notes provide that if our ratio of consolidated funded debt to consolidated cash flows is greater than 3.0 to 1.0, the interest rate on outstanding notes will be increased between 0.25% and 1.00%, depending on the related note series, the actual ratio and/or whether the notes have an investment grade rating from a nationally recognized statistical rating organization, until the ratio becomes 3.0 to 1.0, or less. During the three months ended May 31, 2021 and 2020, our ratio of consolidated funded debt to consolidated cash flows remained below 3.0 to 1.0.

~~Patronage and Equity Redemptions~~

In accordance with our bylaws and by action of our Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year and are based on financial performance. During the nine months ended May 31, 2021, we distributed $30.0 million of cash patronage related to the year ended August 31, 2020. During the nine months ended May 31, 2020, we distributed cash patronage of $90.1 million.

In accordance with authorization from our Board of Directors, we expect total cash redemptions related to the year ended August 31, 2020, which will be distributed in fiscal 2021, to be approximately $83.0 million and to include redemptions of qualified and nonqualified equity owned by individual producer members and association members. During the nine months ended May 31, 2021, $37.8 million of that amount was redeemed in cash, compared to $86.3 million redeemed in cash during the nine months ended May 31, 2020.

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Preferred Stock

~~Dividends paid on our preferred stock during the nine months ended May 31, 2021 and 2020, were $126.5 million.~~ The following is a summary of our outstanding preferred stock as of ~~May 31,~~November 30, 2021, all shares of which are listed on the Global Select Market of The Nasdaq Stock Market LLC:


	Nasdaq Symbol	Issuance Date	Shares Outstanding	Redemption Value		Net Proceeds (a)		Dividend Rate (b) (c)		Dividend Payment Frequency	Redeemable Beginning (d)
				(Dollars in millions)
8% Cumulative Redeemable	CHSCP	(e)	12,272,003	$	306.8	$	311.2	8.00	%	Quarterly	7/18/2023
Class B Cumulative Redeemable, Series 1	CHSCO	(f)	21,459,066	$	536.5	$	569.3	7.875	%	Quarterly	9/26/2023
Class B Reset Rate Cumulative Redeemable, Series 2	CHSCN	3/11/2014	16,800,000	$	420.0	$	406.2	7.10	%	Quarterly	3/31/2024
Class B Reset Rate Cumulative Redeemable, Series 3	CHSCM	9/15/2014	19,700,000	$	492.5	$	476.7	6.75	%	Quarterly	9/30/2024
Class B Cumulative Redeemable, Series 4	CHSCL	1/21/2015	20,700,000	$	517.5	$	501.0	7.50	%	Quarterly	1/21/2025

(a) Includes patron equities redeemed with preferred stock.

(b) Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2, accumulates dividends at a rate of 7.10% per year until March 31, 2024, and then at a rate equal to the three-month LIBOR plus 4.298%, not to exceed 8.00% per annum, subsequent to March 31, 2024.

(c) Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3, accumulates dividends at a rate of 6.75% per year until September 30, 2024, and then at a rate equal to the three-month LIBOR plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024.

(d) Preferred stock is redeemable for cash at our option, in whole or in part, at a per-share price equal to the per-share liquidation preference of $25.00 per share, plus all dividends accumulated and unpaid on that share to and including the date of redemption, beginning on the dates set forth in this column.

(e) The 8% Cumulative Redeemable Preferred Stock was issued at various times from 2002 through 2010.

(f) Shares of Class B Cumulative Redeemable Preferred Stock, Series 1, were issued on September 26, 2013; August 25, 2014; March 31, 2016; and March 30, 2017.

~~Off-Balance Sheet Financing Arrangements~~

~~Guarantees~~

We are a guarantor for lines of credit and performance obligations of related companies. As of May 31, 2021, our bank covenants allowed maximum guarantees of $1.0 billion, of which $188.8 million were outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide guarantees were current as of May 31, 2021.

~~Debt~~

~~We have no material off-balance sheet debt.~~

~~Loan Participations~~

~~We engaged in off-balance sheet arrangements through certain loan participation agreements. Refer to further details about these arrangements in Note 3,~~ ~~Receivables,~~ ~~of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended August 31, 2020.~~

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Critical Accounting Policies

Other than as described within the Significant Accounting Policies section of Note 1, Basis of Presentation and Significant Accounting Policies, to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, our critical accounting policies as presented in ~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~MD&A in our Annual Report on Form 10-K for the year ended August 31, ~~2020,~~2021, have not materially changed during the ~~nine~~three months ended ~~May 31,~~November 30, 2021.

Recent Accounting Pronouncements

See Note 1, Basis of Presentation and Significant Accounting Policies, to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements that apply to us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not experience material changes in market risk exposures for the period ended ~~May 31,~~November 30, 2021, that would affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under

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the Securities Exchange Act of 1934), as of ~~May 31,~~November 30, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting during the quarter ended ~~May 31,~~November 30, 2021, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~We are involved as~~ For a ~~defendant in various lawsuits, claims and disputes, which are in the normal course~~description of our ~~business. The resolution~~material pending legal proceedings, please see Note 13, Commitments and Contingencies, of any such matters may affect consolidated net income for any fiscal period; however, our management believes any resulting liabilities, individually or in aggregate, will not have a material effect on ourthe notes to the unaudited condensed consolidated financial ~~position, results of operations or cash flows during any fiscal year.~~

~~As previously reported~~statements that are included in ~~our~~this Quarterly Report on Form 10-Q for the quarterly period ended February 28, 2021, between January 8, 2021, and March 16, 2021, a total of 21 putative class action lawsuits were filed in the United States District Courts for the District of Idaho, the Southern District of Illinois, the District of Kansas, the District of Minnesota and the Eastern District of Pennsylvania naming us and several other crop protection manufacturers, wholesalers and retailers as defendants and alleging that the defendants violated various federal and state laws, including antitrust, unfair competition, consumer protection and unjust enrichment laws by conspiring to maintain supracompetitive prices in seeds and crop protection chemicals, such as fungicides, herbicides and insecticides ("Crop Inputs"), and to engage in a group boycott intended to prevent companies utilizing electronic sales platforms from competing in the Crop Inputs retail sales market, thereby harming farmers. As of May 31, 2021, an additional six putative class action lawsuits, asserting the same allegations against the same defendants, were filed in the United States District Courts listed above. On June 8, 2021, the Judicial Panel on Multidistrict Litigation ordered that all of the pending lawsuits be consolidated in the United States District Court for the Eastern District of Missouri. It remains too early in the litigation to evaluate the likelihood of any particular outcome or of any estimate of the amount or range of potential loss.10-Q.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10–K for the year ended August 31, ~~2020, except for the risk factor set forth below, which updates the risk factor with the same title included in such Annual Report on Form 10–K.~~

We utilize information technology systems to support our business. The ongoing multiyear implementation of an enterprise wide resource planning system, reliance upon multiple legacy business systems, security breaches or other disruptions to our information technology systems or assets could interfere with our operations, compromise security of our customers' or suppliers' information and expose us to liability that could adversely impact our business and reputation.

Our operations rely on certain key information technology ("IT") systems, many of which are legacy in nature or may depend on third–party services to provide critical connections of data, information and services for internal and external users.

Over the past several years, we have been implementing a new enterprise resource planning system ("ERP"), and we expect this ERP implementation to continue for the next several years. This ERP implementation has and will continue to require significant capital and human resources to deploy. Changes we have experienced in the implementation timeline and the scope of the implementation likely have impacted the capital and operating expense amounts required to complete the implementation and there can be no assurance that the actual costs for completing the ERP implementation will not exceed our current estimates or that the ERP will not take longer to implement than we currently expect. In addition, potential flaws in implementing the ERP or in the failure of any portion/module of the ERP to meet our needs or provide appropriate controls may pose risks to our ability to operate successfully and efficiently and with an effective system of internal controls.

There may be other challenges and risks to both our aging and current IT systems over time due to any number of causes, such as catastrophic events, availability of resources, power outages, security breaches or cyber–based attacks. These challenges and risks could result in legal claims or proceedings, liability or penalties, disruption in operations, loss of valuable data, increased costs and damage to our reputation, all of which could adversely affect our business. Our ongoing IT investments include those relating to cybersecurity, including technology, hired expertise and cybersecurity risk mitigation actions. However, in connection with the COVID-19 pandemic, a number of our employees have transitioned to working remotely. As a result, more of our employees are working from locations where our cybersecurity programs may be less effective and robust.

Like many companies, we continue to experience an increase in the number of sophisticated attempts by external parties to access and/or disrupt our networks without authorization. For example, we recently learned of a credible cybersecurity threat to our IT systems. Upon learning of the cybersecurity threat, we launched an investigation and undertook immediate action, including employing protocols to mitigate the impact of the threat, and engaging internal and third–party information technology security and forensics experts to assess any impact on our IT systems. We also utilized additional

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security measures to help safeguard the integrity of our IT systems’ infrastructure and the data contained therein. Although our systems were not breached, no data was lost or exposed, and our operations were not significantly interrupted from this incident, there is no guarantee that a future incident would not have a greater impact on our operations, our data or our reputation.

In addition, we are subject to laws and regulations in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data. These laws and regulations pose increasingly complex compliance challenges and will require us to incur costs to achieve and maintain compliance; some of those costs may be significant. Any violation of such laws and regulations, including as a result of a security or privacy breach, could subject us to legal claims, regulatory penalties and damage to our reputation.2021.

ITEM 6. EXHIBITS


Exhibit			Description
10.1			Amendment No. 6 to Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (incorporated by reference to our Form 10-K for the year ended August 31, 2021, filed November 4, 2021).
10.2			Amendment No 2. To Employment Agreement, dated as of November 3, 2021, between CHS Inc. and Jay D. Debertin (incorporated by reference to our Form 10-K for the year ended August 31, 2021, filed November 4, 2021).
31.1			Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File ~~(Formatted~~(formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHS Inc.

(Registrant)

Date:

~~July 8, 2021~~January 5, 2022

By:

/s/ Olivia Nelligan

Olivia Nelligan

Executive Vice President and Chief Financial Officer

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	May 31, 2021
	Finance Leases		Operating Leases
	(Dollars in thousands)
Remainder of fiscal 2021	$	2,004	$	18,002
Fiscal 2022	7,787		65,469
Fiscal 2023	6,206		51,946
Fiscal 2024	3,487		41,945
Fiscal 2025	2,078		31,211
After fiscal 2025	8,071		108,601
Total maturities of lease liabilities	29,633		317,174
Less amounts representing interest	3,174		50,894
Present value of future minimum lease payments	26,459		266,280
Less current lease liabilities	7,152		58,767
Long-term lease liabilities	$	19,307	$	207,513