CHS (Cenex Harvest States) continues to hit on all cylinders.
While there is no publicly traded common stock CHS has many preferred issues outstanding.
The company just filed their 10-K annual report showing net income of $1.7 billion in net which was triple the previous year.
Looks like CHS is out w 1st q; saw an alert in FIDO and this is on Yahoo. I have the “L”s Bea https://finance.yahoo.com/news/chs-reports-first-quarter-fiscal-180000456.html
First quarter 2024 income was down over 30%.
I like the reporting time frames. Wondering if they have data on the 2nd quarter of 2024 as well? By the way, i really like Minority Report.
Tim…whats your current take on CHS preferreds…I have an overweighting on them as I see things going pretty good for the company as a whole…the one thing I am starting to watch is the call dates…P 7/23…O 9/23…N 3/24….M 9/24… and L 1/25….I feel you can earn over 7% on a pretty safe preferred..thanks
Someone on this site was concerned about https://www.chsinc.com/about-chs/news/news/2022/09/14/chs-patronage-inc says the CHS intends to distribute $500M in cash patronage and $500M in equity redemptions in calendar year 2023.
Rob Runchey, CHS Director of Treasury told me to go to the Liquidity and Capital Resources section of their most recently filed 10-K. He pointed me to the Liquidity and Capital Resources section of their most recently filed 10-K beginning on page 37. It says the Summary of Our Major Sources of Cash and Cash Equivalents details their funding approach.
Liquidity and Capital Resources
In assessing our financial condition, we consider factors such as working capital, internal benchmarking related to our
applicable covenants and other financial information. The following financial information is used when assessing our liquidity
and capital resources to meet our capital allocation priorities, which include maintaining the safety and compliance of our
operations, paying interest on debt and preferred stock dividends, returning cash to our member-owners in the form of cash
patronage and equity redemptions and taking advantage of strategic opportunities that benefit our member-owners:
August 31,
2022 2021
(Dollars in thousands)
Cash and cash equivalents…………………………………………………………………………………………….. $ 793,957 $ 413,159
Notes payable……………………………………………………………………………………………………………… 606,719 1,740,859
Long-term debt including current maturities…………………………………………………………………… 1,958,814 1,618,361
Total equities………………………………………………………………………………………………………………. 9,461,266 9,017,326
Working capital…………………………………………………………………………………………………………… 2,425,878 1,672,938
Current ratio* ……………………………………………………………………………………………………………… 1.3 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 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 9, Notes Payable and LongTerm Debt, of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for
additional information on our short-term borrowings and long-term debt, including tables with summarized long-term debt
outstanding. We will continue to consider opportunities to further diversify and enhance our sources and amounts of liquidity.
On August 30, 2022, the Securitization Facility and Repurchase Facility were amended to extend their respective
maturity dates to August 29, 2023, and increase the maximum committed availability under the Securitization Facility to $850.0
million from $700.0 million.
Table of Contents
37
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 could 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 advanced loan balance of $366.0 million
reverted to a non-revolving term loan that is payable on September 4, 2025.
Summary of Our Major Uses of Cash and Cash Equivalents
Annually, our Board of Directors approves our capital expenditure budget. Our fiscal 2023 capital expenditure
priorities include maintaining our assets through maintenance; complying with environmental, health and safety requirements;
enhancing information technology capabilities; improving productivity; and growth. Our refining business requires continued
investment in our refining process to maintain its safety, operational reliability and profitability. In addition, our Board of
Directors annually approves our cash patronage and equity redemptions to be paid in fiscal 2023, based on fiscal 2022 financial
performance. The following is a summary of our primary cash requirements for fiscal 2023:
• Capital expenditures. We expect total capital expenditures for fiscal 2023 to be approximately $887.2 million,
compared to capital expenditures of $354.4 million in fiscal 2022. Increased capital expenditures for fiscal 2023 are for
investments in our infrastructure to meet the evolving needs of our owners and customers, enhance value for the
cooperative system and propel sustainable growth. Excluded from the capital expenditures for fiscal 2023 is
approximately $236.0 million for major maintenance at our Laurel and McPherson refineries.
• Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of August 31, 2022.
We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2023.
• Patronage. Our Board of Directors authorized approximately $500.0 million of our fiscal 2022 patronage-sourced
earnings to be paid to our member-owners during fiscal 2023.
• Equity redemptions. Our Board of Directors has authorized equity redemptions of up to $500.0 million to be
distributed in fiscal 2023 in the form of redemptions of qualified and nonqualified equity owned by individual
producer-members and association members. The Board of Directors will continue to periodically evaluate the level of
equity redemption activity throughout fiscal 2023 with respect to the amounts it has authorized for redemption during
the fiscal year.
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. Our notes payable and long-term debt are
subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We
were in compliance with all our debt covenants and restrictions as of August 31, 2022. Based on our current 2023 projections,
we expect continued covenant compliance.
The 10k is at https://www.chsinc.com/-/media/chs%20inc/files/financials/2022/q4/chscp%2010k%2083122%20fiscal%202022%20as%20filed%201122022.pdf?mlts=20221102-151512
Mark, I was the one who asked about coverage for the cash patronage and equity redemptions. Thanks for posting this: it is consistent with and bolsters the reply I also received from CHS IR.
hold both the M & N bought in last 30 days
I would like to sing the praises of the agricultural coop CHS — one of the best companies to own preferred stocks. In 2013, CHS could have redeemed their 8 percent preferred issue CHSCP like many companies would and refinance at a lower rate. CHS extended CHSCP for another 10 years at 8 percent qualified dividend. Dividends always paid on time. CEO Jay Debertin received for 2021 cash compensation of about 1.2 million dollars. His bonus due to a very good year was approximately 8 million. For a Fortune 100 company, this salary is not unreasonable as many companies pay their officers huge salaries and bonuses even when their companies stock is plummeting. CHS has treated its preferred shareholders well. There is no issue under 6.75 percent when last year they clearly could have sold preferred stock at much lower rates like many other companies resulting in large principal losses to their preferred shareholders.
This is one of the few companies I can admire and sleep at night knowing my investment is treated with respect by the leaders of CHS. Credit unions and cooperatives like CHS are a model for capitalism to thrive.