What changed in this filing

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Item 1. Business

2024-11-06 compared with 2023-11-08 · 59 added, 57 removed, 209 unchanged (36% of the section changed)

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Our internet address is www.chsinc.com.

The information contained on our website is not part of, and is not incorporated into, this Annual Report on Form 10-K or any other report we file with or furnish to the Securities and Exchange Commission ("SEC").

Our periodic and current reports on Form 10-K, 10-Q, 8-K and other filings, including exhibits and supplemental schedules filed therewith, and amendments to those reports, filed with the Securities and Exchange Commission ("SEC") are available on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC, free of charge.

The information contained on our website is not part of, and is not incorporated into, this Annual Report on Form 10-K or any other report we file with or furnish to the SEC.

In addition, the SEC maintains a website that contains reports and other information regarding issuers, where you may obtain a copy of all information we file publicly with the SEC.

The SEC website address is www.sec.gov.

We are the nation's largest cooperative energy company based on revenues and identifiable assets, with operations that include petroleum refining and pipelines;

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Other energy operations .

We operate 11 propane terminals, four asphalt terminals, eight refined product terminals and three lubricants blending and packaging facilities.

We operate nine propane terminals, four asphalt terminals, eight refined product terminals and two lubricants blending and packaging facilities.

We also own and lease a fleet of liquid and pressure trailers and tractors, which transport refined fuels, propane, anhydrous ammonia and other products.

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In addition to selling products refined at our Laurel and McPherson refineries, we purchase refined petroleum products from third parties as the need arises.

For fiscal 2023, we obtained approximately 74% of the refined petroleum products we sold from our Laurel and McPherson refineries and approximately 26% from third parties.

For fiscal 2024, we produced approximately 81% of the refined petroleum products we sold at our Laurel and McPherson refineries and obtained approximately 19% from third parties.

The percentage of refined petroleum products that we obtain from third parties is dependent on refinery production volumes and will vary from year to year, primarily based on our planned major maintenance schedule.

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Demand for crude oil and energy products is driven by the condition of local and worldwide economies, local and regional weather patterns and taxation relative to other energy sources, which can significantly affect the price of refined fuel products.

Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined fuel products in the spring, summer and early fall when gasoline and diesel fuel usage by our agricultural customers is highest and is subject to domestic supply and demand forces.

Our Energy segment generally experiences higher volumes and revenues in certain operating areas, such as refined fuel products in the spring, summer and early fall when gasoline and diesel fuel use by our agricultural customers is highest and is subject to domestic supply and demand forces.

Other energy products, such as propane, generally experience higher volumes and revenues during the winter heating and crop-drying seasons.

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Commodity Futures Trading Commission ("CFTC").

The petroleum refining and wholesale fuels business is very competitive.

The petroleum refining and wholesale fuels business is highly competitive.

Among our competitors are some of the world's largest integrated petroleum companies, which have their own crude oil supplies and distribution and marketing systems.

We also compete with smaller domestic refiners and marketers in the midwestern and northwestern United States, with foreign refiners who import products into the United States and with producers and marketers in other industries supplying other forms of energy and fuels to consumers.

Given the commodity nature of the end products, profitability in the industry depends largely on margins, as well as operating efficiency, product mix and costs of product distribution and transportation.

The retail gasoline market is highly competitive, with competitors that are much larger than CHS and have greater brand recognition and distribution outlets throughout the country and world than we do.

Given the commodity nature of the end products, profitability in the industry depends largely on margins, operating efficiency, product mix and costs of product distribution and transportation.

Our retail gasoline competitors are much larger than CHS and have greater brand recognition and distribution outlets throughout the country and world than we do.

We also are experiencing increased competition from regional and unbranded retailers.

Our owned and nonowned retail outlets are located primarily in the midwestern and northwestern United States.

We market refined fuel products in five principal geographic areas.

The first area includes the Midwest and Northern Plains.

We market refined fuel products in five principal geographic regions.

The first region includes the Midwest and Northern Plains.

Competition at the wholesale level in this area includes major oil companies, as well as independent refiners and wholesale brokers and/or suppliers.

This area has a robust spot market and is influenced by the large refinery center along the Gulf Coast.

To the east of the Midwest and Northern Plains is another unique marketing area.

This area centers near Chicago, Illinois, and includes Illinois, Indiana and eastern Wisconsin.

In this area, we principally compete with the major oil companies, as well as independent refiners and wholesale brokers and/or suppliers.

Another market area includes Arkansas, Missouri and the northern part of Texas.

Competition in this area includes the major oil companies and independent refiners.

This area is principally supplied by the Gulf Coast refinery center and is also driven by a strong spot market that reacts quickly to changes in the international and national supply balance.

Another geographic area includes Colorado, Idaho, Montana, western North Dakota, western South Dakota, Utah and Wyoming.

Competition at the wholesale level in this area includes the major oil companies and independent refiners.

The last area includes much of Oregon and Washington.

We compete with the major oil companies in this area, which is known for volatile prices and an active spot market.

Our Ag segment includes global grain and processing, country operations and wholesale agronomy businesses.

These businesses work together to facilitate the production, purchase, sale and eventual use of grain and other agricultural products within the United States, as well as internationally.

This region has a robust spot market and is influenced by the large refinery center along the Gulf Coast.

A second unique marketing region centers near Chicago, Illinois, and includes Illinois, Indiana and eastern Wisconsin.

In this region, we principally compete with the major oil companies, as well as independent refiners and wholesale brokers and/or suppliers.

Another market region includes Arkansas, Missouri and northern Texas.

Competition in this region includes the major oil companies and independent refiners.

This region is principally supplied by the Gulf Coast refinery center and is also driven by a strong spot market that reacts quickly to changes in the international and national supply balance.

Another geographic region includes Colorado, Idaho, Montana, western North Dakota, western South Dakota, Utah and Wyoming.

Competition at the wholesale level in this region includes the major oil companies and independent refiners.

The fifth region includes much of Oregon and Washington.

We compete with the major oil companies in this region, which is known for volatile prices and an active spot market.

Our Ag segment includes global grain and processing, ag retail (formerly referred to as country operations) and wholesale agronomy businesses.

These businesses work together to facilitate production, purchase, sale and eventual use of grain and other agricultural products within the United States and internationally.

In fiscal 2024, revenues in our Ag segment were $30.4 billion after elimination of intersegment revenues.

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We are the nation's largest cooperative marketer of grain and oilseed based on grain sales.

Our global grain marketing operations purchase grain directly from agricultural producers and elevator operators primarily in the midwestern and western United States and indirectly through our country operations business.

Purchased grain is typically contracted for sale for future delivery at a specified location, and we are responsible for handling the grain and either arranging for or facilitating its transportation to that location.

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Oilseed processing is conducted at facilities that crush approximately 144 million bushels of soybeans and canola on an annual basis, producing approximately 3 million short tons of meal and flour and 1.9 billion pounds of edible and inedible oil annually.

We purchase oilseeds to be processed from members, other CHS businesses and third parties that have tightly integrated connections with our global grain marketing operations and country operations business.

We purchase oilseeds to be processed from members, other CHS businesses and third parties that have tightly integrated connections with our global grain marketing operations and ag retail business.

Our renewable fuels business produces 261 million gallons of fuel-grade ethanol, 70 million pounds of inedible corn oil and 658,000 tons of dried distillers grains with solubles ("DDGS") annually.

Renewable fuels produced by our production plants are marketed by our global grain marketing business, along with more than 450 million gallons of ethanol and 5 million tons of DDGS annually under marketing agreements with ethanol production plants.

Country operations.

Our country operations business operates 415 agri-operations locations through 27 business units dispersed throughout the midwestern and western United States.

Our ag retail business operates 420 agri-operations locations through 27 business units dispersed throughout the midwestern and western United States.

Most of these locations purchase grain from farmers and sell agronomy, energy, feed and seed products to those same producers and others, although not all locations provide every product and service.

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Our wholesale agronomy business includes our wholesale crop nutrients and wholesale crop protection businesses.

Our wholesale crop nutrients business delivers products directly to our customers and our country operations business from the manufacturer or through our 11 warehouse terminals and other nonowned storage facilities located throughout the United States.

To supplement what is purchased domestically, our Galveston, Texas, deepwater port and terminal receives fertilizer by vessel from origins in Europe and Asia where significant volumes of urea are produced.

Our wholesale crop nutrients business delivers products directly to our customers and our ag retail business from the manufacturer or through our 11 warehouse terminals and other nonowned storage facilities located throughout the United States.

To supplement what is purchased domestically, our Galveston, Texas, deepwater port and terminal receives fertilizer from vessels originating in Europe and Asia where significant volumes of urea are produced.

The fertilizer is then shipped by rail to destinations within crop-producing regions of the United States.

Our wholesale crop protection business operates out of our network of 28 warehouses from which we deliver products directly to our member cooperatives and independent retailers.

We also operate a bulk chemical rail terminal in Brooten, Minnesota, where we handle and store bulk crop protection products for some of the crop protection industry's largest chemical manufacturers.

We also operate a bulk chemical rail terminal in Brooten, Minnesota, where we handle and store crop protection products for some of the crop protection industry's largest chemical manufacturers.

This facility has more than 6 million gallons of chemical storage capacity.

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The soybean meal and canola meal we produce is sold to integrated livestock producers and feed mills.

The ethanol and DDGS we produce are sold throughout the United States and to various international customers.

Most of the business activities in our Ag segment are highly seasonal and, consequently, the operating results for our Ag segment will typically vary throughout the year.

For example, our country operations business generally experiences higher volumes and revenues during the spring planting and fall harvest seasons and our agronomy business generally experiences higher volumes and revenues during the spring planting season.

The ethanol and DDGS we produce are sold throughout the United States and to international customers.

Most of the business activities in our Ag segment are highly seasonal and, consequently, the operating results for our Ag segment vary throughout the year.

For example, our ag retail business generally experiences higher volumes and revenues during the spring planting and fall harvest seasons and our agronomy business generally experiences higher volumes and revenues during the spring planting season.

In addition, our Ag segment operations may be adversely affected by relative levels of supply and demand, both domestic and international, commodity price levels and transportation costs and conditions.

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Demand may be affected by foreign governments and their programs, relationships of foreign countries with the United States, affluence of foreign countries, wars and civil unrest, currency exchange fluctuations and substitution of commodities.

Demand may also be affected by changes in eating habits, population growth, per capita consumption of some products, federal and state policies and renewable fuels production levels.

Our Ag operations are subject to laws and related regulations and rules designed to protect the environment and that are administered by the EPA, the DOT and similar government agencies.

Demand may also be affected by changes in eating habits, population growth, per capita consumption of some products, federal and state policies, and renewable fuels production levels and state and federal incentives.

Our Ag operations are subject to laws and related regulations and rules designed to protect the environment that are administered by the EPA, DOT and similar government agencies.

These laws, regulations and rules govern, among other things, discharge of materials into the environment, including air and water;

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In some instances, that liability exists regardless of fault.

Our global grain and processing and country operations businesses are also subject to laws and related regulations and rules administered by the U.S.

Our global grain and processing and ag retail businesses are also subject to laws and related regulations and rules administered by the U.S.

Department of Agriculture, the U.S.

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Failure to comply with these laws, regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible product recalls.

The hedging transactions and activities of our global grain and processing and country operations businesses are subject to the rules and regulations of the exchanges we use and to the governing bodies, such as the CME, the Chicago Board of Trade ("CBOT"), the Minneapolis Grain Exchange ("MGEX") and the CFTC.

The hedging transactions and activities of our global grain and processing and ag retail businesses are subject to the rules and regulations of the exchanges we use and to the governing bodies, such as the CME, the Chicago Board of Trade ("CBOT"), the Minneapolis Grain Exchange ("MGEX") and the CFTC.

In our Ag segment, we have significant competition in the businesses in which we operate based principally on price, services, quality, patronage and alternative products.

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and safety of food, feed and grain products.

We compete with other large distributors of agricultural products, as well as with other regional or local distributors, cooperatives, retailers and manufacturers.

We compete with other large distributors of agricultural products, as well as with regional or local distributors, cooperatives, retailers and manufacturers.

NITROGEN PRODUCTION

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See Note 6, Investments , of the notes to the consolidated financial statements that are included in this Annual Report on Form 10-K for additional information.

We believe that our investment in CF Nitrogen positions us and our members for long-term, dependable fertilizer supply, supply chain efficiency and production economics.

We believe our investment in CF Nitrogen positions CHS and our members for long-term, dependable fertilizer supply, supply chain efficiency and production economics.

In addition, the ability to source products from CF Nitrogen production facilities under our supply agreement benefits our members and customers through strategically positioned access to essential fertilizer products.

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Sales and Marketing:

CF Nitrogen has three customers, including CHS and two consolidated subsidiaries of CF Industries.

CF Nitrogen is subject to laws and related regulations and rules designed to protect the environment that are administered by the EPA and similar government agencies.

CF Nitrogen has three customers, which are CHS and two consolidated subsidiaries of CF Industries.

CF Nitrogen is subject to laws and related regulations and rules designed to protect the environment administered by the EPA and similar government agencies.

These laws, regulations and rules govern, among other things, discharge of materials into the environment, including air and water;

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Wheat milling.

Ardent Mills, the largest flour miller in the United States, is a joint venture with CHS, Cargill and Conagra Brands, Inc.

Ardent Mills, the largest flour miller in the United States, is a joint venture of CHS, Cargill and Conagra Brands, Inc.

In connection with the Ardent Mills joint venture, CHS, Cargill and Conagra have various ancillary and noncompete agreements including, among other things, an agreement for us to supply Ardent Mills with certain wheat and durum products.

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We monitor our progress toward these objectives by measuring human capital metrics such as engagement, total and regrettable turnover, hiring statistics and overall cost of human resources delivery.

In addition to these objectives, we also promote a culture focused on diversity and inclusion, provide learning and development opportunities, maintain the health and safety of our employees, encourage community involvement and offer competitive pay and benefits.

In addition to these objectives, we also promote a culture focused on our value of inclusion, provide learning and development opportunities, help maintain the health and safety of our employees, encourage community involvement and offer competitive pay and benefits.

Additional information regarding our employee population and human capital strategies is described below.

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In addition to those individuals directly employed by us, many individuals work for or support our joint ventures, including CF Nitrogen in our Nitrogen Production segment and Ventura Foods and Ardent Mills in our Corporate and Other category, and are not included in these totals.

As of August 31, 2023, we had 11 collective bargaining agreements with unions covering approximately 8% of our employees in the United States, with collective bargaining agreements expiring on various dates through August 31, 2026.

We believe that our relations with our employees are strong.

As of August 31, 2024, we had 11 collective bargaining agreements with unions covering approximately 8% of our employees in the United States and expiring on various dates through May 31, 2027.

We believe our relations with our employees are strong.

We value our employees and believe that employee passion for our work and employee engagement are key elements of our operating performance.

Diversity and inclusion .

Inclusion and diversity .

The CHS value of inclusion compels us to create a work environment where excellence and growth stem from diverse thinking.

Our goal is to foster a workplace where diverse thinking, voices and backgrounds yield better employee experiences, business performance and business outcomes.

In addition to working on modeling inclusive behaviors that positively impact our communities, with the assistance of external experts, we developed and launched an enterprisewide three-year strategic plan in fiscal 2021 to improve inclusion and diversity at CHS.

We sponsor and support employee resource groups made up of individuals who join together as allies and advocates to promote diversity and inclusion, while providing our employees across the country the opportunity to strengthen relationships, learn through educational and networking opportunities that focus on development, help local communities and engage with people across CHS.

In addition to working on modeling inclusive behaviors that positively impact our workplace and communities, we follow our enterprisewide strategic plan to improve inclusion and diversity at CHS.

We sponsor and support employee resource groups made up of individuals who join together to promote inclusion and diversity, while providing our employees opportunities to strengthen relationships, learn through educational and networking opportunities that focus on development, help local communities and engage with others across CHS.

These employee resource groups include Harvest Pride, which promotes a safe, connected and empowered LGBTQA+ community across CHS;

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We are committed to investing in our employees to help them build knowledge, develop skills and achieve their career goals.

In addition to regular performance evaluations and annual development plans that provide employees with feedback and growth opportunities, employees at CHS have access to a variety of learning tools and other opportunities for growth.

These tools and opportunities include access to on-demand learning modules;

internal and external trainings that cover continuous improvement, public speaking, finance and accounting topics and other subjects;

In addition to regular performance evaluations and annual development plans that provide employees with feedback and growth opportunities, employees at CHS have access to learning tools, programs and other opportunities for growth.

These include access to on-demand learning modules;

internal and external training programs that cover topics such as continuous improvement, public speaking, professional sales skills and change management;

participation in a mentoring program and development coaching;

tuition and professional certification reimbursement;

as well as other opportunities focused on developing the future leaders of CHS.

as well as other opportunities focused on developing current and future leaders of CHS.

Health and safety .

Safety is one of our core values.

At CHS, safety is about more than just following the rules, it is about doing things the right way and remembering that no job is so critical that it warrants safety risks.

In addition to defined safety programs designed specifically for individual facilities with operational hazards related to grain, feed, seed, agronomy, petroleum, warehouses and retail operations, we also provide certain employee groups with additional training opportunities such as a defensive driving program.

At CHS, safety is about more than just following the rules;

it is about doing things the right way and remembering that no job is so critical that it warrants safety risks.

In addition to safety programs designed specifically for individual facilities with operational hazards related to grain, feed, seed, agronomy, petroleum, warehouses and retail operations, we also provide certain employee groups with additional training opportunities such as a defensive driving program.

Beyond developing defined safety programs and training opportunities, we monitor our incident rates in comparison to previous years and industry averages, as published by the Bureau of Labor Statistics.

During fiscal 2024 , our Occupational Safety and Health Administration ("OSHA") incident rate was 2.7 incidents per 100 full-time workers, as compared to an average of 2.9 incidents per 100 full-time workers during the three previous years, a reduction of 8%.

Additionally, our lost-time injury rate was 0.9 incidents per 100 full-time workers, a 20% reduction over our three-year average, and our DOT crash rate remained in the top 5% (most favorable) of all carriers in our industry segment for the third consecutive year.

Additionally, our lost-time injury rate was 0.9 incidents per 100 full-time workers, which matches our three-year average, and our DOT crash rate remained in the top 10% (most favorable) of all carriers in our industry segment for the third consecutive year.

Community involvement .

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In addition to our charitable foundation and annual giving campaign, which provide financial support to our communities, eligible employees also receive paid time off to make a difference in our communities through volunteer activities.

During fiscal 2023, our charitable foundation gave approximately $6.7 million in charitable donations.

During fiscal 2024 , we gave approximately $7.3 million in charitable donations through our charitable foundation and corporate giving activities.

Compensation and benefits .

We have designed our compensation and benefits programs to attract and retain qualified employees and to motivate employees to optimize member-owner returns and to achieve our short- and long-term strategies.

addition to offering competitive compensation that includes annual variable pay linked to company and individual employee performance, we also offer a wide array of benefits programs that include health insurance and wellness benefits;

In addition to offering competitive compensation that includes annual variable pay linked to company and individual employee performance, we also offer a wide array of benefits programs that include health insurance and wellness benefits;

retirement benefits, including a company-matched 401(k) contribution and a pension for qualifying employees;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business