CHS Inc. 8% Cumulative Redeemable Prefe (CHSCP, Financial) filed Quarterly Report for the period ended 2009-02-28.
CHS Inc. is a diversified energy grains and food company committed to providing the essential resources that enrich lives around the world. A Fortune 200 company CHS is owned by farmers ranchers and cooperatives along with thousands of preferred stockholders from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. CHS supplies energy crop nutrients livestock feed grain food and food ingredients along with business solutions including insurance financial and risk management services. CHS Inc. 8% Cumulative Redeemable Prefe has a market cap of $230 million; its shares were traded at around $25.43 . The dividend yield of CHS Inc. 8% Cumulative Redeemable Prefe stocks is 7.9%.
Our Ag Business segment revenues, after elimination of intersegment revenues, of $3.4 billion, decreased $854.4 million (20%) during the three months ended February 28, 2009 compared to the three months ended February 29, 2008. Grain revenues in our Ag Business segment totaled $2.8 billion and $3.6 billion during the three months ended February 28, 2009 and February 29, 2008, respectively. Of the grain revenues decrease of $782.2 million (22%), $517.8 million is due to decreased average grain selling prices and $264.4 million is attributable to decreased volumes during the three months ended February 28, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $1.27 per bushel (16%) over the same three-month period in fiscal 2008. The 2008 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as good. The average month-end market price per bushel of spring wheat, soybeans and corn decreased $7.67, $3.90 and $1.22, respectively. Volumes decreased 7% during the three months ended February 28, 2009 compared with the same period of a year ago. Wheat and barley reflected the largest volume decreases, partially offset by increased volumes in soybeans, compared to the three months ended February 29, 2008.
Our Processing segment revenues, after elimination of intersegment revenues, of $269.9 million decreased $20.1 million (7%) during the three months ended February 28, 2009 compared to the three months ended February 29, 2008. Because our wheat milling and packaged foods operations are operated through non-consolidated joint ventures, revenues reported in our Processing segment are entirely from our oilseed processing operations. Oilseed processing revenues decreased $25.2 million (16%), of which $19.7 million was due to a 12% decrease in sales volume and $5.5 was related to lower average sales prices. Oilseed refining revenues increased $1.1 million (1%), of which $5.5 million was due to higher average sales prices, partially offset by a $4.4 million or a 4% net decrease in sales volume. The average selling price of processed oilseed decreased $11 per ton (4%) and the average selling price of refined oilseed products increased $.02 per pound (5%) compared to the same three-month period of fiscal 2008. The changes in the average selling price of products are primarily driven by the average lower price of soybeans.
Interest, net. Net interest of $13.8 million for the three months ended February 28, 2009 decreased $4.3 million (24%) compared to the same period last fiscal year. Interest expense for the three months ended February 28, 2009 and February 29, 2008 was $18.7 million and $22.1 million, respectively. Interest income, generated primarily from marketable securities, was $4.9 million and $4.0 million, for the three months ended February 28, 2009 and February 29, 2008, respectively. The interest expense decrease of $3.4 million (15%) was in spite of an increase in interest expense of $2.2 million as the result of the consolidation of Cofina Financial and an increase in interest expense of $2.9 million due to less capitalized interest related to construction projects. Through August 31, 2008, we held a 49% ownership interest in Cofina Financial and accounted for our investment using the equity method of accounting. On September 1, 2008, we purchased Cenex Finance Associations 51% ownership interest. These increases were more than offset by decreases in the average short-term borrowings for loans, excluding those of Cofina Financial. For the three months ended February 28, 2009 and February 29, 2008, we capitalized interest of $1.3 million and $4.2 million, respectively, primarily related to construction projects in our Energy segment. The average level of short-term borrowings decreased $620.3 million during the three months ended February 28, 2009, compared to the same three-month period in fiscal 2008. This dramatic reduction in short-term borrowings was the result of the lower commodity prices, which reduced working capital needs. The net increase in interest income of $0.9 million (22%) was primarily within Corporate and Other and relates to marketable securities.
Our Ag Business segment generated income before income taxes of $32.7 million for the six months ended February 28, 2009 compared to $324.7 million in the six months ended February 29, 2008, a decrease in earnings of $292.0 million (90%). In our first fiscal quarter of 2008, we sold all of our 1,610,396 shares of CF Industries Holdings stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. Earnings from our wholesale crop nutrients business decreased $94.4 million. The market prices for crop nutrients products fell significantly during our first half of fiscal 2009, and due to a wet fall season, we had a higher quantity of inventories on hand at the end of our first quarter than is typical at that time of year. In order to reflect our wholesale crop nutrients inventories at net-realizable values, we made a lower-of-cost or market adjustment in this business of $56.8 million in November, 2008, of which $18.1 million is remaining at the end of the second quarter of fiscal 2009. A gain on the sale of a Canadian agronomy equity investment along with improved performance by Agriliance, an agronomy joint venture in which we hold a 50% interest, resulted in a $4.7 million increase in earnings from these investments, net of allocated internal expenses. Our grain marketing earnings decreased by $93.8 million during the six months ended February 28, 2009 compared with the same six-month period in fiscal 2008, primarily from net decreased grain product margins and reduced earnings from our joint ventures. Volatility in the grain markets created exceptional opportunities for grain margins during the first half of fiscal 2008. Our country operations earnings decreased $16.8 million, primarily as a result of reduced grain volumes and decreased crop nutrient margins.
Our Energy segment revenues, after elimination of intersegment revenues, of $4.0 billion decreased by $816.3 million (17%) during the six months ended February 28, 2009 compared to the six months ended February 29, 2008. During the six months ended February 28, 2009 and February 29, 2008, our Energy segment recorded revenues from our Ag Business segment of $141.6 million and $149.3 million, respectively. The net decrease in revenues of $816.3 million is comprised of a net decrease of $836.6 million related to lower prices on refined fuels, propane and renewable fuels marketing products, partially offset by $20.3 million related to a net increase in sales volume. Refined fuels revenues decreased $604.2 million (19%), of which $707.7 million was related to a net average selling price decrease, partially offset by $103.5 million, which was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels decreased $0.53 per gallon (21%), while volumes increased 3% when comparing the six months ended February 28, 2009 with the same period a year ago. Renewable fuels marketing revenues decreased $229.0 million (46%), mostly from a 43% decrease in volumes and a decrease of $0.12 (6%) per gallon, when compared with the same six-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues increased $89.7 million (18%), of which $110.6 million related to an increase in volumes, partially offset by $20.9 million due to a decrease in the net average selling price, when compared to the same period in the previous year. Propane sales volume increased 22%, while the average selling price of propane decreased $0.05 per gallon (3%) in comparison to the same period of the prior year. The increase in propane volumes primarily reflects increased demand caused by an earlier home heating and improved crop drying season.
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CHS Inc. is a diversified energy grains and food company committed to providing the essential resources that enrich lives around the world. A Fortune 200 company CHS is owned by farmers ranchers and cooperatives along with thousands of preferred stockholders from the Great Lakes to the Pacific Northwest and from the Canadian border to Texas. CHS supplies energy crop nutrients livestock feed grain food and food ingredients along with business solutions including insurance financial and risk management services. CHS Inc. 8% Cumulative Redeemable Prefe has a market cap of $230 million; its shares were traded at around $25.43 . The dividend yield of CHS Inc. 8% Cumulative Redeemable Prefe stocks is 7.9%.
Highlight of Business Operations:
Our Energy segment revenues, after elimination of intersegment revenues, of $1.5 billion decreased by $839.1 million (36%) during the three months ended February 28, 2009 compared to the three months ended February 29, 2008. During the three months ended February 28, 2009 and February 29, 2008, our Energy segment recorded revenues from our Ag Business segment of $57.6 million and $71.4 million, respectively. The net decrease in revenues of $839.1 million is comprised of a decrease of $883.9 million related to a reduction in prices on refined fuels, propane and renewable fuels marketing products and was partially offset by $44.8 million related to a net increase in sales volume. Refined fuels revenues decreased $597.7 million (41%), of which $708.9 million was related to a net average selling price decrease, partially offset by $111.2 million due to increased volumes, compared to the same period in the previous year. The average selling price of refined fuels decreased $1.15 per gallon (45%),Our Ag Business segment revenues, after elimination of intersegment revenues, of $3.4 billion, decreased $854.4 million (20%) during the three months ended February 28, 2009 compared to the three months ended February 29, 2008. Grain revenues in our Ag Business segment totaled $2.8 billion and $3.6 billion during the three months ended February 28, 2009 and February 29, 2008, respectively. Of the grain revenues decrease of $782.2 million (22%), $517.8 million is due to decreased average grain selling prices and $264.4 million is attributable to decreased volumes during the three months ended February 28, 2009 compared to the same period last fiscal year. The average sales price of all grain and oilseed commodities sold reflected a decrease of $1.27 per bushel (16%) over the same three-month period in fiscal 2008. The 2008 fall harvest produced good yields throughout most of the United States, with the quality of most grains rated as good. The average month-end market price per bushel of spring wheat, soybeans and corn decreased $7.67, $3.90 and $1.22, respectively. Volumes decreased 7% during the three months ended February 28, 2009 compared with the same period of a year ago. Wheat and barley reflected the largest volume decreases, partially offset by increased volumes in soybeans, compared to the three months ended February 29, 2008.
Our Processing segment revenues, after elimination of intersegment revenues, of $269.9 million decreased $20.1 million (7%) during the three months ended February 28, 2009 compared to the three months ended February 29, 2008. Because our wheat milling and packaged foods operations are operated through non-consolidated joint ventures, revenues reported in our Processing segment are entirely from our oilseed processing operations. Oilseed processing revenues decreased $25.2 million (16%), of which $19.7 million was due to a 12% decrease in sales volume and $5.5 was related to lower average sales prices. Oilseed refining revenues increased $1.1 million (1%), of which $5.5 million was due to higher average sales prices, partially offset by a $4.4 million or a 4% net decrease in sales volume. The average selling price of processed oilseed decreased $11 per ton (4%) and the average selling price of refined oilseed products increased $.02 per pound (5%) compared to the same three-month period of fiscal 2008. The changes in the average selling price of products are primarily driven by the average lower price of soybeans.
Interest, net. Net interest of $13.8 million for the three months ended February 28, 2009 decreased $4.3 million (24%) compared to the same period last fiscal year. Interest expense for the three months ended February 28, 2009 and February 29, 2008 was $18.7 million and $22.1 million, respectively. Interest income, generated primarily from marketable securities, was $4.9 million and $4.0 million, for the three months ended February 28, 2009 and February 29, 2008, respectively. The interest expense decrease of $3.4 million (15%) was in spite of an increase in interest expense of $2.2 million as the result of the consolidation of Cofina Financial and an increase in interest expense of $2.9 million due to less capitalized interest related to construction projects. Through August 31, 2008, we held a 49% ownership interest in Cofina Financial and accounted for our investment using the equity method of accounting. On September 1, 2008, we purchased Cenex Finance Associations 51% ownership interest. These increases were more than offset by decreases in the average short-term borrowings for loans, excluding those of Cofina Financial. For the three months ended February 28, 2009 and February 29, 2008, we capitalized interest of $1.3 million and $4.2 million, respectively, primarily related to construction projects in our Energy segment. The average level of short-term borrowings decreased $620.3 million during the three months ended February 28, 2009, compared to the same three-month period in fiscal 2008. This dramatic reduction in short-term borrowings was the result of the lower commodity prices, which reduced working capital needs. The net increase in interest income of $0.9 million (22%) was primarily within Corporate and Other and relates to marketable securities.
Our Ag Business segment generated income before income taxes of $32.7 million for the six months ended February 28, 2009 compared to $324.7 million in the six months ended February 29, 2008, a decrease in earnings of $292.0 million (90%). In our first fiscal quarter of 2008, we sold all of our 1,610,396 shares of CF Industries Holdings stock for proceeds of $108.3 million and recorded a pretax gain of $91.7 million. Earnings from our wholesale crop nutrients business decreased $94.4 million. The market prices for crop nutrients products fell significantly during our first half of fiscal 2009, and due to a wet fall season, we had a higher quantity of inventories on hand at the end of our first quarter than is typical at that time of year. In order to reflect our wholesale crop nutrients inventories at net-realizable values, we made a lower-of-cost or market adjustment in this business of $56.8 million in November, 2008, of which $18.1 million is remaining at the end of the second quarter of fiscal 2009. A gain on the sale of a Canadian agronomy equity investment along with improved performance by Agriliance, an agronomy joint venture in which we hold a 50% interest, resulted in a $4.7 million increase in earnings from these investments, net of allocated internal expenses. Our grain marketing earnings decreased by $93.8 million during the six months ended February 28, 2009 compared with the same six-month period in fiscal 2008, primarily from net decreased grain product margins and reduced earnings from our joint ventures. Volatility in the grain markets created exceptional opportunities for grain margins during the first half of fiscal 2008. Our country operations earnings decreased $16.8 million, primarily as a result of reduced grain volumes and decreased crop nutrient margins.
Our Energy segment revenues, after elimination of intersegment revenues, of $4.0 billion decreased by $816.3 million (17%) during the six months ended February 28, 2009 compared to the six months ended February 29, 2008. During the six months ended February 28, 2009 and February 29, 2008, our Energy segment recorded revenues from our Ag Business segment of $141.6 million and $149.3 million, respectively. The net decrease in revenues of $816.3 million is comprised of a net decrease of $836.6 million related to lower prices on refined fuels, propane and renewable fuels marketing products, partially offset by $20.3 million related to a net increase in sales volume. Refined fuels revenues decreased $604.2 million (19%), of which $707.7 million was related to a net average selling price decrease, partially offset by $103.5 million, which was attributable to increased volumes, compared to the same period in the previous year. The sales price of refined fuels decreased $0.53 per gallon (21%), while volumes increased 3% when comparing the six months ended February 28, 2009 with the same period a year ago. Renewable fuels marketing revenues decreased $229.0 million (46%), mostly from a 43% decrease in volumes and a decrease of $0.12 (6%) per gallon, when compared with the same six-month period in the previous year. The decrease in renewable fuels marketing volumes was primarily attributable to the loss of two customers. Propane revenues increased $89.7 million (18%), of which $110.6 million related to an increase in volumes, partially offset by $20.9 million due to a decrease in the net average selling price, when compared to the same period in the previous year. Propane sales volume increased 22%, while the average selling price of propane decreased $0.05 per gallon (3%) in comparison to the same period of the prior year. The increase in propane volumes primarily reflects increased demand caused by an earlier home heating and improved crop drying season.
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