CHS putting Future First for its Cooperative Owners

09 Dec 2013 --- CHS Inc., the nation's leading cooperative and a global energy, grains and foods company, is committed to continued growth that will drive economic value to its farmer owners and the rural communities in which they live, its leaders told attendees at its recent annual meeting.

"Our ultimate responsibility is to invent the CHS of the future by making the decisions, executing the investments and managing the financial health of this company in a manner that not only adds value for you today, but continues to pay off 10 and 20 years down the road," CHS President and Chief Executive Officer Carl Casale told attendees. "Ultimately, it's about taking actions today that will benefit tomorrow's owner, the generations that are now playing in farm yards or buying their first blue FFA jackets."

The CHS Annual Meeting, held Dec. 5-6 at the Minneapolis Convention Center, drew nearly 2,000 of the cooperative's owners and other stakeholders. Included in the event was a special New Leaders Forum which drew nearly 175 promising young farmers and ranchers from across the U.S. for an exploration of issues facing agriculture and rural America.

In recent years, CHS has completed or committed to $4 billion in acquisitions, expansions and upgrades in its energy, grains, and processing and food ingredients businesses with a goal of adding long-term value for its farmer and cooperative owners, as well as customers worldwide. Casale said as CHS pursues its growth strategy, commitment to safety will be the company's overriding priority.

CHS Board Chairman David Bielenberg, a Silverton, Ore., farmer, said the board of directors' primary goal is ensure the cooperative is appropriately capitalized to add value for its owners. In addition, he said, the 17-member farmer board must continue to expand its knowledge and ability to lead what is now one of the world's major agribusinesses, as well as one of the largest companies owned by farmers.

"And closest to home we must drive the CHS commitment to agriculture and a vibrant rural America, especially for the next generations of farmers and ranchers who will be our owners and customers," Bielenberg said.

Chief Financial Officer Tim Skidmore, who joined CHS in August 2013, told the company's owners that his priority is to maintain the strong balance sheet, the financial flexibility and the liquidity that ensures that CHS has access to the capital it needs to fuel growth.

"Continuing to generate strong earnings as we have in recent years certainly helps, but we are in volatile commodity businesses and our strategic direction includes significant growth," he said. "That means we must optimize our capital structure to manage both costs and the duration on our balance sheet of both assets and capitalization."

In November, CHS reported its second-best earnings on record at $992.4 million for fiscal 2013 (Sept. 1, 2013 – Aug. 31, 2013), down from a record $1.26 for fiscal 2012. Earnings reached a record $44.5 billion. At number 69 in 2013, CHS is the only cooperative in the 2013 Fortune 100. Based on its fiscal 2013 earnings, CHS will return an estimated $433 million in cash to owners in fiscal 2014.

Highlights for fiscal 2013 included

• A $327 million expansion project which will increase production capacity at its McPherson, Kan., refinery by 18 percent to 100,000 barrels per day
• Acquisition and construction of $18 million in propane terminals and storage to enhance dependable supply
• Continued front-end engineering and design studies toward possible construction of a $1.5 billion nitrogen fertilizer plant at Spirit wood, N.D.
• Global commodities expansion including new offices in Uruguay and Taiwan, an Australian wheat origination joint venture, a partnership in an Argentina sunflower processing plant now under construction, and a major upgrade and expansion of a joint venture grain export terminal at Kalama, Wash.
• Continued investment in soy processing and food ingredients including storage capacity, quality assurance and safety
• Investments in domestic crop nutrients supply and distribution and grain origination, many in conjunction with member cooperatives and locally-controlled CHS Country Operations retail facilities