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Table of Contents

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, 2023
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 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 ☐ Accelerated filer ☐ 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, 2023, and August 31, 2022 | 2
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended May 31, 2023 and 2022 | 3
| Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended May 31, 2023 and 2022 | 4
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 2023 and 2022 | 5
| Notes to Condensed Consolidated Financial Statements | 6
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 22
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 45
Item 4. | Controls and Procedures | 46
| PART II. OTHER INFORMATION | 46
Item 1. | Legal Proceedings | 46
Item 1A. | Risk Factors | 46
Item 5. | Other Information | 46
Item 6. | Exhibits | 47
Signatures | 48

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, 2023.
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 fiscal year ended August 31, 2022, in the Quarterly Report on Form 10-Q for the Quarter ended February 28, 2023, and in this Quarterly Report on Form 10-Q. These factors may 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 ongoing war between Russia and Ukraine; the impact of inflation; the impact of epidemics, pandemics, outbreaks of disease and other adverse public health developments, including COVID-19; 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 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, casualty losses and supply chain issues; the impact of workforce factors; our funding needs and financing sources; financial institutions' and other capital sources' policies concerning energy-related businesses; uncertainty regarding the transition away from LIBOR and the replacement of 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 events; security breaches or other disruptions to our information technology systems or assets; the impact of our environmental, social and governance practices, including failures or delays in achieving our strategies or expectations related to climate change or other environmental matters; the impairment of long-lived assets; the impact of bank failures; 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 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.
1

Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 997,323 |  |  | $ | 793,957 |
Receivables | 3,839,097 |  |  | 3,548,315 |
Inventories | 3,280,822 |  |  | 3,652,871 |
Other current assets | 1,269,049 |  |  | 1,382,704 |
Total current assets | 9,386,291 |  |  | 9,377,847 |
Investments | 3,905,734 |  |  | 3,728,006 |
Property, plant and equipment | 4,757,169 |  |  | 4,744,959 |
Other assets | 1,145,257 |  |  | 973,995 |
Total assets | $ | 19,194,451 |  |  | $ | 18,824,807 |
LIABILITIES AND EQUITIES |  |  |
Current liabilities: |  |  |
Notes payable | $ | 605,955 |  |  | $ | 606,719 |
Current portion of long-term debt | 137,402 |  |  | 290,605 |
Accounts payable | 3,145,954 |  |  | 3,063,310 |
Accrued expenses | 863,298 |  |  | 784,317 |
Other current liabilities | 1,868,361 |  |  | 2,207,018 |
Total current liabilities | 6,620,970 |  |  | 6,951,969 |
Long-term debt | 1,814,854 |  |  | 1,668,209 |
Other liabilities | 675,249 |  |  | 743,363 |
Commitments and contingencies (Note 13) |  |  |
Equities: |  |  |
Preferred stock | 2,264,038 |  |  | 2,264,038 |
Equity certificates | 4,965,745 |  |  | 5,391,236 |
Accumulated other comprehensive loss | (260,271) |  |  | (255,335) |
Capital reserves | 3,108,946 |  |  | 2,055,682 |
Total CHS Inc. equities | 10,078,458 |  |  | 9,455,621 |
Noncontrolling interests | 4,920 |  |  | 5,645 |
Total equities | 10,083,378 |  |  | 9,461,266 |
Total liabilities and equities | $ | 19,194,451 |  |  | $ | 18,824,807 |

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
2

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CHS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

| Three Months Ended May 31, |  | Nine Months Ended May 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (Dollars in thousands)
Revenues | $ | 12,026,051 |  |  | $ | 13,137,724 |  |  | $ | 36,098,738 |  |  | $ | 34,351,069 |
Cost of goods sold | 11,351,711 |  |  | 12,493,467 |  |  | 34,160,996 |  |  | 32,917,906 |
Gross profit | 674,340 |  |  | 644,257 |  |  | 1,937,742 |  |  | 1,433,163 |
Marketing, general and administrative expenses | 273,238 |  |  | 243,136 |  |  | 749,829 |  |  | 692,395 |
Operating earnings | 401,102 |  |  | 401,121 |  |  | 1,187,913 |  |  | 740,768 |
Interest expense | 36,949 |  |  | 32,099 |  |  | 106,166 |  |  | 80,705 |
Other income | (31,027) |  |  | (6,636) |  |  | (83,629) |  |  | (31,817) |
Equity income from investments | (162,940) |  |  | (263,079) |  |  | (523,236) |  |  | (644,347) |
Income before income taxes | 558,120 |  |  | 638,737 |  |  | 1,688,612 |  |  | 1,336,227 |
Income tax expense | 10,777 |  |  | 62,492 |  |  | 66,305 |  |  | 89,143 |
Net income | 547,343 |  |  | 576,245 |  |  | 1,622,307 |  |  | 1,247,084 |
Net loss attributable to noncontrolling interests | (156) |  |  | (329) |  |  | (111) |  |  | (451) |
Net income attributable to CHS Inc. | $ | 547,499 |  |  | $ | 576,574 |  |  | $ | 1,622,418 |  |  | $ | 1,247,535 |

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
3

Table of Contents
CHS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

| Three Months Ended May 31, |  | Nine Months Ended May 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
| (Dollars in thousands)
Net income | $ | 547,343 |  |  | $ | 576,245 |  |  | $ | 1,622,307 |  |  | $ | 1,247,084 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Pension and other postretirement benefits | 130 |  |  | 4,485 |  |  | 4,681 |  |  | 12,834 |
Cash flow hedges | (2,531) |  |  | (25,257) |  |  | (7,595) |  |  | (34,951) |
Foreign currency translation adjustment | (707) |  |  | 2,551 |  |  | (2,022) |  |  | (1,568) |
Other comprehensive loss, net of tax | (3,108) |  |  | (18,221) |  |  | (4,936) |  |  | (23,685) |
Comprehensive income | 544,235 |  |  | 558,024 |  |  | 1,617,371 |  |  | 1,223,399 |
Comprehensive loss attributable to noncontrolling interests | (156) |  |  | (329) |  |  | (111) |  |  | (451) |
Comprehensive income attributable to CHS Inc. | $ | 544,391 |  |  | $ | 558,353 |  |  | $ | 1,617,482 |  |  | $ | 1,223,850 |

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
4

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CHS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

| Nine Months Ended May 31,
| 2023 |  | 2022
| (Dollars in thousands)
Cash flows from operating activities: |  |  |
Net income | $ | 1,622,307 |  |  | $ | 1,247,084 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
Depreciation and amortization, including amortization of deferred major maintenance | 400,474 |  |  | 399,562 |
Equity income from investments, net of distributions received | (167,940) |  |  | (345,846) |
Provision for current expected credit losses | (10,592) |  |  | 18,641 |
Deferred taxes | (65,839) |  |  | (51,522) |
Other, net | (3,853) |  |  | (6,643) |
Changes in operating assets and liabilities: |  |  |
Receivables | (206,328) |  |  | (1,074,111) |
Inventories | 372,049 |  |  | (1,117,020) |
Accounts payable and accrued expenses | 214,410 |  |  | 967,603 |
Other, net | (184,963) |  |  | (44,886) |
Net cash provided by (used in) operating activities | 1,969,725 |  |  | (7,138) |
Cash flows from investing activities: |  |  |
Acquisition of property, plant and equipment | (374,230) |  |  | (207,455) |
Proceeds from disposition of property, plant and equipment | 22,823 |  |  | 8,127 |
Expenditures for major maintenance | (184,435) |  |  | (18,072) |
Proceeds from sale of business | 64 |  |  | 73,152 |
Changes in CHS Capital notes receivable, net | (120,657) |  |  | (200,380) |
Financing extended to customers | (138,407) |  |  | (47,235) |
Payments from customer financing | 152,323 |  |  | 53,442 |
Other investing activities, net | (8,569) |  |  | (1,467) |
Net cash used in investing activities | (651,088) |  |  | (339,888) |
Cash flows from financing activities: |  |  |
Proceeds from notes payable and long-term debt | 6,124,177 |  |  | 19,077,600 |
Payments on notes payable, long-term debt and finance lease obligations | (6,104,543) |  |  | (18,401,162) |
Preferred stock dividends paid | (126,501) |  |  | (126,501) |
Redemptions of equities | (480,435) |  |  | (99,229) |
Cash patronage dividends paid | (502,938) |  |  | (51,026) |
Other financing activities, net | (56,924) |  |  | (43,736) |
Net cash (used in) provided by financing activities | (1,147,164) |  |  | 355,946 |
Effect of exchange rate changes on cash and cash equivalents | (16) |  |  | (11,311) |
Increase (decrease) in cash and cash equivalents and restricted cash | 171,457 |  |  | (2,391) |
Cash and cash equivalents and restricted cash at beginning of period | 903,474 |  |  | 542,484 |
Cash and cash equivalents and restricted cash at end of period | $ | 1,074,931 |  |  | $ | 540,093 |

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited).
5

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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, 2022, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC").
Significant Accounting Policies
No significant accounting policies were updated or changed since our Annual Report on Form 10-K for the year ended August 31, 2022.
Recent Accounting Pronouncements
No recent accounting pronouncements are expected to have a material impact on our condensed consolidated financial statements.
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, 2023 and 2022. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 470, Debt, and ASC Topic 842, Leases, that fall outside the scope of ASC Topic 606.

|  | ASC Topic 606 |  | ASC Topic 815 |  | Other Guidance |  | Total Revenues
Three Months Ended May 31, 2023 |  | (Dollars in thousands)
Energy |  | $ | 1,980,243 |  |  | $ | 283,844 |  |  | $ | — |  |  | $ | 2,264,087 |
Ag |  | 3,295,312 |  |  | 6,444,559 |  |  | 4,105 |  |  | 9,743,976 |
Corporate and Other |  | 6,388 |  |  | — |  |  | 11,600 |  |  | 17,988 |
Total revenues |  | $ | 5,281,943 |  |  | $ | 6,728,403 |  |  | $ | 15,705 |  |  | $ | 12,026,051 |
Three Months Ended May 31, 2022 |  |  |  |  |  |  |  |
Energy |  | $ | 2,529,311 |  |  | $ | 246,631 |  |  | $ | — |  |  | $ | 2,775,942 |
Ag |  | 3,460,390 |  |  | 6,883,785 |  |  | 8,194 |  |  | 10,352,369 |
Corporate and Other |  | 4,205 |  |  | — |  |  | 5,208 |  |  | 9,413 |
Total revenues |  | $ | 5,993,906 |  |  | $ | 7,130,416 |  |  | $ | 13,402 |  |  | $ | 13,137,724 |

6

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|  | ASC Topic 606 |  | ASC Topic 815 |  | Other Guidance |  | Total Revenues
Nine Months Ended May 31, 2023 |  | (Dollars in thousands)
Energy |  | $ | 6,775,463 |  |  | $ | 776,831 |  |  | $ | — |  |  | $ | 7,552,294 |
Ag |  | 7,757,867 |  |  | 20,724,153 |  |  | 15,670 |  |  | 28,497,690 |
Corporate and Other |  | 18,874 |  |  | — |  |  | 29,880 |  |  | 48,754 |
Total revenues |  | $ | 14,552,204 |  |  | $ | 21,500,984 |  |  | $ | 45,550 |  |  | $ | 36,098,738 |
Nine Months Ended May 31, 2022 |  |  |  |  |  |  |  |
Energy |  | $ | 6,426,092 |  |  | $ | 681,836 |  |  | $ | — |  |  | $ | 7,107,928 |
Ag |  | 8,056,676 |  |  | 19,139,417 |  |  | 21,466 |  |  | 27,217,559 |
Corporate and Other |  | 11,785 |  |  | — |  |  | 13,797 |  |  | 25,582 |
Total revenues |  | $ | 14,494,553 |  |  | $ | 19,821,253 |  |  | $ | 35,263 |  |  | $ | 34,351,069 |

Less than 1% of revenues accounted for under ASC Topic 606 included within the tables above are recorded over time and relate primarily 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 where the right to payment is not conditional on the passage of time. This results in recognition of an asset, as the amount of revenue recognized at a certain point in time exceeds the amount billed to customers. Contract assets are recorded in receivables within our Condensed Consolidated Balance Sheets and were $51.7 million and $17.2 million as of May 31, 2023, and August 31, 2022, respectively.
Contract liabilities relate to advance payments received from customers for goods and services that we have yet to provide. Contract liabilities of $318.0 million and $541.5 million as of May 31, 2023, and August 31, 2022, respectively, are recorded within other current liabilities on our Condensed Consolidated Balance Sheets. For the three months ended May 31, 2023 and 2022, we recognized revenues of $93.1 million and $48.1 million related to contract liabilities, respectively. For the nine months ended May 31, 2023 and 2022, we recognized revenues of $285.3 million and $213.9 million related to contract liabilities, respectively. These amounts were included in the other current liabilities balance at the beginning of the respective period.
Note 3 Receivables

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Trade accounts receivable | $ | 2,842,749 |  |  | $ | 2,626,623 |
CHS Capital short-term notes receivable | 724,334 |  |  | 644,875 |
Other | 376,571 |  |  | 404,734 |
Gross receivables | 3,943,654 |  |  | 3,676,232 |
Less: allowances and reserves | 104,557 |  |  | 127,917 |
Total receivables | $ | 3,839,097 |  |  | $ | 3,548,315 |

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 certain regional cooperatives' capital stock. These loans are primarily originated in the states of Minnesota, Montana and North Dakota. CHS Capital also has loans receivable from producer borrowers that are collateralized by various combinations of growing crops, livestock, inventories, accounts
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receivable, personal property and supplemental mortgages and are primarily originated in the same states as the commercial notes, as well as in South Dakota.
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 $65.6 million and $54.3 million as of May 31, 2023, and August 31, 2022, respectively. The long-term notes receivable are included in other assets on our Condensed Consolidated Balance Sheets. As of May 31, 2023, and August 31, 2022, commercial notes represented 33% and 25%, respectively, and producer notes represented 67% and 75%, respectively, of total CHS Capital notes receivable.
CHS Capital has commitments to extend credit to customers if there are no violations of any contractually established conditions. As of May 31, 2023, CHS Capital customers had additional available credit of $1.2 billion. 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, 2023, or August 31, 2022.
Note 4 Inventories

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Grain and oilseed | $ | 1,011,947 |  |  | $ | 1,133,531 |
Energy | 673,584 |  |  | 824,114 |
Agronomy | 1,096,250 |  |  | 1,295,548 |
Processed grain and oilseed | 292,254 |  |  | 292,992 |
Other | 206,787 |  |  | 106,686 |
Total inventories | $ | 3,280,822 |  |  | $ | 3,652,871 |

As of May 31, 2023, and August 31, 2022, we valued approximately 17% and 14%, respectively, of inventories, primarily crude oil and refined fuels within our Energy segment, using the lower of cost, determined on the last in, first out ("LIFO") method, or net realizable value. If the first in, first out ("FIFO") method of accounting had been used, inventories would have been higher than the reported amount by $477.8 million and $678.3 million as of May 31, 2023, and August 31, 2022, 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.
Note 5 Investments

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Equity method investments: |  |  |
CF Industries Nitrogen, LLC | $ | 2,717,704 |  |  | $ | 2,641,604 |
Ventura Foods, LLC | 459,906 |  |  | 410,093 |
Ardent Mills, LLC | 258,539 |  |  | 250,857 |
TEMCO, LLC | 47,377 |  |  | 32,809 |
Other equity method investments | 286,810 |  |  | 265,913 |
Other investments | 135,398 |  |  | 126,730 |
Total investments | $ | 3,905,734 |  |  | $ | 3,728,006 |

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 only significant equity method investment during the nine months ended May 31, 2023 and 2022, was CF Industries Nitrogen, LLC ("CF Nitrogen"), which is summarized below. In addition to 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 recorded at cost, unless an impairment or other observable market price change occurs requiring an adjustment. We have approximately $756.7 million in cumulative undistributed earnings from our equity method investees included in the investments balance as of May 31, 2023.
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CF Nitrogen
We have a $2.7 billion investment in CF Nitrogen, a strategic venture with CF Industries Holdings, Inc. ("CF Industries"). The investment consists of an approximate 8% 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 CF Nitrogen's Limited Liability Company Agreement, adjusted for semiannual cash distributions.
The following table provides summarized unaudited financial information for our equity method investment in CF Nitrogen for the nine months ended May 31, 2023 and 2022:

| Nine Months Ended May 31,
| 2023 |  | 2022
| (Dollars in thousands)
Net sales | $ | 4,200,120 |  |  | $ | 4,972,383 |
Gross profit | 1,898,265 |  |  | 2,682,653 |
Net earnings | 1,884,666 |  |  | 2,641,425 |
Earnings attributable to CHS Inc. | 330,855 |  |  | 497,289 |

Our investments in other equity method investees are not significant in relation to our condensed consolidated financial statements, either individually or in 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 all debt covenants as of May 31, 2023. Notes payable as of May 31, 2023, and August 31, 2022, consisted of the following:

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Notes payable | $ | 504,376 |  |  | $ | 459,398 |
CHS Capital notes payable | 101,579 |  |  | 147,321 |
Total notes payable | $ | 605,955 |  |  | $ | 606,719 |

On April 21, 2023, we amended and restated our primary line of credit, which is a five-year unsecured revolving credit facility with a syndicate of domestic and international banks. The credit facility provides a committed amount of $2.8 billion that expires on April 21, 2028. There were no borrowings outstanding on this facility as of May 31, 2023, or August 31, 2022. We also maintain certain uncommitted bilateral facilities to support our working capital needs.
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 secured financing. 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 $850.0 million and an uncommitted portion with a maximum availability of $250.0 million. As of May 31, 2023, total availability under the Securitization Facility was $1.0 billion, of which no amount was utilized.
We also have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can obtain repurchase agreement financing in an amount up to $150.0 million for subordinated notes 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. No balance was outstanding under the Repurchase Facility as of May 31, 2023, or August 31, 2022.
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On July 11, 2023, we amended the Securitization Facility and entered into an additional repurchase facility, under which we can obtain repurchase agreement financing up to $200.0 million for certain eligible receivables of the Originators. The amendments to the Securitization Facility were designed to remove from the securitization certain receivables and loans to permit them to be sold under the new repurchase facility.
On January 24, 2023, we entered into a Note Purchase Agreement to borrow $150.0 million of debt in the form of a note. The note matures on January 24, 2030, and interest accrues at a rate of 5.68%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow.
The following table presents summarized long-term debt (including the current portion) as of May 31, 2023, and August 31, 2022:

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Private placement debt | $ | 1,543,000 |  |  | $ | 1,545,000 |
Term loan | 366,000 |  |  | 366,000 |
Finance lease obligations | 43,476 |  |  | 44,773 |
Deferred financing costs | (3,259) |  |  | (3,535) |
Other | 3,039 |  |  | 6,576 |
Total long-term debt | 1,952,256 |  |  | 1,958,814 |
Less current portion | 137,402 |  |  | 290,605 |
Long-term portion | $ | 1,814,854 |  |  | $ | 1,668,209 |

Interest expense for the three months ended May 31, 2023 and 2022, was $36.9 million and $32.1 million, respectively, net of capitalized interest of $4.1 million and $0.9 million, respectively. Interest expense for the nine months ended May 31, 2023 and 2022, was $106.2 million and $80.7 million, respectively, net of capitalized interest of $9.8 million and $4.7 million, respectively.
Note 7 Income Taxes
Our effective tax rate for the three months ended May 31, 2023, was 1.9%, compared to 9.8% for the three months ended May 31, 2022. Our effective tax rate for the nine months ended May 31, 2023, was 3.9%, compared to 6.7% for the nine months ended May 31, 2022. Our income tax expense reflects the mix of full-year earnings projected across business units and current equity management assumptions. Income taxes and effective tax rates vary each year based on profitability and nonpatronage business activity during the 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, $115.7 million and $115.1 million of the unrecognized tax benefits would ultimately benefit our effective tax rate as of May 31, 2023, and August 31, 2022, 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 months ended May 31, 2023 and 2022, 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, February 28, 2023 | $ | 3,307,140 |  |  | $ | 27,861 |  |  | $ | 1,771,844 |  |  | $ | 2,264,038 |  |  | $ | (257,163) |  |  | $ | 2,710,507 |  |  | $ | 5,092 |  |  | $ | 9,829,319 |
Reversal of prior year patronage and redemption estimates | 462,690 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 119,360 |  |  | — |  |  | 582,050 |
Distribution of 2022 patronage refunds | 2,615 |  |  | — |  |  | 1,226 |  |  | — |  |  | — |  |  | (124,889) |  |  | — |  |  | (121,048) |
Redemptions of equities | (457,679) |  |  | (112) |  |  | (4,898) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (462,689) |
Other, net | (678) |  |  | (44) |  |  | (115) |  |  | — |  |  | — |  |  | 574 |  |  | (16) |  |  | (279) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 547,499 |  |  | (156) |  |  | 547,343 |
Other comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (3,108) |  |  | — |  |  | — |  |  | (3,108) |
Estimated 2023 cash patronage refunds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (144,105) |  |  | — |  |  | (144,105) |
Estimated 2023 equity redemptions | (144,105) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (144,105) |
Balances, May 31, 2023 | $ | 3,169,983 |  |  | $ | 27,705 |  |  | $ | 1,768,057 |  |  | $ | 2,264,038 |  |  | $ | (260,271) |  |  | $ | 3,108,946 |  |  | $ | 4,920 |  |  | $ | 10,083,378 |

| 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, February 28, 2022 | $ | 3,462,002 |  |  | $ | 28,110 |  |  | $ | 1,632,818 |  |  | $ | 2,264,038 |  |  | $ | (221,855) |  |  | $ | 2,196,428 |  |  | $ | 6,903 |  |  | $ | 9,368,444 |
Reversal of prior year patronage and redemption estimates | 81,731 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 20,170 |  |  | — |  |  | 101,901 |
Distribution of 2021 patronage refunds | — |  |  | — |  |  | 4,205 |  |  | — |  |  | — |  |  | (25,188) |  |  | — |  |  | (20,983) |
Redemptions of equities | (78,616) |  |  | (90) |  |  | (3,038) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (81,744) |
Other, net | (2,228) |  |  | (1) |  |  | (6,809) |  |  | — |  |  | — |  |  | 1,105 |  |  | (295) |  |  | (8,228) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 576,574 |  |  | (329) |  |  | 576,245 |
Other comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (18,221) |  |  | — |  |  | — |  |  | (18,221) |
Estimated 2022 cash patronage refunds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (58,745) |  |  | — |  |  | (58,745) |
Estimated 2022 equity redemptions | (117,491) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (117,491) |
Balances, May 31, 2022 | $ | 3,345,398 |  |  | $ | 28,019 |  |  | $ | 1,627,176 |  |  | $ | 2,264,038 |  |  | $ | (240,076) |  |  | $ | 2,710,344 |  |  | $ | 6,279 |  |  | $ | 9,741,178 |

Changes in equities for the nine months ended May 31, 2023 and 2022, 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, 2022 | $ | 3,587,131 |  |  | $ | 27,933 |  |  | $ | 1,776,172 |  |  | $ | 2,264,038 |  |  | $ | (255,335) |  |  | $ | 2,055,682 |  |  | $ | 5,645 |  |  | $ | 9,461,266 |
Reversal of prior year patronage and redemption estimates | (28,368) |  |  | — |  |  | (153,858) |  |  | — |  |  | — |  |  | 1,162,661 |  |  | — |  |  | 980,435 |
Distribution of 2022 patronage refunds | 516,246 |  |  | — |  |  | 154,484 |  |  | — |  |  | — |  |  | (1,173,668) |  |  | — |  |  | (502,938) |
Redemptions of equities | (471,589) |  |  | (184) |  |  | (8,662) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (480,435) |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (126,501) |  |  | — |  |  | (126,501) |
Other, net | (390) |  |  | (44) |  |  | (79) |  |  | — |  |  | — |  |  | 1,401 |  |  | (614) |  |  | 274 |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,622,418 |  |  | (111) |  |  | 1,622,307 |
Other comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (4,936) |  |  | — |  |  | — |  |  | (4,936) |
Estimated 2023 cash patronage refunds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (433,047) |  |  | — |  |  | (433,047) |
Estimated 2023 equity redemptions | (433,047) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (433,047) |
Balances, May 31, 2023 | $ | 3,169,983 |  |  | $ | 27,705 |  |  | $ | 1,768,057 |  |  | $ | 2,264,038 |  |  | $ | (260,271) |  |  | $ | 3,108,946 |  |  | $ | 4,920 |  |  | $ | 10,083,378 |

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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, 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 patronage and redemption estimates | 99,216 |  |  | — |  |  | (230,290) |  |  | — |  |  | — |  |  | 280,290 |  |  | — |  |  | 149,216 |
Distribution of 2021 patronage refunds | — |  |  | — |  |  | 235,576 |  |  | — |  |  | — |  |  | (286,602) |  |  | — |  |  | (51,026) |
Redemptions of equities | (92,668) |  |  | (428) |  |  | (6,133) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (99,229) |
Preferred stock dividends | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (126,501) |  |  | — |  |  | (126,501) |
Other, net | (3,256) |  |  | 16 |  |  | (6,873) |  |  | — |  |  | — |  |  | 2,548 |  |  | (1,735) |  |  | (9,300) |
Net income (loss) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,247,535 |  |  | (451) |  |  | 1,247,084 |
Other comprehensive loss, net of tax | — |  |  | — |  |  | — |  |  | — |  |  | (23,685) |  |  | — |  |  | — |  |  | (23,685) |
Estimated 2022 cash patronage refunds | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (120,902) |  |  | — |  |  | (120,902) |
Estimated 2022 equity redemptions | (241,805) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (241,805) |
Balances, May 31, 2022 | $ | 3,345,398 |  |  | $ | 28,019 |  |  | $ | 1,627,176 |  |  | $ | 2,264,038 |  |  | $ | (240,076) |  |  | $ | 2,710,344 |  |  | $ | 6,279 |  |  | $ | 9,741,178 |

Preferred Stock Dividends
The following is a summary of dividends declared per share by series of preferred stock for the nine months ended May 31, 2023. Due to the timing of dividend declarations throughout the fiscal year, no declarations were made during the three months ended May 31, 2023 or 2022.

|  |  |  |  | Nine Months Ended May 31,
| Nasdaq symbol |  |  |  |  |  | 2023 |  | 2022
Series of preferred stock: |  |  |  |  |  |  | (Dollars per share)
8% Cumulative Redeemable | CHSCP |  |  |  |  |  | $ | 1.50 |  |  | $ | 1.50 |
Class B Cumulative Redeemable, Series 1 | CHSCO |  |  |  |  |  | $ | 1.48 |  |  | $ | 1.48 |
Class B Reset Rate Cumulative Redeemable, Series 2 | CHSCN |  |  |  |  |  | $ | 1.33 |  |  | $ | 1.33 |
Class B Reset Rate Cumulative Redeemable, Series 3 | CHSCM |  |  |  |  |  | $ | 1.27 |  |  | $ | 1.27 |
Class B Cumulative Redeemable, Series 4 | CHSCL |  |  |  |  |  | $ | 1.41 |  |  | $ | 1.41 |

Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component for the three months ended May 31, 2023 and 2022, are as follows:

| Pension and Other Postretirement Benefits |  | Cash Flow Hedges |  | Foreign Currency Translation Adjustment |  | Total
| (Dollars in thousands)
Balance as of February 28, 2023, net of tax | $ | (164,089) |  |  | $ | 3,779 |  |  | $ | (96,853) |  |  | $ | (257,163) |
Other comprehensive income (loss), before tax: |  |  |  |  |  |  |
Amounts before reclassifications | 148 |  |  | (1,051) |  |  | (800) |  |  | (1,703) |
Amounts reclassified | 23 |  |  | (2,289) |  |  | — |  |  | (2,266) |
Total other comprehensive income (loss), before tax | 171 |  |  | (3,340) |  |  | (800) |  |  | (3,969) |
Tax effect | (41) |  |  | 809 |  |  | 93 |  |  | 861 |
Other comprehensive income (loss), net of tax | 130 |  |  | (2,531) |  |  | (707) |  |  | (3,108) |
Balance as of May 31, 2023, net of tax | $ | (163,959) |  |  | $ | 1,248 |  |  | $ | (97,560) |  |  | $ | (260,271) |

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| Pension and Other Postretirement Benefits |  | Cash Flow Hedges |  | Foreign Currency Translation Adjustment |  | Total
| (Dollars in thousands)
Balance as of February 28, 2022, net of tax | $ | (133,036) |  |  | $ | (4,870) |  |  | $ | (83,949) |  |  | $ | (221,855) |
Other comprehensive income (loss), before tax: |  |  |  |  |  |  |
Amounts before reclassifications | 369 |  |  | (39,169) |  |  | 2,497 |  |  | (36,303) |
Amounts reclassified | 5,560 |  |  | 5,782 |  |  | — |  |  | 11,342 |
Total other comprehensive income (loss), before tax | 5,929 |  |  | (33,387) |  |  | 2,497 |  |  | (24,961) |
Tax effect | (1,444) |  |  | 8,130 |  |  | 54 |  |  | 6,740 |
Other comprehensive income (loss), net of tax | 4,485 |  |  | (25,257) |  |  | 2,551 |  |  | (18,221) |
Balance as of May 31, 2022, net of tax | $ | (128,551) |  |  | $ | (30,127) |  |  | $ | (81,398) |  |  | $ | (240,076) |

Changes in accumulated other comprehensive income (loss) by component for the nine months ended May 31, 2023 and 2022, are as follows:

| Pension and Other Postretirement Benefits |  | Cash Flow Hedges |  | Foreign Currency Translation Adjustment |  | Total
| (Dollars in thousands)
Balance as of August 31, 2022, net of tax | $ | (168,640) |  |  | $ | 8,843 |  |  | $ | (95,538) |  |  | $ | (255,335) |
Other comprehensive income (loss), before tax: |  |  |  |  |  |  |
Amounts before reclassifications | 351 |  |  | (24,392) |  |  | (2,288) |  |  | (26,329) |
Amounts reclassified | 70 |  |  | 14,368 |  |  | — |  |  | 14,438 |
Total other comprehensive income (loss), before tax | 421 |  |  | (10,024) |  |  | (2,288) |  |  | (11,891) |
Tax effect | 4,260 |  |  | 2,429 |  |  | 266 |  |  | 6,955 |
Other comprehensive income (loss), net of tax | 4,681 |  |  | (7,595) |  |  | (2,022) |  |  | (4,936) |
Balance as of May 31, 2023, net of tax | $ | (163,959) |  |  | $ | 1,248 |  |  | $ | (97,560) |  |  | $ | (260,271) |

| 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 | 286 |  |  | (34,325) |  |  | (1,679) |  |  | (35,718) |
Amounts reclassified | 16,680 |  |  | (11,877) |  |  | — |  |  | 4,803 |
Total other comprehensive income (loss), before tax | 16,966 |  |  | (46,202) |  |  | (1,679) |  |  | (30,915) |
Tax effect | (4,132) |  |  | 11,251 |  |  | 111 |  |  | 7,230 |
Other comprehensive income (loss), net of tax | 12,834 |  |  | (34,951) |  |  | (1,568) |  |  | (23,685) |
Balance as of May 31, 2022, net of tax | $ | (128,551) |  |  | $ | (30,127) |  |  | $ | (81,398) |  |  | $ | (240,076) |

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 (see Note 9, Benefit Plans, for further information). As described in Note 11, Derivative Financial Instruments and Hedging Activities, amounts reclassified from accumulated other comprehensive loss for cash flow hedges are recorded as cost of goods sold. Gains or losses on foreign currency translation reclassifications are recorded as other income.
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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 of Directors retirement plans.
Components of net periodic benefit costs for the three and nine months ended May 31, 2023 and 2022, are as follows:

| Three Months Ended May 31,
| Qualified Pension Benefits |  | Nonqualified Pension Benefits |  | Other Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Components of net periodic benefit costs: | (Dollars in thousands)
Service cost | $ | 9,645 |  |  | $ | 11,569 |  |  | $ | 460 |  |  | $ | 232 |  |  | $ | 168 |  |  | $ | 249 |
Interest cost | 7,647 |  |  | 4,292 |  |  | 185 |  |  | 70 |  |  | 259 |  |  | 126 |
Expected return on assets | (10,782) |  |  | (10,990) |  |  | — |  |  | — |  |  | — |  |  | — |
Prior service cost (credit) amortization | 37 |  |  | 44 |  |  | (29) |  |  | (29) |  |  | (111) |  |  | (111) |
Actuarial loss (gain) amortization | 468 |  |  | 5,852 |  |  | 61 |  |  | 120 |  |  | (404) |  |  | (315) |
Net periodic benefit cost (benefit) | $ | 7,015 |  |  | $ | 10,767 |  |  | $ | 677 |  |  | $ | 393 |  |  | $ | (88) |  |  | $ | (51) |
| Nine Months Ended May 31,
| Qualified Pension Benefits |  | Nonqualified Pension Benefits |  | Other Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Components of net periodic benefit costs: | (Dollars in thousands)
Service cost | $ | 28,934 |  |  | $ | 34,706 |  |  | $ | 1,380 |  |  | $ | 695 |  |  | $ | 503 |  |  | $ | 747 |
Interest cost | 22,941 |  |  | 12,875 |  |  | 556 |  |  | 211 |  |  | 776 |  |  | 377 |
Expected return on assets | (32,347) |  |  | (32,969) |  |  | — |  |  | — |  |  | — |  |  | — |
Prior service cost (credit) amortization | 112 |  |  | 131 |  |  | (86) |  |  | (86) |  |  | (334) |  |  | (334) |
Actuarial loss (gain) amortization | 1,404 |  |  | 17,555 |  |  | 184 |  |  | 359 |  |  | (1,211) |  |  | (944) |
Net periodic benefit cost (benefit) | $ | 21,044 |  |  | $ | 32,298 |  |  | $ | 2,034 |  |  | $ | 1,179 |  |  | $ | (266) |  |  | $ | (154) |

Employer Contributions
Contributions 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 months ended May 31, 2023, and we do not anticipate being required to make contributions for our pension plans in fiscal 2023, although we may voluntarily elect to do so.
Note 10 Segment Reporting
We are an integrated agricultural 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 grain and oilseed, processed grain and oilseed, renewable fuels and food 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, our chief executive officer, evaluates performance and allocates resources in managing 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 grain and oilseed 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 of our equity method investment in CF Nitrogen and allocated expenses. Our supply agreement with CF Nitrogen entitles us 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 of financial services related to crop production and a U.S. Commodity Futures Trading Commission-regulated futures commission merchant ("FCM") for commodities hedging. Our nonconsolidated
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investments in Ventura Foods, LLC ("Ventura Foods"), and Ardent Mills, LLC ("Ardent Mills"), are also included in our Corporate and Other category.
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 fiscal quarter and increase in the third quarter; however, our income 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 and processing operations are subject to fluctuations in volume and revenues based on producer harvests, world grain prices, global demand and international trade 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, grain, oilseed and oilseed products, 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 reliable rail and river transportation networks, outbreaks of disease, government regulations and policies, global trade disputes, wars and civil unrest, bank failures, 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 is conducted through companies in which we hold ownership interests of 50% or less or otherwise 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 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, LLC. In our Nitrogen Production segment, this consists of our approximate 8% 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 related to our equity method investments.
Reconciling amounts represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.
Segment information for the three and nine months ended May 31, 2023 and 2022, is presented in the tables below:

| Energy |  | Ag |  | Nitrogen Production |  | Corporate and Other |  | Reconciling Amounts |  | Total
Three Months Ended May 31, 2023 | (Dollars in thousands)
Revenues, including intersegment revenues | $ | 2,433,108 |  |  | $ | 9,752,861 |  |  | $ | — |  |  | $ | 21,996 |  |  | $ | (181,914) |  |  | $ | 12,026,051 |
Intersegment revenues | (169,021) |  |  | (8,885) |  |  | — |  |  | (4,008) |  |  | 181,914 |  |  | — |
Revenues, net of intersegment revenues | $ | 2,264,087 |  |  | $ | 9,743,976 |  |  | $ | — |  |  | $ | 17,988 |  |  | $ | — |  |  | $ | 12,026,051 |
Operating earnings (loss) | 198,015 |  |  | 219,333 |  |  | (17,393) |  |  | 1,147 |  |  | — |  |  | 401,102 |
Interest expense | 2,662 |  |  | 20,677 |  |  | 14,619 |  |  | 8,410 |  |  | (9,419) |  |  | 36,949 |
Other income | (4,922) |  |  | (25,001) |  |  | — |  |  | (10,523) |  |  | 9,419 |  |  | (31,027) |
Equity (income) loss from investments | 1,280 |  |  | (9,858) |  |  | (88,275) |  |  | (66,087) |  |  | — |  |  | (162,940) |
Income before income taxes | $ | 198,995 |  |  | $ | 233,515 |  |  | $ | 56,263 |  |  | $ | 69,347 |  |  | $ | — |  |  | $ | 558,120 |

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| Energy |  | Ag |  | Nitrogen Production |  | Corporate and Other |  | Reconciling Amounts |  | Total
Three Months Ended May 31, 2022 | (Dollars in thousands)
Revenues, including intersegment revenues | $ | 2,943,305 |  |  | $ | 10,359,992 |  |  | $ | — |  |  | $ | 11,215 |  |  | $ | (176,788) |  |  | $ | 13,137,724 |
Intersegment revenues | (167,363) |  |  | (7,623) |  |  | — |  |  | (1,802) |  |  | 176,788 |  |  | — |
Revenues, net of intersegment revenues | $ | 2,775,942 |  |  | $ | 10,352,369 |  |  | $ | — |  |  | $ | 9,413 |  |  | $ | — |  |  | $ | 13,137,724 |
Operating earnings (loss) | 164,016 |  |  | 256,817 |  |  | (14,480) |  |  | (5,232) |  |  | — |  |  | 401,121 |
Interest expense | 2,182 |  |  | 18,581 |  |  | 12,263 |  |  | (257) |  |  | (670) |  |  | 32,099 |
Other income | (485) |  |  | (10,221) |  |  | (258) |  |  | 3,658 |  |  | 670 |  |  | (6,636) |
Equity income from investments | (922) |  |  | (25,231) |  |  | (204,697) |  |  | (32,229) |  |  | — |  |  | (263,079) |
Income before income taxes | $ | 163,241 |  |  | $ | 273,688 |  |  | $ | 178,212 |  |  | $ | 23,596 |  |  | $ | — |  |  | $ | 638,737 |

| Energy |  | Ag |  | Nitrogen Production |  | Corporate and Other |  | Reconciling Amounts |  | Total
Nine Months Ended May 31, 2023 | (Dollars in thousands)
Revenues, including intersegment revenues | $ | 8,084,834 |  |  | $ | 28,520,946 |  |  | $ | — |  |  | $ | 58,574 |  |  | $ | (565,616) |  |  | $ | 36,098,738 |
Intersegment revenues | (532,540) |  |  | (23,256) |  |  | — |  |  | (9,820) |  |  | 565,616 |  |  | — |
Revenues, net of intersegment revenues | $ | 7,552,294 |  |  | $ | 28,497,690 |  |  | $ | — |  |  | $ | 48,754 |  |  | $ | — |  |  | $ | 36,098,738 |
Operating earnings (loss) | 857,018 |  |  | 383,946 |  |  | (51,762) |  |  | (1,289) |  |  | — |  |  | 1,187,913 |
Interest expense | 7,203 |  |  | 57,678 |  |  | 44,224 |  |  | 19,740 |  |  | (22,679) |  |  | 106,166 |
Other income | (13,934) |  |  | (64,588) |  |  | — |  |  | (27,786) |  |  | 22,679 |  |  | (83,629) |
Equity (income) loss from investments | 3,338 |  |  | (48,392) |  |  | (330,855) |  |  | (147,327) |  |  | — |  |  | (523,236) |
Income before income taxes | $ | 860,411 |  |  | $ | 439,248 |  |  | $ | 234,869 |  |  | $ | 154,084 |  |  | $ | — |  |  | $ | 1,688,612 |
Total assets as of May 31, 2023 | $ | 4,435,618 |  |  | $ | 7,938,831 |  |  | $ | 2,717,704 |  |  | $ | 4,102,298 |  |  | $ | — |  |  | $ | 19,194,451 |
| Energy |  | Ag |  | Nitrogen Production |  | Corporate and Other |  | Reconciling Amounts |  | Total
Nine Months Ended May 31, 2022 | (Dollars in thousands)
Revenues, including intersegment revenues | $ | 7,574,881 |  |  | $ | 27,239,897 |  |  | $ | — |  |  | $ | 32,060 |  |  | $ | (495,769) |  |  | $ | 34,351,069 |
Intersegment revenues | (466,953) |  |  | (22,338) |  |  | — |  |  | (6,478) |  |  | 495,769 |  |  | — |
Revenues, net of intersegment revenues | $ | 7,107,928 |  |  | $ | 27,217,559 |  |  | $ | — |  |  | $ | 25,582 |  |  | $ | — |  |  | $ | 34,351,069 |
Operating earnings (loss) | 243,009 |  |  | 560,200 |  |  | (35,525) |  |  | (26,916) |  |  | — |  |  | 740,768 |
Interest expense | 4,568 |  |  | 45,466 |  |  | 34,770 |  |  | (3,073) |  |  | (1,026) |  |  | 80,705 |
Other income | (1,217) |  |  | (37,320) |  |  | (2,058) |  |  | 7,752 |  |  | 1,026 |  |  | (31,817) |
Equity income from investments | (3,604) |  |  | (63,240) |  |  | (497,289) |  |  | (80,214) |  |  | — |  |  | (644,347) |
Income before income taxes | $ | 243,262 |  |  | $ | 615,294 |  |  | $ | 429,052 |  |  | $ | 48,619 |  |  | $ | — |  |  | $ | 1,336,227 |

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 cash-settled swaps related to future crude oil purchases and refined product sales, which are accounted for as cash flow hedges, 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 FCM.
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Derivatives Not Designated as Hedging Instruments
The majority of our derivative instruments have not been 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-Offsetting.

| May 31, 2023
|  |  | 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 | $ | 443,518 |  |  | $ | — |  |  | $ | 6,794 |  |  | $ | 436,724 |
Foreign exchange derivatives | 39,623 |  |  | — |  |  | 10,815 |  |  | 28,808 |
Total | $ | 483,141 |  |  | $ | — |  |  | $ | 17,609 |  |  | $ | 465,532 |
Derivative liabilities |  |  |  |  |  |  |
Commodity derivatives | $ | 352,978 |  |  | $ | 1,905 |  |  | $ | 14,301 |  |  | $ | 336,772 |
Foreign exchange derivatives | 13,261 |  |  | — |  |  | 10,815 |  |  | 2,446 |
Total | $ | 366,239 |  |  | $ | 1,905 |  |  | $ | 25,116 |  |  | $ | 339,218 |

| August 31, 2022
|  |  | 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 | $ | 464,167 |  |  | $ | — |  |  | $ | 3,834 |  |  | $ | 460,333 |
Foreign exchange derivatives | 52,923 |  |  | — |  |  | 8,901 |  |  | 44,022 |
Total | $ | 517,090 |  |  | $ | — |  |  | $ | 12,735 |  |  | $ | 504,355 |
Derivative liabilities |  |  |  |  |  |  |
Commodity derivatives | $ | 378,291 |  |  | $ | 1,424 |  |  | $ | 12,574 |  |  | $ | 364,293 |
Foreign exchange derivatives | 12,649 |  |  | — |  |  | 8,901 |  |  | 3,748 |
Total | $ | 390,940 |  |  | $ | 1,424 |  |  | $ | 21,475 |  |  | $ | 368,041 |

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, 2023, and August 31, 2022, was $4.4 million and $8.5 million, respectively. The amount of long-term derivative liabilities recorded on our Condensed Consolidated Balance Sheets as of May 31, 2023, and August 31, 2022, was $3.5 million and $4.0 million, respectively.
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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, 2023 and 2022:

|  |  | Three Months Ended May 31, |  | Nine Months Ended May 31,
| Location of Gain (Loss) |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | (Dollars in thousands)
Commodity derivatives | Cost of goods sold |  | $ | (59,177) |  |  | $ | (324,965) |  |  | $ | (194,832) |  |  | $ | (905,400) |
Foreign exchange derivatives | Cost of goods sold |  | (21,753) |  |  | 18,147 |  |  | (23,792) |  |  | 58,438 |
Foreign exchange derivatives | Marketing, general and administrative expenses |  | 556 |  |  | 1,097 |  |  | 804 |  |  | 1,600 |
Other derivatives | Other income |  | — |  |  | 258 |  |  | — |  |  | 2,057 |
Total |  | $ | (80,374) |  |  | $ | (305,463) |  |  | $ | (217,820) |  |  | $ | (843,305) |

Commodity Contracts
As of May 31, 2023, and August 31, 2022, 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:

| May 31, 2023 |  | August 31, 2022
| Long |  | Short |  | Long |  | Short
| (Units in thousands)
Grain and oilseed (bushels) | 418,318 |  |  | 559,715 |  |  | 609,300 |  | 773,239
Energy products (barrels) | 15,119 |  |  | 9,157 |  |  | 10,541 |  | 5,706
Processed grain and oilseed (tons) | 5,672 |  |  | 11,324 |  |  | 1,191 |  | 4,182
Crop nutrients (tons) | 76 |  |  | 15 |  |  | 23 |  | 22
Ocean freight (metric tons) | 60 |  |  | — |  |  | 60 |  | —
Natural gas (metric million Btu) | 940 |  |  | — |  |  | 420 |  | —

Foreign Exchange Contracts
We conduct a substantial portion of our business in U.S. dollars, but 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 relating 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 amount of our foreign exchange derivative contracts was $1.9 billion as of May 31, 2023, and August 31, 2022, respectively.
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 energy 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, 2023, and August 31, 2022, the aggregate notional amounts of cash flow hedges were 1.1 million and 3.8 million barrels, respectively.
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The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the locations on our Condensed Consolidated Balance Sheets in which they are recorded:

|  | Derivative Assets |  |  |  | Derivative Liabilities
Balance Sheet Location |  | May 31, 2023 |  | August 31, 2022 |  | Balance Sheet Location |  | May 31, 2023 |  | August 31, 2022
|  | (Dollars in thousands) |  |  |  | (Dollars in thousands)
Other current assets |  | $ | 4,698 |  |  | $ | 27,154 |  |  | Other current liabilities |  | $ | 1,551 |  |  | $ | 11,818 |

The following table presents the pretax losses recorded in other comprehensive income relating to cash flow hedges for the three and nine months ended May 31, 2023 and 2022:

|  | Three Months Ended May 31, |  | Nine Months Ended May 31,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
|  | (Dollars in thousands)
Commodity derivatives |  | $ | (3,430) |  |  | $ | (36,688) |  |  | $ | (12,189) |  |  | $ | (51,961) |

The following table presents the pretax gains (losses) 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, 2023 and 2022:

|  |  | Three Months Ended May 31, |  | Nine Months Ended May 31,
| Location of Gain (Loss) |  | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | (Dollars in thousands)
Commodity derivatives | Cost of goods sold |  | $ | 2,590 |  |  | $ | (5,482) |  |  | $ | (13,468) |  |  | $ | 12,777 |

Note 12 Fair Value Measurements
ASC Topic 820, Fair Value 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 among the 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 use of observable inputs and minimize 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 in the circumstances. ASC Topic 820 describes three levels within its hierarchy that may be used to measure fair value. Level 1 inputs are unadjusted quoted prices 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 that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 inputs are unobservable inputs that are supported by little or no market activity for the assets or liabilities. Categorization within the valuation hierarchy is based on the lowest level of input significant to the fair value measurement.
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Recurring fair value measurements as of May 31, 2023, and August 31, 2022, are as follows:

| May 31, 2023
| 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)
Assets |  |  |  |  |  |  |
Commodity derivatives | $ | 2,118 |  |  | $ | 446,098 |  |  | $ | — |  |  | $ | 448,216 |
Foreign exchange derivatives | — |  |  | 39,623 |  |  | — |  |  | 39,623 |
Segregated investments and marketable securities | 221,295 |  |  | — |  |  | — |  |  | 221,295 |
Other assets | 49,066 |  |  | — |  |  | — |  |  | 49,066 |
Total | $ | 272,479 |  |  | $ | 485,721 |  |  | $ | — |  |  | $ | 758,200 |
Liabilities |  |  |  |  |  |  |
Commodity derivatives | $ | 8,372 |  |  | $ | 346,157 |  |  | $ | — |  |  | $ | 354,529 |
Foreign exchange derivatives | — |  |  | 13,261 |  |  | — |  |  | 13,261 |
Total | $ | 8,372 |  |  | $ | 359,418 |  |  | $ | — |  |  | $ | 367,790 |

| August 31, 2022
| 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)
Assets |  |  |  |  |  |  |
Commodity derivatives | $ | 1,161 |  |  | $ | 490,160 |  |  | $ | — |  |  | $ | 491,321 |
Foreign exchange derivatives | — |  |  | 52,923 |  |  | — |  |  | 52,923 |
Segregated investments and marketable securities | 238,124 |  |  | — |  |  | — |  |  | 238,124 |
Other assets | 58,280 |  |  | — |  |  | — |  |  | 58,280 |
Total | $ | 297,565 |  |  | $ | 543,083 |  |  | $ | — |  |  | $ | 840,648 |
Liabilities |  |  |  |  |  |  |
Commodity derivatives | $ | 10,256 |  |  | $ | 379,883 |  |  | $ | — |  |  | $ | 390,139 |
Foreign exchange derivatives | — |  |  | 12,649 |  |  | — |  |  | 12,649 |
Total | $ | 10,256 |  |  | $ | 392,532 |  |  | $ | — |  |  | $ | 402,788 |

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, including location-specific 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 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.
Segregated investments and marketable securities and other assets. Our segregated investments and marketable securities and other assets are comprised primarily of investments in various government agencies, U.S. Treasury securities, money market funds and rabbi trust assets, 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 future costs of remediation associated with identified issues that are both probable and can be reasonably estimated. Estimates of environmental costs are based on current
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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 consolidated financial 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 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 consolidated financial 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 $1.1 billion, of which $74.3 million were outstanding on May 31, 2023. 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, 2023.
Note 14 Other Current Assets and Liabilities
Other current assets and liabilities as of May 31, 2023, and August 31, 2022, are as follows:

| May 31, 2023 |  | August 31, 2022
Other current assets | (Dollars in thousands)
Derivative assets (Note 11) | $ | 483,436 |  |  | $ | 535,698 |
Margin and related deposits | 275,457 |  |  | 390,782 |
Supplier advance payments | 223,419 |  |  | 198,753 |
Restricted cash | 77,608 |  |  | 109,517 |
Other | 209,129 |  |  | 147,954 |
Total other current assets | $ | 1,269,049 |  |  | $ | 1,382,704 |
Other current liabilities |  |  |
Customer margin deposits and credit balances | $ | 148,658 |  |  | $ | 283,234 |
Customer advance payments | 469,753 |  |  | 525,003 |
Derivative liabilities (Note 11) | 364,291 |  |  | 398,781 |
Dividends and equity payable | 885,659 |  |  | 1,000,000 |
Total other current liabilities | $ | 1,868,361 |  |  | $ | 2,207,018 |

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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 condensed consolidated financial statements with a narrative from the perspective of our management regarding 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 2023 Third Quarter Highlights
•Fiscal 2023 Trends Update
•Operating Metrics
•Results of Operations
•Liquidity and Capital Resources
•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, 2022 (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. ("CHS") 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 grain and oilseed originated by our country operations and global grain and processing businesses, by our member cooperatives and by third parties. It also includes our renewable fuels business and serves as a wholesaler and retailer of agronomy products.
•Nitrogen Production. Produces and distributes nitrogen fertilizer. It consists of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and allocated expenses.
In addition, our financing and hedging businesses, along with our nonconsolidated food production and distribution and wheat milling joint ventures, have been aggregated within our Corporate and Other category.
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 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.
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. We also focus 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 fiscal quarter and increase in the third quarter; 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
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operations are subject to fluctuations in volumes and revenues based on producer harvests, world grain prices, demand and international trade 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:
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, grain, 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 networks, disease outbreaks, government regulations and policies, global trade disputes, wars and civil unrest, and general political and/or economic conditions.
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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 these strategies, we are focused on implementing agile, efficient and sustainable technology platforms; building robust and efficient supply chains; hiring, developing and retaining high-performing, diverse and passionate teams; achieving operational excellence and continuously improving; and maintaining a strong balance sheet.
Fiscal 2023 Third Quarter Highlights
•Robust global demand and market volatility continued to result in commodity prices that are elevated from historical averages.
•Strong meal and oil demand resulted in improved oilseed crush margins that contributed to higher earnings in our oilseed processing business, which was partially offset by decreased prices for agronomy products in our Ag segment.
•Our Energy segment continued to deliver strong earnings as a result of favorable market conditions in our refined fuels business, including sustained high global demand for energy products, as consumption outpaced supply.
•Equity method investments continued to perform well, with our CF Nitrogen and Ventura Foods investments being the largest contributors.
•We completed planned major maintenance to overhaul, repair, inspect and replace process materials and equipment (referred to in the industry as "turnaround") at our Laurel, Montana, refinery during April and May 2023.
Fiscal 2023 Trends Update
Our segments operate in cyclical environments in which market conditions can change rapidly with significant positive or negative impacts on our results. We anticipate that various macroeconomic factors, including the ongoing war between Russia and Ukraine; rising interest rates; bank failures and potential bank failures; and inflationary pressures increasing costs of labor, freight and materials; will continue to drive uncertainty and instability in global energy and agricultural commodity markets, as well as in global financial markets. This uncertainty and instability could have a significant impact on each of our segments through the remainder of fiscal 2023. In addition to these broad macroeconomic factors, other factors could impact demand for agricultural inputs and outputs, as well as our ability to supply those inputs and outputs. These include the cost of renewable energy credits, which remains higher than historical levels and could continue to negatively impact our profitability, and regional factors, such as unpredictable weather conditions, including those due to climate change. We currently expect the imbalance between global supply and strong global demand for agricultural commodities to continue to moderate through the remainder of fiscal 2023. We are unable to predict how long the current environment and market conditions will last or the extent of the financial and operational impacts to us in fiscal 2023. Refer to Item 1A of our Annual Report on Form 10-K for the year ended August 31, 2022, and Item 1A of our Quarterly Report on Form 10-Q for the quarter ended February 28, 2023, for additional impacts that these and other risks may have on our business operations and financial performance.
In addition to navigating market conditions that impact our businesses, we will continue to execute our enterprise priorities for fiscal 2023, including empowering and supporting our people, advancing our operating model by transforming how we work and adopting new technologies, and strategically investing in our infrastructure to meet the evolving needs of our owners and customers, enhancing value for the cooperative system and propelling sustainable growth.
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Operating Metrics
Energy
Our Energy segment operations primarily include our refineries in Laurel, Montana, and McPherson, Kansas, which process crude oil to produce refined products, including gasoline, distillates and other products. To ensure the reliability of our refineries, we perform major maintenance activities every two to five years, which require a temporary shutdown of operations. These planned shutdowns allow us to extend the life, increase the capacity and improve the safety and efficiency of our refinery processing assets. They also minimize unplanned business interruptions and are essential to the long-term reliability and profitability of our Energy segment.
During periods of maintenance, utilization rates, throughput volumes and refined fuel yields are lower, and we may purchase refined petroleum products from third parties to meet the needs of our customers. These third-party purchases may result in lower margins than for products produced by our refineries, which reduces our profitability. The following table provides information about our consolidated refinery operations:

| Three Months Ended May 31, |  | Nine Months Ended May 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
Refinery throughput volumes* | (Barrels per day)
Heavy, high-sulfur crude oil | 80,994 |  |  | 106,658 |  |  | 90,878 |  |  | 104,090 |
All other crude oil | 71,037 |  |  | 72,915 |  |  | 70,704 |  |  | 72,359 |
Other feedstocks and blendstocks | 14,543 |  |  | 11,436 |  |  | 11,594 |  |  | 14,007 |
Total refinery throughput volumes | 166,574 |  |  | 191,009 |  |  | 173,176 |  |  | 190,456 |
Refined fuel yields* |  |  |  |  |  |  |
Gasolines | 79,690 |  |  | 87,174 |  |  | 78,805 |  |  | 89,602 |
Distillates | 69,460 |  |  | 85,078 |  |  | 75,640 |  |  | 82,396 |

*Lower refinery throughput volumes and refined fuel yields experienced during the three and nine months ended May 31, 2023, are primarily due to a planned shutdown to perform major maintenance at our Laurel, Montana, refinery.
We are subject to the Renewable Fuel Standard, which requires refiners to blend renewable fuels (e.g., ethanol and 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. In June 2023, the EPA issued its final renewable volume obligation ("RVO") for calendar years 2023 through 2025. 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, which can impact our profitability. The prices for D6 ethanol RINs and D4 biodiesel RINs increased by 16% and decreased by 5%, respectively, during the third quarter of fiscal 2023 compared to the same period in the prior year. Estimates of our RIN expenses are calculated using an average RIN price each month.
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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 discounts (i.e., the price discount for WCS crude oil relative to West Texas Intermediate ("WTI") crude oil), which are driven by the supply and demand for refined products. Crack spreads and WCS crude oil discounts both increased during the nine months ended May 31, 2023, compared to the same period during the prior year, which contributed to improved IBIT for the Energy segment during the period. Although the WCS crude oil discount increased during the three months ended May 31, 2023, and resulted in improved IBIT for the Energy segment during the quarter, crack spreads decreased in the third quarter of fiscal 2023 relative to the same period during the prior year. The table below provides information about average market reference prices and discounts that impacted our Energy segment during the three and nine months ended May 31, 2023 and 2022:

| Three Months Ended May 31, |  | Nine Months Ended May 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
Market indicators |  |  |  |  |  |  |
WTI crude oil (dollars per barrel) | $ | 74.81 |  |  | $ | 106.39 |  |  | $ | 79.05 |  |  | $ | 88.54 |
WTI - WCS crude oil discount (dollars per barrel) | $ | 17.24 |  |  | $ | 12.98 |  |  | $ | 22.48 |  |  | $ | 14.03 |
Group 3 2:1:1 crack spread (dollars per barrel)* | $ | 32.74 |  |  | $ | 38.86 |  |  | $ | 35.99 |  |  | $ | 24.93 |
Group 3 5:3:2 crack spread (dollars per barrel)* | $ | 32.12 |  |  | $ | 36.30 |  |  | $ | 33.54 |  |  | $ | 23.70 |
D6 ethanol RIN (dollars per RIN) | $ | 1.5263 |  |  | $ | 1.3176 |  |  | $ | 1.6063 |  |  | $ | 1.1995 |
D4 biodiesel RIN (dollars per RIN) | $ | 1.5593 |  |  | $ | 1.6443 |  |  | $ | 1.6903 |  |  | $ | 1.5175 |

*Group 3 refers to the oil refining and distribution system serving Midwest markets from the Gulf Coast through the Plains states.
Ag
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, 2023 and 2022:

|  |  | Three Months Ended May 31, |  | Nine Months Ended May 31,
| Market Source* |  | 2023 |  | 2022 |  | 2023 |  | 2022
Commodity prices |  |  |  |  |  |  |  |  |
Corn (dollars per bushel) | Chicago Board of Trade |  | $ | 6.30 |  |  | $ | 7.74 |  |  | $ | 6.57 |  |  | $ | 6.34 |
Soybeans (dollars per bushel) | Chicago Board of Trade |  | $ | 14.17 |  |  | $ | 16.70 |  |  | $ | 14.49 |  |  | $ | 14.18 |
Wheat (dollars per bushel) | Chicago Board of Trade |  | $ | 6.35 |  |  | $ | 10.46 |  |  | $ | 7.47 |  |  | $ | 8.74 |
Urea (dollars per ton) | Green Markets NOLA |  | $ | 351.04 |  |  | $ | 745.00 |  |  | $ | 448.50 |  |  | $ | 688.00 |
Urea ammonium nitrate (dollars per ton) | Green Markets NOLA |  | $ | 268.92 |  |  | $ | 615.04 |  |  | $ | 396.93 |  |  | $ | 539.52 |
Ethanol (dollars per gallon) | Chicago Platts |  | $ | 2.37 |  |  | $ | 2.62 |  |  | $ | 2.35 |  |  | $ | 2.62 |
Volumes |  |  |  |  |  |  |  |  |
Grain and oilseed (thousands of bushels) |  | 544,908 |  |  | 575,827 |  |  | 1,629,545 |  |  | 1,674,894 |
North American grain and oilseed port throughput (thousands of bushels) |  | 135,329 |  |  | 176,773 |  |  | 471,920 |  |  | 536,695 |
Wholesale crop nutrients (thousands of tons) |  | 2,113 |  |  | 1,750 |  |  | 5,098 |  |  | 4,949 |
Ethanol (thousands of gallons) |  | 236,035 |  |  | 234,679 |  |  | 717,438 |  |  | 687,280 |

*Market source information represents the average month-end price during the period.
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Results of Operations
Three Months Ended May 31, 2023 and 2022

| Three Months Ended May 31,
| 2023 |  | % of Revenues* |  | 2022 |  | % of Revenues*
| (Dollars in thousands)
Revenues | $ | 12,026,051 |  |  | 100.0 | % |  | $ | 13,137,724 |  |  | 100.0 | %
Cost of goods sold | 11,351,711 |  |  | 94.4 |  |  | 12,493,467 |  |  | 95.1 |
Gross profit | 674,340 |  |  | 5.6 |  |  | 644,257 |  |  | 4.9 |
Marketing, general and administrative expenses | 273,238 |  |  | 2.3 |  |  | 243,136 |  |  | 1.9 |
Operating earnings | 401,102 |  |  | 3.3 |  |  | 401,121 |  |  | 3.1 |
Interest expense | 36,949 |  |  | 0.3 |  |  | 32,099 |  |  | 0.2 |
Other income | (31,027) |  |  | (0.3) |  |  | (6,636) |  |  | (0.1) |
Equity income from investments | (162,940) |  |  | (1.4) |  |  | (263,079) |  |  | (2.0) |
Income before income taxes | 558,120 |  |  | 4.6 |  |  | 638,737 |  |  | 4.9 |
Income tax expense | 10,777 |  |  | 0.1 |  |  | 62,492 |  |  | 0.5 |
Net income | 547,343 |  |  | 4.6 |  |  | 576,245 |  |  | 4.4 |
Net loss attributable to noncontrolling interests | (156) |  |  | — |  |  | (329) |  |  | — |
Net income attributable to CHS Inc. | $ | 547,499 |  |  | 4.6 | % |  | $ | 576,574 |  |  | 4.4 | %

*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, 2023. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses but not revenues.
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Income Before Income Taxes by Segment
Energy

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income before income taxes | $ | 198,995 |  |  | $ | 163,241 |  |  | $ | 35,754 |  |  | 21.9 | %

The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the three months ended May 31, 2023, compared to the same period during the prior 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:
•Increased margins resulting from hedging-related gains due to global market conditions and increased WCS crude oil discounts in our refined fuels business contributed to $101.0 million and $33.2 million increases of IBIT, respectively.
•Increased margins were partially offset by decreased refined fuels production volumes due to planned major maintenance at our Laurel, Montana, refinery, which reduced the sales mix of higher-margin produced refined fuels compared to the prior period and contributed to a $74.0 million decrease of IBIT, as well as lower crack spreads that contributed to a $54.3 million decrease of IBIT.
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Ag

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income before income taxes | $ | 233,515 |  |  | $ | 273,688 |  |  | $ | (40,173) |  |  | (14.7 | %)

The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the three months ended May 31, 2023, compared to the same period during the prior 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 Ag segment IBIT reflects the following:
•Decreased margins for wholesale and retail agronomy products resulted from market-driven price decreases and contributed to a $99.9 million decrease of IBIT.
•The margin decrease in Ag segment IBIT was partially offset by increased margins in our grain and oilseed and oilseed processing product categories due to strong meal and oil demand resulting in improved crush margins.
•Higher volumes of wholesale and retail agronomy products contributed to a $31.1 million increase of IBIT due to increased demand during the third quarter of fiscal 2023 as prices declined due to global market conditions.
All Other Segments

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Nitrogen Production IBIT* | $ | 56,263 |  |  | $ | 178,212 |  |  | $ | (121,949) |  |  | (68.4 | %)
Corporate and Other IBIT | $ | 69,347 |  |  | $ | 23,596 |  |  | $ | 45,751 |  |  | 193.9 | %

*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.
Our Nitrogen Production segment IBIT decreased from the prior year due to lower equity income attributed to decreased selling prices of urea and UAN due to global supply and demand factors. Corporate and Other IBIT increased primarily due to increased equity income from our Ventura Foods, LLC ("Ventura Foods"), investment as a result of more favorable market conditions for edible oils experienced during the third quarter of fiscal 2023 compared to the same period in the prior year, as well as increased interest income due to higher interest rates.
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Revenues by Segment
Energy

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Revenues | $ | 2,264,087 |  |  | $ | 2,775,942 |  |  | $ | (511,855) |  |  | (18.4 | %)

The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the three months ended May 31, 2023, compared to the same period during the prior year:
The change in Energy segment revenues reflects the following:
•Decreased selling prices resulting from global market conditions contributed to $545.5 million and $62.9 million decreases of revenues for refined fuels and propane, respectively.
•Higher refined fuels volumes contributed to a $91.5 million increase in revenues driven by higher demand.
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Ag

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Revenues | $ | 9,743,976 |  |  | $ | 10,352,369 |  |  | $ | (608,393) |  |  | (5.9 | %)

The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the three months ended May 31, 2023, compared to the same period during the prior year:
The change in Ag segment revenues reflects the following:
•Decreased selling prices across many of our Ag segment product categories during the third quarter of fiscal 2023, included:
◦$654.0 million decrease for wholesale and retail agronomy products driven by lower urea and UAN prices;
◦$64.1 million decrease for renewable fuels resulting from lower ethanol prices due to decreased demand; and
◦$36.7 million decrease for oilseed processing due to global market conditions.
•Increased volumes of wholesale and retail agronomy products contributed to a $374.6 million increase in revenues, which experienced increased demand during the third quarter of fiscal 2023 as prices declined due to global market conditions.
•The overall volume increase was mostly offset by decreased volumes within our grain and oilseed product category due to a combination of factors, including drought conditions in parts of our trade territory and lower global demand for U.S. grain.
All Other Segments

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Corporate and Other revenues* | $ | 17,988 |  |  | $ | 9,413 |  |  | $ | 8,575 |  |  | 91.1 | %

*Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses but not revenues.
Corporate and Other revenues increased during the three months ended May 31, 2023, compared to the same period during the prior year, primarily as a result of increased interest income due to higher interest rates.
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Cost of Goods Sold by Segment
Energy

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Cost of goods sold | $ | 1,989,646 |  |  | $ | 2,533,135 |  |  | $ | (543,489) |  |  | (21.5 | %)

The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the three months ended May 31, 2023, compared to the same period during the prior year:
The change in Energy segment COGS reflects the following:
•Global market conditions contributed to decreased costs for refined fuels and propane that drove $583.7 million and $52.3 million decreases in COGS, respectively.
•Higher volumes of refined fuels resulting from higher demand contributed to increased COGS of $83.2 million.
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Ag

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Cost of goods sold | $ | 9,365,319 |  |  | $ | 9,960,631 |  |  | $ | (595,312) |  |  | (6.0 | %)

The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the three months ended May 31, 2023, compared to the same period during the prior year:
The change in Ag segment COGS reflects the following:
•Lower costs across many of our Ag segment product categories during the third quarter of fiscal 2023, included:
◦$554.1 million decrease for wholesale and retail agronomy products driven by lower urea and UAN prices;
◦$65.4 million decrease for oilseed processing due to lower commodity prices; and
◦$53.5 million decrease for renewable fuels resulting from lower input costs.
•Increased volumes of wholesale and retail agronomy products contributed to a $343.5 million increase in COGS, which experienced increased demand during the third quarter of fiscal 2023 as prices declined due to global market conditions.
•The overall volume increase was mostly offset by volume decreases within our grain and oilseed product category primarily due to drought conditions in parts of our trade territory and lower global demand for U.S. grain.
All Other Segments

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Nitrogen Production COGS | $ | 424 |  |  | $ | 428 |  |  | $ | (4) |  |  | (0.9 | %)
Corporate and Other COGS | $ | (3,678) |  |  | $ | (727) |  |  | $ | (2,951) |  |  | (405.9 | %)

There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the three months ended May 31, 2023, compared to the same period during the prior year.
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Marketing, General and Administrative Expenses

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Marketing, general and administrative expenses | $ | 273,238 |  |  | $ | 243,136 |  |  | $ | 30,102 |  |  | 12.4 | %

Marketing, general and administrative expenses increased during the three months ended May 31, 2023, primarily due to higher salary and benefit expenses, as well as costs related to certain legal matters.
Interest Expense

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Interest expense | $ | 36,949 |  |  | $ | 32,099 |  |  | $ | 4,850 |  |  | 15.1 | %

Interest expense increased during the three months ended May 31, 2023, as a result of higher interest rates compared to the same period in the prior year, which was partially offset by decreased notes payable balances.
Other Income

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Other income | $ | 31,027 |  |  | $ | 6,636 |  |  | $ | 24,391 |  |  | 367.6 | %

Other income increased during the three months ended May 31, 2023, as a result of increased interest income due to higher interest rates and a larger cash balance earning interest.
Equity Income from Investments

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Equity income from investments* | $ | 162,940 |  |  | $ | 263,079 |  |  | $ | (100,139) |  |  | (38.1 | %)

*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.
Equity income from investments decreased during the three months ended May 31, 2023, compared to the same period during the prior year, primarily due to lower income associated with our equity method investment in CF Nitrogen, partially offset by higher income associated with our equity method investment in Ventura Foods. Equity income decreased for CF Nitrogen as a result of lower prices of urea and UAN due to global supply and demand factors and increased for Ventura Foods as a result of more favorable market conditions for edible oils.
Income Tax Expense

| Three Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income tax expense | $ | 10,777 |  |  | $ | 62,492 |  |  | $ | (51,715) |  |  | (82.8 | %)

Decreased income tax expense during the three months ended May 31, 2023, resulted from decreased nonpatronage earnings and additional Domestic Production Activities Deduction ("DPAD") benefit during the period. Effective tax rates for the three months ended May 31, 2023 and 2022, were 1.9% and 9.8%, respectively. Federal and state statutory rates of 24.7% and 24.4% were applied to nonpatronage business activity for the three months ended May 31, 2023 and 2022, respectively. Income taxes and effective tax rates vary each year based on profitability, nonpatronage business activity and current equity management assumptions.
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Results of Operations
Nine Months Ended May 31, 2023 and 2022

| Nine Months Ended May 31,
| 2023 |  | % of Revenues* |  | 2022 |  | % of Revenues*
| (Dollars in thousands)
Revenues | $ | 36,098,738 |  |  | 100.0 | % |  | $ | 34,351,069 |  |  | 100.0 | %
Cost of goods sold | 34,160,996 |  |  | 94.6 |  |  | 32,917,906 |  |  | 95.8 |
Gross profit | 1,937,742 |  |  | 5.4 |  |  | 1,433,163 |  |  | 4.2 |
Marketing, general and administrative expenses | 749,829 |  |  | 2.1 |  |  | 692,395 |  |  | 2.0 |
Operating earnings | 1,187,913 |  |  | 3.3 |  |  | 740,768 |  |  | 2.2 |
Interest expense | 106,166 |  |  | 0.3 |  |  | 80,705 |  |  | 0.2 |
Other income | (83,629) |  |  | (0.2) |  |  | (31,817) |  |  | (0.1) |
Equity income from investments | (523,236) |  |  | (1.4) |  |  | (644,347) |  |  | (1.9) |
Income before income taxes | 1,688,612 |  |  | 4.7 |  |  | 1,336,227 |  |  | 3.9 |
Income tax expense | 66,305 |  |  | 0.2 |  |  | 89,143 |  |  | 0.3 |
Net income | 1,622,307 |  |  | 4.5 |  |  | 1,247,084 |  |  | 3.6 |
Net loss attributable to noncontrolling interests | (111) |  |  | — |  |  | (451) |  |  | — |
Net income attributable to CHS Inc. | $ | 1,622,418 |  |  | 4.5 | % |  | $ | 1,247,535 |  |  | 3.6 | %

*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 nine months ended May 31, 2023. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses but not revenues.
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Income Before Income Taxes by Segment
Energy

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income before income taxes | $ | 860,411 |  |  | $ | 243,262 |  |  | $ | 617,149 |  |  | 253.7 | %

The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the nine months ended May 31, 2023, compared to the same period during the prior 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:
•Higher crack spreads and increased WCS crude oil discounts resulted from higher global demand and improved market conditions in our refined fuels business, which contributed to a $742.3 million increase of IBIT.
•Higher margins for refined fuels and propane attributable to hedging-related impacts due to global market conditions affecting the price of these products contributed to $108.0 million and $19.6 million increases of IBIT, respectively.
•The increased IBIT was partially offset by the impact of decreased refined fuels production volumes due to planned and unplanned major maintenance at our Laurel and McPherson refineries that reduced the sales mix of higher-margin produced refined fuels compared to the prior year and contributed to a $170.0 million decrease of IBIT.
•Increased costs in our refined fuels business also partially offset the increased IBIT, the most significant of which included $59.0 million related to higher RIN prices due to market conditions and $33.0 million of higher repair and maintenance expenses in the current year.
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Ag

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income before income taxes | $ | 439,248 |  |  | $ | 615,294 |  |  | $ | (176,046) |  |  | (28.6 | %)

The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the nine months ended May 31, 2023, compared to the same period during the prior 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 Ag segment IBIT reflects the following:
•Decreased margins of $238.7 million were realized primarily for wholesale and retail agronomy products, which experienced market-driven price decreases during the period.
•Decreased margins of $47.6 million for renewable fuels resulted from decreased ethanol prices.
•Overall decreased Ag margins were partially offset by increased margins of $63.5 million and $40.8 million in our oilseed processing and grain and oilseed product categories due to strong meal and oil crush margins and favorable global market conditions, respectively.
All Other Segments

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Nitrogen Production IBIT* | $ | 234,869 |  |  | $ | 429,052 |  |  | $ | (194,183) |  |  | (45.3 | %)
Corporate and Other IBIT | $ | 154,084 |  |  | $ | 48,619 |  |  | $ | 105,465 |  |  | 216.9 | %

*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.
Our Nitrogen Production segment IBIT decreased from the prior year as a result of lower equity income attributed to decreased selling prices of urea and UAN due to global supply and demand factors. Corporate and Other IBIT increased primarily due to increased equity income from our Ventura Foods investment as a result of more favorable market conditions for edible oils experienced during the first nine months of fiscal 2023 compared to the same period in the prior year, as well as increased interest income due to higher interest rates.
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Revenues by Segment
Energy

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Revenues | $ | 7,552,294 |  |  | $ | 7,107,928 |  |  | $ | 444,366 |  |  | 6.3 | %

The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the nine months ended May 31, 2023, compared to the same period during the prior year:
The change in Energy segment revenues reflects the following:
•Global market conditions contributed to increased selling prices for refined fuels that contributed to a $390.2 million increase in revenues, which was partially offset by lower selling prices for propane, which resulted in a $135.0 million decrease in revenues.
•Higher refined fuels volumes driven by higher demand contributed to a $151.6 million increase in revenues.
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Ag

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Revenues | $ | 28,497,690 |  |  | $ | 27,217,559 |  |  | $ | 1,280,131 |  |  | 4.7 | %

The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the nine months ended May 31, 2023, compared to the same period during the prior year:
The change in Ag segment revenues reflects the following:
•Higher revenues were primarily attributed to market-driven price increases for grain and oilseed, which resulted from increased global demand during the first nine months of fiscal 2023 and contributed to a $2.5 billion increase of revenues.
•The overall increase of revenues was partially offset by a $1.1 billion decrease in revenues for wholesale and retail agronomy products driven by lower urea and UAN prices.
•Volumes decreased within our grain and oilseed product category due to a combination of factors, including lower crop yields resulting from drought conditions experienced in portions of our trade territory in North America, and contributed to a $464.0 million decrease in revenues.
•The overall volume decrease was partially offset by volume increases in most of our product categories, including a $119.9 million increase in revenues for oilseed processing driven by strong meal and oil demand, a $79.8 million increase in revenues for renewable fuels due to higher demand and a $47.5 million increase in revenues for retail and wholesale agronomy products, which experienced increased demand during the third quarter of fiscal 2023 as prices declined due to global market conditions.
All Other Segments

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Corporate and Other revenues* | $ | 48,754 |  |  | $ | 25,582 |  |  | $ | 23,172 |  |  | 90.6 | %

*Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses but not revenues.
Corporate and Other revenues increased during the nine months ended May 31, 2023, compared to the same period during the prior year, primarily as a result of increased interest income due to higher interest rates.
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Cost of Goods Sold by Segment
Energy

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Cost of goods sold | $ | 6,475,627 |  |  | $ | 6,665,612 |  |  | $ | (189,985) |  |  | (2.9 | %)

The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the nine months ended May 31, 2023, compared to the same period during the prior year:
The change in Energy segment COGS reflects the following:
•Global market conditions, including hedging-related impacts for refined fuels and propane, contributed to $215.2 million and $154.2 million decreases in COGS, respectively.
•Higher volumes of refined fuels due to higher demand contributed to increased COGS of $141.3 million.
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Ag

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Cost of goods sold | $ | 27,689,354 |  |  | $ | 26,256,104 |  |  | $ | 1,433,250 |  |  | 5.5 | %

The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the nine months ended May 31, 2023, compared to the same period during the prior year:
The change in Ag segment COGS reflects the following:
•Higher costs were primarily attributed to market-driven price increases for grain and oilseed, which resulted from increased global demand during the first nine months of fiscal 2023 and contributed to a $2.5 billion increase of COGS.
•The overall increase of costs was partially offset by a $819.2 million decrease for wholesale and retail agronomy products driven by lower urea and UAN prices.
•Volumes decreased within our grain and oilseed product category due to a combination of factors, including lower crop yields resulting from drought conditions experienced in portions of our trade territory in North America and contributed to a $458.3 million decrease in COGS.
•The overall volume decrease was partially offset by volume increases in most of our product categories, including a $105.6 million increase in COGS for oilseed processing driven by strong meal and oil demand, a $77.1 million increase in COGS for renewable fuels due to higher demand and a $49.6 million increase in COGS for retail and wholesale agronomy products, which experienced increased demand during the third quarter of fiscal 2023 as prices declined due to global market conditions.
All Other Segments

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Nitrogen Production COGS | $ | 1,276 |  |  | $ | 1,256 |  |  | $ | 20 |  |  | 1.6 | %
Corporate and Other COGS | $ | (5,261) |  |  | $ | (5,066) |  |  | $ | (195) |  |  | (3.8 | %)

There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the nine months ended May 31, 2023, compared to the same period during the prior year.
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Marketing, General and Administrative Expenses

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Marketing, general and administrative expenses | $ | 749,829 |  |  | $ | 692,395 |  |  | $ | 57,434 |  |  | 8.3 | %

Marketing, general and administrative expenses increased during the nine months ended May 31, 2023, primarily due to higher salary and benefit expenses, as well as costs related to certain legal matters and higher repair and maintenance expenses for our facilities and information technology platforms.
Interest Expense

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Interest expense | $ | 106,166 |  |  | $ | 80,705 |  |  | $ | 25,461 |  |  | 31.5 | %

Interest expense increased during the nine months ended May 31, 2023, as a result of higher interest rates compared to the same period in the prior year, which was partially offset by decreased notes payable balances.
Other Income

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Other income | $ | 83,629 |  |  | $ | 31,817 |  |  | $ | 51,812 |  |  | 162.8 | %

Other income increased during the nine months ended May 31, 2023, primarily as a result of increased interest income due to higher interest rates and a larger cash balance earning interest.
Equity Income from Investments

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Equity income from investments* | $ | 523,236 |  |  | $ | 644,347 |  |  | $ | (121,111) |  |  | (18.8 | %)

*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.
Equity income from investments decreased during the nine months ended May 31, 2023, compared to the same period during the prior year, primarily due to lower income associated with our equity method investment in CF Nitrogen, which was partially offset by higher income associated with our equity method investment in Ventura Foods. Equity income decreased for CF Nitrogen as a result of lower prices of urea and UAN due to global supply and demand factors and increased for Ventura Foods as a result of more favorable market conditions for edible oils.
Income Tax Expense

| Nine Months Ended May 31, |  | Change
| 2023 |  | 2022 |  | Dollars |  | Percent
| (Dollars in thousands) |  |
Income tax expense | $ | 66,305 |  |  | $ | 89,143 |  |  | $ | (22,838) |  |  | (25.6 | %)

Decreased income tax expense during the nine months ended May 31, 2023, resulted from decreased nonpatronage earnings and additional DPAD benefit during the period. Effective tax rates for the nine months ended May 31, 2023 and 2022, were 3.9% and 6.7%, respectively. Federal and state statutory rates of 24.7% and 24.4% were applied to nonpatronage business activity for the nine months ended May 31, 2023 and 2022, respectively. Income taxes and effective tax rates vary each year based on profitability, nonpatronage business activity and current equity management assumptions.
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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:

| May 31, 2023 |  | August 31, 2022
| (Dollars in thousands)
Cash and cash equivalents | $ | 997,323 |  |  | $ | 793,957 |
Notes payable | 605,955 |  |  | 606,719 |
Long-term debt including current maturities | 1,952,256 |  |  | 1,958,814 |
Total equities | 10,083,378 |  |  | 9,461,266 |
Working capital | 2,765,321 |  |  | 2,425,878 |
Current ratio* | 1.4 |  |  | 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 our cash flows from operations and with short-term borrowings through our committed and uncommitted revolving credit facilities, including our securitization facility with certain unaffiliated financial institutions and our repurchase facilities relating thereto. On April 21, 2023, we amended and restated our five-year unsecured revolving credit facility, which provides a committed amount of $2.8 billion. That facility now expires on April 21, 2028. 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. On January 24, 2023, we entered into a Note Purchase Agreement to borrow $150.0 million of debt in the form of a note. The note matures on January 24, 2030, and interest accrues at a rate of 5.68%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow, and the proceeds were used to retire maturing 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 2023:
•Capital expenditures. We expect total capital expenditures for fiscal 2023 to be approximately $730.2 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. During the nine months ended May 31, 2023, we acquired $374.2 million of property, plant and equipment.
•Major maintenance. We expect total major maintenance for fiscal 2023 to be approximately $238.3 million compared to major maintenance of $24.8 million in fiscal 2022. Increased major maintenance for fiscal 2023 is for a turnaround at our Laurel refinery. During the nine months ended May 31, 2023, we paid $184.4 million in major maintenance.
•Debt and interest. We expect to repay approximately $291.7 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately $87.5 million during fiscal 2023. During the nine months ended May 31, 2023, we repaid $159.4 million of scheduled long-term debt maturities and finance lease obligations.
•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding as of May 31, 2023. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2023. Dividends paid on our preferred stock during the nine months ended May 31, 2023, were $126.5 million.
•Patronage. Our Board of Directors has authorized approximately $500.0 million of our fiscal 2022 patronage-sourced earnings to be paid to our member-owners during fiscal 2023. During the nine months ended May 31, 2023, we distributed $502.9 million of cash patronage related to the year ended August 31, 2022.
•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
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producer-members and association members. During the nine months ended May 31, 2023, we redeemed $480.4 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 short- and long-term operations. 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 debt covenants and restrictions as of May 31, 2023. Based on our current fiscal 2023 projections, we expect continued covenant compliance.
Working Capital
We measure working capital as current assets less current liabilities as each amount appears on our condensed consolidated balance sheets. We believe this information is meaningful to investors as a measure of operational efficiency and 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 other companies. Working capital as of May 31, 2023, and August 31, 2022, was as follows:

| May 31, 2023 |  | August 31, 2022 |  | Change
| (Dollars in thousands)
Current assets | $ | 9,386,291 |  |  | $ | 9,377,847 |  |  | $ | 8,444 |
Less current liabilities | 6,620,970 |  |  | 6,951,969 |  |  | (330,999) |
Working capital | $ | 2,765,321 |  |  | $ | 2,425,878 |  |  | $ | 339,443 |

As of May 31, 2023, working capital increased by $339.4 million compared with August 31, 2022. Current asset balance changes increased working capital by $8.4 million, primarily driven by increases in receivables and cash and cash equivalents, which were driven by seasonality in our business. Current liability balance changes increased working capital by $331.0 million, primarily due to a decrease in the current portion of long-term debt following its maturity during fiscal 2023 and a decrease in customer advances, which was driven by seasonality in our business.
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.
Contractual Obligations
For information regarding our estimated contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report on Form 10-K for the year ended August 31, 2022. No material changes occurred during the nine months ended May 31, 2023.
Cash Flows
The following table presents summarized cash flow data for the nine months ended May 31, 2023 and 2022:

| Nine Months Ended May 31, |  |
| 2023 |  | 2022 |  | Change
| (Dollars in thousands)
Net cash provided by (used in) operating activities | $ | 1,969,725 |  |  | $ | (7,138) |  |  | $ | 1,976,863 |
Net cash used in investing activities | (651,088) |  |  | (339,888) |  |  | (311,200) |
Net cash (used in) provided by financing activities | (1,147,164) |  |  | 355,946 |  |  | (1,503,110) |
Effect of exchange rate changes on cash and cash equivalents | (16) |  |  | (11,311) |  |  | 11,295 |
Increase (decrease) in cash and cash equivalents and restricted cash | $ | 171,457 |  |  | $ | (2,391) |  |  | $ | 173,848 |

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 $2.0 billion decrease in cash used in operating activities primarily reflects decreases in inventories and receivables, which resulted from a combination of reduced prices and volumes, as well as increased net income during the first nine months of fiscal 2023 compared to the same period during fiscal 2022.
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The $311.2 million increase of cash used in investing activities reflects larger expenditures for property, plant and equipment and major maintenance during the first nine months of fiscal 2023, compared to the same period during fiscal 2022.
The $1.5 billion decrease in cash provided by financing activities primarily reflects decreased net cash inflows associated with our notes payable due to lower short-term funding needs resulting from strong cash earnings and increased cash outflows for patronage paid and equity redemptions during the first nine months of fiscal 2023 compared to the same period during fiscal 2022.
Preferred Stock
The following is a summary of our outstanding preferred stock as of May 31, 2023, 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 benchmark interest rate 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 benchmark interest rate plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024.
(d) All series of preferred stock are 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.
Critical Accounting Policies
Our critical accounting policies as presented in the MD&A in our Annual Report on Form 10-K for the year ended August 31, 2022, have not materially changed during the nine months ended May 31, 2023.
Recent Accounting Pronouncements
No recent accounting pronouncements are expected to have a material impact on our condensed consolidated financial statements.
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, 2023, that would affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, 2022.
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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 the Securities Exchange Act of 1934) as of May 31, 2023. 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, 2023, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For a description of our material pending legal proceedings, please see Note 13, Commitments and Contingencies, of the notes to the unaudited condensed consolidated financial statements that are included in this Quarterly Report on Form 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, 2022, or disclosed in Item 1A of our Quarterly Report on Form 10-Q for the quarter ended February 28, 2023.
ITEM 5. OTHER INFORMATION
Effective as of September 1, 2023, the CHS Inc. Executive Long-Term Incentive Plan was amended and restated (the "ELTI Plan") to update the ELTI Plan eligibility to clarify that the employees in the positions of Vice President, Senior Vice President, Executive Vice President, President and Chief Executive Officer are eligible to participate in the ELTI Plan. The ELTI Plan was also updated to clarify that the Chief Executive Officer, Chief Financial Officer and Chief Human Resource Officer administer the ELTI Plan and that as administrators they may jointly approve amendments to the ELTI Plan subject to the CHS Board of Directors approving any material amendments to the ELTI Plan. The ELTI Plan was also updated to make certain other technical, administrative and non-substantive changes.
Effective as of September 1, 2023, the CHS Inc. Annual Variable Pay Plan was amended and restated (the "AVP Plan") to update the AVP Plan eligibility provisions to outline the criteria that employees must meet in order to be eligible to participate in the AVP Plan and provides examples of the types of job roles or job start dates that are not eligible for participation in the AVP Plan. The AVP Plan was updated to clarify the proration of awards under the AVP plan under certain promotions and other status changes. The AVP Plan was also updated to clarify that the Chief Executive Officer, Chief Financial Officer and Chief Human Resource Officer administer the AVP Plan and that as administrators they may jointly approve amendments to the AVP Plan subject to the CHS Board of Directors approving any material amendments to the AVP Plan. The AVP Plan makes it clear that the Chief Executive Officer and the Chief Financial Officer must approve any modification of the business unit level performance metrics or performance goals. The AVP Plan was also updated to made certain other technical, administrative and non-substantive changes.
The foregoing descriptions of the ELTI Plan as amended and restated and the AVP Plan as amended and restated do not purport to be complete and are qualified in their entirety by reference to the full text of the ELTI Plan and the AVP Plan, copies of which are attached hereto as Exhibits 10.6 and 10.7, respectively, and which are incorporated herein by reference.
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ITEM 6. EXHIBITS

Exhibit | Description
10.1 | Second Amended and Restated Limited Liability Company Agreement, dated as of April 1, 2023, between CHS Inc. and Cargill, Incorporated.
10.2 | 2023 Third Amended and Restated Credit Agreement (5-Year Revolving Loan), dated as of April 21, 2023, by and between CHS Inc., CoBank, ACB, for its own benefit as a lender and as the administrative agent and the bid agent for the benefit of the present and future lenders, Sumitomo Mitsui Banking Corporation, for its own benefit as a lender and as the syndication agent, and the other lenders thereto. (Incorporated by reference to our Current Report on Form 8-K, filed April 25, 2023).
10.3 | Amendment No. 4 to 2015 Credit Agreement (10-Year Term Loan), dated as of April 21, 2023, by and between CHS Inc., CoBank, ACB, for its own benefit as a lender and as the administrative agent for the benefit of the present and future lenders, and the other lenders party thereto. (Incorporated by reference to our Current Report on Form 8-K, filed April 25, 2023).
10.4 | Twelfth Amendment and Restated Receivables Purchase Agreement, dated as of July 11, 2023, by and among Cofina Funding, LLC, as seller, CHS Inc., as servicer and as originator, CHS Capital, LLC, as an originator, each of the conduit purchasers, committed purchasers and purchaser agents set forth on the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ. Ltd., New York Branch, as administrative agent.
10.5 | Master Framework Agreement, dated as of July 11, 2023 (the "Framework Agreement), by and among Coöperatieve Rabobank, U.A., New York Branch, a Dutch coöperatieve acting through its New York Branch, as buyer, CHS Inc. and CHS Capital, LLC, as sellers, and CHS Inc., as agent for the sellers.
10.6 | CHS Inc. Executive Long-Term Incentive Plan (2023 Restatement).
10.7 | CHS Inc. Annual Variable Pay Plan (2023 Restatement).
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 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 13, 2023 |  | By: |  | /s/ Olivia Nelligan
|  |  |  |  | Olivia Nelligan
|  |  |  |  | Executive Vice President, Chief Financial Officer and Chief Strategy Officer

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