|2/1/2019 2:55:00 PM|
'Premier Co-op' reports income of approximately $190 million in 2018
|Hundreds of co-op members and guests filled a hotel ballroom in Mineral Point recently, hearing annual reports, facility updates and plans for the future regarding generally positive 2018 financial performance reports from one of Wisconsin's largest member-owned cooperatives, Premier Cooperative. |
Chief Financial Officer Andy Jones reported a trend ticking upward over much of the past decade in total sales volume. The co-op reported sales of approximately $190 million last year (between Sept. 1, 2017 and Sept. 1, 2018), an increase from $185 million in 2017 and a figure up approximately $100 million, compared to a decade ago, in 2009.
Agriculture cooperative annual meeting attendees often hope to see at least some diversification regarding operations and were rewarded Wednesday in noting CFO Jones' powerpoint presentation revealing the following:
For 2018, Premier Co-op Energy sales were up substantially, as Premier's propane sales (both wholesale and retail) continue to ramp upward and the Mount Horeb-based co-op is now in the top 25 in the entire United States in propane sales. Regarding Energy sales as a whole, sales (approximately $30 million) increased by 25 percent.
The co-op closed an older 'automotive shop' facility at Westby, a move that in some part, is reflected in the Automotive Service Center category of co-op sales 'decreasing' 19 percent in 2018 (at just over $3 million in total category sales). The co-op also maintains and services much of it's own 600 vehicle fleet of service vehicles.
The Co-op's Hardware/Lumber Division held firm at $6,557,550 in sales, nearly identical to 2017 sales. Spending and sales at the co-op owned convenience stores also increased seven percent in 2018, to sales of $13.6 million in 2018.
At a time when sales by livestock and dairy producers have often involved depressed subsector prices, the co-op's Feed Sales held firm, the same as the previous year, selling $57,463,377 worth of feed.
The slippage of prices for soybeans, corn or other grain commodities also undoubtedly, indirectly, affected co-op Agronomy sales in 2018, a category down one percent, at approx. $57.16 million dollars.
Understandably, due in part to international tariffs and grain sales marketing factors, sales ticked downward, by seven percent, at $22.65 million in total grain sales.
Co-op Board Treasurer/Co-op Chief Executive Officer Andy Fiene pointed out (in a separate visuals display) - that of the total calendar year sales in 2018 (of $195.1 million in total Jan. 1 -Dec. 31 sales), Agronomy and Feed each accounted for 30 percent of the co-op's core diversification. Energy sales made up 16 percent of the total; Grain and Energy sales were identical at 12 percent apiece with other, smaller sub-categories accounting for the remaining 12 percent in co-op sales.
Fiene remarked how various, previous expansions, via several mergers, have fueled the co-op's growth in total sales from $25.9 million in calendar year 2000 to the $195.1 million in year 2018.
Displaying a visual of Dodgeville's Propane Auto Gas Fueling Station, Fiene and Jones, and Co-op Energy Division representative, Tim Lease, all indicated the 120 percent uptick in category sales (in just one 12 month period) comes as propane autogas clean fuel usage is increasingly popular, across the region, state and nation - not only for state and county governments, police departments and municipal transportation fleets, but also for private users.
Members in the annual meeting audience - (many were from the Dodgeville Chronicle, Pecatonica Valley Leader and Mineral Point Democrat Tribune readership areas across southwest Wisconsin), heard reports indicating that in the breakdown of co-op 'operating expenses,' 61. 2 percent of money spent went into Distribution, 35.2 percent went into General expenditures; and 3.6 percent was devoted to Administrative expenses.
CFO Jones revealed the $190 million in sales came at a cost of $147.86 million dollars, resulting in a gross margin for the co-op of $41.7 million in 2018. Local Net Savings was announced at just over $7 million and Patronage Refunds Received topped $2 million ($2.072 million) in 2018.
In total Net Savings for the co-op, the Net Savings increased by 4.99 percent, from $8.615 million in 2017 to $9.45 million in 2018.
Total Cash To Patrons topped $3.5 million in 2018, (when combining Patron Equities Redeemed and Cash Patronage Refunds).
In terms of cash flow, Premier Co-op began the financial year with $21.2 million in cash/cash equivalents and finished with $23,043,942 in the same category.
"These are challenging times in agriculture and brick and mortar retailing, but with challenges there are also opportunities," added Fiene, addressing the Mineral Point audience. Fiene and Premier Co-op Board Chairman, Steve Burns, have both commented over recent months on Premier's proposed merger with Marshfield, Wisconsin based ProVision Partners Cooperative.
Sharing prospective merger details prior to the annual meeting - Fiene had indicated the following - "While there are still many details to work out, the underlying vision to bring these two successful, member owned cooperatives together is clear. Simply put, we need to be able to combine the ability to deliver industry leading products and solutions to our members in an efficient manner while having the size and scale to be a preferred partner of the major suppliers."
Fiene alluded to - and Burns confirmed, that national suppliers are most impressed (as the national and world economy heads into 2019), with customers who can deliver, regarding sheer scale and size.
"The face of agriculture is constantly evolving, and your cooperative must continue to adapt as well, like we have done for the past 125 years, or face irrelevance," warned Fiene. Fiene said the board and employees of ProVision Partners will be asking their membership to vote (this month) in favor of joining the two companies together.
"Premier and ProVision Partners are two of the most financially sound ag and consumer supply cooperatives in the Midwest. Both have an incredible passion for and commitment to animal agriculture, crop production, grain services, and home, farm, and business energy, hardware, convenience, and other retail products and services."
Speaking last weekend, Burns confirmed ProVision Partners possesses co-op members diversified, but rooted in Animal Agriculture and especially the dairy industry and in milk production. Burns noted ProVision Partners is the 2015 conglomeration entity formed when Central Wisconsin Co-op and Harmony Country Co-op merged. The byproduct now has major Energy, Agronomy, Feed and Grain divisions, possesses C-stores in Auburndale, Pittsville, Stratford and Colby, along with several other stores including a tire/service center, a lawncare business and the large Central Wisconsin Country Store retail facility in Marshfield.
In giving his annual report, Burns said that with Premier's history dating back to the co-op's beginnings in 1893 (Premier celebrated a 125th anniversary in Dec., 2018) - generations who came before would be amazed at today's precision farming and life in general. Burns said earlier generations could not imagine drone use, GPS use, spraying so precise it overlaps by less than two inches and home security systems allowing a person to be a half world away, simultaneously seeing (on a cell phone screen) who's ringing a door bell tens of thousands of miles away.
Burns compared the co-op's first year in business (1893) doing $99 worth of business per day, whereas in 2018, Premier Co-op did $519,000 worth of business, daily. In his CEO's report, Fiene pointed out that as the number of co-ops continues to contract, in Wisconsin and across the U.S., just 28 co-ops remain in Wisconsin. Of the 28, Fiene displayed an industry map revealing just eight (Premier, Allied, United, Provision Partners, Landmark, Countryside, Country Vision, and Synergy.... when combined, account for over 85 percent of the now $2 billion in annual sales by co-op entities across Wisconsin.
Hinting that still more consolidation and merging is likely to occur in the years ahead - he said all eight co-ops Feed sales, territories overlap in a 90 minute drive, while all but 3 overlap Agronomy territories in a 45 minute drive from their closest locations to Premier Co-op.
"Why would Premier look at partnering?" asked Fiene - then answering his own questions with what he said are the major points the co-op's Board is now considering, including: what is best for members and employees; the success of past partnerships; improved cash returns to members; attracting and retaining quality staffers; growing the balance sheet for the future, having greater access to needed services, people or facilities; and achieving economies of scale regarding purchasing power and positive asset utilization.
Fiene was adamant in pointing out the successes enjoyed by the co-op following past partnerships/mergers, noting that since the year 2000 (just prior to the merger with Blanchardville's former Quad County Co-op) Premier, via several expansions had added $88 million of member value, with the net of paying back nearly $30 million (to co-op members) during the same 18 year time span.
Premier Co-op currently has Energy Offices and/or Storage Facilities in the following communities: Bloomington, Boscobel, Cashton, Cassville, Cobb, Cochrane/Fountain City, Dodgeville, Independence, Lancaster, Manawa, Mazomanie, Mineral Point, Monticello, Mount Horeb, Platteville, Richland Center, Viroqua, Waupaca and Westby.
Regarding improvements, Fiene mentioned C-store upgrades in 2018 included new pumps, new lines, new islands having been installed in Mount Horeb's East side store), comparative project work finished at Westby and new credit card security point of sale equipment having been installed at all stations in 2018.
Upcoming investments include the huge new Agronomy dry plant facility in Lancaster. Fiene lauded the Ag co-op's Agronomy sales as one example of the sales driving future fine-tuning or expansion, noting the co-op sold approx 27,000 bags of seed corn in 2018 and over 38,500 bags of soybean seed. Co-op workers also customer applied in excess of 477,000 acres in Wisconsin in 2018. Fiene said Grain storage and Agronomy service upgrades have continually taken place in recent years and Burns and Fiene spoke on the topic of expansion - and provided services most needed by Wisconsin farmers.
For example, Fiene provided timelines and construction photos regarding the shutdown of tired, inefficient feed manufacturing mills which had been located in Westby, Cashton and Richland Center, all having been replaced with the new, state-of-the-art feed manufacturing facility now brought on line in Westby - similar to the mammoth Mineral Point facility which replaced earlier mill sites in Hollandale, Blanchardville, Darlington and Mount Horeb. In addition - in Richland Center, small adjacent offices at various Ag center buildings have been remodeled and combined. Fiene said the new 'One Stop Ag Office' will better serve Feed Agronomy, Energy and grain warehousing customers and will open in Spring, 2019, and, as he quoted - "will reduce hassle and will increase efficiencies."
Fiene displayed drawings and a display of a planned major addition in Mount Horeb, at Premier's west side convenience store, stating - "if the budget comes in close to the estimates, we hope to break ground this spring." (Plans call for a near doubling in size of the current west side convenience store.)
Per co-op Vice President of Risk Management - Matt Severson's announcement, approximately two dozen co-op customer sons or daughters (2019 high school seniors) - were announced as $500 scholarship recipients. Students applying for the $500 per person awards were tasked prior to the annual meeting, with writing 200 word essays on the topic of cooperative's role and importance in rural America. Three prep seniors read their essays aloud to the annual meeting gathering including Pecatonica senior Joe Tisch, who has been accepted into School of Engineering at UW-Madison. Following are the names of the scholarship recipients - each receiving $500. (Name, High School, College the individual will attend):
Miranda Swaziek, Riverdale, UW- Stevens Point; Rebecca Gilbertson, River Valley, Viterbo University; Melody Hampton, Cassville, Bradley University; Rachel Peterson, Cashton, UW-Stevens Point; Samantha Marx, Sauk Prairie, UW-Milwaukee; Ashley Kempf, Cashton, UW-River Falls; Dylan McGraw, Dodgeville, UW-Madison; Matt Foley, Willow Brook, IL., Marquette; Adam Martin, Wauzeka, UW-La Crosse; Charlie Halvorsen, Arcadia, Univ. of Minnesota; Landon Stoppelmoor, Cochrane-Fountain, City Rock, Comm Tech; Dacodah Kepler, River Valley, UW-Richland; Katie Yanke, Sauk Prairie, UW-Platteville; Haiden Koopmann, Beckmann, IA., NICC Calmar; Joseph Tisch, Pecatonica, UW-Madison; Julia Jones, Sauk Prairie, Madison College; Isaac Ripp, Waunakee, UW-Madison/Shortcourse; Jenna Thomas, Richland Center, UW-River Falls; Sam Sawle, Dodgeville, Madison College; Lily Durst, Dodgeville, UW-La Crosse; Noelle Elfering, Barneveld, SWTC; Haylie Birchman, Fennimore, UW Platteville; Andrew Knowles, Boscobel, SWTC.
Board of Directors members for the co-op include Chairman Burns, vice-chairman Mitch Seston, secretary Louie Kieler, directors Brad McCauley, Steve Trescher, Dave Unbehaun and treasurer Fiene.
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