December 3, 2020

MaxYield’s Profitable “Three-Peat”

Bob BurkardtOur current level of savings and distributions could not be possible without the support of our loyal members and clients.” — Bob Burkhardt, MaxYield’s chief financial officer

Good things come in threes at MaxYield Cooperative, where our fiscal year ending July 31 marked the third highest annual earnings in the company’s history.

“MaxYield’s balance sheet is strong, and it continues to get stronger every year,” said Keith Heim, MaxYield’s CEO. “In today’s business environment, this is crucial.”

MaxYield’s savings generated from operations for the fiscal year totaled $4.1 million, up from $3.9 million for the prior fiscal year. Adding patronage and dividend income created total savings of $8.4 million for fiscal year 2012, compared to $6.2 million for the prior year.

Continued growth in MaxYield’s business units lead to record sales for the company, Heim said. Agronomy revenues and corn volumes were strong, while refined fuels showed increases compared to the previous year.

Solid, consistent earnings allow MaxYield to continue investing in the infrastructure required to support its clients. “Some of the facilities we have today weren’t built to handle 200-bushel-per-acre corn and 60-bushel soybeans,” Heim said. “We need to continue investing in our facilities and equipment to stay current, and it takes profit and working capital to do that.”

Giving back to MaxYield’s members

MaxYield’s strong earnings in fiscal year 2012 also allowed the company to add $3.5 million to retained savings while distributing $3.3 million in cash and equity to members.

“Again this year, 20% of the patronage distribution will be paid in cash with 80% added to member equity,” said Bob Burkhardt, MaxYield’s chief financial officer.

MaxYield’s patronage rates this year are 4.3¢ per bushel on grain, 4.04¢ per gallon on all fuels, and 3.36% of the dollar value of all other goods or services. This compares to the prior year’s rates of 2.85¢, 2.39¢, and 2.05%, respectively.

In addition to the cash and equity distribution, MaxYield is passing through $1.6 million in tax deductions to members from the company’s available Domestic Production Activities Deduction (also called the Section 199 tax deduction). “While the market and the economy have allowed us to have a series of good years, our current level of savings and distributions could not be possible without the support of our loyal members and clients,” Burkhardt noted.

No two years are the same

Every fiscal year is unique and presents its own opportunities and challenges, Burkhardt added. For the fiscal year ending July 31, 2011, MaxYield made the most of its money during the last three months of the fiscal year—the exact opposite of what happened in fiscal year 2012.

“We started off strong in the fall and winter months of fiscal year 2012, while the last several months of the fiscal year tapered off. The market run-up caused by the summer 2012 drought took the cream off the top. Higher interest costs resulting from the large amount of money we had to put up to fund hedge margins were key factors.”

The pattern of grain movement can also shift dramatically from one fiscal year to the next, added Burkhardt, who noted that the timing of cash flows impacts how soon MaxYield can pay down its interest bill. “In the last fiscal year, grain volumes moved a lot earlier than they have in previous years. We moved more grain in the first six months of fiscal year 2012 than in the last six months.”

Financial stability equals strength

While MaxYield can’t control all these factors, it can control how it focuses on growing the business, such as investing in “people-first” practices that help team members enhance their skills to serve clients more effectively.

“This is helping us progress as a financially stable company that can continue to upgrade our facilities and equipment to provide the service that our clients require,” said Heim, who is cautiously optimistic about fiscal year 2013. “Moving forward, we will remain focused on generating earnings consistently.”

 

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