November 21, 2019

The Secret is Not to Stop

20140514_maxyield_292 (681x1024)By Keith Heim, CEO

There’s a story about an old farmer who wasn’t known for his progressive methods, yet he managed to make a successful career out of farming. As he looked back on his life, he chalked his success up to one simple fact. “The secret is not to stop,” he said.

This kind of persistence is vital to success. It’s especially important during a year like 2015, when the economic climate became much more challenging in agriculture. This year also highlights why a business needs a solid foundation and a game plan.

As we look back on MaxYield’s 2015 fiscal year, your cooperative’s earnings were down compared to previous years. We still achieved what we set out to accomplish, though, from paying down debt to upgrading assets.

Here are some of the highlights:
• MaxYield showed $925,000 in local earnings and total earnings of more than $5 million. This was our lowest local earnings year since 2007. Lower commodity prices during the year slowed the ag economy. MaxYield also recorded lower fertilizer applications. I’m hopeful we’ll see more fertilizer applications in 2016, however, due to higher 2015 yields and the likelihood that farmers won’t be willing to lower soil nutrient levels.

• Based on the last fiscal year’s financials, the board approved $807,000 in patronage for 2015, with 40% of that allocation paid in cash.
• In addition, the board approved passing about one half of MaxYield’s domestic production activities deduction (DPAD) to members. We passed this through in the form of a tax deduction totaling $2.112 million. Members can use this DPAD as a 2015 tax deduction on their individual returns. When the 40% cash patronage and the cash value of the DPAD pass-through are combined, that’s more than $1 million in cash value to the membership. I believe that’s a success story.

• In September, the board approved retiring the oldest outstanding year of previously allocated patronage at face value. The board also approved $200,000 in cash for the second discounted equity offering. The same two equity groups used last year will be eligible for the discounted equity program this year. Information will be mailed to members in late November following harvest. Members will have until early 2016 to choose whether to participate.

• MaxYield invested $6 million during the last fiscal year in equipment, rolling stock, and facilities throughout the company, including two grain storage additions. We didn’t acquire any term debt to make these investments.

• The board approved and paid $875,000 for the retirement of previously allocated patronage.

• We retired $3.1 million of term debt during fiscal year 2015. At the end of fiscal 2015, MaxYield’s balance sheet showed just under $29 million of working capital, term debt of $15.5 million, and local equity of more than $36 million, resulting in the lowest local leverage ratio in years.

• MaxYield’s retained savings total more than $38 million, up from retained savings of negative $122,000 on July 31, 1997. That’s a great indicator of progress.

Going forward, your cooperative remains a financially solid company. We know the secret is not to stop. That’s why MaxYield’s board will continue to pursue a balanced approach of upgrading assets, retiring term debt, and retiring previously allocated patronage.

On behalf of all of us at MaxYield, we appreciate your support and look forward to working with you in 2016.

 

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