January 26, 2021

What’s the Biggest Secret to Success?

By Keith Heim, CEO, MaxYield Cooperative

Think of the last time you stopped by a MaxYield location. Did our team members greet you? Were they friendly? Were they able to answer your questions, or find the information needed to answer them?

These things may seem basic, but they build the foundation that allows your cooperative to succeed. That’s why we continue to invest in leadership and training initiatives across the company so we can serve you effectively.

Focusing on fundamentals like this is one of the biggest secrets to success in business. It also translates into solid financial returns that keeps your cooperative strong.

MaxYield has achieved consistent earnings in our past three fiscal years. I’m especially proud of how our team has performed during this COVID-19 pandemic, showing grit, resiliency and a renewed focus on the fundamentals to meet your needs.

In fiscal year 2020, we achieved the second-best total revenue in company history. MaxYield’s local savings from operations for the 2019-2020 fiscal year (which ended July 31) totaled $1,512,243. Pre-tax total savings reached $8.6 million. Nearly all revenue areas showed consistency with the prior year and continue to trend upwards. Areas of note include:

  • Our second-best drying revenue year
  • Solid total energy and feed margins
  • Strong total seed margins
  • Exceptional soybean margins

All this equates to a solid balance sheet. We also reduced term debt by approximately $4 million, maintained adequate working capital and invested approximately $13 million on capital expenditures during the fiscal year—well above what we normally invest.

In addition to routine upgrades, we’ve built one new grain bin at Belmond and one in Britt. We’ve also added a new 750,000-bushel bin and other equipment to modernize the grain complex at Klemme. These investments reflect a key business fundamental: if you’re not investing in your company, you’re going backwards.

GROWING MEMBERS’ EQUITY, RETAINED SAVINGS

All fits into MaxYield’s balanced approach to three key areas, including 1.) investing in property, plant and equipment, 2.) timely retirement of bank debt and 3.) retiring some MaxYield equity each year. We achieved this balanced approach again in fiscal year 2020.

Members’ equity and retained savings both grew in fiscal 2020. Member’s equity increased by about $2.65 million in fiscal year 2020. Retained savings now total nearly $67 million, compared to 1997 retained savings of ($122,242)—a dramatic increase in 23 years.

Completed 750,000-bu. bin in Belmond.

This shows you need to have business fundamentals in place long before hard times hit, so you can keep building your balance sheet. This allows you to focus on strategic, long-term decisions, rather than being held captive to short-term, quarterly, knee-jerk reactions.

PUTTING MONEY BACK IN YOUR POCKET

The MaxYield board has approved using a portion of this year’s available Section 199A tax deduction internally to mitigate the cooperative’s tax obligation. The unused Section 199A tax deduction amount (approximately $1.4 million) will be passed through to you, our members, for possible use on your individual tax returns. This is the same opportunity we offered in 2019.

Your MaxYield board of directors also reviews estate requests monthly. We paid approximately $128,000 to estates in fiscal year 2020.

During the board’s August 2020 meeting, the directors approved the distribution of a portion of allocated equities from 1999, totaling approximately $108,000. The board also approved making $500,000 available for a seventh discounted equity offering. The three stock groups for the discounted equity offering will remain the same as last year.

The notable change involves the percentages offered for each stock group:

  • Group 2 is raised from 65% to 80%.
  • Group 3 is raised from55% to 65%.
  • Group 4 is raised from 45% to 50%.

Stockholders will have until end of January 2021 to decide if they want to participate in this discounted equity offering. If you haven’t received a letter in the mail regarding this, contact your nearest MaxYield location.

THERE IS NO COMPROMISE ON PROVEN FUNDAMENTALS

The results of fiscal year 2020 show that although life is full of compromises, there is no compromise on proven business fundamentals. That’s why MaxYield embraces certain non-negotiables, including integrity, client focus, safety, professionalism, empowerment, accountability and teamwork.

Through our leadership training, we’ve discovered that it’s easy to assume team members know how to do something when they don’t, or they don’t realize they’re empowered to do a certain job. We want our team members to be comfortable in their roles and be good at what they do. That’s why we set expectations for our team members and then mentor them across the finish line so they can serve you effectively.

Ultimately, there are no secrets to keeping MaxYield strong. Get the fundamentals down, and the level of everything you do will rise. Thanks for being part of MaxYield’s success.

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