annual report2015 - aghost · npc’s lamoille location sprayer is seen spraying a field of beans....
TRANSCRIPT
www.northernpartners.net
815.539.6772 www.northernpartners.net
ANNUAL REPORT
2015
www.northernpartners.net
815.539.6772
As President of the Board of Directors of Northern Partners Coop , I speak for all the Board members in looking back at this past year. The announcement of our partnership with CHS to build a river terminal (Market Street Terminal) on the Illinois River is the biggest news since the formation of NPC six years ago. This endeavor will guide our Coop in years to come, probably in ways that
we cannot foresee. It will connect NPC in a most direct manner to world markets both in grain and agricultural inputs, which will benefit our Coop and most importantly our shareholders. This is a monumental year in the history of NPC, and we as Board members are proud to be a part of it.
Gary Ford
5-Year Financial Performance
Board of Directors:
President’s Perspective
2011 2012 2013 2014 2015
Sales $90,078,335 $161,769,934 $137,391,630 $134,390,082 $114,956,233
Sales with LLC $107,091,221 $178,304,974 $149,938,146 $153,341,564 $128,974,280
Earnings $2,130,531 $1,938,650 $1,687,428 $2,001,051 $2,060,577
Earnings with LLC $2,871,839 $2,177,333 $1,882,869 $2,303,152 $2,227,828
Regional Patronage $602,190 $602,850 $500,471 $457,430 $490,444
Capital Improvements $1,671,668 $2,059,857 $1,256,973 $1,960,807 $3,536,622
Patronage to Members $388,562 $400,000 $470,000 $556,756 $558,583
DMD Pass Through to Members 0 $500,000 0 $680,000 $250,000
Member Equity $13,418,851 $14,826,007 $16,887,976 $18,466,335 $19,389,649
5 Year Financial Performance
Board of Directors are (front row, left to right) Gary Ford, President; RE Larkin, Jr; Randy Michelini; Glenn Faber; Steve Finley; Back Row: Cory Biers, Secretary-Treasurer; Marty Wheatland, Vice President; Mike Denton; Matt Kreiser; Andy Gehm. 192
Rewind to 2008. The Directors and manage-ment teams of 4 separate coops were form-ing the vision of Northern Partners Coop. A frequently used statement at that time was “The formation of Northern Partners isn’t the intended end result, rather, it’s to better position us to take advantage of future opportunities”. After 6 years of operation, that op-portunity knocked and NPC was in a position to take advantage of it.
January 20th, 2015 the formation of Market Street Terminal, a joint venture with CHS, Inc. was of-ficially announced. Market Street will consist of a 27,000 ton dry fertilizer warehouse with prod-uct blending capabilities, 20,000 ton liquid fertilizer storage with product distribution which will be owned by CHS and operated by NPC. This will allow NPC to decommission its ageing, undersized dry facili-ties and retail dry fertilizer and some UAN out of Market Street. This should help ensure our member owners have the supply required when they need it, at a competitive price. Market Street will also feature a grain barge loading facility which will handle corn, beans and wheat for export through the CHS terminal in Myrtle Grove Louisiana. The grain facility is a 50/50 joint venture between NPC and CHS
which will provide NPC patrons ownership in a direct link to the export market. The forma-tion and ownership in this river terminal gives NPC patrons ownership in a next generation asset to utilize in their farming operations for many years to come. This terminal is expected to begin operations in the spring of 2016.
In addition to the terminal project, NPC has a number of additions and upgrades planned for our facilities this year totaling approximately $5 million dollars as we strive to provide the top tier service for our patrons.
The end of fiscal 2015 also brought to a close Northern Partners ownership in MFC Building Supply. Follow-ing an intensive study and much deliberation, the NPC
board made the decision to divest of MFC and focus solely on its agricultural business units. RP Lumber purchased MFC effective March 1st. We believe this will also better position the lumber business as it now has the size, scope and expertise of an experienced lumber company behind it. We welcome them to the Mendota community and hope they experience great success. We also thank Jason, Kevin, Chad and Doug for their years of loyal service
Distribution of Revenue
Manager’s Report
Patronage DeclarationCash Portion - 60% $335,150Equity Portion - 40% $223,433Total Patronage Declared $556,756
Income Distribution
Stock Dividends $16,838 0.80%Patronage Declaration $558,583 27.10%PY Patronage Under Accrual $3,454 0.2$Deferred Income Taxes ($161,290) -7.80%Cash Income Taxes $28,409 1.40%Provision for Uncertain Tax Position $302,406 14.70%Prior Period Uncertain Tax Position Adjustment $558,346 27.10%Add to Retained Savings $753,831 36.50%Total Pre Tax Income $2,060,57 100%Additional Benefits to PatronsDMD Pass Thru $250,000Class D Stock Repayment $66,010
Elevator CornElevator BeansDirect GrainWheatChemical PurchasesLiquid fertilizer purchasesAnhydrous purchasesDry Fertilizer purchasesMisc. Fertilizer purchasesApplication servicesDiesel FuelGasoline Fuel OilPropane
0.5 % purchases
Distribution of Revenue
3.5 cents per bushel2.25 cents per bushel0.5 cents per bushel0.5 cents per bushel
2.75 cents per gallon4 cents per gallon
1.50 cents per gallon
$6.00 per ton$3.50 per ton$6.00 per ton
0.5% purchases15 cents per acre4 cents per gallon
“The formation of
Northern Partners isn’t
the intended end result,
rather, it’s to better
position us to take
advantage of future
opportunities.”
Eric AndersonGeneral Manager
318
Manager’s Report
ConsolidatedBalance Sheets
to NPC and wish them nothing but success.
NPC finished fiscal 2015 with a profit of $2,060,000 on sales of $126,000,000. Your board of directors has approved a 6% dividend on Class A and Class B stock. In addition, they have approved a patronage refund of $560,000 for business transacted with NPC the past fiscal year. 60% of this will be distributed in cash with the remaining 40% distributed in the form of Class C stock. Another 20% of Class D stock will be retired this year as well.
It’s with great anticipation that we proceed with the 2015 crop season. Lower commod-ity prices will provide challenges not seen for some time, but we remain very optimistic. Much time and energy will be spent on build-ing the river terminal this year, but rest assured our front line staff will continue to focus on meeting your needs and exceeding your expec-tations. As always, on behalf of the entire staff and Board, thank you for your patronage of Northern Partners.
Eric
Current Assets 2015 2014Cash $365,045 $649,654Net Receivables $3,164,921 $3,447,723Inventories $26,893,423 $32,635,365Commodity Derivative Asset $126,177 $501,831Prepaid Expense $5,453,513 $6,886,116Deferred Income Taxes $203,369 $214,591
Total Current Assets $36,206,448 $44,335,280Investments $3,608,295 $2,460,108Net Property, Plant & Equipment $13,577,057 $13,604,669Other Non Current Asstes $98,607 $72,487
TOTAL ASSETS $53,490,407 $60,472,544
CURRENT LIABILITIESNotes Payable -due within 1 year $2,784,724 $6,434,391Accounts Payable $22,205,001 $26,802,730Commodity Derivative Liability $234,711 $754,758Member Distributions Payable $160,521 $311,152Dividends Payable $16,838 $15,798Patronage Refunds Payable $335,150 $334,054Accrued Expenses $905,320 $1,133,672
Total Current Liabilities $26,481,744 $35,786,555Long Term Notes Payable $4,126,997 $3,329,351Provision For Uncertain Tax Position $1,857,794 $997,042Deferred Income Taxes $1,634,223 $1,806,735
Total Liabilities $34,100,758 $41,410,283Stockholders' EquityCapital Stock & Credits $1,180,321 $1,010,794Non - Controlling Interests $602,657 $595,926Retained Income $18,209,328 $17,455,541
Total Stockholder Equity $19,992,306 $19,062,261TOTAL LIABILITES & STOCKHOLDER EQUITY $53,490,407 $60,472,544
Consolidated Balance Sheets
Management Team Picture:
Front row (l to r) Jim Meyer, Op-erations Manager Mark Corrigan,
Agronomy Manager
Back Row (l to r) Alan Zehr, Chief Financial Officer Manager Eric
Anderson, General Manager Mike Leffelman, Energy Manager
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Northern Partners Cooperative ended its sixth year on February 28. Fiscal Year 2015 provided NPC with opportunities and challenges unlike any other year. Our staff works hard every day to live up to our Mission Statement: “meet or exceed the needs of our customers and return value back to our members, and to be good stewards in the communities in which we do business.”
MissionStatement
Meet or exceed the
needs of our customers
and return value back
to our members, and to
be good stewards in the
communities in which we
do business.
ConsolidatedStatement of
Operations
Katy Faber, Grain Originator, and Liz Collins, Preceision/Seed Ac-count Manager, at women changing the face of agriculture, Bloomington, Illinois.
Northern Partners at the Northern Illinois Farm Show in DeKalb, Il-linois.
2015 2014Grain Sales Bushels 2015 - 13,358,986 2014 - 12,777,714 $69,753,319 $90,476,591Cost of Sales $66,472,192 $88,246,402
Gross Trading Income $3,281,127 $2,230,189
Merchandise Sales $40,436,822 $58,068,639Cost of Merchandise Sales $34,502,304 $50,427,794
Gross Merchandise Trading Income $5,934,518 $7,640,845Other Operating Income $4,766,092 $4,796,334
Total Gross Trading Income $13,981,737 $14,667,368
Operating Expense $13,064,793 $12,817,240
Net Operating Income $916,944 $1,850,128
Other Income $1,319,729 $879,486Interest Expense $176,096 $356,836
Income before taxes $2,060,577 $2,372,778Taxes $727,871 $69,626Income to Non - Controlling Interest $167,251 $302,101
NET INCOME $1,332,706 $2,001,051
Consolidated Statement of Operations
516
2015 2014
GROSS REVENUE 2015
GrainAgronomyEnergyLumber/FeedSeed
Grain: 36% Agronomy: 46% Energy: 8% Lumber / Feed: 3% Seed 7%
GrossRevenue 2015
Grain: 36%
Agronomy: 46%
Energy: 8%
Lumber/Feed: 3%
Seed: 7%
Annual Sales 2015
Grain: $72 million
Agronomy: $28 million
Fuel/Propane: $12.3 million
Lumber/Feed: 2.8 million
Seed: $11.5 million
One of the most prominent issues that NPC dealt with in FY2015 was corn and bean yields. Crop yields in North Central Illinois were excellent, in general, and this presented NPC and our member owners with challenges and opportuni-ties on several fronts. Taking de-livery of grain, drying corn, and logistics in general were areas that could have proven difficult but were handled well by the Grain Division with storage and drier construction projects dur-ing the year, as well as additions to the truck fleet.
156
Though the crop was large, it came in dryer than expected, and that plus a warmer winter left the Energy Division with propane inventories to deal with after drying and home heating seasons were over. Crude oil price levels lower than in quite some time are impacting many facets of NPC business.
Refined fuels team (l to r) are Ted Leffelman, Gene Faber, Chris Payne, and Roger Sond-geroth.
“This is a monumetal year in the history of NPC, and was as Board mem-bers are proud to be a part of it.
After 6 years of operation, that opportun- ity knocked and NPC was in a position to take advantage of it.
714
Larger crops also resulted in commodity prices moving to lower levels, and this has challenged our grower customers to find profits in their crop plans for 2015. Agronomy Division personnel worked through crop plans with customers to keep costs reasonable, while not eliminating inputs or reducing them below lev-els necessary to maintain excellent crop yields.
Planned for Fiscal Year 2016
Update Anhydrous Ammonia load out facilities in Ottawa for efficiency and safety
Incorporate low boy trailer into Agronomy fleet
Add two pieces of application equipment to Agronomy Division
Add new tandem tender truck and tank at LaMoille Agronomy location
Construct additional storage and new dryer at Triumph Grain location
Construct additional storage at Tonica Grain location
Construct Grain and Fertilizer facilities at Market Street Terminal
As in every year, changes occur along the way. NPC had two long-time em-ployees leave to enjoy a well-deserved retirement. Mary Kay Hodgson left the Triumph Office Manager position after 20 years. Kimberly Anktkowiak has stepped into the posi-tion and is a valued asset to the Northern Partners family.
Gene Faber retired in FY2015. Gene had been a fuel driver from the LaMoille location for NPC and the Legacy Van Orin Cooperative Oil Com-pany since October 25, 1976. That’s 38 years, 4 months and 1 day. Ted Lef-felman is stepping in to that position and will do a great job. Congratulations and Good Luck to Mary Kay and Gene.
Mary KayHodgson
GeneFaber
138
Changes
Northern Partners continued our commitment to the quality of life in the communities where we live and work. Involvement with Land’o’Lakes Foundation Coop Match Program and CoBank Shar-ing Success Program is an important part of this community involvement. NPC takes pride in giving back to the communities that support our work.
Northern Partners Coop during FY2015
Construction of a new 749,000 bushel bin at the Van Orin Elevator
Added a 5000 bushel per hour dryer at the Tonica Elevator
Added two additional semis to the NPC truck fleet
Donated $3000 to the Tri-County Fair Association through CoBank Sharing Success Program
Donated $2000 to the University of Illinois Lee County 4H Youth and Development Program through the Land’o’Lakes Foundation Coop Match Program
Made donations over $12,000 to more than 100 non-profits and charities throughout NPC’s trade territory
Incorporated 2 new pieces of Agronomy application equipment in Ottawa and Malden
Incorporated 2 tandem trucks equipped with 16 ton dry boxes and 3200 gallon liquid tanks into the Agronomy fleet
Revamped Chemical shed for efficiency and safety at Tonica location
Instituted new lockout/tagout procedures and performed hazards assess ment at all company locations and the Market Street Terminal site
Incorporated a new tripod and self-retracting lifeline to improve con fined space entries. Classified confined spaces at all company locations
Re-evaluated and updated 3 year business plan
Approved patronage of $560,000
Attending the Land of Lakes check presentation are (l to r) Kathy Book, 4-H program Coordina-tor, Burt Bickett, LaMoille Facility Agronomy Account Manager, Katy Fa-ber, Grain Originator, and Janice McCoy, County Director
Attending the CoBank check presentation are (l to r) Jason Stam-berger, MFC/NPC Building Supplies Office Manager, Ken Purvis, Member of the Tri County Fair Association, Kelly Keller, Secretary of the Tri County Fair Assocication, Matt Ramer, President of the Tri County Fair Assoociation, Matt Bauer, Vice President of the Tri County Fair Assoc.
912
Discussions, meetings, and conference calls have been ongoing for several years ironing out the de-tails and fine points of this project. NPC has been working for several years building a balance sheet that would allow us to do something big, and Mar-ket Street Terminal is that something. Rick Dusek, Vice President of Agronomy for CHS, Inc. said at the groundbreaking ceremony, “It’s connecting Northern Partners and the producers in this area with the global marketplace. That’s a big deal. We’re going to have a state-of-the-art terminal connected to the global market.” Peru Mayor Scott Harl added, ““To know that there is another termi-nal in Peru that will be feeding the world is very gratifying,” Building and operating the Market Street Terminal will add layers of responsibility to NPC employees, too. An area that will be new is compliance with maritime regulations and river safety concerns.
MARKET STREET TERMINAL
The primary issue for Northern Partners Coop in FY2015 was the announcement on January 20, 2015 of the joint venture with CHS, Inc. in the construction and operation of Market Street Termi-nal on the Illinois River in Peru.
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THE TERMINAL LIQUID SYSTEMGRAIN HANDLING GRAIN TERMINAL
27,000-ton capacity fertilizer warehouse
250-ton-per-hour,
10 -compa r tmen t blend tower.
two,10,000-ton storage tanks
two-bay, automated 24-hour truck loadout
system with 500-gal-lon-per-minute load capacity for each bay
The grain-handling facility for corn, soy-
beans and wheat will manage grain bound
for the CHS facility at Myrtle Grove, La.
two, 1,000-bushel pits with 20,000-bushel-
per-hour elevation each
40,000-bushel-per-hour conveyor belt to
the river
A 7,000-bushel-per hour dryer
“To know that there is another terminal in Peru that will be feeding the world is very gratifying,”
Scott Harl, Mayor of Peru
“It’s significant and it’s connecting Northern Partners and the producers in this area with the global market-place. That’s a big deal.”
Rick Dusek, Vice-president of Agronomy for CHS
At-a-Glance