‘Challenging but profitable year’ ends with 18 percent decline in total net sales
The Aurora Cooperative reported “a challenging but profitable year” in fiscal 2023 at last week’s summit and annual meeting in Grand Island, with president and CEO Chris Decker announcing a pledge to create a new standard of excellence with a concept called “AuroraOne.”
“AuroraOne is a commitment to change the narrative and perception of who we are and who we aspire to be,” Decker said during his management report at Wednesday’s business meeting, which kicked off the company 116th annual meeting at the state fairgrounds. “It represents one team, one vision, one unified force. It supports the popular saying we over me, and there is no ‘I’ in team. It makes each of us responsible for working together to achieve excellence and provide the best products, services and expertise for our owners.”
Looking back over the company’s history, Decker said it was surprising to consider that the cooperative once used the word “divisions” to describe the various segments of the business. That, he said, is not the corporate philosophy now or moving forward.
“That word implies separation, which can inadvertently shape the organization’s culture,” he explained. “Our goal has been to adopt a team philosophy within the cooperative that thrives on communication, dedication and elevating agriculture and growth to create a standard of excellence. We have coined this concept AuroraOne.”
The goal, he continued, is for this concept to promote a company that operates seamlessly as a unified entity, leveraging all the collective talents and resources to create the best experience possible for customers.
“It means a cooperative that is agile, responsive and adaptive to our ever-changing needs and agriculture for our owners,” he continued. “Working as one we can achieve greater efficiencies, deliver exceptional value and contribute to the success and profitability of our owners.”
For the company’s 650 employees, Decker noted, “AuroraOne” means eliminating barriers and working together across all segments to share knowledge, resources and best practices.
“That means having the same sense of purpose and pride in our work, knowing that we are part of something greater than ourselves,” he added. “It serves as a reminder for us to accept the new, build upon the old and continually elevate our personal or professional games. As AuroraOne, I promise you we will continue to elevate agriculture and build a successful cooperative for you now and in the future.”
Financial report
The “challenging but profitable year,” as described by company CFO Karl Smith, ended with net sales of $1.36 billion, representing an 18 percent decrease compared to 2022 net sales. Last year’s $1.66 billion total was a 30 percent increase over the previous year, resulting in net income for FY 2022 (after accounting for cost of goods sold and other expenses) listed at $21.7 million, the best results since 2013. By comparison, this year’s net income was reported at $12.8 million, a decrease of approximately 39 percent from a year ago.
Smith reported that the board elected to revolve $4 million of equity to its member/owners and also approved distribution of $16 million through Section 199A tax deductions. He also noted that the management team has been focused on reducing interest expense in light of the current high interest rate environment. Current interest expense was listed on the 2023 financial report at $20.2 million.
Paul McHargue spoke briefly as the company’s new chairman of the board, having stepped in to fill a seat long held by Bill Schuster, who was thanked and recognized for his 39 years on the board, including 29 years as chairman.
McHargue recalled that the cooperative made a decision last February to “get back to what we do best” by finding a partner to operate the Aurora West ethanol plant, of which the Aurora Cooperative remains a minority owner. Kearney-based KAAPA Ethanol Holdings is now the majority partner, running the day-to-day operations of the plant since that February announcement.
“Because of their expertise in the industry, they’re reworking the plant to make it one of the most efficient plants in the country and are also increasing its capacity from 100 million gallons a year to 150 million gallons a year,” McHargue said. “Because of operational changes, we now have more working capital to invest in our core business. It will be exciting to see what this team will do now that they can really focus on this co-op and what this coop does really, really well.”
Decker later announced plans to utilize some of that working capital.
“We have made significant strides in reducing debt, improving our working capital and divesting from non-performing assets,” Decker said. “Through our partnership with KAAPA, we have built a strong foundation to prepare for the road ahead.”
He then announced a number of capital investments already in motion for 2024, including a new A-STOP facility in Central City, newly added services at the St. Paul tire and service center, construction of a 3.5 million bushel covered storage facility to begin in March at Murphy and Keene, expansion of bulk energy assets in Grant and a new liquid fertilizer asset at the Traer, Iowa location.
“All of these combined are the beginning of a five-year capital plan with significant investments in all the segments of our cooperative,” he said. “These investments will help shape our future.”
Elections were held as always during last week’s annual meeting, which this year was reduced from two days to a single day.
Bill Schuster and Evan Brandes both chose not to seek re-election to the board. Five positions were up for election with five candidates all running unopposed. They included Scott Elting, Paul Mumm, Troy Rainforth, Courtney Brandes and Ryan Bonham.