Mt. Angel, Ore., March 6, 2020 – Wilco, a farmer-owned cooperative, held their 54th Annual meeting yesterday in Salem and announced a patronage revolve of $803,000 to their farmer-owners.
Glenn Goschie, Wilco’s Board Chair and grower of hops and wine grapes addressed the membership with a message of confidence and excitement in the cooperative’s future. His conviction stems from the cooperative’s strategic direction, proven track record of evolving and managing change and was furthered by his recent attendance of Wilco’s Leadership Conference where he relayed his appreciation and respect for the talented group of team members.
Bart Walker, Wilco’s CFO, reported record 2019 sales and margins but lower profits due to startup expenses for multiple new farm stores, the new Donald hazelnut plant, and a challenging year for their Valley Agronomics joint venture; where Wilco has a 26% interest. Even with all the investment in growth, Walker affirmed Wilco’s continued financial strength, a below industry average debt ratio and a stable grower equity trend the past four years.
The financial performance includes continued strength from the farm store business with same-store sales up 5.6% in 2019 and net income near the coop’s plan. The Energy division outperformed plan in 2019 and successfully added propane to complement the mature gasoline, diesel and lubricants offering.
In a challenging economic year for ag, Wilco reported positive net income distributed by Valley Agronomics, but a shortfall to plan. Most of the shortfall came from significantly less rebates due to an intentional drawdown in year-end inventory levels. Valley Ag is now well-positioned for improved profitability this year.
The Hazelnut Growers of Oregon (HGO) business unit reported a loss associated with continuing start-up expenses from the new, state-of-the-art processing plant in Donald. Walker was pleased to report considerable cash flow improvements with an EBITDA increase of more than two million dollars over 2018. Greg Thorsgard, HGO General Manager, then highlighted new sales and the progress of their value-added products which is leading the business from a start-up to profitability. The momentum is expected to continue as the new plant has the capacity to take advantage of the growing acreage in the Willamette Valley and has an SQF Level III rating, the highest in food safety, which can attract large retailers and manufacturers.
In addition to the $803,000 patronage payouts to Wilco members, Walker passed on the additional good news that HGO member hazelnuts sold to the cooperative are exempt from the Oregon Corporate Activities Tax (CAT), and that Wilco will allocate 199A/DPAD tax deductions totaling approximately $800,000 directly to cooperative members.
Sam Bugarsky, 35+ year Wilco employee and CEO, addressed the membership with an emphasis on their core strategies focused on strengthening agriculture and improving net income to historical levels; through the first two months of 2020, the team is executing that plan and achieving the results.
He then confirmed the Wilco Farmers Coop patronage and equity pool is separate from the Hazelnut Growers of Oregon pool. This prevents the temporary start-up losses at HGO from impacting the Wilco member pool not associated with hazelnuts. Any past losses from the new HGO facility remain unallocated and will be offset by future unallocated profits as more value-added products are commercialized.
Bugarsky reaffirmed Wilco’s commitment to the membership, “If equity has your name on it, it’s your money and will be paid out.” A commitment Wilco has upheld for over 50 years, throughout many substantial business changes and multiple mergers and acquisitions.
Greg Wilmes, Board Vice Chairman, concluded the meeting with an announcement that all incumbent Directors were re-elected to the Wilco Farmers Board. The meeting was adjourned over lunch, including samples of new marionberry and skinny chocolate-flavored hazelnuts, and an FFA silent auction that has contributed to raising over a million dollars through Wilco’s FFA Forever program.