Strong balance sheet and continued growth highlight MFA’s market position
Unaudited financials show MFA enjoyed a good year with $15.4 million in after-tax profitability. That’s below the two previous years, but an acceptable return considering the weather’s impact on this past fiscal year. MFA’s fiscal year runs from Sept. 1 to Aug. 31.
Audited numbers will be available in the February issue of Today’s Farmer.
MFA accounted for total sales of $1.458 billion, an increase from last year’s $1.420 billion. The trend line for the past four years is up. Of that income, $33 million came from new locations at Osage City, Madison and Emporia, Kan.; Coin, Iowa; and Producers MFA Agri Services at El Dorado Springs and its related locations.
Grain sales were down 2.3 percent to stand at $530 million, but the average value was higher in 2013. Volume has been down the last few years considering MFA trade territory experienced flooding in some parts while drought affected others.
We can’t control weather, but we can control marketing. That strategy has allowed us to maintain market share through short crops.
We also have added an additional two million bushels of storage and upgraded facilities. MFA has acquired several operations in the past 16 months and that has affected our total sales and strengthened the organization.
Field crop sales have had very good growth the past few years. For fiscal year 2013, field crop sales totaled $744 million, an 8 percent increase over the previous year. Volume increased across all divisions.
Livestock supply sales have been steady at $174 million. Livestock numbers have declined not just in our territory, but nation-wide. Yet MFA’s complete feed tonnage has stayed level. That means we continue to increase market share.
Total operating margins (product sales, service revenues and patronage) were level with last year and stand at $205 million, a result of reduced grain revenues and one-time earnings at one of our joint ventures.
Total expenses are up, due in part to addition of new locations, fuel and maintenance, construction costs in updating facilities, continued upgrading of rolling stock, and payroll and fringe benefit costs. Agriculture is capital intensive, especially human capital. MFA is dedicated to having highly trained, highly competent people at all levels of the organization.
MFA’s balance sheet is strong. We are dedicated to keeping it strong. Our working capital of $94 million is excellent. Working capital is the measure of a company’s ability to meet short-term financing needs, which, in turn, allows MFA to take advantage of growth opportunities when they arise. A company MFA’s size should have working capital in the $90 million to $100 million range.
As a company, we have a financial plan that looks forward three years, and we continue to challenge ourselves to improve our financial condition.
Investments and other assets stand at $47 million, which shows the strength of our joint ventures and associated partners. Our fixed assets stand at $90 million.
Capital expenditures total $23 million, the same as last year. That number shows, although we have made acquisitions, we are taking care of ongoing operations.
Total assets are $412 million, down from $506 million last year. Total assets are driven by seasonal and commodity values. Fiscal year 2012’s early harvest stands in stark contrast to 2013’s lingering crop season.
Long-term debt of $82 million shows MFA’s bond program is still appealing. Of the $82 million of debt, $59 million relates to bonds. The remainder is term debt from lenders. Attractive rates give MFA access to long-term, non-bank financing.
Net worth shows a good trend line. It is up to $142 million. Net worth is the amount of the company our farm families own. It is a combination of retained earnings and member equities.
Member equity is approximately $60 million each year over the past six years. That means the amount of the company owned by our farm families is 34 percent. Personally, my goal is to move that number closer to 40 percent.
All in all, MFA enjoyed a good year in the face of bad weather and declining livestock numbers. For fiscal year 2014, we expect continued growth and profitability.
As a company, we have a financial plan that looks forward three years, and we continue to challenge ourselves to improve our financial condition. We want to reach new heights.
Our lenders recognize the strength of the company. We have positioned ourselves to take advantage of opportunities. We function as a team, both across the company and with our farm families. That’s a roadmap for success.
Bill Streeter is President and CEO of MFA Incorporated.