|CEO Rivers Myres announced another record-setting year during AFC’s 79th Annual Meeting at the Renaissance Hotel and Convention Center in Montgomery Feb. 24.|
CEO Rivers Myres announces another record-setting year and more good news for Cooperative members.
Excellent leadership and hard work resulted in continued financial growth and success for Alabama Farmers Cooperative in 2015, the fourth-most profitable year in the Cooperative’s history.
After another record-setting year, almost 300 Cooperative members gathered at the Renaissance Hotel and Convention Center in Montgomery Feb. 24 for AFC’s 79th Annual Meeting. At the meeting, President and CEO Rivers Myres announced AFC’s Board of Directors had approved management’s recommendation to retire $40 million in equity from Bonnie Plants, AFC’s wholly owned subsidiary, to its cooperative members.
"In 1975, AFC purchased Bonnie Plants for $250,000," Myres said. "Over the past 40 years, you have invested millions of dollars into Bonnie to help it grow. The time has come to receive a return on your investment."
Myres explained the impact of Bonnie’s transaction with The Scotts Miracle-Gro Company has allowed the company to retire 19 years of equity at one time (1976-1995).
The good news for the Cooperative members didn’t stop there.
"Chief Financial Officer Tricia Arnold and her team have worked diligently to make Bonnie Plants’ income eligible for patronage dividends to AFC’s member-owners," Myres said. "In 2016, Bonnie Plants will begin contributing a small amount of patronage with the intent to increase the percentage each year."
Executive Vice President and Chief Operating Officer Al Cheatham presented the terms of agreement for the strategic partnership between Bonnie Plants and ScottsMiracle-Gro, a deal AFC negotiated for nearly a year.
"At the end of the day, when you do these deals, it’s a cultural fit," Cheatham said. "You have to make sure your partner has the same values you have."
Myres elaborated by explaining the parallels between the two companies. The heritage of both companies runs deep: Bonnie Plants is led by Stan Cope, the grandson of company founders Livingston and Bonnie Paulk; ScottsMiracle-Gro is led by Jim Hagedorn, the son of Miracle-Gro’s founding partner Horace Hagedorn.
"Both are the best at what they do," Myres said. "Bonnie is the largest and best in the United States when it comes to growing and distributing vegetables and herbs, while Scotts is the leading marketer of branded consumer lawn and garden products."
Myres said Bonnie Plants will benefit from ScottsMiracle-Gro’s strengths – the company boasts $3 billion in annual sales and invests $190 million annually in marketing, research and development.
"ScottsMiracle-Gro’s extensive knowledge of consumers will allow Bonnie to improve the success of our gardening customers as well as help us innovate new products to continue to drive sales," Myres said. "By combining the strengths of Bonnie and Scotts, we will continue to be the dominant player in garden centers for many years."
After the presentation, AFC members unanimously approved the proposed transaction.
In addition to the good news about the partnership between Bonnie Plants and ScottsMiracle-Gro, members received a positive update on the financial state of AFC and its subsidiaries.
"The state of our Cooperative is strong," said AFC Board Chairman Jimmy Newby, whose two-year term ended at this year’s meeting. "Our member cooperatives are in the best financial health in memory."
Arnold reported Fiscal Year 2015 sales of $542 million, down from $583 million in 2014. Despite the slight decline in sales, 2015 sales were the third highest in AFC’s history. The Cooperative also saw the fourth-most profitable year in its history with pretax net income of $19.5 million.
"The last two years for farmers, our member Cooperatives and AFC have been challenging, but good," Newby said. "Farmers have been challenged by lower commodity prices than have been seen in the earlier years of this decade. We were fortunate that last year saw higher-than-average yields on most crops, offsetting low commodity prices."
On average, commodity prices fell by 15-20 percent compared to FY 2014. Despite these low prices, all of AFC’s divisions were profitable in FY 2015. Bonnie Plants led the way with increased sales of 8.5 percent and pretax earnings of $31.6 million compared to $23.6 million in FY 2014.
Newby said farmers face similar and possibly more difficult challenges in 2016.
"Last year was one of our most profitable years," said Mike Tate of Madison County, who was elected as the new chairman of the board of directors. "We are headed into a tough period for farmers, but our member stores are in a strong financial position, so we look forward to working with our customers and supporting them during this time."
As Newby ended his term as chairman, he expressed appreciation for fellow members and board directors in addition to extending a special thank you to AFC’s staff, describing them as the "backbone of the Cooperative and the reason for AFC’s success."
Jill Clair Gentry is a freelance writer from Montgomery.