Northern Lakes Cooperative
Annual Meeting Minutes-August 19, 2020
Live Meeting Cancelled Due to Covid19
Board of Directors: Tom Turngren, Margaret Winter, Julie Greene, Stacey Hessel, Wendy Williamson, Dan Rusch, Cliff Williams and General Manager Mike Covelli.
It was determined that a member quorum was present because there were 52 voting members that cast absentee ballots.
Candidates running for two available seats on the Board of Directors were Tom Turngren (Incumbent) and Stacey Hessel (Incumbent). Their Bios were attached to all absentee ballots that were distributed.
Tom Turngren, Board President provided a letter to the membership:
On behalf of the Northern Lakes Cooperative Board and our employees we sincerely thank you for your continued support of your locally owned Co-op. The Board would also like to thank all the Co-op employees for their dedication and hard work throughout the year and especially during the trying Covid-19 lockdown as all the Co-op’s essential businesses remained opened. Financially the Co-op had another good year which GM Mike Covelli will detail in his report. I will note that the Board approved a 3.37% payout in combined Reward Vouchers and Patronage. In closing we will continue to look to grow our top line revenues profitably while recognizing the many challenges we face.
A motion was put on the ballot to approve the 2019 annual meeting minutes. The motion was approved 52 to 0. Motion carried.
Mike Rutten CPA of CliftonLarsonAllen provided an overview of the financial reports and provided written comments as follows:
What a time to be alive…COVID, the roller coaster ride of our economy, and a very tense election year. The days turned into weeks and now into months, and we continue to ask ourselves, “When will things go back to normal?” As we find ourselves seemingly stuck in this very unusual and stressful point in our lives as a nation, it is both welcoming and relieving to hear that rare piece of good news every once in a while. Once again, we definitely have that piece of good news from your local Co-op. After going a stretch of five years showing bottom line net losses (2013-2017), the Co-op finds itself in its 3rd year of both local and bottom line net profits. You can attribute that to a Board of Directors that made the tough, but necessary, decisions to remove non-performing assets over the years, as well as management that has implemented and followed through on those decisions to help steer the Co-op in the right direction. As you can see from the Statement of Operations, total sales and margin for fiscal year 2020 has closely followed the prior year. The Co-op almost broke $15 million in total sales, and was able to obtain a 25.8% gross margin on those sales. While we did see an overall decrease in market prices of petroleum over the year, the slack in sales caused by this was picked up by the pharmacy, auto center, and c-store confections. We know sales and margins are an important part to any business, but it is efficiency and effectiveness of operations that determines how much of these margin dollars make it to the bottom line. As we continue to see the cost of running a business generally increase due to wages, insurance, and maintenance of assets, it is all the more important to be able to control these costs in order to remain profitable. Total operating expenses in fiscal year 2020 was $3.4 million, up from $3.3 million a year ago. After factoring in interest and other miscellaneous expenses, consisting mostly of credit card fees, the Co-op ended up with a Local Net Savings of $105,456, down from $217,983 a year ago. The big line item after Local Net Savings is Patronage Refunds Received; a reminder that the patronage refunds received, totaling $365,743, consists of cash and equity received by the Co-op from doing business with other Cooperatives. The vast majorities of these refunds were received from CHS and Do it Best. After factoring in income taxes, that leaves bottom line Net Savings of $392,254, down only one Benjamin (and change) from $392,376 in the prior year.
Another way to analyze how a Co-op is doing is by looking at the cash outflows, or return of funds, back to the patrons. Over the past three years, your Co-op has returned cash in the form of equity retirements and cash patronage totaling approximately $87,000 in 2020, $49,000 in 2019, and $24,000 in 2018. This is separate from the 1% patronage rewards that are issued on an annual basis, which has also seen a healthy increase over the past three years. Based on current year results, your Board has also approved a patronage refund totaling $150,000, with $50,000 of that total being paid in the form of cash.
As your Co-op moves into fiscal year 2021, it is important to note that the effects of COVID will be seen in the early months of the operating cycle. While COVID may have put a damper on certain sales, your Co-op was able to obtain a forgivable loan from the Paycheck Protection Program. This loan is used to help fund payroll, rent, utilities, and interest on existing debt, and will no doubt help the Co-op cash flow through these strenuous times.
Mike Covelli, General Manager, presented the General Managers Report (available online) via Power Point Presentation that included some of the operational highlights, first quarter results for 2020-21, marketing highlights and initiatives for the next fiscal year.
I am pleased to report on another good year for the Co-op. Looking back over the past 12 months, we experienced a lot of positive growth. My report looks at some of our highlights and key accomplishments. I would like to take this opportunity to thank the entire Co-op staff for all their hard work and efforts to make this past fiscal year such a great success. I would like to especially thank all of you, our wonderful members, because without your support and loyalty, none of these successes would be possible. We are off to a great start for 2020-21 and I’m excited to bring all of you another strong and profitable year!
Years of Service Awards were given to 4 employees, Eric Rantala, Hardware Asst. Manager for 20 years of service, Sue Boersma for 10 years of service, Mike Hermann and Tom Housel for 5 years of service.
Election results as follows: Motion to re-elect to a three year term; Tom Turngren 52 to 0. Stacey Hessel 52 to 0. Motion carried.
Julie Greene, NL Coop Board Secretary