An Extraordinary Year – 91st Annual Delegate Meeting
March 2, 2021
Written By Adam Buckallew
MFA Oil Announces $10 Million in Cash Returns to Owners
In a year often described as unprecedented and bizarre, it was perhaps fitting that MFA Oil Company reported an extraordinary 2020 during its 91st Annual Delegate Meeting, which was held virtually for the first time in the company’s history due to the COVID-19 pandemic. On Dec. 14, the company’s 741 delegates were invited to watch a pre-taped video message from company leaders summarizing the past year’s performance.
Though the novel coronavirus and its related disruptions presented unusual and sometimes daunting circumstances, MFA Oil was able to rise to the occasion. Jeff Raetz, MFA Oil chief financial officer, reported the co-op earned $36 million in net income before taxes for the fiscal year that ended on Aug. 31, 2020.
“There was no roadmap for how to navigate this pandemic,” Raetz said. “I’m proud of the way our organization responded by focusing on the well-being of our employees and customers.”
Raetz reported all operating divisions within MFA Oil exceeded 2019 results and budgeted projections for 2020 with the exception of Jiffy Lube. The positive results and the co-op’s strong balance sheet allowed the cooperative to declare it will pay more than $10 million in cash to its members in exchange for doing business with the company. The total includes a 60 percent cash payout of the $8 million in qualified patronage returned for the 2020 fiscal year ($4.8 million) and retirement of member equity from 2007 ($5.5 million). Another $6.3 million in non-qualified patronage earned in 2020 will be redeemed in the future. In the last five years, MFA Oil has returned $42.7 million in patronage to its farmer-owners.
MFA Oil President and CEO Jon Ihler credited the company’s swift response to coronavirus concerns and its talented workforce with its success in 2020.
“By focusing on protecting the health and wellness of our employees, customers and communities, we introduced protective measures to maintain safety while continuing to provide the essential services our customers count on us to deliver,” Ihler said. “I have tremendous gratitude for the way our employees—especially those who were working on our front lines—responded to the situation.”
The company introduced a variety of safeguards to combat the virus and its spread including social distancing, temporary offices closures, installation of plexiglass shields at checkout counters in retail environments, and provisioning employees with gloves, masks and sanitation supplies.
Beyond the company’s COVID-19 response, Ihler said he was pleased with the co-op’s progress in 2020. He noted MFA Oil has restructured its accounting and financial staff to provide tighter internal controls to ensure the co-op’s finances are appropriately managed and said installation of a new customer management and point-of-sale system called Energy-Force is moving forward.
“Energy-Force system will provide stability and much needed support to our traditional bulk fuel and propane business,” Ihler said. “It is a powerful, more user-friendly, way to manage our business.”
Strengthening the company’s culture is another priority for Ihler. During the meeting, he introduced delegates to the new MFA Oil core values, which he said, “align with the spirit and direction we want to go as a company.” The core values—put customers first, be tenacious and lead by example—are the cornerstones upon which the company’s culture is based and will help establish what Ihler describes as the MFA Oil Way.
2020 and Beyond
Delegates were given an overview of the performance cooperative’s various business units and the company’s plans moving forward.
Within the bulk fuel and propane division, the company is set to grow its business both organically and through acquisition. Ihler said the company’s state-of-the-art fleet and experienced staff are capable of serving more customers, and the company is exploring all avenues for growth while maintaining excellent customer service.
Highlights from 2020 for the bulk fuel and propane division included the acquisition of Simmons Energy Solutions, which had locations in northwest Arkansas and northeast Oklahoma; the addition of two new Petro-Card 24 locations; the opening of two new strategically located bulk fuel and propane offices, in northeast and north central Arkansas; Work Horse lubricant sales that exceeded growth projections; and the successful redesign of the MFA Oil website.
APM, the company’s wholesale division, continues to push its boundaries. APM has grown its volume significantly in recent years and it is now branching out into surrounding states.
The company’s Break Time division continues to focus on building its market share in Missouri.
“We are looking to provide customers with fast fueling and a convenient checkout process inside our stores,” Ihler said. “We’re also working on adding more quality food offerings to keep pace with the evolving demands and expectations of convenience store customers.”
At Big O Tires, MFA Oil continues to add new stores. The company opened two new Missouri locations in 2020 in Lebanon and Sedalia, and now boasts 22 stores with plans for future expansion. Big O Tires is working to certify many of its mechanics with the National Institute for Automotive Service Excellence and exploring training and certification programs that would allow its staff to work on electric vehicles.
While the company’s Jiffy Lube franchise business has served as a profitable and valued division within MFA Oil since 1988, Ihler informed delegates that the company recently sold its Jiffy Lube operations.
Ihler noted the MFA Oil management team and the Board of Directors are keeping an eye on business trends and maintaining an open mind to non-traditional means of business that could provide a return on investment to the co-op’s member-owners.
“We know the cooperative will look different in the future than it does today just as today’s co-op looks different than it did 50 or even 25 years ago,” Ihler said. “We will have to evolve to meet the demands of the future.”
One way MFA Oil has recently adapted its business is by creating a captive insurance program in 2020. Captive insurance is an alternative to self-insurance in which a parent group (MFA Oil) has created a licensed insurance company (MFA Oil Captive) to minimize the cost of rising insurance premiums and deductibles. Ihler said a stronger focus on risk management, safety practices and improved operating procedures will be the key to this insurance company’s success.
Results of the elections for three seats on the MFA Oil Board of Directors were announced during the meeting. Delegates from the company’s northeast, southeast and east-central districts cast their ballots by mail to re-elect incumbent directors Monte Fisher of Brashear, Mo.; Marion Kertz of Ste. Genevieve, Mo; and Tony Dameron of Vandalia, Mo., to new three-year terms.