2024 Annual Meeting Notes
Partners met at a new location this year — Duncan Hall in downtown Lafayette, IN. Daryl Starr provided his welcome and overview of purpose, values and core competency. He reviewed the main 3 lines and geographic expansion plans and success over the last twelve months. Throughout he introduced each manager and two sellers.
Each of the lines are seeing increased network opportunities. Maps were used to show service areas and changes over the last year.
Mikel Berger gave an overview of the Objectives and Key Results (OKRs) highlights over the last year. Highlights include: General Manager Training launched and ran 7 cohorts. General Managers were added in each of the 3 main business lines. Established District Manager role. Centralized some marketing analysis. Continued to prune misfit lines and allocated management time to larger opportunities.
Starr then facilitated open Q&A time. Below are highlights. Attendance is best for full detail.
Q: What happened in the organic launches?
A: One location never secured a solid manager. Two locations did and ran near break even. Sales had to be conducted by the District Manager on site and they were too far away. We then lost a GM and decided to let the remaining GM go so we could prioritize a pending acquisition, which we did complete.
Q: Are redemption requests stressing the partnership?
A: They could become a major stressor but at this point are simply limiting our rate of expansion at this time. We are okay that the partnership has been a net buyer of shares as we expect this to increase earning per share without capital contributions from partners. As management capacity opens up we will look to resume fund-raising in back half of 2024.
Q: What is the ideal ratio of District Manager to General Manager? How many locations can a DM oversee?
A: This depends on the maturity of the locations within the district. Organic launches and integrations take more time than mature locations that are running The LEV Way. If every location was mature we think the maximum is 14. Two organic launches may be too many for one DM. We are seeking to optimize based on the individual circumstances.
Q: Have you considered an advisory board for each business line?
A: Our DMs have mentors around the globe that are specialists in the field. A formal advisory committee by line is a good idea.
Q: What are the precise operating and investment cash profit projections for 2024?
A: We have realized $X from marketable securities this year and unrealized of $Y. This is changing regularly. Operating cash from control companies is estimated to be $Z. This may vary substantially depending on factors outside of our control. Our year to date realized and distributed is in your reports. We consolidate annually.
Q: I see we bought an airplane. Where is it located?
A: The aircraft is hangared at Skydive the Rock in Beloit, WI.
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Q: What do you need?
A: Each District Manager requires about 6 months to fully integrate an acquisition into The LEV Way. The bulk of the work happens in the first 30 days, then follow on over the first 90 and lingering clean up in the next few months. Thus, a new purchase per DM ought to be made no faster than every 3 months. If we continue at this pace we will begin to borrow money, and then raise more equity. We will not exceed our management capacity. We have previously throttled back management burden to free up time. GM turn over is a solvable challenge. We have a system now that we like and know how to operate. On-going support is most helpful.
Q: You started in agriculture. Is there an appetite to do more in agriculture?
A: We love ag and will stay in it for our other lines of Kentland Seeds and Boden. While we are long-term open we are short-term closed –to additions outside of our core 3 lines.
Q: What are the plans for the aircraft in the winter?
A: The aircraft we purchased has a lot of hours on it’s engine. We are evaluating resting it a bit and getting another season out of it before rebuilding the engine. A rebuilt engine can be upgraded and believe this can add value to the asset more than it’s cost. We are not in a hurry to do this as it provides us with more than enough lift capacity at present performance. We liken this aircraft to a tractor on the farm. You cannot farm without it, but logging hours on the tractor in the winter is not the purpose of the farm.
BREAK
Q: Could you provide a chart for financial ratios by business line by month?
A: We provide tables of major ratios by business line annually.
Q: What portion of our customers are bull’s eye rated? (a really great question that uses our internal language.)
A: We will have to look that up but my estimate is 60-70%. We are their best option in each of our geographies. Our 1-degree’r customers are probably 20-30%. They are a source of profit. We have run off most of our misfits and if I catch GMs allowing misfits to remain they get scolded. It’s too complex to try to serve customers that we are simply not the best.
Q: Where does marketing strategy come from? Who is responsible?
A: We used to be extremely decentralized. Each business location did what was best in their eyes. As we have narrowed our focus on our 3 core lines we have recently begun to centralize marketing strategy, training and accountabilities. The District Managers play a large role in laying a good foundation for each line. The GMs contribute mightily to topping up in their locations. We do not have a head of marketing, yet. We expect each business line to grow into a place where each can and will have a full executive leadership team that would include a head of sales and marketing. These are just too small to justify it presently, so they’re stuck with me and the DMs.
There were additional questions on financials and a LOI. A partner asked Starr if he enjoyed what he was doing. Starr asked what the scale of joy was. He indicated how hard things in the past few years have been and how these challenges have made persistence more important than joy recently. The last twelve months has been good but there is work that remains to make each realize their individual potential. If LEV intends to succeed they must be better than competitors and that resolve is one in which Starr indicate he will not quit.
LUNCH
ADJOURN
Next year’s meeting: Thursday, July 17, 2025.