Alico, Inc. Announces Financial Results for the First Quarter Ended December 31, 2023
- Net income of $42.9 million and EBITDA of $63.8 million
- Sale of 17,229 acres of Alico Ranch for $77.6 million
- Strong balance sheet with a working capital ratio of 2.52 to 1.00
- Increase in citrus production by 30.1%
- Reduction in total debt by $44 million and net debt by almost $62 million
- Adjusted EBITDA of $(2.3) million due to lower box production from the impact of Hurricane Ian
- Adversely impacted fruit production due to Hurricane Ian
- Increase in operating expenses due to higher property taxes
Insights
The reported net income of Alico, Inc. for the fiscal quarter ended December 31, 2023, is notably higher than the net loss reported in the comparable quarter of the previous year. This significant increase is primarily attributed to the sale of a substantial portion of Alico Ranch. Such a transaction is a strategic move that can reshape the company's asset portfolio and provide liquidity, potentially improving the company's financial flexibility. The repayment of high-interest debt, particularly at a rate exceeding 7.00% per annum, is a prudent financial decision that reduces future interest expenses and enhances the company's debt profile.
However, the Adjusted EBITDA presents a different picture, indicating an operational loss when excluding non-recurring items. This highlights underlying challenges in the company's core operations, exacerbated by Hurricane Ian's impact on crop production. The inventory write-down reflects these operational difficulties and suggests a need for close monitoring of future yields and cost management strategies. The strong balance sheet and low debt ratio are positive indicators, suggesting that Alico is in a solid position to manage its liabilities and pursue growth opportunities.
The impact of Hurricane Ian on Alico's Early and Mid-Season harvest has had a significant effect on the company's inventory valuation and production volumes. The write-down of $10.8 million indicates the severity of the hurricane's impact on crop yields. The agricultural sector is highly susceptible to such environmental risks and Alico's experience underscores the importance of risk management strategies in agriculture, such as crop insurance and diversification of crop types and harvest schedules.
The increase in pound solids and processed box production, despite the adverse conditions, shows resilience in the company's operations. The slight increase in price per pound solids suggests some ability to pass on costs to buyers, which can be crucial for maintaining profitability in the face of rising production costs. These factors, combined with the company's investment in combating citrus greening through Oxytetracycline treatments, highlight Alico's proactive measures to manage agricultural challenges and maintain crop quality.
Alico's strategic sale of land to the State of Florida and the resultant debt repayment could signal a shift in the company's strategic focus or an effort to streamline operations. From a market perspective, such transactions can affect investor sentiment by indicating that the company is taking active steps to improve its financial health and potentially reinvest in more profitable ventures. The company's liquidity position, with $95 million in undrawn credit, provides it with the flexibility to respond to market opportunities or unforeseen challenges.
Additionally, the company's focus on sustainability, as reported in its Annual Sustainability Report, aligns with growing consumer and investor interest in environmental, social and governance (ESG) factors. Companies that effectively communicate and implement sustainable practices may enjoy enhanced brand reputation and investor confidence, which can be reflected in stock performance over the long term.
FORT MYERS, Fla., Feb. 07, 2024 (GLOBE NEWSWIRE) -- Alico, Inc. (“Alico” or the “Company”) (Nasdaq: ALCO) today announces financial results for the first fiscal quarter ended December 31, 2023, the highlights of which are as follows:
- The Company reports net income attributable to Alico, Inc. common stockholders of
$42.9 million and EBITDA of$63.8 million for the fiscal quarter. After adjusting for certain items, the Company reports Adjusted EBITDA of$(2.3) million for the quarter ended December 31, 2023. - On December 21, 2023, the Company closed on the sale of 17,229 acres of the Alico Ranch to the State of Florida for
$77.6 million in gross proceeds. - The Company repaid all outstanding borrowings on its working capital line of credit, as well as
$19.1 million outstanding on its Met Life Variable-Rate Terms loans, both of which incurred interest in excess of7.00% per annum. - The Company had lower than anticipated box production for the Early and Mid-Season Harvest, due to the impacts from Hurricane Ian, which resulted in an inventory write-down of
$10.8 million . - The Company maintains a strong balance sheet with a working capital ratio of 2.52 to 1.00, and has maintained its debt ratio at 0.19 to 1.00 for the fiscal quarter, as compared to 0.30 to 1.00 for the comparable prior year fiscal quarter.
Results of Operations
For the first fiscal quarter ended December 31, 2023, the Company reported net income attributable to Alico common stockholders of
Total operating expenses were
When both periods are adjusted for certain items, including gains on sale of real estate, federal relief proceeds from the 2017 Hurricane Irma, a net realizable value adjustment, and stock-based compensation expense, the Company had Adjusted EBITDA for the fiscal quarters ended December 31, 2023 and 2022 of
The Company reported the following financial results:
| (in thousands, except for per share amounts and percentages) | ||||||||||
| Three Months Ended December 31, | ||||||||||
| 2023 | 2022 | Change | ||||||||
| Net income (loss) attributable to Alico, Inc. common stockholders | $ | 42,945 | $ | (3,150 | ) | NM | ||||
| Earnings (loss) per diluted common share | $ | 5.64 | $ | (0.41 | ) | NM | ||||
| EBITDA (1) | $ | 63,811 | $ | 865 | NM | |||||
| Adjusted EBITDA (1) | $ | (2,312 | ) | $ | (3,441 | ) | 32.8 | % | ||
| Net cash used in operating activities | $ | (13,169 | ) | $ | (9,665 | ) | (36.3)% | |||
(1) “EBITDA” and “Adjusted EBITDA” are non-GAAP financial measures. See “Non-GAAP Financial Measures” at the end of this earnings release for details regarding these measures, including reconciliations of the Non-GAAP Financial Measures to their most directly comparable GAAP measures.
NM = Not meaningful
These quarterly financial results also reflect the seasonal nature of the Company’s business. The majority of the Company’s citrus crop is harvested in the second and third quarters of the fiscal year; consequently, most of the Company's gross profit and cash flows from operating activities are typically recognized in those quarters and the Company’s working capital requirements are typically greater in the first and fourth quarters of the fiscal year.
Alico Citrus Division Results
Citrus production for the three months ended December 31, 2023 and 2022 is summarized in the following table.
| (in thousands, except per box and per pound solids data) | ||||||||||||
| Three Months Ended December 31, | Change | |||||||||||
| 2023 | 2022 | Unit | % | |||||||||
| Boxes Harvested: | ||||||||||||
| Early and Mid-Season | 1,047 | 805 | 242 | 30.1 | % | |||||||
| Total Processed | 1,047 | 805 | 242 | 30.1 | % | |||||||
| Fresh Fruit | 31 | 36 | (5 | ) | (13.9)% | |||||||
| Total | 1,078 | 841 | 237 | 28.2 | % | |||||||
| Pound Solids Produced: | ||||||||||||
| Early and Mid-Season | 4,666 | 3,737 | 929 | 24.9 | % | |||||||
| Total | 4,666 | 3,737 | 929 | 24.9 | % | |||||||
| Pound Solids per Box: | ||||||||||||
| Early and Mid-Season | 4.46 | 4.64 | (0.18 | ) | (4.0)% | |||||||
| Price per Pound Solids: | ||||||||||||
| Early and Mid-Season | $ | 2.66 | $ | 2.57 | $ | 0.09 | 3.4 | % | ||||
The increase in revenue for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to a
In addition, there was an increase in the price per pound solid of
Land Management and Other Operations Division Results
Land Management and Other Operations includes lease income from grazing rights leases, hunting leases, a farm lease, a lease to a third party of an aggregate mine, leases of oil extraction rights to third parties, and other miscellaneous income.
The increase in revenues from Land Management and Other Operations for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to the signing of new farming leases.
The increase in operating expenses from Land Management and Other Operations for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, is primarily due to an increase in property taxes.
Management Comment
John Kiernan, President and Chief Executive Officer, commented:
As previously announced, on September 18, 2023, Alico signed a contract with the State of Florida to sell the remaining 17,229 acres of the Alico Ranch, and on December 21, 2023, we closed on the sale for
Results from our Early and Mid-Season harvest this season were disappointing, resulting in an inventory write-down of
In January 2024, the Company received funding from the Citrus Research and Field Trial Foundation to support our use of Oxytetracycline to combat the effect of “greening” in the citrus trees. Last year beginning in January 2023 over
Also last month, we published our 2023 Annual Sustainability Report, highlighting our approach to sustainability and progress with our environmental, social, and governance priorities.
We believe that our balance sheet remains one of our greatest strengths as we continue to operate in a challenging citrus industry. Because of the sale of the remaining acreage of Alico Ranch we have been able to reduce our total debt by
Other Corporate Financial Information
General and administrative expense for the three months ended December 31, 2023 was
Other income (expense), net for the three months ended December 31, 2023 and 2022, was
Dividend
On January 12, 2024, the Company paid a first quarter cash dividend of
Balance Sheet and Liquidity
The Company continues to demonstrate financial strength within its balance sheet, as highlighted below:
- The Company’s working capital was
$43.3 million at December 31, 2023, representing a 2.52 to 1:00 ratio. - The Company maintains a solid debt ratio. At December 31, 2023 and 2022, the ratios were 0.19 to 1.00 and 0.30 to 1.00, respectively.
- Total debt was
$84.7 million and net debt was$66.1 million at December 31, 2023, compared to$128.7 million and$127.6 million at September 30, 2023. - Available borrowings under the Company’s lines of credit were
$95 million at December 31, 2023.
About Alico
Alico, Inc. primarily operates two divisions: Alico Citrus, one of the nation’s largest citrus producers, and Land Management and Other Operations, which includes land leasing and related support operations. Learn more about Alico (Nasdaq: “ALCO”) at www.alicoinc.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements regarding our expectations regarding market prices and the results of our 2023-24 harvest, the impact of Hurricane Ian on our results, expectations regarding our Valencia crop, the impact of the OTC injections, expectations regarding our liquidity, business strategy, plans and objectives of management for future operations or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management and can be identified by terms such as “will,” “should,” “expects,” “plans,” ,”hopes,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.
These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including, but not limited to: adverse weather conditions, natural disasters and other natural conditions, including the effects of climate change and hurricanes and tropical storms, particularly because our citrus groves are geographically concentrated in Florida; damage and loss from disease including, but not limited to, citrus greening and citrus canker; any adverse event affecting our citrus business; our ability to effectively perform grove management services, or to effectively manage an expanded portfolio of groves; our dependency on our relationship with Tropicana and Tropicana’s relationship with certain third parties for a significant portion of our business; our ability to execute our strategic growth initiatives and whether they adequately address the challenges or opportunities we face; product contamination and product liability claims; water use regulations restricting our access to water; changes in immigration laws; harm to our reputation; tax risks associated a Section 1031 Exchange; risks associated with the undertaking of one or more significant corporate transactions; the seasonality of our citrus business; fluctuations in our earnings due to market supply and prices and demand for our products; climate change, or legal, regulatory, or market measures to address climate change; ESG issues, including those related to climate change and sustainability; increases in labor, personnel and benefits costs; increases in commodity or raw product costs, such as fuel and chemical costs; transportation risks; any change or the classification or valuation methods employed by county property appraisers related to our real estate taxes; liability for the use of fertilizers, pesticides, herbicides and other potentially hazardous substances; compliance with applicable environmental laws; loss of key employees; material weaknesses and other control deficiencies relating to our internal control over financial reporting ; macroeconomic conditions, such as rising inflation, the deadly conflicts in Ukraine and Israel, and the COVID-19 pandemic; system security risks, data protection breaches, cyber-attacks and systems integration issues; our indebtedness and ability to generate sufficient cash flow to service our debt obligations; higher interest expenses as a result of variable rates of interest for our debt; our ability to continue to pay cash dividends; and the other factors described under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on December 6, 2023, and in our Quarterly Reports on Form 10-Q, to be filed with the SEC. Except as required by law, we do not undertake an obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
This press release also contains financial projections that are necessarily based upon a variety of estimates and assumptions which may not be realized and are inherently subject, in addition to the risks identified in the forward-looking statement disclaimer, to business, economic, competitive, industry, regulatory, market and financial uncertainties, many of which are beyond the Company’s control. There can be no assurance that the assumptions made in preparing the financial projections will prove accurate. Accordingly, actual results may differ materially from the financial projections.
Investor Contact:
Investor Relations
(239) 226-2060
InvestorRelations@alicoinc.com
Brad Heine
Chief Financial Officer
(239) 226-2000
bheine@alicoinc.com
ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
| December 31, 2023 | September 30, 2023 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash | $ | 18,632 | $ | 1,062 | |||
| Accounts receivable, net | 7,886 | 712 | |||||
| Inventories | 41,804 | 52,481 | |||||
| Income tax receivable | — | 1,200 | |||||
| Assets held for sale | 69 | 1,632 | |||||
| Prepaid expenses and other current assets | 3,426 | 1,718 | |||||
| Total current assets | 71,817 | 58,805 | |||||
| Restricted cash | 2,630 | 2,630 | |||||
| Property and equipment, net | 361,603 | 361,849 | |||||
| Goodwill | 2,246 | 2,246 | |||||
| Other non-current assets | 2,913 | 2,823 | |||||
| Total assets | $ | 441,209 | $ | 428,353 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 7,041 | $ | 6,311 | |||
| Accrued liabilities | 3,633 | 5,363 | |||||
| Current portion of long-term debt | 1,410 | 2,566 | |||||
| Income tax payable | 15,552 | — | |||||
| Other current liabilities | 904 | 825 | |||||
| Total current liabilities | 28,540 | 15,065 | |||||
| Long-term debt, net | 83,299 | 101,410 | |||||
| Lines of credit | — | 24,722 | |||||
| Deferred income tax liabilities, net | 36,410 | 36,410 | |||||
| Other liabilities | 334 | 369 | |||||
| Total liabilities | 148,583 | 177,976 | |||||
| Stockholders' equity: | |||||||
| Preferred stock, no par value, 1,000,000 shares authorized; none issued | — | — | |||||
| Common stock, | 8,416 | 8,416 | |||||
| Additional paid in capital | 20,064 | 20,045 | |||||
| Treasury stock, at cost, 800,064 and 806,341 shares held at December 31, 2023 and September 30, 2023, respectively | (27,099 | ) | (27,274 | ) | |||
| Retained earnings | 286,368 | 243,804 | |||||
| Total Alico stockholders' equity | 287,749 | 244,991 | |||||
| Noncontrolling interest | 4,877 | 5,386 | |||||
| Total stockholders' equity | 292,626 | 250,377 | |||||
| Total liabilities and stockholders' equity | $ | 441,209 | $ | 428,353 | |||
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Three Months Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Operating revenues: | |||||||
| Alico Citrus | $ | 13,592 | $ | 10,268 | |||
| Land Management and Other Operations | 393 | 320 | |||||
| Total operating revenues | 13,985 | 10,588 | |||||
| Operating expenses: | |||||||
| Alico Citrus | 28,107 | 14,295 | |||||
| Land Management and Other Operations | 133 | 94 | |||||
| Total operating expenses | 28,240 | 14,389 | |||||
| Gross profit | (14,255 | ) | (3,801 | ) | |||
| General and administrative expenses | 3,272 | 2,509 | |||||
| Loss from operations | (17,527 | ) | (6,310 | ) | |||
| Other income (expense), net: | |||||||
| Interest income | 95 | — | |||||
| Interest expense | (1,605 | ) | (1,148 | ) | |||
| Gain on sale of real estate, property and equipment and assets held for sale | 77,025 | 3,189 | |||||
| Total other income (expense), net | 75,515 | 2,041 | |||||
| Income (loss) before income taxes | 57,988 | (4,269 | ) | ||||
| Income tax provision (benefit) | 15,552 | (1,083 | ) | ||||
| Net income (loss) | 42,436 | (3,186 | ) | ||||
| Net loss attributable to noncontrolling interests | 509 | 36 | |||||
| Net income (loss) attributable to Alico, Inc. common stockholders | $ | 42,945 | $ | (3,150 | ) | ||
| Per share information attributable to Alico, Inc. common stockholders: | |||||||
| Earnings per common share: | |||||||
| Basic | $ | 5.64 | $ | (0.41 | ) | ||
| Diluted | $ | 5.64 | $ | (0.41 | ) | ||
| Weighted-average number of common shares outstanding: | |||||||
| Basic | 7,616 | 7,593 | |||||
| Diluted | 7,616 | 7,593 | |||||
| Cash dividends declared per common share | $ | 0.05 | $ | 0.05 | |||
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Three Months Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Net cash used in operating activities: | |||||||
| Net income (loss) | $ | 42,436 | $ | (3,186 | ) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||
| Depreciation, depletion and amortization | 3,804 | 3,950 | |||||
| Amortization of debt issue costs | 120 | 36 | |||||
| Gain on sale of real estate, property and equipment and assets held for sale | (77,025 | ) | (3,189 | ) | |||
| Loss on disposal of long-lived assets | 225 | 1,915 | |||||
| Inventory net realizable value adjustment | 10,846 | — | |||||
| Stock-based compensation expense | 194 | 305 | |||||
| Other | 36 | 8 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | (7,174 | ) | (4,045 | ) | |||
| Inventories | (169 | ) | (1,316 | ) | |||
| Prepaid expenses | (1,708 | ) | (122 | ) | |||
| Income tax receivable | 1,200 | (1,083 | ) | ||||
| Other assets | 2 | 108 | |||||
| Accounts payable and accrued liabilities | (1,320 | ) | (2,822 | ) | |||
| Income taxes payable | 15,552 | — | |||||
| Other liabilities | (188 | ) | (224 | ) | |||
| Net cash used in operating activities | (13,169 | ) | (9,665 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (3,490 | ) | (3,453 | ) | |||
| Acquisition of citrus groves | — | (29 | ) | ||||
| Net proceeds from sale of real estate, property and equipment and assets held for sale | 79,090 | 3,287 | |||||
| Change in deposits on purchase of citrus trees | (375 | ) | (301 | ) | |||
| Net cash provided by (used in) investing activities | 75,225 | (496 | ) | ||||
| Cash flows from financing activities: | |||||||
| Repayments on revolving lines of credit | (44,032 | ) | (8,902 | ) | |||
| Borrowings on revolving lines of credit | 19,310 | 23,019 | |||||
| Principal payments on term loans | (19,383 | ) | (759 | ) | |||
| Dividends paid | (381 | ) | (3,793 | ) | |||
| Net cash (used in) provided by financing activities | (44,486 | ) | 9,565 | ||||
| Net increase (decrease) in cash and restricted cash | 17,570 | (596 | ) | ||||
| Cash and restricted cash at beginning of period | 3,692 | 865 | |||||
| Cash and restricted cash at end of the period | $ | 21,262 | $ | 269 | |||
| Non-cash investing activities: | |||||||
| Assets received in exchange for services | $ | 298 | $ | — | |||
| Trees delivered in exchange for prior services | $ | 176 | $ | — | |||
Non-GAAP Financial Measures
In addition to the GAAP financial measures, Alico utilizes the EBITDA, Adjusted EBITDA, and Net Debt which are non-GAAP financial measures within the meaning of Regulation G and Item 10(e) of Regulation S-K, to evaluate the performance of its business. Due to significant depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure, management believes that EBITDA, Adjusted EBITDA, and Net Debt are important measures to evaluate our results of operations between periods on a more comparable basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis and relative to our peers and the broader market, provide useful information to both management and investors by excluding certain items that may not be indicative of our core operating results and operational strength of our business and help investors evaluate our ability to service our debt. Such measurements are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-GAAP information provided is unique to Alico and may not be consistent with methodologies used by other companies. EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, depletion and amortization. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation, depletion and amortization and adjustments for non-recurring transactions or transactions that are not indicative of our core operating results, such as gains or losses on sales of real estate, property and equipment and assets held for sale. Net Debt is defined as Current portion of long-term debt, Long-term debt, net and Lines of credit, less cash.
EBITDA and Adjusted EBITDA
| (in thousands) | ||||||||
| Three Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Net income (loss) attributable to Alico, Inc. common stockholders | $ | 42,945 | $ | (3,150 | ) | |||
| Interest expense, net | 1,510 | 1,148 | ||||||
| Income tax provision (benefit) | 15,552 | (1,083 | ) | |||||
| Depreciation, depletion, and amortization | 3,804 | 3,950 | ||||||
| EBITDA | 63,811 | 865 | ||||||
| Non-GAAP Adjustments: | ||||||||
| Inventory net realizable value adjustment | 10,846 | — | ||||||
| Employee stock compensation expense (1) | 56 | 149 | ||||||
| Federal relief - Hurricane Irma | — | (1,266 | ) | |||||
| Gain on sale of real estate, property and equipment and assets held for sale | (77,025 | ) | (3,189 | ) | ||||
| Adjusted EBITDA | $ | (2,312 | ) | $ | (3,441 | ) | ||
| (1) Includes stock compensation expense for current executives, senior management and other employees. | ||||||||
Net Debt
| (in thousands) | ||||||||
| December 31, 2023 | September 30, 2023 | |||||||
| Current portion of long-term debt | $ | 1,410 | $ | 2,566 | ||||
| Long-term debt, net | 83,299 | 101,410 | ||||||
| Lines of credit | — | 24,722 | ||||||
| Total Debt | 84,709 | 128,698 | ||||||
| Less: Cash | (18,632 | ) | (1,062 | ) | ||||
| Net Debt | $ | 66,077 | $ | 127,636 | ||||
FAQ
What was Alico, Inc.'s net income for the first fiscal quarter ended December 31, 2023?
What was the reason for Adjusted EBITDA being $(2.3) million for the quarter ended December 31, 2023?
What was the working capital ratio for Alico, Inc. at December 31, 2023?
What was the increase in citrus production for the three months ended December 31, 2023?
What was the decrease in total debt and net debt for Alico, Inc. from September 30, 2023 to December 31, 2023?
