Alico Q1 2025 Earnings Report

Alico EPS Results

• Actual EPS: -$1.20
• Consensus EPS: -$0.93
• Beat/Miss: Missed by -$0.27
• One Year Ago EPS: N/A

Alico Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $10.40 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Alico Announcement Details

• Quarter: Q1 2025
• Date: 2/12/2025
• Time: After Market Closes
• Conference Call Date: Thursday, February 13, 2025
• Conference Call Time: 8:30AM ET

Alico (NASDAQ:ALCO), together with its subsidiaries, operates as an agribusiness and land management company in the United States. The company operates in two segments, Alico Citrus, and Land Management and Other Operations. The Alico Citrus segment engages in planting, owning, cultivating, and/or managing citrus groves to produce fruit for sale to fresh and processed citrus markets, including activities related to the purchase and resale of fruit and value-added services, which include contracting for the harvesting, marketing, and hauling of citrus. The Land Management and Other Operations segment is involved in the activities related to native plant sales, grazing and hunting leasing, management, and/or conservation of unimproved native pastureland; and activities related to rock mining royalties and other insignificant lines of business, as well as in the activities related to owning and/or leasing improved farmland. The company was incorporated in 1960 and is based in Fort Myers, Florida.

Alico Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good morning, and welcome to Aliko's First Quarter twenty twenty five Earnings Call. Currently, all participants are in a listen only mode. As a reminder, today's conference is being recorded. I would now like to turn the call over to your host, John Mills, Managing Partner at ICR.

[John Mills, Managing Partner at ICR]

Thank you. Good morning, everyone, and thank you for joining us for Aliko's First Quarter Fiscal Year twenty twenty five conference call. On the call today are John Kiernan, President and Chief Executive Officer and Brad Heine, Chief Financial Officer. By now, everyone should have access to the first quarter fiscal year twenty twenty five earnings release, which went out yesterday at approximately 4PM Eastern Time. If you not had a chance to view the release, it's available on the Investor Relations portion of the company's website at alicoinc.com.

[John Mills, Managing Partner at ICR]

This call is being webcast and a replay will be available on Aliko's website as well. Before we begin, we'd like to remind everyone that the prepared remarks contain forward looking statements. Such statements are subject to risks, uncertainties and other factors that may cause the actual results to differ materially from those expressed or implied in these statements. Important factors that could cause or contribute to such differences include risks detailed in the company's quarterly reports on Form 10 Q, annual reports on Form 10 K, current reports on Form eight K and any amendments thereto filed with the SEC and those mentioned in the earnings release. The company undertakes no obligation to subsequently update or revise the forward looking statements made on today's call, except as required by law.

[John Mills, Managing Partner at ICR]

During this call, the company may also discuss non GAAP financial measures, including adjusted EBITDA and net debt. For more detail on these measures, please refer to the company's press release issued yesterday. And with that, it is my pleasure to turn the call over to the company's President and CEO, Mr. John Kiernan.

[John Kiernan, President and Chief Executive Officer at Alico]

Thank you, John. Good morning, everyone, and thank you for joining us for Aliko's first quarter of fiscal year twenty twenty five earnings call. I'm going to spend most of my prepared remarks updating you about our strategic transformation, which we announced in early January and how we are already executing on this new strategy, balancing alternative agricultural operations with strategic land monetization opportunities. We have decided not to spend further material capital on our citrus operations after the current crop is harvested in the first half of calendar year twenty twenty five with the exception of a few grows that will be harvested for one more year our consolidated investment in Citri. We will focus our resources on creating new opportunities for profitable growth, while also acting prudently on behalf of our shareholders.

[John Kiernan, President and Chief Executive Officer at Alico]

By winding down our capital intensive citrus production, we believe we are strengthening our financial position. For over a century, Oweko has been proud to be one of Florida's leading citrus producers and a dedicated steward of its agricultural land. But now we must reluctantly adapt the changing environmental and economic realities. Owico owns approximately 53,371 acres of land across eight counties in Florida, as well as approximately 48,700 acres of oil, gas and mineral rights in the state. And we believe that our strategic transformation creates a tremendous opportunity to unlock the value in these assets for our shareholders.

[John Kiernan, President and Chief Executive Officer at Alico]

Management believes that approximately 75% of current Aliko acres can remain agriculture related and approximately 25% can be transitioned and entitled for non agricultural purposes. We expect to maintain our commitment to the Florida agricultural industry through diversified profitable non citrus operations following this wind down and also expect to entitle certain parcels of our land for commercial and residential development. The company believes our strategic transformation will improve our ability to provide investors with a greater return on capital that includes the benefits and stability of a conventional agricultural investment with the optionality that comes with active land management. This strategic transformation beyond citrus production will allow OLEKO to maintain our agricultural heritage while creating new opportunities for profitable growth, while also acting prudently on behalf of shareholders. Management and the Board believe that the steps taken to launch our strategic transformation in January went smoothly and efficiently and we are now well positioned to turn our attention to driving profitability, which begins with harvesting our Valencia crop in early March and should continue through April.

[John Kiernan, President and Chief Executive Officer at Alico]

We have been consistently transparent about how our citrus operations have faced increasing financial challenges from citrus greening disease and environmental factors for many seasons. As a result of citrus greening and multiple hurricanes, our Florida our citrus production has declined approximately 73% over the last ten years, despite significant investments in land, trees and citrus disease treatments. We remain encouraged by updates from Florida Citrus Mutual about the potential for some form of federal relief for the citrus industry for the damage that Hurricane Ian, which struck in 2022, due to the 2023 and 2024 crops and potentially for the damage that Hurricane Milton, which struck in 2024, due to the crops this year. We've explored many available options to restore our citrus operations to profitability, but the long term production trend and the cost needed to combat citrus greening disease no longer support our expectations for recovery. During our first fiscal quarter, operational results reflected these ongoing challenges in our citrus division with lower levels year over year pound solids being produced.

[John Kiernan, President and Chief Executive Officer at Alico]

For the three months ended 12/31/2024, we harvested approximately 4,000,000 pound solids compared to 4,700,000 pound solids in the comparable prior fiscal year. The decrease in pound solids harvested was driven by fruit drop caused by Hurricane Milton. However, due to a 38.9% increase in the price per pound solid that we received as a result of our new Tropicana agreement, we had a $2,500,000 increase in revenue related to the early and mid season harvest. And adjusted EBITDA was $700,000 in the first fiscal quarter ended 12/31/2024, compared to a loss of $2,300,000 in the first fiscal quarter ended 12/31/2023. Current season production trends indicate that our total harvest volume for fiscal twenty twenty five will likely be lower than fiscal twenty twenty four.

[John Kiernan, President and Chief Executive Officer at Alico]

These continued production challenges reinforced our recent strategic decision to wind down Polleco citrus operations as they are no longer economically viable. Looking ahead to the remainder of fiscal twenty twenty five, we expect to complete our final significant citrus harvest while positioning the company for our next chapter. We are also in the process of closing several land sales, which are expected to generate approximately $20,000,000 in proceeds this fiscal year based upon transactions that are under option agreements or have been negotiated and are expected to close soon. These expected proceeds and cash generated by the Valencia harvest, which will begin next month, are expected to fund operations through fiscal twenty twenty seven. Aweco also has an additional $73,500,000 in borrowings under its credit facilities available if needed.

[John Kiernan, President and Chief Executive Officer at Alico]

We have a proven track record of monetizing certain non core assets over the past decade. In December of twenty twenty three, we completed the final sale of 17,229 acres of the Aliko Ranch to the State of Florida for $77,600,000 in gross proceeds, which we use to repay all of our outstanding borrowings under our line of credit, which was originally borrowed due to the impact of Hurricane Ian and the $19,100,000 balance on our MetLife variable term rate debt, thereby strengthening our balance sheet and reducing our required principal payments through fiscal twenty twenty nine to less than $1,500,000 per year. In addition to increasing our financial flexibility in September of twenty twenty four, we amended our credit agreement with MetLife by extending the maturity of our revolving line of credit until 05/01/2034, which we believe demonstrates the continued support and confidence in OECO by MetLife. We believe that the revolving line of credit provides us with ample liquidity should we need it to manage significant weather events as well as to ensure that we have time and capital to realize the long term highest and best use for our real estate assets. Since our announcement in early January, management has been evaluating inquiries from developers, brokers, agents and principals about possibly acquiring parcels of our citrus acres after this current harvest season.

[John Kiernan, President and Chief Executive Officer at Alico]

We've also begun selling selected rolling stock and are continuing to evaluate offers to acquire other fixed assets such as trucks and tractors. Supported by these positive factors, the company reiterates that as a result of our cash flow being positive since January, we expect to end the fiscal year with enough cash to meet our operating expenses for fiscal years twenty twenty six and 2027. Aliko has also been discussing lease arrangements with many agricultural operators in Florida about possible sod production, expanding sand mining activities and potentially growing seasonal crops such as corn, sugarcane, vegetables such as green beans and fruits such as watermelon, berries on some of the company's parcels. Details about these opportunities will be disclosed once contracts are finalized. As part of Oweko's strategic transformation, we continue to evaluate all of our properties to determine what will create the highest and best use for our shareholders.

[John Kiernan, President and Chief Executive Officer at Alico]

Instrumental in that process is evaluating all opportunities where we can leverage conservation programs to simultaneously create value and enhance environmental outcomes. Alweko identified five properties ranging in size from three forty eight acres to 7,789 acres for a total of 10,484 acres as case studies to explore the opportunities provided under Florida's Rural and Family Lands Protection Program. Those applications were submitted to FDACS prior to the January 2029 deadline and will be evaluated over the coming months. While not all the properties may ultimately be a fit for the program, we look forward to coordinating with the Florida Department of Agriculture and Consumer Services to analyze these properties fit within the Florida Rural and Family Lands Protection Program, as well as our strategic transformation framework. In the past, Aweko has successfully returned capital through optional debt repayments, a tender offer, share buyback programs as well as paying a quarterly common dividend for more than fifty years.

[John Kiernan, President and Chief Executive Officer at Alico]

As our cash balances rise, whether through land sales or our non citrus agricultural activities becoming more firmly established, we intend to discuss more specific plans to return capital to investors. Under this new strategy, OLEKO will become a diversified land company and most of its properties are expected to create profitable agricultural revenues that are not citrus related. The company expects to recognize positive cash flow for the remainder of the current fiscal year after land sales that have already been negotiated close, severance and restructuring costs are paid and harvesting activities conclude. Management estimates that the present value of our current land holdings could be worth approximately $650,000,000 dollars to $750,000,000 even with approximately 75% of these acres valued for agricultural usage and assuming 10% of those acres are entitled for development within the next five years. Our entitlement work in Collier And Highlands Counties is proceeding on schedule and we expect to provide our investors with a briefing on our development plans for our Corkscrew Grove once public applications have been filed.

[John Kiernan, President and Chief Executive Officer at Alico]

Overall, I am very excited about the opportunity this strategic transformation creates to unlock value for our long term shareholders and we look forward to updating you on our progress throughout the fiscal year. And with that, I'll now turn the call over to Brad Heinem.

[Brad Heine, CFO at Alico]

Thank you, John, and good morning, everyone. While we typically harvest most of our crop in the second and third quarters, generating the bulk of our profit and cash flow during this period, this year's harvest will be concentrated in the first and second quarters. This shift will push our peak working capital requirements into the third and fourth quarters of the fiscal year. For the first fiscal quarter ended 12/31/2024, revenue increased 21% to $16,900,000 compared to $14,000,000 in the prior year period. Aliko Citrus revenue was $16,300,000 compared to $13,600,000 in the prior year period.

[Brad Heine, CFO at Alico]

The $2,700,000 increase in revenue was primarily due to an increase in the price per pound solid, partially offset by a decrease in pound solids produced by the early and mid season harvest. Approximately 4,000,000 pound solids were harvested for three months ended December 31 at a $3.69 average price per pound solid compared to 4,600,000 pound solids at a $2.6.0.66 dollars average price per pound solids in the prior year period. First quarter harvest yields declined after Hurricane Milton severe winds drove an increase in fruit drop rates. The increase in price was a result of more favorable pricing in one of our contracts with Tropicana. Land management and other operations revenue increased 45% to $600,000 compared to $400,000 in the prior year period.

[Brad Heine, CFO at Alico]

This was primarily the result of an increase in rock and sand royalty income and sod sales, partially offset by lower farm, grazing and hunting lease revenues due to the sale of the Aliko Ranch. Total operating expenses were $25,100,000 and $28,200,000 for the three months ended 12/31/2024 and 2023 respectively. The decrease in operating expenses primarily relates to the inventory adjustments recorded at 09/30/2024 on the ending inventory balance as a result of the continued weak recovery from Hurricane Ian and the ongoing effects of citrus screening, which effectively lowered the inventory to be expensed in fiscal year twenty twenty five. General administrative expenses for the three months ended 12/31/2024 and 2023 were 2,600,000 and $3,300,000 respectively. The decrease was primarily due to lower employee costs as a result of lower bonus accruals and lower professional fees.

[Brad Heine, CFO at Alico]

Other income expense net for the three months ended 12/31/2024 and 2023 was a loss of $600,000 and income of $75,500,000 respectively. The decrease is primarily due to there being no land sales in the three months ended 12/31/2024, as compared to gains of $77,000,000 during the prior year period, driven by the sale of the Aliko Ranch to the State of Florida. We recognized an income tax benefit of $2,200,000 and an income tax provision of $15,600,000 for the three months ended 12/31/2024 and 2023 respectively. The income tax benefit for the three months ended 12/31/2024 was principally due to a change in the valuation allowance on our deferred tax assets. This valuation allowance required primarily due to the planned accelerated book depreciation on citrus producing assets, which is anticipated to result in a cumulative three year loss during the fiscal year ending 09/30/2025.

[Brad Heine, CFO at Alico]

For the first fiscal quarter ended 12/31/2024, the company reported a net loss attributable to Aliko common shareholders of 9,200,000 compared to net income of $42,900,000 for the first fiscal quarter ended 12/31/2023, driven by the aforementioned sale of the Aliko Ranch. For the three months ended 12/31/2024, the company had a loss of $1.2 per diluted common share compared to earnings of $5.64 per diluted common share for the three months ended 12/31/2023. Adjusted EBITDA was $700,000 in the first fiscal quarter ended 12/31/2024 compared to a loss of $2,300,000 for the first fiscal quarter ended 12/31/2023. Turning now to our balance sheet and liquidity. Cash and cash equivalents were $4,400,000 as of 12/31/2024 compared to $3,200,000 at the end of fiscal year 2024.

[Brad Heine, CFO at Alico]

Net cash used in operating activities was $7,600,000 as of 12/31/2024 compared to $13,200,000 through 12/31/2023. At quarter end, we had $73,500,000 of remaining availability on our line of credit and there were no significant debt maturities until 2029. Total debt was $104,900,000 and net debt was $100,500,000 as of 12/31/2024, compared to $92,100,000 and $89,000,000 respectively at the end of fiscal year 2024. Now I'd like to turn the call back to John to discuss our fiscal year 2025 outlook.

[John Kiernan, President and Chief Executive Officer at Alico]

Thank you, Bert.

[John Kiernan, President and Chief Executive Officer at Alico]

Turning to our guidance, we expect harvest volumes in 2025 to be lower compared to 2024 levels due to the effects of greening and Hurricane Milton. We expect to realize approximately $20,000,000 in land sales in fiscal twenty twenty five based upon transactions that are under option agreements or have been negotiated and are expected to close soon. Our entitlement work in Collier and Highlands Counties are proceeding on schedule and we expect to provide our investors with a briefing on our development plans for our Corkscrew Grove once public applications have been filed. We expect to end fiscal year twenty twenty five with enough cash to meet our operating expenses for fiscal years twenty twenty six and 2027. I'm very pleased with the launch of our strategic transformation and the opportunity it creates for our shareholders and look forward to updating you in May on our second fiscal quarter call.

[John Kiernan, President and Chief Executive Officer at Alico]

And with that, we'll now open the line up to questions from industry analysts. Marjorie?

[Operator]

Thank you very much. And at this time, we have no questions. I'd like to turn the call back over to John Kiernan for any closing remarks.

[John Kiernan, President and Chief Executive Officer at Alico]

In closing remarks, I just want to say thank you to everyone for joining our call today and for your continued support of OLEKO. We look forward to speaking with you about our second quarter results in May. Have a good day.

[Operator]

Thank you. Ladies and gentlemen, that does conclude today's conference. We appreciate your participation. You may disconnect at any time.

Participants

Executives

• John Kiernan, President and Chief Executive Officer
• Brad Heine, CFO

Analysts

• John Mills, Managing Partner at ICR