Alico, Inc. (NASDAQ:ALCO) Q2 2023 Earnings Conference Call May 4, 2023 8:30 AM ET Company Participants John Kiernan - President and Chief Executive Officer Perry Del Vecchio - Chief Financial Officer Conference Call Participants Operator Ladies and gentlemen, welcome to Alico's Second Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Earlier today, the company issued a press release announcing its results for ...

[Part I - FINANCIAL INFORMATION](index=2&type=section&id=Part%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Financial performance declined significantly, with revenues falling, leading to a net loss and negative operating cash flow Condensed Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2023 (Unaudited) | September 30, 2022 | | :--- | :--- | :--- | | **Total current assets** | $36,973 | $31,616 | | **Total assets** | $411,561 | $409,255 | | **Total current liabilities** | $14,311 | $16,525 | | **Total liabilities** | $174,240 | $160,390 | | **Total stockholders' equity** | $237,321 | $248,865 | - Total stockholders' equity decreased from **$248.9 million** at September 30, 2022, to **$237.3 million** at March 31, 2023, primarily due to a net loss and dividend payments[11](index=11&type=chunk) - Lines of credit increased significantly from **$4.9 million** to **$21.1 million**, indicating increased reliance on short-term borrowing[11](index=11&type=chunk) Condensed Consolidated Statements of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total operating revenues | $21,294 | $49,641 | $31,882 | $64,978 | | Gross (loss) profit | $(6,328) | $3,999 | $(10,129) | $5,810 | | Net (loss) income attributable to Alico | $(7,787) | $20,702 | $(10,937) | $30,833 | | Diluted EPS | $(1.02) | $2.74 | $(1.44) | $4.08 | - For the six months ended March 31, 2023, the company reported a **net loss of $10.9 million**, a significant downturn from the **$30.8 million net income** in the prior-year period, largely due to a 50.9% decrease in operating revenues[12](index=12&type=chunk) - Gain on sale of real estate, property and equipment **decreased from $35.0 million** in the first six months of fiscal 2022 to **$4.8 million** in the same period of fiscal 2023, significantly impacting other income and overall profitability[12](index=12&type=chunk) Condensed Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2023 | Six Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,110) | $8,798 | | Net cash (used in) provided by investing activities | $(4,111) | $25,998 | | Net cash provided by (used in) financing activities | $10,504 | $(9,506) | | **Net (decrease) increase in cash** | **$(717)** | **$25,290** | - Cash from operations turned negative, with a **net use of $7.1 million** for the six months ended March 31, 2023, compared to a **net provision of $8.8 million** in the prior year, reflecting the sharp decline in net income[23](index=23&type=chunk) - Net proceeds from the sale of real estate and other assets **decreased from $36.7 million to $4.9 million** year-over-year, causing a significant swing in cash from investing activities[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the business structure, accounting policies, and significant events including Hurricane Ian's impact and a debt covenant waiver - The company operates through two segments: **Alico Citrus** and **Land Management and Other Operations**[24](index=24&type=chunk)[29](index=29&type=chunk) - Due to Hurricane Ian, the company recorded a **$1.6 million adjustment** to reduce inventory to net realizable value for the six months ended March 31, 2023; insurance proceeds of **$4.76 million** were received during the same period[51](index=51&type=chunk)[53](index=53&type=chunk) - As of March 31, 2023, the company was **not in compliance with its minimum debt service coverage ratio covenant** but obtained a waiver from the lender, Rabo, for the quarter[78](index=78&type=chunk) - The company is a defendant in a class action lawsuit (Sinder v Alico, Inc) and a shareholder derivative complaint (Assad v Brokaw et al) related to its December 2022 financial restatement[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - Subsequent to the quarter's end, in April 2023, the company received an additional **$8.9 million** in Hurricane Ian crop insurance proceeds and **$838,000** for property damage claims[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes poor performance to Hurricane Ian's impact on citrus production and the termination of a key services contract [Business Overview and Recent Developments](index=27&type=section&id=Business%20Overview%20and%20Recent%20Developments) - **Hurricane Ian impacted a majority of the company's groves**, affecting fiscal year 2023 fruit production, with recovery expected to take up to two full seasons[140](index=140&type=chunk) - The company began treating its trees with a new application of Oxytetracycline (OTC) in January 2023 to mitigate the impacts of citrus greening, with benefits not measurable until the fiscal 2024 harvest[142](index=142&type=chunk) - During the first half of fiscal 2023, the company sold approximately **888 acres of land** for total proceeds of about **$4.9 million**[144](index=144&type=chunk)[145](index=145&type=chunk) - The company received the final portion of Hurricane Irma federal relief funds, amounting to **$1.266 million**, in the first quarter of fiscal 2023[148](index=148&type=chunk) [Condensed Consolidated Results of Operations](index=30&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) Alico Citrus Segment Performance - Six Months Ended March 31 | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenue (in thousands) | $31,205 | $63,780 | (51.1)% | | Total Boxes Harvested (in thousands) | 2,273 | 4,146 | (45.2)% | | Total Pound Solids Produced (in thousands) | 11,146 | 20,815 | (46.5)% | - The decrease in Alico Citrus revenue was driven by lower processed box production for both Early/Mid-Season (**down 55.0%**) and Valencia (**down 33.4%**) crops due to Hurricane Ian[156](index=156&type=chunk) - Grove Management Services revenue **decreased by 93.0%** for the six-month period, as a key group of third-party grove owners exited the citrus business in June 2022[151](index=151&type=chunk)[158](index=158&type=chunk) - Land Management and Other Operations revenue **decreased by 43.5%** for the six-month period, primarily due to reduced grazing and hunting lease income resulting from the sale of portions of the Alico Ranch[165](index=165&type=chunk)[168](index=168&type=chunk) - Other income, net, **decreased by 92.9%** for the six-month period, mainly because gains from real estate sales fell to **$4.8 million** from **$35.0 million** in the prior-year period[149](index=149&type=chunk)[177](index=177&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Working Capital Summary (in thousands) | Metric | March 31, 2023 | September 30, 2022 | | :--- | :--- | :--- | | Total current assets | $36,973 | $31,616 | | Total current liabilities | $14,311 | $16,525 | | **Working capital** | **$22,662** | **$15,091** | - Management believes existing cash, cash from operations, asset sales, and credit lines will provide sufficient liquidity for at least the next twelve months[183](index=183&type=chunk)[184](index=184&type=chunk) - As of March 31, 2023, the company had approximately **$48.6 million** available on its $70 million working capital line of credit and **$25 million** available on its revolving line of credit[185](index=185&type=chunk) - Net cash used in operating activities was **$7.1 million** for the first six months of fiscal 2023, a reversal from **$8.8 million** provided by operations in the prior year, mainly due to lower box production and the termination of a grove management contract[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its variable rate debt, with no other significant exposures - The company is subject to interest rate risk on its variable rate debt; a **one-percentage-point increase** in prevailing interest rates would have increased interest expense by approximately **$100,000** for the three months ended March 31, 2023[196](index=196&type=chunk) - The company does not use derivative financial instruments for trading or speculative purposes[195](index=195&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to ongoing material weaknesses in internal control over financial reporting - Management concluded that as of March 31, 2023, the company's disclosure controls and procedures were **not effective** at a reasonable assurance level[201](index=201&type=chunk) - The ineffectiveness is due to two ongoing material weaknesses: one related to controls around the **income tax provision** and another related to the **evaluation of misstatements'** impact on financial statements[204](index=204&type=chunk)[205](index=205&type=chunk) - A remediation plan has been designed and is being implemented to address these weaknesses, involving improved reconciliation, documentation, review, and approval processes for the tax provision and misstatement evaluations[204](index=204&type=chunk) [Part II - OTHER INFORMATION](index=41&type=section&id=Part%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending a class action and a shareholder derivative complaint related to its 2022 financial restatement - A class action complaint (Sinder v Alico, Inc) was filed on February 17, 2023, alleging violations of the Exchange Act related to false and misleading statements regarding financial reporting and a subsequent restatement[208](index=208&type=chunk) - A shareholder derivative complaint (Assad v Brokaw et al) was filed on March 7, 2023, asserting breach of fiduciary duty and unjust enrichment based on similar allegations as the class action[209](index=209&type=chunk) - The company believes the claims in both legal matters are **without merit** and does not anticipate a material adverse impact on its financial condition[210](index=210&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors were reported during the period - No material changes were reported in the company's risk factors from its most recent Form 10-K[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in unregistered equity sales or share repurchases during the quarter - There were no sales of unregistered equity securities or issuer repurchases of equity securities during the reporting period[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) None [Item 4. Mine Safety Disclosure](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) Not Applicable [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) None [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the report, including a debt modification agreement and officer certifications - Exhibits filed include an Option To Defer Principal Payments agreement with Metropolitan Life Insurance Company and certifications from the CEO and CFO[217](index=217&type=chunk)

Alico Inc. (NASDAQ:ALCO) Q1 2023 Earnings Conference Call February 6, 2023 8:30 AM ET Company Participants John Kiernan - President, Chief Executive Officer Perry Del Vecchio - Chief Financial Officer Conference Call Participants Gerry Sweeney - Roth Capital Operator Welcome to Alico’s first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, today’s conference is being recorded. Earlier today, the company issued a press release announcing its re ...

Part I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=2&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company's unaudited statements show a net loss of $3.2 million versus a prior-year net income of $10.1 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities both increased slightly, driven by changes in current assets and credit line borrowings Balance Sheet Summary (in thousands) | Account | Dec 31, 2022 | Sep 30, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $37,555 | $31,616 | | **Total Assets** | $412,990 | $409,255 | | **Total Current Liabilities** | $10,225 | $16,525 | | **Total Liabilities** | $167,386 | $160,390 | | **Total Stockholders' Equity** | $245,604 | $248,865 | - Total assets slightly increased to **$413.0 million** as of December 31, 2022, from $409.3 million as of September 30, 2022, primarily due to an increase in current assets like accounts receivable and inventories[11](index=11&type=chunk) - Total liabilities increased to **$167.4 million**, mainly driven by a significant increase in borrowings on lines of credit from $4.9 million to $19.0 million[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company experienced a significant revenue decline and shifted from a net income to a net loss year-over-year Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | **Total Operating Revenues** | $10,588 | $15,337 | | **Gross (Loss) Profit** | $(3,801) | $1,811 | | **Loss from Operations** | $(6,310) | $(773) | | **Net (Loss) Income** | $(3,186) | $10,080 | | **Net (Loss) Income Attributable to Alico** | $(3,150) | $10,131 | | **Diluted EPS** | $(0.41) | $1.34 | | **Cash Dividends per Share** | $0.05 | $0.50 | - Total operating revenues decreased by **31.0% YoY**, from $15.3 million to $10.6 million, primarily due to lower revenue from the Alico Citrus segment[12](index=12&type=chunk) - The company reported a **net loss of $3.2 million**, a significant shift from a net income of $10.1 million in the prior-year quarter, driven by lower revenues and a smaller gain on asset sales[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash usage remained stable, while investing activities used cash and financing activities provided cash Cash Flow Summary (in thousands) | Activity | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | $(9,665) | $(9,608) | | **Net Cash (Used in) Provided by Investing Activities** | $(496) | $4,079 | | **Net Cash Provided by Financing Activities** | $9,565 | $4,712 | | **Net Decrease in Cash** | $(596) | $(817) | | **Cash at End of Period** | $269 | $69 | - Net cash used in operating activities remained stable at approximately **$(9.7) million**, reflecting the seasonal nature of the business where costs are incurred before harvest revenues are fully realized[18](index=18&type=chunk) - Investing activities used **$0.5 million in cash**, a sharp contrast to providing $4.1 million in the prior year, mainly due to lower proceeds from the sale of real estate[18](index=18&type=chunk) - Financing activities provided **$9.6 million in cash**, primarily from increased net borrowings on revolving lines of credit to fund operations[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, debt compliance, asset sales, and purchase commitments - The company operates two primary business segments: **Alico Citrus** (cultivation and management of citrus groves) and **Land Management and Other Operations** (leasing, conservation, etc)[19](index=19&type=chunk)[24](index=24&type=chunk) - In Q1 2023, the company sold approximately **609 acres for $3.3 million**, resulting in a gain of $3.2 million[48](index=48&type=chunk) - As of December 31, 2022, the company had total outstanding debt and lines of credit of **$125.0 million** and was in compliance with all financial covenants[56](index=56&type=chunk)[67](index=67&type=chunk) - The company has outstanding purchase commitments of approximately **$5.4 million** for citrus trees as of December 31, 2022[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the revenue decline and net loss, attributing them to Hurricane Ian and a terminated contract [Recent Developments](index=26&type=section&id=Recent%20Developments) Hurricane Ian significantly impacted groves, and the company is seeking federal relief while managing credit lines - **Hurricane Ian**, which made landfall on September 28, 2022, impacted a majority of the Company's groves, affecting fruit production[123](index=123&type=chunk) - The company is seeking **federal relief funds** made available through the Consolidated Appropriations Act to mitigate the financial impact of Hurricane Ian[126](index=126&type=chunk)[127](index=127&type=chunk) - The working capital line of credit was **extended to November 1, 2025**, and the interest rate benchmark was converted from LIBOR to SOFR[124](index=124&type=chunk) - The company received the final portion of Hurricane Irma federal relief funds, amounting to **$1.3 million** in Q1 2023, which is recorded as a reduction to operating expenses[128](index=128&type=chunk) [Condensed Consolidated Results of Operations](index=27&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) A 31% revenue drop and a 73% decrease in other income led to a significant net loss compared to the prior year Quarterly Results of Operations (in thousands) | Metric | Q1 2023 (ended Dec 31, 2022) | Q1 2022 (ended Dec 31, 2021) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $10,588 | $15,337 | (31.0)% | | **Total Gross (Loss) Profit** | $(3,801) | $1,811 | NM | | **Loss from Operations** | $(6,310) | $(773) | NM | | **Total Other Income, net** | $2,041 | $7,553 | (73.0)% | | **Net (Loss) Income** | $(3,186) | $10,080 | (131.6)% | - The significant decrease in revenue was primarily driven by a **30.4% decline** in the Alico Citrus segment[129](index=129&type=chunk) - Other income decreased by **73.0%** due to smaller gains on the sale of real estate in the current quarter ($3.2 million) compared to the prior-year quarter ($8.4 million)[149](index=149&type=chunk) [Segment Performance](index=28&type=section&id=Segment%20Performance) The Alico Citrus segment suffered from a terminated contract and hurricane impact, while Land Management revenue also fell - Alico Citrus revenue decreased primarily due to a **$3.2 million (94.5%) decline** in Grove Management Services after a major third-party client exited the citrus business[131](index=131&type=chunk)[134](index=134&type=chunk) - The Early and Mid-Season harvest was **negatively impacted by Hurricane Ian**, leading to accelerated harvesting, a 4.5% decrease in pound solids per box, and a 2.7% decrease in processed boxes[135](index=135&type=chunk) - Alico Citrus operating expenses increased by **6.8%** due to significant cost increases in fertilizer, herbicide, fuel, and additional costs for hurricane-related cleanup and repairs[131](index=131&type=chunk)[139](index=139&type=chunk) - Land Management and Other Operations revenue decreased by **45.7%**, mainly due to lower grazing and hunting lease revenue resulting from the sale of portions of the Alico Ranch[144](index=144&type=chunk)[145](index=145&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Working capital increased significantly, and management believes liquidity is sufficient for the next twelve months Liquidity Summary (in thousands) | Metric | Dec 31, 2022 | Sep 30, 2022 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $269 | $865 | | **Working capital** | $27,330 | $15,091 | | **Principal amount of term loans and lines of credit** | $124,982 | $111,624 | - **Working capital increased significantly to $27.3 million** from $15.1 million, primarily due to a decrease in current liabilities, specifically accrued dividends and ad valorem taxes[73](index=73&type=chunk)[153](index=153&type=chunk) - The company had approximately **$50.7 million available** under its $70 million working capital line of credit and $25 million available under its revolving line of credit as of December 31, 2022[157](index=157&type=chunk) - Management believes that cash-on-hand, cash from operations, asset sales, and available credit lines will provide **sufficient liquidity** for at least the next twelve months[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes in its market risk disclosures from its last annual report - There have been **no material changes** in the company's quantitative and qualitative disclosures about market risk during the reporting period[167](index=167&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in financial reporting - Management concluded that disclosure controls and procedures were **not effective** as of the end of the period covered by the report[168](index=168&type=chunk) - The ineffectiveness is due to a continuing **material weakness** related to controls around the income tax provision and the evaluation of financial statement misstatements[170](index=170&type=chunk)[171](index=171&type=chunk) - A **remediation plan** has been designed and is being implemented to address the control deficiencies, including instituting a more rigorous reconciliation process for the tax provision and documenting the evaluation of any misstatements[171](index=171&type=chunk)[172](index=172&type=chunk) Part II - OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not party to any legal proceedings expected to have a material adverse effect - There are **no current legal proceedings** expected to have a material adverse effect on the Company[176](index=176&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors disclosed in the company's latest Annual Report have occurred - **No material changes** have occurred in the risk factors from the company's most recent Form 10-K filing[177](index=177&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered equity sales or share repurchases during the quarter - There were **no sales of unregistered equity securities** during the reporting period[178](index=178&type=chunk) - The company **did not purchase any of its own equity securities** during the reporting period[178](index=178&type=chunk)

Financial Data and Key Metrics Changes - For the fiscal year ended September 30, 2022, the company reported net income attributable to Alico common stockholders of approximately $12.5 million, a decrease from approximately $34.9 million for the fiscal year ended September 30, 2021 [7][23] - Adjusted EBITDA for the fiscal year ended September 30, 2022, was approximately $13.4 million, down from approximately $25.3 million for the fiscal year ended September 30, 2021 [8][23] - Total operating revenue was $91.9 million for the fiscal year ended September 30, 2022, compared to $108.6 million for the fiscal year ended September 30, 2021 [13] Business Line Data and Key Metrics Changes - Citrus revenue decreased to $89.7 million for the fiscal year ended September 30, 2022, from $105.8 million for the fiscal year ended September 30, 2021, primarily due to lower box production and a reduction in Grove Management Services [13][14] - Operating revenue from Grove Management Services was approximately $11.9 million for the fiscal year ended September 30, 2022, down from $17 million in the previous fiscal year [17] Market Data and Key Metrics Changes - The USDA indicated that the Florida orange crop decreased by 22.5% to approximately 41.1 million boxes for the 2021/2022 harvest season, while Alico's box production declined by 12.9% [17] Company Strategy and Development Direction - The company plans to continue evaluating non-citrus assets and has sold approximately 9,400 acres of ranch land, with about 20,000 acres remaining for potential sale [11] - Future capital allocation decisions will focus on maximizing returns to shareholders, which may include acquiring additional citrus acres, repurchasing shares, or considering special dividends [11] Management's Comments on Operating Environment and Future Outlook - Management noted that fiscal year 2023 will see lower revenue due to reduced fruit availability and anticipated recovery of groves may take up to two seasons [7] - The company is working closely with industry groups and government agencies to seek federal relief for recovery from Hurricane Ian [9][38] Other Important Information - The company has improved its debt-to-equity ratio to 0.45 to 1 as of September 30, 2022, down from 0.50 to 1 a year ago, and has significantly reduced long-term debt levels [8][24] - Alico's Board of Directors voted to reduce the next quarterly common dividend to $0.05 per share due to the impact of recent storms [27] Q&A Session Summary Question: Insights on crop insurance status and timing - Management confirmed that crop insurance is in place for all acres, primarily catastrophic, and actual measurements will be taken at the end of the crop season [31] Question: Visibility on harvest quality and timing - Management indicated that visibility on the quality of the harvest will improve in a few weeks, with the Valencia season expected to start in mid-February [33][34] Question: Updates on federal relief - Management stated that there is limited visibility on federal relief funding, which is expected to be dependent on federal funding rather than state-driven programs [38][40] Question: Real estate market activity - Management noted continued demand for real estate, with several buyers negotiating or in contract stages for Alico Ranch properties [42]

Alico, Inc. (NASDAQ:ALCO) Q3 2022 Earnings Conference Call August 3, 2022 4:30 PM ET Company Participants John Kiernan – President and Chief Executive Officer Conference Call Participants Gerry Sweeney – ROTH Capital Operator Welcome to Alico's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Earlier today, the company issued a press release announcing its results for the third quarter ended June 30, 2 ...

Alico, Inc. (NASDAQ:ALCO) Q2 2022 Results Conference Call May 9, 2022 4:30 PM ET Company Participants John Kiernan - President and Chief Executive Officer Rich Rallo - Chief Financial Officer Conference Call Participants Gerry Sweeney - ROTH Capital Operator Welcome to Alico's Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Earlier today, the Company issued a press release, announced its results for the ...

Part I - FINANCIAL INFORMATION [Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) The company's unaudited condensed consolidated financial statements for Q1/Q2 2022 reflect increased assets and net income, primarily from real estate sales Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | **Total current assets** | $70,582 | $54,913 | | **Total assets** | $452,912 | $433,217 | | **Total current liabilities** | $24,531 | $22,306 | | **Total liabilities** | $181,356 | $185,612 | | **Total stockholders' equity** | $271,556 | $247,605 | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Total operating revenues | $64,978 | $69,676 | | Gross profit | $5,810 | $15,623 | | Gain on sale of real estate | $35,049 | $3,347 | | Net income attributable to Alico | $30,833 | $8,712 | | Diluted EPS | $4.08 | $1.16 | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2022 | Six Months Ended Mar 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,798 | $25,626 | | Net cash provided by (used in) investing activities | $25,998 | $(24,598) | | Net cash used in financing activities | $(9,506) | $(10,344) | | **Net increase (decrease) in cash** | **$25,290** | **$(9,316)** | [Note 1. Description of Business and Basis of Presentation](index=9&type=section&id=Note%201.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Alico, Inc. is a Florida-based agribusiness and land management company operating through Alico Citrus and Land Management segments - The company owns approximately **75,000 acres of land** and **90,000 acres of mineral rights** in Florida[22](index=22&type=chunk) - Performance is evaluated based on two operating segments: (i) Alico Citrus and (ii) Land Management and Other Operations[25](index=25&type=chunk) - The company has experienced no material adverse impacts from the COVID-19 pandemic to date[47](index=47&type=chunk) [Note 2. Inventories](index=13&type=section&id=Note%202.%20Inventories) Inventories, mainly unharvested fruit crop, decreased to **$33.2 million** by March 31, 2022, with **$1.1 million** in federal relief funds received Inventory Breakdown (in thousands) | Category | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Unharvested fruit crop | $32,278 | $42,117 | | Other | $905 | $1,260 | | **Total inventories** | **$33,183** | **$43,377** | - The company received approximately **$1.123 million** in federal relief proceeds from the CRBG program during the six months ended March 31, 2022, which are recorded as a reduction to operating expenses[52](index=52&type=chunk) [Note 3. Assets Held for Sale](index=13&type=section&id=Note%203.%20Assets%20Held%20for%20Sale) The company continued its non-core asset disposal strategy, selling **6,286 acres** of Alico ranch for **$28.3 million** and recognizing a **$26.6 million** gain - On March 15, 2022, the company sold approximately **6,286 acres** from the Alico ranch for approximately **$28.3 million**, resulting in a gain of about **$26.6 million**[54](index=54&type=chunk) - In December 2021, the State of Florida purchased **1,638 acres** of the Alico ranch for **$5.7 million**, leading to a gain of **$5.6 million**[56](index=56&type=chunk) [Note 4. Property and Equipment, Net](index=14&type=section&id=Note%204.%20Property%20and%20Equipment%2C%20Net) Net property and equipment slightly increased to **$373.9 million** by March 31, 2022, including a **$1.45 million** gain from a property condemnation Property and Equipment, Net (in thousands) | Category | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Net depreciable properties | $260,230 | $259,277 | | Land and land improvements | $113,633 | $113,954 | | **Property and equipment, net** | **$373,863** | **$373,231** | - In connection with a property condemnation by the State of Florida in October 2021, the company received and recognized a gain of approximately **$1.45 million**[60](index=60&type=chunk) [Note 5. Long-Term Debt and Lines of Credit](index=15&type=section&id=Note%205.%20Long-Term%20Debt%20and%20Lines%20of%20Credit) Total long-term debt decreased slightly to **$119.9 million** by March 31, 2022, with no outstanding revolving credit balances and compliance with financial covenants Long-Term Debt Summary (in thousands) | Debt Category | March 31, 2022 (Principal) | September 30, 2021 (Principal) | | :--- | :--- | :--- | | Met Fixed-Rate Term Loans | $70,000 | $70,000 | | Met Variable-Rate Term Loans | $36,656 | $38,094 | | Other Term Loans | $17,495 | $18,200 | | **Total Long-Term Debt** | **$124,151** | **$126,294** | - The company had no outstanding balance on its **$25 million RLOC** and **$70 million WCLC** as of March 31, 2022[64](index=64&type=chunk)[71](index=71&type=chunk)[75](index=75&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2022[76](index=76&type=chunk) - The company is working with lenders to transition its LIBOR-based debt to an alternative reference rate, with the transition expected in fiscal 2023[79](index=79&type=chunk) [Note 8. Earnings Per Common Share](index=18&type=section&id=Note%208.%20Earnings%20Per%20Common%20Share) Diluted earnings per share significantly increased to **$4.08** for the six months ended March 31, 2022, driven by net income from asset sales Earnings Per Common Share | Period | Diluted EPS (2022) | Diluted EPS (2021) | | :--- | :--- | :--- | | Three Months Ended March 31 | $2.74 | $0.65 | | Six Months Ended March 31 | $4.08 | $1.16 | [Note 9. Segment Information](index=19&type=section&id=Note%209.%20Segment%20Information) For the six months ended March 31, 2022, Alico Citrus revenues decreased to **$63.8 million** with gross profit of **$4.9 million**, and Land Management also declined Segment Performance for Six Months Ended March 31 (in thousands) | Segment | Revenues (2022) | Revenues (2021) | Gross Profit (2022) | Gross Profit (2021) | | :--- | :--- | :--- | :--- | :--- | | Alico Citrus | $63,780 | $68,194 | $4,904 | $14,529 | | Land Management & Other | $1,198 | $1,482 | $906 | $1,094 | | **Total** | **$64,978** | **$69,676** | **$5,810** | **$15,623** | [Note 11. Stockholders' Equity](index=21&type=section&id=Note%2011.%20Stockholders%27%20Equity) The company awarded over **12,000 restricted shares** in H1 FY22, with certain performance-based stock options forfeited due to unmet price hurdles - On January 26, 2022, **7,256 restricted shares** were awarded to employees[104](index=104&type=chunk) - In October and November 2021, a combined **4,724 restricted shares** were awarded to the CEO and other executives[105](index=105&type=chunk) - The **2019 Option Grants** and a majority of the **2018 Option Grants** were forfeited as of December 31, 2021, because the required stock price hurdles were not achieved[109](index=109&type=chunk)[112](index=112&type=chunk) [Note 12. Commitments and Contingencies](index=23&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) The company has **$336,000** in standby letters of credit and **$6.6 million** in citrus tree purchase commitments, with no material adverse legal proceedings - As of March 31, 2022, the company had approximately **$6.578 million** in outstanding commitments for the purchase of citrus trees[120](index=120&type=chunk) - The company is not party to any legal proceedings that are expected to have a material adverse effect on its financial condition[118](index=118&type=chunk) [Note 13. Related Party Transactions](index=24&type=section&id=Note%2013.%20Related%20Party%20Transactions) The company entered into an amended employment and bonus agreement with CEO John E. Kiernan, who also leased **93 acres** of company land with a **$480,000** purchase option - The company entered into a new employment and bonus agreement with CEO John E. Kiernan, effective April 1, 2022, with a term ending September 30, 2024[121](index=121&type=chunk) - CEO John Kiernan entered into a lease for **93 acres** of company land with an option to purchase it for **$480,000**, exercisable through January 1, 2023[123](index=123&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses decreased operating revenues and gross profit for H1 FY22 due to lower citrus volume, offset by substantial net income from ranch land sales, improving liquidity [Recent Developments](index=27&type=section&id=Recent%20Developments) Recent developments include a new CEO employment agreement, significant ranch land sales, federal relief funds, and a freeze event impacting Valencia orange crop yield - On March 15, 2022, the company sold **6,286 acres** of the Alico ranch for **$28.3 million**[136](index=136&type=chunk) - A freeze event in late January 2022 had a material adverse effect on the yield of the season's Valencia crop[138](index=138&type=chunk) - The company received **$1.123 million** from the Florida CRBG program in the six months ended March 31, 2022[137](index=137&type=chunk) [Condensed Consolidated Results of Operations](index=28&type=section&id=Condensed%20Consolidated%20Results%20of%20Operations) For H1 FY22, total operating revenues decreased **6.7%** to **$65.0 million** and gross profit fell **62.8%** to **$5.8 million**, though net income surged to **$30.8 million** from real estate sales Results of Operations for Six Months Ended March 31 (in thousands) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total operating revenues | $64,978 | $69,676 | (6.7)% | | Gross profit | $5,810 | $15,623 | (62.8)% | | Income from operations | $688 | $10,442 | (93.4)% | | Total other income, net | $33,288 | $1,081 | NM | | Net income attributable to Alico | $30,833 | $8,712 | NM | - The decrease in Alico Citrus revenue was due to a **11.0% decrease** in processed box production and lower pound solids per box, partially offset by an **11.2% increase** in price per pound solid[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - The USDA forecasts the overall Florida orange crop to decrease by **27.9%** for the 2021-22 season, while the company anticipates a smaller decline for its Valencia crop (**12-15%**) due to its grove management program[153](index=153&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly strengthened, with cash increasing to **$26.2 million** and working capital to **$46.1 million**, primarily from **$36.7 million** in real estate sales proceeds Liquidity Summary (in thousands) | Metric | March 31, 2022 | September 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $26,176 | $886 | | Working capital | $46,051 | $32,607 | | Principal amount of term loans | $124,151 | $126,294 | - Cash from investing activities was a source of **$26.0 million** in H1 FY22, a major shift from a use of **$24.6 million** in H1 FY21, mainly due to higher proceeds from asset sales[184](index=184&type=chunk) - Cash used in financing activities decreased slightly to **$9.5 million** from **$10.3 million**, as lower principal payments on debt were partially offset by higher dividend payments[186](index=186&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes were reported in the company's market risk disclosures compared to the prior fiscal year's Annual Report on Form 10-K - No material changes were reported regarding market risk during the period[190](index=190&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting during the quarter - The Principal Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of the end of the reporting period[191](index=191&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[192](index=192&type=chunk) Part II - OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings expected to have a material adverse effect on its financial condition or operations - There are no current legal proceedings expected to have a material adverse effect on the company[194](index=194&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported compared to those disclosed in the company's prior Annual Report on Form 10-K - No material changes to risk factors were reported for the period[195](index=195&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no sales of unregistered equity securities or issuer repurchases of its equity securities during the quarter ended March 31, 2022 - There were no sales of unregistered equity securities or issuer repurchases of equity securities during the reporting period[195](index=195&type=chunk) [Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and Sarbanes-Oxley Act certifications