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

Financial Data and Key Metrics Changes - Total operating revenue for Q1 2022 was $15.3 million, an increase from $13.7 million in Q1 2021 [12] - Citrus revenue increased to $14.7 million from $12.9 million year-over-year [12] - Net income attributable to Alico common stockholders was approximately $10.1 million in Q1 2022, compared to $3.8 million in Q1 2021 [21] Business Line Data and Key Metrics Changes - Revenue increase was primarily driven by early and mid-season harvests, attributed to higher market prices per pound solids due to decreased production and strong consumption of not-from-concentrate orange juice [13] - A slight increase in early and mid-season boxes harvested was noted, although overall box production is expected to be lower due to disease and weather conditions [14][15] Market Data and Key Metrics Changes - Market pricing for early and mid-season fruit is estimated to be between $2.55 and $2.60, an increase of $0.25 to $0.30 compared to the previous year [6] - Consumption of not-from-concentrate orange juice has increased approximately 11% for the 12-month period ended January 1, 2022, compared to the pre-pandemic period [13] Company Strategy and Development Direction - The company is focused on increasing planting density and has planted approximately 1.5 million trees since 2018, expecting meaningful production from these trees in fiscal 2023 [8] - Alico is pursuing strategic sales opportunities for ranch land, having sold approximately 1,900 acres, and anticipates similar or greater prices for remaining premium property [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy of increasing plantings despite challenges in box production due to recent weather events [23] - The company has withdrawn previously issued guidance for net income and EBITDA for fiscal year 2022 due to uncertainties from a recent freeze, but believes it can endure potential losses and maintain dividend payments [22] Other Important Information - Total operating expenses increased to $13.5 million in Q1 2022 from $8.3 million in Q1 2021, primarily due to reduced proceeds from the Citrus Recovery Block Grant program [16] - Other income net increased significantly to approximately $7.6 million in Q1 2022, driven by gains on the sale of real estate [20] Q&A Session Summary Question: Clarification on USDA report and freeze impact - Management confirmed that the 12% to 15% decline in box production was prior to the freeze and that they are currently assessing the freeze damage [26][27] Question: Pricing expectations for Valencia - Management indicated that while it is difficult to predict post-freeze pricing, an incremental step-up in Valencia pricing is expected year-over-year [31] Question: Damage assessment from freeze - Initial assessments suggest no significant tree damage, with impacts primarily related to seasonal fruit [35]

Alico, Inc. (NASDAQ:ALCO) Q4 2021 Earnings Conference Call December 7, 2021 8:30 AM ET Company Participants John Kiernan - President and Chief Executive Officer Richard Rallo - Chief Financial Officer Conference Call Participants Gerry Sweeney - ROTH Capital Marco Rodriguez - Stonegate Capital Operator Welcome to Alico’s Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. Earlier today, the company issued a press release an ...

Alico, Inc. (NASDAQ:ALCO) Q3 2021 Results Conference Call August 5, 2021 8:30 AM ET Company Participants John Kiernan - President and CEO Rich Rallo - CFO Conference Call Participants Gerry Sweeney - ROTH Capital Operator Welcome to Alico's Third Quarter 2021 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, 2021. ...