Alico, Inc. Announces Financial Results for the Third Quarter and Nine Months Ended June 30, 2018

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FORT MYERS, Fla., Aug. 06, 2018 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) today announces financial results for the third quarter and nine months ended June 30, 2018. For the nine months ended, the Company recorded net income of $12.3 million and earnings of $1.48 per diluted common share, compared to net income of $9.6 million and earnings of $1.15 per diluted common share in the prior year. Net income for the nine months ended June 30, 2018 benefited from a greater gain on sales of real estate, property and equipment and assets held for sale, lower operating expenses and a one-time deferred tax benefit of $10.0 million due to the federal corporate tax rate reduction enacted on December 22, 2017 but was offset by lower citrus production due to the impact of Hurricane Irma and a valuation allowance of $6.1 million related to expiring capital loss carryforwards.

When both periods are adjusted for non-recurring items related to transaction costs, separation and consulting fees, gains on sale of real estate, property and equipment and assets held for sale, employee stock compensation expense, impairment of long-lived assets, insurance proceeds received relating to Hurricane Irma, and net deferred tax adjustments, the Company had adjusted earnings of $0.13 per diluted common share for the nine month period ended June 30, 2018, compared to adjusted earnings of $1.10 per diluted common share for the nine months ended June 30, 2017. Adjusted EBITDA for the nine months ended June 30, 2018 and 2017 was $19.6 million and $34.1 million, respectively. Adjusted free cash flow for the nine months ended June 30, 2018 and 2017 was $2.6 million and $17.8 million, respectively.

On November 16, 2017, Alico announced the Alico 2.0 Modernization Program to aggressively improve the operations of the Company and optimize its return on capital employed through cost reductions, increased efficiencies and disposition of non-performing assets.  The Company believes its modernization program is on track and there has been improvement to Alico’s citrus and ranch operations, including all back office support activities. The Company has divested several underperforming assets during the first nine months of fiscal 2018 and continues to pursue the sale of other underperforming assets.

The Company reported the following financial results:

(in thousands except for per share amounts)
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 Change 2018 2017 Change
Net income $ 9,092 $ 5,472 $ 3,620 66.2% $ 12,300 $ 9,613 $ 2,687 28.0%
EBITDA (1) $ 19,634 $ 15,100 $ 4,534 30.0% $ 30,015 $ 34,743 $ (4,728 ) (13.6)%
Earnings per diluted common share $ 1.09 $ 0.66 $ 0.43 65.2% $ 1.48 $ 1.15 $ 0.33 28.7%
Net cash provided by operating activities $ 16,370 $ 31,649 $ (15,279 ) (48.3)% $ 16,119 $ 28,900 $ (12,781 ) (44.2)%

(1) See “Non-GAAP Financial Measures” at the end of this earnings release for details regarding these measures.

Alico Citrus Division Results

For the nine months ended June 30, 2018, Alico Citrus harvested approximately 4.8 million boxes of fruit, a decline of 36.4% from the same period in the prior year. The Early and Mid-Season box production decreased by 43.7%, while the Valencia box production decreased by 28.5% as compared to the same period in the prior year. The decrease is a direct result of the impact of Hurricane Irma.

Following the hurricane last September, the Company estimated its 2018 processed boxes would decrease by approximately 40-45% compared to fiscal year 2017. Based on the final harvest totals, the Company’s box production was down approximately 36%. The improvement over the original estimate is the result of the Valencia late season crop experiencing less fruit drop then was anticipated.

To date, the Company has received approximately $9.4 million in property and casualty and crop insurance proceeds relating to the damage incurred from Hurricane Irma. The Company has additional insurance claims pending. In addition to the commercial insurance claims which have been submitted, the Company may be eligible for Irma federal relief programs distributed by the Farm Service Agency under the 2017 Wildfires and Hurricane Indemnity Program (2017 WHIP) as well as block grants that will be administered through the State of Florida.  At this time, the Company cannot determine the amount of federal relief funds which will be received or when these funds will be disbursed.

The Company continues to believe that operating expenses for fiscal year 2018 will remain consistent with fiscal year 2017 on a per acre basis.  The financial benefits of Alico 2.0 will begin to be apparent in fiscal year 2019 because the improved citrus growing costs incurred in fiscal 2018 are expensed in the following crop season when fruit is harvested and sold.

Citrus production for the three and nine months ended June 30, 2018 and 2017 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended
June 30,
Nine Months Ended
June 30,
Change Change
2018 2017 Unit % 2018 2017 Unit %
Boxes Harvested:
Early and Mid-Season NM 1,811 3,215 (1,404 ) (43.7)%
Valencias 1,421 2,819 (1,398 ) (49.6)% 2,891 4,044 (1,153 ) (28.5)%
Total Processed 1,421 2,819 (1,398 ) (49.6)% 4,702 7,259 (2,557 ) (35.2)%
Fresh Fruit 27 84 (57 ) (67.9)% 124 328 (204 ) (62.2)%
Total 1,448 2,903 (1,455 ) (50.1)% 4,826 7,587 (2,761 ) (36.4)%
Pound Solids Produced:
Early and Mid-Season NM NM NM NM 9,194 17,950 (8,756 ) (48.8)%
Valencias 8,668 17,194 (8,526 ) (49.6)% 17,319 24,661 (7,342 ) (29.8)%
Total 8,668 17,194 (8,526 ) (49.6)% 26,513 42,611 (16,098 ) (37.8)%
Average Pound Solids Per Box:
Early and Mid-Season NM NM NM NM 5.07 5.58 (0.51 ) (9.1)%
Valencias 6.10 6.10 —% 5.99 6.10 (0.11 ) (1.8)%
Price per Pound Solids:
Early and Mid-Season NM NM NM NM $ 2.64 $ 2.56 $ 0.08 3.1%
Valencias $ 2.80 $ 2.72 $ 0.08 2.9% $ 2.82 $ 2.72 $ 0.10 3.7%

Alico Citrus cost of sales decreased to $45.8 million for the nine months ended June 30, 2018, compared to $62.7 million for the nine months ended June 30, 2017. The decrease is mainly because the Company took a $13.5 million charge for inventory casualty losses in the quarter ended September 30, 2017 as a result of Hurricane Irma.

Conservation and Environmental Resources Division Results

In January 2018, the Company sold its cattle herd.  All inventory costs that were accumulated at the date of sale were expensed. As part of this transaction, the Company entered into a long-term leasing arrangement for the grazing rights on the Ranch with the purchaser. The Company continues to own the property and conduct its long-term water dispersement program and wildlife management programs. As a result of these changes, Alico is in the process of renaming this division to Alico Water Resources to reflect its focus on water storage and nutrient reduction.  Alico believes that its dispersed water storage project is the largest and most cost-effective project of its kind in the United States and once permits from state and federal agencies have been approved, will store and prevent large volumes of water from entering the Caloosahatchee River, remove substantial amount of nitrogen from the watershed and rehydrate natural systems that eventually flow south into the Everglades.

Other Corporate Financial Information

General and administrative expenses decreased by $1.0 million to $9.9 million for the nine months ended June 30, 2018. The decrease primarily relates to one-time consulting fees, separation fees and recruitment fees incurred in the nine months ended June 30, 2017. The decrease was partially offset by an accrual related to a change in our employee paid time-off policy and increased rent expense as a result of the Company selling its corporate office building in Florida and leasing a portion of the space back.

Other income (expense), net was $2.6 million for the nine months ended June 30, 2018, as compared to $(5.1) million for the nine months ended June 30, 2017. The increase of $7.7 million is primarily attributable to the Company recording a greater gain on sales of real estate, property and equipment and assets held for sale.  Additionally, the Company incurred less interest expense due to mandatory pay down of long-term debt, as well as a prepayment made on a loan of approximately $4.5 million with proceeds from asset sales.

The Company paid a third quarter cash dividend of $0.06 per share on its outstanding common stock on July 13, 2018 to shareholders of record at June 29, 2018.

At June 30, 2018, the Company had working capital of $62.4 million and had term debt, net of cash and cash equivalents, of $150.5 million.

About Alico

Alico, Inc. is a holding company with assets and related operations in agriculture and environmental resources, including citrus, wildlife management, and water management. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship.

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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth and corporate opportunities; onetime events; acquisitions and divestitures; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization Program; customer concentration; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 30, September 30,
2018 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 26,553 $ 3,395
Accounts receivable, net 8,796 4,286
Inventories 29,726 36,204
Assets held for sale 10,295 20,983
Prepaid expenses and other current assets 2,558 1,621
Total current assets 77,928 66,489
Property and equipment, net 337,235 349,337
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 198 262
Other non-current assets 1,009 848
Total assets $ 418,616 $ 419,182
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 3,061 $ 3,192
Accrued liabilities 6,348 6,781
Long-term debt, current portion 5,250 4,550
Other current liabilities 856 1,460
Total current liabilities 15,515 15,983
Long-term debt:
Principal amount, net of current portion 171,805 181,926
Less: deferred financing costs, net (1,613 ) (1,767 )
Long-term debt less current portion and deferred financing costs, net 170,192 180,159
Deferred income tax liabilities 27,757 27,108
Deferred gain on sale 24,788 26,440
Deferred retirement obligations 4,053 4,123
Total liabilities 242,305 253,813
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 8,192,398 and 8,238,830 shares outstanding at June 30, 2018 and September 30, 2017, respectively 8,416 8,416
Additional paid in capital 19,168 18,694
Treasury stock, at cost, 223,747 and 177,315 shares held at June 30, 2018 and September 30, 2017, respectively (7,854 ) (6,502 )
Retained earnings 150,885 140,033
Total Alico stockholders’ equity 170,615 160,641
Noncontrolling interest 5,696 4,728
Total stockholders’ equity 176,311 165,369
Total liabilities and stockholders’ equity $ 418,616 $ 419,182
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 2018 2017
Operating revenues:
Alico Citrus $ 25,711 $ 49,993 $ 77,499 $ 122,537
Conservation and Environmental Resources 544 1,151 1,400 1,789
Other Operations 262 374 751 837
Total operating revenues 26,517 51,518 79,650 125,163
Operating expenses:
Alico Citrus 13,697 35,059 56,102 90,067
Conservation and Environmental Resources 864 1,451 3,054 2,726
Other Operations 42 165 93
Total operating expenses 14,603 36,510 59,321 92,886
Gross profit 11,914 15,008 20,329 32,277
General and administrative expenses 2,955 3,709 9,914 10,896
Income from operations 8,959 11,299 10,415 21,381
Other (expense) income:
Interest expense (2,188 ) (2,223 ) (6,682 ) (6,924 )
Gain on sale of real estate, property and equipment and assets held for sale 7,248 157 9,083 1,989
Other income (expense), net 14 (96 ) 158 (120 )
Total other (expense) income, net 5,074 (2,162 ) 2,559 (5,055 )
Income before income taxes 14,033 9,137 12,974 16,326
Provision for income taxes 4,941 3,665 674 6,713
Net income 9,092 5,472 12,300 9,613
Net income (loss) attributable to noncontrolling interests 8 7 32 (36 )
Net income attributable to Alico, Inc. common stockholders $ 9,100 $ 5,479 $ 12,332 $ 9,577
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic $ 1.11 $ 0.66 $ 1.50 $ 1.15
Diluted $ 1.09 $ 0.66 $ 1.48 $ 1.15
Weighted-average number of common shares outstanding:
Basic 8,228 8,293 8,243 8,315
Diluted 8,324 8,364 8,314 8,340
Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.18 $ 0.18
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended June 30,
2018 2017
Net cash provided by operating activities:
Net income $ 12,300 $ 9,613
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred gain on sale of sugarcane land (767 ) (422 )
Depreciation, depletion and amortization 10,327 11,529
Deferred income tax provision 649 4,437
Gain on sale of real estate, property and equipment and assets held for sale (8,315 ) (1,338 )
Impairment of long-lived assets 1,855
Non-cash interest expense on deferred gain on sugarcane land 1,021 1,060
Stock-based compensation expense 1,337 1,230
Other (285 ) 145
Changes in operating assets and liabilities:
Accounts receivable (4,510 ) (7,104 )
Inventories 6,478 17,350
Prepaid expenses and other assets (892 ) (621 )
Accounts payable and accrued expenses (594 ) (6,826 )
Income tax payable 1,539
Other liabilities (2,485 ) (1,692 )
Net cash provided by operating activities 16,119 28,900
Cash flows from investing activities:
Purchases of property and equipment (12,129 ) (11,450 )
Net proceeds from sale of property and equipment and assets held for sale 31,671 3,016
Notes receivable (379 )
Other 155
Net cash provided by (used in) investing activities 19,163 (8,279 )
Cash flows from financing activities:
Repayments on revolving lines of credit (21,424 ) (70,770 )
Borrowings on revolving lines of credit 21,424 65,770
Principal payments on term loans (9,421 ) (8,061 )
Treasury stock purchases (2,215 ) (2,174 )
Dividends paid (1,480 ) (1,496 )
Capital contribution received from noncontrolling interest 1,000
Capital lease obligation payments (8 ) (571 )
Net cash used in financing activities (12,124 ) (17,302 )
Net increase in cash and cash equivalents 23,158 3,319
Cash and cash equivalents at beginning of the period 3,395 6,625
Cash and cash equivalents at end of the period $ 26,553 $ 9,944
Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 2018 2017
Net income attributable to common stockholders $ 9,100 $ 5,479 $ 12,332 $ 9,577
Interest expense 2,188 2,223 6,682 6,924
Provision for income taxes 4,941 3,665 674 6,713
Depreciation, depletion and amortization 3,405 3,733 10,327 11,529
EBITDA 19,634 15,100 30,015 34,743
Transaction costs 10 (5 ) 98 196
Impairment of long-lived assets 1,855 1,855
Stock compensation expense (1) 242 231 715 648
Separation and consulting agreement expense 187 188 475
Insurance proceeds – Hurricane Irma (4,185 ) (4,185 )
Gains on sale of real estate and property and equipment and assets held for sale (7,248 ) (157 ) (9,083 ) (1,989 )
Adjusted EBITDA $ 10,308 $ 15,356 $ 19,603 $ 34,073
 (1) Includes stock compensation expense for current and former executives.
Adjusted Earnings Per Diluted Common Share
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 2018 2017
Net income attributable to common stockholders $ 9,100 $ 5,479 $ 12,332 $ 9,577
Impairment of long-lived assets 1,855 1,855
One-time deferred tax adjustment due to new tax legislation 106 (9,971 )
Valuation allowance on capital loss carryforward 6,060
Transaction costs 10 (5 ) 98 196
Stock compensation expense (1) 242 231 715 648
Separation and consulting agreement expense 187 188 475
Insurance proceeds – Hurricane Irma (4,185 ) (4,185 )
Gains on sale of real estate and property and equipment and assets held for sale (7,248 ) (157 ) (9,083 ) (1,989 )
Tax impact 2,677 (118 ) 3,065 275
Adjusted net income $ 2,557 $ 5,617 $ 1,074 $ 9,182
Diluted common shares 8,324 8,364 8,314 8,340
Adjusted Earnings per Diluted Common Share $ 0.31 $ 0.67 $ 0.13 $ 1.10
 (1) Includes stock compensation expense for current and former executives.
Adjusted Free Cash Flow
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2018 2017 2018 2017
Net cash provided by operating activities $ 16,370 $ 31,649 $ 16,119 $ 28,900
Adjustments for non-recurring items:
Transaction costs 10 (5 ) 98 196
Separation and consulting agreement expense 187 188 475
Impairment of long-lived assets 1,855 1,855
Insurance proceeds – Hurricane Irma (4,185 ) (4,185 )
Tax impact 690 (69 ) 622 (276 )
Capital expenditures (4,691 ) (6,477 ) (12,129 ) (11,450 )
Adjusted Free Cash Flow $ 10,049 $ 25,285 $ 2,568 $ 17,845
Diluted common shares 8,324 8,364 8,314 8,340
Adjusted Free Cash Flow per Diluted Common Share $ 1.21 $ 3.02 $ 0.31 $ 2.14

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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. Adjusted EBITDA is defined as earnings before interest expense, provision for income taxes, and depreciation and amortization adjusted 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 and property and equipment and assets held for sale. Adjusted Earnings per Diluted Common Share is defined as net income adjusted for non-recurring transactions divided by diluted common shares. Adjusted Free Cash Flow is defined as net cash provided by operating activities adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

Alico, Inc. Announces Financial Results for the Second Quarter and Six Months Ended March 31, 2018

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FORT MYERS, Fla., May 07, 2018 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) today announces financial results for the second quarter and six months ended March 31, 2018.  For the six months ended, the Company recorded net income of $3.2 million and earnings of $0.39 per diluted common share, compared to net income of $4.1 million and earnings of $0.49 per diluted common share in the prior year.  The decrease in net income is primarily due to the impact of Hurricane Irma on the current production season and a valuation allowance resulting in a tax expense of $6.1 million. Partially offsetting this decrease are lower operating expenses and a one-time deferred tax benefit of $10.1 million due to the federal corporate tax rate change enacted on December 22, 2017.

When both periods are adjusted for non-recurring items related to transaction costs, separation and consulting fees, gains on sale of real estate and property and equipment, employee stock compensation expense, net deferred tax and other valuation allowances, the Company incurred an adjusted loss of $0.18 per diluted common share for the six month period ended March 31, 2018, compared to adjusted earnings of $0.43 per diluted common share for the six months ended March 31, 2017.  Adjusted EBITDA for the six months ended March 31, 2018 and 2017 was $9.3 million and $18.7 million, respectively. Adjusted free cash flow for the six months ended March 31, 2018 was flat compared to the same period in the prior year, even though Alico increased capital expenditures significantly in 2018 due to a more aggressive tree-planting program.

These financial results reflect the seasonal nature of Alico’s business as impacted by Hurricane Irma. Historically, the second and third quarters of Alico’s fiscal year produce the majority of the Company’s annual revenue and working capital requirements are typically greater in the first and fourth quarters.  Due to Hurricane Irma, in the first six months of fiscal 2018 Alico harvested fruit earlier than in prior years.

On November 16, 2017, Alico announced the Alico 2.0 Modernization Program to aggressively improve the operations of the Company and optimize its return on capital employed through cost reductions, increased efficiencies and disposition of non-performing assets.  Since then, Alico’s citrus and ranch operations, including all back office support activities, have been improved through Alico 2.0.  Because the program has been successful, Alico will continue to measure the productivity of all of its assets and eliminate costs that will not negatively affect citrus production.  Alico 2.0 remains active to improve long-term performance throughout the Company.  Consistent with the objectives of Alico 2.0, the Company divested several underperforming assets during the first six months of fiscal 2018.

The Company reported the following financial results:

(in thousands except for per share amounts)
Three Months Ended March 31, 2018
Six Months Ended March 31, 2018
2018 2017 Change
2018 2017 Change
Net (loss) income $ (5,530 ) $ 5,884 $ (11,414 ) NM $ 3,208 $ 4,141 $ (933 ) (22.5 )%
EBITDA (1) $ 8,307 $ 16,408 $ (8,101 ) (49.4 )% $ 10,381 $ 19,643 $ (9,262 ) (47.2 )%
Earnings (loss) per diluted common share $ (0.67 ) $ 0.70 $ (1.37 ) NM $ 0.39 $ 0.49 $ (0.10 ) (20.4 )%
Net cash provided by (used in) operating activities $ 9,438 $ 14,688 $ (5,250 ) (35.7 )% $ (251 ) $ (2,749 ) $ 2,498 (90.9 )%

(1) See “Non-GAAP Financial Measures” at the end of this earnings release for details regarding these measures.
NM = Not Meaningful

Alico Citrus Division Results

During the six months ended March 31, 2018, Alico Citrus harvested approximately 3.4 million boxes of fruit, a decline of 27.9% from the same period in the prior year. The Early and Mid-Season harvest was completed and those total boxes decreased by 43.7%.  Valencia boxes harvested through March 31, 2018 increased by 20.0% over the same period in the prior year because the harvesting season commenced approximately one month earlier than in the prior year due to Hurricane Irma. This will likely result in the Valencia harvesting being completed earlier this year and the Company anticipates operating results to be lower in the third quarter of fiscal 2018, as compared to the same period in the prior year.

As previously announced, Alico continues to estimate its total number of boxes harvested per acre for fiscal year 2018 will decrease by approximately 40-45% due to the impact of Hurricane Irma. The Company expects operating expenses for fiscal year 2018 will remain consistent with fiscal year 2017 on a per acre basis, and the financial benefits of Alico 2.0 will begin to be realized in fiscal year 2019 because growing costs incurred in fiscal 2018 are expensed in the following crop season when fruit is harvested and sold.

Citrus production for the three and six months ended March 31, 2018 and 2017 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended
March 31,
Six Months Ended
March 31,
Change Change
2018 2017 Unit % 2018 2017 $ %
Boxes Harvested:
Early and Mid-Season 597 2,186 (1,589 ) (72.7 )% 1,811 3,215 (1,404 ) (43.7 )%
Valencias 1,470 1,225 245 20.0 % 1,470 1,225 245 20.0 %
Total Processed 2,067 3,411 (1,344 ) (39.4 )% 3,281 4,440 (1,159 ) (26.1 )%
Fresh Fruit 24 115 (91 ) (79.1 )% 97 244 (147 ) (60.2 )%
Total 2,091 3,526 (1,435 ) (40.7 )% 3,378 4,684 (1,306 ) (27.9 )%
Pound Solids Produced:
Early and Mid-Season 3,125 12,510 (9,385 ) (75.0 )% 9,194 17,950 (8,756 ) (48.8 )%
Valencias 8,651 7,467 1,184 15.9 % 8,651 7,467 1,184 15.9 %
Total 11,776 19,977 (8,201 ) (41.1 )% 17,845 25,417 (7,572 ) (29.8 )%
Average Pound Solids Per Box:
Early and Mid-Season 5.23 5.72 (0.49 ) (8.6 )% 5.08 5.58 (0.50 ) (9.0 )%
Valencias 5.89 6.09 (0.20 ) (3.3 )% 5.89 6.09 (0.20 ) (3.3 )%
Price per Pound Solids:
Early and Mid-Season $ 2.83 $ 2.56 $ 0.27 10.5 % $ 2.64 $ 2.55 $ 0.09 3.5 %
Valencias $ 2.84 $ 2.72 $ 0.12 4.4 % $ 2.84 $ 2.72 $ 0.12 4.4 %

Alico Citrus cost of sales decreased to $31.9 million for the six months ended March 31, 2018, compared to $38.5 million for the six months ended March 31, 2017. The decrease is because the Company took a charge for inventory casualty losses in the quarter ended September 30, 2017, due to the impact of Hurricane Irma related to the reduced amount of fruit that was expected to be harvested this season.

Conservation and Environmental Resources Division Results

In January 2018, the Company sold its breeding herd and leased grazing rights on the Alico Ranch to a third party operator. The Company continues to own the property and conduct its long-term water dispersement program and wildlife management programs.  As part of the sales transaction, the Company expensed all inventory costs that were accumulated at the date of sale.

Other Corporate Financial Information

General and administrative expenses decreased by $0.2 million to $7.0 million for the six months ended March 31, 2018. The decrease primarily relates to one-time consulting fees incurred in the six months ended March 31, 2017.  The decrease was partially offset by an accrual related to a change in our employee paid time-off policy and increased professional fees.

Other expense, net was $2.5 million for the six months ended March 31, 2018, as compared to $2.9 million for the six months ended March 31, 2017. The decrease of $0.4 million is primarily attributable to a reduction of interest expense due to mandatory pay down of long-term debt, as well as a prepayment made on a loan of approximately $4.5 million with proceeds from asset sales.

The Company paid a second quarter cash dividend of $0.06 per share on its outstanding common stock on April 13, 2018 to shareholders of record at March 30, 2018.

At March 31, 2018 the Company had working capital of $43.4 million and had term debt, net of cash and cash equivalents, of $167.7 million.

About Alico

Alico, Inc. is a holding company with assets and related operations in agriculture and environmental resources, including citrus, wildlife management, and water management. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization Program; customer concentration; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
March 31, September 30,
2018 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,022 $ 3,395
Accounts receivable, net 16,515 4,286
Inventories 27,010 36,204
Assets held for sale 706 20,983
Prepaid expenses and other current assets 2,287 1,621
Total current assets 58,540 66,489
Property and equipment, net 348,017 349,337
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 138 262
Other non-current assets 1,001 848
Total assets $ 409,942 $ 419,182
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 4,449 $ 3,192
Accrued liabilities 4,991 6,781
Long-term debt, current portion 5,225 4,550
Other current liabilities 438 1,460
Total current liabilities 15,103 15,983
Long-term debt:
Principal amount, net of current portion 174,536 181,926
Less: deferred financing costs, net (1,664 ) (1,767 )
Long-term debt less current portion and deferred financing costs, net 172,872 180,159
Deferred income tax liabilities 22,802 27,108
Deferred gain on sale 26,829 26,440
Deferred retirement obligations 4,097 4,123
Total liabilities 241,703 253,813
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 8,248,449 and 8,238,830 shares outstanding at March 31, 2018 and September 30, 2017, respectively 8,416 8,416
Additional paid in capital 19,050 18,694
Treasury stock, at cost, 167,696 and 177,315 shares held at March 31, 2018 and September 30, 2017, respectively (6,208 ) (6,502 )
Retained earnings 142,277 140,033
Total Alico stockholders’ equity 163,535 160,641
Noncontrolling interest 4,704 4,728
Total stockholders’ equity 168,239 165,369
Total liabilities and stockholders’ equity $ 409,942 $ 419,182
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Operating revenues:
Alico Citrus $ 34,709 $ 55,667 $ 51,788 $ 72,544
Conservation and Environmental Resources 493 337 856 638
Other Operations 398 196 489 463
Total operating revenues 35,600 56,200 53,133 73,645
Operating expenses:
Alico Citrus 26,110 40,923 42,405 55,008
Conservation and Environmental Resources 1,593 761 2,190 1,275
Other Operations 64 123 93
Total operating expenses 27,767 41,684 44,718 56,376
Gross profit 7,833 14,516 8,415 17,269
General and administrative expenses 3,073 3,399 6,959 7,187
Income from operations 4,760 11,117 1,456 10,082
Other (expense) income:
Interest expense (2,239 ) (2,374 ) (4,494 ) (4,701 )
Gain on sale of real estate, property and equipment 99 1,396 1,835 1,832
Other income (expense), net 66 144 (24 )
Total other expense, net (2,140 ) (912 ) (2,515 ) (2,893 )
Income (loss) before income taxes 2,620 10,205 (1,059 ) 7,189
Provision (benefit) for income taxes 8,150 4,321 (4,267 ) 3,048
Net (loss) income (5,530 ) 5,884 3,208 4,141
Net loss (income) attributable to noncontrolling interests 16 (51 ) 24 (43 )
Net (loss) income attributable to Alico, Inc. common stockholders $ (5,514 ) $ 5,833 $ 3,232 $ 4,098
Per share information attributable to Alico, Inc. common stockholders:
Earnings (loss) per common share:
Basic $ (0.67 ) $ 0.70 $ 0.39 $ 0.49
Diluted $ (0.67 ) $ 0.70 $ 0.39 $ 0.49
Weighted-average number of common shares outstanding:
Basic 8,256 8,327 8,251 8,326
Diluted 8,256 8,327 8,310 8,326
Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.12 $ 0.12
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
(in thousands)
Six Months Ended March 31,
2018 2017
Net cash used in operating activities:
Net income $ 3,208 $ 4,141
Adjustments to reconcile net income to net cash used in operating activities:
Deferred gain on sale of sugarcane land (282 ) (265 )
Depreciation, depletion and amortization 6,922 7,796
Deferred income tax provision (benefit) (4,306 ) 3,048
Gain on sale of real estate, property and equipment (1,835 ) (1,619 )
Non-cash interest expense on deferred gain on sugarcane land 688 707
Stock-based compensation expense 856 835
Other (300 ) 153
Changes in operating assets and liabilities:
Accounts receivable (12,229 ) (17,909 )
Inventories 9,194 3,434
Prepaid expenses and other assets (620 ) (1,627 )
Accounts payable and accrued expenses (533 ) (2,701 )
Other liabilities (1,014 ) 1,258
Net cash used in operating activities (251 ) (2,749 )
Cash flows from investing activities:
Purchases of property and equipment (7,438 ) (5,040 )
Proceeds from sale of property and equipment 24,612 2,651
Notes receivable (379 )
Other 156
Net cash provided by (used in) investing activities 16,795 (2,233 )
Cash flows from financing activities:
Repayments on revolving lines of credit (21,424 ) (47,082 )
Borrowings on revolving lines of credit 21,424 53,499
Principal payments on term loans (6,715 ) (5,381 )
Treasury stock purchases (206 ) (641 )
Dividends paid (988 ) (997 )
Capital lease obligation payments (8 )
Net cash used in financing activities (7,917 ) (602 )
Net increase (decrease) in cash and cash equivalents 8,627 (5,584 )
Cash and cash equivalents at beginning of the period 3,395 6,625
Cash and cash equivalents at end of the period $ 12,022 $ 1,041
 
Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Net income (loss) attributable to common stockholders $ (5,514 ) $ 5,833 $ 3,232 $ 4,098
Interest expense 2,239 2,374 4,494 4,701
Provision (benefit) for income taxes 8,150 4,321 (4,267 ) 3,048
Depreciation, depletion and amortization 3,432 3,880 6,922 7,796
EBITDA 8,307 16,408 10,381 19,643
Transaction costs 12 183 88 201
Stock compensation expense (1) 242 232 473 417
Separation and consulting agreement expense 238 188 288
Gains on sale of real estate and property and equipment (99 ) (1,396 ) (1,835 ) (1,832 )
Adjusted EBITDA $ 8,462 $ 15,665 $ 9,295 $ 18,717
Adjusted Earnings (Loss) Per Diluted Common Share
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Net income (loss) attributable to common stockholders $ (5,514 ) $ 5,833 $ 3,232 $ 4,098
One-time deferred tax adjustment due to new tax legislation 1,250 (10,077 )
Valuation allowance on capital loss carryforward 6,060 6,060
Transaction costs 12 183 88 201
Stock compensation expense (1) 242 232 473 417
Separation and consulting agreement expense 238 188 288
Gains on sale of real estate and property and equipment (99 ) (1,396 ) (1,835 ) (1,832 )
Tax impact 84 315 388 393
Adjusted net income (loss) $ 2,035 $ 5,405 $ (1,483 ) $ 3,565
Diluted common shares 8,256 8,327 8,310 8,326
Adjusted Earnings (Loss) per Diluted Common Share $ 0.25 $ 0.65 $ (0.18 ) $ 0.43
(1) Includes stock compensation expense for current and former executives.
Adjusted Free Cash Flow
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2018 2017 2018 2017
Net cash provided by (used in) operating activities $ 9,438 $ 14,688 $ (251 ) $ (2,749 )
Adjustments for non-recurring items:
Transaction costs 12 183 88 201
Separation and consulting agreement expense 238 188 288
Tax impact (3 ) (178 ) (68 ) (207 )
Capital expenditures (3,877 ) (2,683 ) (7,438 ) (5,040 )
Adjusted Free Cash Flow $ 5,570 $ 12,248 $ (7,481 ) $ (7,507 )

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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. Adjusted EBITDA is defined as earnings (loss) before interest expense, provision (benefit) for income taxes, and depreciation and amortization adjusted 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 and property and equipment. Adjusted Earnings (Loss) per Diluted Common Share is defined as net income (loss) adjusted for non-recurring transactions divided by diluted common shares. Adjusted Free Cash Flow is defined as cash  provided by (used in) operating activities adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

Alico, Inc Announces Financial Results for the First Quarter Ended December 31, 2017

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FORT MYERS, Fla., Feb. 06, 2018 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) today announces financial results for the first quarter ended December 31, 2017. For the quarter ended, the Company recorded net income of $8.7 million and earnings of $1.05 per diluted common share, compared to a net loss of $1.7 million and a loss of $0.21 per diluted common share in the prior year.  The increase in net income primarily resulted from a deferred tax benefit of $11.3 million recorded to adjust the Company’s net deferred tax liabilities to the recently enacted 21% federal corporate tax rate. When both periods are adjusted for non-recurring items related to transaction costs, consulting fees, gains on sale of real estate and property and equipment, net deferred tax and other asset valuation adjustments and employee stock compensation expense, the Company incurred a loss of $0.42 per diluted common share in the first quarter ended December 31, 2017, compared to a loss of $0.22 per diluted common share in first quarter ended December 31, 2016.

These results reflect the seasonal nature of the Company’s business. The majority of our citrus crop is harvested in the second and third quarters of the fiscal year; consequently, most of the Company’s profit and cash flows from operating activities is typically recognized in those quarters and our working capital requirements are greater in the first and fourth quarters.

The Company reported the following financial results:

(in thousands except for per share amounts)
Three Months Ended December 31, 2017
2017   2016   Change
Net income (loss) $ 8,738 $ (1,743 ) $ 10,481 NM
EBITDA (1) $ 2,074 $ 3,235 $ (1,161 ) (35.9 )%
Earnings (loss) per diluted common share (1) $ 1.05 $ (0.21 ) $ 1.26 NM
Net cash used in operating activities $ (9,689 ) $ (17,437 ) $ 7,748 (44.4 )%

(1) See “Non-GAAP Financial Measures” at the end of this earnings release for details regarding these measures.
NM = Not Meaningful

On November 16, 2017, Alico announced the Alico 2.0 Modernization Program. The program is focused on aggressively improving the operations of the Company and optimizing its return on capital employed through cost reductions, increased efficiencies and disposition of non-performing assets. Every aspect of Alico’s citrus and ranch operations, all back office support activities, and the productivity of all assets were analyzed to determine how to eliminate costs that will not negatively affect citrus production and also to improve performance throughout the Company. The changes required to realize those improvements have now been implemented.

Alico Citrus Division Results

During the quarter ended December 31, 2017, Alico Citrus’s Early and Mid-season boxes processed increased by 18.0%, and pound solids increased by 11.6% as a result of harvesting beginning approximately one month earlier than in the prior year due to Hurricane Irma. Harvesting will be completed earlier this season for the Early and Mid-season crop, and we anticipate operating revenues to be less in the second quarter of fiscal 2018, as compared to the same period in the prior year.

As previously announced, Alico continues to estimate its total number of boxes harvested per acre for fiscal year 2018 will decrease by approximately 40-45%. We expect operating expenses for fiscal year 2018 will remain consistent with fiscal year 2017 on a per acre basis, and the benefits of Alico 2.0 will be realized in fiscal year 2019 because our growing costs incurred in fiscal 2018 are capitalized then expensed in the following crop season when fruit is harvested and sold.

Citrus production for the quarters ended December 31, 2017 and 2016 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended
December 31,
Change
2017 2016 Unit %
Boxes Harvested:
Early and Mid-Season 1,214 1,029 185 18.0 %
Total Processed 1,214 1,029 185 18.0 %
Fresh Fruit 73 129 (56 ) (43.4 )%
Total 1,287 1,158 129 11.1 %
Pound Solids Produced:
Early and Mid-Season 6,069 5,440 629 11.6 %
Total 6,069 5,440 629 11.6 %
Average Pound Solids Per Box 5.00 5.29 (0.29 ) (5.5 )%
Price per Pound Solids:
Early and Mid-Season $ 2.54 $ 2.51 $ 0.03 1.2 %

Alico Citrus cost of sales increased to $11.8 million for the quarter ended December 31, 2017, compared to $8.6 million for the quarter ended December 31, 2016. The increase primarily relates to the timing of the harvesting of the Early and Mid-Season fruit, as well as costs incurred for clean up and repairs as a result of Hurricane Irma.

Conservation and Environmental Resources Division Results

The operating results for the three months ended December 31, 2017 were consistent with those from the three months ended December 31, 2016, as a minimal loss was recognized in both periods.

In January 2018, the Company sold its breeding herd and leased grazing rights on the Alico Ranch to a third party operator, 5F Cattle LLC.  The Company continues to own the property and conduct its long-term water dispersement program and wildlife management programs.

Other Corporate Financial Information

General and Administrative expenses increased by $0.1 million to $3.9 million for the quarter ended December 31, 2017. The increase primarily related to separation expenses, accruals for paid time-off, and audit and tax fees. In the first quarter of December 2016, there were significant G&A expenses related to consulting services.

Other expense, net was $0.4 million for the quarter ended December 31, 2017 as compared to $2.0 million for the quarter ended December 31, 2016. The decrease of $1.6 million is primarily attributable to a $1.3 million increase in gain on sale of real estate and property and equipment.

The Company paid a first quarter cash dividend of $0.06 per share on its outstanding common stock on January 16, 2018 to shareholders of record at December 29, 2017.

At December 31, 2017 the Company had working capital of $54.0 million and had net term debt, net of cash and cash equivalents, of $184.4 million.

About Alico

Alico, Inc. is a holding company with assets and related operations in agriculture and environmental resources, including citrus, wildlife management, and water management. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization Program; customer concentration; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:

John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
December 31, September 30,
2017 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 948 $ 3,395
Accounts receivable, net 11,875 4,286
Inventories 33,180 36,204
Assets held for sale 18,295 20,983
Prepaid expenses and other current assets 1,985 1,621
Total current assets 66,283 66,489
Property and equipment, net 348,509 349,337
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 200 262
Other non-current assets 724 848
Total assets $ 417,962 $ 419,182
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 2,097 $ 3,192
Accrued liabilities 4,551 6,781
Long-term debt, current portion 4,575 4,550
Other current liabilities 1,069 1,460
Total current liabilities 12,292 15,983
Long-term debt:
Principal amount, net of current portion 180,783 181,926
Less: deferred financing costs, net (1,715 ) (1,767 )
Long-term debt less current portion and deferred financing costs, net 179,068 180,159
Lines of credit 7,123
Deferred income tax liabilities 14,691 27,108
Deferred gain on sale 26,643 26,440
Deferred retirement obligations 4,109 4,123
Total liabilities 243,926 253,813
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and
8,416,145 shares issued and 8,249,357 and 8,238,830 shares outstanding at
December 31, 2017 and September 30, 2017, respectively
8,416 8,416
Additional paid in capital 18,890 18,694
Treasury stock, at cost, 166,788 and 177,315 shares held at December 31, 2017 and
September 30, 2017, respectively
(6,275 ) (6,502 )
Retained earnings 148,285 140,033
Total Alico stockholders’ equity 169,316 160,641
Noncontrolling interest 4,720 4,728
Total stockholders’ equity 174,036 165,369
Total liabilities and stockholders’ equity $ 417,962 $ 419,182
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended December 31,
2017 2016
Operating revenues:
Alico Citrus $ 17,079 $ 16,877
Conservation and Environmental Resources 363 301
Other Operations 91 267
Total operating revenues 17,533 17,445
Operating expenses:
Alico Citrus 16,295 14,085
Conservation and Environmental Resources 597 514
Other Operations 59 93
Total operating expenses 16,951 14,692
Gross profit 582 2,753
General and administrative expenses 3,886 3,788
Loss from operations (3,304 ) (1,035 )
Other (expense) income:
Interest expense (2,255 ) (2,327 )
Gain on sale of real estate and property and equipment 1,736 436
Other income (expense), net 144 (90 )
Total other expense, net (375 ) (1,981 )
Loss before income taxes (3,679 ) (3,016 )
Income tax benefit (12,417 ) (1,273 )
Net income (loss) 8,738 (1,743 )
Net loss attributable to noncontrolling interests 8 8
Net income (loss) attributable to Alico, Inc. common stockholders $ 8,746 $ (1,735 )
Per share information attributable to Alico, Inc. common stockholders:
Earnings (loss) per common share:
Basic $ 1.06 $ (0.21 )
Diluted $ 1.05 $ (0.21 )
Weighted-average number of common shares outstanding:
Basic 8,245 8,324
Diluted 8,364 8,324
Cash dividends declared per common share $ 0.06 $ 0.06
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended December 31,
2017 2016
Net cash used in operating activities:
Net income (loss) $ 8,738 $ (1,743 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Deferred gain on sale of sugarcane land (141 ) (300 )
Depreciation, depletion and amortization 3,490 3,916
Deferred income tax benefit (12,417 ) (1,273 )
Gain on sale of property and equipment (1,596 ) (205 )
Non-cash interest expense on deferred gain on sugarcane land 344 356
Stock-based compensation expense 423 440
Other (44 ) 125
Changes in operating assets and liabilities:
Accounts receivable (7,589 ) (7,177 )
Inventories 3,024 (4,053 )
Prepaid expenses and other assets (240 ) (1,579 )
Accounts payable and accrued expenses (3,298 ) (4,823 )
Other liabilities (383 ) (1,121 )
Net cash used in operating activities (9,689 ) (17,437 )
Cash flows from investing activities:
Purchases of property and equipment (3,561 ) (2,357 )
Proceeds from sale of property and equipment 5,300
Other 547
Net cash provided by (used in) investing activities 1,739 (1,810 )
Cash flows from financing activities:
Repayments on revolving lines of credit (10,608 ) (5,000 )
Borrowings on revolving lines of credit 17,731 21,945
Principal payments on term loans (1,118 ) (2,699 )
Dividends paid (494 ) (498 )
Capital lease obligation payments (8 )
Net cash provided by financing activities 5,503 13,748
Net decrease in cash and cash equivalents (2,447 ) (5,499 )
Cash and cash equivalents at beginning of the period 3,395 6,625
Cash and cash equivalents at end of the period $ 948 $ 1,126
Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended December 31,
2017 2016
Net earnings (loss) attributable to common stockholders $ 8,746 $ (1,735 )
Interest expense 2,255 2,327
Income tax benefit (12,417 ) (1,273 )
Depreciation and amortization 3,490 3,916
EBITDA 2,074 3,235
Transaction costs 76 18
Stock compensation expense 231 185
Separation and consulting agreement expense 188 50
Gains on sale of real estate and property and equipment (1,736 ) (436 )
Adjusted EBITDA $ 833 $ 3,052
Adjusted Loss Per Diluted Common Share
(in thousands)
Three Months Ended December 31,
2017 2016
Net earnings (loss) attributable to common stockholders $ 8,746 $ (1,735 )
One-time deferred tax adjustment due to new tax legislation (11,327 )
Transaction costs 76 18
Stock compensation expense 231 185
Separation and consulting agreement expense 188 50
Gains on sale of real estate and property and equipment (1,736 ) (436 )
Tax impact 304 77
Adjusted net loss $ (3,518 ) $ (1,841 )
Diluted common shares 8,364 8,324
Adjusted Loss per Diluted Common Share $ (0.42 ) $ (0.22 )
Adjusted Free Cash Flow
(in thousands)
Three Months Ended December 31,
2017 2016
Net cash used in operating activities $ (9,689 ) $ (17,437 )
Adjustments for non-recurring items:
Transaction costs 76 18
Separation and consulting agreement expense 188 50
Tax impact (65 ) (29 )
Capital expenditures (3,561 ) (2,357 )
Adjusted Free Cash Flow $ (13,051 ) $ (19,755 )
Diluted common shares 8,364 8,324
Adjusted Free Cash Flow per Diluted Common Share $ (1.56 ) $ (2.37 )

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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. Adjusted EBITDA is defined as earnings (loss) before interest expense, benefit for income taxes, and depreciation and amortization adjusted 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 and property and equipment. Adjusted Earnings (Loss) per Diluted Common Share is defined as earnings adjusted for non-recurring transactions divided by diluted common shares. Adjusted Free Cash Flow is defined as cash used in operating activities adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

Alico, Inc. Announces Financial Results for Fiscal Year 2017

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FORT MYERS, Fla., Dec. 11, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) today announces financial results for the fourth quarter and fiscal year ended September 30, 2017.  For the fiscal year, the Company recorded a loss of $1.14 per diluted common share compared to earnings of $0.84 per diluted common share in the prior year. 2017 results were negatively impacted by approximately $24.0 million of one-time items which included inventory casualty loss adjustments related to Hurricane Irma’s impact on the 2017-2018 season, and asset impairment adjustments related to disposal decisions made through the Alico 2.0 restructuring program. When both periods are adjusted for non-recurring items related to prior acquisitions including transaction costs, litigation, consulting fees, real estate gains, asset valuation adjustments and employee stock compensation expense, the Company earned $0.24 per diluted common share in fiscal year 2017 and $0.94 per diluted common share in fiscal year 2016 primarily due to lower citrus production volume.

(in thousands except for per share amounts)
Three Months Ended September 30, Fiscal Year Ended September 30,
2017 2016 Change 2017 2016 Change
Net (loss) income $ (19,109 ) $ (3,416 ) $ (15,693 ) NM $ (9,496 ) $ 6,959 $ (16,455 ) NM
EBITDA $ (23,673 ) $ 430 $ (24,103 ) NM $ 11,070 $ 37,789 $ (26,719 ) (70.7 )%
Earnings (loss) per diluted common share $ (2.29 ) $ (0.41 ) $ (1.88 ) NM $ (1.14 ) $ 0.84 $ (1.98 ) NM
Net cash (used in) provided by operating activities $ (671 ) $ (3,828 ) $ 3,157 82.5 % $ 28,229 $ 30,357 $ (2,128 ) (7.0 )%

NM = Not Meaningful

Alico Citrus Division Results

Alico Citrus’s financial results declined during the year due to lower citrus production volume and an increase in citrus operating costs compared to the prior year, partially offset by higher per pound solid prices.

Alico Citrus’s 2017 crop production was lower by 17.1% on a pound solids basis and by 17.8% on a box basis for the year ended September 30, 2017. The USDA estimated the Florida orange crop decreased by approximately 15.8% last as measured by total boxes produced.  Alico Citrus’s early and mid-season pound solids decreased by 11.0% and boxes decreased by 11.5%. Late season Valencia pound solids decreased by 21.1% and boxes decreased by 22.2%. The Company believes these declines were due to unusual weather patterns including a drought and higher than normal temperatures during the early and mid-season harvest, and premature fruit drop (“PFD”) and citrus greening. These factors caused a higher level of fruit drop which resulted in less harvested fruit. These declines were partially offset by an increase in price per pound solid. Citrus production for the years ended September 30, 2017 and 2016 is summarized in the following table.

(boxes and pound solids in thousands) Fiscal Year Ended
September 30,
Change 
2017 2016 Unit %
Boxes Harvested:
Early and Mid-Season 3,215 3,634 (419 ) (11.5 )%
Valencias 4,044 5,195 (1,151 ) (22.2 )%
Total Processed 7,259 8,829 (1,570 ) (17.8 )%
Fresh Fruit 328 402 (74 ) (18.4 )%
Total 7,587 9,231 (1,644 ) (17.8 )%
Pound Solids Produced:
Early and Mid-Season 17,950 20,167 (2,217 ) (11.0 )%
Valencias 24,661 31,237 (6,576 ) (21.1 )%
Total 42,611 51,404 (8,793 ) (17.1 )%
Average Pound Solids Per Box 5.87 5.82 0.05 0.9 %
Price per Pound Solids:
Early and Mid-Season $ 2.56 $ 2.18 $ 0.38 17.4 %
Valencias $ 2.72 $ 2.41 $ 0.31 12.9 %

Alico Citrus costs of sales increased to $84.9 million in fiscal 2017 compared to $64.8 million in fiscal 2016. A $20.1 million increase in costs of sales was due to an inventory casualty loss recorded after Hurricane Irma caused a loss of unharvested fruit and certain other impairments to long-lived assets which are now Held for Sale. Without these non-recurring items, Alico Citrus expenses were flat as compared to fiscal 2016.

On November 16, 2017, Alico announced the Alico 2.0 Modernization Program (“Alico 2.0”). This program is transforming three legacy businesses (Alico, Orange Co., and Silver Nip) into a single efficient enterprise, Alico Citrus, so it will remain the leader in the U.S. citrus industry. As part of Alico 2.0, Alico Citrus is reducing expenses through better purchasing, more precise application of selected fertilizers and chemicals, outsourcing work such as harvesting, hauling, and certain caretaking tasks, and by streamlining grove management. Alico Citrus has also deployed a more efficient labor model that is consistent and uniform for field staffing and grove operating programs and aligns with the geographical footprint of the citrus groves.

Conservation and Environmental Resources Division Results

Operating loss for the Conservation and Environmental Resources (“CER”) division was $4.0 million in fiscal year 2017 compared to $0.7 million in the prior year, a decrease of $3.3 million. The number of calves sold declined and were sold at lower pricing. This decline was partially offset by increased number of culls sold during the same period. During fiscal 2017, CER recorded a $3.2 million impairment of two abandoned mines. CER financial results also included $1.8 million and $2.3 million of operating costs related to the dispersed water storage project in 2017 and 2016, respectively. Funding for the water project was approved in the Florida state budget in 2017. Permitting approvals are still in process and construction will commence immediately upon receipt of the required permits.

In the first quarter of fiscal 2018 Alico will cease its direct cattle operations at Alico Ranch. Even when profitable, ranch operations generated a minimal rate of return on capital. Alico plans to continue to own this property and conduct its long-term water dispersement program and wildlife management programs, but will lease the ranch to a third party operator instead of conducting its own cattle operations. This decision is intended to enable additional investment in the citrus business and redeployment of capital.

Other Corporate Financial Information

General and Administrative expenses increased by $1.8 million from $13.2 million in fiscal 2016 to $15.0 million in fiscal 2017. The increase primarily relates to salary and stock compensation expenses, which were partially offset by reduced legal fees.

Other expense, net was $7.2 million for 2017 compared to $9.4 million for 2016. The decrease of $2.2 million is primarily attributable to a $1.6 million increase in gain on sale of real estate and fixed assets and a decrease in interest expense by $0.8 million as term loans are amortized.

The Company paid a fourth quarter cash dividend of $0.06 per share on its outstanding common stock on October 16, 2017 to shareholders of record at September 29, 2017.  Dividends for the year totaled $0.24 per share.

The Company ended the year with long-term debt, net of cash and cash equivalents, of $183.1 million.

About Alico

Alico, Inc. is a holding company with assets and related operations in agriculture and environmental resources, including citrus, cattle ranching, and water management. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization Program; customer concentration; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended September 30, Year Ended September 30,
2017 2016 2017 2016
Net (loss) income attributable to common stockholders $ (19,028 ) $ (3,411 ) $ (9,451 ) $ 6,993
Interest expense 2,217 2,445 9,141 9,893
Provision (benefit) for income taxes (10,559 ) (1,898 ) (3,846 ) 5,521
Depreciation, depletion and amortization 3,697 3,294 15,226 15,382
EBITDA $ (23,673 ) $ 430 $ 11,070 $ 37,789
Inventory casualty loss 13,489 13,489
Inventory net realizable value adjustment 1,199 1,199
Impairment of long-lived assets 9,346 9,346
Gains on sale of real estate and fixed assets (192 ) (2,181 ) (618 )
Litigation expenses related to shareholder lawsuit 96 506
Payments on consulting agreements 1,275 50 1,750 605
Stock compensation expense 232 150 880 150
Transaction costs 342 196 892
Adjusted EBITDA $ 1,676 $ 1,068 $ 35,749 $ 39,324
Adjusted Earnings (Loss) Per Common Share
(in thousands)
Three Months Ended September 30, Year Ended September 30,
2017 2016 2017 2016
Net (loss) income attributable to common stockholders $ (19,028 ) $ (3,411 ) $ (9,451 ) $ 6,993
Inventory casualty loss 13,489 13,489
Inventory net realizable value adjustment 1,199 1,199
Impairment of long-lived assets 9,346 9,346
Gains on sale of real estate and fixed assets (192 ) (2,181 ) (618 )
Litigation expenses related to shareholder lawsuit 96 506
Payments on consulting agreements 1,275 50 1,750 605
Stock compensation expense 232 150 880 150
Transaction costs 342 196 892
Tax impact (13,488 ) (305 ) (13,213 ) (679 )
Adjusted net (loss) income $ (7,167 ) $ (3,078 ) $ 2,015 $ 7,849
Diluted common shares 8,300 8,315 8,300 8,311
Adjusted Earnings (Loss) per Diluted Common Share $ (0.86 ) $ (0.37 ) $ 0.24 $ 0.94
Adjusted Free Cash Flow
(in thousands)
Three Months Ended September 30, Year Ended September 30,
2017 2016 2017 2016
Cash (used in) provided by operating activities $ (671 ) $ (3,828 ) $ 28,229 $ 30,357
Adjustments for non-recurring items:
Litigation expenses related to shareholder lawsuit 96 506
Payments on consulting agreements 1,275 50 1,750 605
Transaction costs 342 196 892
Tax impact (254 ) (886 )
Capital expenditures (1,903 ) (5,190 ) (13,353 ) (14,305 )
Adjusted Free Cash Flow $ (1,299 ) $ (8,784 ) $ 16,822 $ 17,169

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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. Adjusted EBITDA is defined as earnings (loss) before interest expense, provision (benefit) for income taxes, depreciation and amortization adjusted 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 and fixed assets. Adjusted Earnings (Loss) per Diluted Common Share is defined as earnings adjusted for non-recurring transactions divided by diluted common shares. Adjusted Free Cash Flow is defined as cash provided by (used in) operating activities adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

ALICO, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30,
2017 2016
ASSETS
Current assets:
Cash and cash equivalents $ 3,395 $ 6,625
Accounts receivable, net 4,286 4,740
Inventories 36,204 58,469
Income tax receivable 1,013
Assets held for sale 20,983
Prepaid expenses and other current assets 1,621 1,024
Total current assets 66,489 71,871
Property and equipment, net 349,337 379,247
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 262 389
Other non-current assets 848 1,692
Total assets $ 419,182 $ 455,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 3,192 $ 5,975
Accrued liabilities 6,781 6,920
Long-term debt, current portion 4,550 4,493
Other current liabilities 1,460 1,290
Total current liabilities 15,983 18,678
Long-term debt:
Principal Amount 181,926 192,726
Less: deferred financing costs, net (1,767 ) (1,980 )
Long-term debt less deferred financing costs, net 180,159 190,746
Lines of credit 5,000
Deferred tax liability 27,108 31,056
Deferred gain on sale 26,440 27,204
Deferred retirement obligations 4,123 4,198
Obligations under capital leases 300
Total liabilities 253,813 277,182
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 8,238,830 and 8,315,535 shares outstanding at September 30, 2017 and 2016, respectively 8,416 8,416
Additional paid in capital 18,694 18,155
Treasury stock, at cost, 177,315 and 100,610 shares held at September 30, 2017 and 2016, respectively (6,502 ) (4,585 )
Retained earnings 140,033 151,504
Total Alico stockholders’ equity 160,641 173,490
Noncontrolling interest 4,728 4,773
Total stockholders’ equity 165,369 178,263
Total liabilities and stockholders’ equity $ 419,182 $ 455,445
ALICO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Fiscal Year Ended September 30,
2017 2016 2015
Operating revenues:
Alico Citrus $ 123,441 $ 137,282 $ 146,147
Conservation and Environmental Resources 4,793 5,669 5,394
Other Operations 1,595 1,245 1,585
Total operating revenues 129,829 144,196 153,126
Operating expenses:
Alico Citrus 111,947 102,347 110,777
Conservation and Environmental Resources 8,814 6,393 4,808
Other Operations 138 397 2,083
Total operating expenses 120,899 109,137 117,668
Gross profit 8,930 35,059 35,458
General and administrative expenses 15,024 13,213 16,494
(Loss) income from operations (6,094 ) 21,846 18,964
Other (expense) income:
Investment and interest income, net (148 ) 2
Interest expense (9,141 ) (9,893 ) (8,366 )
Gain on bargain purchase 1,145
Gain on sale of real estate and fixed assets 2,181 618 13,590
Loss on extinguishment of debt (1,051 )
Other expense, net (140 ) (91 ) (196 )
Total other (expense) income, net (7,248 ) (9,366 ) 5,124
(Loss) income before income taxes (13,342 ) 12,480 24,088
Provision (benefit) for income taxes (3,846 ) 5,521 10,905
Net (loss) income (9,496 ) 6,959 13,183
Net loss attributable to noncontrolling interests 45 34 31
Net (loss) income attributable to Alico, Inc. common stockholders $ (9,451 ) $ 6,993 $ 13,214
Per share information attributable to Alico, Inc. common stockholders:
Earnings (loss) per common share:
Basic $ (1.14 ) $ 0.84 $ 1.64
Diluted $ (1.14 ) $ 0.84 $ 1.64
Weighted-average number of common shares outstanding:
Basic 8,300 8,303 8,056
Diluted 8,300 8,311 8,061
Cash dividends declared per common share $ 0.24 $ 0.24 $ 0.24
ALICO, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
Fiscal Year Ended September 30,
2017 2016 2015
Cash flows from operating activities:
Net (loss) income $ (9,496 ) $ 6,959 $ 13,183
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Gain on sale of sugarcane land (538 ) (618 ) (13,734 )
Depreciation, depletion and amortization 15,226 15,382 14,732
Loss (gain) loss on breeding herd sales 337 296 (183 )
Deferred income tax (benefit) expense (3,948 ) 5,277 12,350
Cash surrender value (15 ) (20 ) (27 )
Deferred retirement benefits (102 ) 65 623
Magnolia Fund undistributed loss (earnings) 202 103 (57 )
(Gain) loss on sale of property and equipment (1,373 ) 147 (290 )
Inventory casualty loss 13,489
Inventory net realizable value adjustment 1,199
Impairment of long-lived assets 9,346 541
Loss on extinguishment of debt 457
Non-cash interest expense on deferred gain on sugarcane land 1,413 1,406 607
Bad debt expense 312
Stock-based compensation expense 1,653 925 952
Other 245
Changes in operating assets and liabilities:
Accounts receivable 142 (1,707 ) 5,983
Inventories 3,724 (196 ) 8,659
Prepaid expenses (604 ) (1,759 ) (1,347 )
Income tax receivable 1,013 1,074
Other assets 333 821 465
Accounts payable and accrued expenses (2,895 ) 3,720 (522 )
Income tax payable (6,660 )
Other liabilities (1,189 ) (1,518 ) (2,251 )
Net cash provided by operating activities $ 28,229 $ 30,357 $ 33,726
Cash flows from investing activities:
Acquisition of citrus businesses, net of cash acquired $ $ $ (265,587 )
Proceeds on sale of sugarcane land 97,151
Purchases of property and equipment (13,353 ) (14,305 ) (11,523 )
Return on investment in Magnolia Fund 324 171 675
Proceeds from sales of assets 760 799 1,963
Proceeds from surrender of life insurance policies 297
Proceeds from sales of real estate 2,184
Other 4 264
Net cash used in investing activities $ (10,085 ) $ (13,034 ) $ (177,057 )
Cash flows from financing activities:
Proceeds from term loans $ $ 2,500 $ 184,500
Principal payments on revolving line of credit (70,770 ) (53,882 ) (87,031 )
Borrowings on revolving line of credit 65,770 58,882 81,031
Repayment of term loan (34,000 )
Principal payments on term loans (10,743 ) (10,761 ) (17,870 )
Contingent consideration paid (7,500 )
Financing costs (2,834 )
Treasury stock purchases (3,064 ) (3,141 ) (4,013 )
Dividends paid (1,987 ) (1,993 ) (1,877 )
Capital lease obligation principal payments (580 ) (277 ) (231 )
Net cash (used in) provided by financing activities $ (21,374 ) $ (16,172 ) $ 117,675
Net (decrease) increase in cash and cash equivalents $ (3,230 ) $ 1,151 $ (25,656 )
Cash and cash equivalents at beginning of the year 6,625 5,474 31,130
Cash and cash equivalents at end of the year $ 3,395 $ 6,625 $ 5,474
Supplemental disclosure of cash flow information:
Cash paid for interest, net of amount capitalized $ 7,534 $ 7,530 $ 6,167
Cash income tax refunds, net of income taxes paid $ (911 ) $ (878 ) $
Cash paid for income taxes, net of income tax refunds $ $ $ 5,213
Supplemental disclosure of non-cash investing and financing activities:
Escrow deposit in other assets applied to capital expenditures $ $ $ 250
Property and equipment purchased with capital leases $ $ $ 37
Dividend declared $ 494 $ 498 $ 500

Alico Inc. Announces Restructuring Program Which Has Been Transforming it Into a More Competitive Company

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FORT MYERS, Fla., Nov. 16, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) announces the Alico 2.0 Modernization Program.  In January 2017, Alico Inc. embarked on an aggressive plan to improve its operational efficiencies and optimize its asset returns.  This program, called Alico 2.0, is transforming three legacy businesses (Alico, Orange Co., and Silver Nip) into a single efficient enterprise, Alico Citrus, so we will remain one of the leaders in the U.S. citrus industry.  This initiative explored every aspect of Alico’s citrus and ranch operations, including corporate and operational cost structures, grove costs, purchasing and procurement, non-performing and under-performing assets, professional fees, and human resources efficiency.

Alico has been careful to eliminate costs that it believes will not negatively affect citrus production.  In fact, we believe that its new management structure and practices will drive enhanced production.  Alico 2.0 will take at least two seasons to realize full results.  Alico Citrus is reducing total expenses per acre from $3,314/acre in FY16 to $2,164/acre when Alico 2.0 is fully implemented.  Overall, the program should reduce the company’s cost to produce a pound solid from $2.14 to $1.56.

(Per Acre) FY16 Alico 2.0
Grove Costs $ 1,850 $ 1,300
Pick, Load, and Haul $ 787 $ 668
G&A $ 213 $ 139

This efficiency will be achieved through better purchasing, more precise application of selected fertilizers and chemicals, outsourcing work such as harvesting, hauling, and certain caretaking tasks, and by streamlining grove management.  Alico Citrus also expects to deploy a more efficient labor model that is consistent and uniform for field staffing and grove operating programs and aligns with the geographical footprint of the citrus groves.  In addition to grove cost savings, Alico Citrus’ general and administrative expenses are projected to decline by more than 25% over the next two years, and recent information technology investments have already automated and simplified many administrative tasks.

Alico 2.0 led the Company to decide to divest assets that generated low rates of return and shut down parts of its operations that were not profitable.  Alico Citrus has shut down its nursery in Gainesville, is in the process of selling its trucks and trailers, consolidated offices, and sold real estate assets that were not strategic.  We believe that Alico has approximately $175 million of assets which may be divested without materially affecting earnings.  This quarter, Alico will cease its direct cattle operations at Alico Ranch.  The ranch has been a landholding for us for generations, but, even when profitable, ranch operations generated a minimal rate of return on capital.  Alico will continue to own the property and still conduct its long term water dispersement program and wildlife management programs, but it will lease the ranch to a third party operator instead of conducting its own cattle operations.  All of these decisions are intended to enable additional investment in the citrus business and redeployment of capital elsewhere.

Management within Alico Citrus is also changing.  Danny Sutton has been promoted to President and General Manager of Alico Citrus, taking over for Steve Ryan, who has resigned to pursue other opportunities.  We thank Mr. Ryan for his help in implementing Alico 2.0.  Mr. Sutton has shown great leadership over the past year, and the performance of the Alico Citrus staff under his direction before and after Hurricane Irma gave the Alico Board of Directors confidence that he is ready to lead Alico Citrus through its current challenges towards sustainable increased prosperity.

We are pleased to announce that when Alico 2.0 is fully implemented over the next two years, Alico Citrus expects to generate net income of $17.9mm, EBITDA of $50mm, earnings of $2.00-$2.40 per share and its ROCE will increase to between 12-14%.  When combined with the Dispersed Water Program, the Company believes that Adjusted EBITDA at Alico will increase to $60mm and earnings of $3.00-$3.25/share.  These estimates assume normalized pre-hurricane levels of approximately 7.9mm boxes of citrus production and the achievement of $12mm of cost savings which are already in progress.

Alico 2.0 also includes an enhanced program to plant more than 400,000 trees in FY2018, which is expected to drive growth beyond 2020.  The Company believes that its current acreage can produce 10mm boxes per year on a sustained basis, even in an environment where citrus greening continues.

Impact of Hurricane Irma

Florida’s citrus industry was hit hard by the recent impacts of Hurricane Irma.  Alico Citrus estimates that production will be down 40-45% from the prior season that was completed in June of 2017.  While Alico Citrus lost a small percentage of trees, the force and duration of the storm impacted the majority of the groves.  Based upon prior experience with serious storms of this nature, we expect it will take at least two seasons for the groves to recover to pre-hurricane production levels.  Alico Citrus expects production between 4.0-4.4mm boxes in FY2018, an increase in production in FY2019 and a return to pre-hurricane production levels by FY2020.  The Company has crop insurance and is working closely with its insurers and adjusters.  It is also working with Florida Citrus Mutual, the industry trade group, and government agencies on potential federal relief funds.

Despite the fixed cost nature of its agricultural business, the Company believes that the Alico 2.0 restructuring efforts and cost efficiencies that were began in early 2017 will mitigate the financial impact to Alico of Hurricane Irma.  The Company expects to be EBITDA breakeven in FY2018, before the benefit of any insurance claims paid or federal relief funds, with an improvement the following season as production rebounds.

Alico Dispersed Water Program

Alico currently has a 10 year contract with the state of Florida to store 94,000 acre feet of water for $127 per acre foot. This Dispersed Water Program continues to make progress in seeking permitting approval from the Southwest Florida Water Management District and the Natural Resources Conservation Service.  The project impacts approximately 34,000 acres of the 71,000 acre Alico Ranch, making it one of the largest private water storage programs in Florida.  The Company is extremely proud of developing this venture because it protects historical lands in central Florida from development, provides a significantly more cost efficient solution for the state’s water storage programs, addresses longstanding Everglades pollution issues, and provides an important solution to numerous problems in central Florida and on both coasts caused by overflows from Lake Okeechobee.

Real Estate Dispositions

A core goal of Alico 2.0 is that the Company will not retain assets that depress its overall rate of return.  A comprehensive review of Alico’s assets identified approximately $175mm of properties that generate no or low returns, including its office building in Ft. Myers, which was recently sold.  Over the next two years, the Company expects that a substantial number of these assets will be sold.  The proceeds from these sales will be redeployed or returned to shareholders.

About Alico

Alico is a holding company with assets and related operations in agriculture and environmental resources, including cattle ranching, water management, and mining. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock, and the actual impact of Alico 2.0 on reducing expenses, production, profitability and EBITDA growth and actual results of sales of certain assets and use of such proceeds.  Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:

John E. Kiernan

Executive Vice President and Chief Financial Officer

(239) 226-2000

JKiernan@alicoinc.com

Non-GAAP Financial Measures
Adjusted EBITDA
(in millions)
Twelve Months
Ended September 30,
2020
Net income attributable to common stockholders $   17.9
Interest expense   8.5
Provision for income taxes   11.2
Depreciation and amortization   12.4
EBITDA (without water)   50.0
Water Program   10.0
Adjusted EBITDA   60.0

Alico utilizes the non-GAAP measures EBITDA and Adjusted EBITDA 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 and Adjusted EBITDA 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, provides 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 helps 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 earnings before interest expense, provision for income taxes, depreciation and amortization.  Adjusted EBITDA for the above presentation is defined as earnings before interest expense, provision for income taxes, depreciation and amortization adjusted for earnings related to the Dispersed Water Program.  The company has used other Adjusted EBITDA metrics in previous periods which included other items.

Source: Alico, Inc.

Alico, Inc. Announces Fiscal Year 2017 Fourth Quarter Dividend

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Per share cash dividend of $0.06 cents to be paid on October 16, 2017

FORT MYERS, Fla., Sept. 15, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico”) (NASDAQ:ALCO), a holding company with assets and related operations in agriculture and natural resources, today announced that its Board of Directors declared a Fourth quarter cash dividend in the amount of $0.06 per share on its outstanding common stock. The dividend is to be paid to shareholders of record as of September 29, 2017, with payment expected on October 16, 2017.

About Alico

Alico is a holding company with assets and related operations in agriculture and natural resources. In addition to its citrus operations, Alico is currently involved in cattle ranching, water management, mining and other natural resources. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. Learn more about Alico (NASDAQ:ALCO) at www.alicoinc.com.

Forward-Looking Statements

We provide forward-looking information in this release pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this release that are not historical facts are forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions 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.  These assumptions 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 those risks factors described in our Annual Report on Form 10-K for the year ended September 30, 2016 and our Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission.  Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

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Source: Alico, Inc.

Alico Weathers Hurricane Irma and Pledges $250,000 for Local Relief Efforts

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FORT MYERS, Fla., Sept. 12, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (the “Company”) (NASDAQ:ALCO), a holding company with assets and related operations in agriculture and natural resources, made the following announcement:

Florida and Alico have weathered many storms.

Last week, Alico aggressively prepared its properties to minimize possible damage from Hurricane Irma.

The impact of Hurricane Irma to Alico remains uncertain at this time:

  • Once local roads are traversable, more employees will be able to return to work and help the Company complete its property assessments; however, initial inspections indicate that nearly all of Alico’s buildings and structures remain intact with limited apparent structural damage.
  • Cursory inspections yesterday indicate that substantially all of our trees remain intact.
  • There appears to be significant drop of fruit that has fallen from the trees, but the magnitude of this drop needs to be formally calculated by our staff and our insurance companies over the next few weeks.

Alico regards itself as fortunate because its efficient preparations, dedicated workforce and experienced management limited the damage to our properties.  The Company would like to help its neighbors who were also affected by Hurricane Irma recover more quickly by pledging $250,000 to local relief organizations.

About Alico

Alico is a holding company with assets and related operations in agriculture and natural resources. In addition to its citrus operations, Alico is currently invested in cattle ranching, water management, mining and other natural resources. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from disease, insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
jkiernan@alicoinc.com

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Source: Alico, Inc.

Alico, Inc. Announces Third Quarter and Nine Month Financial Results for Fiscal Year 2017 Highlighted by $9.6 Million of Net Income, $34.7 Million of EBITDA, and $28.9 Million of Net Cash Provided by Operating Activities for the Nine Months of Fiscal Year 2017

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FORT MYERS, Fla., Aug. 07, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO), today announces financial results for the third quarter and nine months ended June 30, 2017. For the nine month period, the Company earned $1.15 per share compared to $1.25 per share in the prior year. When both periods are adjusted for certain items including merger and acquisition transaction costs, litigation costs, consulting fees, real estate gains and stock compensation expense, the Company earned $1.10 per share in the nine month period of fiscal year 2017 and $1.32 per share in the nine months of fiscal year 2016.

(in thousands, except per share amounts)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 Change 2017 2016 Change
Net income $ 5,472 $ 4,670 $ 802 17.2 % $ 9,613 $ 10,375 $ (762 ) (7.3 )%
EBITDA $ 15,100 $ 14,587 $ 513 3.5 % $ 34,743 $ 37,359 $ (2,616 ) (7.0 )%
Earnings per diluted common
share
$ 0.66 $ 0.56 $ 0.10 17.9 % $ 1.15 $ 1.25 $ (0.10 ) (8.0 )%
Net cash provided by
operating activities
$ 31,649 $ 22,047 $ 9,602 43.6 % $ 28,900 $ 34,185 $ (5,285 ) (15.5 )%

Alico Citrus Division Results

Alico Citrus completed its 2016-17 harvest season during the quarter ended June 30, 2017. Early and Mid-Season box and pound solids production for the nine months were down 11.5% and 11.0%, respectively, compared to the 2015-16 harvest.  Valencia box and pound solids production for the nine months were down 22.2% and 21.1%, respectively, compared to the 2015-16 harvest.  The decrease in production was partially offset by increases in prices and pound solids per box. Early and Mid-Season prices increased by 18.0% to $2.56 per pound solid compared to $2.17 last year.  Similarly, Valencia prices increased by 13.3% to $2.72 per pound solid compared to $2.40 last year.  Early and Mid-Season pound solids per box increased to 5.58 compared to 5.55 last year while Valencia pound solids per box increased to 6.10 compared to 6.01 last year.

The USDA, in its July 12, 2017 Citrus Crop Forecast for the 2016-17 harvest season, indicated that the Florida orange crop finished at approximately 68,700,000 boxes which was down from approximately 81,700,000 boxes for the 2015-16 crop year, a decrease of  approximately 15.9%.  The Company’s 2016-17 production of all varieties totaled approximately 7,587,000 boxes representing a decrease of approximately 17.8% from the 2015-16 crop year.

Citrus production for the third quarter and nine months ended June 30, 2017 and 2016 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 % Change 2017 2016 % Change
Boxes Harvested:
Early and Mid-Season 30 (100.0 )% 3,215 3,634 (11.5 )%
Valencias 2,819 2,854 (1.2 )% 4,044 5,195 (22.2 )%
Total Processed 2,819 2,884 (2.3 )% 7,259 8,829 (17.8 )%
Fresh Fruit 84 52 61.5 % 328 401 (18.2 )%
Total 2,903 2,936 (1.1 )% 7,587 9,230 (17.8 )%
Pound Solids Produced:
Early and Mid-Season 19 (100.0 )% 17,950 20,167 (11.0 )%
Valencias 17,194 17,338 (0.8 )% 24,661 31,237 (21.1 )%
Total 17,194 17,357 (0.9 )% 42,611 51,404 (17.1 )%
Pound Solids per Box:
Early and Mid-Season NM NM NM 5.58 5.55 0.5 %
Valencias 6.10 6.07 0.5 % 6.10 6.01 1.5 %
Price per Pound Solids:
Early and Mid-Season NM NM NM $ 2.56 $ 2.17 18.0 %
Valencias $ 2.72 $ 2.39 13.8 % $ 2.72 $ 2.40 13.3 %

Alico Citrus continues to focus on efficiency and cost control.  Our cost of sales for the nine months ended June 30, 2017 have decreased by approximately $2,700,000 compared to the nine months ended June 30, 2016 despite the challenges of unusual weather and disease; however, the cost of production per pound solid increased 15.6% to $1.41 for the nine months ended June 30, 2017 as compared to $1.22 in the same period last year because of lower volumes supporting the cost base.

Conservation and Environmental Resources Division Results

Conservation and Environmental Resources (“CER”) revenues for the nine months ended June 30, 2017 totaled $1.8 million compared to $2.5 million in the nine months ended June 30, 2016.  The decrease relates primarily to the timing of calf sales. CER held an additional 1,000 calves in inventory at September 30, 2015 which would have historically been sold prior to year-end but were instead sold in the first quarter of fiscal year 2016.

CER operating expenses decreased by $0.8 million for the nine months ended June 30, 2017 compared to the nine months ended June 30, 2016 due to the decrease in pounds sold and a $0.6 million decrease in water conservation related expenses.

Other Corporate Financial Information

Alico continues to invest in information technology, management talent and strategic acquisition activities while simultaneously controlling recurring general and administrative costs.  Corporate G&A expenses for the nine months ended June 30, 2017 totaled $10.9 million compared to $9.5 million for the nine months ended June 30, 2016, an increase of $1.4 million. General and administrative costs adjusted for consulting agreements, litigation expenses, stock compensation expense and transaction costs increased by approximately $1.7 million in the first nine months of fiscal 2017 compared to the first nine months of fiscal year 2016.  The increase was primarily attributable to executive compensation-related expenses.

Other expense, net was $5.1 million and $7.2 million for the nine months ended June 30, 2017 and 2016, respectively.  The decrease of $2.1 million is primarily attributable to a $1.4 million increase in gains on real estate sales and a $0.5 million decrease in interest expense.

The Company paid a third quarter cash dividend of $0.06 per share on its outstanding common stock on July 15, 2017 to shareholders of record at June 30, 2017.

The Company ended the quarter with term debt, net of cash and cash equivalents, of $179.2 million.

Effective June 30, 2017 the Company appointed Mr. Richard Rallo the Chief Accounting Officer.  Mr. Rallo will be responsible for all corporate treasury and accounting functions for Alico, Inc. and its subsidiaries.

About Alico

Alico is a holding company with assets and related operations in agriculture and environmental resources, including cattle ranching, water management, and mining. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 2017 2016
Operating revenues:
Alico Citrus $ 49,993 $ 45,639 $ 122,537 $ 135,916
Conservation and Environmental Resources 1,001 877 1,789 2,528
Other Operations 524 337 837 902
Total operating revenues 51,518 46,853 125,163 139,346
Operating expenses:
Alico Citrus 35,059 31,706 90,067 101,030
Conservation and Environmental Resources 1,451 1,399 2,726 3,540
Other Operations 65 93 212
Total operating expenses 36,510 33,170 92,886 104,782
Gross profit 15,008 13,683 32,277 34,564
General and administrative expenses 3,709 2,747 10,896 9,521
Income from operations 11,299 10,936 21,381 25,043
Other (expense) income:
Interest expense (2,223 ) (2,470 ) (6,924 ) (7,448 )
Gain (loss) on sale of real estate 157 (284 ) 1,989 618
Other expense, net (96 ) (120 ) (120 ) (419 )
Total other expense, net (2,162 ) (2,874 ) (5,055 ) (7,249 )
Income before income taxes 9,137 8,062 16,326 17,794
Provision for income taxes 3,665 3,392 6,713 7,419
Net income 5,472 4,670 9,613 10,375
Net loss (income) attributable to noncontrolling
interests
7 11 (36 ) 29
Net income attributable to Alico, Inc. common
stockholders
$ 5,479 $ 4,681 $ 9,577 $ 10,404
Per share information attributable to Alico, Inc.
common stockholders:
Earnings per common share:
Basic $ 0.66 $ 0.56 $ 1.15 $ 1.25
Diluted $ 0.66 $ 0.56 $ 1.15 $ 1.25
Weighted-average number of common shares
outstanding:
Basic 8,293 8,309 8,315 8,299
Diluted 8,364 8,309 8,340 8,309
Cash dividends declared per common share $ 0.06 $ 0.06 $ 0.18 $ 0.18
ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
June 30, September 30,
2017 2016
   (unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,944 $ 6,625
Accounts receivable, net 11,844 4,740
Inventories 39,497 58,469
Income tax receivable 275 1,013
Assets held for sale 3,223
Prepaid expenses and other current assets 2,419 1,024
Total current assets 67,202 71,871
Property and equipment, net 376,010 379,247
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 325 389
Other non-current assets 1,438 1,692
Total assets $ 447,221 $ 455,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,502 $ 5,975
Accrued liabilities 4,564 6,920
Long-term debt, current portion 4,525 4,493
Income taxes payable 1,539
Obligations under capital leases, current portion 8 288
Other current liabilities 947 1,002
Total current liabilities 13,085 18,678
Long-term debt:
Principal amount 184,633 192,726
Less: deferred financing costs, net (1,819 ) (1,980 )
Long-term debt less deferred financing costs, net 182,814 190,746
Lines of credit 5,000
Deferred tax liability 35,493 31,056
Deferred gain on sale 26,203 27,204
Deferred retirement obligations 4,179 4,198
Obligations under capital leases 9 300
Total liabilities 261,783 277,182
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
 Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and
 8,261,308 and 8,315,535 shares outstanding at June 30, 2017 and September 30, 2016, respectively 8,416 8,416
Additional paid in capital 18,489 18,155
Treasury stock, at cost, 154,837 and 100,610 shares held at June 30, 2017 and September 30, 2016, respectively (5,863 ) (4,585 )
Retained earnings 159,587 151,504
Total Alico stockholders’ equity 180,629 173,490
Noncontrolling interest 4,809 4,773
Total stockholders’ equity 185,438 178,263
Total liabilities and stockholders’ equity $ 447,221 $ 455,445
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Nine Months Ended June 30,
2017 2016
Cash flows from operating activities:
Net income $ 9,613 $ 10,375
Adjustments to reconcile net income to net cash provided by
operating activities:
Gain on sale of sugarcane land (422 ) (618 )
Depreciation, depletion and amortization 11,529 12,088
Deferred income taxes 4,437 7,288
(Gain) loss on sale of property and equipment (1,338 ) 626
Non-cash interest expense on deferred gain on sugarcane land 1,060 1,051
Stock-based compensation expense 1,230 635
Other 145 473
Changes in operating assets and liabilities:
Accounts receivable (7,104 ) (10,932 )
Inventories 17,350 14,147
Income tax receivable 738 861
Prepaid expenses and other assets (1,359 ) (1,193 )
Accounts payable and accrued expenses (6,826 ) (196 )
Income tax payable 1,539
Other liabilities (1,692 ) (420 )
Net cash provided by operating activities 28,900 34,185
Cash flows from investing activities:
Purchases of property and equipment (11,450 ) (9,115 )
Proceeds from sale of property and equipment 3,016
Other 155 164
Net cash used in investing activities (8,279 ) (8,951 )
Cash flows from financing activities:
Proceeds from term loans 2,500
Principal payments on revolving lines of credit (70,770 ) (53,882 )
Borrowings on revolving lines of credit 65,770 53,882
Principal payments on term loans (8,061 ) (8,080 )
Contingent consideration paid (7,500 )
Treasury stock purchases (2,174 ) (3,141 )
Dividends paid (1,496 ) (1,497 )
Capital lease obligation payments (571 )
Net cash used in financing activities (17,302 ) (17,718 )
Net decrease in cash and cash equivalents 3,319 7,516
Cash and cash equivalents at beginning of the period 6,625 5,474
Cash and cash equivalents at end of the period $ 9,944 $ 12,990
Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 2017 2016
Net income attributable to common stockholders $ 5,479 $ 4,681 $ 9,577 $ 10,404
Interest expense 2,223 2,470 6,924 7,448
Provision for income taxes 3,665 3,392 6,713 7,419
Depreciation and amortization 3,733 4,044 11,529 12,088
EBITDA 15,100 14,587 34,743 37,359
Consulting agreement expenses 187 109 475 555
(Gain) loss on sales of real estate (157 ) 284 (1,989 ) (618 )
Litigation expenses related to shareholder lawsuit 7 410
Employee stock compensation expense 231 38 648 113
Transaction costs (5 ) 48 196 550
Adjusted EBITDA $ 15,356 $ 15,073 $ 34,073 $ 38,369
Adjusted Earnings Per Diluted Common Share
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 2017 2016
Net income attributable to common stockholders $ 5,479 $ 4,681 $ 9,577 $ 10,404
Consulting agreement expenses 187 109 475 555
Gain (loss) on sales of real estate (157 ) 284 (1,989 ) (618 )
Litigation expenses related to shareholder lawsuit 7 410
Employee stock compensation expense 231 38 648 113
Transaction costs (5 ) 48 196 550
Tax impact (118 ) (204 ) 275 (421 )
Adjusted net income $ 5,617 $ 4,963 $ 9,182 $ 10,993
Diluted common shares 8,364 8,309 8,340 8,309
Adjusted Earnings per Diluted Common Share $ 0.67 $ 0.60 $ 1.10 $ 1.32
Adjusted Free Cash Flow
(in thousands)
Three Months Ended June 30, Nine Months Ended June 30,
2017 2016 2017 2016
Net cash provided by operating activities $ 31,649 $ 22,047 $ 28,900 $ 34,185
Adjustments for non-recurring items:
Consulting agreement expenses 187 109 475 555
Litigation expenses related to shareholder lawsuit 7 410
Transaction costs (5 ) 48 196 550
Tax impact (69 ) (73 ) (276 ) (632 )
Capital expenditures (6,477 ) (3,184 ) (11,517 ) (9,115 )
Adjusted Free Cash Flow $ 25,285 $ 18,954 $ 17,778 $ 25,953

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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.  Adjusted EBITDA is defined as earnings before interest expense, provision for income taxes, depreciation and amortization adjusted for consulting agreement expenses, gain (loss) on sales of real estate, litigation expenses related to shareholder lawsuit, employee stock compensation expenses and transaction costs. Adjusted Earnings per Diluted Common Share is defined as net income attributable to common stockholders adjusted for consulting agreement expenses, gain on sales of real estate, litigation expenses related to shareholder lawsuit, employee stock compensation expenses and transaction costs, all adjusted for estimated taxes, divided by diluted common shares. Adjusted Free Cash Flow is defined as cash provided by operating activities adjusted for consulting agreement expenses, litigation expenses related to shareholder lawsuit and transaction costs, all adjusted for estimated taxes, less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

Investor Contact:
John E. Kiernan
Senior Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

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Source: Alico, Inc.

Alico, Inc. Announces Fiscal Year 2017 Second Quarter Dividend

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Per share dividend of six cents to be paid on April 14, 2017

FORT MYERS, Fla., Feb. 27, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (the “Company”) (NASDAQ:ALCO), a holding company with assets and related operations in agriculture and natural resources, announced that its Board of Directors, on February 23, 2017, declared a second quarter cash dividend in the amount of $0.06 per share on its outstanding common stock. The dividend is to be paid to shareholders of record as of March 31, 2017, with the payment expected on April 14, 2017.

About Alico

Alico is a holding company with assets and related operations in agriculture and natural resources. In addition to its citrus operations, Alico is currently invested in cattle ranching, water management, mining and other natural resources. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from disease, insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:
John E. Kiernan
Senior Vice President and Chief Financial Officer
(239) 226-2000
jkiernan@alicoinc.com

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Source: Alico, Inc.

Alico, Inc. Announces First Quarter Financial Results for Fiscal Year 2017 Highlighted by ($1.7) million of Net Income, $3.2 million of EBITDA, and ($17.4) million of Net Cash Used In Operating Activities

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FORT MYERS, Fla., Feb. 06, 2017 (GLOBE NEWSWIRE) — Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO), today announces financial results for the first quarter ended December 31, 2016.  The Company earned ($0.21) per share in the first quarter compared to ($0.36) per share in the prior year reflecting an increase in fruit pricing partially offset by a decrease in production volume. When both periods are adjusted for certain items including merger and acquisition transaction costs, litigation costs, consulting fees, real estate gains and stock compensation expense, the Company earned ($0.22) per share in the first quarter of fiscal year 2017 and ($0.29) per share in the first quarter of fiscal year 2016.

These results are reflective of the seasonal nature of the Company’s business as we harvest the majority of our citrus crops in the second and third quarters of our fiscal year.  Accordingly, we typically recognize the majority of our profit and cash flow from operations in the second and third quarters, and experience greater working capital requirements in the first and fourth quarters.

Three Months Ended December 31,
2016 2015 Change
Net loss $ (1,743 ) $ (3,019 ) $ 1,276 42.3 %
EBITDA $ 3,235 $ 1,425 $ 1,810 127.0 %
Earnings per diluted common share $ (0.21 ) $ (0.36 ) $ 0.15 41.7 %
Net cash used in operating activities $ (17,437 ) $ (14,781 ) $ (2,656 ) (18.0 )%

Orange Co. Division Results

Orange Co.’s financial results improved in the first quarter of fiscal year 2017 due to an increase in fruit prices.  We realized a price of $2.51 per pound solid in the first quarter of fiscal year 2017 compared to $2.01 in the same period of the prior year, an increase of 24.9%.

Orange Co.’s crop production was lower by 21.5% on a pound solids basis and by 23.2% on a box basis for the quarter ended December 31, 2016 compared to the first quarter of fiscal year 2016.  These results are significantly impacted by timing as our harvest activities commenced later this year. On January 12, 2017, the USDA estimated that the Florida orange crop, as measured in boxes, for the 2016-2017 season will decline by approximately 12.3% compared to last year. We are currently projecting a full season year-over-year decline in production of approximately 10%.

Citrus production for the quarters ended December 31, 2016 and 2015 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended
December 31,
2016 2015 % Change
Boxes Harvested:
Early and Mid-Season 1,029 1,311 (21.5 )%
Total Processed 1,029 1,311 (21.5 )%
Fresh Fruit 129 196 (34.2 )%
Total 1,158 1,507 (23.2 )%
Pound Solids Produced:
Early and Mid-Season 5,440 6,931 (21.5 )%
Total 5,440 6,931 (21.5 )%
Average Pound Solids Per Box 5.29 5.29 %
Price per Pound Solids:
Early and Mid-Season $ 2.51 $ 2.01 24.9 %

Orange Co. continues to focus on efficiency and cost control.  Our cost of sales for fiscal year 2017 are expected to decrease by approximately $1.2 million from the prior year despite the challenges of unusual weather and disease; however, the cost of production per pound solid increased 2.0% from $1.37 to $1.39 in the first quarter because of lower volumes supporting the cost base.

Conservation and Environmental Resources Division Results

Conservation and Environmental Resources (“CER”) revenues for the first quarter of fiscal year 2017 totaled $0.3 million compared to $1.0 million in the first quarter of fiscal year 2016. The decrease relates primarily to the timing of calf sales. CER held an additional 1,000 calves in inventory at September 30, 2015 which would have historically been sold prior to year-end but were instead sold in the first quarter of fiscal year 2016.

 CER operating expenses decreased by $1.0 million for the three months ended December 31, 2016 compared to the three months ended December 31, 2015 due to the timing of additional pounds sold and a $0.5 million decrease in water conservation related expenses.

Other Corporate Financial Information

Alico continues to invest in information technology, management talent and strategic acquisition activities while simultaneously controlling recurring general and administrative costs.  Recurring general and administrative costs decreased by approximately $0.2 million in the first quarter compared to the first quarter of fiscal year 2016.  Corporate G&A expenses for the three months ended December 31, 2016 totaled $3.8 million compared to $3.9 million for the three months ended December 31, 2015, a decrease of $0.1 million.

Other expense, net was $2.0 million and $2.5 million for the three months ended December 31, 2016 and 2015, respectively.  The decrease of $0.5 million is primarily attributable to a $0.3 million increase in gains on real estate sales and a $0.2 million decrease in interest expense.

The Company paid a first quarter cash dividend of $0.06 per share on its outstanding common stock on January 13, 2017 to shareholders of record at December 30, 2016.

The Company ended the quarter with term debt, net of cash and cash equivalents, of $193.4 million.

About Alico

Alico is a holding company with assets and related operations in agriculture and environmental resources, including cattle ranching, water management, and mining. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. 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. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” ”expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended December 31,
2016 2015
Net loss attributable to common stockholders $ (1,735 ) $ (3,011 )
Interest expense 2,327 2,503
Income tax benefit (1,273 ) (2,075 )
Depreciation and amortization 3,916 4,008
EBITDA 3,235 1,425
Gains on sale of real estate (436 ) (142 )
Litigation expenses related to shareholder lawsuit 400
Consulting agreement expenses 50 304
Stock compensation expense 185 38
Transaction costs 18 397
Adjusted EBITDA $ 3,052 $ 2,422
Adjusted Earnings Per Diluted Common Share
(in thousands)
Three Months Ended December 31,
2016 2015
Net loss attributable to common stockholders $ (1,735 ) $ (3,011 )
Gains on sale of real estate (436 ) (142 )
Litigation expenses related to shareholder lawsuit 400
Payments on consulting agreements 50 304
Stock compensation expense 185 38
Transaction costs 18 397
Tax impact 77 (406 )
Adjusted net income $ (1,841 ) $ (2,420 )
Diluted common shares 8,324 8,303
Adjusted Earnings per Diluted Common Share $ (0.22 ) $ (0.29 )
Adjusted Free Cash Flow
(in thousands)
Three Months Ended December 31,
2016 2015
Net cash used in operating activities $ (17,437 ) $ (14,781 )
Adjustments for non-recurring items:
Litigation expenses related to shareholder lawsuit 400
Payments on consulting agreements 50 304
Transaction costs 18 397
Tax impact (29 ) (448 )
Capital expenditures (2,357 ) (2,988 )
Adjusted Free Cash Flow $ (19,755 ) $ (17,116 )

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings per Diluted Common Share and Adjusted Free Cash Flow among other measures, 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 Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, and Adjusted Free Cash Flow 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, provides 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 helps 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. Adjusted EBITDA is defined as earnings before interest expense, provision for income taxes, depreciation and amortization adjusted for non-recurring transactions. Adjusted Earnings per Diluted Common Share is defined as Net Income adjusted for non-recurring transactions divided by diluted common shares.  Adjusted Free Cash Flow is defined as cash provided by operations adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended
December 31,
2016 2015
Operating revenues:
Orange Co. $ 16,877 $ 19,295
Conservation and Environmental Resources 301 1,007
Other Operations 267 302
Total operating revenues 17,445 20,604
Operating expenses:
Orange Co. 14,085 17,608
Conservation and Environmental Resources 514 1,560
Other Operations 93 70
Total operating expenses 14,692 19,238
Gross profit 2,753 1,366
General and administrative expenses 3,788 3,925
Loss from operations (1,035 ) (2,559 )
Other (expense) income:
Interest expense (2,327 ) (2,503 )
Gain on sale of real estate 436 142
Other expense, net (90 ) (174 )
Total other expense, net (1,981 ) (2,535 )
Loss before income taxes (3,016 ) (5,094 )
Benefit for income taxes (1,273 ) (2,075 )
Net loss (1,743 ) (3,019 )
Net loss attributable to noncontrolling interests 8 8
Net loss attributable to Alico, Inc. common stockholders $ (1,735 ) $ (3,011 )
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic $ (0.21 ) $ (0.36 )
Diluted $ (0.21 ) $ (0.36 )
Weighted-average number of common shares outstanding:
Basic 8,324 8,303
Diluted 8,324 8,303
Cash dividends declared per common share $ 0.06 $ 0.06
ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share amounts)
December 31, September 30,
2016 2016
ASSETS
Current assets:
Cash and cash equivalents $ 1,126 $ 6,625
Accounts receivable, net 11,917 4,740
Inventories 62,522 58,469
Income tax receivable 1,013 1,013
Prepaid expenses and other current assets 3,374 1,024
Total current assets 79,952 71,871
Property and equipment, net 376,806 379,247
Goodwill 2,246 2,246
Deferred financing costs, net of accumulated amortization 326 389
Other non-current assets 1,423 1,692
Total assets $ 460,753 $ 455,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 3,731 $ 5,975
Accrued liabilities 3,020 6,422
Dividend payable 499 498
Long-term debt, current portion 4,475 4,493
Obligations under capital leases, current portion 288 288
Other current liabilities 681 1,002
Total current liabilities 12,694 18,678
Long-term debt:
Principal amount 190,045 192,726
Less: deferred financing costs, net (1,927 ) (1,980 )
Long-term debt less deferred financing costs, net 188,118 190,746
Lines of credit 21,945 5,000
Deferred tax liability 29,784 31,056
Deferred gain on sale 27,258 27,204
Deferred retirement obligations 4,192 4,198
Obligations under capital leases 300 300
Total liabilities 284,291 277,182
Stockholders’ equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and 8,324,727 and 8,315,535 shares outstanding at December 31, 2016 and September 30, 2016, respectively 8,416 8,416
Additional paid in capital 18,210 18,155
Treasury stock, at cost, 91,398 and 100,610 shares held at December 31, 2016 and September 30, 2016, respectively (4,199 ) (4,585 )
Retained earnings 149,270 151,504
Total Alico stockholders’ equity 171,697 173,490
Noncontrolling interest 4,765 4,773
Total stockholders’ equity 176,462 178,263
Total liabilities and stockholders’ equity $ 460,753 $ 455,445
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Three Months Ended December 31,
2016 2015
Net cash used in operating activities: $ (17,437 ) $ (14,781 )
Cash flows from investing activities:
Purchases of property and equipment (2,357 ) (2,988 )
Other 547 140
Net cash used in investing activities (1,810 ) (2,848 )
Cash flows from financing activities:
Repayments on revolving lines of credit (5,000 )
Borrowings on revolving lines of credit 21,945 24,986
Principal payments on term loans (2,699 ) (2,699 )
Contingent consideration paid (3,750 )
Treasury stock purchases (2,602 )
Dividends paid (498 ) (504 )
Net cash provided by financing activities 13,748 15,431
Net decrease in cash and cash equivalents (5,499 ) (2,198 )
Cash and cash equivalents at beginning of the period 6,625 5,474
Cash and cash equivalents at end of the period $ 1,126 $ 3,276

 

Investor Contact:
John E. Kiernan
Senior Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com

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Source: Alico, Inc.