Alico, Inc. Q2 FY2026 Earnings Call

good morning and welcome to alico's second quarter 2026 earnings call currently all participants are in a listen-only mode as a reminder today's call is being recorded i would now like to turn the call over to your host john mills managing partner at icr please go ahead sir good morning

everyone and thank you for joining us for alico's second quarter 2026 conference call on the call All today are John Kiernan, President and Chief Executive Officer, and Brad Heine, Chief Financial Officer. By now, everyone should have access to the second quarter 2026 earnings release, which went out yesterday at approximately 4.15 p.m. Eastern Time. If you've not had a chance to view the release, it's available on the Investor Relations portion of the company's website at alicoinc.com. This call is being webcast, and the replay will be available on Alico's website as well. Before we begin, we'd like to remind everyone that the prepared remarks contain forward-looking statements. Such statements are subject to risk, uncertainties, and other factors that may cause the actual results to differ materially from those expressed or implied in these statements. Important factors that could cause or contribute to such differences include risks detailed in the company's quarterly reports on Form 10Q, annual reports on Form 10K, current reports on Form 8K and any amendments thereto filed with the SEC and those mentioned in the earnings release. The company undertakes no obligation to subsequently update or revise the forward-looking statements made on today's call, except as required by law. During this call, the company may also discuss non-GAAP financial measures, including EBITDA, adjusted EBITDA, and net debt. For more details on these measures, please refer to the company's press release issued yesterday. And with that, it is my pleasure to turn the call over to the company's

president and CEO, Mr. John Kiernan. Thank you, John. And good morning, good afternoon, and good evening to everyone here on the call. Our second quarter results demonstrate continued execution of our strategy and our commitment to delivering on our near-term and long-term goals. With net income of $11.4 million, adjusted EBITDA of $16.9 million, and cash of $52.9 million at quarter end, we've extended our financial runway through fiscal 28 while maintaining the flexibility to advance our development initiatives. Let me walk through the key accomplishments during and subsequent to the quarter. First, we closed the $26.9 million land sale in January. This transaction involved approximately 2,950 acres and generated a gain of approximately $19.8 million, bringing our year-to-date land sales to $34.6 million. The transaction reflects the strong demand for our Florida properties and validates our land monetization strategy. Our land portfolio continues to attract qualified buyers seeking prime agricultural and development-ready properties across Southwest Florida's growth corridors. With approximately 46,000 acres remaining in our Florida portfolio, we believe our diversified holdings provide continued opportunities for strategic land monetization that balances near-term cash generation with long-term development optionality. Second, we deployed $10 million through our 10B5-1 share repurchase program, acquiring 245,399 shares through April. This reflects our balanced approach to capital allocation and our confidence in the embedded value within our portfolio. We continue to assess optimal capital allocation decisions, including potential additional share, repurchases, dividends, and strategic investments in our development pipeline as we execute our value creation strategy. Third, and most significantly, in late April, we received unanimous approval from the Collier County Board of Commissioners for Corkscrew Grove East Village. This local entitlement represents a meaningful regulatory milestone for what we believe has has the potential to be a significant development project for Southwest Florida. The approved East Village encompasses 1,446 acres and authorizes up to 4,502 dwelling units, including 362 affordable housing units for essential workers and approximately 238,000 square feet of neighborhood-scaled retail and office space. The project aligns with Collier County's Rural Land Stewardship Area Program and reflects our commitment to responsible development that balances growth with conservation. Corscrew Grove East Village will enhance public infrastructure while permanently protecting thousands of acres of sensitive land and restoring wetlands and uplands to native habitat. As part of this plan, ILICA will place nearly 5,000 acres into permanent conservation at no cost to taxpayers. The project reflects our emphasis on connected open space, preservation and restoration, and landscape scale habitat connectivity. With local approvals now secured, we're focusing on working closely with the South Florida Water Management District, the U.S. Army Corps of Engineers, and the U.S. Fish and Wildlife Service to continue to show that this project is thoughtfully planned, environmentally responsible, and aligned with all requirements necessary to secure state and federal permits. We remain on our timeline of expected state approval by early 2027 and federal approval by the end of 2028, keeping us on track for potential construction commencement in 2028 or 2029. And fourth, our diversified land utilization strategy continues to perform as intended. Approximately 97% of our farmable acres now generate revenue through agricultural partnerships with citrus growers, farmers, cattle ranchers, mining companies, sugarcane producers, and sod farming operations. These programs reduce operational complexity while maintaining agricultural use of our land. I'm also pleased to announce that Eric Spiron joined our board of directors this quarter. Eric brings proven expertise in real estate and finance from his work at Purse Foundation and previously at J.P. Morgan. He currently serves on the board of Keweenaw Land Association and Tehan Ranch Company, and his experience will be valuable as we advance our development pipeline. Our development pipeline continues to advance with Corkscrew Grove villages bonnet lake saddlebag grove and plant world which total a total of 5500 acres maintain their estimated present value of between 335 million and 380 million which we expect to realize within the next five years this represents significant value creation potential from just 10 percent of our land holdings our balance sheet is strong with 52.9 million in cash at quarter end and $92.5 million of available borrowing under our line of credit, we have the financial resources to execute our strategy. That cash position extends our runway through fiscal 2028, giving us the time and flexibility to advance our development projects on our timeline, not driven by liquidity constraints. In addition, because of our strategic decision to exit the citrus business, we have now dramatically improved our operating cash flow and essentially removed the current headwinds of fuel and fertilizer costs facing many industries today. Management's NPV analysis of our approximately 46,000 acres indicates asset value between $650 and $750 million. dollars. With our current market capitalization and net debt of approximately $32.6 million a quarter end, we believe ILICO represents value for investors seeking exposure to Florida's growth. What differentiates ILICO is their combination of strategic land holdings across seven Florida counties, more than 125 years of local relationships and conservation credibility, a management team with expertise in both agriculture and real estate development, and a balanced portfolio approach with 75% of our land continuing in agricultural use. Our priorities for fiscal 2026 remain unchanged. Optimize agricultural operations by maximizing revenue from diversified leasing programs while maintaining cost controls. Advance our development projects through the entitlement process, with particular focus on securing remaining approvals for Corkscrew Grove Villages, balance required entitlement investments with shareholder returns while maintaining financial flexibility, and to pursue operational excellence by leveraging our experienced team and local relationships to execute efficiently. The foundation is in place. The Collier County approval represents meaningful progress, and we're positioned to advance through the remaining permitting processes. Our balance sheet and revenues from diversified agricultural operations provide the resources to execute our strategy. With that, I'll turn it over to Brad Heine, who will walk through our detailed financial

results. Thank you, John. Good morning, everyone. we'll get through our second quarter fiscal 2026 financial results and provide additional details on our financial position. For the three months ended March 31st, 2026, we reported total revenue of 5.3 million compared to 18 million in the prior year period. For the six-month period ended March 31, 2026, we reported total revenue of 7.2 million compared to 34.9 million in the prior year period. Looking at our business segments, the Lico citrus results reflect the ongoing wind-down of citrus operations that began in 2025. Revenue decreased significantly, as expected, while cost of sales declined correspondingly. We completed our last significant citrus harvest in April 2025, and while we may see some residual activity during the wind-down period, the reduced scale demonstrates our successful exit from capital and tentative citrus production. Land management and other operations revenue increased 113% in the quarter driven by farm lease and sod revenue as we shift our focus to diversified land usage. For the six months ended March 31, 2026, revenues increased 97% primarily from farm lease revenue, rock and sand royalties, and sod revenue. Our diversified programs now utilize approximately 97% of our roughly 32,500 farmable acres, representing approximately 89% of our total 46,000 agricultural acres. Our net income attributable to illegal common stockholders for the three-month ended March 31, 2026 was $11.4 million, or $1.49 per diluted share, compared to a net loss of $111.4 million, or $14.58 per diluted share in the prior year period. The improvement was principally driven by the wind down of our citrus operations and the 26.9 million land sale we closed in January. We achieved positive EBITDA of 16.7 million for the three-month period ended March 31, 2026 compared to negative 14.7 million in the prior year period, a 31.4 million dollar improvement. Our adjusted EBITDA was 16.9 million for the three-month period ended March 31, 2026 compared to 12.7 million last year. This positive EBITDA generation validates the cash generating capability of our transformed operating model. From a balance sheet perspective, we continue to demonstrate financial strength. Cash and cash equivalents at quarter end were 52.9 million up from 38.1 million at fiscal year end. This increase reflects the 26.9 million land sale in January partially offset by 8.4 million in share repurchases during the quarter and operational uses of cash. Working capital was 52.2 million with a current ratio of 9.63 to 1 while total debt was 85.5 million and net debt was 32.6 million at quarter end compared to 85.5 million and 47.4 million respectively at fiscal year end. Available borrowings in our credit facility were approximately 92.5 million and our minimum liquidity requirement was 5.8 million, providing substantial financial flexibility. Through April 2026, we've repurchased 245,399 shares for $10 million through our share repurchase program, demonstrating our commitment to returning capital shareholders when we see value. We are maintaining our 2026 guidance for adjusted EBITDA of approximately 14 million and we are updating our year-end cash guidance to approximately 40 million and net debt guidance to approximately 45 million reflecting the 10 million share repurchase program completed through April 2026. we expect to end the fiscal year with only the minimum required balance of 2 million 2.5 million on our revolving line of credit the fundamentals are working as intended we're generating cash flow from diversified land usage while maintaining optionality to pursue higher value development opportunities. The Collier County Approval of Corks-Cougar of East Villages represents meaningful progress, and our balance sheet provides the resources to advance through the remaining permitting processes. Now, I'd like to turn the call back to John for his closing remarks.

Thank you, Brad. Before we open the call to questions from research analysts, I want to emphasize a few key points. First, IWICO's delivering on what we committed to do. The land sales, the share repurchases, the entitlement approvals, the high land utilization rates, we've achieved really demonstrate a consistent execution of our strategy. Second, our financial position provides the runway and flexibility to advance our development projects. The extension of our cash runway through fiscal 28 gives us the time to maximize value from a regulatory process and development pipeline. Third, our business model is working. We've created multiple revenue streams through land leasing and management while advancing high-value development projects that we believe will generate substantial returns over the next five years. We're very pleased to have received unanimous approval from the Collier County Board of Commissioners for Corkscrew Grove East Village. We remain on our timeline of expecting state approval by the end of 2026 or 2027, and federal approval by the end of 2028, keeping us on track for potential construction commencement in 2028 or 2029. And finally, we remain focused on responsible land stewardship and conservation. Wildlife Underpass partnership with the Florida Department of Transportation and our commitment to preserving more than 6,000 acres of conservation areas for the entire Corkscrew Grove Village Village's project reflects our values and differentiate OLECO in the development community. Katie will now open the call for questions. Thank you.

If you would like to ask a question, please press star 1 on your telephone keypad. To leave the queue at any time, please press star 2. Once again, that is star 1 to ask a question. We will pause for just a moment to allow everyone the chance to queue. Thank you. Our first question will come from Jerry Sweeney with Ross Capital. Your line is open.

Good morning, John and Brad. Thanks for taking my call.

How are you doing, Jerry?

I'm okay. Doing well. Congrats on the Calgary County approval Corkscrew Ranch. You also laid out the next sort of the state and I understand that it could be early. you have gone or reviewed buddy do it yourself etc and again I know it may be a little bit early for that question but I figured I would ask it oh it's a it's

a highly relevant question we've been discussing it publicly over the last two years and right now our answer has not changed but certainly the time horizon is starting to to shrink a little bit we go still reserves the optionality to sell the land outright once it's entitled for entitled value to national or local home builders we reserve the right to actually partner with these home builders at the same time where we would get a little money up front and then share as the development progresses over time or we go reserves the right to potentially bring in-house capabilities inside and basically develop this ourselves right now we continue to have meetings in a number of those areas and clearly in the next year or so we will probably have to commit to one path or another but it really is going to depend on a number of factors that would be the timing of the approval process and the success that we have on on staying on the 2027 and the 2028 slash 29 approvals and also kind of what what the market bears you know we have a very very good team in-house but we really are not construction experts but this is a prime location it is a very well thought out plan I think the the approvals that we got at the local level reflect the fact that it's been very thoughtful and we think it's highly marketable. But at this point, we have nothing to announce on which path we're

continuing to go down. That's helpful. And so within a year or so, it's getting closer. So I appreciate that. Separately, obviously, nice land sale in January, by my math, a little over $9,100 per acre. I think you have about 46,000 acres left, he said. And some of that is uh corkscrew ranch some of his bonnet lake and some other maybe potentially developable land how much shall we say um maybe for lack of a better word i know agricultural land or sand land is available for sale and you know that nine thousand dollar per acre number uh is up considerably from five six seven years ago you know how much could you get for that remaining land understand that maybe some of you know not all land was created equal and some have different sure we asked that you give us another week we're

going to be seeing an investor conference next week and we will give you a more detailed breakdown of kind of the the buckets that we previously had discussed for you know what what management believes is potentially their net present value. However, we just reiterated it, we think the entire portfolio, which is now 46,000 acres instead of the 50,000 plus that we had two years ago, is still worth between 650 and 750 million dollars. And that is supported primarily by the large percentage of acres that will be tied to agricultural for the long term, simply because the price point we had said previously was between four and five thousand dollars per acre and the trades that we've done over the last year and change have been you know uh in the nine thousand dollar range we can't say that the inventory portfolio is worth nine thousand dollars we're not saying that at all um we're continuing to actually be conservative and uh we again beg your indulgence but when we come out with our revised investment presentation next week. We should have a detailed slide that will break that out in detail.

So in other words, $4,000 to $5,000 per acre, some, not all that land.

And we think recent comps report that as an analysis. We don't think we're making that up.

Got it. And then one last question. You know, obviously you have local approval, you have state approval, federal approval. You laid that out. You discussed that in the course of the next year. Any other major sort of steps, milestones that we should be aware of over the next couple of years, or do you think that's the majority of them?

I mean, as far as Corkshire Grove, East Villages, you actually hit the third point, which is making a decision on how potentially we would monetize this on behalf of shareholders would be kind of the next big news item outside of the state approval and the federal approval for that.

Thank you. Thank you, Jerry.

Thank you.

This concludes our Q&A session. I'll now turn the call back over to John Kiernan for any final or closing remarks.

Thank you, Katie. And to everyone, we really appreciate your continued interest in OECO. We look forward to updating you on our progress in the quarters ahead. We hope to talk to you again in August. Have a good day.

That brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.