Alico, Inc 10-Q for FY2024 Q1
Alico, Inc. (ALCO)
10-Q
2024-02-07
For: 2023-12-31
View Original
Added on
April 06, 2026
About this 10-Q
Alico, Inc filed this 10-Q on February 7, 2024, covering the quarter ended December 31, 2023 (FY2024 Q1).
Headline figures
Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $13.99M
- up 32.1% from $10.59M a year earlier
- Net income
- $42.95M
- compared with a net loss of $3.15M a year earlier
- Diluted EPS
- $5.64
- compared with -$0.41 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||
For the Quarterly Period Ended | ||||||||
| or | ||||||||
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | ||||||||
For the transition period
from____________________ to _________________________
Commission File Number: 0-261
(Exact name of registrant as specified in its charter) | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
( | ||
(Registrant’s telephone number, including area code) | ||
| Not Applicable | ||
| (Former name, former address and former fiscal year, if changed since last report) | ||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þYes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:
| Large Accelerated Filer | o | þ | |||||||||
| Non-accelerated filer | o | Smaller Reporting Company | |||||||||
| Emerging Growth Company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
There were 7,620,769 shares of common stock outstanding at February 5, 2024.
ALICO, INC.
FORM 10-Q
For the three months ended December 31, 2023 and 2022
Table of Contents
PART I
Item 1. Condensed Consolidated Financial Statements
Index to Condensed Consolidated Financial Statements
Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains certain forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements, including without limitation, statements regarding future actions, business plans and prospects, prospective products, trends, future performance or results of current and anticipated products, sales efforts, expenses, interest rates, the outcome of contingencies, plans relating to dividends, government regulations, the adequacy of our liquidity to meet our needs for the foreseeable future, our expectations regarding the continued impact of Hurricane Ian, and our expectations regarding market conditions. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as such as “may,” “will,” “could,” “should,” “would,” “believes,” “expects,” “anticipates”, “estimates”, “projects,” “intends,” “plans” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, including, but not limited to: adverse weather conditions, natural disasters and other natural conditions, including the effects of climate change and hurricanes and tropical storms, particularly because our citrus groves are geographically concentrated in Florida; damage and loss from disease including, but not limited to, citrus greening and citrus canker; any adverse event affecting our citrus business; our ability to effectively perform grove management services, or to effectively manage an expanded portfolio of groves; our dependency on our relationship with Tropicana and Tropicana’s relationship with certain third parties for a significant portion of our business; our ability to execute our strategic growth initiatives and whether they adequately address the challenges or opportunities we face; product contamination and product liability claims; water use regulations restricting our access to water; changes in immigration laws; harm to our reputation; tax risks associated a Section 1031 Exchange; risks associated with the undertaking of one or more significant corporate transactions; the seasonality of our citrus business; fluctuations in our earnings due to market supply and prices and demand for our products; climate change, or legal, regulatory, or market measures to address climate change; ESG issues, including those related to climate change and sustainability; increases in labor, personnel and benefits costs; increases in commodity or raw product costs, such as fuel and chemical costs; transportation risks; any change or the classification or valuation methods employed by county property appraisers related to our real estate taxes; liability for the use of fertilizers, pesticides, herbicides and other potentially hazardous substances; compliance with applicable environmental laws; loss of key employees; material weaknesses and other control deficiencies relating to our internal control over financial reporting; macroeconomic conditions, such as rising inflation, the deadly conflicts in Ukraine and Israel, and the COVID-19 pandemic; system security risks, data protection breaches, cyber-attacks and systems integration issues; our indebtedness and ability to generate sufficient cash flow to service our debt obligations; higher interest expenses as a result of variable rates of interest for our debt; our ability to continue to pay cash dividends;; and the other factors described under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on December 6, 2023 (the “2023 Annual Report on Form 10-K”). Except as required by law, we do not undertake an obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
As used in this Quarterly Report, unless otherwise specified or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Alico” refer to the operations of Alico, Inc. and its consolidated subsidiaries.
ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
| December 31, 2023 | September 30, 2023 | ||||||||||
(Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash | $ | $ | |||||||||
| Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Income tax receivable | |||||||||||
| Assets held for sale | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Restricted cash | |||||||||||
| Property and equipment, net | |||||||||||
| Goodwill | |||||||||||
| Other non-current assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Current portion of long-term debt | |||||||||||
| Income tax payable | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt, net | |||||||||||
| Lines of credit | |||||||||||
| Deferred income tax liabilities, net | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies (Note 12) | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, | |||||||||||
Common stock, $ | |||||||||||
| Additional paid in capital | |||||||||||
Treasury stock, at cost, | ( | ( | |||||||||
| Retained earnings | |||||||||||
| Total Alico stockholders' equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
1
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
| Three Months Ended December 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||
| Alico Citrus | $ | $ | |||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Total operating revenues | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Alico Citrus | |||||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Gross profit | ( | ( | |||||||||||||||||||||
| General and administrative expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | |||||||||||||||||||||
| Other income (expense), net: | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense | ( | ( | |||||||||||||||||||||
| Gain on sale of real estate, property and equipment and assets held for sale | |||||||||||||||||||||||
| Total other income (expense), net | |||||||||||||||||||||||
| Income (loss) before income taxes | ( | ||||||||||||||||||||||
| Income tax provision (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) | ( | ||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income (loss) attributable to Alico, Inc. common stockholders | $ | $ | ( | ||||||||||||||||||||
| Per share information attributable to Alico, Inc. common stockholders: | |||||||||||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | $ | ( | ||||||||||||||||||||
| Diluted | $ | $ | ( | ||||||||||||||||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
| Cash dividends declared per common share | $ | $ | |||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
2
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(in thousands)
| For the Three Months Ended December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | Additional Paid In Capital | Treasury Stock | Retained Earnings | Total Alico, Inc. Equity | Non- controlling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2023 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| For the Three Months Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | Additional Paid In Capital | Treasury Stock | Retained Earnings | Total Alico, Inc. Equity | Non- controlling Interest | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 30, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
Dividends ($ | — | — | — | — | — | ( | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
3
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Three Months Ended December 31, | |||||||||||
| 2023 | 2022 | ||||||||||
| Net cash used in operating activities: | |||||||||||
| Net income (loss) | $ | $ | ( | ||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
| Depreciation, depletion and amortization | |||||||||||
| Amortization of debt issue costs | |||||||||||
| Gain on sale of real estate, property and equipment and assets held for sale | ( | ( | |||||||||
| Loss on disposal of long-lived assets | |||||||||||
| Inventory net realizable value adjustment | |||||||||||
| Stock-based compensation expense | |||||||||||
| Other | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses | ( | ( | |||||||||
| Income tax receivable | ( | ||||||||||
| Other assets | |||||||||||
| Accounts payable and accrued liabilities | ( | ( | |||||||||
| Income taxes payable | |||||||||||
| Other liabilities | ( | ( | |||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Acquisition of citrus groves | ( | ||||||||||
| Net proceeds from sale of real estate, property and equipment and assets held for sale | |||||||||||
| Change in deposits on purchase of citrus trees | ( | ( | |||||||||
| Net cash provided by (used in) investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments on revolving lines of credit | ( | ( | |||||||||
| Borrowings on revolving lines of credit | |||||||||||
| Principal payments on term loans | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Net cash (used in) provided by financing activities | ( | ||||||||||
| Net increase (decrease) in cash and restricted cash | ( | ||||||||||
| Cash and restricted cash at beginning of the period | |||||||||||
| Cash and restricted cash at end of the period | $ | $ | |||||||||
| Non-cash investing activities: | |||||||||||
| Assets received in exchange for services | $ | $ | |||||||||
| Trees delivered in exchange for prior services | $ | $ | |||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
4
ALICO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Dollars in thousands, except per share and per acre amounts)
Note 1. Description of Business and Basis of Presentation
Description of Business
Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”), is a Florida agribusiness and land management company owning approximately 54,000 acres of land and also mineral rights throughout Florida. Alico holds these mineral rights on substantially all its owned acres, with additional mineral rights on other acres. The Company manages its land based upon its primary usage, and reviews its performance based upon two primary classifications: (i) Alico Citrus and (ii) Land Management and Other Operations. Financial results are presented based upon these two business segments.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements, which are referred to herein as the “Financial Statements”, of Alico have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, these Financial Statements do not include all of the disclosures required for complete annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). As such, these Financial Statements should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023, as filed with the SEC on December 6, 2023 (the “2023 Annual Report on Form 10-K”).
Seasonality
The Company is primarily engaged in the production of fruit for sale to citrus markets, which is of a seasonal nature, and subject to the influence of natural phenomena and wide price fluctuations. Historically, the second and third quarters of Alico's fiscal year produce most of the Company's annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. Because of the seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
Note 2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our 2023 Annual Report on Form 10-K.
Revenue Recognition
The Company recognizes revenue under ASC 606. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
•Step 1: Identify the contract with the customer
•Step 2: Identify the performance obligations in the contract
•Step 3: Determine the transaction price
•Step 4: Allocate the transaction price to the performance obligations in the contract
•Step 5: Recognize revenue when the company satisfies a performance obligation
5
Revenues are derived from the sale of processed fruit, fresh fruit, other citrus revenue, revenues from grove management services, leasing revenue and other resource revenues. Most of the revenue is generated from the sale of citrus fruit to processing facilities, fresh fruit sales and grove management services.
For fruit sales, the Company recognizes revenue in the amount it expects to be entitled to be paid, determined when control of the products or services is transferred to its customers, which occurs upon delivery of and acceptance of the fruit by the customer and when the Company has a right to payment.
For the sale of fruit, the Company has identified one performance obligation, which is the delivery of fruit to the processing facility of the customer (or harvesting of the citrus in the case of fresh fruit) for each separate variety of fruit identified in the respective contract with the respective customer. The Company initially recognizes revenue in an amount which is estimated based on contractual and market prices, if such market price falls within the range (known as “floor” and “ceiling” prices) identified in the specific respective contracts. Additionally, the Company also has a contractual agreement whereby revenue is determined based on applying a cost-plus structure methodology. As such, since all these contracts contain elements of variable consideration, the Company recognizes this variable consideration by using the expected value method. On a quarterly basis, management reviews the reasonableness of the revenues accrued based on buyers’ and processors’ advances to growers, cash and futures markets and experience in the industry. Adjustments are made throughout the year to these estimates as more current relevant industry information becomes available. Differences between the estimates and the final realization of revenues at the close of the harvesting season can result in either an increase or decrease to reported revenues. For the three months ended December 31, 2023 and 2022, the Company recognized revenues of $12,901 and $10,079 , respectively, at a point in time. For the three months ended December 31, 2023 and 2022, the Company recognized revenues of $1,084 and $509 , respectively, over time.
Receivables under contracts, whereby pricing is based on contractual and market prices, are primarily paid at the floor amount and are collected within seven days after the harvest week. Any adjustments to pricing as a result of changes in market prices are generally collected or paid thirty to sixty days after final market pricing is published. Receivables under those contracts where pricing is based off a cost-plus structure methodology are paid at the final prior year rate. Any adjustments to pricing because of the cost-plus calculation are collected or paid upon finalization of the calculation and agreement by both parties. As of December 31, 2023, and September 30, 2023, the Company had total receivables relating to sales of citrus of $7,134 and $394 , respectively, recorded in Accounts Receivable, net, in the Condensed Consolidated Balance Sheets.
For grove management services, the Company has identified one performance obligation, which is the management of the third party’s groves. Grove management services include caretaking of the citrus groves, harvesting and hauling of citrus, management and coordination of citrus sales and other related activities. The Company is reimbursed for expenses incurred in the execution of its management duties and the Company receives a per acre management fee. The Company recognizes operating revenue, including a management fee, and corresponding operating expenses when such services are rendered and consumed.
The Company recorded $691 and $189 of operating revenue relating to these grove management services, including the management fee, in the three months ended December 31, 2023 and 2022, respectively, for this group of third-party grove owners noted above. The Company recorded $368 and $67 of operating expenses relating to these grove management services in the three months ended December 31, 2023 and 2022, respectively, for this group of third-party grove owners noted above.
Disaggregated Revenue
Revenues disaggregated by significant products and services for the three months ended December 31, 2023 and 2022 are as follows:
6
| (in thousands) | Three Months Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Alico Citrus | |||||||||||||||||||||||
| Early and Mid-Season | $ | $ | |||||||||||||||||||||
| Fresh Fruit and Other | |||||||||||||||||||||||
| Grove Management Services | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Land and Other Leasing | $ | $ | |||||||||||||||||||||
| Other | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
| Total Revenues | $ | $ | |||||||||||||||||||||
Fair Value Measurements
The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability into a three tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
•Level 1 – Observable inputs such as quoted market prices for identical assets and liabilities in active markets;
•Level 2 – Inputs, other than the quoted prices for identical assets and liabilities in active markets, for which significant other observable market inputs are readily available; and
•Level 3 – Unobservable inputs in which there is little or no market data, such as internally developed valuation models which require the reporting entity to develop its own assumptions.
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||||||||||||||
| Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | ||||||||||||||||||||
| Corporate debt | |||||||||||||||||||||||
| Current long-term debt | $ | $ | $ | $ | |||||||||||||||||||
| Long-term debt | $ | $ | $ | $ | |||||||||||||||||||
As of December 31, 2023 and September 30, 2023 the Company did not have any assets held for sale that had been measured at fair value on a non-recurring basis.
Accounting for government grants
The Company recognizes government grants when there is reasonable assurance that: (1) the grant will be received and (2) all conditions will be met. For income-based grants, the Company recognizes the income on a systemic basis over the periods in which we recognize as expense the related costs for which the grant was intended to compensate.
On December 31, 2023, the Company recognized $1,805 of grant money from the Citrus Research and Field Trial Foundation’s (“CRAFT”) program to assist citrus growers in the State of Florida using Oxytetracycline (“OTC”) and other
7
approved therapies to combat the effect of “greening” of their citrus trees. These funds were recognized as a component of Inventories ($1,381 at December 31, 2023) on the Company’s Condensed Consolidated Balance Sheet and will be recognized as a reduction of Operating expenses ($424 during the three months ended December 31, 2023) on its Condensed Consolidated Statement of Operations, as its fruit is sold; in order to align it to the period over which the expense related to the OTC treatments is recognized. These grant monies were received in exchange for providing certain historical data to the CRAFT Foundation about its citrus groves. The Company may continue, but is not obligated, to participate in future CRAFT programs on the effects of the use of OTC on its Citrus Trees. In January 2024, the Company collected these grant monies from CRAFT.
Concentrations
Accounts receivable from the Company’s major customer as of December 31, 2023 and September 30, 2023, and revenue from such customer as of December 31, 2023 and 2022, are as follows:
| (in thousands) | Accounts Receivable | Revenue | % of Total Revenue | ||||||||||||||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||||||||||||||||||
| 2023 | 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||||||
| Tropicana | $ | $ | $ | $ | % | % | |||||||||||||||||||||||||||||
The citrus industry is subject to various factors over which growers have limited or no control, including weather conditions, disease, pestilence, water supply and market price fluctuations. Market prices are highly sensitive to aggregate domestic and foreign crop sizes, as well as factors including, but not limited to, weather and competition from foreign countries.
The overall increase in Tropicana revenue, as a percentage of sales, was primarily due to an increase in processed fruit sales during the current quarter.
Segments
Operating segments are defined in the criteria established under the Financial Accounting Standards Board – Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on two operating segments: (i) Alico Citrus and (ii) Land Management and Other Operations.
Principles of Consolidation
The Financial Statements include the accounts of Alico and the accounts of all the subsidiaries in which a controlling interest is held by the Company. Under U.S. GAAP, consolidation is generally required for investments of more than 50% of the outstanding voting stock of an investee, except when control is not held by the majority owner. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, LLC, Alico Fruit Company, LLC, Alico Citrus Nursery, LLC, Alico Chemical Sales, LLC, Alico Ranch, LLC, Alico Natural Resources, LLC, 734 Citrus Holdings 1, LLC and subsidiaries (“Silver Nip”), Alico Skink Mitigation, LLC and Citree Holdings 1, LLC (“Citree”). The Company considers the criteria established under FASB ASC Topic 810, “Consolidations” in its consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the accompanying Financial Statements, the disclosure of contingent assets and liabilities in the Financial Statements and the accompanying Notes, and the reported amounts of revenues and expenses and cash flows during the periods presented. Actual results could differ from those estimates. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic conditions, historical experience, the experience and judgment of the Company’s management and various other specific assumptions that the Company believes to be reasonable.
8
Noncontrolling Interest in Consolidated Subsidiary
The Financial Statements include all assets and liabilities of the less-than-100%-owned subsidiary the Company controls, Citree. Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a loss of $1,039 and a net loss of $73 for the three months ended December 31, 2023 and 2022, respectively, of which 51 % is attributable to the Company.
Recent Accounting Pronouncements
The Company has reviewed other recently issued accounting standards which have not yet been adopted to determine their potential effect, if any, on the results of operations or financial condition. Based on the review of these other recently issued standards, the Company does not currently believe that any of those accounting pronouncements will have a significant effect on its current or future financial position, results of operations, cash flows or disclosures.
Recently Adopted Accounting Pronouncements
None this period.
Note 3. Inventories
Inventories consist of the following at December 31, 2023 and September 30, 2023:
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Unharvested fruit crop on the trees | $ | $ | |||||||||
| Other | |||||||||||
| Total inventories | $ | $ | |||||||||
The Company records its inventory at the lower of cost or net realizable value.
For the three months ended December 31, 2023 and December 31, 2022, the Company recorded $10,846 and $0 , respectively, for adjustments to reduce inventory to net realizable value. The adjustment for the three months ended December 31, 2023 was due to a significantly lower than anticipated harvest of the Early and Mid-Season crop, as a result of the continued recovery from the impacts of Hurricane Ian. The determination of the write down of inventory to net realizable value as of December 31, 2023 is based on management’s estimates that are inherently uncertain and subject to change. These estimates reflect management’s consideration of a number of factors, including patterns regarding the physical condition of the citrus trees, the results of previous harvests, weather patterns and events, and the use of OTC. As a result, we may experience adjustments to inventory provisions in future periods.
In the three months ended December 31, 2023 and December 31, 2022, the Company received $0 and approximately $1,300 under the Florida Citrus Recovery Block Grant (“CRBG”) program. These federal relief proceeds are included as a reduction to operating expenses in the Condensed Consolidated Statements of Operations.
In December 2022, the Consolidated Appropriations Act was signed into law by the federal government; however, the details of the mechanism and funding of any Hurricane Ian relief still remains unclear and, if available, the extent to which we will be eligible. We intend to take advantage of any such available programs as and when they become available. We are currently working with Florida Citrus Mutual, the industry trade group, and government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.
9
Note 4. Assets Held for Sale
In accordance with its strategy to dispose of non-core and under-performing assets, the following assets have been classified as assets held for sale at December 31, 2023 and September 30, 2023:
| (in thousands) | Carrying Value | ||||||||||
| December 31, 2023 | September 30, 2023 | ||||||||||
| Ranch | $ | $ | |||||||||
| Total assets held for sale | $ | $ | |||||||||
During the three months ended December 31, 2023, the Company consummated the sale of approximately 17,556 acres of land for $79,090 and recognized a of $77,025 , including 17,229 acres of the Alico Ranch to the State of Florida for $77,631 in gross proceeds. A portion of the proceeds from these sales was used to repay the outstanding balance on the Company’s working capital line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”) and the $19,094 Met Life Variable-Rate Term Loans, plus accrued interest.
During the three months ended December 31, 2022, the Company sold approximately 609 acres to various third parties for $3,287 and recognized a of $3,189 (including approximately 85 acres to Mr. John E. Kiernan, the Company’s President and CEO, on October 20, 2022, for $439 ($5,161 per acre)). See Note 13. “Related Party Transactions” for further information.
Note 5. Property and Equipment, Net
Property and equipment, net consists of the following at December 31, 2023 and September 30, 2023:
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Citrus trees | $ | $ | |||||||||
| Equipment and other facilities | |||||||||||
| Buildings and improvements | |||||||||||
| Total depreciable properties | |||||||||||
| Less: accumulated depreciation and depletion | ( | ( | |||||||||
| Net depreciable properties | |||||||||||
| Land and land improvements | |||||||||||
| Property and equipment, net | $ | $ | |||||||||
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Note 6. Accrued Liabilities
Accrued liabilities consist of the following at December 31, 2023 and September 30, 2023:
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Accrued employee wages and benefits | $ | $ | |||||||||
| Accrued interest | |||||||||||
| Accrued insurance | |||||||||||
| Professional fees | |||||||||||
| Accrued dividends | |||||||||||
| Other accrued liabilities | |||||||||||
| Ad valorem taxes | |||||||||||
| Total accrued liabilities | $ | $ | |||||||||
Note 7. Long-Term Debt and Lines of Credit
The following table summarizes long-term debt and related deferred financing costs, net of accumulated amortization at December 31, 2023 and September 30, 2023:
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Long-term debt, net of current portion: | |||||||||||
| Met Fixed-Rate Term Loans | $ | $ | |||||||||
| Met Variable-Rate Term Loans | |||||||||||
| Met Citree Term Loan | |||||||||||
| Pru Loans A & B | |||||||||||
| Deferred financing fees | ( | ( | |||||||||
| Less current portion | |||||||||||
| Long-term debt | $ | $ | |||||||||
The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at December 31, 2023 and September 30, 2023:
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Lines of Credit: | |||||||||||
| RLOC | $ | $ | |||||||||
| WCLC | |||||||||||
| Deferred financing fees | ( | ( | |||||||||
| Lines of Credit | $ | ( | $ | ||||||||
11
Future maturities of long-term debt and lines of credit as of December 31, 2023 are as follows:
| (in thousands) | December 31, 2023 | ||||
| Due within one year | $ | ||||
| Due between one and two years | |||||
| Due between two and three years | |||||
| Due between three and four years | |||||
| Due between four and five years | |||||
| Due beyond five years | |||||
| Total future maturities | $ | ||||
Interest costs expensed and capitalized were as follows:
| (in thousands) | Three Months Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Interest expense | $ | $ | |||||||||||||||||||||
| Interest capitalized | |||||||||||||||||||||||
| Total | $ | $ | |||||||||||||||||||||
Debt
The Company’s credit facilities consist of fixed interest rate term loans originally in the amount of $125,000 (“Met Fixed-Rate Term Loans”) variable interest rate term loans originally in the amount of $57,500 (“Met Variable-Rate Term Loans”), a $25,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and a $70,000 WCLC with Rabo. At December 31, 2023 and September 30, 2023, $25,000 and $25,000 was available under the RLOC, respectively, and $69,752 and $45,030 was available under the WCLC, respectively.
The term loans and RLOC are secured by real property. The security for the term loans and RLOC consists of approximately 38,200 gross acres of citrus groves and originally included 5,800 gross acres of ranch land. In April 2021, the 5,800 gross acres of ranch land was released as security against the term loans and RLOC and only the 38,200 gross acres of citrus groves remain as security for the term loans and RLOC. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.
The Met Fixed-Rate Term Loans bear, which bear interest at 3.85 %, are interest-only with a balloon payment at maturity on November 1, 2029.
The Met Variable-Rate Term Loans are subject to quarterly principal payments of $406 and bear interest at the One Month Term Secured Overnight Financing Rate ("SOFR") plus 175 basis points (the “SOFR spread”). Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. The SOFR spread is subject to adjustment by Met every 2 years beginning May 1, 2023, until maturity. Interest on the term loans is payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 7.56 % per annum and 7.52 % per annum, as of December 31, 2023 and September 30, 2023, respectively and were set to mature on November 1, 2029. On December 26, 2023, the Company repaid the outstanding balance of $19,094 , plus accrued interest, on these loans.
The SOFR spread is subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity on November 1, 2029. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit and is available for funding general corporate purposes. The variable interest rate was 7.56 % per annum and 7.52 % per annum as of December 31, 2023 and September 30, 2023, respectively.
12
The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The WCLC agreement was amended on October 27, 2022, and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. There were no changes to the commitment amount. The rate at September 30, 2023 was SOFR plus 175 basis points. The variable interest rate was 7.11 % per annum and 7.07 % per annum as of December 31, 2023 and September 30, 2023, respectively. The WCLC agreement provides for Rabo to issue up to $2,000 in letters of credit on the Company’s behalf, of which $248 and $248 were issued as of December 31, 2023 and September 30, 2023, respectively.
The WCLC is subject to a quarterly commitment fee on the daily unused availability under the line computed as the commitment amount less the aggregate of the outstanding loans and outstanding letters of credit. The commitment fee is adjusted quarterly based on The Company's debt service coverage ratio for the preceding quarter and can vary from a minimum of 20 basis points to a maximum of 30 basis points. Commitment fees were charged at 20 basis points; except from May 18, 2023 through August 8, 2023, when they were charged at 30 basis points.
These credit facilities noted above are subject to various covenants including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00; (ii) tangible net worth of at least $160,000 increased annually by 10 % of consolidated net income for the preceding years, or $174,628 for the year ended September 30, 2023; (iii) minimum current ratio of 1.50 to 1.00; (iv) debt to total assets ratio not greater than .625 to 1.00, and; (v) solely in the case of the WCLC, a limit on capital expenditures of $30,000 per fiscal year. As of December 31, 2023, the Company was in compliance with all of the financial covenants.
Credit facilities also include a Met Life term loan collateralized by 1,200 gross acres of citrus grove owned by Citree (“Met Citree Loan”). This is a $5,000 credit facility that bears interest at a fixed rate of 5.28 % per annum. Principal and interest payments are made on a quarterly basis. Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. The loan matures in February 2029.
Silver Nip Citrus Debt
There are two fixed-rate term loans, with an original combined balance of $27,550 , which bear interest at 5.35 % per annum (“Pru Loans A & B”). Principal of $290 is payable quarterly, together with accrued interest. The loans are collateralized by 5,700 acres of citrus groves in Collier, Hardee, Highlands and Polk Counties, Florida and mature on June 1, 2029 and June 1, 2033, respectively.
The Pru Loans A & B are subject to an annual financial covenant whereby the consolidated current ratio requirement is 1.00 to 1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of December 31, 2023.
Deferred Financing Costs
Costs incurred to obtain financing are deferred and amortized to “Interest expense” in the consolidated statement of operations over the related financing period using the effective interest method. The Company records debt issuance costs as a direct reduction of the carrying value of the related debt. Financing costs related to the undrawn RLOC are included in "Other non-current assets" in the consolidated balance sheet.
Note 8. Income Taxes
Our effective tax rate for the three months ended December 31, 2023 was a provision of 26.8 %. Such rate differed from the Federal Statutory rate of 21.0% primarily due to state income taxes.
Our effective tax rate for the three months ended December 31, 2022 was a provision of 24.3 %. Such rate differed from the Federal Statutory rate of 21.0% primarily due to state income taxes.
13
Note 9. Segment Information
Segments
Total revenues represent sales to unaffiliated customers, as reported in the Condensed Consolidated Statements of Operations. Goods and services produced by these segments are sold to wholesalers and processors in the United States, who prepare the products for consumption. The Company evaluates the segments’ performance based on direct margins (gross profit) from operations before general and administrative expenses, interest expense, other income (expense) and income taxes, not including nonrecurring gains and losses.
Information by operating segment is as follows:
| (in thousands) | Three Months Ended December 31, | ||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Alico Citrus | $ | $ | |||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Alico Citrus | |||||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||
| Alico Citrus | ( | ( | |||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Total gross profit | $ | ( | $ | ( | |||||||||||||||||||
| Depreciation, depletion and amortization: | |||||||||||||||||||||||
| Alico Citrus | $ | $ | |||||||||||||||||||||
| Land Management and Other Operations | |||||||||||||||||||||||
| Other Depreciation, Depletion and Amortization | |||||||||||||||||||||||
| Total depreciation, depletion and amortization | $ | $ | |||||||||||||||||||||
| (in thousands) | December 31, 2023 | September 30, 2023 | |||||||||
| Assets: | |||||||||||
| Alico Citrus | $ | $ | |||||||||
| Land Management and Other Operations | |||||||||||
| Other Corporate Assets | |||||||||||
| Total Assets | $ | $ | |||||||||
Note 10. Leases
The Company determines whether an arrangement is a lease at inception. The Company’s leases consist of operating lease arrangements for certain office space, tractor leases and IT facilities. When these lease arrangements include lease and non-lease components, the Company accounts for lease components and non-lease components (e.g., common area maintenance) separately based on their relative standalone prices.
14
Any lease arrangements with an initial term of one year or less are not recorded on the Company’s Condensed Consolidated Balance Sheets, and it recognizes lease cost for these lease arrangements on a straight-line basis over the applicable lease term. Many lease arrangements provide the options to exercise one or more renewal terms or to terminate the lease arrangement. When the options are reasonably certain to be exercised, the Company includes these options when it will be reasonably certain to exercise them in the lease term used to establish the right-of-use assets and lease liabilities. Generally, lease agreements do not include an option to purchase the leased asset, residual value guarantees or material restrictive covenants.
As most of our lease arrangements do not provide an implicit interest rate, the Company applies an incremental borrowing rate based on the information available at the commencement date of the lease arrangement to determine the present value of lease payments.
No lease costs associated with finance leases and sale-leaseback transactions occurred and our lease income associated with lessor and sublease arrangements are not material to our Condensed Consolidated Financial Statements.
Our operating leases cost components are reported in our Condensed Consolidated Statements of Operations as follows:
| (in thousands) | Three Months Ended December 31, | |||||||||||||||||||||||||
| Operating lease components | 2023 | 2022 | ||||||||||||||||||||||||
| Operating leases costs recorded in general and administrative expenses | $ | $ | ||||||||||||||||||||||||
The weighted-average remaining lease term and weighted-average discount rate for our operating leases are as follows:
| December 31, 2023 | |||||
| Weighted-average remaining lease term | |||||
| Weighted-average discount rate | % | ||||
Note 11. Stock-based Compensation
Effective January 27, 2015, the Company’s Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”) which provides for up to 1,250 common shares available for issuance to provide a long-term incentive plan for officers, employees, directors and/or consultants to directly link incentives to stockholder value. The 2015 Plan was approved by the Company’s stockholders in February 2015. The Company’s 2015 Plan provides for grants to eligible participants in various forms including restricted shares of the Company’s common stock and stock options. Awards are discretionary and are determined by the Compensation Committee of the Board of Directors. Awards vest based upon service conditions. Non-vested restricted shares generally vest over requisite service periods of to six years from the date of grant.
The Company recognizes stock-based compensation expense for (i) Board of Directors fees (generally paid in treasury stock), and (ii) other awards under the 2015 Plan (paid in restricted stock and stock options). Stock-based compensation expense is recognized in general and administrative expenses in the Condensed Consolidated Statements of Operations.
Stock Compensation – Board of Directors
The Board of Directors can either elect to receive stock compensation or cash for their fees for services provided. Stock-based compensation expense relating to the Board of Directors fees was $138 and $156 for the three months ended December 31, 2023 and 2022, respectively.
Restricted Stock
Stock compensation expense related to the Restricted Stock was $56 and $130 for the three months ended December 31, 2023 and 2022, respectively. There was $320 and $376 of total unrecognized stock compensation costs related to unvested stock compensation for the Restricted Stock grants at December 31, 2023 and September 30, 2023, respectively.
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Restricted Stock Awards
| Restricted Stock Awards | Shares | Weighted- Average Grant Date Fair Value | ||||||||||||
| Outstanding at September 30, 2023 | $ | |||||||||||||
| Granted | ||||||||||||||
| Vested | ||||||||||||||
| Forfeited | ( | |||||||||||||
Outstanding at December 31, 2023 (a) | $ | |||||||||||||
a.The weighted average remaining contractual term is 1.5 years and the aggregate intrinsic value of RSAs expected to vest is $510 .
Stock Option Grants
| Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Vested and outstanding – December 31, 2023 | $ | ||||||||||||||||||||||
Stock compensation expense related to the options of $0 and $18 was recognized for the three months ended December 31, 2023 and December 31, 2022, respectively. At December 31, 2023 and September 30, 2023, there were no unrecognized stock compensation costs related to unvested share-based compensation for the option grants.
Forfeitures of RSAs and stock options were recognized as incurred.
Total stock-based compensation expense for the three months ended December 31, 2023 and 2022, which was recognized in general and administrative expense, was $56 and $130 , respectively.
Note 12. Commitments and Contingencies
Purchase Commitments
The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of December 31, 2023, the Company had $3,735 relating to outstanding commitments for these purchases that will be paid upon delivery of the remaining citrus trees.
Letters of Credit
The Company had outstanding standby letters of credit in the total amount of $248 and $248 at December 31, 2023 and September 30, 2023, respectively, to secure its various contractual obligations.
Legal Proceedings
From time to time, Alico may be involved in litigation relating to claims arising out of its operations in the normal course of business. There are no current legal proceedings to which the Company is a party or of which any of its property is subject that it believes will have a material adverse effect on its financial condition.
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Note 13. Related Party Transactions
Lease Agreement
On January 1, 2022, Mr. Kiernan, the Company’s President and CEO, entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company leased approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022, and ending on January 1, 2025, with a yearly rent of $1,860 (in whole dollars). Additionally, under the terms of the Kiernan Lease Agreement, the Company granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only during the one-year period January 1, 2022, through January 1, 2023, and at a price of $480 ($5,161 per acre), which price is based on an independent appraisal obtained by the Company. On August 26, 2022, Mr. Kiernan exercised his option to purchase the land. Pursuant to the exercise of the option, the Company sold 85 acres to Mr. Kiernan on October 20, 2022 for $439 ($5,161 per acre).
Note 14. Subsequent Events
The Company evaluated subsequent events and transactions that occurred after December 31, 2023, the balance sheet date, up to the date that the unaudited condensed consolidated financial statements were issued and determined there are no additional events to disclose.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes thereto and other information included elsewhere in this Quarterly Report on Form 10-Q, our 2023 Annual Report on Form 10-K, and in our other filings with the SEC. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including, but not limited to, those included our 2023 Annual Report on Form 10-K and other portions of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. In the following discussion and analysis, dollars are in thousands.
Business Overview
Business Description
Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”) generates operating revenues primarily from the sale of our citrus products, providing management services to citrus groves owned by third parties, and grazing and hunting leasing. We operate as two business segments, and all of our operating revenues are generated in the United States. For the three months ended December 31, 2023, we generated operating revenues of $13,985, loss from operations of $17,527, and net income attributable to common stockholders of $42,945. Net cash used in operating activities was $13,169 for the three months ended December 31, 2023.
Business Segments
Operating segments are defined in the criteria established under the Financial Accounting Standards Board – Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by our chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. Our CODM assesses performance and allocates resources based on its operating segments.
Our two segments are as follows:
•Alico Citrus includes activities related to planting, owning, cultivating and/or managing citrus groves to produce fruit for sale to fresh and processed citrus markets, including activities related to the purchase and resale of fruit and value-added services, which include contracting for the harvesting, marketing and hauling of citrus; and
•Land Management and Other Operations includes activities related to native plant sales, grazing and hunting leasing, management and/or conservation of unimproved native pastureland and activities related to rock mining royalties and other insignificant lines of business. Also included are activities related to owning and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.
For the three months ended December 31, 2023 and 2022, the Alico Citrus segment generated 97.2% of our consolidated revenues and the Land Management and Other Operations segment generated 2.8% of our consolidated revenues.
Recent Developments
Florida Forever Program Land Sale
On December 21, 2023, the sale of 17,229 acres of the Alico Ranch to the State of Florida was consummated and we received gross proceeds of $77,631 (the “Sale”).
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Debt Retirement
On December 26, 2023. the proceeds from the Sale were used to repay our Working Capital Line of Credit (“WCLC”) and retire $19,094 of Variable Rate Term Debt and will retain the balance of the proceeds for general corporate purposes. See Note 4. “Assets Held for Sale” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.
Grove Management Agreement
On October 30, 2023, we entered into a Citrus Grove Management Agreement (the “Grove Owners Agreement”) with an unaffiliated group of third parties to provide citrus grove caretaking and harvest and haul management services for approximately 3,300 acres owned by such third parties. Under the terms of the Grove Owners Agreement, we are reimbursed by the third parties for all costs incurred related to providing these services and receive a management fee based on acres covered under this agreement. The Grove Owners Agreement may be terminated with written notice provided at least 60 days prior to the commencement of the next fiscal year, occurring subsequent to September 30, 2024, and with shorter notice under certain conditions.
Citrus Research and Field Trial Foundation
In January 2024, we received $1,790 from the Citrus Research and Field Trial Foundation (“CRAFT”) of grower’s support payments in connection with our use of Oxytetracycline (“OTC”), to combat the effect of “greening” in our citrus trees.
19
Condensed Consolidated Results of Operations
The following discussion provides an analysis of our results of operations for the three months ended December 31, 2023, as compared to 2022:
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
| Operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| Alico Citrus | $ | 13,592 | $ | 10,268 | $ | 3,324 | 32.4 | % | |||||||||||||||||||||||||||||||||||||||
| Land Management and Other Operations | 393 | 320 | 73 | 22.8 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total operating revenues | 13,985 | 10,588 | 3,397 | 32.1 | % | ||||||||||||||||||||||||||||||||||||||||||
| Gross profit: | |||||||||||||||||||||||||||||||||||||||||||||||
| Alico Citrus | (14,515) | (4,027) | (10,488) | (260.4) | % | ||||||||||||||||||||||||||||||||||||||||||
| Land Management and Other Operations | 260 | 226 | 34 | 15.0 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total gross profit | (14,255) | (3,801) | (10,454) | (275.0) | % | ||||||||||||||||||||||||||||||||||||||||||
| General and administrative expenses | 3,272 | 2,509 | 763 | 30.4 | % | ||||||||||||||||||||||||||||||||||||||||||
| Loss from operations | (17,527) | (6,310) | (11,217) | (177.8) | % | ||||||||||||||||||||||||||||||||||||||||||
| Total other income, net | 75,515 | 2,041 | 73,474 | NM | |||||||||||||||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 57,988 | (4,269) | 62,257 | NM | |||||||||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | 15,552 | (1,083) | 16,635 | NM | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 42,436 | (3,186) | 45,622 | NM | |||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to noncontrolling interests | 509 | 36 | 473 | NM | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to Alico, Inc. common stockholders | $ | 42,945 | $ | (3,150) | $ | 46,095 | NM | ||||||||||||||||||||||||||||||||||||||||
NM = Not meaningful
Operating Revenue
The increase in revenue for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to a 24.9% increase in pound solids, driven by a 30.1% increase in processed box production, as we begin to recover from the effects of Hurricane Ian.
Operating Expenses
The increase in operating expenses for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily driven by a $10,846 adjustment to reduce inventory to its net realizable value, as a result of lower than anticipated box production from our Early and Mid-Season crop, due to the impacts of Hurricane Ian; as well as increased harvest and haul costs driven by our increased box production and approximately $1,300 we received under the CRBG program in the quarter ended December 31, 2022, which was the last installment of this grant program for the 2017 storm, Hurricane Irma. See Note 3. “Inventories” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.
General and Administrative Expense
20
General and administrative expense for the three months ended December 31, 2023 was $3,272, compared to $2,509 for the three months ended December 31, 2022. The increase was primarily due to an increase in salaries and wages of $607 and consulting fees principally related to real estate entitlement activities of $317.
Other Income (expense), net
Other income (expense), net for the three months ended December 31, 2023 and 2022, was $75,515 and $2,041, respectively. The increase to other income (expense), net, is primarily due to the sale of 17,229 acres of the Alico Ranch to the State of Florida.
Income Taxes
The income tax provision (benefit) was $15,552 and $(1,083) for the three months ended December 31, 2023 and 2022, respectively. The income tax provision for the three months ended December 31, 2023 was principally due to the sale of 17,229 acres of the Alico Ranch to the State of Florida, while the income tax provision for the three months ended December 31, 2022 was driven by the pre-tax loss generated for the period.
The following discussion provides an analysis of our operating segments:
Alico Citrus
(in thousands, except per box and per pound solids data) | ||||||||||||||||||||||||||
| Three Months Ended December 31, | Change | |||||||||||||||||||||||||
| 2023 | 2022 | Unit | % | |||||||||||||||||||||||
| Operating Revenues: | ||||||||||||||||||||||||||
| Early and Mid-Season | $ | 12,395 | $ | 9,586 | $ | 2,809 | 29.3 | % | ||||||||||||||||||
| Fresh Fruit and Other | 506 | 493 | 13 | 2.6 | % | |||||||||||||||||||||
| Grove Management Services | 691 | 189 | 502 | 265.6 | % | |||||||||||||||||||||
| Total | $ | 13,592 | $ | 10,268 | $ | 3,324 | 32.4 | % | ||||||||||||||||||
| Boxes Harvested: | ||||||||||||||||||||||||||
| Early and Mid-Season | 1,047 | 805 | 242 | 30.1 | % | |||||||||||||||||||||
| Total Processed | 1,047 | 805 | 242 | 30.1 | % | |||||||||||||||||||||
| Fresh Fruit | 31 | 36 | (5) | (13.9) | % | |||||||||||||||||||||
| Total | 1,078 | 841 | 237 | 28.2 | % | |||||||||||||||||||||
| Pound Solids Produced: | ||||||||||||||||||||||||||
| Early and Mid-Season | 4,666 | 3,737 | 929 | 24.9 | % | |||||||||||||||||||||
| Total | 4,666 | 3,737 | 929 | 24.9 | % | |||||||||||||||||||||
| Pound Solids per Box: | ||||||||||||||||||||||||||
| Early and Mid-Season | 4.46 | 4.64 | (0.18) | (4.0) | % | |||||||||||||||||||||
| Price per Pound Solids: | ||||||||||||||||||||||||||
| Early and Mid-Season | $ | 2.66 | $ | 2.57 | $ | 0.09 | 3.4 | % | ||||||||||||||||||
| Price per Box: | ||||||||||||||||||||||||||
| Fresh Fruit | $ | 16.32 | $ | 12.44 | $ | 3.88 | 31.2 | % | ||||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||||||
| Cost of Sales | $ | 23,602 | $ | 12,486 | $ | 11,116 | 89.0 | % | ||||||||||||||||||
| Harvesting and Hauling | 4,076 | 2,979 | 1,097 | 36.8 | % | |||||||||||||||||||||
| Fresh Fruit and Other | 61 | (1,237) | 1,298 | (104.9) | % | |||||||||||||||||||||
| Grove Management Services | 368 | 67 | 301 | NM | ||||||||||||||||||||||
| Total | $ | 28,107 | $ | 14,295 | $ | 13,812 | 96.6 | % | ||||||||||||||||||
NM = Not meaningful
21
Components of Results of Operations for Alico Citrus Segment
We sell our Early and Mid-Season and Valencia oranges to orange juice processors. The processors generally buy the citrus crop on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. Our Fresh Fruit revenue is derived from sales to packing houses that purchase the citrus on a per box basis. We also provide citrus grove caretaking and harvest and haul management services to third parties from which revenues are recorded as Grove Management Services, including a management fee. Other revenues consist of the purchase and reselling of fruit.
Operating expenses for our Alico Citrus segment consist primarily of Cost of Sales, Harvesting and Hauling costs and Grove Management Service costs. Cost of Sales represents the cost of maintaining the citrus groves for the preceding calendar year and does not vary in relation to production. Harvesting and Hauling costs represent the costs of bringing citrus product to processors and vary based upon the number of boxes produced. Grove Management Services costs include those costs associated with citrus grove caretaking and harvest and haul management services provided to third parties. Other expenses include the period costs of third-party grove caretaking and the purchase and reselling of third-party fruit.
Comparison of the Three Months Ended December 31, 2023 and 2022 for the Alico Citrus Segment
The increase in revenue for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, was primarily due to a 24.9% increase in pound solids, driven by a 30.1% increase in processed box production, as we began to recover from the effects of Hurricane Ian. Our fruit production for the three months ended December 31, 2022 was adversely impacted by the fruit drop caused as a result of the impact of Hurricane Ian in September 2022. Although Hurricane Ian initially impacted the fiscal year 2023 harvest, we expect it may take another season, or more, for the groves to recover to pre-hurricane production levels.
In addition, there was an increase in the price per pound solid of 3.4% for the three months ended December 31, 2023, compared to the same period in the prior year, as a result of more favorable pricing in one of our contracts with Tropicana.
For the three months ended December 31, 2023, we also recorded an increase in revenue from sales of Fresh Fruit, primarily due to an increase in pricing per box of 31.2%, partially offset by a decrease in boxes produced of 13.9%, as compared to the three months ended December 31, 2022.
We recorded $691 and $189 of revenue from the Grove Owners relating to Grove Management Services for the three months ended December 31, 2023 and 2022, respectively. The increase in grove management services revenue was principally due to the signing of the new Grove Owners Agreement in October 2023.
The 89.0% increase in Cost of Sales, as compared to the same period in the prior year, was principally due to an adjustment of $10,846 to reduce inventory to its net realizable value as a result of the continued recovery from the impacts of Hurricane Ian, increased harvest and haul costs driven by our increased box production and approximately $1,300 we received under the CRBG program in the quarter ended December 31, 2022, which was the last installment of this grant program for the 2017 storm, See Note 3. “Inventories” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.
For the three months ended December 31, 2023, we also recorded an increase in Harvesting and Hauling expenses per box, which is directly related to a 30.1% increase in boxes harvested and an increase in the cost per box of harvesting labor costs, when compared to the similar period in the prior year.
We recorded $368 and $67 of operating expenses relating to grove management services for the Grove Owners for the three months ended December 31, 2023 and 2022, respectively. The increase in grove management services expenses was principally due to the signing of the new Grove Owners Agreement in October 2023.
The credit amounts shown in “Fresh Fruit and Other” in operating expenses above primarily represent federal relief proceeds of approximately $1,300 received under the CRBG program in the quarter ended December 31, 2022.
22
Land Management and Other Operations
The table below presents key operating measures for the three months ended December 31, 2023 and 2022 for the Land Management and Other Operations segment:
| (in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Change | ||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | $ | % | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue From: | |||||||||||||||||||||||||||||||||||||||||||||||
| Land and Other Leasing | $ | 314 | $ | 281 | $ | 33 | 11.7 | % | |||||||||||||||||||||||||||||||||||||||
| Other | 79 | 39 | 40 | 102.6 | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 393 | $ | 320 | $ | 73 | 22.8 | % | |||||||||||||||||||||||||||||||||||||||
| Operating Expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Land and Other Leasing | $ | 132 | $ | 93 | $ | 39 | 41.9 | % | |||||||||||||||||||||||||||||||||||||||
| Other | 1 | 1 | — | — | % | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 133 | $ | 94 | $ | 39 | 41.5 | % | |||||||||||||||||||||||||||||||||||||||
Components of Results of Operations for Land Management and Other Operations Segment
Land and Other Leasing includes lease income from leases for grazing rights, hunting leases, a farm lease, a lease to a third party of an aggregate mine, leases of oil extraction rights to third parties, and other miscellaneous income.
Land and Other Leasing operating expenses includes real estate, property taxes, general and administrative expenses including salaries, benefits and legal.
Comparison of the Three Months Ended December 31, 2023 and 2022 for the Land Management and Other Operations Segment
The increase in revenues from Land Management and Other Operations for the three months ended December 31, 2023, as compared to the same period in the prior year, was primarily due to the signing of new farming leases.
The increase in operating expenses from Land Management and Other Operations for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to an increase in property taxes.
Seasonality
We are primarily engaged in the production of fruit for sale to citrus markets, which is of a seasonal nature, and subject to the influence of natural phenomena and wide price fluctuations. Historically, the second and third quarters of our fiscal year produce most of our annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. Because of the seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.
23
Liquidity and Capital Resources
A comparative balance sheet summary is presented in the following table:
| (in thousands) | December 31, 2023 | September 30, 2023 | Change | ||||||||||||||
| Cash | $ | 18,632 | $ | 1,062 | $ | 17,570 | |||||||||||
| Total current assets | $ | 71,817 | $ | 58,805 | $ | 13,012 | |||||||||||
| Total current liabilities | $ | 28,540 | $ | 15,065 | $ | 13,475 | |||||||||||
| Working capital | $ | 43,277 | $ | 43,740 | $ | (463) | |||||||||||
| Total assets | $ | 441,209 | $ | 428,353 | $ | 12,856 | |||||||||||
| Principal amount of term loans and lines of credit | $ | 85,215 | $ | 129,319 | $ | (44,104) | |||||||||||
| Current ratio | 2.52 to 1 | 3.90 to 1 | |||||||||||||||
| Debt ratio | 0.19 to 1 | 0.30 to 1 | |||||||||||||||
Sources and Uses of Liquidity and Capital
Our business has historically generated full fiscal year positive net cash flows from operating activities, although the net cash flow in the first quarter of each fiscal year has been negative because of seasonality and the associated need to expend cash in advance of generating revenues from the harvesting season. Sources of cash primarily include cash flows from operations, sales of under-performing land and other assets, amounts available under our credit facilities, and access to capital markets. Access to additional borrowings under revolving lines of credit is subject to the satisfaction of customary borrowing conditions. As a public company, we may have access to other sources of capital. However, access to, and availability of, financing on acceptable terms in the future will be affected by many factors, including (i) financial condition, prospects, and credit rating; (ii) liquidity of the overall capital markets; and (iii) the state of the economy. There can be no assurance that we will continue to have access to the capital markets on acceptable terms, or at all.
The principal uses of cash that affect our liquidity position include the following: operating expenses including employee costs, the cost of maintaining the citrus groves, harvesting and hauling of citrus products, capital expenditures, stock repurchases, dividends, debt service costs including interest and principal payments on term loans and other credit facilities and acquisitions.
Management believes that a combination of cash-on-hand, cash generated from operations, and asset sales and availability under our lines of credit will provide sufficient liquidity to service the principal and interest payments on our indebtedness and will satisfy working capital requirements and capital expenditures for at least the next twelve months and over the long term. However, this is subject, to a certain extent, on general economic, financial, competitive, regulatory and other factors that are beyond our control.
Borrowing Facilities and Long-term Debt
We have a $70,000 working capital line of credit and a $25,000 revolving line of credit, of which $69,752 and $25,000 was available for general use as of December 31, 2023 (see Note 7. “Long-Term Debt and Lines of Credit” to the accompanying Condensed Consolidated Financial Statements). We may utilize the available cash to pay down indebtedness, pursue citrus grove acquisitions, conduct share repurchases, and possibly reinstate increased dividends. If we choose to pursue significant growth and other corporate opportunities, these actions could have a material adverse impact on its cash balances and may require us to finance such activities by drawing down on our lines of credit or by obtaining additional debt or equity financing. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Any inability to obtain additional financing could adversely impact our ability to pursue different growth and other corporate opportunities.
The level of debt could have important consequences on our business, including, but not limited to, increasing our vulnerability to general adverse economic and industry conditions, limiting the availability of cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements, and limiting flexibility in planning for, or reacting to, changes in its business and industry.
24
Our credit facilities are subject to various debt covenants including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00; (ii) tangible net worth of at least $160,000 increased annually by 10% of consolidated net income for the preceding years, or $174,628 applicable for the year ended September 30, 2023; (iii) minimum current ratio of 1.50 to 1.00; (iv) debt to total assets ratio not greater than .625 to 1.00; and (v) solely in the case of the WCLC, a limit on capital expenditures of $30,000 per fiscal year. As of December 31, 2023, the Company was in compliance with all of the financial covenants.
Cash Flows
Cash and restricted cash increased from $269 as of December 31, 2022, to $21,262 as of December 31, 2023. The components of these changes are discussed below.
| (in thousands) | Three Months Ended December 31, | Change | |||||||||||||||
| 2023 | 2022 | ||||||||||||||||
| Net Cash used in operating activities | $ | (13,169) | $ | (9,665) | $ | (3,504) | |||||||||||
| Net Cash provided by (used in) investing activities | 75,225 | (496) | 75,721 | ||||||||||||||
| Net Cash (used in) provided by financing activities | (44,486) | 9,565 | (54,051) | ||||||||||||||
| Net increase (decrease) in cash and restricted cash | $ | 17,570 | $ | (596) | $ | 18,166 | |||||||||||
Net Cash Provided By (Used In) Operating Activities
The $3,504 increase in Net Cash used in operating activities was principally due to increased interest expense associated with borrowings under our WCLC and the timing of interest payments, in connection with the early repayment of debt, and other payments, for the three months ended December 31, 2023, as compared to the same period for the prior year.
Net Cash Provided By (Used In) Investing Activities
The $75,721 increase in Net Cash provided by (used in) investing activities for the three months ended December 31, 2023, compared to the three months ended December 31, 2022, is primarily due to proceeds from the sale of 17,229 acres of the Alico Ranch.
Net Cash (Used In) Provided By Financing Activities
The increase of $54,051 in Net Cash (used in) provided by financing activities for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to the repayment of the WCLC and the $19,094 Met Life Variable-Rate Term debt with the proceeds from the sale of 17,229 acres of the Alico Ranch, as compared to an increase in net borrowings under WCLC in the same period in the prior year.
We had $0 and $19,045 outstanding on our revolving lines of credit as of December 31, 2023 and December 31, 2022, respectively.
The WCLC line of credit agreement provides for Rabo Agrifinance, Inc. to issue up to $2,000 in letters of credit on our behalf. As of December 31, 2023, there was $248 in outstanding letters of credit, which correspondingly reduced our availability under the WCLC.
Contractual Obligations
Our material cash requirements from known contractual and other obligations are described in the accompanying notes to the financial statements within Item 1 of Part I of this Quarterly Report. These include principal and interest payments on long-term debt as described in Note 7. “Long-Term Debt and Lines of Credit”, operating leases as described in Note 10. “Leases” and purchase commitments as described in Note 12. “Commitments and Contingencies” to the Condensed Consolidated Financial Statements included in this Quarterly Report.
25
Critical Accounting Policies and Estimates
The discussion and analysis of the Company’s financial condition and results of operations is based upon its unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires the Company to make certain estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, the Company evaluates the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
See Note 1. “Description of Business and Basis of Presentation” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for a detailed description of recent accounting pronouncements. There have been no material changes to the Company’s Critical Accounting Policies and Estimates from those reflected in the Company’s 2023 Annual Report on Form 10-K.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk - We are subject to interest rate risk from the utilization of financial instruments such as term loan debt and other borrowings. Our primary long-term obligations are fixed rate debts subject to fair value risk due to interest rate fluctuations. See Note 1. “Description of Business and Basis of Presentation” to these Condensed Consolidated Financial Statements.
We are also subject to interest rate risk on our variable rate debt; however, at December 31, 2023, we had no variable-rate debt outstanding.
In the three months ended December 31, 2023, there were no other material changes to our quantitative and qualitative disclosures about market risk from those discussed in Part II, Item 7A in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on December 6, 2023.
Item 4. Controls and Procedures
Limitations on effectiveness of controls and procedures
In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of December 31, 2023, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2023 there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
27
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we have been, and may in the future be involved in, litigation relating to claims arising out of our operations in the normal course of business. There are no current legal proceedings to which we are a party or of which any of our property is subject that we believe will have a material adverse effect on our financial position, results of operations or cash flows. See Note 12. Commitments and Contingencies to the Condensed Consolidated Financial Statements included in this Quarterly Report for further information.
Item 1A. Risk Factors
There have been no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, as filed with the SEC on December 6, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of unregistered equity securities during the period covered by this Quarterly Report.
There were no issuer repurchases of the Company’s equity securities during the period covered by this Quarterly Report.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not Applicable.
Item 5. Other Information
a)None.
b)None.
c)During the three months ended December 31, 2023, no director or officer of the Company adopted terminated
28
Item 6. Exhibits
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | Filed/Furnished Herewith | ||||||||||||||
| 3.1 | 10-K | 00-000261 | 3.1 | 12/11/2017 | ||||||||||||||||
| 3.2 | S-8 | 333-130575 | 4.2 | 12/21/2005 | ||||||||||||||||
| 3.3 | S-8 | 333-130575 | 4.3 | 12/21/2005 | ||||||||||||||||
| 3.4 | S-8 | 333-130575 | 4.4 | 12/21/2005 | ||||||||||||||||
| 3.5 | 8-K | 000-00261 | 3.6 | 1/15/2021 | ||||||||||||||||
| 10.1 | 10-K | 000-00261 | 10.39 | 12/11/2017 | ||||||||||||||||
| 10.2 | 8-K | 000-00261 | 10.1 | 4/5/2022 | ||||||||||||||||
| 10.3 | 8-K | 000-00261 | 10.2 | 4/5/2022 | ||||||||||||||||
| 10.4 | 8-K | 000-00261 | 10.1 | 12/19/2023 | ||||||||||||||||
| 31.1 | * | |||||||||||||||||||
| 31.2 | * | |||||||||||||||||||
| 32.1 | ** | |||||||||||||||||||
| 32.2 | ** | |||||||||||||||||||
| 101.INS | Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | * | ||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | * | ||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | * | ||||||||||||||||||
29
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | * | ||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | * | ||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | * | ||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). | * | ||||||||||||||||||
| * | Filed herewith. | |||||||||||||||||||
| ** | Furnished herewith. | |||||||||||||||||||
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ALICO, INC. (Registrant) | ||||||||
| February 7, 2024 | By: | /s/ John E. Kiernan | ||||||
| John E. Kiernan | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
| February 7, 2024 | By: | /s/ Bradley Heine | ||||||
| Bradley Heine | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
31
Exhibit 31.1
CERTIFICATIONS
I, John E. Kiernan, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Alico, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 7, 2024 | By: | /s/ John E. Kiernan | ||||||
| John E. Kiernan | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 31.2
CERTIFICATION
I, Bradley Heine, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Alico, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: February 7, 2024 | By: | /s/ Bradley Heine | ||||||
| Bradley Heine | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||
Exhibit 32.1
Certification
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the Quarterly Report of Alico, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2023 as filed with the Securities and Exchange Commission on February 7, 2024, (the “Form 10-Q”), I, John E. Kiernan, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 7, 2024 | By: | /s/ John E. Kiernan | ||||||
| John E. Kiernan | ||||||||
| President and Chief Executive Officer | ||||||||
| (Principal Executive Officer) | ||||||||
Exhibit 32.2
Certification
Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
In connection with the Quarterly Report of Alico, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on February 7, 2024, (the “Form 10-Q”), I, Bradley Heine, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 7, 2024 | By: | /s/ Bradley Heine | ||||||
| Bradley Heine | ||||||||
| Chief Financial Officer | ||||||||
| (Principal Financial Officer and Principal Accounting Officer) | ||||||||