Alico, Inc 10-Q for FY2020 Q2

Alico, Inc. (ALCO)

10-Q 2020-05-11 For: 2020-03-31

Added on April 06, 2026

About this 10-Q

Alico, Inc filed this 10-Q on May 11, 2020, covering the quarter ended March 31, 2020 (FY2020 Q2).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $50.52M; up 4.1% from $48.52M a year earlier
Net income: $3.57M; down 52.7% from net income of $7.55M a year earlier
Diluted EPS: $0.48; down 52.5% from $1.01 a year earlier

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☑	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the Quarterly Period Ended	March 31, 2020

	or



☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period
	from____________________	to_________________________



Florida			59-0906081
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
10070 Daniels Interstate Court
10070 Daniels Interstate Court
Suite 100	Fort Myers	FL	33913
(Address of principal executive offices)			(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	ALCO	Nasdaq Global Select Market



Large Accelerated Filer	☐	Accelerated Filer	☑
Non-accelerated filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐



(239)	226-2000
(Registrant’s telephone number, including area code)



Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements	1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36
Part II - OTHER INFORMATION
Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3. Defaults Upon Senior Securities	38
Item 4. Mine Safety Disclosures	38
Item 5. Other Information	39
Item 6. Exhibits	39
Signatures	40



	Page
Condensed Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and September 30, 2019	1
Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2020 and 2019 (Unaudited)	2
Condensed Consolidated Statements of Changes in Equity for the three and six months ended March 31, 2020 and 2019 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2020 and 2019 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6



ALICO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)


	March 31,			September 30,
	2020			2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	80,407		$	18,630
Accounts receivable, net	4,385			713
Inventories	28,503			40,143
Assets held for sale	1,366			1,442
Prepaid expenses and other current assets	1,521			1,049
Total current assets	116,182			61,977

Restricted cash	3,671			5,208
Property and equipment, net	347,816			345,648
Goodwill	2,246			2,246
Other non-current assets	2,369			2,309
Total assets	$	472,284		$	417,388

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,154		$	4,163
Accrued liabilities	4,943			7,769
Long-term debt, current portion	5,130			5,338
Deferred retirement obligations	5,226			5,226
Income taxes payable	2,660			5,536
Other current liabilities	554			919
Total current liabilities	23,667			28,951

Long-term debt:
Principal amount, net of current portion	148,499			158,111
Less: deferred financing costs, net	(1,240		)	(1,369		)
Long-term debt less current portion and deferred financing costs, net	147,259			156,742
Lines of credit	66,714			—
Deferred income tax liabilities, net	31,298			32,125
Other liabilities	278			172
Total liabilities	269,216			217,990
Commitments and Contingencies (Note 12)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued	—			—
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and 7,479,671 and 7,476,513 shares outstanding at March 31, 2020 and September 30, 2019, respectively	8,416			8,416
Additional paid in capital	20,174			19,781
Treasury stock, at cost, 936,474 and 939,632 shares held at March 31, 2020 and September 30, 2019, respectively	(31,784		)	(31,943		)
Retained earnings	201,065			198,049
Total Alico stockholders' equity	197,871			194,303
Noncontrolling interest	5,197			5,095
Total stockholders' equity	203,068			199,398
Total liabilities and stockholders' equity	$	472,284		$	417,388



ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands, except per share amounts)

	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
Operating revenues:
Alico Citrus	$	49,801		$	47,823		$	59,976		$	61,720
Water Resources and Other Operations	714			698			1,544			1,580
Total operating revenues	50,515			48,521			61,520			63,300
Operating expenses:
Alico Citrus	43,518			31,582			48,358			42,456
Water Resources and Other Operations	380			625			931			1,348
Total operating expenses	43,898			32,207			49,289			43,804
Gross profit	6,617			16,314			12,231			19,496
General and administrative expenses	2,953			4,654			5,713			8,104
Income from operations	3,664			11,660			6,518			11,392
Other income (expense), net:
Interest expense	(1,452		)	(1,963		)	(2,996		)	(3,880		)
Gain on sale of real estate, property and equipment and assets held for sale	2,838			1			2,863			23
Change in fair value of derivatives	—			(33		)	—			(989		)
Other income (expense)	12			23			(64		)	10
Total other income (expense), net	1,398			(1,972		)	(197		)	(4,836		)
Income before income taxes	5,062			9,688			6,321			6,556
Income tax provision	1,496			2,228			1,857			1,599
Net income	3,566			7,460			4,464			4,957
Net loss (income) attributable to noncontrolling interests	5			87			(102		)	123
Net income attributable to Alico, Inc. common stockholders	$	3,571		$	7,547		$	4,362		$	5,080
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic	$	0.48		$	1.01		$	0.58		$	0.68
Diluted	$	0.48		$	1.01		$	0.58		$	0.68
Weighted-average number of common shares outstanding:
Basic	7,480			7,463			7,478			7,471
Diluted	7,496			7,469			7,494			7,506

Cash dividends declared per common share	$	0.09		$	0.06		$	0.18		$	0.12



ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(in thousands)

For the Three Months Ended March 31, 2020

				Additional									Total			Non-
	Common stock			Paid In			Treasury			Retained			Alico, Inc.			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Equity			Interest			Equity
Balance at December 31, 2019	8,416	$	8,416	$	19,857		$	(31,956	)	$	198,169		$	194,486		$	5,202		$	199,688
Net income (loss)	—	—		—			—			3,571			3,571			(5		)	3,566
Dividends ($0.09/share)	—	—		—			—			(675		)	(675		)	—			(675		)
Stock-based compensation:
Directors	—	—		(10		)	172			—			162			—			162
Executives	—	—		327			—			—			327			—			327
Balance at March 31, 2020	8,416	$	8,416	$	20,174		$	(31,784	)	$	201,065		$	197,871		$	5,197		$	203,068



For the Six Months Ended March 31, 2020

				Additional									Total			Non-
	Common stock			Paid In			Treasury			Retained			Alico, Inc.			controlling			Total
	Shares	Amount		Capital			Stock			Earnings			Equity			Interest			Equity
Balance at September 30, 2019	8,416	$	8,416	$	19,781		$	(31,943	)	$	198,049		$	194,303		$	5,095		$	199,398
Net income	—	—		—			—			4,362			4,362			102			4,464
Dividends ($0.18/share)	—	—		—			—			(1,346		)	(1,346		)	—			(1,346		)
Treasury stock purchases	—	—		—			(238		)	—			(238		)	—			(238		)
Stock-based compensation:
Directors	—	—		(42		)	397			—			355			—			355
Executives	—	—		435			—			—			435			—			435
Balance at March 31, 2020	8,416	$	8,416	$	20,174		$	(31,784	)	$	201,065		$	197,871		$	5,197		$	203,068



(in thousands)

Operating lease components	Classification	March 31, 2020
Right-of-use assets	Other non-current assets	$	329
Current lease liabilities	Other current liabilities	$	167
Non-current lease liabilities	Other liabilities	$	252



(in thousands)
		Three Months Ended		Six Months Ended
Operating lease components	Classification	March 31, 2020		March 31, 2020
Operating lease costs	General and administrative expenses	$	52	$	104
Operating lease right-of-use asset impairment	Other expense	$	—	$	87



(in thousands)

2020	$	82
2021	169
2022	175
2023	15
Total noncancelable future lease obligations	$	441
Less: Interest	(22		)
Present value of lease obligations	$	419



	March 31, 2020
Weighted-average remaining lease term	2.58	years
Weighted-average discount rate	3.89	%



(in thousands)	March 31,			September 30,
	2020			2019
Citrus trees	$	287,238		$	281,149
Equipment and other facilities	56,216			54,622
Buildings and improvements	8,189			8,224
Total depreciable properties	351,643			343,995
Less: accumulated depreciation and depletion	(109,662		)	(104,169		)
Net depreciable properties	241,981			239,826
Land and land improvements	105,835			105,822
Property and equipment, net	$	347,816		$	345,648



	March 31, 2020				September 30, 2019
(in thousands)	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	86,563	$	672	$	89,688	$	724
Met Variable-Rate Term Loans	42,406		309		43,844		334
Met Citree Term Loan	4,638		38		4,750		40
Pru Loans A & B	15,677		221		16,257		224
Pru Loan E	4,345		—		4,455		9
Pru Loan F	—		—		4,455		38
	153,629		1,240		163,449		1,369
Less current portion	5,130		—		5,338		—
Long-term debt	$	148,499	$	1,240	$	158,111	$	1,369



(in thousands)

Due within one year	$	5,130
Due between one and two years	61,374
Due between two and three years	10,535
Due between three and four years	10,535
Due between four and five years	10,535
Due beyond five years	122,234

Total future maturities	$	220,343



Expected Volatility	26.0	%
Expected Term (in years)	3.61
Risk Free Rate	1.60	%



Cash flow information related to leases consists of the following:
(in thousands)	Six Months Ended
	March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	101

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	511



(in thousands)	Carrying Value
	March 31,		September 30,
	2020		2019
East Ranch	$	1,366	$	1,442
Total Assets Held for Sale	$	1,366	$	1,442



(in thousands except per share amounts)
	Three Months Ended March 31,				Six Months Ended March 31,
	2020		2019		2020		2019

Net income attributable to Alico, Inc. common stockholders	$	3,571	$	7,547	$	4,362	$	5,080

Weighted average number of common shares outstanding - basic	7,480		7,463		7,478		7,471
Dilutive effect of equity-based awards	16		6		16		35
Weighted average number of common shares outstanding - diluted	7,496		7,469		7,494		7,506

Net income per common shares attributable to Alico, Inc. common stockholders:
Basic	$	0.48	$	1.01	$	0.58	$	0.68
Diluted	$	0.48	$	1.01	$	0.58	$	0.68



Expected Volatility	25.0	%
Expected Term (in years)	1.50
Risk Free Rate	2.52	%



Expected Volatility	30.0	%
Expected Term (in years)	4.09
Risk Free Rate	2.95	%



(in thousands, except share amounts)
	Shares		Cost
Balance as of September 30, 2019	939,632		$	31,943
Purchased	7,000		238
Issued to employees and directors	(10,158	)	(397		)
Balance as of March 31, 2020	936,474		$	31,784


•	Alico Citrus includes activities related to planting, owning, cultivating and/or managing citrus groves in order 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



(in thousands)
	Three Months Ended March 31,					Change					Six Months Ended March 31,						Change
	2020		2019			$			%		2020			2019			$			%
Operating revenues:
Alico Citrus	$	49,801	$	47,823		$	1,978		4.1	%	$	59,976		$	61,720		$	(1,744	)	(2.8	)%
Water Resources and Other Operations	714		698			16			2.3	%	1,544			1,580			(36		)	(2.3	)%
Total operating revenues	50,515		48,521			1,994			4.1	%	61,520			63,300			(1,780		)	(2.8	)%

Gross profit:
Alico Citrus	6,283		16,241			(9,958		)	(61.3	)%	11,618			19,264			(7,646		)	(39.7	)%
Water Resources and Other Operations	334		73			261			NM		613			232			381			164.2	%
Total gross profit	6,617		16,314			(9,697		)	(59.4	)%	12,231			19,496			(7,265		)	(37.3	)%

General and administrative expenses	2,953		4,654			(1,701		)	(36.5	)%	5,713			8,104			(2,391		)	(29.5	)%
Income from operations	3,664		11,660			(7,996		)	(68.6	)%	6,518			11,392			(4,874		)	(42.8	)%
Total other income (expense), net	1,398		(1,972		)	3,370			NM		(197		)	(4,836		)	4,639			(95.9	)%
Income before income taxes	5,062		9,688			(4,626		)	(47.7	)%	6,321			6,556			(235		)	(3.6	)%
Income tax provision	1,496		2,228			(732		)	(32.9	)%	1,857			1,599			258			16.1	%
Net income	3,566		7,460			(3,894		)	(52.2	)%	4,464			4,957			(493		)	(9.9	)%
Net loss (income) attributable to noncontrolling interests	5		87			(82		)	(94.3	)%	(102		)	123			(225		)	NM
Net income attributable to Alico, Inc. common stockholders	$	3,571	$	7,547		$	(3,976	)	(52.7	)%	$	4,362		$	5,080		$	(718	)	(14.1	)%



(in thousands, except per box and per pound solids data)

	Three Months Ended									Six Months Ended
	March 31,				Change					March 31,					Change
	2020		2019		Unit			%		2020			2019		Unit			%
Operating Revenues:
Early and Mid-Season	$	22,237	$	27,929	$	(5,692	)	(20.4	)%	$	31,303		$	39,574	$	(8,271	)	(20.9	)%
Valencias	25,810		18,746		7,064			37.7	%	25,810			18,746		7,064			37.7	%
Fresh Fruit	802		671		131			19.5	%	1,537			2,577		(1,040		)	(40.4	)%
Purchase and Resale of Fruit	556		221		335			151.6	%	603			246		357			145.1	%
Other	396		256		140			54.7	%	723			577		146			25.3	%
Total	$	49,801	$	47,823	$	1,978		4.1	%	$	59,976		$	61,720	$	(1,744	)	(2.8	)%
Boxes Harvested:
Early and Mid-Season	2,266		2,120		146			6.9	%	3,146			3,114		32			1.0	%
Valencias	2,260		1,298		962			74.1	%	2,260			1,298		962			74.1	%
Total Processed	4,526		3,418		1,108			32.4	%	5,406			4,412		994			22.5	%
Fresh Fruit	108		33		75			NM		203			136		67			49.3	%
Total	4,634		3,451		1,183			34.3	%	5,609			4,548		1,061			23.3	%
Pound Solids Produced:
Early and Mid-Season	13,091		11,735		1,356			11.6	%	17,947			16,873		1,074			6.4	%
Valencias	13,661		7,831		5,830			74.4	%	13,661			7,831		5,830			74.4	%
Total	26,752		19,566		7,186			36.7	%	31,608			24,704		6,904			27.9	%
Pound Solids per Box:
Early and Mid-Season	5.78		5.54		0.24			4.3	%	5.70			5.42		0.28			5.2	%
Valencias	6.04		6.04		—			—	%	6.04			6.04		—			—	%
Price per Pound Solids:
Early and Mid-Season	$	1.70	$	2.38	$	(0.68	)	(28.6	)%	$	1.74		$	2.35	$	(0.61	)	(26.0	)%
Valencias	$	1.89	$	2.39	$	(0.50	)	(20.9	)%	$	1.89		$	2.39	$	(0.50	)	(20.9	)%
Price per Box:
Fresh Fruit	$	7.43	$	20.17	$	(12.74	)	(63.2	)%	$	7.57		$	18.95	$	(11.38	)	(60.1	)%
Operating Expenses:
Cost of Sales	$	30,747	$	21,886	$	8,861		40.5	%	$	37,374		$	29,794	$	7,580		25.4	%
Harvesting and Hauling	12,290		9,404		2,886			30.7	%	14,755			12,148		2,607			21.5	%
Purchase and Resale of Fruit	392		147		245			166.7	%	424			168		256			152.4	%
Other	89		145		(56		)	(38.6	)%	(4,195		)	346		(4,541		)	NM
Total	$	43,518	$	31,582	$	11,936		37.8	%	$	48,358		$	42,456	$	5,902		13.9	%


•	governmental, business and individual actions taken in response to the pandemic and the impact of those actions on economic activity;


•	the actions of our customers, particularly Tropicana, and their respective abilities to continue their facility operations;


•	our ability to secure the necessary products/chemicals from our vendors to allow us to continue to provide proper care to our citrus trees;


•	our ability to continue to obtain third-party resources, including laborers and truck drivers, to provide the harvesting and hauling of our citrus fruit including the extent to which the laborers and/or truck drivers are unable and/or refuse to work as a result of experiencing and/or caring for those experiencing the COVID-19 disease;


•	our ability to avoid business disruptions as a result of our employees working remotely.



Period	(a) Total number of shares (or units) purchased	(b) Average price paid per share (or unit)		(c) Total number of shares (or units) purchased as part of publicly announced plans or programs	(d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
1/1/2020 - 1/31/2020	—	—		—	—
2/1/2020 - 2/29/2020	—	—		—	—
3/1/2020 - 3/31/2020	—	—		—	—
Total	—	$	—	—	—



Exhibit Number		Exhibit Index
3.1		Restated Certificate of Incorporation, dated February 17, 1972 (incorporated by reference to Exhibit 3.1 of Alico's filing on Form 10-K dated December 11, 2017)
3.2		Certificate of Amendment to Certificate of Incorporation, dated January 14, 1974 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
3.3		Amendment to Articles of Incorporation, dated January 14, 1987 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
3.4		Amendment to Articles of Incorporation, dated December 27, 1988 (incorporated by reference to Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
3.5		By-Laws of Alico, Inc., amended and restated
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
101
101.INS	**	XBRL Instance Document
101.SCH	**	XBRL Taxonomy Extension Schema Document
101.CAL	**	XBRL Taxonomy Calculation Linkbase Document
101.DEF	**	XBRL Taxonomy Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
*	Denotes a management contract or compensatory plan, contract or arrangement.
**	In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.



	ALICO, INC. (Registrant)

May 11, 2020	By:	/s/ John E. Kiernan
		John E. Kiernan
		President and Chief Executive Officer
		(Principal Executive Officer)

May 11, 2020	By:	/s/ Richard Rallo
		Richard Rallo
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)