Q4 2024 Alico Inc Earnings Call
Operator: 4-0 Welcome to Alico's fourth quarter and fiscal year-ended 2024 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded.
Yeah.
Speaker Change: Welcome to Ali Coast fourth quarter and fiscal year ended 2024 earnings conference call. At this time all participants are in a listen only mode. As a reminder, today's conference is being recorded.
Operator: This morning, the company issued a press release announcing its results for the fourth quarter and fiscal year ended September 30th, 2024. If you have not had a chance to view the release, it is available on the investor relations portion of the company's website at alicoinc.com. This call is being webcast and a replay will be available on Alico's website as well.
Speaker Change: This morning, the company issued a press release announcing its results for the fourth quarter and fiscal year ended September 30 of 2024.
We have not had a chance to view the release, it's available on the Investor relations portion of the company's website.
Alicia Inc. Dot com.
Speaker Change: This call is being webcast and a replay will be available on the elite goes website as well before we begin we would like to remind everyone that the prepared remarks today contain forward looking statements such statements are subject to risks uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in these statements.
Operator: Before I begin, we would like to remind everyone that the prepared remarks today contain forward-looking statements. Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in these statements. Important factors that could cause or contribute to such differences include risk details in the company's quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, and any amendments thereto, filed with the SEC and those mentioned in the entering superlatives. The company undertakes no obligation to subsequently update or revise the forward-looking statements made on today's call, except as required by law.
Speaker Change: Important factors that could cause or contribute to such differences include risk details in the company's quarterly reports on Form 10-Q annual reports on Form 10-K current reports on form 8-K, and any amendments thereto filed with the SEC and those mentioned in the earnings release. The company undertakes no obligation to subsequently update or revise upward.
Speaker Change: Statements made on today's call, except as required by law. During this call. The company May also discuss non-GAAP financial measures, including EBITDA, adjusted EBITDA and that deck for more details on these measures. Please refer to the company's press release issued yesterday.
Operator: During this call, the company may also discuss non-GAAP financial measures, including EBITDA, adjusted EBITDA, and net debt. For more details on these measures, please refer to the company's press release issued yesterday.
John Kiernan: With that, I would like to turn the call over to the company's president and CEO, Mr. John Kiernan. Thank you, Madison, and thank you, everyone, for joining us for Alico's fourth quarter and fiscal year ended 2024 earnings call this morning. To begin, I want to recognize that Alico has more than 125 years of experience as a leader in Florida agriculture and land management. We have consistently stated that Alico seeks to provide our investors with the benefits and stability of a conventional agricultural investment. with the optionality that comes from active land management. As a reminder, we own approximately 53,371 acres of land across eight counties in Florida, as well as approximately 48,700 acres of oil, gas, and mineral rights in the state.
Speaker Change: With that I would like to turn the call over to the company's President and CEO, Mr. John Kiernan.
John Kiernan: Thank you Madison and thank you everyone for joining us for <unk> fourth quarter and fiscal year ended 2024 earnings call. This morning.
John Kiernan: To begin.
John Kiernan: I want to recognize that a we go has more than 125 years of experience as a leader in Florida agricultural land management.
John Kiernan: We have consistently stated that a weaker seeks to provide our investors with the benefits and stability of our conventional agriculture investment.
With the Optionality that comes from active land management.
John Kiernan: As a reminder, we own approximately 53371 acres of land across eight counties in Florida as well as approximately 48700 acres of oil gas and mineral rights in the state.
John Kiernan: Since 2022, Alico has continued to face challenges in recovering from the aftermath of Hurricane Ian. More than half our crops dropped before harvesting in fiscal year 2023 and fiscal year 2024 fruit production did not return to pre-EIN levels. These lower levels of production remain a concern to management as we begin to harvest the fiscal year 2025 crops, and we are evaluating our performance daily. We are unable to forecast the size of the 2025 crops at this time and cannot provide any fiscal forecast for this fiscal year. until we have greater visibility about our expected revenues.
John Kiernan: Since 2022.
John Kiernan: <unk> has continued to face challenges in recovering from the aftermath of Hurricane Ian.
John Kiernan: More than half of our crops dropped before harvesting in fiscal year 2023.
John Kiernan: In fiscal year 2024 for production did not return to pre <unk> levels.
John Kiernan: These lower levels of production remain a concern to management.
John Kiernan: As we begin to harvest the fiscal year 2025 crops and we are evaluating our performance daily.
We are unable to forecast the size of the 2025 crops at this time and cannot provide any physical.
John Kiernan: Forecast for these for this fiscal year until.
John Kiernan: Until we have greater visibility about our expected revenues.
John Kiernan: However... Alico is committed to focusing on operating income potential. protecting our balance sheet. and preserving our capital to ensure that we have adequate financial resources to invest in the business so that Alico can continue to provide competitive returns to our stockholders. Lower production for early and mid-season and Valencia harvest this season resulted in lower levels of pound solids being produced. which required the company to write down $28.5 million of total inventory related to our 2023-2024 harvest. and $19.5 million of total inventory related to our 2024-2025 harvest. On October 9, 2024, Hurricane Milton impacted most of our citrus groves with sustained hurricane or tropical force winds for varying durations of time.
John Kiernan: However.
John Kiernan: A weaker was committed to focusing on operating income potential.
John Kiernan: Protecting our balance sheet.
John Kiernan: And preserving our capital to ensure that we have adequate financial resources to invest in the business.
John Kiernan: So that <unk> can continue to provide competitive returns to our stockholders.
John Kiernan: Lower production for early and mid season, and Valencia harvest. This season resulted in lower levels of pounds, how it's being produced which required the company to write down $28 5 million of total invoice inventory related to our 2023 2020 for harvest.
John Kiernan: $19 5 million of total inventory related to our 2020 for 2025 harvest.
John Kiernan: On October 9th 2024, Hurricane Milton impacted most of our citrus grows with sustained hurricane or tropical forest wins for varying durations of time.
John Kiernan: The company believes that our groves sustained minimal tree damage, however, there was measurable fruit drop from trees in our northern groves, particularly in Polk and Hardy counties. At this time, it is not possible to reliably estimate the amount of additional fruit drop, if any, that may occur as a result of Hurricane Milton. As Alico reported previously, the company entered into a new three-year orange purchase agreement to sell oranges to Tropicana at prices that are approximately 33% to 50% higher over the life of the contract than the average price for all the citrus fruits sold to Tropicana last season.
John Kiernan: The company believes that our growth sustained minimal tree damage.
John Kiernan: However, there was measurable fruit drop from trees in our northern growth, particularly in Polk and Hardy counties.
At this time it is not possible to reliably estimate.
John Kiernan: The amount of additional fruit drop if any that may occur as a result of hurricane Milton.
As we go reported previously the company entered into a new three year Orange purchase agreement to sell oranges to Tropicana.
John Kiernan: At prices that are approximately 33% to 50% higher over the life of the contract.
The average price for all the citrus fruit Solta Tropicana last season.
John Kiernan: In addition, in 2024, we treated nearly all of our producing trees with an oxytetracycline, or OTC, injection. to combat citrus greening, approximately 35% of which were treated for a second consecutive year. Our decisions to treat our trees with OTC were supported by scientific research, which indicated that the benefits of OTC trunk injections include a decrease in fruit drop Proof of Quality and mitigating some of the impacts from citrus greening. We have and will continue to apply to the Florida Citrus Research and Field Trial Foundation for grant monies to offset the cost of these OTC injections.
John Kiernan: In addition in 2024, we treated nearly all of our producing trees within oxy tetracycline or OTC injection to.
John Kiernan: To combat citrus screening approximately 35% of which were treated for a second consecutive year.
John Kiernan: Our decisions to treat our trees with OTC were supported by scientific research, which indicated that the benefits of OTC truck injections included decreasing for drop.
<unk> for quality.
John Kiernan: And mitigating some of the impacts from citrus greening.
John Kiernan: We have and will continue to apply to the Florida Citrus research and field trial Foundation for grant monies to offset the cost of these OTC injections.
John Kiernan: In January of 2024, we received grants that covered substantially all of the OTC application costs incurred in fiscal year 2023. And to date, we received approximately 35% of the money spent during fiscal year 2024. We have applications pending that would cover the rest of our fiscal year 2024 treatment costs. Despite the recent challenges in our citrus operations, we remain optimistic about the future success of Alico. In December of 2023, we completed the sale of 17,229 acres of the Alico Ranch to the state of Florida for $77.6 million in gross proceeds, which we used to repay all of our outstanding borrowings under our line of credit due to the impact of Hurricane Ian and the $19.1 million balance of our MetLife variable term rate debt.
John Kiernan: In January of 2024, we received grants that covered substantially all of the OTC application costs incurred in fiscal year 2023.
John Kiernan: And to date, we have received approximately 35% of the money spent during fiscal year 2024.
John Kiernan: We have applications pending that would cover the rest of our fiscal year 2024 treatment costs.
John Kiernan: Despite the recent challenges in our citrus operations, we remain optimistic about the future success of a week ago.
John Kiernan: In December of 2023, we completed the sale of 17229 acres of the weaker ranch to the state of Florida for $77 $6 million in gross proceeds, which we used to repay all of our outstanding borrowings under our line of credit due to the impact of Hurricane Ian.
John Kiernan: And the $19 1 million dollar balance of.
John Kiernan: Our metlife variable term rate debt.
John Kiernan: thereby strengthening our balance sheet and reducing our required principal payments through fiscal year 2029 to less than $1.5 million per year. in addition to increase our financial flexibility. In September 2024, we amended our credit agreement with MetLife by extending the maturity of our revolving line of credit until May 1, 2034. and which we believe demonstrates the continued support and confidence in Alico by MetLife. We believe that the revolving line of credit provides us with ample liquidity, should we need it, to manage significant weather events, as well as to ensure that we have time and capital to realize the long-term highest and best use of our real estate assets.
John Kiernan: Thereby strengthening.
John Kiernan: Our balance sheet, and reducing our required principal payments through fiscal year 2029 to less than $1.5 million per year.
John Kiernan: In addition.
John Kiernan: <unk> to.
John Kiernan: To increase our.
John Kiernan: In addition to increase our financial flexibility.
John Kiernan: In September 2024, we amended our credit agreement with Metlife.
John Kiernan: Many of the maturity of our revolving line of credit until May one 2000 22034.
John Kiernan: And which we believe demonstrates the continued support and confidence in <unk> by Metlife.
We believe that the revolving line of credit provides us with ample liquidity should we need it to manage significant weather events as well as to ensure that we have time and capital to realize the long term highest and best use of our real estate assets.
John Kiernan: We are continuing to evaluate all of our properties to enhance and build value for our stockholders. The multi-year entitlement process, which we began in 2023 for our 4,500-acre grove in Collier County near Fort Myers, is proceeding well under the leadership of our Executive Vice President of Real Estate. While there is considerable work yet to be done, the company has made significant progress, including but not limited to the completion of environmental assessments, the development of conservation strategies. preparation of market assessments to facilitate planning and beginning to conduct selective stakeholder outreach efforts. In addition, other real estate properties in Polk, Highlands, and Henry Counties are also being considered for potential transactions.
We are continuing to evaluate all of our properties to enhance and build value for our stockholders.
John Kiernan: The multi year entitlement process, which we began in 2023 for our 4500 acre Grove in Collier County, near Fort Myers is proceeding well under the leadership of our executive Vice President of real estate.
John Kiernan: While there is considerable work yet to be done.
John Kiernan: The company has made significant progress, including but not limited to the completion of environmental assessments. The development of conservation strategies, the preparation of a market assessments to facilitate planning and beginning to conduct selective stakeholder outreach efforts.
In addition, other real estate properties and poke Highlands and Henry counties are also being considered for potential transactions. The company remains committed to considering all options for the most profitable use of all the land in our portfolio.
John Kiernan: The company remained committed to considering all options for the most profitable use of all the land in our portfolio.
John Kiernan: With that, I will turn the call over to Brad Heine. to discuss our more detailed financial results.
Brad Heine: With that I will turn the call over to Brad Heine.
Brad Heine: To discuss our more detailed financial results.
Bradley Heine: Thank you, John.
Thank you John and good morning, everyone.
Bradley Heine: Good morning, everyone. As our fourth quarter is not indicative of our full year results due to the seasonal nature of our business, I will focus primarily on our full year 2024 results today. As a reminder, the majority of our citrus crop is harvested in the second and third quarters of the fiscal year. And as such, the majority of our profit and cash flows are also recognized in the second and third quarters. However, due to the timing of the current year harvest, more of the citrus crop was harvested in the first and second quarters of this fiscal As such, the quarterly results for the fourth quarter are not indicative of our full year results.
Speaker Change: Fourth quarter is not indicative of our full year results due to the seasonal nature of our business I will focus primarily on our full year 2024 results today.
Speaker Change: A reminder, the majority of our citrus crop is harvested in the second and third quarters of the fiscal year.
Speaker Change: As such the majority of our profit and cash flows are also recognized in the second and third quarters. However, due to the timing of the current year harvest more of the citrus crop was harvested in the first and second quarters of this fiscal year as.
Speaker Change: As such the quarterly results for the fourth quarter are not indicative of our full year results.
Bradley Heine: For the fiscal year ended September 30, 2024, the company reported net income attributable to Alico common stockholders of $7 million, compared to net income attributable to Alico common stockholders of $1.8 million for the fiscal year ended September 30, 2023. The increase in net income is principally attributable to a gain of $81.4 million for the sale of land in the current year as compared to a gain of $11.4 million in the prior year. partially offset by an inventory impairment charge of $19.5 million in the fourth quarter of the fiscal year ended September 30, 2024, related to our 2024-2025 estimated harvest.
Speaker Change: For the fiscal year ended September 32024, the company reported net income attributable to our legal common stockholders of $7 million compared to net income attributable to <unk> common stockholders of $1 8 million.
Speaker Change: Full year ended September 32023.
Speaker Change: The increase in net income is principally attributable to a gain of $1 4 million for the sale of land in the current year as compared to a gain of $11.4 million in the prior year.
Speaker Change: Partially offset by an inventory impairment charge of $19 5 million in the fourth quarter of the fiscal year ended September 32024 related to our 2020 for 2025 estimated harvest.
Bradley Heine: In addition, our net income for the fiscal year ended September 30, 2023, was positively impacted by inventory adjustments recorded at September 30, 2022, as a result of the impact of Hurricane Ian, which effectively lowered the inventory to be expensed in the fiscal year ended September 30, 2023, as well as $27.4 million of crop insurance proceeds. 0.8 million in property and casualty insurance reimbursements for Hurricane Ian and 1.3 million in proceeds from federal relief proceeds received under the Florida Citrus Recovery Block Grant program in the fiscal year ended September 30, 2023. For the fiscal year ended September 30, 2024, the company had earnings of $0.91 per diluted common share compared to earnings of $0.24 per diluted common share for the fiscal year ended September 30, 2023.
In addition, our net income for the fiscal year ended September 32023 was positively impacted by inventory adjustments recorded at September 32022 as.
Speaker Change: As a result of the impact for <unk>, NAND, which effectively lowered the inventory to be expensed in the fiscal year ended September 32023.
Speaker Change: As well as 27 $4 million of crop insurance proceeds.
<unk> 8 million in property and casualty insurance reimbursements for Hurricane Ian and $1 $3 million in proceeds from federal relief proceeds received under the Florida Citrus recovery Block Grant program in the fiscal year ended September 32023.
Speaker Change: For the fiscal year ended September 32024, the company had earnings of 91 cents per diluted common share compared to earnings of 24 cents per diluted common share for the fiscal year ended September 32023.
Bradley Heine: When both periods are adjusted for certain items, including gains on sale of real estate, federal relief proceeds from the 2017 Hurricane Irma and 2022 Hurricane Ian insurance proceeds and net realizable value adjustments, the company had an adjusted EBITDA loss for the fiscal years ended September 30, 2024 and 2023 of $3.8 million and $16.1 million respectively. General administrative expense for the year ended September 30, 2024 was $11.1 million compared to $10.6 million for the year ended September 30, 2023. The increase was principally attributable to an increase in personnel costs, partially offset by lower depreciation, legal and professional fees due to the dismissal of the shareholder litigation in 2023, and lower insurance costs as compared to the same period prior year.
Speaker Change: When both periods are adjusted for certain items, including gains on sale of real estate Federal relief proceeds from the 2017 Hurricane Irma in 2022 Hurricane insurance proceeds and net realizable value adjustments. The company had an adjusted EBITDA loss for the fiscal years ended September 32002.
Speaker Change: For 2023.
$3 8 million and $16 1 million respectively.
Speaker Change: General and administrative expense for the year ended September 32024 was $11 1 million compared to $10 6 million for the year ended September 32023.
Speaker Change: The increase was principally attributable to an increase in personnel costs, partially offset by lower depreciation legal and professional fees due to the dismissal of the shareholder litigation in 2023, and lower insurance costs as compared to the same period prior year.
Bradley Heine: Other income net for the years ended September 30, 2024 and 2023 was $78.4 million and $6.7 million, respectively. The increase in other income net was primarily due to an increase in land sales, including the 17,229 acres of the Alico Ranch to the state of Florida for approximately $77.6 million in gross proceeds. during the year end of September 30, 2024, compared to $11.5 million for the prior year period.
Speaker Change: Other income net for the years ended September 32024, and 2023 was $78 4 million and $6 7 million respectively.
Speaker Change: The increase in other income net was primarily due to an increase in land sales, including the 17229 acres to daily Gill Ranch to the state of Florida for approximately $77 6 million in gross proceeds.
Speaker Change: During the year ended September 32024, compared to $11.5 million for the prior year period.
John Kiernan: I will now pass the call back to John. Thanks, Brad. Although the last harvest season was disappointing, which we believe is the result of continuing recovery from Hurricane Ian, Alico enters the current harvest season with more than 4.5 million producing citrus trees which have been treated with OTC. This crop will be sold at prices 30 plus percent higher than last season because of the new supply agreement with Tropicana. Our employee base is stable, experienced, and focused on delivering results for our shareholders.
I will now pass the call back to John.
John Kiernan: Thanks, Brad.
John Kiernan: Although the last harvest season was disappointing, which we believe is the result of continuing recovery from Hurricane Ian.
Speaker Change: Ah Leeco enters the current harvest season, with more than $4 5 million, producing citrus trees, which had been treated with OTC.
Speaker Change: This crop will be sold at prices, 30% higher than last season, because of the new supply agreement with Tropicana.
Speaker Change: Our employee base is stable experienced and focused on delivering results for our shareholders.
John Kiernan: Alico has endured another challenging weather season in 2024. but sustained no real damage to our trees.
Speaker Change: Well, we go has endured another challenging weather season in 2024.
But sustained no real damage to our trees.
John Kiernan: The company has a strong balance sheet, which we believe will provide us with the time and capital to evaluate and then realize the long-term highest and best use of our real estate assets to create long-term value for our shareholders. two significant entitlement programs, and a few other potential land sales are already in progress. We remain committed to providing our investors with the benefits and stability of a conventional agricultural investment. with the enhanced optionality that comes through active land management.
Speaker Change: The company has a strong balance sheet, which we believe will provide us with the time and capital to evaluate and then realize long term highest and best use of our real estate assets to create long term value for our shareholders.
Speaker Change: Two significant entitlement programs and a few other potential land sales already in progress.
Speaker Change: We remain committed to providing our investors with the benefits and stability of our conventional agricultural investment.
Speaker Change: With the enhanced Optionality that comes through active land management.
John Kiernan: And with that, we'll now open the line up to questions from industry analysts.
Speaker Change: And with that we'll now.
Speaker Change: Now open the lineup to questions from industry analysts Madison.
Operator: Madison. Thank you. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. And we will pause for a moment to allow questions to queue. And once again, that is star and one to ask a question.
Speaker Change: Thank you and at this time, if you would like to ask a question. Please press the star and one on your telephone keypad you may remove yourself from the queue at any time by pressing star two and we'll pause for amendment to allow questions to queue.
And once again that is star and one to ask a question.
Okay.
Operator: And we have reached the end of today's question and answer session.
Speaker Change: And we have reached the end of today's question and answer session I would now like to turn the call back over to Mr. Kieran and for closing remarks.
John Kiernan: I would now like to turn the call back over to Mr. Kiernan for closing remarks. I just want to say thank you to everyone for joining our call today and for your continued support of Alico. We look forward to speaking with you about our first quarter results in February. Thank you.
John Kiernan: I just wanted to say thank you to everyone for joining our call today and for your continued support of a week ago.
John Kiernan: We look forward to speaking with you about our first quarter results in February.
Speaker Change: Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.
Speaker Change: Hello.
Speaker Change: Oh.
Speaker Change: Uh-huh.
Speaker Change: Uh huh.
Speaker Change: Yeah.