Alico, Inc. Price & Performance (ALCO)

The company undertakes no obligation to subsequently update or revise the forward looking statements made on today's call except as required by law. During this call, the company may also discuss non GAAP financial measures including adjusted EBITDA and net debt. For more detail, on these measures, please refer to the company's press release issued yesterday. With that, it is my pleasure to turn the call over to the company's President and CEO, Mr. John Carrennan.

Thank you, John.

Good morning, everyone, and thank you for joining us for Alico's earnings call. I'm going to spend most of my prepared remarks updating you about our strategic transformation, which we announced in and how we are already executing on this new strategy balancing alternative agriculture operations with strategic land monetization opportunities.

We have decided not to spend further material capital in the the exception of a few groves that will be harvested for one more year, and our consolidated investment in Citri. We will focus our resources on creating new opportunities Alico acting prudently on behalf of our shareholders. By winding down our capital intensive citrus production, believe we are strengthening our financial position. For over a century, Aweco has been proud to be 1 of Florida's leading citrus producers and a dedicated steward of its agricultural land. But now, we must reluctantly adapt to changing environmental and economic realities Oweco owns approximately 53371 Acres of land across 8 counties in Florida, as well as approximately 48700 acres of oil, gas and mineral rights in the state and we believe that our strategic transformation creates a tremendous opportunity to unlock the value in these assets for our shareholders. Management believes that approximately 75% of current Owego acres can remain agriculture related and approximately 25% can be transitioned and entitled for non agricultural purposes. We expect to maintain our commitment to the Florida agriculture industry through diversified profitable non citrus operations following this wind down, we also expect to entitle certain parcels of our land for commercial and residential development.

The company believes our strategic transformation will improve our ability to provide investors with a greater return on capital that includes the benefits and stability of a conventional agricultural investment, with the optionality that comes with active land management.

This strategic transformation beyond citrus production will allow Owego to maintain our agricultural heritage while creating new opportunities for profitable growth while also acting prudently on behalf of shareholders. Management and the Board believe that the steps taken to launch or went smoothly and efficiently and we are now well positioned to turn our attention to driving profitability which begins with harvesting our Valencia crop in and should continue through April 0. We have been consistently transparent about how our Citrus operations have faced increasing financial challenges from citrus greening disease and environmental factors for many seasons. As a result of citrus greening in multiple hurricanes, Our Florida our citrus production has declined approximately 73% over the last ten years Despite significant investments in land, trees and citrus disease treatments. We remain encouraged by updates from Florida Citrus Mutual about the potential for some form of federal relief for the citrus industry the damage that Hurricane Ian, which struck in 2022, due to the 2023 and 2024 crops potentially for the damage to Hurricane Milton, which struck in 2024, due to the crops this year. We've explored many available options to restore our citrus operations to profitability with the long term protection trend and the cost needed to combat citrus greening disease no longer support our expectations for recovery.

During our operational results reflected these ongoing challenges our citrus division lower levels year over year pound solids being produced. For the three months ended Dec. 31, 2024, harvested approximately 4000000 pounds solids compared to 4700000.0 pounds solids in the comparable prior fiscal year. The decrease in pound solids harvested was driven by Fruit Drop caused by Hurricane Milton. However, due to a 38.9% increase in the price per pound solid that we received as a result of our new Tropicana agreement, We had a $250,000,0.0 increase in revenue related to the early and mid harvest. And adjusted EBITDA was $700,000 in the ended Dec. 31, 2024, compared to a loss of 230,000,0.0 in the ended Dec. 31, 2023. Current season production trends indicate that our total harvest volume for will likely be lower than These continued production challenges reinforced our recent strategic decision to wind down [indiscernible] as they are no longer economically viable Looking ahead to the remainder of we expect to complete our final significant citrus harvest while positioning the company for our next chapter.

We are also in the process of closing several land sales which are expected to generate approximately $20,000,000 in proceeds this fiscal year based upon transactions that are under option agreements, or have been negotiated and are expected to close soon. These expected proceeds and cash generated by the harvest which will begin next month are expected to fund operations through Awego also has an additional $7,350,000,0.0 in borrowings under its credit facilities available if needed. We have a proven track record of monetizing certain non core assets over the past decade. In we completed the final sale of 17229 acres of the Iweko Ranch to the State Of Florida for $7,760,000,0.0 in gross proceeds. Which we used to repay all of our outstanding all of our outstanding borrowings under our line of credit was originally borrowed due to the impact of Hurricane Ian and the $1,910,000,0.0 balance on our Met Life variable term rate debt thereby strengthening our balance sheet and reducing our required principal payments through for less than $150,000,0.0 per year. In addition to increasing our financial flexibility and de 4, we amended our credit agreement with MetLife by extending the maturity of our revolving line of credit until May 1, 2034, which we believe demonstrates the continued support and confidence in Owego by MetLife.

We believe that the revolving line of credit provides us with ample liquidity should we need it, manage significant weather events as well as to ensure that we have time and capital to realize the long term highest and best use for our real estate assets. Since our announcement in management has been evaluating inquiries From developers brokers agents and principals about possibly acquiring parcels of our citrus acres after this current harvest season. We've also begun selling selected rolling stock and are continuing to evaluate offers to acquire other fixed assets such as trucks and tractors. Supported by these positive factors, the company reiterates that as a result of our cash flow being positive since Jan. 0, we expect to end the fiscal year with enough cash REITO has also been discussing lease arrangements with many agricultural operators in Florida about possible sod production, expanding sand mining activities potentially growing seasonal crops such as corn, sugarcane, Vegetables such as green beans, and fruits such as watermelon, berries, some of the company's parcels. Details about these opportunities will be disclosed once contracts are finalized. As part of OEECO's strategic transformation, we continue to evaluate all of our properties to determine what will create the highest and best use for our shareholders.

Instrumental in that process evaluating all opportunities where we can leverage conservation programs Simultaneously create value and enhance environmental outcomes. Awego identified five properties 7,789 acres for a total of 10,484 acres as case studies to explore the opportunities provided under Florida's Rural and Family Lands Protection Program. Those applications were submitted to FDACS prior to the January 2029 deadline will be evaluated over the coming months. While not all the properties may ultimately be a fit for the program, we look forward to coordinating with the Florida Department of Agriculture and Consumer Services to analyze these properties fit within the Florida Rural and Family Lands Protection Program, as well as our strategic transformation framework. In the past, Owego has successfully returned capital for optional debt repayments, a tender offer, share buyback programs as well as paying a quarterly common dividend more than fifty years. As our cash balances rise, whether through land sales, or our non citrus agricultural activities becoming more firmly established, We intend to discuss more specific plans to return capital to investors. Under this new strategy, Owego will become a diversified land company and most of its properties are expected to create that are not citrus related The company expects to recognize positive cash flow for the remainder of the current fiscal year after land sales that have already been negotiated close severance and restructuring costs are paid, and harvesting activities conclude Management estimates that the present value of our current land holdings could be worth approximately $650,000,000 to $750,000,000 even with approximately 75% of these acres valued for agricultural usage, and assuming 10% of those acres are entitled for development within the next five years.

Our entitlement work in Collier and Highlands Counties is proceeding on schedule and we expect to provide our investors with a briefing on our development plans for our course Once public applications have been filed, Overall, I am very excited about the opportunity This strategic transformation creates to unlock value for our long term shareholders and we look forward to updating you on our progress throughout the fiscal year. With that, I'll now turn the call over to Brad Heinem. Thank you, John, and good morning, everyone. While we typically harvest most of our crop in the second and third quarters, generating the bulk of our profit and cash flow during this period, this year's harvest will be concentrated in the first and second quarters.

This shift will push our peak working capital requirements into the third and fourth quarters of the fiscal For the first fiscal quarter ended 12/31/2024, Licorice revenue was $16,300,000 compared to $13,600,000 in the prior year period. The $2,700,000 increase in revenue was primarily due to an increase in the price per pound salad, partially offset by a decrease in pound solids produced by the early and mid season Approximately 4,000,000 pounds solids were harvested for the three months ended December 31 at a $3.69 average price per pound [indiscernible] Compared to 4,600,000 pounds solids at a $2.6 dollars average price per pound solids in the prior year period. First quarter harvest yields declined after Hurricane Mill and severe winds drove an increase in fruit drop rates. The increase in price was a result of more favorable pricing in one of our our contracts with Tropicana. Land management and other operations revenue increased 45% to $600,000 compared to $400,000 in the prior year period. This was primarily the result of an increase in rock and sand royalty income and sod sales partially offset by lower farm, grazing and hunting lease revenues due to the sale of the Alico Ranch. [indiscernible] were $25,100,000 and $28,200,000 for the three months ended December 3124 and 2023 respectively.

The decrease in operating expenses primarily relates to the inventory adjustments recorded at 09/30/2024, on the ending inventory balance as a result of the continued weak recovery from Hurricane Ian and the ongoing effects of citrus screening, which effectively lowered the inventory to be expensed in fiscal year twenty twenty five. General and administrative expenses for the three months ended 12/31/2024 and 2023 were $2,600,000 and $3,300,000 respectively. The decrease was primarily due to lower employee costs as a result of lower bonus accruals and lower professional fees. Other income expense net for the three months ended 12/31/2024 and 2023 was a loss of $600,000 and income of $75,500,000 respectively. Decrease is primarily due to there being no land sales in the three months ended 12/31/2024, as compared to gains of $77,000,000 during the prior year period. Driven by the sale of the Alico Ranch to the State of Florida. We recognized an income tax benefit of $2,200,000 and an income tax provision of $15,600,000 for the three months ended 12/31/2024 and 2023 respectively. The income tax benefit for the three months ended December 31, 2024 was partially due to a change in the valuation allowance on our deferred tax assets.

This valuation allowance is required primarily due to the planned accelerated book depreciation citrus producing assets, which is anticipated to result in a cumulative three year loss during the fiscal year ending 09/30/2025. For the first fiscal quarter ended 12/31/2024, the company reported a net loss attributable to Alico common shareholders of $9,200,000 compared to net income of $42,900,000 for dollars for the first fiscal quarter ended 12/31/2023, driven by the aforementioned sale of the Alico Ranch. For the three months ended 12/31/2024, the company had a loss of $1.02 $0 per diluted common share compared to earnings of $5.64 per diluted common share for the three months ended 12/31/2023. Adjusted EBITDA was $700,000 in the first fiscal quarter ended 12/31/2024, compared to a loss of $2,300,000 for the first fiscal quarter ended 12/31/2023. Turning now to our balance sheet and liquidity. Cash and cash equivalents were $4,400,000 as of December 31, 2024 compared to $3,200,000 at the end of fiscal year twenty twenty four. Net cash used in operating activities was $7,600,000 dollars as of December 3124 compared to $13,200,000 through 12/31/2023. At quarter end, we had $73,500,000 of remaining availability on our line of credit and there were no significant debt maturities until 2029.

Debt was $104,900,000 and net debt was 100 point $500,000 as of 12/31/2024. Compared to $92,100,000 and $89,000,000 respectively at the end of fiscal year twenty twenty Now I'd like to turn the call back to John to discuss our fiscal year 2025 outlook. Thank you, Brian. Turning to our guidance. Expect harvest volumes in 2025 to be lower compared to 2024 levels, due to the effects of Greening and Hurricane Milton. We expect to realize approximately $20,000,000 in land sales in fiscal twenty twenty five based upon transactions that are under option agreements or have been negotiated and are expected to close soon.

Our entitlement work in Collier and Highlands Counties are proceeding on schedule and we expect to provide our investors with a briefing on our development plans for our Corkscrew Grove once public applications have been filed We expect to end fiscal year twenty twenty five with enough cash to meet our operating expenses for fiscal years twenty twenty six and 2027. [indiscernible] I'm very pleased with the launch of our strategic transformation and the opportunity it creates for our shareholders and look forward to updating you in May on our second fiscal quarter call And with that, we'll now open the line up to questions from industry analysts.

Marjorie?

Thank you very much. And at this time, we have no questions. I'd like to turn the call back over to John Keirne for any closing remarks.

In closing remarks, I just want to say thank you to everyone for joining our call today and for your continued support of Aweka. We look forward to speaking with you about our second quarter results in May. Have a good day.

Thank you. Ladies and gentlemen, that does conclude today's