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Alico, Inc. Announces Financial Results for the First Quarter Ended December 31, 2017

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FORT MYERS, Fla., Feb. 06, 2018 (GLOBE NEWSWIRE) -- Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO) today announces financial results for the first quarter ended December 31, 2017. For the quarter ended, the Company recorded net income of $8.7 million and earnings of $1.05 per diluted common share, compared to a net loss of $1.7 million and a loss of $0.21 per diluted common share in the prior year.  The increase in net income primarily resulted from a deferred tax benefit of $11.3 million recorded to adjust the Company's net deferred tax liabilities to the recently enacted 21% federal corporate tax rate. When both periods are adjusted for non-recurring items related to transaction costs, consulting fees, gains on sale of real estate and property and equipment, net deferred tax and other asset valuation adjustments and employee stock compensation expense, the Company incurred a loss of $0.42 per diluted common share in the first quarter ended December 31, 2017, compared to a loss of $0.22 per diluted common share in first quarter ended December 31, 2016.

These results reflect the seasonal nature of the Company’s business. The majority of our citrus crop is harvested in the second and third quarters of the fiscal year; consequently, most of the Company's profit and cash flows from operating activities is typically recognized in those quarters and our working capital requirements are greater in the first and fourth quarters.

The Company reported the following financial results:

               
(in thousands except for per share amounts)              
  Three Months Ended December 31, 2017
  2017   2016   Change
                             
Net income (loss) $ 8,738     $ (1,743 )   $ 10,481     NM  
EBITDA (1) $ 2,074     $ 3,235     $ (1,161 )   (35.9 )%
Earnings (loss) per diluted common share (1) $ 1.05     $ (0.21 )   $ 1.26     NM  
Net cash used in operating activities $ (9,689 )   $ (17,437 )   $ 7,748     (44.4 )%

(1) See "Non-GAAP Financial Measures" at the end of this earnings release for details regarding these measures.
NM = Not Meaningful

On November 16, 2017, Alico announced the Alico 2.0 Modernization Program. The program is focused on aggressively improving the operations of the Company and optimizing its return on capital employed through cost reductions, increased efficiencies and disposition of non-performing assets. Every aspect of Alico’s citrus and ranch operations, all back office support activities, and the productivity of all assets were analyzed to determine how to eliminate costs that will not negatively affect citrus production and also to improve performance throughout the Company. The changes required to realize those improvements have now been implemented.

Alico Citrus Division Results

During the quarter ended December 31, 2017, Alico Citrus’s Early and Mid-season boxes processed increased by 18.0%, and pound solids increased by 11.6% as a result of harvesting beginning approximately one month earlier than in the prior year due to Hurricane Irma. Harvesting will be completed earlier this season for the Early and Mid-season crop, and we anticipate operating revenues to be less in the second quarter of fiscal 2018, as compared to the same period in the prior year. 

As previously announced, Alico continues to estimate its total number of boxes harvested per acre for fiscal year 2018 will decrease by approximately 40-45%. We expect operating expenses for fiscal year 2018 will remain consistent with fiscal year 2017 on a per acre basis, and the benefits of Alico 2.0 will be realized in fiscal year 2019 because our growing costs incurred in fiscal 2018 are capitalized then expensed in the following crop season when fruit is harvested and sold.

Citrus production for the quarters ended December 31, 2017 and 2016 is summarized in the following table.

             
(boxes and pound solids in thousands)            
  Three Months Ended
December 31,
       
    Change
  2017   2016   Unit   %
Boxes Harvested:              
Early and Mid-Season 1,214     1,029     185     18.0 %
Total Processed 1,214     1,029     185     18.0 %
Fresh Fruit 73     129     (56 )   (43.4 )%
Total 1,287     1,158     129     11.1 %
Pound Solids Produced:                
Early and Mid-Season 6,069     5,440     629     11.6 %
Total 6,069     5,440     629     11.6 %
                 
Average Pound Solids Per Box 5.00     5.29     (0.29 )   (5.5 )%
                 
Price per Pound Solids:                
Early and Mid-Season $ 2.54     $ 2.51     $ 0.03     1.2 %
                             

Alico Citrus cost of sales increased to $11.8 million for the quarter ended December 31, 2017, compared to $8.6 million for the quarter ended December 31, 2016. The increase primarily relates to the timing of the harvesting of the Early and Mid-Season fruit, as well as costs incurred for clean up and repairs as a result of Hurricane Irma.

Conservation and Environmental Resources Division Results

The operating results for the three months ended December 31, 2017 were consistent with those from the three months ended December 31, 2016, as a minimal loss was recognized in both periods.

In January 2018, the Company sold its breeding herd and leased grazing rights on the Alico Ranch to a third party operator, 5F Cattle LLC.  The Company continues to own the property and conduct its long-term water dispersement program and wildlife management programs.

Other Corporate Financial Information

General and Administrative expenses increased by $0.1 million to $3.9 million for the quarter ended December 31, 2017. The increase primarily related to separation expenses, accruals for paid time-off, and audit and tax fees. In the first quarter of December 2016, there were significant G&A expenses related to consulting services.

Other expense, net was $0.4 million for the quarter ended December 31, 2017 as compared to $2.0 million for the quarter ended December 31, 2016. The decrease of $1.6 million is primarily attributable to a $1.3 million increase in gain on sale of real estate and property and equipment.

The Company paid a first quarter cash dividend of $0.06 per share on its outstanding common stock on January 16, 2018 to shareholders of record at December 29, 2017.

At December 31, 2017 the Company had working capital of $54.0 million and had net term debt, net of cash and cash equivalents, of $184.4 million.

About Alico

Alico, Inc. is a holding company with assets and related operations in agriculture and environmental resources, including citrus, wildlife management, and water management. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. Learn more about Alico (NASDAQ:ALCO) at www.alicoinc.com.  

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization Program; customer concentration; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

Investor Contact:

John E. Kiernan
Executive Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com 

 
ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
       
  December 31,   September 30,
  2017   2017
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 948     $ 3,395  
Accounts receivable, net 11,875     4,286  
Inventories 33,180     36,204  
Assets held for sale 18,295     20,983  
Prepaid expenses and other current assets 1,985     1,621  
Total current assets 66,283     66,489  
       
Property and equipment, net 348,509     349,337  
Goodwill 2,246     2,246  
Deferred financing costs, net of accumulated amortization 200     262  
Other non-current assets 724     848  
Total assets $ 417,962     $ 419,182  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 2,097     $ 3,192  
Accrued liabilities 4,551     6,781  
Long-term debt, current portion 4,575     4,550  
Other current liabilities 1,069     1,460  
Total current liabilities 12,292     15,983  
       
Long-term debt:      
Principal amount, net of current portion 180,783     181,926  
Less: deferred financing costs, net (1,715 )   (1,767 )
Long-term debt less current portion and deferred financing costs, net 179,068     180,159  
Lines of credit 7,123      
Deferred income tax liabilities 14,691     27,108  
Deferred gain on sale 26,643     26,440  
Deferred retirement obligations 4,109     4,123  
Total liabilities 243,926     253,813  
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 and
8,416,145 shares issued and 8,249,357 and 8,238,830 shares outstanding at
December 31, 2017 and September 30, 2017, respectively
8,416     8,416  
Additional paid in capital 18,890     18,694  
Treasury stock, at cost, 166,788 and 177,315 shares held at December 31, 2017 and
September 30, 2017, respectively
(6,275 )   (6,502 )
Retained earnings 148,285     140,033  
Total Alico stockholders' equity 169,316     160,641  
Noncontrolling interest 4,720     4,728  
Total stockholders' equity 174,036     165,369  
Total liabilities and stockholders' equity $ 417,962     $ 419,182  
 
 


ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
       
  Three Months Ended December 31,
  2017   2016
Operating revenues:      
Alico Citrus $ 17,079     $ 16,877  
Conservation and Environmental Resources 363     301  
Other Operations 91     267  
Total operating revenues 17,533     17,445  
               
Operating expenses:              
Alico Citrus 16,295     14,085  
Conservation and Environmental Resources 597     514  
Other Operations 59     93  
Total operating expenses 16,951     14,692  
       
Gross profit 582     2,753  
General and administrative expenses 3,886     3,788  
       
Loss from operations (3,304 )   (1,035 )
       
Other (expense) income:      
Interest expense (2,255 )   (2,327 )
Gain on sale of real estate and property and equipment 1,736     436  
Other income (expense), net 144     (90 )
Total other expense, net (375 )   (1,981 )
       
Loss before income taxes (3,679 )   (3,016 )
Income tax benefit (12,417 )   (1,273 )
       
Net income (loss) 8,738     (1,743 )
Net loss attributable to noncontrolling interests 8     8  
Net income (loss) attributable to Alico, Inc. common stockholders $ 8,746     $ (1,735 )
       
Per share information attributable to Alico, Inc. common stockholders:      
Earnings (loss) per common share:      
Basic $ 1.06     $ (0.21 )
Diluted $ 1.05     $ (0.21 )
Weighted-average number of common shares outstanding:      
Basic 8,245     8,324  
Diluted 8,364     8,324  
       
Cash dividends declared per common share $ 0.06     $ 0.06  
               
               


ALICO, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
       
  Three Months Ended December 31,
  2017   2016
       
Net cash used in operating activities:      
Net income (loss) $ 8,738     $ (1,743 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:      
Deferred gain on sale of sugarcane land (141 )   (300 )
Depreciation, depletion and amortization 3,490     3,916  
Deferred income tax benefit (12,417 )   (1,273 )
Gain on sale of property and equipment (1,596 )   (205 )
Non-cash interest expense on deferred gain on sugarcane land 344     356  
Stock-based compensation expense 423     440  
Other (44 )   125  
Changes in operating assets and liabilities:      
Accounts receivable (7,589 )   (7,177 )
Inventories 3,024     (4,053 )
Prepaid expenses and other assets (240 )   (1,579 )
Accounts payable and accrued expenses (3,298 )   (4,823 )
Other liabilities (383 )   (1,121 )
Net cash used in operating activities (9,689 )   (17,437 )
       
Cash flows from investing activities:      
Purchases of property and equipment (3,561 )   (2,357 )
Proceeds from sale of property and equipment 5,300      
Other     547  
Net cash provided by (used in) investing activities 1,739     (1,810 )
       
Cash flows from financing activities:      
Repayments on revolving lines of credit (10,608 )   (5,000 )
Borrowings on revolving lines of credit 17,731     21,945  
Principal payments on term loans (1,118 )   (2,699 )
Dividends paid (494 )   (498 )
Capital lease obligation payments (8 )    
Net cash provided by financing activities 5,503     13,748  
       
Net decrease in cash and cash equivalents (2,447 )   (5,499 )
Cash and cash equivalents at beginning of the period 3,395     6,625  
       
Cash and cash equivalents at end of the period $ 948     $ 1,126  
 
 


Non-GAAP Financial Measures        
         
Adjusted EBITDA        
(in thousands)        
    Three Months Ended December 31,
    2017   2016
         
Net earnings (loss) attributable to common stockholders   $ 8,746     $ (1,735 )
Interest expense   2,255     2,327  
Income tax benefit   (12,417 )   (1,273 )
Depreciation and amortization   3,490     3,916  
EBITDA   2,074     3,235  
         
Transaction costs   76     18  
Stock compensation expense   231     185  
Separation and consulting agreement expense   188     50  
Gains on sale of real estate and property and equipment   (1,736 )   (436 )
         
Adjusted EBITDA   $ 833     $ 3,052  
         
         
         
         
Adjusted Loss Per Diluted Common Share        
(in thousands)        
    Three Months Ended December 31,
    2017   2016
         
Net earnings (loss) attributable to common stockholders   $ 8,746     $ (1,735 )
One-time deferred tax adjustment due to new tax legislation   (11,327 )    
Transaction costs   76     18  
Stock compensation expense   231     185  
Separation and consulting agreement expense   188     50  
Gains on sale of real estate and property and equipment   (1,736 )   (436 )
Tax impact   304     77  
         
Adjusted net loss   $ (3,518 )   $ (1,841 )
         
Diluted common shares   8,364     8,324  
         
Adjusted Loss per Diluted Common Share   $ (0.42 )   $ (0.22 )
         
         
         
         
Adjusted Free Cash Flow        
(in thousands)        
         
    Three Months Ended December 31,
    2017   2016
Net cash used in operating activities   $ (9,689 )   $ (17,437 )
Adjustments for non-recurring items:        
Transaction costs   76     18  
Separation and consulting agreement expense   188     50  
Tax impact   (65 )   (29 )
Capital expenditures   (3,561 )   (2,357 )
Adjusted Free Cash Flow   $ (13,051 )   $ (19,755 )
         
Diluted common shares   8,364     8,324  
         
Adjusted Free Cash Flow per Diluted Common Share   $ (1.56 )   $ (2.37 )
 

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share and Adjusted Free Cash Flow among other measures, to evaluate the performance of its business. Due to significant depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure, management believes that Adjusted EBITDA, Adjusted Earnings (Loss) per Diluted Common Share, and Adjusted Free Cash Flow are important measures to evaluate our results of operations between periods on a more comparable basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis and relative to our peers and the broader market, provides useful information to both management and investors by excluding certain items that may not be indicative of our core operating results and operational strength of our business and helps investors evaluate our ability to service our debt. Such measurements are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-GAAP information provided is unique to Alico and may not be consistent with methodologies used by other companies. Adjusted EBITDA is defined as earnings (loss) before interest expense, benefit for income taxes, and depreciation and amortization adjusted for non-recurring transactions or transactions that are not indicative of our core operating results, such as gains or losses on sales of real estate and property and equipment. Adjusted Earnings (Loss) per Diluted Common Share is defined as earnings adjusted for non-recurring transactions divided by diluted common shares. Adjusted Free Cash Flow is defined as cash used in operating activities adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

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Source: Alico, Inc.