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

| Source: Alico, Inc. Alico, Inc.

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-Season1,214  1,029  185  18.0%
Total Processed1,214  1,029  185  18.0%
Fresh Fruit73  129  (56) (43.4)%
Total1,287  1,158  129  11.1%
Pound Solids Produced:        
Early and Mid-Season6,069  5,440  629  11.6%
Total6,069  5,440  629  11.6%
         
Average Pound Solids Per Box5.00  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, net11,875  4,286 
Inventories33,180  36,204 
Assets held for sale18,295  20,983 
Prepaid expenses and other current assets1,985  1,621 
Total current assets66,283  66,489 
    
Property and equipment, net348,509  349,337 
Goodwill2,246  2,246 
Deferred financing costs, net of accumulated amortization200  262 
Other non-current assets724  848 
Total assets$417,962  $419,182 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,097  $3,192 
Accrued liabilities4,551  6,781 
Long-term debt, current portion4,575  4,550 
Other current liabilities1,069  1,460 
Total current liabilities12,292  15,983 
    
Long-term debt:   
Principal amount, net of current portion180,783  181,926 
Less: deferred financing costs, net(1,715) (1,767)
Long-term debt less current portion and deferred financing costs, net179,068  180,159 
Lines of credit7,123  — 
Deferred income tax liabilities14,691  27,108 
Deferred gain on sale26,643  26,440 
Deferred retirement obligations4,109  4,123 
Total liabilities243,926  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 capital18,890  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 earnings148,285  140,033 
Total Alico stockholders' equity169,316  160,641 
Noncontrolling interest4,720  4,728 
Total stockholders' equity174,036  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 Resources363  301 
Other Operations91  267 
Total operating revenues17,533  17,445 
        
Operating expenses:       
Alico Citrus16,295  14,085 
Conservation and Environmental Resources597  514 
Other Operations59  93 
Total operating expenses16,951  14,692 
    
Gross profit582  2,753 
General and administrative expenses3,886  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 equipment1,736  436 
Other income (expense), net144  (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 interests8  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:   
Basic8,245  8,324 
Diluted8,364  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 amortization3,490  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 land344  356 
Stock-based compensation expense423  440 
Other(44) 125 
Changes in operating assets and liabilities:   
Accounts receivable(7,589) (7,177)
Inventories3,024  (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 equipment5,300  — 
Other—  547 
Net cash provided by (used in) investing activities1,739  (1,810)
    
Cash flows from financing activities:   
Repayments on revolving lines of credit(10,608) (5,000)
Borrowings on revolving lines of credit17,731  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 activities5,503  13,748 
    
Net decrease in cash and cash equivalents(2,447) (5,499)
Cash and cash equivalents at beginning of the period3,395  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.