UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM 10-Q~~



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

		For the Quarterly Period Ended ~~December 31, 2017~~June 30, 2023

		or



☐	¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


			For the transition period
from____________________	~~from____________________~~	to_________________________

Commission File Number: 0-261

ALICO, INC.

~~Alico, Inc.~~

(Exact name of registrant as specified in its charter)



Florida				59-0906081
(State or other jurisdiction of incorporation or organization)				(I.R.S. Employer Identification No.)

			10070 Daniels Interstate Court
~~Suite 100, Fort Myers, FL~~		~~33913~~
Suite 200	Fort Myers	FL		33913
(Address of principal executive offices)				(Zip Code)


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

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ☑Yes¨☐ No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). þ☑Yes¨☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act. ~~(Check one)~~:



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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No þ

☑

There were ~~8,249,357~~7,610,551 shares of common stock outstanding at ~~February 5, 2018.~~

August 1, 2023.

ALICO, INC.

FORM 10-Q

For the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~

~~Part 1 - FINANCIAL INFORMATION~~

PART I

Item 1. Condensed Consolidated Financial Statements ~~(Unaudited).~~

Index to Condensed Consolidated Financial Statements



	~~Page~~
Condensed Consolidated Balance Sheets as of ~~December 31, 2017~~June 30, 2023 (Unaudited) and September 30, ~~2017~~2022	1
Condensed Consolidated Statements of Operations for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 (Unaudited)	2
Condensed Consolidated Statements of Changes in Equity for the three and nine months ended June 30, 2023 and 2022 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 (Unaudited)	3 5
Notes to Condensed Consolidated Financial Statements (Unaudited)	4 6

Cautionary Statement Regarding Forward-Looking Information

We provide forward-looking information in this Quarterly Report on Form 10-Q, particularly in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q that are not historical facts, including without limitation statements regarding our future results of operations and financial position, pursuit of opportunistic land sales, recovery timeline for our groves, business strategy, plans and objectives of management for future operations are forward-looking statements. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management and can be identified by terms such as “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. 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.

These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including, but not limited to: adverse weather conditions, natural disasters and other natural conditions, including the effects of climate change; damage and loss to our citrus groves from disease including but not limited to citrus greening and citrus canker; hurricanes and tropical storms given our geographic concentration in Florida; any adverse event affecting our citrus business; our ability to maintain our market share in a highly competitive business; our dependency on our relationship with Tropicana and Tropicana’s relationship with certain third parties; heightened risks as a result of the sale of a majority of ownership of Tropicana to a French private equity firm; supply and demand pricing; development and execution of our strategic growth initiatives; product contamination and product liability claims; water use regulations restricting our access to water; changes in immigration laws; risks associated with acquisition of additional agricultural assets and other businesses; adverse impacts from dispositions of our assets; harm to our reputation; tax risks associated with a “Section 1031 Exchange”; undertaking one or more significant corporate transactions; seasonality of our citrus business; significant competition in our agricultural operations; fluctuations in our earnings as a result of market supply and prices and demand for our products; climate change, or legal, regulatory or market measures to address climate change and sustainability; increases in labor, personnel and benefits costs; increases in commodity or raw product costs, such as fuel and chemical costs; transportation risks; any change or the classification or valuation methods employed by county property appraisers related to our real estate taxes; any weakness or instability in the real estate industry; liability for the use of fertilizers, pesticides, herbicides and other potentially hazardous substances; compliance with applicable environmental laws; loss of key employees; material weaknesses and other control deficiencies, including as a result of restatement of our financial statements as of September 30, 2021, and the end of certain quarterly periods; the impact of any restatements and any resulting investigations, legal or administrative proceedings; the effect of inflation on our operations, including as a result of the conflict in Ukraine; increased costs as a result of being a public company; system security risks; the COVID-19 pandemic; any harm by natural disasters or epidemics; our indebtedness and ability to generate sufficient cash flow to service our debt obligations; higher interest expenses as a result of variable rates of interest for our debt; our ability to continue to pay cash dividends; and risks related with repurchases; and the other factors described under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022 filed with the Securities and Exchange Commission (the “SEC”) on December 13, 2022 (the “2022 Annual Report on Form 10-K”) and in our Quarterly Reports on Form 10-Q. Except as required by law, we do not undertake an obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.

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
Commitments and Contingencies (Note 11)

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


	June 30,			September 30,
	2023			2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,592		$	865
Accounts receivable, net		4,363			324
Inventories		38,833			27,682
Income tax receivable		1,046			1,116
Assets held for sale		130			205
Prepaid expenses and other current assets		1,731			1,424
Total current assets		47,695			31,616
Property and equipment, net		368,290			372,479
Goodwill		2,246			2,246
Other non-current assets		2,895			2,914
Total assets	$	421,126		$	409,255

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	7,063		$	3,366
Accrued liabilities		5,428			9,062
Long-term debt, current portion		2,098			3,035
Other current liabilities		800			1,062
Total current liabilities		15,389			16,525
Long-term debt:
Principal amount, net of current portion		102,791			103,661
Less: deferred financing costs, net		(653	)		(748	)
Long-term debt less current portion and deferred financing costs, net		102,138			102,913
Lines of credit		17,910			4,928
Deferred income tax liabilities, net		35,755			35,589
Other liabilities		282			435
Total liabilities		171,474			160,390
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 7,605,189 and 7,586,995 shares outstanding at June 30, 2023 and September 30, 2022, respectively		8,416			8,416
Additional paid in capital		20,011			19,784
Treasury stock, at cost, 810,956 and 829,150 shares held at June 30, 2023 and September 30, 2022, respectively		(27,444	)		(27,948	)
Retained earnings		243,245			243,490
Total Alico stockholders' equity		244,228			243,742
Noncontrolling interest		5,424			5,123
Total stockholders' equity		249,652			248,865
Total liabilities and stockholders' equity	$	421,126		$	409,255

See accompanying notes to the unaudited condensed consolidated financial statements.

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


	Three Months Ended June 30,						Nine Months Ended June 30,
	2023			2022			2023			2022
Operating revenues:
Alico Citrus	$	6,712		$	25,533		$	37,917		$	89,313
Land Management and Other Operations		572			405			1,249			1,603
Total operating revenues		7,284			25,938			39,166			90,916
Operating expenses:
Alico Citrus		(8,322	)		24,489			33,493			83,365
Land Management and Other Operations		104			138			300			430
Total operating expenses		(8,218	)		24,627			33,793			83,795
Gross profit		15,502			1,311			5,373			7,121
General and administrative expenses		2,930			2,557			8,106			7,679
Income (loss) from operations		12,572			(1,246	)		(2,733	)		(558	)
Other income (expense), net:
Interest expense		(1,196	)		(854	)		(3,618	)		(2,625	)
Gain on sale of real estate, property and equipment and assets held for sale		2,605			5,755			7,368			40,804
Other income, net		14			9			44			19
Total other income, net		1,423			4,910			3,794			38,198
Income before income taxes		13,995			3,664			1,061			37,640
Income tax provision		1,923			1,002			306			4,281
Net income		12,072			2,662			755			33,359
Net (income) loss attributable to noncontrolling interests		(240	)		44			140			180
Net income attributable to Alico, Inc. common stockholders	$	11,832		$	2,706		$	895		$	33,539
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic	$	1.56		$	0.36		$	0.12		$	4.44
Diluted	$	1.56		$	0.36		$	0.12		$	4.44
Weighted-average number of common shares outstanding:
Basic		7,605			7,570			7,599			7,551
Diluted		7,605			7,589			7,599			7,561

Cash dividends declared per common share	$	0.05		$	0.50		$	0.15		$	1.50

See accompanying notes to the unaudited condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands)


For the Three Months Ended June 30, 2023

					Additional									Total			Non-
	Common stock				Paid In			Treasury			Retained			Alico, Inc.			controlling		Total
	Shares		Amount		Capital			Stock			Earnings			Equity			Interest		Equity
Balance at March 31, 2023		8,416	$	8,416	$	19,985		$	(27,616	)	$	231,793		$	232,578		$	4,743	$	237,321
Net income		—		—		—			—			11,832			11,832			240		12,072
Dividends ($0.05/share)		—		—		—			—			(380	)		(380	)		—		(380	)
Capital contribution received from noncontrolling interest		—		—		—			—			—			—			441		441
Stock-based compensation:
Directors		—		—		(35	)		172			—			137			—		137
Executives and Managers		—		—		61			—			—			61			—		61
Balance at June 30, 2023		8,416	$	8,416	$	20,011		$	(27,444	)	$	243,245		$	244,228		$	5,424	$	249,652


For the Nine Months Ended June 30, 2023

					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, 2022		8,416	$	8,416	$	19,784		$	(27,948	)	$	243,490		$	243,742		$	5,123		$	248,865
Net income (loss)		—		—		—			—			895			895			(140	)		755
Dividends ($0.15/share)		—		—		—			—			(1,140	)		(1,140	)		—			(1,140	)
Capital contribution received from noncontrolling interest		—		—		—			—			—			—			441			441
Stock-based compensation:
Directors		—		—		(53	)		503			—			450			—			450
Executives and Managers		—		—		224			—			—			224			—			224
Employees		—		—		56			1			—			57			—			57
Balance at June 30, 2023		8,416	$	8,416	$	20,011		$	(27,444	)	$	243,245		$	244,228		$	5,424		$	249,652

See accompanying notes to the unaudited condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands)


For the Three Months Ended June 30, 2022

					Additional									Total			Non-
	Common stock				Paid In			Treasury			Retained			Alico, Inc.			controlling			Total
	Shares		Amount		Capital			Stock			Earnings			Equity			Interest			Equity
Balance at March 31, 2022 (Restated)		8,416	$	8,416	$	19,963		$	(29,027	)	$	269,450		$	268,802		$	5,266		$	274,068
Net income (loss)		—		—		—			—			2,706			2,706			(44	)		2,662
Dividends ($0.50/share)		—		—		—			—			(3,792	)		(3,792	)		—			(3,792	)
Exercise of stock options						19			276			—			295						295
Stock-based compensation:
Directors		—		—		27			130			—			157			—			157
Executives and Managers		—		—		(471	)		528			—			57			—			57
Employees		—		—		93			(3	)		—			90			—			90
Balance at June 30, 2022 (Restated)		8,416	$	8,416	$	19,631		$	(28,096	)	$	268,364		$	268,315		$	5,222		$	273,537


For the Nine Months Ended June 30, 2022

					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, 2021 (Restated)		8,416	$	8,416	$	19,989		$	(29,853	)	$	246,163		$	244,715		$	5,402		$	250,117
Net income (loss)		—		—		—			—			33,539			33,539			(180	)		33,359
Dividends ($1.50/share)		—		—		—			—			(11,338	)		(11,338	)		—			(11,338	)
Exercise of stock options		—		—		34			431			—			465			—			465
Stock-based compensation:
Directors		—		—		77			428			—			505			—			505
Executives and Managers		—		—		(359	)		671			—			312			—			312
Employees		—		—		(110	)		227			—			117			—			117
Balance at June 30, 2022 (Restated)		8,416	$	8,416	$	19,631		$	(28,096	)	$	268,364		$	268,315		$	5,222		$	273,537

See accompanying notes to the unaudited condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS 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


	Nine Months Ended June 30,
	2023			2022
Net cash (used in) provided by operating activities:
Net income	$	755		$	33,359
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation, depletion and amortization		11,685			11,476
Debt issue costs expense		106			214
Gain on sale of real estate, property and equipment and assets held for sale		(7,368	)		(40,804	)
Loss on disposal of long-lived assets		5,535			2,228
Inventory net realizable value adjustment		1,616			—
Deferred income tax provision (benefit)		166			(4,758	)
Stock-based compensation expense		731			934
Other		(4	)		—
Changes in operating assets and liabilities:
Accounts receivable		(4,039	)		1,509
Inventories		(12,767	)		4,376
Prepaid expenses		(307	)		(428	)
Income tax receivable		70			3,233
Other assets		315			(556	)
Accounts payable and accrued liabilities		3,355			(3,618	)
Income taxes payable		—			3,138
Other liabilities		(467	)		489
Net cash (used in) provided by operating activities		(618	)		10,792

Cash flows from investing activities:
Purchases of property and equipment		(12,923	)		(15,112	)
Acquisition of citrus groves		(77	)		(136	)
Net proceeds from sale of real estate, property and equipment and assets held for sale		7,583			42,718
Notes receivable		(570	)		—
Change in deposits on purchase of citrus trees		269			65
Net cash (used in) provided by investing activities		(5,718	)		27,535

Cash flows from financing activities:
Repayments on revolving lines of credit		(51,953	)		(46,470	)
Borrowings on revolving lines of credit		64,935			46,470
Principal payments on term loans		(1,807	)		(18,839	)
Capital contribution received from noncontrolling interest		441			—
Exercise of stock options		—			465
Dividends paid		(4,553	)		(11,310	)
Net cash provided by (used in) financing activities		7,063			(29,684	)

Net increase in cash and cash equivalents and restricted cash		727			8,643
Cash and cash equivalents and restricted cash at beginning of the period		865			886

Cash and cash equivalents and restricted cash at end of the period	$	1,592		$	9,529

See accompanying notes to the unaudited condensed consolidated financial statements.

ALICO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1. Description of Business and Basis of Presentation

Description of Business

Alico, Inc. ~~(“Alico”)~~, together with its subsidiaries (collectively, “Alico”, the ~~“Company"~~“Company”, ~~"we"~~“we”, ~~"us"~~“us” or ~~"our”~~“our”), is a Florida agribusiness and land management company owning approximately ~~122,000~~72,000 acres of land ~~throughout Florida, including~~and approximately 90,000 acres of mineral ~~rights.~~rights throughout Florida. Alico holds these mineral rights on substantially all its owned acres, with additional mineral rights on other acres. The Company manages its land based upon its primary usage, and reviews its performance based upon two primary ~~classifications -~~classifications: (i) Alico Citrus and ~~Conservation~~(ii) Land Management and ~~Environmental Resources.~~Other Operations. Financial results are presented based upon ~~its three~~these two business ~~segments (Alico Citrus, Conservation and Environmental Resources and Other Operations).~~

segments.

Basis of Presentation

The Company has prepared the accompanying financial statements on a condensed consolidated basis. These accompanying unaudited condensed consolidated interim financial statements, which are referred to herein as the “Financial ~~Statements",~~Statements,” have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to Article 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission ~~("SEC"~~(“SEC”) for interim financial information. These Financial Statements do not include all of the disclosures required for complete annual financial statements and, accordingly, certain information, footnotes and disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP, have been condensed or omitted in accordance with SEC rules and regulations. Accordingly, the Financial Statements should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2022, as filed with the SEC on December ~~11, 2017.~~

13, 2022 (the “2022 Annual Report on Form 10-K”).

The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited. However, in the opinion of management, such Financial Statements include all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods.

Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the current fiscal year ending September 30, ~~2018. All intercompany transactions~~2023.

During the audit of our financial statements for the period ending September 30, 2022, the Company discovered an error in the calculation of the deferred tax liabilities for the fiscal years 2015 through 2019. As disclosed in the Company’s audited Consolidated Financial Statements and ~~account~~Notes thereto included in the Company’s 2022 Annual Report on Form 10-K, this error was corrected and resulted in a cumulative increase in the Company’s Retained Earnings of approximately $2,512,000. As a result, the Retained Earnings balances ~~between~~at September 30, 2021, March 31, 2022, and June 30, 2022 are captioned as Restated in the ~~consolidated businesses have been eliminated.~~accompanying Condensed Consolidated Statements of Changes in Equity (Unaudited).

Segments

Operating segments are defined in the criteria established under the Financial Accounting Standards Board - Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on ~~three~~two operating segments: (i) Alico Citrus ~~(formerly Orange Co.), Conservation~~ and ~~Environmental Resources~~(ii) Land Management and Other Operations.

Principles of Consolidation

The Financial Statements include the accounts of Alico ~~Inc.~~ and the accounts of all the subsidiaries in which a controlling interest is held by the Company. Under U.S. GAAP, consolidation is generally required for investments of more than 50% of the outstanding voting stock of an investee, except when control is not held by the majority owner. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, LLC, Alico Fruit Company, LLC, Alico Citrus Nursery, LLC, Alico Chemical Sales, LLC, 734 Citrus Holdings, LLC and subsidiaries ~~Alico Fresh Fruit LLC,~~( “Silver Nip”), Alico Skink Mitigation, LLC and Citree Holdings 1, ~~LLC.~~LLC (“Citree”). The Company considers the criteria established under FASB ASC Topic 810, “Consolidations”in its consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the accompanying Financial Statements, the disclosure of contingent assets and liabilities in the Financial Statements and the accompanying Notes, and the reported amounts of revenues and expenses and cash flows during the periods presented. Actual results could differ from those ~~estimates based upon future events.~~estimates. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic conditions, historical experience, the experience and judgment of the Company’s management and various other specific

assumptions that the Company believes to be reasonable.

Revenue Recognition

Revenues are derived from the sale of processed fruit, fresh fruit, other citrus revenue, revenues from grove management services, leasing revenue and other resource revenues. Most of the revenue is generated from the sale of citrus fruit to processing facilities, fresh fruit sales and grove management services.

For fruit sales, the Company recognizes revenue in the amount it expects to be entitled to be paid, determined when control of the products or services is transferred to its customers, which occurs upon delivery of and acceptance of the fruit by the customer and when the Company has a right to payment.

For the sale of fruit, the Company has identified one performance obligation, which is the delivery of fruit to the processing facility of the customer (or harvesting of the citrus in the case of fresh fruit) for each separate variety of fruit identified in the respective contract with the respective customer. The Company ~~evaluates its assumptions~~initially recognizes revenue in an amount which is estimated based on contractual and ~~estimates on an ongoing basis~~market prices, if such market price falls within the range (known as “floor” and ~~may employ outside experts to assist~~“ceiling” prices) identified in the ~~Company’s evaluations.~~specific respective contracts. Additionally, the Company also has a contractual agreement whereby revenue is determined based on applying a cost-plus structure methodology. As such, since all these contracts contain elements of variable consideration, the Company recognizes this variable consideration by using the expected value method. On a quarterly basis, management reviews the reasonableness of the revenues accrued based on buyers’ and processors’ advances to growers, cash and futures markets and experience in the industry. Adjustments are made throughout the year to these estimates as more current relevant industry information becomes available. Differences between the estimates and the final realization of revenues at the close of the harvesting season can result in either an increase or decrease to reported revenues.

Receivables under contracts, whereby pricing is based on contractual and market prices, are primarily paid at the floor amount and are collected within seven days after the harvest week. Any adjustments to pricing as a result of changes in market prices are generally collected or paid thirty to sixty days after final market pricing is published. Receivables under those contracts where pricing is based off a cost-plus structure methodology are paid at the final prior year rate. Any adjustments to pricing because of the cost-plus calculation are collected or paid upon finalization of the calculation and agreement by both parties. As of June 30, 2023, and September 30, 2022, the Company had total receivables relating to sales of citrus of approximately $4,005,000 and $124,000, respectively, recorded in Accounts Receivable, net, in the Condensed Consolidated Balance Sheets.

For grove management services, the Company has identified one performance obligation, which is the management of the third party’s groves. Grove management services include caretaking of the citrus groves, harvesting and hauling of citrus, management and coordination of citrus sales and other related activities. The Company is reimbursed for expenses incurred in the execution of its management duties and the Company receives a per acre management fee. The Company recognizes operating revenue, including a management fee, and corresponding operating expenses when such services are rendered and consumed.

In June 2022, the Company was notified by a group of third-party grove owners, who are affiliated with each other, for which the Company was managing groves that such third-party grove owners were terminating the property management agreement dated as of July 16, 2020 with the Company as such third-party grove owners decided to exit the citrus business. As a result, all services relating to this caretaking management initiative and the accompanying management fee and reimbursed costs associated with performing caretaking management services ceased as of June 10, 2022.

The Company recorded approximately $0 and $10,552,000 of operating revenue relating to these grove management services, including the management fee, in the nine months ended June 30, 2023 and 2022, respectively, for this group of third-party grove owners noted above. The Company recorded approximately $0 and $9,664,000 of operating expenses relating to these grove management services in the nine months ended June 30, 2023 and 2022, respectively, for this group of third-party grove owners noted above.

Disaggregated Revenue

Revenues disaggregated by significant products and services for the three and nine months ended June 30, 2023 and 2022 are as follows:


(in thousands)
	Three Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022
Alico Citrus
Early and Mid-Season	$	—	$	—	$	11,954	$	28,287
Valencias		6,064		21,601		23,994		47,455
Fresh Fruit		48		—		570		1,229
Grove Management Services		427		3,835		978		11,669
Other		173		97		421		673
Total	$	6,712	$	25,533	$	37,917	$	89,313

Land Management and Other Operations
Land and Other Leasing	$	474	$	359	$	1,028	$	1,329
Other		98		46		221		274
Total	$	572	$	405	$	1,249	$	1,603

Total Revenues	$	7,284	$	25,938	$	39,166	$	90,916

Noncontrolling Interest in Consolidated Subsidiary

The Financial Statements include all assets and liabilities of the less-than-100%-owned subsidiary the Company controls, ~~Citree Holdings I, LLC (“Citree”).~~Citree. Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a net income of approximately $490,000 and a net loss of ~~$16,219 and $15,848~~approximately $90,000 for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, respectively, and a net loss of approximately $286,000 and approximately $368,000 for the nine months ended June 30, 2023 and 2022, respectively, of which ~~51%~~51% is attributable to the Company.

Recent Accounting Pronouncements

In ~~May 2014,~~March 2020, the FASB issued ~~Accounting Standard Update ("ASU") 2014-09, “Revenue from Contracts with Customers,” as a new ASC topic~~ASU 2020-04, Reference Rate Reform (Topic 606). The core principle of this ASU is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU further provides guidance for any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards (for example, lease contracts). The FASB subsequently issued ASU 2015-14 to defer the effective date of ASU 2014-09 until annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, with earlier adoption permitted. The FASB also recently issued ASU 2016-10, "Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing," and 2016-12, "Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients," that clarify or amend the original Topic 606. ASU 2014-09 can be adopted using one of two retrospective transition methods: 1) retrospectively to each prior reporting period presented or 2) as a cumulative-effect adjustment as848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. The Company’s floating rate notes and variable funding notes have historically borne interest at fluctuating interest rates based on LIBOR. Because LIBOR will cease to exist, the Company renegotiated its variable rate loan agreements, to instead utilize fluctuating interest rates based on the 30 day Secured Overnight Financing Rate (SOFR), some with the change having taken effect in late fiscal year 2022, and one with the change having taken effect in early fiscal year 2023. ASU 2020-04 was effective March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to extend the sunset date from December 31, 2022 to December 31, 2024. The Company is currently assessing the impact of ~~adoption.~~ adopting this standard and the impact on its condensed consolidated financial statements.

The Company has reviewed other recently issued accounting standards which have not yet ~~selected~~been adopted to determine their potential effect, if any, on the results of operations or financial condition. Based on the review of these other recently issued standards, the Company does not currently believe that any of those accounting pronouncements will have a ~~transition method~~significant effect on its current or future financial position, results of operations, cash flows or disclosures.

Recently Adopted Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”),which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and ~~is currently evaluating~~making other minor improvements. The Company adopted ASU 2019-12 effective October 1, 2021, and the ~~impact~~adoption of ~~ASU 2014-09~~this standard did not have a material impact on the Company’s condensed consolidated financial statements.

The COVID-19 Pandemic

Measures imposed by federal, state, and local governments throughout the United States in response to the COVID-19 Pandemic had a significant adverse impact upon many sectors of the economy, including certain agriculture businesses. While epidemiological conditions in the United States have improved as of June 30, 2023, and certain restrictions on social and commercial activity have been relaxed, a resurgence of the virus, such as variant BA.5, could cause epidemiological and macroeconomic conditions to deteriorate and more severe restrictions to be put in place. It is not possible for the Company to predict the duration or magnitude of any adverse effects due to a resurgence at this time. We will continue to monitor the COVID-19 pandemic and its impacts on our business, financial condition, and results of operations.

To date, the Company has experienced no material adverse impacts from this pandemic.

Reclassifications

Certain prior year amounts have been reclassified in the accompanying Financial Statements ~~upon adoption.~~for consistent presentation to the current period. These reclassifications had no impact on net income, equity, cash flows or working capital as previously reported.

Seasonality

The Company is primarily engaged in the production of fruit for sale to citrus markets, which is of a seasonal nature, and subject to the influence of natural phenomena and wide price fluctuations. Historically, the second and third quarters of ~~our~~Alico's fiscal year ~~generally~~ produce most of the ~~majority of our~~Company's annual ~~revenue, and working~~revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal ~~year. The results~~year, coinciding with harvesting cycles. Because of the ~~reported periods herein~~seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for ~~any other interim periods or~~ the ~~entire~~full fiscal year.

Note 2. Inventories

Inventories consist of the following at ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017:~~2022:


(in thousands)	June 30,		September 30,
	2023		2022
Unharvested fruit crop on the trees	$	37,374	$	26,717
Other		1,459		965
Total inventories	$	38,833	$	27,682

(in thousands) December 31, September 30,
2017 2017
Unharvested fruit crop on the trees $ 29,551
$ 32,145
Beef cattle 2,254
1,954
Other 1,375
2,105
Total inventories $ 33,180
$ 36,204

The Company records its inventory at the lower of cost or net realizable value. For the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~the fiscal year ended September 30, 2022, the Company ~~did not record any~~recorded approximately $1,616,000 and approximately $6,676,000, respectively, for adjustments to reduce inventory to net realizable ~~value.~~

~~In September 2017,~~value, as a result of the ~~State~~impact of ~~Florida's citrus business, including~~Hurricane Ian, which adversely impacted the ~~Company's~~Company’s unharvested citrus crop as of March 31, 2023 and September 30, 2022. No additional adjustment was ~~significantly impacted by Hurricane Irma. For~~required for the three months ended June 30, 2023.

The Company, for the fiscal year ended September 30, ~~2017, the Company~~2022, recorded a casualty loss to reduce the carrying value of the unharvested fruit crop on ~~its inventory. In calculating this~~trees inventory by approximately $14,900,000. No additional casualty loss was recorded for the nine months ended June 30, 2023.

In the three and nine months ended June 30, 2023, the Company ~~made certain estimates. As~~received insurance proceeds relating to Hurricane Ian of ~~December 31, 2017, there were no revisions to these estimates~~approximately $16,643,000 and $21,403,000, respectively, for crop claims, which ~~required any further inventory losses to be recorded.~~have been recorded as a reduction in operating expenses in the Condensed Consolidated Statement of Operations. The Company ~~continues to work closely with its insurers~~has received the remaining crop insurance claims of approximately $329,000 in July 2023.

The Company was eligible for Hurricane Irma federal relief programs for block grants that were being administered through the State of Florida. During the fiscal years ended September 30, 2022, 2021 and ~~adjusters to determine the amount of insurance recoveries, if any,~~2020, the Company ~~may~~received approximately $1,123,000, $4,299,000 and $4,629,000, respectively, under the Florida Citrus Recovery Block Grant (“CRBG”) program. The Company received the remaining portion of approximately $1,315,000 during the nine months ended June 30, 2023. These federal relief proceeds are included as a reduction to operating expenses in the Condensed Consolidated Statements of Operations.

In December 2022, the Consolidated Appropriations Act was signed into law by the federal government; however, the details of the mechanism and funding of any Hurricane Ian relief still remain unclear and, if available, the extent to which the Company will be ~~entitled to.~~eligible. The Company intends to take advantage of any such available programs as and when they become available. The Company is currently working with Florida Citrus Mutual, the industry trade group, and government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.

Note 3. Assets Held for Sale

~~During fiscal 2017, in~~

In accordance with its strategy to dispose of non-core and under-performing assets, the following assets have been classified as assets held for sale ~~as of December 31, 2017~~at June 30, 2023 and September 30, ~~2017:~~2022:


(in thousands)	Carrying Value
	June 30,		September 30,
	2023		2022
Ranch	$	130	$	205
Total assets held for sale	$	130	$	205

(in thousands) Carrying Value
December 31, September 30,
2017 2017
Office Building $ —
$ 3,214
Nursery - Gainsville 6,500
6,500
Chancey Bay 4,179
4,179
Gal Hog 70
70
Breeding Herd 6,133
5,858
Winterhaven 251
—
Trailers 1,162
1,162
Total Assets Held For Sale $ 18,295
$ 20.983

~~On October 30, 2017,~~

During the third quarter 2023, the Company sold ~~its corporate office building in Fort Myers, Florida~~approximately 548 acres to a third party for ~~$5,300,000~~approximately $2,739,000 and ~~realized~~recognized a gain of approximately ~~$1,800,000. The sales agreement provides that~~$2,613,000.

During the ~~Company will lease back a portion of~~second quarter 2023, the ~~office space for five years.~~

~~Negotiations with interested~~company sold approximately 279 acres to various third parties for ~~certain assets held for sale have already taken place,~~approximately $1,596,000 and ~~in January, 2018~~recognized a gain of approximately $1,500,000.

During the first quarter 2023, the Company sold ~~its breeding herd~~approximately 609 acres to various third parties for approximately $3,300,000 and recognized a ~~portion~~gain of ~~their trailers (See Note 13)~~approximately $3,200,000. ~~Assets held~~One of these sales transactions was a sale of approximately 85 acres to Mr. John E. Kiernan, the Company’s President and CEO, on October 20, 2022, for ~~sale consists solely~~approximately $438,900 ($5,161 per acre). On January 1, 2022, Mr. Kiernan entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to be approximately 93 acres of ~~property~~Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022, and ~~equipment.~~

ending on January 1, 2025, and with a yearly rent of $1,860. Additionally, under the terms of the Kiernan Lease Agreement, the Company had granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only during the one-year period January 1, 2022 through January 1, 2023, and at a price of $480,000 ($5,161 per acre), which price was based on an independent appraisal obtained by the Company and dated as of November 11, 2021. On August 26, 2022, Mr. Kiernan exercised his option to purchase the Land. Pursuant to exercise of the option, the Company sold what turned out to be a parcel of approximately 85 acres to Mr. Kiernan.

On May 31, 2022, the Company sold approximately 400 acres of Alico Ranch to a third party for approximately $1,900,000 and recognized a gain of $1,700,000.

During April 2022, the Company sold approximately 788 acres from the Alico Ranch to third parties for approximately $4,100,000 and recognized a gain of approximately $3,900,000. One of these sales transactions, consisting of approximately 142 acres, was sold to an employee of the Company for approximately $651,000.

On March 15, 2022, the Company sold approximately 6,286 acres from the Alico Ranch to third parties for approximately $28,288,000 and recognized a gain of approximately $26,554,000.

On December 3, 2021, the State of Florida purchased, under the Florida Forever program, approximately 1,638 acres of the Alico Ranch for approximately $5,675,000 pursuant to an option agreement entered into between the State of Florida and the Company. The Company ~~recorded an impairment loss~~recognized a gain of approximately ~~$4,131,000 during fiscal year 2017 on these assets classified as assets held~~$5,570,000.

During November 2021, the Company sold approximately 302 acres from the Alico Ranch to various third parties for ~~sale.~~approximately $1,458,000 and recognized a gain of approximately $1,400,000.

Note 4. Property and Equipment, Net

Property and equipment, net consists of the following at ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017:~~2022:


(in thousands)	June 30,			September 30,
	2023			2022
Citrus trees	$	332,749		$	329,582
Equipment and other facilities		58,238			58,021
Buildings and improvements		7,081			7,374
Total depreciable properties		398,068			394,977
Less: accumulated depreciation and depletion		(143,401	)		(135,990	)
Net depreciable properties		254,667			258,987
Land and land improvements		113,623			113,492
Property and equipment, net	$	368,290		$	372,479

For the nine months ended June 30, 2023 and fiscal year ended September 30, 2022, the Company did not record any impairments.

The Company recorded a casualty loss of approximately $1,400,000 for the year ended September 30, 2022 with respect to one of its groves, which sustained tree loss of approximately $1,300,000, and damage to one of its buildings of approximately $100,000, as a direct result of Hurricane Ian.

In connection with the State of Florida’s condemnation of a certain portion of Alico’s property in October 2021, the Company received approximately $1,450,000, all of which was recognized as a gain.

(in thousands) December 31, September 30,
2017 2017
Citrus trees $ 261,286
$ 258,949
Equipment and other facilities 54,840
54,592
Buildings and improvements 8,279
8,835
Total depreciable properties 324,405
322,376
Less: accumulated depreciation and depletion (85,498 ) (82,443 )
Net depreciable properties 238,907
239,933
Land and land improvements 109,602
109,404
Net property and equipment $ 348,509
$ 349,337

Note 5. Long-Term Debt and Lines of Credit

~~Debt Refinancing~~

The ~~Company refinanced its outstanding~~following table summarizes long-term debt ~~obligations on December 3, 2014 in connection with the Orange-Co acquisition. These~~and related deferred financing costs, net of accumulated amortization at June 30, 2023 and September 30, 2022:


	June 30, 2023				September 30, 2022
(in thousands)	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	70,000	$	371	$	70,000	$	435
Met Variable-Rate Term Loans		19,094		97		19,906		113
Met Citree Term Loan		3,888		24		4,013		27
Pru Loans A & B		11,907		161		12,777		173
		104,889		653		106,696		748
Less current portion		2,098		—		3,035		—
Long-term debt	$	102,791	$	653	$	103,661	$	748

The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at June 30, 2023 and September 30, 2022:


	June 30, 2023				September 30, 2022
(in thousands)	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
Lines of Credit:
RLOC	$	—	$	99	$	—	$	110
WCLC		17,910		—		4,928		—
Lines of Credit	$	17,910	$	99	$	4,928	$	110

Future maturities of long-term debt and lines of credit as of June 30, 2023 are as follows:


(in thousands)
	June 30, 2023
Due within one year	$	2,098
Due between one and two years		3,035
Due between two and three years		20,945
Due between three and four years		3,035
Due between four and five years		3,035
Due beyond five years		90,651

Total future maturities	$	122,799

Interest costs expensed and capitalized were as follows:


(in thousands)
	Three Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022
Interest expense	$	1,196	$	854	$	3,618	$	2,625
Interest capitalized		391		395		1,005		1,026
Total	$	1,587	$	1,249	$	4,623	$	3,651

Debt

The Company's credit facilities ~~initially included $125,000,000 in~~consist of (i) fixed interest rate term loans originally in the amount of $125,000,000(“Met Fixed-Rate Term Loans”), ~~$57,500,000 in~~(ii) prior to the satisfaction of one such loan, variable interest rate term loans originally in the amount of $57,500,000(“Met Variable-Rate Term Loans”), ~~and~~(iii) a ~~$25,000,000~~$25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and (iv) a ~~$70,000,000~~$70,000,000 working capital line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”).

The term loans and RLOC are secured by real property. The security for the term loans and RLOC consists of approximately 38,200 gross acres of citrus ~~groves and 5,762 gross acres of ranch land.~~groves. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.

Initially, the Met Fixed-Rate Term Loans were subject to quarterly principal payments of $1,562,500 and bore interest at 4.15% per annum. Effective May 1, 2021, the Company modified its Met Fixed-Rate Term Loans, which, in the aggregate, have a balance of $70,000,000 after the prepayment of $10,312,500 made in April 2021, to be interest-only with a balloon payment to be paid at maturity on November 1, 2029. The ~~term loans, collectively,~~interest rate on these Met Fixed-Rate Term Loans, which were bearing interest at 4.15%, was adjusted to 3.85%. As part of this modification, the Company no longer has the prepayment option previously allowed under the arrangement.

The Met Variable-Rate Term Loans are subject to quarterly principal payments of ~~$2,281,250,~~$406,250 and ~~mature November 1, 2029. The Met Fixed-Rate Term Loans bear~~historically bore an interest ~~at 4.15% per annum, and the Met Variable-Rate Term Loans bear interest at a~~ rate equal to ~~90 day~~90-day LIBOR plus ~~150~~165 basis points (the “LIBOR spread”). Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. For the fiscal year ended September 30, 2022, the LIBOR rate was effective from October 1, 2021 through July 31, 2022.The LIBOR spread was subject to adjustment by Met beginning May 1, 2017 and was subject to further adjustment every two years thereafter until maturity. No adjustment was made at May 1, 2019, or at May 1, 2021. Effective August 1, 2022, the interest rate was renegotiated to the One Month Term Secured Overnight Financing Rate (SOFR) plus 175 basis points (the “SOFR spread”). The ~~LIBOR~~SOFR spread is subject to adjustment by ~~the lender on~~Met every 2 years beginning May 1, ~~2019 and every two years thereafter~~2023, until maturity. Effective May 1, 2023 the SOFR spread was adjusted to 220 basis points. Interest on the term loans is payable quarterly.

The interest rates on the Met Variable-Rate Term Loans were ~~3.03%~~7.37% per annum and ~~2.96%~~4.27% per annum, as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~2022, respectively.

The Company may prepay up to $8,750,000 of the Met Fixed-Rate Term Loan principal annually without penalty, and any such prepayments may be applied to reduce subsequent mandatory principal payments. The maximum annual prepayment was made for calendar year 2015 and remains available to reduce future mandatory principal payments should the Company elect to do so. During the first quarter of fiscal 2018, the company elected not to make its principal payment and utilized its prepayment to satisfy its payment requirement. The Met Variable-Rate Term Loans ~~may be prepaid without penalty.~~

~~The~~mature on November 1, 2029.

With respect to the RLOC, ~~bears~~for the fiscal year ended September 30, 2022, the LIBOR-based rate was effective from October 1, 2021 through July 31, 2022 and bore interest at a floating rate equal to ~~90 day~~90-day LIBOR plus ~~150~~165 basis points, payable quarterly. Effective August 1, 2022, the LIBOR-based rate was renegotiated to SOFR plus 175 basis points. The SOFR spread is subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity. Effective May 1, 2023 the SOFR spread was adjusted to 220 basis points. The LIBOR spread was adjusted by ~~the lender~~Met on May 1, 2017 and iswas subject to further adjustment every two years thereafter. ~~Outstanding principal, if any, is due at~~No adjustment was made on May 1, 2019 or on May 1, 2021. In October 2019, the RLOC agreement was modified to extend the maturity onto November 1, ~~2019.~~2029. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit. The RLOC is available for funding general corporate needs. The variable interest rate

was ~~3.03%~~7.37% per annum and ~~2.96%~~4.27% per annum as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~2022, respectively. Availability under the RLOC was ~~$25,000,000~~$25,000,000 as of ~~December 31, 2017.~~

both June 30, 2023 and September 30, 2022.

The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The interest rate on the WCLC iswas based on the ~~one month~~one-month LIBOR, plus a spread, which iswas adjusted quarterly, based on the ~~Company's~~Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. ~~The rate is currently at LIBOR plus 175 basis points. The variable interest rate was 3.11% per annum and 2.99% per annum as of December 31, 2017 and September 30, 2017, respectively.~~ The WCLC agreement was amended on ~~September 30, 2017, and the primary terms of the amendment were an extension of~~October 27, 2022, primarily to extend the maturity to November 1, ~~2019.~~2025, and convert the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. There were no changes to the commitment ~~amount or~~amount. The variable interest ~~rate. Availability~~rate was 7.66% at June 30, 2023 (representing the rate based on SOFR, plus the spread) and the interest rate at September 30, 2022 was 4.31% per annum (representing the rate based upon LIBOR, plus the spread). The WCLC agreement provides for Rabo to issue up to $2,000,000 in letters of credit on the Company’s behalf, of which $248,000 was outstanding as of June 30, 2023, which correspondingly reduced the Company's availability under the ~~WCLC was approximately $52,577,000 as~~line of ~~December 31, 2017 and September 30, 2017, respectively.~~

credit.

The WCLC is subject to a quarterly commitment fee on the daily unused availability under the line computed as the commitment amount less the aggregate of the outstanding loans and outstanding letters of credit. The commitment fee is adjusted quarterly based on Alico's debt service coverage ratio for the preceding quarter and can vary from a minimum of 20 basis points to a maximum of 30 basis points. Commitment fees ~~to date have been~~were charged at 20 basis points; as of May 18, 2023, the Company is being charged at 30 basis points.

~~The~~

There was approximately $17,910,000 and $4,928,000 outstanding ~~balance~~ on the WCLC at June 30, 2023 and September 30, 2022, respectively. Availability under the WCLC was approximately ~~$7,123,000 at December 31, 2017. The WCLC agreement provides for Rabo~~$51,842,000 and $64,762,000 as of June 30, 2023 and September 30, 2022, respectively.

In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to ~~issue up~~a refinancing and approximately $339,000 of costs related to ~~$20,000,000~~the retired debt. Additionally, financing costs of approximately $23,000 were incurred in the fiscal year ended September 30, 2020 in connection with the letters of ~~credit~~credit. During the three months ended June 30, 2022, the Company expensed approximately $94,000 in deferred financing costs related to the Met Variable-Rate Term Loan prepayment of approximately $15,625,000 on April 29, 2022. All costs are included in deferred financing costs and are being amortized to interest expense over the ~~Company’s behalf. As~~applicable terms of ~~December 31, 2017, there~~the obligations. The unamortized balance of deferred financing costs related to the financing above was approximately ~~$10,300,000 in outstanding letters of credit, which correspondingly reduced the Company's availability under the line of credit.~~

$567,000 and approximately $658,000 at June 30, 2023 and September 30, 2022, respectively.

These credit facilities noted above are subject to various covenants including the following financial covenants: (i) minimum debt service coverage ratio of 1.10 to ~~1.00,~~1.00; (ii) tangible net worth of at least ~~$160,000,000~~$160,000,000 increased annually by ~~10%~~10% of consolidated net income for the preceding ~~year,~~years, or approximately ~~$162,300,000~~$174,462,000 for the year ~~ending~~ended September 30, ~~2017,~~2022; (iii) minimum current ratio of 1.50 to ~~1.00,~~1.00; (iv) debt to total assets ratio not greater than .625 to 1.00, ~~and,~~and; (v) solely in the case of the WCLC, ~~(v)~~ a limit on capital expenditures of ~~$30,000,000~~$30,000,000 per fiscal year. As of ~~December 31, 2017,~~June 30, 2023, the Company was in compliance with all of the financial covenants.

~~The credit~~

Credit facilities also include a Met Life term loan collateralized by ~~real estate~~1,200 gross acres of citrus grove owned by Citree (“Met Citree Loan”). This is a ~~$5,000,000~~$5,000,000 credit facility that bears interest at a fixed rate of ~~5.28%~~5.28% per annum. ~~An initial advance of $500,000 was~~Principal and interest payments are made ~~at closing~~ on ~~March 4, 2014. The loan agreement was amended~~a quarterly basis. Effective February 17, 2023, the Company agreed to ~~provide for an interim advance of $2,000,000 on September 17, 2015,~~defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the ~~interest rate was adjusted to 5.30% per annum at the time~~maturity date of the ~~interim advance. The final $2,500,000 advance~~loan. At June 30, 2023 and September 30, 2022, there was ~~funded on April 27, 2016~~an outstanding balance of $3,888,000 and ~~the interest rate was adjusted to 5.28%. Principal payments on this term loan commence February 1, 2018 and are payable quarterly thereafter.~~$4,013,000, respectively. The loan matures in February 2029.

The unamortized balance of deferred financing costs related to this loan was approximately $24,000 and $27,000 at June 30, 2023 and September 30, 2022, respectively.

Transition from LIBOR

On July 27, 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that it intended to phase out LIBOR. On November 30, 2020, ICE Benchmark Administration (“IBA”), the administrator of LIBOR, with the support of the United States Federal Reserve and the Financial Conduct Authority of the United Kingdom, announced plans to consult on ceasing publication of LIBOR on December 31, 2021 for only the one week and two-month LIBOR tenors, and on June 30, 2023 for all other LIBOR tenors. On March 5, 2021, the FCA confirmed that all LIBOR settings will either cease to be provided by any administrator or no longer be representative: (a) immediately after December 31, 2021, in the case of the one week and two-month U.S. dollar settings; and (b) immediately after June 30, 2023, in the case of the remaining U.S. dollar settings. The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has proposed an alternative rate to replace U.S. Dollar LIBOR: the Secured Overnight Financing Rate (SOFR). On March 15, 2022, President Biden signed the Consolidated Appropriations Act, 2022, which contains as part of its many provisions the Adjustable Interest Rate (LIBOR) Act providing for a transition from LIBOR to a SOFR based rate for certain legacy contracts which lack adequate fallback provisions. However, the LIBOR Act does not affect the Company because the Company has amended its LIBOR based loan documents to include benchmark replacement provisions (i.e., provisions based on SOFR).

Silver Nip Citrus Debt

~~There are~~

Silver Nip Citrus entered into two initial fixed-rate term loans with Prudential Mortgage Capital Company (“Prudential”), with an original combined balance of ~~$27,550,000,~~$27,550,000, bearing interest at ~~5.35%~~5.35% per annum (“Pru Loans A & B”). Principal of ~~$290,000~~$290,000 is payable quarterly, together with accrued interest. The ~~Company may prepay up to $5,000,000 of principal without penalty. On February 15, 2015, Silver Nip Citrus made a prepayment of $750,000. The~~ loans are collateralized by ~~real estate~~approximately 5,700 acres of citrus groves in Collier, Hardee, Highlands ~~Martin, Osceola~~ and Polk Counties, Florida and mature on June 1, ~~2033.~~

Silver Nip Citrus entered into two additional fixed-rate term loans with Prudential to finance the acquisition of a 1,500 acre citrus grove on September 4, 2014. Each loan was in the original amount of $5,500,000. Principal of $55,000 per loan is payable quarterly, together with accrued interest. One loan bears interest at 3.85% per annum (“2029 and June 1, 2033, respectively.

The Pru ~~Loan E”), while the other bears interest at 3.45% per annum (“Pru Loan F”). The interest rate on Pru Loan E is~~Loans A & B are subject to adjustment on September 1, 2019 and every year thereafter until maturity. Both loans are collateralized by real estate in Charlotte County, Florida. Pru Note E matures September 1, 2021, and Pru Note F matures September 1, 2039.

The Silver Nip Citrus credit agreements were amended on December 1, 2016. The primary terms of the amendments were (1) the Company provided a limited $8,000,000 guaranty of the Silver Nip debt, (2) the limited personal guarantees provided by George Brokaw, Remy Trafelet and Clayton Wilson prior to the Company’s merger with Silver Nip Citrus, and also totaling $8,000,000, were released and (3)an annual financial covenant whereby the consolidated current ratio ~~covenant~~ requirement ~~was reduced from 1.50~~is 1.00 to ~~1.00 to 1.00 to 1:00.~~1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of ~~December 31, 2017,~~June 30, 2023.

The unamortized balance of deferred financing costs related to the ~~most recent measurement date.~~

~~Other Modifications of Rabo and Prudential Credit Agreements~~

~~In February 2015, Rabo agreed, subject to certain conditions, that the Company may loan~~ Silver Nip Citrus ~~up to $7,000,000 on a revolving basis for cash management purposes. These advances would be funded from either cash on hand or draws on the Company’s WCLC.~~

~~Silver Nip Citrus has provided a $7,000,000 limited guaranty~~debt was approximately $161,000 and ~~security agreement granting Rabo a security interest in crops, accounts receivable, inventory and certain other assets.~~

~~This modification required the amendment of various Prudential and Rabo loan documents and mortgages.~~

~~The following table summarizes long-term debt and related deferred financing costs net of accumulated amortization~~$173,000 at ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017:~~2022, respectively.

December 31, 2017 September 30, 2017
Principal Deferred Financing Costs, Net Principal Deferred Financing Costs, Net
(in thousands)

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans $ 99,062
$ 924
$ 99,062
$ 954
Met Variable-Rate Term Loans 48,876
425
49,594
439
Met Citree Term Loan 5,000
48
5,000
49
Pru Loans A & B 22,740
253
23,030
258
Pru Loan E 4,840
23
4,895
25
Pru Loan F 4,840
42
4,895
42
185,358
1,715
186,476
1,767
Less current portion 4,575
—
4,550
—
Long-term debt $ 180,783
$ 1,715
$ 181,926
$ 1,767

~~The following table summarizes lines of credit and related deferred financing costs net of accumulated amortization at December 31, 2017 and September 30, 2017:~~

December 31, 2017 September 30, 2017
Principal Deferred Financing Costs, Net Principal Deferred Financing Costs, Net
(in thousands)

Lines of Credit:
RLOC $ —
$ 96
$ —
$ 109
WCLC 7,123
104
—
153
Lines of Credit $ 7,123
$ 200
$ —
$ 262

~~Future maturities of long-term debt and lines of credit as of December 31, 2017 are as follows:~~

(in thousands)

Due within one year $ 4,575
Due between one and two years 15,548
Due between two and three years 10,975
Due between three and four years 14,935
Due between four and five years 10,755
Due beyond five years 135,693

Total future maturities $ 192,481

~~Interest costs expensed and capitalized were as follows:~~

(in thousands)
Three Months Ended December 31,
2017 2016
Interest expense $ 2,255
$ 2,327
Interest capitalized 134
63
Total $ 2,389
$ 2,390

Note 6. Accrued Liabilities

Accrued ~~Liabilities~~liabilities consist of the following at ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017:~~

2022:


(in thousands)	June 30,		September 30,
	2023		2022
Ad valorem taxes	$	1,423	$	2,024
Accrued interest		998		764
Accrued employee wages and benefits		1,747		1,713
Accrued dividends		380		3,793
Accrued insurance		226		345
Professional fees		425		303
Other accrued liabilities		229		120
Total accrued liabilities	$	5,428	$	9,062

(in thousands) December 31, September 30,
2017 2017

Ad valorem taxes $ —
$ 2,648
Accrued interest 1,203
1,165
Accrued employee wages and benefits 1,169
1,320
Accrued dividends 494
494
Current portion of deferred retirement obligations 315
315
Accrued insurance 266
166
Other accrued liabilities 1,104
673
Total accrued liabilities $ 4,551
$ 6,781

Note 7.Income Taxes

On ~~December 22, 2017,~~March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (H.R. 748) (the “CARES Act”). Among the changes to the U.S. federal income tax rules, the CARES Act restored net operating loss carryback rules that were eliminated by the 2017 Tax Cuts and Jobs Act, ~~(the “Act”~~modified the limit on the deduction for net interest expense, and accelerated the timeframe for refunds of AMT credit carryovers. From a federal tax reporting standpoint, the Company had a federal tax net operating loss (“NOL”) ~~was signed into law. The Act contains significant changes to corporate taxes, including a permanent reduction~~in the amount of $2,390,415 for the ~~U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The Company’s statutory rate for~~ fiscal year ended September 30, ~~2018 will be 24.5%, based on a fiscal year blended rate calculation. The 21% U.S. corporate tax rate will apply to fiscal years ending September 30, 2019~~2020 and, ~~each year thereafter.~~

~~Additionally, the Act requires a one-time remeasurement of certain tax related assets and liabilities. During the first quarter ended December 31, 2017, the Company made certain estimates related~~ pursuant

to the ~~impact~~provisions of the CARES Act, ~~including the remeasurement of deferred taxes at the new expected tax rate and a revised effective tax rate~~Form 1139 was filed for the NOL carryback during fiscal year ended September 30, ~~2018,~~2021, resulting in a refund of $580,314, which was ~~used~~received on May 31, 2022.

The Company’s Federal and State filings remain subject to ~~compute current~~examination by tax ~~expense~~authorities for tax periods ending after September 30, 2018.

In December 2021, the ~~first quarter ended December 31, 2017. The amounts recorded in the three months ended December 31, 2017 for the remeasurement~~Company sold 1,638 acres of ~~deferred tax liabilities principally relate~~land to the ~~reduction~~State of Florida at a price below market value, which resulted in ~~the U.S. corporate income~~a charitable contribution and related charitable deduction for tax ~~rate.~~purposes. The ~~Company has recorded~~charitable contribution generated a tax benefit of approximately ~~$11,300,000~~$6,300,000, however, the Company does not anticipate it will be able to ~~account for these~~realize the entire charitable deduction before it expires in 2027. A valuation allowance of approximately $1,400,000 was initially recorded in December 2021 to partially offset the charitable contribution carryover deferred tax ~~impacts.~~asset, resulting in a net benefit of approximately $4,900,000. During fiscal year ending September 2022, the Company utilized approximately $500,000 of the charitable contribution, leaving a charitable contribution carryover of $5,800,000. Also, as of September 2022, the valuation allowance increased to approximately $4,300,000 due to economic hardships from Hurricane Ian, resulting in a net benefit of approximately $1,500,000. For the year ending September 30, 2023, the valuation allowance is expected to increase by $449,000 due to the estimated realization of the charitable contribution carryover.

Note 8. Earnings Per Common Share

Basic earnings per share for Alico's common stock is calculated by dividing net income attributable to Alico, Inc. common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of common shares issuable under equity-based compensation plans in accordance with the treasury stock method, except where the inclusion of such common shares would have an anti-dilutive impact.

For the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, basic and diluted earnings per common share were as follows:


(in thousands except per share amounts)	Three Months Ended June 30,				Nine Months Ended June 30,
	2023		2022		2023		2022
Net income attributable to Alico, Inc. common stockholders	$	11,832	$	2,706	$	895	$	33,539

Weighted average number of common shares outstanding – basic		7,605		7,570		7,599		7,551
Dilutive effect of equity-based awards		—		19		—		10
Weighted average number of common shares outstanding – diluted		7,605		7,589		7,599		7,561

Net income per common share attributable to Alico, Inc. common stockholders:
Basic	$	1.56	$	0.36	$	0.12	$	4.44
Diluted	$	1.56	$	0.36	$	0.12	$	4.44

(in thousands except per share amounts)
Three Months Ended December 31,
2017 2016

Net income (loss) attributable to Alico, Inc. common stockholders $ 8,746
$ (1,735 )

Weighted average number of common shares outstanding - basic 8,245
8,324
Dilutive effect of equity-based awards 119
—
Weighted average number of common shares outstanding - diluted 8,364
8,324

Net income (loss) per common shares attributable to Alico, Inc. common stockholders:
Basic $ 1.06
$ (0.21 )
Diluted $ 1.05
$ (0.21 )

~~The computation~~

For the three and nine months ended June 30, 2023 and 2022 there were no anti-dilutive equity awards excluded from the calculation of diluted earnings per common share for the three months ended December 31, 2017 includes the impact of certain equity awards because they are dilutive. Such awards are comprised of 750,000 stock options granted to Executive Officers (see Note 12. "Related Party Transactions") during the three months ended December 31, 2016.share.

Note 9. Segment Information

Segments

Operating segments are defined in the criteria established under the ~~Financial Accounting Standards Board - Accounting Standards Codification (“~~FASB ~~ASC”)~~ASC Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to

assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on ~~three~~two operating segments: Alico Citrus ~~Conservation~~ and ~~Environmental Resources~~Land Management and Other Operations.

Total revenues represent sales and services rendered to unaffiliated customers, as reported in the Condensed Consolidated Statements of Operations. Goods ~~and services~~ produced by ~~these segments~~the Alico Citrus segment, as well as through the grove management services rendered by the Alico Citrus segment, are sold to wholesalers and processors in the United States who prepare the products for consumption. The Company evaluates the segments’ performance based on direct margins (gross profit) from operations before general and administrative expenses, interest expense, other income (expense) and income taxes, not including nonrecurring gains and losses.

Information by operating segment is as follows:


(in thousands)	Three Months Ended June 30,					Nine Months Ended June 30,
	2023			2022		2023		2022
Revenues:
Alico Citrus	$	6,712		$	25,533	$	37,917	$	89,313
Land Management and Other Operations		572			405		1,249		1,603
Total revenues		7,284			25,938		39,166		90,916

Operating expenses:
Alico Citrus		(8,322	)		24,489		33,493		83,365
Land Management and Other Operations		104			138		300		430
Total operating expenses		(8,218	)		24,627		33,793		83,795

Gross profit:
Alico Citrus		15,034			1,044		4,424		5,948
Land Management and Other Operations		468			267		949		1,173
Total gross profit	$	15,502		$	1,311	$	5,373	$	7,121

Depreciation, depletion and amortization:
Alico Citrus	$	3,714		$	3,676	$	11,318	$	11,043
Land Management and Other Operations		23			13		41		84
Other Depreciation, Depletion and Amortization		101			119		326		349
Total depreciation, depletion and amortization	$	3,838		$	3,808	$	11,685	$	11,476


(in thousands)	June 30,		September 30,
	2023		2022
Assets:
Alico Citrus	$	407,923	$	396,266
Land Management and Other Operations		11,833		11,326
Other Corporate Assets		1,370		1,663
Total Assets	$	421,126	$	409,255

(in thousands) Three Months Ended December 31,
2017 2016
Revenues:
Alico Citrus $ 17,079
$ 16,877
Conservation and Environmental Resources 363
301
Other Operations 91
267
Total 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 (loss):
Alico Citrus 784
2,792
Conservation and Environmental Resources (234 ) (213 )
Other Operations 32
174
Total gross profit $ 582
$ 2,753

Depreciation, depletion and amortization:
Alico Citrus $ 3,398
$ 3,516
Conservation and Environmental Resources 59
169
Other Operations 11
32
Other Depreciation, Depletion and Amortization 22
199
Total depreciation, depletion and amortization $ 3,490
$ 3,916

(in thousands) December 31, September 30,
2017 2017
Assets:
Alico Citrus $ 389,351
$ 387,972
Conservation and Environmental Resources 15,314
13,845
Other Operations 10,889
10,974
Other Corporate Assets 2,408
6,391
Total Assets $ 417,962
$ 419,182

Note 10. ~~Stockholders'~~Leases

The Company determines whether an arrangement is a lease at inception. The Company’s leases consist of operating lease arrangements for certain office space and IT facilities, and equipment leases. When these lease arrangements include lease and non-lease components, the Company accounts for lease components and non-lease components (e.g., common area maintenance) separately based on their relative standalone prices.

Any lease arrangements with an initial term of one year or less are not recorded on the Company’s Condensed Consolidated Balance Sheets, and it recognizes lease cost for these lease arrangements on a straight-line basis over the lease term. Many lease arrangements provide the options to exercise one or more renewal terms or to terminate the lease arrangement. The Company includes these options when it will be reasonably certain to exercise them in the lease term used to establish the right-of-use assets

and lease liabilities. Generally, lease agreements do not include an option to purchase the leased asset, residual value guarantees or material restrictive covenants.

As most of our lease arrangements do not provide an implicit interest rate, the Company applies an incremental borrowing rate based on the information available at the commencement date of the lease arrangement to determine the present value of lease payments.

No lease costs associated with finance leases and sale-leaseback transactions occurred and our lease income associated with lessor and sublease arrangements are not material to our Condensed Consolidated Financial Statements.

Our operating leases cost components are reported in our Condensed Consolidated Statements of Operations as follows:


(in thousands)	Three Months Ended June 30,				Nine Months Ended June 30,
Operating lease components	2023		2022		2023		2022
Operating leases costs recorded in general and administrative expenses	$	30	$	31	$	91	$	109

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are as follows:


	June 30, 2023
Weighted-average remaining lease term		1.23 years
Weighted-average discount rate			1.80	%

Note 11. Stockholders’ Equity

Effective January 27, 2015, the Company’s Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”) which provides for up to 1,250,000 common shares available for issuance to provide a long-term incentive plan for officers, employees, directors and/or consultants to directly link incentives to stockholder value. The 2015 Plan was approved by the Company’s stockholders in February 2015. The Company’s 2015 Plan provides for grants to eligible participants in various forms including restricted shares of the Company’s common stock and stock options. Awards are discretionary and are determined by the Compensation Committee of the Board of Directors. Awards vest based upon service conditions. Non-vested restricted shares generally vest over requisite service periods of one to six years from the date of grant.

The Company recognizes stock-based compensation expense for (i) Board of Directors fees ~~(paid~~(generally paid in treasury stock), and (ii) other awards under the ~~Stock Incentive~~2015 Plan ~~of 2015~~ (paid in restricted stock and stock options). Stock-based compensation expense is recognized in general and administrative expenses in the Condensed Consolidated Statements of Operations.

Stock Compensation -– Board of Directors

The Board of Directors can either elect to receive stock compensation or cash for their fees for services provided. Stock-based compensation expense relating to the Board of ~~Director~~Directors fees was approximately ~~$192,000~~$137,000 and ~~$255,000~~$157,000 for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, respectively, and $450,000 and $505,000 for the nine months ended June 30, 2023 and 2022, respectively.

Restricted Stock

In fiscal year 2015, the Company awarded 12,500 restricted shares of the Company’s common stock (“Restricted Stock”) to two senior executives under the 2015 Plan at a weighted average fair value of $49.49 per common share, vesting over three to five years.

In November 2017, a senior executive was awarded 5,000 restricted shares of the Company’s common stock (“Restricted Stock”) under the 2015 Plan at a weighted average fair value of $31.95 per common share, vesting over approximately three years.

Stock compensation expense related to the Restricted Stock ~~totaled~~was approximately ~~$26,000~~$61,000 and ~~$150,000~~$253,000 for the three and nine months ended ~~December 31, 2017~~June 30, 2023, respectively, and ~~2016,~~approximately $129,000 and $333,000 for the three and nine months ended June 30, 2022, respectively. There was approximately ~~$283,000~~$441,000 and ~~$413,000~~$692,000 of total unrecognized stock compensation costs related to unvested stock compensation for the Restricted Stock grants at ~~December 31, 2017~~June 30, 2023 and ~~2016,~~September 30, 2022, respectively.

Restricted Stock ~~Option Grant~~

Awards

On ~~December 31, 2016,~~September 6, 2022, the Company ~~entered into new employment agreements (collectively,~~awarded 747 restricted shares of the ~~“Employment Agreements”) with each of Remy W. Trafelet, Henry R. Slack, and George R. Brokaw (collectively,~~Company’s common stock to the ~~“Executives”). Mr. Trafelet serves as the President and~~newly appointed Chief ~~Executive~~Financial Officer of the Company ~~Mr. Slack serves~~under the 2015 Plan at a fair value of $33.50 per common share, with all shares scheduled to vest on January 1, 2024.

On May 18, 2022, the Company awarded 12,500 restricted shares of the Company’s common stock to the President and CEO under the 2015 Plan at a weighted average fair value of $40.17 per common share, with one half of the shares scheduled to vest on January 1, 2025 and the remaining shares scheduled to vest on January 1, 2026.

On April 1, 2022, the Company awarded 5,000 restricted shares of the Company’s common stock to the President and CEO under the 2015 Plan at a weighted average fair value of $37.98 per common share, with one half of the shares scheduled to vest on January 1, 2025 and the remaining shares scheduled to vest on January 1, 2026.

On January 26, 2022, the Company awarded 7,256 restricted shares of the Company’s common stock to employees, with more than one year of service, under the 2015 plan at a weighted average fair value of $35.50 per common share, vesting on January 1, 2023. During the third quarter of fiscal year 2022, several employees were dismissed in connection with the wind down of a certain Property Management Agreement dated as of July 16, 2020, with a third party (the “Property Management Agreement”). As part of the ~~Executive Chairman~~wind down, 1,144 shares of the 7,256 restricted shares referenced above vested upon the dates such employees were terminated, which resulted in the recognition of the remaining unrecognized stock expense in the Consolidated Statement of Operations as of September 30, 2022. The remaining shares vested on January 1, 2023.

On November 5, 2021, the Company awarded 2,224 restricted shares of the Company’s common stock to certain executives and senior managers under the 2015 Plan at a weighted average fair value of $37.13 per common share, vesting on January 1, 2023. On May 31, 2022, due to the resignation of an executive officer, 674 shares of the 2,224 restricted shares referenced above were forfeited and the stock compensation expense already recognized was reversed in the Consolidated Statement of Operations as of September 30, 2022. The remaining shares vested on January 1, 2023.

On October 15, 2021, the Company awarded 2,500 restricted shares of the Company’s common stock to the President and CEO under the 2015 Plan at a weighted average fair value of $34.41 per common share. These shares vested on January 1, 2022.

On November 10, 2020, the Company awarded 5,885 restricted shares of the Company’s common stock to certain other executives and senior managers under the 2015 Plan at a weighted average fair value of $31.20 per common share. These shares vested on January 1, 2022.

Stock Option Grant

Stock option grants of 118,000 options to certain officers and managers of the Company ~~and Mr. Brokaw serves as the Executive Vice Chairman of the Company, and each of them continues to serve on the Company’s Board of Directors.~~

~~A stock option grant of 300,000 options in the case of Mr. Trafelet and 225,000 options in the case of each of Messrs. Slack and Brokaw~~ (collectively the ~~“Option~~“2020 Option Grants”) were granted on ~~December 31, 2016.~~October 11, 2019. The option exercise price was set at ~~$27.15,~~$33.96, the closing price on ~~December 31, 2016.~~October 11, 2019. The 2020 Option Grants ~~will vest~~were to have vested as follows: (i) ~~25%~~25% of the options ~~will vest~~were to have vested if the price of the Company’s common stock during a consecutive ~~20-trading~~20-trading day period exceeds ~~$60.00;~~$35.00; (ii) ~~25%~~25% of the options ~~will vest~~were to have vested if ~~such~~the price of the Company’s common stock during a consecutive 20-trading day period exceeds ~~$75.00;~~$40.00; (iii) ~~25%~~25% of the options ~~will vest~~were to have vested if ~~such~~the price of the Company’s common stock during a consecutive 20-trading day period exceeds ~~$90.00;~~$45.00; and (iv) ~~25%~~25% of the options ~~will vest~~were to have vested if ~~such~~the price of the Company’s common stock during a consecutive 20-trading day period exceeds ~~$105.00.~~$50.00. If the applicable stock price hurdles ~~have~~were not ~~been~~ achieved by (A) the ~~second anniversary of~~date that is 18 months following the ~~Executive’s~~ termination of employment, if the ~~Executive’s~~ employment is terminated due to death or disability, (B) the date that is 1812 months following the ~~Executive’s~~ termination of employment, if the ~~Executive’s~~ employment is terminated by the Company without cause, by the ~~Executive~~employee with good reason, or due to the ~~Executive’s~~employee’s retirement, or (C) the date of the termination of ~~the Executive’s~~ employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles ~~have~~were not ~~been~~ achieved by ~~the fifth anniversary of the grant date (or the fourth anniversary of the grant date, in the case of the tranche described in clause (i) above),~~December 31, 2022, then any unvested options ~~will be~~

were to have been forfeited. ~~The~~During the nine months ended June 30, 2023, the stock did not trade above $40.00 per share for twenty consecutive days (the $35.00 per share threshold was met during fiscal year 2020 and thus 25% was previously vested); accordingly, no additional amounts of the 2020 Option Grants ~~will also become~~were vested ~~to the extent that the applicable stock price hurdles are satisfied in connection with a change in control~~as of June 30, 2023. On December 15, 2021, an officer of the ~~Company.~~

Company exercised 5,000 stock options that had previously vested. Additionally, in the three months ended June 30, 2022, three officers of the Company exercised 9,000 options that had previously vested. As of June 30, 2023, only the first hurdle under each such option grant had been reached; therefore, only 25% of each option grant vested and the remainder of the options have now been forfeited.

Stock compensation expense related to the options ~~totaled~~of approximately ~~$205,000~~$0 and $0$18,000 was recognized for the three and nine months ended ~~December 31, 2017~~June 30, 2023, respectively, and ~~2016,~~approximately $18,000 and $96,000 was recognized for the three and nine months ended June 30, 2022, respectively. At ~~December 31, 2017~~June 30, 2023 and ~~2016,~~September 30, 2022, there was approximately ~~$1,822,000~~$0 and ~~$2,646,000~~$18,000, respectively, of total unrecognized stock compensation costs related to unvested share-based compensation for the option ~~grants, respectively. The total unrecognized compensation cost is expected to be recognized over a weighted-average period of approximately 2.3 years.~~

grants.

The fair value of the 2020 Option ~~Grants~~Grant was estimated on the date of grant using a Monte Carlo valuation model that uses the assumptions noted in the following table. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding; the range given below results from different ~~time-frames~~timeframes for the various market conditions being met.



~~Expected Volatility~~ 2020 Option Grant	~~32.19~~	%
Expected Volatility			26.0	%
Expected Term (in years)	~~2.6 - 4.0~~	3.61
Risk Free Rate	~~24.5~~		1.60	%

The weighted-average grant-date fair value of the 2020 Option ~~Grants~~Grant was ~~$3.53.~~$3.20. There were no additional stock options granted ~~exercised or forfeited~~ for the three and nine months ended ~~December 31, 2017.~~

June 30, 2023.

~~Stock Repurchase Authorizations~~

In fiscal year 2017, the Board of Directors authorized the repurchase of up to $7,000,000 of the Company’s common stock in two separate authorizations (the "2017 Authorization"). In March 2017, our Board of Directors authorized the repurchase of up to $5,000,000 of the Company’s common stock beginning March 9, 2017 and continuing through March 9, 2019. In May 2017, our Board of Directors authorized the repurchase of up to an additional $2,000,000 of the Company’s common stock beginning May 24, 2017 and continuing through May 24, 2019. The stock repurchases made under this repurchase were made through open market transactions at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18.

For the three months ended December 31, 2017, the Company did not purchase any shares under the 2017 Authorization and has 477,500 shares available to purchase in accordance with the 2017 Authorization.

In fiscal year 2016, the Board of Directors authorized the repurchase of up to 50,000 shares of the Company’s outstanding common stock beginning February 18, 2016 and continuing through February 17, 2017 (the "2016 Authorization"). No shares were repurchased under the 2016 Authorization.

The following table illustrates the Company’s treasury stock ~~issuances~~activity for the ~~three~~nine months ended ~~December 31, 2017:~~

June 30, 2023:


(in thousands, except share amounts)
	Shares			Cost
Balance as of September 30, 2022		829,150		$	27,948
Issued to employees and directors, net		(18,194	)		(504	)
Balance as of June 30, 2023		810,956		$	27,444

(in thousands, except share amounts)
Shares Cost
Balance as of September 30, 2017 177,315
$ 6,502
Issued to Employees and Directors (10,527 ) (227 )

Balance as of December 31, 2017 166,788
$ 6,275

Note ~~11.~~12. Commitments and Contingencies

Letters of Credit

The Company ~~has~~had outstanding standby letters of credit in the total amount of approximately ~~$10,300,000~~$248,000 and $310,000 at ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~2022, respectively, to secure its various contractual obligations.

Legal Proceedings

From time to time, Alico may be involved in litigation relating to claims arising out of its operations in the normal course of business. There are no ~~other~~ current legal proceedings to which the Company is a party or of which any of its property is subject that it believes will have a material adverse effect on its financial ~~position, results~~condition.

On February 17, 2023, a class action complaint was filed in the Middle District of ~~operations~~Florida captioned Sinder v. Alico, Inc. et al., Case No. 2:23-cv-00107 (the “Sinder” matter) asserting violations of Sections 10(b) and 20(a) of the Exchange Act of 1934 against the Company and certain of its current and former officers on behalf of a putative class of investors who purchased the Company’s common stock between February 4, 2021 and December 13, 2022. The complaint alleges, among other things, that the Company and certain of its current and former officers made false and misleading statements and failed to disclose certain information regarding the Company’s financial reporting and December 13, 2022 restatement of the Company’s previously issued

financial statements. Plaintiff seeks damages, interest, costs, expenses, attorneys’ fees, and other unspecified relief. The Court overseeing the Sinder matter has ordered the plaintiff to file an amended complaint on or ~~cash flows.~~before August 28, 2023. In response, the Company anticipates moving to dismiss the amended complaint on behalf of all defendants, on or before October 27, 2023. All discovery is stayed in the Sinder matter pending a ruling on the Company’s anticipated motion to dismiss.

On March 7, 2023, an alleged shareholder filed a derivative complaint purportedly on behalf of the Company against certain of its current and former officers and directors in the 20th Judicial Circuit for Lee County, Florida captioned Assad v. Brokaw et al., Case # 23-CA-001484 (the “Assad” matter). The complaint asserts claims of breach of fiduciary duty and unjust enrichment arising from substantially similar allegations as those contained in the securities class action described above. The complaint seeks an unspecified sum of damages, interest, restitution, expenses, attorneys’ fees and other equitable relief. On June 20, 2023, the Court entered an order staying proceedings in the Assad matter until a ruling on the Company’s anticipated motion to dismiss in the Sinder matter.

The Company believes that the claims in both the Sinder and Assad matters are without merit. Although the outcome of any complex litigation is inherently uncertain, based on information presently known to management, the Company does not believe that the matters will have a material adverse impact on its financial condition.

Purchase Commitments

The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of June 30, 2023, the Company had approximately $4,380,000 relating to outstanding commitments for these purchases that will be paid upon delivery of the remaining citrus trees.

Note ~~12.~~13. Related Party Transactions

~~Clayton G. Wilson~~

~~The~~

Consulting Agreement

On May 17, 2022, Richard Rallo notified the Company ~~entered into a Separation and Consulting Agreement with Clayton G. Wilson (the “Separation and Consulting Agreement”),~~of his decision to resign from his role as the Company’s Senior Vice President and Chief ~~Executive~~Financial Officer ~~pursuant to which Mr. Wilson stepped down as Chief Executive Officer of the Company~~(Principal Financial and Accounting Officer) effective as of ~~December~~May 31, ~~2016. Under the Separation~~2022. Mr. Rallo’s decision to resign was for personal reasons to eliminate extensive travel and/or avoid relocation to Florida and ~~Consulting Agreement, Mr. Wilson also acknowledged and agreed that he would continue~~was not related to ~~be bound by the restrictive covenants set forth in his Employment Agreement~~any disagreement with the ~~Company. The Separation and Consulting Agreement provided that, subject to his execution, delivery, and non-revocation of a general release of claims in favor of the~~ Company ~~Mr. Wilson would be entitled to vesting of~~or its independent registered public accountants on any ~~unvested portion of the restricted stock award granted to him under his Employment Agreement. In addition, the Separation and Consulting Agreement provided that Mr. Wilson serve as a consultant~~matter relating to the Company during 2017 and would receive an aggregate consulting fee of $750,000 for such services (payable $200,000 in an initial lump sum, $275,000 in a lump sum on July 1, 2017, and $275,000 in six equal monthly installments commencing July 31, 2017 and ending December 31, 2017). As of December 31, 2017 the Company satisfied its obligation toCompany’s financial or accounting operations, policies, or practices. Mr. ~~Wilson in full. The Company expensed $187,500 for the three months ended December 31, 2017. Mr. Wilson resigned as a member of the Company’s Board of Directors effective February 27, 2017.~~

~~Remy W. Trafelet, Henry R. Slack, and George R. Brokaw~~

On December 31, 2016, the Company entered into new employment agreements (collectively, the “Employment Agreements”) with each of Remy W. Trafelet, Henry R. Slack, and George R. Brokaw (collectively, the “Executives”). Mr. Trafelet serves as the President and Chief Executive Officer of the Company, Mr. Slack serves as the Executive Chairman of the Company, and Mr. Brokaw serves as the Executive Vice Chairman of the Company, and each of them continues to serve on the Company’s Board of Directors. The Employment Agreements provide for an annual base salary of $400,000 in the case of Mr. Trafelet and $250,000 in the case of each of Messrs. Slack and Brokaw and, additionally, provided for payment to the Executives an amount in cash equal to $400,000 to Mr. Trafelet and $250,000 to each of Messrs. Slack and Brokaw within five business days of December 31, 2016.

As part of their employment agreements, each of the Executives were granted stock options. A stock option grant of 300,000 options in the case of Mr. Trafelet, and 225,000 options in the case of each of Messrs. Slack and Brokaw (collectively, the “Option Grants”) was provided. The Option Grants vest in accordance with the terms as described in Note 10.

The Employment Agreements also provide that, if the applicable Executive’s employment is terminated by the Company without “cause” or the applicable Executive resigns with “good reason” (as each such term is defined in the Employment Agreements), then, subject to his execution, delivery, and non-revocation of a general release of claims in favor of the Company, the Executive will be entitled to cash severance in an amount equal to 24 months (in the case of Mr. Trafelet) or 18 months (in the case of Messrs. Slack and Brokaw) of the Executive’s annual base salary.

The Employment Agreement includes various restrictive covenants in favor of the Company, including a confidentiality covenant, a nondisparagement covenant, and 12-month post-termination noncompetition and customer and employee nonsolicitation covenants.

~~As of June 26, 2017, both Messrs. Slack and Brokaw have~~Rallo agreed to ~~waive payment of their salary.~~

~~Ken Smith~~

On March 20, 2015, Ken Smith tendered his resignation as Chief Operating Officer, and as an employee of the Company. Mr. Smith’s resignation included a waiver of any rights to any payments under his Change-in-Control Agreement with the Company. On March 20, 2015, the Company and Mr. Smith also entered into a Consulting and Non-Competition Agreement under which (i) Mr. Smith will provide consulting services to the Company through December 31, 2022.

Lease Agreement

On January 1, 2022, Mr. Kiernan, the Company’s President and CEO, entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to be approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022, and ending on January 1, 2025, and with a yearly rent of $1,860. Additionally, under the terms of the Kiernan Lease Agreement, the Company had granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only during the ~~three-year~~one-year period ~~after~~January 1, 2022, through January 1, 2023, and at a price of $480,000 ($5,161 per acre), which price is based on an independent appraisal obtained by the ~~resignation date, (ii)~~Company. On August 26, 2022, Mr. ~~Smith agreed~~Kiernan exercised his option to ~~be bound by certain non-competition covenants relating~~purchase the land. Pursuant to the Company’s citrus operations and non-solicitation and non-interference covenants for a period of two years after the resignation date, and (iii) the Company paid Mr. Smith $925,000 for such services and covenants. The Company expensed $0 and approximately $50,000 under the Consulting and Non-Competition Agreement for eachexercise of the ~~three months ended December 31, 2017 and 2016, respectively.~~

~~Shared Services Agreement~~

The Company has a shared services agreement with Trafelet Brokaw Capital Management, L.P. (“TBCM”), whereby the Company will reimburse TBCM for use of office space and various administrative and support services. The annual cost of the office and

services is approximately $592,000. The agreement will expire in May 2018. The Company expensed approximately $148,000 and $73,000 under the Shared Services Agreement for the three months ended December 31, 2017 and 2016, respectively.

~~Note 13. Subsequent Events~~

~~On January 19, 2018,~~option, the Company sold ~~certain trailers to a third party for $500,000. The Company received $125,000 and the remaining portion is~~what turned out to be ~~paid in accordance with~~ a ~~promissory note over three years. The trailers were classified as an Asset Held for Sale in the accompanying Condensed Consolidated Balance Sheets at December 31, 2017 and September 30, 2017.~~

~~On January 25, 2018, the Company sold its breeding herd~~parcel of approximately 85 acres to ~~a third party~~Mr. Kiernan on October 20, 2022 for approximately $7,800,000. The breeding herd was classified as an Asset Held for Sale in the accompanying Condensed Consolidated Balance Sheets at December 31, 2017 and September 30, 2017. As part of this transaction, the purchaser will also lease grazing and other rights on the Alico Ranch from the Company.$438,900 ($5,161 per acre).

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations.~~

Operations

The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes ~~thereto. Additional context can also be found in Alico's Annual Report on Form 10-K for the fiscal year ended September 30, 2017 as filed with the Securities~~ thereto and ~~Exchange Commission (“SEC”) on December 11, 2017.~~

~~Cautionary Statement Regarding Forward-Looking Information~~

~~We provide forward-looking~~other information included elsewhere in this Quarterly Report on Form 10-Q, ~~particularly~~our 2022 Annual Report on Form 10-K, and in ~~this Management’s Discussion~~our other filings with the SEC. The discussion and ~~Analysis~~analysis below include forward-looking statements that are subject to risks, uncertainties and ~~Results~~other factors described in the “Risk Factors” section of Operations, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report on Form 10-Q ~~that are not historical facts are forward-looking statements. Forward-looking statements include, but are not limited to, statements that express~~and our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. 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 their 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 Citrus merger; seasonality; our ability to achieve the anticipated cost savings under the Alico 2.0 Modernization program; 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; changes in dividends; and market and pricing risks due to concentrated ownership of stock. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those Risks Factors described in our2022 Annual Report on Form 10-K that could cause actual results to differ materially from such forward-looking statements. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the ~~fiscal year ended September 30, 2017 and our Quarterly Reports on Form 10-Q.~~

future.

Business Overview

Business Description

Alico, Inc. ~~(the "Company"~~, together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”) generates operating revenues primarily from the sale of its citrus products, providing services to citrus groves owned by third parties, and ~~conservation~~grazing and ~~resources operations.~~hunting leasing. The Company operates as ~~three~~two business segments, and ~~substantially~~ all of its operating revenues are generated in the United States. ~~During~~For the three months ended ~~December 31, 2017, Alico~~June 30, 2023 and June 30, 2022, the Company generated operating revenues of approximately ~~$17,533,000,~~$7,284,000 and $25,938,000, respectively, net income from operations of approximately $12,572,000 and a loss from operations of approximately ~~$3,304,000,~~$1,246,000, respectively, and net income attributable to common stockholders of approximately ~~$8,746,000. Cash~~$11,832,000 and $2,706,000, respectively. Net cash used in ~~operations~~operating activities was approximately ~~$9,689,000 during~~$618,000 for the ~~three~~nine months ended ~~December 31, 2017.~~

June 30, 2023.

Business Segments

Operating segments are defined in the criteria established under the Financial Accounting Standards Board -– Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on ~~three~~its operating ~~segments: Alico Citrus (formerly Orange Co.), Conservation and Environmental Resources and Other Operations.~~

segments.

The Company ~~operates three~~has two segments ~~related to its various land holdings,~~ as follows:

•

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 ~~as well as, to~~and value-added services, which include contracting for the harvesting, marketing and hauling of ~~citrus.~~citrus; and

•

~~Conservation~~Land Management and ~~Environmental Resources~~Other Operations includes activities related to ~~cattle grazing, sod,~~ native plant sales, grazing and ~~animal sales,~~hunting leasing, management and/or conservation of unimproved native ~~pasture land.~~

~~Other Operations consists of~~pastureland and activities related to rock mining royalties ~~oil exploration~~ and other insignificant lines of business. Also included are activities related to owning and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.

For the three months ended June 30, 2023, the Alico Citrus segment generated 92.1% of the Company’s consolidated revenues and the Land Management and Other Operations segment generated 7.9% of the Company’s consolidated revenues.

Critical Accounting Policies and Estimates

The discussion and analysis of the ~~Company's~~Company’s financial condition and results of operations is based upon its unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires itthe Company to make certain estimates and judgments that affect the reported amounts of assets and liabilities,

revenues and expenses, and related disclosures of contingent assets and liabilities. Alico bases these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, the Company evaluates the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no significant changes during this reporting period to the policies and disclosures set forth in Part II, Item 7 in Alico's Annual Report on Form 10-K for the fiscal year ended September 30, 2017.

See Note 1. ~~"Basis~~“Description of ~~Presentation"~~Business and Basis of Presentation” to the condensed consolidated financial statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for a detailed description of recent accounting pronouncements.

There have been no material changes to the Company’s critical accounting policies and estimates from those reflected in the Company’s 2022 Annual Report on Form 10-K.

Recent Developments

Hurricane Ian

On ~~November 16, 2017, Alico announced~~September 28, 2022, Hurricane Ian made landfall on the ~~Alico 2.0 Modernization Program (“Alico 2.0”). The program is focused on aggressively improving the operations~~southwest coast of Florida and a majority of the Company’s groves were impacted by the storm. The impact of Hurricane Ian has affected our fiscal year 2023 fruit production as the Company accelerated the harvest to maximize box production for both its Early and ~~optimizing its return on capital employed through cost reductions, increased efficiencies~~Mid-Season and ~~disposition~~Valencia harvest, which was completed earlier than the prior year harvest season. Approximately 48,900 gross acres of ~~non-performing assets.~~ our citrus groves, which are in Charlotte, Collier, DeSoto, Hardee, Hendry, Highlands and Polk Counties, sustained hurricane or tropical storm force winds for varying durations of time. While we lost a small percentage of trees, the force and duration of the storm impacted the majority of the groves. Based upon prior experience with serious storms of this nature, we expect it may take up to two full seasons or more for the groves to recover to pre-hurricane production levels.

The ~~Program~~Company maintains crop insurance and property and casualty insurance and has received, as of June 30, 2023, approximately $21,403,000 in proceeds for crop claims and approximately $839,000 relating to property and casualty damage claims. During July 2023, the Company received additional Hurricane Ian crop insurance proceeds of approximately $329,000.

Citrus Greening Treatment

In 2022, the Company began ~~in early 2017 to transform Alico’s three legacy businesses (Alico, Orange Co.~~testing a new application of the Citrus Greening therapy Oxytetracycline (“OTC”), ~~and Silver Nip) into a single efficient enterprise, now called Alico Citrus. Every aspect of Alico’s~~which is used in citrus and ~~ranch operations, all back office support activities,~~other crops. Although not a cure for citrus greening, this OTC application is expected to mitigate some of the impacts of citrus greening and is expected to decrease the rate of fruit drop and improve fruit quality. After a review of the new application method by the U.S. Environmental Protection Agency, the Florida Department of Agriculture and Consumer Services (“FDACS”) granted a special local-need registration (24c) on October 28, 2022. The Company began treating its trees on January 16, 2023, as the product and application devices became available, and as of June 30, 2023 had treated over 35% of its trees. The extent of any benefit of the OTC application will not be measurable until the completion of the fiscal year 2024 harvest.

Extension of the Working Capital Line of Credit

On October 27, 2022, the working capital line of credit agreement (“WCLC”) was amended. The primary terms of the amendment were an extension of the maturity to November 1, 2025, and the productivity of all assets were analyzed to determine how to eliminate costs that will not negatively affect citrus production and also improve performance throughout the Company. The changes required to realize those improvements have now been implemented. As partconversion of the ~~program, Alico realigned its management structure~~interest rate from LIBOR plus a spread to SOFR plus a spread. This spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter, and ~~appointed Danny Sutton as~~can vary from 175 to 250 basis points. There were no changes to the ~~President~~commitment amount.

Sales and ~~General Manager~~Purchase of ~~Alico Citrus.~~

~~As indicated in Alico’s 2.0,~~Land

During the ~~Company intended to divest itself from and cease operations at the Ranch. On January 25, 2018,~~third quarter 2023, the Company sold ~~its breeding herd and leased grazing and other rights on its Ranch~~approximately 548 acres to a third party for approximately ~~$7,800,000.~~ $2,739,000 and recognized a gain of approximately $2,613,000.

During the second quarter 2023, the Company sold approximately 279 acres to various third parties for approximately $1,596,000 and recognized a gain of approximately $1,500,000.

During the first quarter 2023, the company sold approximately 609 acres to various third parties for approximately $3,300,000. One of these sales transactions was a sale of approximately 85 acres to Mr. Kiernan, the Company’s President and CEO on October 20, 2022 for approximately $438,900 ($5,161 per acre). On January 1, 2022, Mr. Kiernan entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to be approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022, and ending on January 1, 2025, and with a yearly rent of $1,860. Additionally, under the terms of the Kiernan Lease Agreement, the Company had granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only during the one-year period January 1, 2022 through January 1, 2023, and at a price of $480,000 ($5,161 per acre), which price was based on an independent appraisal obtained by the Company and dated as of November 11, 2021. On August 26, 2022, Mr. Kiernan exercised his option to purchase the land. Pursuant to exercise of the option, the Company sold what turned out to be a parcel of approximately 85 acres to Mr. Kiernan.

Federal Relief Program – Hurricane Irma

The Company was eligible for Hurricane Irma federal relief programs for block grants that were being administered through the State of Florida. The Company has received a total of approximately $26,900,000 in Hurricane Irma federal relief for the period commencing in fiscal year ended September 30, 2019 through December 31, 2022. As of December 31, 2022, the Company has received all funds due under the Florida Citrus Recovery Block Grant (“CRBG”) program. These federal relief proceeds are included as a reduction to operating expenses in the Condensed Consolidated Statements of Operations. For the nine months ended June 30, 2023 and June 30, 2022, the Company received Hurricane Irma federal relief proceeds of approximately $1,315,000 and $1,123,000, respectively.

Federal Relief Program – Hurricane Ian

In December 2022, the Consolidated Appropriations Act was signed into law by the federal government; however, the details of the mechanism and funding of any Hurricane Ian relief still remains unclear and, if available, the extent to which the Company will ~~continue~~be eligible. The Company intends to ~~own~~take advantage of any such available programs as and when they become available. The Company is currently working with Florida Citrus Mutual, the ~~property~~industry trade group, and ~~conduct its long term water dispersement program and wildlife management programs.~~

government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.

Condensed Consolidated Results of Operations

The following discussion provides an analysis of ~~Alico's~~Alico’s results of operations and should be read in conjunction with the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~

(in thousands) Three Months Ended
December 31, Change
2017 2016 $ %
Operating revenues:

Alico Citrus $ 17,079
$ 16,877
$ 202
1.2 %
Conservation and Environmental Resources 363
301
62
20.6 %
Other Operations 91
267
(176 ) (65.9 )%
Total operating revenues 17,533
17,445
88
0.5 %

Gross profit (loss):

Alico Citrus 784
2,792
(2,008 ) (71.9 )%
Conservation and Environmental Resources (234 ) (213 ) (21 ) 9.9 %
Other Operations 32
174
(142 ) (81.6 )%
Total gross profit 582
2,753
(2,171 ) (78.9 )%

General and administrative expenses 3,886
3,788
98
2.6 %
Loss from operations (3,304 ) (1,035 ) (2,269 ) 219.2 %
Total other expense, net (375 ) (1,981 ) 1,606
(81.1 )%
Loss before income taxes (3,679 ) (3,016 ) (663 ) 22.0 %
Income tax benefit (12,417 ) (1,273 ) (11,144 ) NM
Net income (loss) 8,738
(1,743 ) 10,481
NM
Net loss attributable to noncontrolling interests 8
8
—
NM
Net income (loss) attributable to Alico, Inc. common stockholders $ 8,746
$ (1,735 ) $ 10,481
NM

2022:


(in thousands)
	Three Months Ended June 30,						Change						Nine Months Ended June 30,						Change
	2023			2022			$			%			2023			2022			$			%
Operating revenues:
Alico Citrus	$	6,712		$	25,533		$	(18,821	)		(73.7	)%	$	37,917		$	89,313		$	(51,396	)		(57.5	)%
Land Management and Other Operations		572			405			167			41.2	%		1,249			1,603			(354	)		(22.1	)%
Total operating revenues		7,284			25,938			(18,654	)		(71.9	)%		39,166			90,916			(51,750	)		(56.9	)%

Gross profit:
Alico Citrus		15,034			1,044			13,990		NM				4,424			5,948			(1,524	)		(25.6	)%
Land Management and Other Operations		468			267			201			75.3	%		949			1,173			(224	)		(19.1	)%
Total gross profit		15,502			1,311			14,191		NM				5,373			7,121			(1,748	)		(24.5	)%

General and administrative expenses		2,930			2,557			373			14.6	%		8,106			7,679			427			5.6	%
Income (loss) from operations		12,572			(1,246	)		13,818		NM				(2,733	)		(558	)		(2,175	)	NM
Total other income, net		1,423			4,910			(3,487	)		(71.0	)%		3,794			38,198			(34,404	)		(90.1	)%
Income before income taxes		13,995			3,664			10,331		NM				1,061			37,640			(36,579	)		(97.2	)%
Income tax provision		1,923			1,002			921			91.9	%		306			4,281			(3,975	)		(92.9	)%
Net income		12,072			2,662			9,410		NM				755			33,359			(32,604	)		(97.7	)%
Net (income) loss attributable to noncontrolling interests		(240	)		44			(284	)	NM				140			180			(40	)		(22.2	)%
Net income attributable to Alico, Inc. common stockholders	$	11,832		$	2,706		$	9,126		NM			$	895		$	33,539		$	(32,644	)		(97.3	)%

NM -= Not ~~Meaningful~~

meaningful

The following discussion provides an analysis of the ~~Company's business segments:~~

Company’s two operating segments, Alico Citrus

and Land Management and Other Operations segments:

Alico Citrus

The table below presents key operating measures for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016:~~

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

Three Months Ended
December 31,
Change
2017 2016 Unit %
Operating Revenues:
Early and Mid-Season $ 15,417
$ 13,669
$ 1,748
12.8 %
Fresh Fruit 1,088
2,621
(1,533 ) (58.5 )%
Purchase and Resale of Fruit 35
99
(64 ) (64.6 )%
Other 539
488
51
10.5 %
Total $ 17,079
$ 16,877
$ 202
1.2 %
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 %
Pound Solids per Box:

Early and Mid-Season 5.00
5.29
(0.29 ) (5.5 )%
Price per Pound Solids:

Early and Mid-Season $ 2.54
$ 2.51
$ 0.03
1.2 %
Price per Box:

Fresh Fruit $ 14.75
$ 20.32
$ (5.57 ) (27.4 )%
Operating Expenses:

Cost of Sales $ 12,245
$ 8,630
$ 3,615
41.9 %
Fresh Fruit Packaging —
1,182
(1,182 ) NM
Harvesting and Hauling 3,497
3,747
(250 ) (6.7 )%
Purchase and Resale of Fruit 41
97
(56 ) (57.7 )%
Other 512
429
83
19.3 %
Total $ 16,295
$ 14,085
$ 2,210
15.7 %

2022 for the Alico Citrus segment:


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

	Three Months Ended											Nine Months Ended
	June 30,					Change						June 30,						Change
	2023			2022		Unit			%			2023			2022			Unit			%
Operating Revenues:
Early and Mid-Season	$	—		$	—	$	—			—	%	$	11,954		$	28,287		$	(16,333	)		(57.7	)%
Valencias		6,064			21,601		(15,537	)		(71.9	)%		23,994			47,455			(23,461	)		(49.4	)%
Fresh Fruit		48			—		48		NM				570			1,229			(659	)		(53.6	)%
Purchase and Resale of Fruit		78			67		11			16.4	%		312			574			(262	)		(45.6	)%
Grove Management Services		427			3,835		(3,408	)		(88.9	)%		978			11,669			(10,691	)		(91.6	)%
Other		95			30		65		NM				109			99			10			10.1	%
Total	$	6,712		$	25,533	$	(18,821	)		(73.7	)%	$	37,917		$	89,313		$	(51,396	)		(57.5	)%
Boxes Harvested:
Early and Mid-Season		—			—		—			—	%		979			2,175			(1,196	)		(55.0	)%
Valencias		415			1,391		(976	)		(70.2	)%		1,669			3,274			(1,605	)		(49.0	)%
Total Processed		415			1,391		(976	)		(70.2	)%		2,648			5,449			(2,801	)		(51.4	)%
Fresh Fruit		1			—		1		NM				41			88			(47	)		(53.8	)%
Total		416			1,391		(975	)		(70.1	)%		2,689			5,537			(2,848	)		(51.4	)%
Pound Solids Produced:
Early and Mid-Season		—			—		—			—	%		4,586			11,034			(6,448	)		(58.4	)%
Valencias		2,142			7,975		(5,833	)		(73.1	)%		8,702			17,756			(9,054	)		(51.0	)%
Total		2,142			7,975		(5,833	)		(73.1	)%		13,288			28,790			(15,502	)		(53.8	)%
Pound Solids per Box:
Early and Mid-Season		—			—		—			—	%		4.68			5.07			(0.39	)		(7.7	)%
Valencias		5.16			5.73		(0.57	)		(9.9	)%		5.21			5.42			(0.21	)		(3.9	)%
Price per Pound Solids:
Early and Mid-Season	$	—		$	—	$	—			—	%	$	2.61		$	2.56		$	0.05			2.0	%
Valencias	$	2.83		$	2.71	$	0.12			4.4	%	$	2.76		$	2.67		$	0.09			3.4	%
Price per Box:
Fresh Fruit	NM			$	—	$	—		NM			$	14.02		$	13.97		$	0.05			0.4	%
Operating Expenses:
Cost of Sales	$	6,603		$	16,777	$	(10,174	)		(60.6	)%	$	45,647		$	57,664		$	(12,017	)		(20.8	)%
Harvesting and Hauling		2,047			4,356		(2,309	)		(53.0	)%		10,573			15,965			(5,392	)		(33.8	)%
Purchase and Resale of Fruit		251			44		207		NM				434			449			(15	)		(3.3	)%
Grove Management Services		306			3,312		(3,006	)		(90.8	)%		613			10,410			(9,797	)		(94.1	)%
Other		(17,529	)		—		(17,529	)	NM				(23,774	)		(1,123	)		(22,651	)	NM
Total	$	(8,322	)	$	24,489	$	(32,811	)	NM			$	33,493		$	83,365		$	(49,872	)		(59.8	)%

NM -= Not ~~Meaningful~~

meaningful

Components of Results of Operations for Alico ~~primarily~~Citrus Segment

The Company sells its Early and Mid-Season and Valencia oranges to processors that convert ~~the majority~~most of the citrus crop into orange juice. The processors generally buy the citrus crop on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. The Company’s Fresh Fruit revenue is ~~generally sold~~derived from sales to packing houses that purchase the citrus on a per box basis. ~~Purchase~~The Company also provides citrus grove caretaking and ~~resale of fruit relates~~harvest and haul management services to ~~the buying of fruit from~~ third parties ~~and generally reselling this fruit to processors. These~~in which revenues ~~and costs vary based on the number of boxes bought and sold.~~are recorded as Grove Management Services, including a management fee. Other revenues consist of ~~third-party grove caretaking~~the purchase and ~~the contracting~~reselling of fruit.

Alico’s operating expenses for ~~harvesting and hauling of citrus.~~

~~The Company's operating expenses~~its Alico Citrus segment consist primarily of ~~cost~~Cost of ~~sales~~Sales, Harvesting and ~~harvesting~~Hauling costs and ~~hauling~~Grove Management Service costs. Cost of ~~sales~~Sales represents the cost of maintaining ~~Alico's~~the citrus groves for the preceding calendar

year and does not vary in relation to production. Harvesting and ~~hauling~~Hauling costs represent the costs of bringing citrus product to processors and ~~varies~~vary based upon the number of boxes produced. Grove Management Services costs include those costs associated with citrus grove caretaking and harvest and haul management services provided to third parties. Other expenses include the period costs of third-party grove caretaking and the ~~contracting~~purchase and reselling of third-party fruit.

Comparison of the Three and Nine Months Ended June 30, 2023 and 2022 for ~~harvesting and hauling activities.~~

the Alico Citrus Segment

The ~~increase~~decrease in ~~operating revenues~~revenue for the three and nine months ended ~~December 31, 2017, as~~June 30, 2023, compared to the three and nine months ended ~~December 31, 2016, is~~June 30, 2022, was primarily due to ~~the timing of when~~a decrease in revenue generated from the Early and Mid-Season and Valencia fruit harvested, driven by the increased fruit drop caused by the impact of Hurricane Ian and a decrease in Grove Management Services, as described further below.

The decrease in the Early and Mid-Season and Valencia fruit harvested was ~~harvested. As~~primarily driven by a decrease in processed box production and a decrease in pound solids per box for both the Early and Mid-Season and Valencia Crop for the nine months ended June 30, 2023. The Company decided to accelerate the harvesting of the Early and Mid-Season and Valencia crops to maximize the box production and avoid additional fruit drop as a result of the impact of Hurricane ~~Irma, the Company commenced the harvesting of its~~Ian. The Early and Mid-Season ~~fruit in late October, as compared to~~harvest is complete and pound solids per box decreased 7.7% and the ~~harvesting commencing~~

~~in mid to late November in the previous harvest season. As such, the Company has harvested a greater number of boxes in the three month period ended December 31, 2017~~processed box production decreased 55.0% as compared to the same nine-month period in ~~2016.~~the prior year. The ~~increase from~~Valencia harvest is complete and the ~~greater number~~fruit harvest box production as of ~~boxes being harvested was partially offset by a reduction in~~June 30, 2023 decreased 49.0% and pound solids per box of 0.29. The Company will complete the harvesting earlier in the current fiscal year, as compared to the prior year, for its Early and Mid-Season fruit and anticipates an overall decrease in the number of boxes harvested and revenues generated from Early and Mid-Season fruit for the 2018 harvest as compared to the prior year. Offsetting this increase was fewer boxes of fresh fruit sold at a lower price per box,decreased 3.9%, as compared to the same period in the prior year.

Although Hurricane Ian impacted the fiscal year 2023 harvest, and we expect it may take up to two full seasons or more for the groves to recover to pre-hurricane production levels, there does not appear to be long-term damage to the citrus trees.

The ~~USDA,~~Company also recorded a decrease in revenue from sales of Fresh Fruit. The decrease in the Fresh Fruit is primarily due to a decrease in both boxes sold and pricing per box.

The decrease in Grove Management Services is primarily due to a primary group of third-party grove owners, who are affiliated with each other (collectively, the “Grove Owners”), to whom the Company was providing caretaking management services, deciding to exit the citrus business at the beginning of the three month period ended June 30, 2022, thereby eliminating their need for caretaking management services. The Company recorded approximately $0 and $10,552,000 of revenue from the Grove Owners relating to Grove Management Services for the nine months ended June 30, 2023 and 2022, respectively. As a result, caretaking management services and the accompanying reimbursement of caretaking expenses decreased during the three and nine months ended June 30, 2023, when compared to the same periods in the prior year.

In its ~~January~~July 12, ~~2018~~2023 Citrus Crop Forecast for the ~~2017-18~~2022-23 harvest season, the USDA indicated its expectation is that the overall Florida orange crop ~~will decrease~~decreased from approximately ~~68,700,000~~41,200,000 boxes for the ~~2016-17~~2021-22 crop year to approximately ~~46,000,000~~15,850,000 boxes for the ~~2017-18~~2022-23 crop year, a decrease of approximately ~~33.0%.~~61.5%, as compared to an overall decrease of 51.4% for the Company. The ~~significant decline~~Company, along with the Florida citrus industry in general, is recording a smaller number of boxes harvested due to an even greater fruit drop rate, attributed to the hurricane and disease during the current harvest season, as compared to the previous year.

The decrease in operating expenses for the nine months ended June 30, 2023, as compared to the nine months ended June 30, 2022, primarily relates to the inventory adjustments recorded at September 30, 2022 on the ending inventory balance, as a result of the impact of Hurricane ~~Irma and~~Ian, which effectively lowered the ~~related fruit loss experienced~~inventory to be expensed in fiscal year 2023, as well as the ~~stress on the citrus trees for short-term fruit growth.~~

~~We originally estimated our 2018 processed boxes will decrease by~~receipt of approximately ~~40-45% compared to our fiscal year 2017 processed boxes, on a per acre basis. Based on the harvesting of fruit through the first quarter of fiscal 2018, the~~$21,403,000 in crop insurance reimbursements. The Company ~~estimate of reduced production for fiscal year 2018 will remain unchanged. We expect that our operating expenses for fiscal year 2018 will remain consistent~~experienced significant cost increases in fertilizer, herbicide, labor and fuel in maintaining its groves. These cost increases, coupled with ~~fiscal year 2017 on a per acre basis.~~

~~The increase in cost of sales for the three months ended December 31, 2017 compared to three months ended December 31, 2016 primarily relates to~~ the timing of the ~~harvesting of~~harvest, and the lower box production for both its Early and Mid-Season ~~fruit~~and Valencia harvest, resulted in a higher cost of sales per box for the nine months ended June 30, 2023, as ~~well as~~compared to the same period in the prior year. In addition, the Company incurred additional costs ~~incurred for~~related to the clean-up and repairs as a result of Hurricane ~~Irma.~~Ian.

The Company also recorded increases in its Harvesting and Hauling expenses per box which is directly related to an increase in the harvesting labor costs, as well as the increased time spent by the harvesters to fill the boxes as a result of the increased fruit drop caused by Hurricane Ian for the nine months ended June 30, 2023, when compared to the similar period in the prior year.

The decrease in Grove Management Services expense is directly related to the termination of the grove management services by the Grove Owners in June 2022. The Company recorded approximately $0 and $9,644,000 of operating expenses relating to grove management services for the Grove Owners for the nine months ended June 30, 2023 and 2022, respectively. As a result, ~~of commencing~~caretaking expenses decreased significantly during the ~~harvesting of Early and Mid-Season fruit earlier~~nine months ended June 30, 2023, when compared to the same period in the ~~season~~prior year.

The credit amounts shown in “Other” in operating expenses above primarily represent insurance proceeds of approximately $22,241,000 received in the nine months ended June 30, 2023 and ~~harvesting a greater percentage~~federal relief proceeds received under the CRBG program in the nine months ended June 30, 2023 and 2022 of ~~boxes, in relation to estimated total boxes to be harvested~~approximately $1,315,000 and $1,123,000, respectively.

Land Management and Other Operations

The table below presents key operating measures for the ~~full season,~~three and nine months ended June 30, 2023 and 2022 for the Land Management and Other Operations segment:


(in thousands)

	Three Months Ended June 30,				Change						Nine Months Ended June 30,				Change
	2023		2022		$			%			2023		2022		$			%
Revenue From:
Land and Other Leasing	$	474	$	359	$	115			32.0	%	$	1,028	$	1,329	$	(301	)		(22.6	)%
Other		98		46		52			113.0	%		221		274		(53	)		(19.3	)%
Total	$	572	$	405	$	167			41.2	%	$	1,249	$	1,603	$	(354	)		(22.1	)%
Operating Expenses:
Land and Other Leasing	$	104	$	138	$	(34	)		(24.6	)%	$	295	$	426	$	(131	)		(30.8	)%
Other		—		—		—			—	%		5		4		1			25.0	%
Total	$	104	$	138	$	(34	)		(24.6	)%	$	300	$	430	$	(130	)		(30.2	)%

Components of Results of Operations for Land Management and Other Operations Segment

Land and Other Leasing includes lease income from leases for grazing rights, hunting leases, a farm lease, a lease to a third party of an aggregate mine, leases of oil extraction rights to third parties, and other miscellaneous income.

Land and Other Leasing operating expenses includes real estate, property taxes, general and administrative expenses including salaries, benefits and legal.

Comparison of the Three and Nine Months Ended June 30, 2023 and 2022 for the Land Management and Other Operations Segment

The increase in revenue for the three months ended ~~December 31, 2017~~June 30, 2023 was due to an increase in royalty revenue, as compared to the three months ended June 30, 2022. The decrease in revenues from Land Management and Other Operations for the nine months ended June 30, 2023, as compared to the same period in the prior year, was primarily due to a ~~greater percentage~~decrease in grazing and hunting lease revenue due to the sales of ~~costs were allocated to Cost~~portions of ~~Sales~~the Alico Ranch, which resulted in the ~~period.~~

~~Alico 2.0 explored every aspect~~reduction of ~~Alico’s citrus~~land covered under grazing and hunting lease contracts. Additionally, the modification to the grazing leases resulted in a reduction in the ad valorem taxes due from the lessees, as the Company revised the grazing lease agreements due to the sale of certain of the ranch ~~operations, including corporate~~acres previously covered under the agreement.

The slight decrease in operating expenses from Land Management and ~~operational cost structures, grove costs, purchasing~~Other Operations for the three and ~~procurement, non-performing~~nine months ended June 30, 2023, as compared to the three and ~~under-performing assets, professional fees, and human resources efficiency. Under this program, we expect~~nine months ended June 30, 2022, is primarily due to ~~reduce total expenses per acre from $3,314/acre in fiscal 2016~~the reduction of the ad valorem tax expense due to ~~$2,164/acre when Alico 2.0 is fully implemented, which is expected to be over~~ the ~~next two years. Overall, we anticipate~~Company owning fewer ranch acres as result of the ~~program should reduce~~sale of certain acres.

The following discussion provides an analysis of the Company’s results of operation, as a whole:

Operating Revenue

The decrease in revenue for the three and nine months ended June 30, 2023, as compared to the three and nine months ended June 30, 2022, was primarily driven by the overall decrease in fruit processed box production in the Early and Mid-Season and Valencia crop harvests as compared to the same period in the prior year, and the decrease in Grove Management Services, which are discussed in further detail above.

Operating Expenses

The decrease in operating expenses for the three and nine months ended June 30, 2023, as compared to the three and nine months ended June 30, 2022, was primarily driven by lower cost of sales due to ~~produce~~the inventory adjustments recorded at September 30, 2022 on the ending inventory balance and crop insurance reimbursements received, as a pound solid from $2.14 to $1.56. This efficiency will be achieved through better purchasing, more precise application of selected fertilizers and chemicals, outsourcing work such as harvesting, hauling, and certain caretaking tasks, and by streamlining grove management. We also will be deploying a more efficient labor model that is consistent and uniform for field staffing and grove operating programs and aligns with the geographical footprintresult of the ~~citrus groves. However, there can be no assurance that we will be able~~impact of Hurricane Ian and a reduction in the harvest and haul expenses due to ~~achieve~~ the ~~anticipated cost savings under Alico 2.0.~~

~~Conservation~~decreased box production and ~~Environmental Resources~~

~~The table below presents key operating measures~~a reduction in Grove Management Services, which are discussed in further detail above.

General and Administrative Expense

General and administrative expense for the three months ended ~~December 31, 2017 and 2016:~~

(in thousands, except per pound data)
Three Months Ended December 31, Change
2017 2016 $ %
Revenue From:

Sale of Calves $ 57
$ 20
$ 37
NM
Land Leasing 247
230
17
7.4 %
Other 59
51
8
15.7 %
Total $ 363
$ 301
$ 62
20.6 %
Pounds Sold:

Calves 49
16
33
NM
Price Per Pound:

Calves $ 1.17
$ 1.22
$ (0.05 ) (4.1 )%
Operating Expenses:

Cost of Calves Sold $ 69
$ 24
$ 45
NM
Land Leasing Expenses 133
32
101
NM
Water Conservation 395
458
(63 ) (13.7 )%
Total $ 597
$ 514
$ 83
16.1 %

~~NM - Not Meaningful~~

~~Ranch~~

~~The increase in revenues from the sale of calves~~June 30, 2023 was approximately $2,930,000, compared to approximately $2,557,000 for the three ~~month~~months ended ~~December 31, 2017,~~June 30, 2022. The increase was primarily due to an increase in salaries and wages of approximately $187,000 and legal and professional fees of approximately $136,000, as compared to the same period in the prior year.

General and administrative expense for the nine months ended June 30, 2023 was approximately $8,106,000, compared to approximately $7,679,000 for the nine months ended June 30, 2022. The increase was primarily due to an increase in legal and professional fees of approximately $358,000, as compared to the same period in the prior year.

Other Income (expense), net

Other income (expense), net for the three months ended June 30, 2023 and 2022, was approximately $1,423,000 and $4,910,000, respectively. The decrease to other income, net, is primarily due to the timing of the gains on sale of real estate, property and equipment and assets held for sale. During the quarter ended June 30, 2023 the Company sold approximately 548 acres from the Alico Ranch to a third party and recognized a gain of approximately $2,613,000. By comparison, the Company recognized gains on sales of real estate, property and equipment and assets held for sale of approximately $5,755,000 for the three months ended June 30, 2022. In addition, the Company recognized an increase in interest expense of approximately $342,000 for the three months ended June 30, 2023, as compared to the three months ended ~~December 31, 2016,~~June 30, 2022, as a result of an increase in borrowings under the WCLC and an increase in the overall interest rates on its variable rate term debt and the WCLC.

Other income (expense), net for the nine months ended June 30, 2023 and 2022 was approximately $3,794,000 and approximately $38,198,000, respectively. The decrease in other income, net, is primarily due to gains on sale of real estate, property and equipment and assets held for sale of approximately $7,368,000 relating to the sale during the nine months ended June 30, 2023 of approximately 1,436 acres, in the aggregate, from the Alico Ranch to several third parties. By comparison, the Company recognized gains on sale of real estate, property and equipment and assets held for sale of approximately $40,804,000 arose from

the sale during the nine months ended June 30, 2022 of approximately 9,418 acres, in the aggregate, from the Alico Ranch to several third parties. Additionally, an increase in ~~the number~~interest expense of ~~calves sold, partially offset by a decrease in price per pound sold.~~

In January 2018, the Company sold the breeding herd and leased the ranch to a third party operator. The Company will continue to own the property and conduct its long term water dispersement program and wildlife management programs.

~~Conservation~~

~~In December 2012, the SFWMD issued a solicitation request for projects to be considered~~approximately $993,000 for the ~~Northern Everglades Payment for Environmental Services Program. In March 2013, the Company submitted its response proposing a dispersed water management project on a portion of its ranch land.~~

On December 11, 2014, the SFWMD approved a contract with the Company. The contract term is eleven years and allows up to one year for implementation (design, permitting, construction and construction completion certification) and ten years of operation, whereby the Company will provide water retention services. Payment for these services includes an amount not to exceed $4,000,000 of reimbursement for implementation. In addition, it provides for an annual fixed payment of $12,000,000 for operations and maintenance costs, as long as the project is in compliance with the contract and subject to annual District Board approval of funding. The contract specifies that the District Board has to approve the payments annually and there can be no assurance that it will approve the annual fixed payments. The Florida budget for the state’s 2017/2018 fiscal year was approved and included funding for the Program. Operating expenses were approximately $395,000 and $458,000 for the threenine months ended ~~December 31, 2017 and 2016, respectively.~~

~~General and Administrative~~

General and administrative expenses for the three months ended December 31, 2017 totaled approximately $3,886,000 compared to approximately $3,788,000 for the three months ended December 31, 2016. The increase in general and administrative expenses for the three months ended December 31, 2017,June 30, 2023, as compared to the ~~same period in 2016,~~nine months ended June 30, 2022, was the result of an increase ofin borrowings under the ~~following:~~

~~separation~~WCLC, and ~~consulting agreement expenses of~~an increase in interest rates on its variable rate term debt and the variable rate interest on the WCLC.

Income Taxes

The income tax provision was approximately ~~$388,000~~

~~an accrual for paid time off of approximately $120,000,~~$1,923,000 and

~~audit and tax fees of approximately $100,000.~~

~~These increases were primarily offset by expenses incurred in in the first quarter of December 2016 relating to one-time consulting expenses incurred.~~

~~Other (Expense) Income, net~~

~~Other expense, net~~ $1,002,000 for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016 was~~2022, respectively, and approximately ~~$375,000~~$306,000 and ~~approximately$1,981,000,~~$4,281,000 for the nine months ended June 30, 2023 and 2022, respectively. During the nine months ended June 30, 2022 the Company sold 1,638 acres of land to the State of Florida at a price below market value, which resulted in a charitable deduction for tax purposes and a tax benefit of approximately $4,900,000 impacting the income tax provision for the nine-month period ended June 30, 2022. The decrease in the ~~expense~~tax provision is the result of the net income realized in the nine-month period ending June 30, 2023 as compared to the net income realized in the nine month period ending June 30, 2022, primarily due to the ~~Company recording a gain~~lower harvesting revenue generated and lower gains realized on the sale of ~~its office building~~real estate, property and equipment.

Seasonality

The Company is primarily engaged in ~~Fort Myers, Florida,~~the production of ~~approximately $1,800,000. As part~~fruit for sale to citrus markets, which is of ~~the sale, the Company has entered into~~ a ~~lease arrangement with the buyer for a portion of the office space.~~

~~Benefit for Income Taxes~~

~~The benefit for income tax was approximately $12,417,000~~seasonal nature, and $1,273,000 for the three months ended December 31, 2017 and 2016, respectively. The increase primarily resulted from approximately $11,300,000 in non-cash tax benefit recorded to remeasure the Company's net deferred tax liabilitiessubject to the ~~21% corporate tax rate that was enacted December 22, 2017.~~

~~Seasonality~~

influence of natural phenomena and wide price fluctuations. Historically, the second and third quarters of ~~Alico's~~Alico’s fiscal year produce ~~the majority~~most of the Company's annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. Due to Hurricane Irma, in the first quarter of fiscal 2018 Alico produced a greater percentage of boxes harvested, as compared to the estimated totals for the full harvest season, then in past years. As a result, the working capital requirements may vary from the typical trends we have historically experienced in the current year. Because of the seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Liquidity and Capital Resources

A comparative balance sheet summary is presented in the following table:

(in thousands) December 31, September 30,
2017 2017 Change
Cash and cash equivalents $ 948
$ 3,395
$ (2,447 )
Total current assets $ 66,283
$ 66,489
$ (206 )
Total current liabilities $ 12,292
$ 15,983
$ (3,691 )
Working capital $ 53,991
$ 50,506
$ 3,485
Total assets $ 417,962
$ 419,182
$ (1,220 )
Principal amount of term loans and lines of credit $ 192,481
$ 186,476
$ 6,005
Current ratio 5.39 to 1
4.16 to 1


(in thousands)	June 30,		September 30,
	2023		2022		Change
Cash and cash equivalents	$	1,592	$	865	$	727
Total current assets	$	47,695	$	31,616	$	16,079
Total current liabilities	$	15,389	$	16,525	$	(1,136	)
Working capital	$	32,306	$	15,091	$	17,215
Total assets	$	421,126	$	409,255	$	11,871
Principal amount of term loans and lines of credit	$	122,799	$	111,624	$	11,175
Current ratio		3.10 to 1		1.91 to 1

Sources and Uses of Liquidity and Capital

Alico's business has historically generated full fiscal year positive net cash flows from operating activities, although the net cash flow in the first quarter of each fiscal year has been negative because of seasonality and the associated need to expend cash in advance of generating revenues from the harvesting season. The Company's Early and Mid-Season and Valencia fiscal year 2023 harvest season generated lower revenue, as compared to the prior year, which decreased cash flow from operations for the first nine months of fiscal year 2023, as compared to the prior year. Sources of cash primarily include cash flows from operations, sales of under-performing land and other assets, amounts available under the Company’s credit facilities, and access to capital markets. Access to additional borrowings under revolving lines of credit is subject to the satisfaction of customary borrowing conditions. As a public company, Alico may have access to other sources of capital. However, access to, and availability of, financing on acceptable terms in the future will be affected by many factors, including (i) financial condition, prospects, and credit rating; (ii) liquidity of the overall capital markets; and (iii) the state of the economy. There can be no assurance that the Company will continue to have access to the capital markets on acceptable terms, or at all.

The principal uses of cash that affect Alico’s liquidity position include the following: operating expenses including employee costs, the cost of maintaining the citrus groves, harvesting and hauling of citrus products, capital expenditures, stock repurchases, dividends, debt service costs including interest and principal payments on term loans and other credit facilities and acquisitions.

Management believes that a combination of cash-on-hand, cash generated from operations, ~~assets~~and asset sales and availability under the ~~Company's~~Company’s lines of credit will provide sufficient liquidity to service the principal and interest payments on its indebtedness and will satisfy working capital requirements and capital expenditures for at least the next twelve months and over the long term. However, this is subject, to a certain extent, on general economic, financial, competitive, regulatory and other factors that are beyond our control.

Borrowing Facilities and Long-term Debt

Alico has a $70,000,000 working capital line of credit, of which approximately ~~$52,600,000 is~~$51,842,000 was available for general use as of ~~December 31, 2017,~~June 30, 2023, and a $25,000,000 revolving line of credit, all of which iswas available for general use as of ~~December 31, 2017~~June 30, 2023 (see Note 5. “Long-Term Debt and Lines of ~~Credit"~~Credit” to the accompanying Condensed Consolidated Financial Statements). Additionally, effective May 1, 2021, the Company converted its Met Fixed-Rate Term Loans into interest bearing only loans with a balloon payment of the balance due at maturity, which is November 1, 2029. Such conversion has increased available cash and may be expected to continue to increase the available cash for the foreseeable future. The Company may utilize the available cash to pay down indebtedness, pursue citrus grove acquisitions, conduct share repurchases, and possibly reinstate increased dividends. If the Company ~~pursues~~chooses to pursue significant growth and other corporate opportunities, ~~in the future, it~~these actions could have a material adverse impact on its cash balances and may ~~need~~require the Company to finance such activities by drawing down ~~monies under~~on its lines of credit or by obtaining additional debt or equity financing. There can be no assurance that additional financing will be available to the Company when needed or, if available, that it can be obtained on commercially reasonable terms. Any inability to obtain additional financing could adversely impact ~~Alico's~~Alico’s ability to pursue different growth and other corporate opportunities.

~~Our~~

The level of debt could have important consequences on ~~our~~Alico's business, including, but not limited to, increasing ~~our~~its vulnerability to general adverse economic and industry conditions, limiting the availability of ~~our~~ cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements, and limiting ~~our~~ flexibility in planning for, or reacting to, changes in ~~our~~its business and industry.

Alico’s credit facilities are subject to various debt covenants including the ~~industry~~following financial covenants: (i) minimum debt service coverage ratio of 1.10 to 1.00; (ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding years, or approximately $174,462,000 applicable for the year ended September 30, 2022; (iii) minimum current ratio of 1.50 to 1.00; (iv) debt to total assets ratio not greater than .625 to 1.00; and (v) solely in ~~which we operate.~~

the case of the WCLC, a limit on capital expenditures of $30,000,000 per fiscal year. As of June 30, 2023, the Company was in compliance with all of the financial covenants.

Cash Management Impacts

Cash and cash equivalents and restricted cash decreased from approximately $9,529,000 as of June 30, 2022, to approximately $1,592,000 as of June 30, 2023. The components of these changes are discussed below.


(in thousands)	Nine Months Ended June 30,
	2023			2022			Change
Net Cash (used in) provided by operating activities	$	(618	)	$	10,792		$	(11,410	)
Net Cash (used in) provided by investing activities		(5,718	)		27,535			(33,253	)
Net Cash provided by (used in) financing activities		7,063			(29,684	)		36,747
Net increase in cash and cash equivalents and restricted cash	$	727		$	8,643		$	(7,916	)

Net Cash ~~Used In~~(Used In) Provided By Operating Activities

The ~~following table details the items contributing to~~($11,410) change from $10,792 Net Cash ~~Used In Operating Activities~~provided by operating activities for the ~~three~~nine months ended ~~December 31, 2017 and 2016:~~

(in thousands) Three Months Ended December 31,
2017 2016 Change
Net income (loss) $ 8,738
$ (1,743 ) $ 10,481
Deferred gain on sale of sugarcane land (141 ) (300 ) 159
Depreciation, depletion and amortization 3,490
3,916
(426 )
Deferred income tax benefit (12,417 ) (1,273 ) (11,144 )
Gain on sale of property and equipment (1,596 ) (205 ) (1,391 )
Non-cash interest expense on deferred gain on sugarcane land 344
356
(12 )
Stock-based compensation expense 423
440
(17 )
Other (44 ) 125
(169 )
Change in working capital (8,486 ) (18,753 ) 10,267
Net cash used in operating activities $ (9,689 ) $ (17,437 ) $ 7,748

~~The increase in net cash~~June 30, 2022, to ($618) of Net Cash used in operating activities for the ~~three~~nine months ended ~~December 31, 2017, as compared~~June 30, 2023, was primarily due to the ~~same period in 2016, was due to a non-cash decrease in deferred tax liabilities, primarily~~lower box production as result of ~~new tax legislation which went into effect on December 22, 2017.~~

~~Due~~Hurricane Ian, a reduction in net grove management fees due to the ~~seasonal nature~~termination of ~~Alico's business, working capital requirements are typically greater~~the Grove Management Services by the Grove Owners, partially offset by crop insurance proceeds received. The Company also recorded additional costs related to the clean-up and repair costs due to Hurricane Ian during the nine months ended June 30, 2023.

Net Cash (Used In) Provided By Investing Activities

The ($33,253) change from $27,535 Net Cash provided by investing activities for the nine months ended June 30, 2022, to ($5,718) of Net Cash used in investing activities for the ~~first~~nine months ended June 30, 2023, was primarily due to the timing of ranch sales. The Company received net proceeds of $7,583 from the sale of real estate, property and ~~fourth quarters of its fiscal year. Cash flows from operating activities typically improve in~~equipment and assets held for sale during the ~~second and third fiscal quarters as its citrus crops are harvested.~~

nine months ended June 30, 2023, compared to $42,718 during the nine months ended June 30, 2022.

Net Cash Provided By (Used In) ~~Investing~~Financing Activities

The ~~following table details the items contributing to~~increase of $36,747 in Net Cash ~~Provided By (Used In) Investing Activities for the three months ended December 31, 2017 and 2016:~~

(in thousands) Three Months Ended December 31,
2017 2016 Change
Capital expenditures:
   Citrus tree development $ (2,628 ) $ (1,113 ) $ (1,515 )
   Breeding herd purchases (317 ) (91 ) (226 )
   Equipment and other (616 ) (1,070 ) 454
   Other —
(83 ) 83
     Total (3,561 ) (2,357 ) (1,204 )

Proceeds from sale of property and equipment 5,300
—
5,300
Proceeds from sale of assets —
432
(432 )
Other —
115
(115 )
     Net cash provided by (used in) investing activities $ 1,739
$ (1,810 ) $ 3,549

~~The increase in net cash~~ provided by ~~(used in) investing~~financing activities for the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2023 to $7,063, as compared to ($29,684) of Net Cash used in financing activities for the ~~three~~nine months ended ~~December 31, 2016,~~June 30, 2022, was primarily due to ~~proceeds received from~~an increase in net borrowings under the ~~sale~~working capital line of ~~Alico's corporate office building in Fort Myers, Florida, for $5,300,000. This increase was partially offset by greater capital expenditures in~~credit during the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2023, as compared to the same period in the prior year.

~~Net Cash Provided By Financing Activities~~

The ~~following table details the items contributing to Net Cash Provided by Financing Activities for the three months ended December 31, 2017~~Company had approximately $17,910,000 and ~~2016:~~

(in thousands) Three Months Ended December 31,
2017 2016 Change
Repayments on revolving lines of credit $ (10,608 ) $ (5,000 ) $ (5,608 )
Borrowings on revolving lines of credit 17,731
21,945
(4,214 )
Principal payments on term loans (1,118 ) (2,699 ) 1,581
Dividends paid (494 ) (498 ) 4
Capital lease obligation payments (8 ) —
(8 )
Net cash provided by financing activities $ 5,503
$ 13,748
$ (8,245 )

The decrease in net cash provided by financing activities for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016, was primarily due to increased repayments on the revolving line of credit and reduced borrowings on the revolving lines of credit.

~~Alico drew, on a net basis, $7,123,000~~$0 outstanding on its revolving lines of credit ~~primarily to fund working capital requirements~~as of June 30, 2023 and ~~investing activities for the three months ended December 31, 2017.~~

June 30, 2022, respectively.

The WCLC line of credit agreement provides for Rabo Agrifinance, Inc. to issue up to ~~$20,000,000~~$2,000,000 in letters of credit on the Company’s behalf. As of ~~December 31, 2017,~~June 30, 2023, there was approximately ~~$10,300,000~~$248,000 in outstanding letters of credit, which correspondingly reduced Alico's availability under the WCLC line of credit.

As a result of Hurricane Irma, the Company experienced fruit loss during September 2017. As discussed in the Alico's Annual Report on Form 10-K for the fiscal year ended September 30, 2017, the Company anticipates revenue and cash flow will be negatively impacted. The Company originally estimated a 40-45% reduction in production as compared to the prior season completed June 2017. Based on the harvesting of fruit through the first quarter of fiscal 2018, the Company still estimates production will be reduced by 40-45%.

Purchase Commitments

The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of ~~December 31, 2017,~~June 30, 2023, the Company had approximately ~~$1,072,000~~$4,380,000 relating to outstanding commitments for these purchases ~~which~~that will be paid upon ~~delivery.~~

~~Contractual Obligations and Off Balance Sheet Arrangements~~

~~There have been no material changes during this reporting period to~~ the ~~disclosures set forth in Part II, Item 7 in Alico's Annual Report on Form 10-K for~~delivery of the ~~fiscal year ended September 30, 2017.~~

remaining citrus trees.

Item 3.Quantitative and Qualitative Disclosures ~~about~~About Market ~~Risk.~~

~~There have been no material~~Risk

Market Risk- Market risk represents the potential loss resulting from adverse changes ~~during this reporting period~~ in the ~~disclosures set forth~~value of financial instruments, either derivative or non-derivative, caused by fluctuations in ~~Part II, Item 7A~~interest rates, foreign exchange rates, commodity prices, and equity security prices. The Company handles market risks in ~~our Annual Report~~accordance with its established policies; however, Alico does not enter into derivatives or other financial instruments for trading or speculative purposes. The Company does consider, on ~~Form 10-K~~occasion, the need to enter into financial instruments to manage and reduce the impact of changes in interest rates; however, the Company entered into no such instruments during the three months ended June 30, 2023. The Company held various financial instruments as of June 30, 2023, consisting of financial assets and liabilities reported in the Company’s Consolidated Balance Sheets and off-balance sheet exposures resulting from letters of credit issued for the ~~fiscal year~~benefit of Alico.

Interest Rate Risk - The Company is subject to interest rate risk from the utilization of financial instruments such as term loan debt and other borrowings. The Company’s primary long-term obligations are fixed rate debts subject to fair value risk due to interest rate fluctuations. The Company believes that the carrying value of its long-term debt approximates fair value as of June 30, 2023 and continues to manage interest rate risk in the current environment by monitoring the value of its collateral. The Company is also subject to interest rate risk on its variable rate debt. A one-percentage-point increase in prevailing interest rates would have increased interest expense on our variable rate debt obligations by approximately $100,000 for the three months ended ~~September~~June 30, ~~2017, as filed with~~2023.

Foreign-Exchange Rate Risk - The Company currently has no exposure to foreign-exchange rate risk because all of its financial transactions are denominated in U.S. dollars.

Commodity Price Risk - The Company has no financial instruments subject to commodity price risk.

Equity Security Price Risk - None of the ~~SEC on December 11, 2017.~~

Company’s financial instruments have potential exposure to equity security price risk.

Item 4. Controls and ~~Procedures.~~


~~(a)~~	~~Evaluation of Disclosure Controls and Procedures.~~

~~Alico's Chief Executive Officer~~Procedures

Limitations on effectiveness of controls and ~~Chief Financial Officer have~~procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of ~~the~~our disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of the end of the period covered by this report. Based on this evaluation, ~~Alico's Chief Executive Officer~~our principal executive officer and ~~Chief Financial Officer~~principal financial officer have concluded that, as of the end of the period covered by this report, ~~the Company's~~our disclosure controls and procedures were ~~effective.~~not effective at the reasonable assurance level solely as a result of the material weaknessesmanagement identified in our internal control over financial reporting as previously disclosed in our Annual Report on the Form 10-K for the fiscal year ended September 30, 2022.

Material Weaknesses in Internal Control over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, management identified the following material weaknesses in our internal control over financial reporting that continued to exist as of June 30, 2023:

•

The Company identified a deficiency as it related to controls around the completeness and accuracy of the information used in the preparation of its income tax provision.

•

The Company did not design effective controls surrounding the evaluation of misstatements and the impact to the financial statements for all periods presented.


~~(b)~~	~~Changes in Internal Control over Financial Reporting.~~

Remediation Plan

Management, with oversight by our Audit Committee, has designed and implemented the following internal control procedures, which are intended to address the completeness and accuracy of the information used in the preparation of our income tax provisions and the evaluation of the impact of errors in our financial statements:

•

Instituted a process to reconcile the amounts to the underlying support with any differences investigated and resolved prior to completion of the year-end tax provision. This includes the proper documentation, review and approval of the quarterly tax provision workpapers by management.

•

Each quarter, management will document the evaluation of misstatements, if any, and the impact to the financial statements.

While we believe that these actions will remediate the identified material weaknesses, until the remediation steps set forth above, including the efforts to implement the necessary control activities we identify, are fully implemented, and concluded to be operating effectively, the material weaknesses will not be considered remediated. As we continue to evaluate and work to remediate the material weaknesses, we may take additional measures to address the control deficiencies.

Changes in Internal Control over Financial Reporting.

During the ~~first~~ fiscal quarter ended ~~December 31, 2017~~June 30, 2023, other than the changes described above in the “Remediation Plan,” there were no changes in ~~Alico's~~our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, ~~the Company's~~our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~

Proceedings

From time to time, Alico may be involved in litigation relating to claims arising out of its operations in the normal course of business. There are no current legal proceedings to which the Company is a party or of which any of its property is subject that it believes will have a material adverse effect on its financial ~~condition,~~position, results of operations or cash flows.

On February 17, 2023, a class action complaint was filed in the Middle District of Florida captioned Sinder v. Alico, Inc. et al., Case No. 2:23-cv-00107 (the “Sinder” matter) asserting violations of Sections 10(b) and 20(a) of the Exchange Act of 1934 against the Company and certain of its current and former officers on behalf of a putative class of investors who purchased the Company’s common stock between February 4, 2021 and December 13, 2022. The complaint alleges, among other things, that the Company and certain of its current and former officers made false and misleading statements and failed to disclose certain information regarding the Company’s financial reporting and December 13, 2022 restatement of the Company’s previously issued financial statements. Plaintiff seeks damages, interest, costs, expenses, attorneys’ fees, and other unspecified relief. The Court overseeing the Sinder matter has ordered the plaintiff to file an amended complaint on or before August 28, 2023. In response, the Company anticipates moving to dismiss the amended complaint on behalf of all defendants, on or before October 27, 2023. All discovery is stayed in the Sinder matter pending a ruling on the Company’s anticipated motion to dismiss.

Item 1A.Risk ~~Factors.~~

Factors

There have been no material changes in the risk factors set forth in Part 1, Item 1A, “Risk Factors” in Alico's Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2022, as filed with the SEC on December ~~11, 2017.~~

13, 2022.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of ~~Proceeds.~~

Proceeds, and Issuer Purchases of Equity Securities

There were no sales of unregistered equity securities during the ~~period.~~

~~In fiscal year 2017, the Board of Directors authorized the repurchase of up to $7,000,000~~period covered by this Quarterly Report on Form 10-Q.

There were no issuer repurchases of the Company’s ~~common stock in two separate authorizations (the "2017 Authorization"). In March 2017, our Board of Directors authorized~~equity securities during the repurchase of up to $5,000,000 of the Company’s common stock beginning March 9, 2017 and continuing through March 9, 2019. In May 2017, our Board of Directors authorized the repurchase of up to an additional $2,000,000 of the Company’s common stock beginning May 24, 2017 and continuing through May 24, 2019. The stock repurchases made underperiod covered by this ~~repurchase were made through open market transactions at times and in such amounts as the Company’s broker determined subject to the provisions of SEC Rule 10b-18.~~

For the three months ended December 31, 2017, the Company did not purchase any shares in accordance with the 2017 Authorization and has 477,500 shares available to purchase in accordance with the 2017 Authorization.

~~Item~~Quarterly Report on Form 10-Q.

Item 3. Defaults Upon Senior ~~Securities.~~

Securities

None.

Item 4. Mine Safety ~~Disclosure.~~

Disclosure

Not Applicable.

Item 5. Other ~~Information.~~

Information

None.

Not applicable.

Item 6. ~~Exhibits.~~

Exhibits



Exhibit Number		Exhibit Index
~~3.1~~
3.1		Restated Certificate of Incorporation, ~~Dated~~dated February 17, 1972 (incorporated by reference to Exhibit 3.1 of ~~the Company's Annual Report~~Alico's filing on Form 10-K ~~filed with the Commission on~~dated December 11, 2017)
~~3.2~~
3.2		Certificate of Amendment to Certificate of Incorporation, ~~Dated~~dated January 14, 1974 (incorporated by reference to Exhibit 4.2 of Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
~~3.3~~
3.3		Amendment to Articles of Incorporation, ~~Dated~~dated January 14, 1987 (incorporated by reference to Exhibit 4.3 of Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
~~3.4~~
3.4		Amendment to Articles of Incorporation, ~~Dated~~dated December 27, 1988 (incorporated by reference to Exhibit 4.4 of Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
~~3.5~~
3.5		Second Amended By-Laws of Alico, Inc., amended and restated ~~(Incorporated~~(incorporated by reference to Exhibit ~~3.1~~3.6 of ~~the Company’s current report~~Alico’s filing on Form 8-K ~~filed with the Commission on~~dated January ~~25, 2013)~~15, 2021)
~~31.1~~
10.1		Letter Agreement regarding amendment to compensation arrangements, dated May 15, 2023, by and between the registrant and John Kiernan (incorporated by reference to Exhibit 10.1 of Alico’s filing on Form 8-K dated May 18, 2023)

31.1	*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification
~~31.2~~
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~~
32.1	**	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350
~~32.2~~
32.2	**	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350
~~101~~
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101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~	**
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~	**
101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*		Filed herewith.
**	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.	Furnished herewith.

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		ALICO, INC. (Registrant)

~~February 6, 2018~~ August 3, 2023	By:	/s/ ~~Remy W. Trafelet~~ John E. Kiernan
		~~Remy W. Trafelet~~ John E. Kiernan
		President and Chief Executive Officer
		(Principal Executive Officer)


~~February 6, 2018~~	~~By:~~	~~/s/ John E. Kiernan~~
August 3, 2023	By:	~~John E. Kiernan~~ /s/ Perry Del Vecchio
		~~Executive Vice President and~~ Perry Del Vecchio
		Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)



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	17 22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27 33
Item 4. Controls and Procedures	27 33
Part II - OTHER INFORMATION
Item 1. Legal Proceedings	28 35
Item 1A. Risk Factors	28 35
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities	28 35
Item 3. Defaults Upon Senior Securities	28 35
Item 4. Mine Safety ~~Disclosures~~Disclosure	28 35
Item 5. Other Information	28 36
Item 6. Exhibits	29 37
Signatures	30 38



	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
Commitments and Contingencies (Note 11)
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



	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



	December 31, 2017				September 30, 2017
	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
	(in thousands)

Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	99,062	$	924	$	99,062	$	954
Met Variable-Rate Term Loans	48,876		425		49,594		439
Met Citree Term Loan	5,000		48		5,000		49
Pru Loans A & B	22,740		253		23,030		258
Pru Loan E	4,840		23		4,895		25
Pru Loan F	4,840		42		4,895		42
	185,358		1,715		186,476		1,767
Less current portion	4,575		—		4,550		—
Long-term debt	$	180,783	$	1,715	$	181,926	$	1,767



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

	Three Months Ended December 31,
	Three Months Ended December 31,				Change
	2017		2016		Unit			%
Operating Revenues:
Early and Mid-Season	$	15,417	$	13,669	$	1,748		12.8	%
Fresh Fruit	1,088		2,621		(1,533		)	(58.5	)%
Purchase and Resale of Fruit	35		99		(64		)	(64.6	)%
Other	539		488		51			10.5	%
Total	$	17,079	$	16,877	$	202		1.2	%
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	%
Pound Solids per Box:
Early and Mid-Season	5.00		5.29		(0.29		)	(5.5	)%
Price per Pound Solids:
Early and Mid-Season	$	2.54	$	2.51	$	0.03		1.2	%
Price per Box:
Fresh Fruit	$	14.75	$	20.32	$	(5.57	)	(27.4	)%
Operating Expenses:
Cost of Sales	$	12,245	$	8,630	$	3,615		41.9	%
Fresh Fruit Packaging	—		1,182		(1,182		)	NM
Harvesting and Hauling	3,497		3,747		(250		)	(6.7	)%
Purchase and Resale of Fruit	41		97		(56		)	(57.7	)%
Other	512		429		83			19.3	%
Total	$	16,295	$	14,085	$	2,210		15.7	%



(in thousands, except per pound data)
	Three Months Ended December 31,				Change
	2017		2016		$			%
Revenue From:
Sale of Calves	$	57	$	20	$	37		NM
Land Leasing	247		230		17			7.4	%
Other	59		51		8			15.7	%
Total	$	363	$	301	$	62		20.6	%
Pounds Sold:
Calves	49		16		33			NM
Price Per Pound:
Calves	$	1.17	$	1.22	$	(0.05	)	(4.1	)%
Operating Expenses:
Cost of Calves Sold	$	69	$	24	$	45		NM
Land Leasing Expenses	133		32		101			NM
Water Conservation	395		458		(63		)	(13.7	)%
Total	$	597	$	514	$	83		16.1	%