(in thousands, except share amounts)

	December 31,			September 30,
	2020			2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,601		$	3,163
Accounts receivable, net		5,598			4,347
Inventories		46,430			40,855
Income tax receivable	—				781
Assets held for sale		1,410			1,366
Prepaid expenses and other current assets		1,755			1,387
Total current assets		57,794			51,899

Restricted cash		—			16,524
Property and equipment, net		367,221			350,061
Goodwill		2,246			2,246
Other non-current assets		2,921			3,207
Total assets	$	430,182		$	423,937

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,950		$	3,533
Accrued liabilities		5,473			7,095
Long-term debt, current portion		9,090			9,145
Income taxes payable		469			—
Other current liabilities		1,031			1,385
Total current liabilities		18,013			21,158

Long-term debt:
Principal amount, net of current portion		136,472			139,106
Less: deferred financing costs, net		(1,109	)		(1,151	)
Long-term debt less current portion and deferred financing costs, net		135,363			137,955
Lines of credit		12,204			2,942
Deferred income tax liabilities, net		39,728			39,728
Other liabilities		332			372
Total liabilities		205,640			202,155
Commitments and Contingencies (Note 12)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized; NaN issued		—			—
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and 7,506,160 and 7,492,524 shares outstanding at December 31, 2020 and September 30, 2020, respectively		8,416			8,416
Additional paid in capital		19,634			19,685
Treasury stock, at cost, 909,985 and 923,621 shares held at December 31, 2020 and September 30, 2020, respectively		(30,421	)		(30,779	)
Retained earnings		221,513			219,019
Total Alico stockholders' equity		219,142			216,341
Noncontrolling interest		5,400			5,441
Total stockholders' equity		224,542			221,782
Total liabilities and stockholders' equity	$	430,182		$	423,937

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

See accompanying notes to the condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

	Three Months Ended December 31,
	2020			2019
Operating revenues:
Alico Citrus	$	12,926		$	10,175
Land Management and Other Operations		806			830
Total operating revenues		13,732			11,005
Operating expenses:
Alico Citrus		8,147			4,840
Land Management and Other Operations	188				551
Total operating expenses		8,335			5,391
Gross profit		5,397			5,614
General and administrative expenses		2,528			2,760
Income from operations		2,869			2,854
Other income (expense), net:
Interest expense		(1,189	)		(1,544	)
Gain on sale of real estate, property and equipment and assets held for sale		3,364			25
Other income (expense)		10			(76	)
Total other income (expense), net		2,185			(1,595	)
Income before income taxes		5,054			1,259
Income tax provision		1,250			361
Net income		3,804			898
Net loss (income) attributable to noncontrolling interests		41			(107	)
Net income attributable to Alico, Inc. common stockholders	$	3,845		$	791
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic	$	0.51		$	0.11
Diluted	$	0.51		$	0.11
Weighted-average number of common shares outstanding:
Basic		7,503			7,477
Diluted		7,503			7,491

Cash dividends declared per common share	$	0.18		$	0.09

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

See accompanying notes to the condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands)

For the Three Months Ended December 31, 2020

					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, 2020		8,416	$	8,416	$	19,685		$	(30,779	)	$	219,019		$	216,341		$	5,441		$	221,782
Net income (loss)		—		—		—			—			3,845			3,845			(41	)		3,804
Dividends ($0.18/share)		—		—		—			—			(1,351	)		(1,351	)		—			(1,351	)
Stock-based compensation:
Directors		—		—		20			202			—			222			—			222
Executives and Managers		—		—		(71	)		156			—			85			—			85
Balance at December 31, 2020		8,416	$	8,416	$	19,634		$	(30,421	)	$	221,513		$	219,142		$	5,400		$	224,542

For the Three Months Ended December 31, 2019

					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, 2019		8,416	$	8,416	$	19,781		$	(31,943	)	$	198,049		$	194,303		$	5,095	$	199,398
Net income		—		—		—			—			791			791			107		898
Dividends ($0.09/share)		—		—		—			—			(671	)		(671	)		—		(671	)
Treasure stock purchases		—		—		—			(238	)		—			(238	)		—		(238	)
Stock-based compensation:
Directors		—		—		(32	)		225			—			193			—		193
Executives and Managers		—		—		108			—			—			108			—		108
Balance at December 31, 2019		8,416	$	8,416	$	19,857		$	(31,956	)	$	198,169		$	194,486		$	5,202	$	199,688

See accompanying notes to the condensed consolidated financial statements.

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three Months Ended December 31,
	2020			2019
Net cash used in operating activities:
Net income	$	3,804		$	898
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion, and amortization		3,851			3,609
Gain on sale of real estate, property and equipment and assets held for sale		(3,364	)		(25	)
Loss on disposal of long-lived assets		443			88
Impairment of right-of-use asset	—				87
Stock-based compensation expense		307			301
Changes in operating assets and liabilities:
Accounts receivable		(1,251	)		(1,139	)
Inventories		(5,575	)		(3,145	)
Prepaid expenses		(432	)		(477	)
Income tax receivable		781			—
Other assets		134			(457	)
Accounts payable and accrued liabilities		(3,882	)		(6,213	)
Income taxes payable		469			361
Other liabilities		(394	)		69
Net cash used in operating activities		(5,109	)		(6,043	)

Cash flows from investing activities:
Purchases of property and equipment		(5,062	)		(3,541	)
Acquisition of citrus grove		(16,450	)		—
Net proceeds from sale of real estate, property and equipment and assets held for sale		3,425			42
Change in deposits on purchase of citrus trees		64			(194	)
Advances on notes receivables, net		122			4
Other		25			—
Net cash used in investing activities		(17,876	)		(3,689	)

Cash flows from financing activities:
Repayments on revolving lines of credit		(14,187	)		—
Borrowings on revolving lines of credit		23,449			—
Principal payments on term loans		(2,689	)		(7,132	)
Treasury stock purchases	—				(238	)
Dividends paid		(674	)		(448	)
Deferred financing costs	—				(23	)
Net cash provided by (used in) financing activities		5,899			(7,841	)

Net decrease in cash and cash equivalents and restricted cash		(17,086	)		(17,573	)
Cash and cash equivalents and restricted cash at beginning of the period		19,687			23,838

Cash and cash equivalents and restricted cash at end of the period	$	2,601		$	6,265

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

See accompanying notes to the 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", "we", "us" or "our”), is a Florida agribusiness and land management company owning approximately ~~122,000~~103,000 acres of land throughout Florida, ~~including~~holding mineral rights on approximately 90,000 ~~acres~~ of ~~mineral rights.~~those owned acres. The Company manages its land based upon its primary usage, and reviews its performance based upon ~~two~~2 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 2 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", 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") 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,~~2020, as filed with the SEC on December ~~11, 2017.~~

8, 2020.

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 and account balances between the consolidated businesses have been eliminated.~~

2021.

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, 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.

Restricted Cash

Restricted cash is comprised of cash receipts from the sale of property which was being held specifically for the purpose of deferring a tax impact on the gain on sale of the property.

In September 2020, the Company sold certain sections of the West Ranch, from which a portion of the net cash proceeds amounting to $16,524,000 were being held by a qualified intermediary in anticipation of purchasing a like-kind asset and in order to defer a portion of the gain on sale of the ranch land. Such funds were included in restricted cash at September 30, 2020. In October 2020, the Company closed on a purchase of a like-kind asset and used all of these net cash proceeds which were being held by the intermediary.

Revenue Recognition

Revenues are derived from the sale of processed fruit, fresh fruit, other citrus revenue, leasing revenue and other resource revenues. The majority of the revenue is generated from the sale of citrus fruit to processing facilities, fresh fruit sales and grove management services. The Company ~~evaluates its assumptions and estimates on an ongoing basis and may employ outside experts to assist~~recognizes revenue in the ~~Company’s evaluations.~~

amount it expects it will 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 initially recognizes revenue in an amount which is estimated based on contractual and market prices, including if such market price falls within the range (known as “floor” and “ceiling” prices) identified in the 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 of 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 collected or paid thirty to sixty days after final market pricing is published. Receivables under contracts, whereby pricing is based off a cost-plus structure methodology, are paid at the final prior year rate. Any adjustments to pricing as a result of the cost-plus calculation are collected or paid upon finalization of the calculation and agreement by both parties. As of December 31, 2020, and September 30, 2020, the Company had total receivables relating to sales of citrus of approximately $4,328,000 and $584,000, 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 grove management services are rendered and consumed.

Disaggregated Revenue

Revenues disaggregated by significant products and services for the three months ended December 31, 2020 and 2019 are as follows:

(in thousands)
	Three Months Ended December 31,
	2020		2019
Alico Citrus
Early and Mid-Season	$	9,315	$	9,066
Fresh Fruit		409		735
Grove Management Services		3,092		305
Other		110		69
Total	$	12,926	$	10,175

Land Management and Other Operations
Land and Other Leasing	$	727	$	663
Other		79		167
Total	$	806	$	830

Total Revenues	$	13,732	$	11,005

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 loss of ~~$16,219 and $15,848~~$82,500 for the three months ended December 31, ~~2017~~2020 and ~~2016, respectively,~~net income of $218,414 for the three months ended December 31, 2019, of which 51% is attributable to the Company.

The net income for the three months ended December 31, 2019, was the result of reimbursements received under the federal relief program relating to Hurricane Irma, aggregating approximately $330,000.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): 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 bear interest at fluctuating interest rates based on LIBOR. If LIBOR ceases to exist, the Company may need to renegotiate its loan agreements and the Company cannot predict what alternative index would be negotiated with its lenders. ASU 2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. The Company is currently assessing the impact of 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 been adopted in order 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 significant effect on its current or future financial position, results of operations, cash flows or disclosures.

Recently Adopted Accounting Pronouncements

In ~~May 2014,~~January 2017, the FASB issued Accounting ~~Standard~~Standards Update ~~("ASU"~~(“ASU”) ~~2014-09, “Revenue from Contracts with Customers,” as~~2017-04, “Intangibles-Goodwill and Other” (Topic 350), which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a ~~new ASC topic~~goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in Step 1. The Company adopted ASU 2017-04 effective October 1, 2020, using the prospective approach, and will apply this standard in future impairment tests.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic ~~606).~~820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurements” (“ASU 2018-13”), which aims to improve the overall usefulness of disclosures to financial statement users and reduce unnecessary costs to companies when preparing fair value measurement disclosures. ASU 2018-13 is effective for annual and interim periods in the fiscal years beginning after December 15, 2019. Retrospective adoption is required, except for certain disclosures, which will be required to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. The ~~core principle~~Company adopted ASU 2018-13 effective October 1, 2020, and the adoption of this standard did not have a material impact on the Company’s condensed consolidated financial statements.

In November 2018, the FASB issued ASU is2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses.” ASU 2018-19 clarifies 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 contractsreceivables arising from operating leases are not within the scope of ~~other standards (for example, lease contracts)~~Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Leases (Topic 842). The ~~FASB subsequently issued~~Company adopted ASU ~~2015-14 to defer~~2018-19 effective October 1, 2020, and the ~~effective date~~adoption 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) asthis standard did not have a ~~cumulative-effect adjustment as of the date of adoption. The Company has not yet selected a transition method and is currently evaluating the~~material impact ~~of ASU 2014-09~~ on the Company’s condensed consolidated financial statements.

The COVID-19 Pandemic

On March 11, 2020, the World Health Organization declared the current novel coronavirus outbreak (“COVID-19”) to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These measures have had a significant adverse impact upon many sectors of the economy, including certain agriculture businesses. To date, the Company has experienced no material adverse impact 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 the majority of ~~our~~the 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~~2020 and September 30, ~~2017:~~2020:

(in thousands)	December 31,		September 30,
	2020		2020
Unharvested fruit crop on the trees	$	45,925	$	40,265
Other		505		590
Total inventories	$	46,430	$	40,855

(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 months ended December 31, ~~2017~~2020 and ~~2016~~the year ended September 30, 2019, the Company did not record any adjustments to reduce inventory to net realizable value.

~~In September 2017,~~

The Company was eligible for Hurricane Irma federal relief programs for block grants that were being administered through the State of ~~Florida's citrus business, including~~Florida. During the ~~Company's unharvested citrus crop, was significantly impacted by Hurricane Irma. For the year~~fiscal years ended September 30, ~~2017,~~2020 and 2019, the Company ~~recorded a casualty loss on its inventory.~~received approximately $4,629,000, of which approximately $4,466,000 was received during the quarter ended December 31, 2019, and $15,597,000 under the Florida Citrus Recovery Block Grant (“CRBG”) program. These federal relief proceeds represented Part 1 and Part 2 reimbursement under the three-part program. In ~~calculating this casualty loss,~~the quarter ended December 31, 2020, the Company ~~made certain estimates. As~~received approximately $4,136,000, representing reimbursement under Part 3 of ~~December 31, 2017, there were no revisions~~the program. These federal relief proceeds are included as a reduction to ~~these estimates which required any further inventory losses to be recorded. The Company continues to work closely with its insurers and adjusters to determine~~operating expenses in the ~~amount~~Condensed Consolidated Statements of ~~insurance recoveries, if any, the Company may be entitled to.~~

Operations.

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~~at December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:

(in thousands)	Carrying Value
	December 31,		September 30,
	2020		2020
East and West Ranch	$	1,410	$	1,366
Total Assets Held for Sale	$	1,410	$	1,366

(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,~~December 18, 2020, the Company sold ~~its corporate office building~~approximately 600 acres of the East Ranch for approximately $2,630,000 and recognized a gain of approximately $2,550,000. Additionally, the Company sold several smaller parcels of the East Ranch during the quarter ended December 31, 2020, which generated a gain of approximately $814,000.

On September 10, 2020, the State of Florida purchased, under the Florida Forever program, approximately 10,700 acres of the Alico Ranch for approximately $28,500,000 pursuant to an option agreement entered into between the State of Florida and the Company. The Company recognized a gain of approximately $27,470,000. The Company subsequently used a portion of the net cash proceeds to purchase a like-kind asset in ~~Fort Myers, Florida~~October 2020, which allowed the Company to defer a portion of the tax impact of the gain on sale of the ranch land (see Note 4. Property and Equipment, Net).

On March 27, 2020, the Company sold certain sections at the East Ranch for ~~$5,300,000~~approximately $2,980,000 and realized a gain of approximately ~~$1,800,000.~~$2,748,000. The ~~sales agreement provides that~~Company subsequently used substantially all of the net cash proceeds to purchase a like-kind asset in May 2020, which has allowed the Company ~~will lease back a portion~~to defer substantially all of the ~~office space for five years.~~

tax impact of the gain on sale of the ranch land.

Negotiations with interested parties for certain assets held for sale have already taken place, and in January, 2018 the Company sold its breeding herd and a portion of their trailers (See Note 13). Assets held for sale consists solely of property and equipment.

~~The Company recorded an impairment loss of approximately $4,131,000 during fiscal year 2017 on these assets classified as assets held for sale.~~

Note 4. Property and Equipment, Net

Property and equipment, net consists of the following at December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:

(in thousands)	December 31,			September 30,
	2020			2020
Citrus trees	$	307,384		$	296,012
Equipment and other facilities		56,617			55,593
Buildings and improvements		8,110			8,128
Total depreciable properties		372,111			359,733
Less: accumulated depreciation and depletion		(118,795	)		(115,440	)
Net depreciable properties		253,316			244,293
Land and land improvements		113,905			105,768
Property and equipment, net	$	367,221		$	350,061

(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

For the three months ended December 31, 2020 and fiscal year ended September 30, 2020, the Company did not record any impairments.

On October 30, 2020, the Company purchased approximately 3,280 gross acres located in Hendry County for a purchase price of approximately $16,450,000.

On June 1, 2020, the Company sold approximately 30 ranch acres to an employee for approximately $122,000 and recognized a gain of approximately $83,000.

On May 4, 2020, the Company purchased approximately 334 citrus acres for approximately $2,850,000. This acquisition complements the Company’s existing citrus acres as these acres are located adjacent to existing groves in the Frostproof area. Additionally, this purchase was part of a like-kind exchange transaction, which will allow the Company to defer taxes relating to the sale of certain sections of the East Ranch.

Note 5. Long-Term Debt and Lines of Credit

The following table summarizes long-term debt and related deferred financing costs, net of accumulated amortization at December 31, 2020 and September 30, 2020:

	December 31, 2020				September 30, 2020
(in thousands)	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
Long-term debt, net of current portion:
Met Fixed-Rate Term Loans	$	81,875	$	596	$	83,438	$	621
Met Variable-Rate Term Loans		40,250		274		40,969		286
Met Citree Term Loan		4,450		35		4,512		36
Pru Loans A & B		14,807		203		15,097		207
Pru Loan E		4,180		1		4,235		1
		145,562		1,109		148,251		1,151
Less current portion		9,090		—		9,145		—
Long-term debt	$	136,472	$	1,109	$	139,106	$	1,151

~~Debt Refinancing~~

The ~~Company refinanced its outstanding~~following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at December 31, 2020 and September 30, 2020:

	December 31, 2020				September 30, 2020
(in thousands)	Principal		Deferred Financing Costs, Net		Principal		Deferred Financing Costs, Net
Lines of Credit:
RLOC	$	—	$	138	$	—	$	141
WCLC		12,204		—		2,942		—
Lines of Credit	$	12,204	$	138	$	2,942	$	141

Future maturities of long-term debt ~~obligations on~~and lines of credit as of December ~~3, 2014 in connection with the Orange-Co acquisition. These~~31, 2020 are as follows:

(in thousands)
	December 31, 2020
Due within one year	$	9,090
Due between one and two years		10,535
Due between two and three years		22,739
Due between three and four years		10,535
Due between four and five years		10,535
Due beyond five years		94,332

Total future maturities	$	157,766

Interest costs expensed and capitalized were as follows:

(in thousands)
	Three Months Ended December 31,
	2020		2019
Interest expense	$	1,189	$	1,544
Interest capitalized		312		269
Total	$	1,501	$	1,813

Debt

The Company's credit facilities ~~initially included~~consist of $125,000,000 in fixed interest rate term loans (“Met Fixed-Rate Term Loans”), $57,500,000 in variable interest rate term loans (“Met Variable-Rate Term Loans”), ~~and~~ a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and a $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~~5,800 gross acres of ranch land. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.

The term loans, collectively, are subject to quarterly principal payments of $2,281,250, and mature November 1, 2029. The Met Fixed-Rate Term Loans bear 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”). The LIBOR spread is subject to adjustment by ~~the lender on~~Met beginning May 1, ~~2019~~2017 and is subject to further adjustment every two years thereafter until maturity. No adjustment was made at May 1, 2019. Interest on the term loans is payable quarterly.

The interest rates on the Met Variable-Rate Term Loans were ~~3.03%~~1.86% per annum and ~~2.96%~~1.91% per annum as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, 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. During the first and second quarter of fiscal year 2018, the Company elected not to make its principal payment and utilized a portion of its 2015 ~~and remains~~prepayment to satisfy its principal payment requirements for such quarters. At December 31, 2020, the Company had $5,625,000 remaining 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 RLOC bears interest at a floating rate equal to ~~90 day~~90-day LIBOR plus ~~150~~165 basis points, payable quarterly. The LIBOR spread was adjusted by ~~the lender~~Met on May 1, 2017 and is subject to further adjustment every two years thereafter. ~~Outstanding principal, if any, is due~~No adjustment was made at May 1, 2019. 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%~~1.86% and ~~2.96%~~1.91% per annum as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, respectively. Availability under the RLOC was $25,000,000 as of December 31, ~~2017.~~

2020 and September 30 2020, respectively.

The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The interest rate on the WCLC is based on the one month LIBOR, plus a spread, which 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. The rate is currently at LIBOR plus 175 basis points. The variable interest rate was ~~3.11% per annum~~1.90% and ~~2.99%~~1.90% per annum as of December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, respectively. The WCLC agreement was amended on ~~September 30, 2017,~~August 25, 2020, and the primary terms of the amendment were an extension of the maturity to November 1, ~~2019.~~2023. There were no changes to the commitment amount or interest rate. ~~Availability under~~The WCLC agreement provides for Rabo to issue up to $2,000,000 in letters of credit on the ~~WCLC was approximately $52,577,000 as~~Company’s behalf. As of December 31, ~~2017 and September 30, 2017, respectively.~~

2020, there was approximately $236,000 in outstanding letters of credit, which correspondingly reduced the Company's availability under the line of 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 charged at 20 basis points.

~~The~~

There was approximately $12,204,000 and $2,942,000 outstanding ~~balance~~ on the WCLC at December 31, 2020 and September 30, 2020, respectively. Availability under the WCLC was approximately ~~$7,123,000~~$57,560,000 and $66,659,000 as of December 31, 2020 and September 30, 2020, respectively.

In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to the refinancing and approximately $339,000 of costs related to 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. All costs are included in deferred financing costs and being amortized to interest expense over the applicable terms of the obligations. The unamortized balance of deferred financing costs related to the financing above was approximately $1,008,000 and approximately $1,048,000 at December 31, 2017. The WCLC agreement provides for Rabo to issue up to $20,000,000 in letters of credit on the Company’s behalf. As of December 31, 2017, there was approximately $10,300,000 in outstanding letters of credit, which correspondingly reduced the Company's availability under the line of credit.

2020 and September 30, 2020, 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, (ii) tangible net worth of at least $160,000,000 increased annually by 10% of consolidated net income for the preceding ~~year,~~years, or approximately ~~$162,300,000~~$169,730,000 for the year ~~ending~~ended September 30, ~~2017,~~2020, (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 the case of the WCLC, ~~(v)~~ a limit on capital expenditures of $30,000,000 per fiscal year. As of December 31, ~~2017,~~2020, 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”~~Loan"). This is a $5,000,000 credit facility that bears interest at a fixed rate of 5.28% per annum. ~~An initial advance~~Principal and interest payments are made on a quarterly basis. At December 31, 2020 and September 30, 2020, there was an outstanding balance of ~~$500,000 was made at closing on March 4, 2014. The loan agreement was amended to provide for an interim advance of $2,000,000 on September 17, 2015,~~$4,450,000 and the interest rate was adjusted to 5.30% per annum at the time of the interim advance. The final $2,500,000 advance was funded on April 27, 2016 and the interest rate was adjusted to 5.28%. Principal payments on this term loan commence February 1, 2018 and are payable quarterly thereafter.$4,512,000, respectively. The loan matures in February 2029.

The unamortized balance of deferred financing costs related to this loan was approximately $35,000 and $36,000 at December 31, 2020 and September 30, 2020, respectively.

Transition from LIBOR

The Company is currently evaluating the impact of the transition from LIBOR as an interest rate benchmark to other potential alternative reference rates. Currently, the Company has debt instruments in place that reference LIBOR-based rates. The transition from LIBOR is estimated to take place in 2022 and management will continue to actively assess the related opportunities and risks involved in this transition.

Silver Nip Citrus Debt

There are ~~two~~2 fixed-rate term loans, with an original combined balance of $27,550,000, bearing interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290,000 is payable quarterly, together with accrued interest. On February 15, 2015, 734 Citrus Holdings, LLC d/b/a Silver Nip Citrus (“Silver Nip Citrus”) made a prepayment of $750,000. In addition, the Company made prepayments of approximately $4,453,000 in the second fiscal quarter of 2018 with proceeds from the sale of certain properties, which were collateralized under these loans. The Company may prepay up to $5,000,000 of principal without penalty. ~~On February 15, 2015, Silver Nip Citrus made~~As such, the Company exceeded the allowed $5,000,000 prepayment by approximately $203,000 and was required to make a ~~prepayment~~premium payment of ~~$750,000.~~approximately $22,000. 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.~~

2029 and June 1, 2033, respectively.

Silver Nip Citrus entered into ~~two~~2 additional fixed-rate term loans with Prudential to finance the acquisition of a 1,500 acre citrus grove on September 4, 2014. Each loan (“Pru Loan E” and “Pru Loan F”) was in the original amount of ~~$5,500,000. Principal~~$5,500,000 with principal of $55,000 per loan isbeing payable quarterly, together with accrued interest. ~~One loan~~In November 2019, the Company prepaid Pru Loan F in full in the amount of $4,455,000. As a result of this prepayment, the Company’s required annual principal payments on its Pru Loans was reduced by $220,000 per annum. Pru Loan E, which matures September 1, 2021, bears interest at 3.85% per ~~annum (“Pru Loan E”), while the other bears interest at 3.45% per annum (“Pru Loan F”).~~annum. The interest rate on Pru Loan E is subject to adjustment on September 1, 2019 and every year thereafter until maturity. ~~Both loans are~~No adjustment was made at September 1, 2019. This loan is collateralized by ~~real estate~~approximately 1,500 gross acres of citrus groves 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~~are subject to 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)financial covenant whereby the consolidated current ratio ~~covenant~~ requirement ~~was reduced from 1.50 to~~is 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,~~2020.

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 $204,000 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~~$208,000 at December 31, ~~2017~~2020 and September 30, ~~2017:~~

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

2020, respectively.

Note 6. Accrued Liabilities

Accrued ~~Liabilities~~liabilities consist of the following at December 31, ~~2017~~2020 and September 30, ~~2017:~~2020:

(in thousands)	December 31,		September 30,
	2020		2020
Ad valorem taxes	$	—	$	2,057
Accrued interest		992		1,020
Accrued employee wages and benefits		945		2,214
Accrued harvest and haul		671		—
Accrued dividends		1,351		674
Consulting and separation charges		46		146
Accrued insurance		1,096		636
Other accrued liabilities		372		348
Total accrued liabilities	$	5,473	$	7,095

(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

In October 2019, the Internal Revenue Service concluded its audit of the September 30, 2015 tax year with no changes. The Federal and state filings remain subject to examination by tax authorities for tax periods ending after September 30, 2015.

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 anticipates a federal tax net operating loss (“NOL”) ~~was signed into law. The Act contains significant changes to corporate taxes, including a permanent reduction of~~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,~~plans to carry back the ~~Act requires~~NOL pursuant to the provisions of the CARES Act. As a ~~one-time remeasurement~~result of ~~certain~~the federal tax ~~related assets and liabilities. During the first quarter ended December 31, 2017,~~NOL carryback, the Company ~~made certain~~ estimates ~~related to the impact of the Act including the remeasurement of deferred taxes at the new expected tax rate and~~ a revised effective tax rate for the year ended September 30, 2018, which was used to compute current tax expense for the first quarter ended December 31, 2017. The amounts recorded in the three months ended December 31, 2017 for the remeasurement of deferred tax liabilities principally relate to the reduction in the U.S. corporate income tax rate. The Company has recorded acash tax benefit of approximately ~~$11,300,000 to account for these deferred tax impacts.~~

$605,000, with an income statement benefit of approximately $82,000.

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 months ended December 31, ~~2017~~2020 and ~~2016,~~2019, basic and diluted earnings per common share were as follows:

(in thousands except per share amounts)	Three Months Ended December 31,
	2020		2019
Net income attributable to Alico, Inc. common stockholders	$	3,845	$	791

Weighted average number of common shares outstanding - basic		7,503		7,477
Dilutive effect of equity-based awards		—		14
Weighted average number of common shares outstanding - diluted		7,503		7,491

Net income per common share attributable to Alico, Inc. common stockholders:
Basic	$	0.51	$	0.11
Diluted	$	0.51	$	0.11

(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 of diluted earnings per common share for~~

For the three months ended December 31, ~~2017 includes~~2020, 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~~had no dilutive or anti-dilutive impact on the earnings per common share. For the three months ended December 31, ~~2016.~~

2019, there were no anti-dilutive equity awards excluded from the calculation of diluted earnings per common 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”)~~CODM in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on ~~three~~2 operating segments: Alico Citrus ~~Conservation~~ and ~~Environmental Resources~~Land Management and Other Operations.

Total revenues represent sales to unaffiliated customers, as reported in the Condensed Consolidated Statements of Operations. Goods and services produced by these segments 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 December 31,
	2020		2019
Revenues:
Alico Citrus	$	12,926	$	10,175
Land Management and Other Operations		806		830
Total revenues		13,732		11,005

Operating expenses:
Alico Citrus		8,147		4,840
Land Management and Other Operations		188		551
Total operating expenses		8,335		5,391

Gross profit:
Alico Citrus		4,779		5,335
Land Management and Other Operations		618		279
Total gross profit	$	5,397	$	5,614

Depreciation, depletion and amortization:
Alico Citrus	$	3,689	$	3,437
Land Management and Other Operations		38		46
Other Depreciation, Depletion and Amortization		124		126
Total depreciation, depletion, and amortization	$	3,851	$	3,609

(in thousands)	December 31,		September 30,
	2020		2020
Assets:
Alico Citrus	$	413,751	$	406,763
Land Management and Other Operations		14,745		15,367
Other Corporate Assets		1,686		1,807
Total Assets	$	430,182	$	423,937

(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. Leases

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” This guidance requires entities that sign leases as a lessee to recognize right-of-use assets and lease liabilities for those leases classified as operating leases under previous U.S. GAAP. The accounting applied by a lessor is largely unchanged from that applied under previous U.S. GAAP. The Company adopted ASU 2016-02 on October 1, 2019.

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. 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 12 months 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 December 31,
Operating lease components	2020		2019
Operating leases costs recorded in General and Administrative expenses	$	132	$	52
Operating lease right-of-use asset impairment recorded in Other expenses	$	—	$	87

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

	December 31, 2020
Weighted-average remaining lease term	1.36 years
Weighted-average discount rate		3.20	%

Note ~~10.~~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 executives 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 fees was approximately ~~$192,000~~$222,000 and ~~$255,000~~$193,000 for the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, 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~~of approximately ~~$26,000~~$25,000 and ~~$150,000~~$26,000 for the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. There was approximately ~~$283,000~~$159,000 and ~~$413,000~~$0 of total unrecognized stock compensation costs related to unvested stock compensation for the Restricted Stock grants at December 31, ~~2017~~2020 and ~~2016,~~September 30, 2020, respectively.

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

Stock Option Grant

~~On December 31, 2016, the Company entered into new employment agreements (collectively, the “Employment Agreements”) with each~~

Stock option grants of ~~Remy W. Trafelet, Henry R. Slack,~~118,000 options to certain Officers and ~~George R. Brokaw (collectively, the “Executives”). Mr. Trafelet serves as the President and Chief Executive Officer~~Managers of the Company ~~Mr. Slack serves~~(collectively the “2020 Option Grants”) were granted on October 11, 2019. The option exercise price was set at $33.96, the closing price on October 11, 2019. The 2020 Option Grants will vest as ~~the Executive Chairman~~follows: (i) 25% of the ~~Company, and Mr. Brokaw serves as~~options will vest if the ~~Executive Vice Chairman~~price of the ~~Company, and each~~Company’s common stock during a consecutive 20-trading day period exceeds $35.00; (ii) 25% of ~~them continues to serve on~~the options will vest if the price of the Company’s ~~Board~~common stock during a consecutive 20-trading day period exceeds $40.00; (iii) 25% of ~~Directors.~~

the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $45.00; and (iv) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $50.00. If the applicable stock price hurdles have not been achieved by (A) the date that is 18 months following the termination of employment, if the employment is terminated due to death or disability, (B) the date that is 12 months following the termination of employment, if the employment is terminated by the Company without cause, by the employee with good reason, or due to the employee’s retirement, or (C) the date of the termination of employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles have not been achieved by December 31, 2022 then any unvested options will be forfeited. The 2020 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company. During the three months ended December 31, 2020, 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 vested); accordingly, no additional amounts of the 2020 Option Grants vested at December 31, 2020.

Stock option grants of 10,000 options to Mr. John Kiernan (the “2019 Option Grants”) were granted on October 25, 2018. The option exercise price for these options was set at $33.34, the closing price on October 25, 2018. The 2019 Option Grants will vest as follows: (i) 3,333 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $40.00; (ii) 3,333 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $45.00; and (iii) 3,334 of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $50.00. If the applicable stock price hurdles have not been achieved by (A) the date that is 18 months following Mr. Kiernan’s termination of employment, if Mr. Kiernan’s employment is terminated due to death or disability, (B) the date that is 12 months following Mr. Kiernan’s termination of employment, if Mr. Kiernan’s employment is terminated by the Company without cause, by Mr. Kiernan with good reason, or due to Mr. Kiernan’s retirement, or (C) the date of the termination of Mr. Kiernan’s employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles have not been achieved by December 31, 2021 then any unvested options will be forfeited. The 2019 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company. Since the date of grant the stock did not trade above $40.00 per share for twenty consecutive days; accordingly, NaN of the 2019 Option Grants are vested at December 31, 2020.

Stock option grants of 210,000 options to Mr. Remy Trafelet and 90,000 options to Mr. John Kiernan (collectively, the “2018 Option Grants”) were granted on September 7, 2018. The option exercise price for these options was set at $33.60, the closing price on September 7, 2018. The 2018 Option Grants will vest as follows: (i) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $35.00; (ii) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $40.00; (iii) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $45.00; and (iv) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $50.00. If the applicable stock price hurdles have not been achieved by (A) the date that is 18 months following the respective Executive’s termination of employment, if the respective Executive’s employment is terminated due to death or disability, (B) the date that is 12 months following the respective Executive’s termination of employment, if the respective Executive’s employment is terminated by the Company without cause, by the respective Executive with good reason, or due to the respective Executive’s retirement, or (C) the date of the termination of the respective Executive’s employment for any other reason, then any unvested options will be forfeited. In addition, if the applicable stock price hurdles have not been achieved by

December 31, 2021 then any unvested options will be forfeited. The 2018 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company. During the three months ended December 31, 2020, the stock did not trade above $40.00 per share for a consecutive twenty days (the $35.00 per share threshold was met during fiscal year 2020 and thus 25% was vested); accordingly, 0 additional stock options of Mr. Kiernan's 2018 Option Grants vested at December 31, 2020. As set forth below, more than a majority of the 2018 Option Grants issued to Mr. Trafelet were forfeited and the vesting conditions of the remainder were modified, all pursuant to the Alico Settlement Agreement, as defined below.

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.~~Mr. Henry Slack and Mr. George Brokaw (collectively, the ~~“Option~~“2016 Option Grants”) were granted on December 31, 2016. The option price was set at $27.15, the closing price on December 31, 2016. The 2016 Option Grants will vest as follows: (i) 25% of the options will vest if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $60.00; (ii) 25% of the options will vest if such price during a consecutive 20-trading day period exceeds $75.00; (iii) 25% of the options will vest if such price during a consecutive 20-trading day period exceeds $90.00; and (iv) 25% of the options will vest if such price during a consecutive 20-trading day period exceeds $105.00. If the applicable stock price hurdles have not been achieved by (A) the second anniversary of the Executive’s termination of employment, if the Executive’s employment is terminated due to death or disability, (B) the date that is 18 months following the Executive’s termination of employment, if the Executive’s employment is terminated by the Company without cause, by the Executive with good reason, or due to the Executive’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 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), then any unvested options will be forfeited. The 2016 Option Grants will also become vested to the extent that the applicable stock price hurdles are satisfied in connection with a change in control of the Company.

Since the date of grant the stock did not trade above $60.00 per share for twenty consecutive days; accordingly, NaN of the 2016 Option Grants are vested at December 31, 2020. As set forth below, all of the 2016 Option Grants issued to Mr. Trafelet were forfeited pursuant to the Alico Settlement Agreement, as defined below.

Additionally, 187,500 shares of the 2016 Option Grants made to each of Messrs. Slack and Brokaw were forfeited on September 5, 2018 and no replacement options were granted.

Pursuant to an Alico Settlement Agreement dated February 11, 2019 (described in Note 13. “Related Party Transactions”), which was unanimously approved by the Board of Directors, Mr. Trafelet agreed to voluntarily resign from his roles as President and Chief Executive Officer and a director of the Company. Under the Settlement Agreement, Mr. Trafelet forfeited (i) all of the 2016 Option Grants granted to him and (ii) all of the 2018 Option Grants granted to him in September 2018, other than 26,250 stock options that were to vest if the minimum price of Alico's common stock over 20 consecutive trading days exceeded $35.00 per share and 26,250 stock options that were to vest if the minimum price of Alico's common stock over 20 consecutive trading days exceeded $40.00 per share (“2019 Modified Option Grant”), in each case, by the first anniversary of the date of the Alico Settlement Agreement (collectively, the "Retained Options"). Any Retained Options that vest in accordance with their terms were to expire on the date that is six months following the date on which the Retained Option vests, and any Retained Options that do not vest by the first anniversary of the Alico Settlement Agreement were to be forfeited as of such first anniversary. Although, by the first anniversary of the Alico Settlement Agreement, the Company’s common stock traded above $35.00 per share for a consecutive twenty days and thus 26,250 stock options from the 2019 Modified Options Grant vested, such Retained Options were not exercised within six months following the date on which such Retained Options vested, and accordingly they were forfeited. Additionally, since the stock did not trade above $40.00 per share for a consecutive twenty days by the first anniversary of the date of the Alico Settlement Agreement, the other 26,250 stock options from the 2019 Modified Option Grants never vested and were forfeited.

Forfeitures of all stock options were recognized as incurred.

Stock compensation expense related to the options ~~totaled~~of approximately ~~$205,000~~$60,000 and $0$82,000 was recognized for the three months ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. At December 31, ~~2017~~2020 and ~~2016,~~September 30, 2020, there was approximately ~~$1,822,000~~$316,000 and ~~$2,646,000~~$376,000, respectively, of total unrecognized stock compensation costs related to unvested share-based compensation for the option ~~grants, respectively.~~grants. The total unrecognized compensation cost is expected to be recognized over a weighted-average period of ~~approximately 2.3~~1.47 years.

The fair value of the 2020 and 2019 Option Grants 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.

2020 Option Grant
Expected Volatility			26.0	%
~~Expected Volatility~~	~~32.19~~	%
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~~exercised for the three months ended December 31, ~~2017.~~2020.

2019 Modified Option Grant
Expected Volatility		25.0	%
Expected Term (in years)	1.50
Risk Free Rate		2.52	%

The weighted-average grant-date fair value of the 2019 Modified Option Grant was $1.40.

2019 Option Grants
Expected Volatility		30.0	%
Expected Term (in years)	4.09
Risk Free Rate		2.95	%

The weighted-average grant-date fair value of the 2019 Option Grants was $7.10.

Stock Repurchase Authorizations

~~In fiscal year 2017,~~

On October 10, 2019, the Board of Directors authorized the repurchase of up to ~~$7,000,000~~7,000 shares of the Company’s common stock from 734 Investors in ~~two separate authorizations (the "2017 Authorization"). In March 2017, our Board of Directors authorized the~~a privately negotiated repurchase of upshares; and on October 15, 2019, the Company entered into a repurchase agreement to ~~$5,000,000~~repurchase a total of 7,000 shares of the Company’s common stock ~~beginning March 9, 2017 and continuing through March 9,~~from 734 Investors, effective October 15, 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 months ended December 31, ~~2017:~~2020:

(in thousands, except share amounts)
	Shares			Cost
Balance as of September 30, 2020		923,621		$	30,779
Issued to employees and directors		(13,636	)		(358	)
Balance as of December 31, 2020		909,985		$	30,421

(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~~$236,000 and $399,000 at December 31, ~~2017~~2020 and September 30, ~~2017,~~2020, 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 of operations or cash flows.

Purchase Commitments

The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of December 31, 2020, the Company had approximately $2,955,000 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 Company entered into a Separation and Consulting Agreement with Clayton G. Wilson (the “Separation and Consulting Agreement”), the Company’s Chief Executive Officer, pursuant to which Mr. Wilson stepped down as Chief Executive Officer of the Company effective as of December 31, 2016. Under the Separation and Consulting Agreement, Mr. Wilson also acknowledged and agreed that he would continue to be bound by the restrictive covenants set forth in his Employment Agreement 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 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 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 to 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,~~Brokaw. Mr. Slack ~~serves~~previously served as the Executive Chairman of the Company, and Mr. Brokaw ~~serves~~previously served as the Executive Vice Chairman of the ~~Company, and each of them continues to serve on the Company’s Board of Directors.~~Company. The Employment Agreements ~~provide~~provided for an annual base salary of ~~$400,000~~$250,000 in the case of Mr. ~~Trafelet~~Slack and an annual base salary of $250,000 in the case of ~~each of Messrs.~~Mr. Brokaw.

Effective July 1, 2019, Mr. Slack resigned his employment with the Company as Executive Chairman. Effective December 31, 2019, Mr. Brokaw resigned his employment with the Company as Executive Vice Chairman. Mr. Slack and Mr. Brokaw ~~and, additionally, provided for payment~~continue to serve on the ~~Executives an amount in cash equal to $400,000 to~~Board of the Company.

Remy W. Trafelet

On February 11, 2019, as contemplated by a settlement agreement between the Company, certain members of the Board of Directors, Mr. Trafelet, and ~~$250,000~~certain third parties affiliated with Mr. Trafelet (the “Alico Settlement Agreement”) Mr. Trafelet submitted to ~~each of Messrs. Slack~~the Board his resignation as President and ~~Brokaw within five business days of December 31, 2016.~~

~~As part of their employment agreements, each~~Chief Executive Officer of the ~~Executives were granted stock options. A stock option grant~~Company and a member of ~~300,000 options in~~ the ~~case~~Board, effective upon the execution of the Alico Settlement Agreement. Also, on February 11, 2019, as contemplated by the Alico Settlement Agreement, the Company entered into a consulting agreement (the "Consulting Agreement") with Mr. Trafelet and ~~225,000 options in~~3584 Inc., an entity controlled by Mr. Trafelet (the "Consultant"). Pursuant to 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, subjectConsulting Agreement, Mr. Trafelet will make himself available 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 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 ~~during~~through the ~~three-year period after~~Consultant for up to 24 months. In exchange for the ~~resignation date, (ii) Mr. Smith agreed to be bound by certain non-competition covenants relating to~~consulting services, the ~~Company’s citrus operations and non-solicitation and non-interference covenants for a period~~Consultant will receive an annual consulting fee of ~~two years after the resignation date, and (iii)~~$400,000. As of December 31, 2020, the Company has paid ~~Mr. Smith $925,000 for such services and covenants. The~~approximately $754,000 towards these consulting fees. If the Company ~~expensed $0 and approximately $50,000 under~~terminates the ~~Consulting and Non-Competition Agreement for each 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”)~~consulting period (other than in certain specified circumstances), ~~whereby~~ the Company will ~~reimburse TBCM for use of office space and various administrative and support services. The annual cost~~continue to pay the consulting fees described above through the balance of the ~~office and~~

~~services is approximately $592,000. The agreement will expire in May 2018.~~24-month term.

Distribution of Shares by Alico’s Largest Shareholder

On November 12, 2019, 734 Investors, the Company’s largest shareholder from 2013 until November 12, 2019, distributed the 3,173,405 shares of Company common stock held by it, on a pro rata basis, to its members. The Company ~~expensed approximately $148,000 and $73,000 under~~understands this share distribution was made in anticipation of the ~~Shared Services Agreement for the three months ended December 31, 2017 and 2016, respectively.~~

dissolution of 734 Investors. Transfers of these shares were not made pursuant to any current Alico registration statement.

~~Note 13. Subsequent Events~~

On January 19, 2018, the Company sold certain trailers to a third party for $500,000. The Company received $125,000 and the remaining portion is 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 to a third party 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.

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 and Exchange Commission (“SEC”) on December 11, 2017.

Cautionary Statement Regarding Forward-Looking Information

We provide forward-looking information in this Quarterly Report on Form 10-Q, particularly in this 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 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 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.~~managementand can be identified by terms such as “plans,” “expect,” “may,” "anticipate,” “intend,” “should be,” “will be” “is likely to,” “believes,” and similar expressions referring to future periods. Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and their ~~by-products,~~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; market pricing of citrus; 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 and corporate opportunities; onetime events; acquisitions and ~~divestitures including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip Citrus merger;~~divestitures; 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; impact of the COVID-19 outbreak and coronavirus pandemic on our agriculture operations, including without limitation demand for product, supply chain, health and availability of our labor force, the labor force of contractors we engage, and the labor force of our competitors; other risks related to the duration and severity of the COVID-19 outbreak and coronavirus pandemic and its impact on Alico’s business; the impact of the COVID-19 outbreak and coronavirus pandemic on the U.S. and global economies and financial markets; access to governmental loans and incentives; any reduction in the public float resulting from repurchases of common stock by Alico; changes in ~~dividends;~~equity awards to employees; whether the Company's dividend policy, including its recent increased dividend amounts, is continued; the impact on the trading price of the Company’s common stock as a result of an expressed desire of certain of our shareholders to liquidate their shareholdings and ~~market~~sales of common stock and other future transactions designed to consummate such expressed desire; political changes and economic crises; competitive actions by other companies; increased competition from international companies; changes in environmental regulations and their impact on farming practices; the land ownership policies of governments; changes in government farm programs and policies and international reaction to such programs; changes in pricing ~~risks due~~calculations with our customers; fluctuations in the value of the U.S. dollar, interest rates, inflation and deflation rates; length of terms of contracts with customers; and changes in and effects of crop insurance programs, global trade agreements, trade restrictions and tariffs; the exercise of an option by the State of Florida to ~~concentrated ownership~~purchase approximately 5,804 acres of ~~stock.~~land from Alico; and soil conditions, harvest yields, prices for commodities, and crop production expenses. These ~~assumptions~~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 those Risks Factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~2020, and our Quarterly Reports on Form 10-Q.

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~~2020, the Company generated operating revenues of approximately ~~$17,533,000, loss~~$13,732,000, income from operations of approximately ~~$3,304,000,~~$2,869,000, and net income attributable to common stockholders of approximately ~~$8,746,000. Cash~~$3,845,000. Net cash used in ~~operations~~operating activities was approximately ~~$9,689,000 during~~$5,109,000 for the three months ended December 31, ~~2017.~~

2020.

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 and value-added services, which include contracting for the harvesting, marketing and hauling of citrus; and

•

Land Management and Other Operations includes activities related to native plant sales, grazing and hunting leasing, management and/or conservation of unimproved native pastureland and activities related to rock mining royalties 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.

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 value-added services, which include contracting for the harvesting, marketing and hauling of citrus.

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

Other Operations consists of 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.

Critical Accounting Policies and Estimates

The discussion and analysis of the 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 it 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 Form 10-Q for a detailed description of recent accounting pronouncements.

Recent Developments

The COVID-19 Pandemic

On ~~November 16, 2017,~~March 11, 2020, the World Health Organization declared the current novel coronavirus outbreak (“COVID-19”) to be a global pandemic. In response to this declaration and the rapid spread of COVID-19 within the United States, federal, state and local governments throughout the country have imposed varying degrees of restrictions on social and commercial activity to promote social distancing in an effort to slow the spread of the illness. These measures have had a significant adverse impact upon many sectors of the economy, including certain agriculture businesses.

For the protection of our employees in accordance with the Centers For Disease Control and Prevention (CDC) guidelines, the Company arranged to have the majority of office personnel work remotely and continues to do so, has taken steps to allow and encourage greater separation for our employed and contracted field workers and has worked with its harvesters, haulers and suppliers to minimize interactions. The Company continues to assess the situation on a routine basis.

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

Sale and Purchase of Land

On December 15, 2020 (the “Approval Date”), the State of Florida approved entering into an option agreement for sale and purchase (the “Option Agreement”) submitted by the Company which grants the State of Florida an option to purchase approximately 5,804 acres of Alico ~~announced~~Ranch for approximately $14,600,000 (the “Exercise Price”) under the ~~Alico 2.0 Modernization Program (“Alico 2.0”~~Florida Forever program (the “Option”). The ~~program is focused~~State of Florida may exercise the Option any time beginning on ~~aggressively improving~~ the ~~operations~~Approval Date until the 120th day after the Approval Date, subject to extension in accordance with the terms of the Option Agreement. The Option Agreement provides for certain adjustments to the Exercise Price; however, if the adjusted purchase price is less than the Exercise Price, the Company may, in its sole discretion, either approve the adjusted purchase price or terminate the Option Agreement.

On October 30, 2020, the Company purchased approximately 3,280 gross acres located in Hendry County for a purchase price of $16,450,000. This acquisition allows the Company to add additional scale to its existing 45,000 gross acres of citrus properties. Strategically, with these acquired groves neighboring existing Alico groves, Alico believes that this acquisition will help Alico to its operation as a low-cost, high producing citrus grower.

Federal Relief Program

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, 2020 and ~~optimizing its return on capital employed through cost reductions, increased efficiencies~~2019, the Company received approximately $4,629,000 and ~~disposition of non-performing assets. The Program began in early 2017 to transform Alico’s three legacy businesses (Alico, Orange Co.,~~$15,597,000, respectively, under the Florida Citrus Recovery Block Grant (“CRBG”) program. These federal relief proceeds represented Part 1 and ~~Silver Nip) into a single efficient enterprise, now called Alico Citrus. Every aspect of Alico’s citrus and ranch operations, all back office support activities, and~~Part 2 reimbursement under 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~~three-part program. In the ~~Company. The changes required to realize those improvements have now been implemented. As part~~quarter ended December 31, 2020, the Company received approximately $4,136,000, representing reimbursement under Part 3 of the ~~program, Alico realigned its management structure and appointed Danny Sutton as the President and General Manager of Alico Citrus.~~

program.

As indicated in Alico’s 2.0, the Company intended to divest itself from and cease operations at the Ranch. On January 25, 2018, the Company sold its breeding herd and leased grazing and other rights on its Ranch to a third party for approximately $7,800,000. The Company will continue to own the property and conduct its long term water dispersement program and wildlife management programs.

Condensed Consolidated Results of Operations

The following discussion provides an analysis of Alico's results of operations and should be read in conjunction with the accompanying Condensed Consolidated Statements of Operations for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

(in thousands)
	Three Months Ended December 31,					Change
	2020		2019			$			%
Operating revenues:
Alico Citrus	$	12,926	$	10,175		$	2,751			27.0	%
Land Management and Other Operations		806		830			(24	)		(2.9	)%
Total operating revenues		13,732		11,005			2,727			24.8	%

Gross profit:
Alico Citrus		4,779		5,335			(556	)		(10.4	)%
Land Management and Other Operations		618		279			339			121.5	%
Total gross profit		5,397		5,614			(217	)		(3.9	)%

General and administrative expenses		2,528		2,760			(232	)		(8.4	)%
Income from operations		2,869		2,854			15			0.5	%
Total other income (expense), net		2,185		(1,595	)		3,780		NM
Income before income taxes		5,054		1,259			3,795		NM
Income tax provision		1,250		361			889		NM
Net income		3,804		898			2,906		NM
Net loss (income) attributable to noncontrolling interests		41		(107	)		148		NM
Net income attributable to Alico, Inc. common stockholders	$	3,845	$	791		$	3,054		NM

(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

NM - Not ~~Meaningful~~

meaningful

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

Alico Citrus

The table below presents key operating measures for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

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

	Three Months Ended
	December 31,						Change
	2020			2019			Unit			%
Operating Revenues:
Early and Mid-Season	$	9,315		$	9,066		$	249			2.7	%
Fresh Fruit		409			735			(326	)		(44.4	)%
Purchase and Resale of Fruit		57			47			10			21.3	%
Grove Management Services		3,092			305			2,787		NM
Other		53			22			31			140.9	%
Total	$	12,926		$	10,175		$	2,751			27.0	%
Boxes Harvested:
Early and Mid-Season		785			880			(95	)		(10.8	)%
Total Processed		785			880			(95	)		(10.8	)%
Fresh Fruit		48			95			(47	)		(49.5	)%
Total		833			975			(142	)		(14.6	)%
Pound Solids Produced:
Early and Mid-Season		4,132			4,856			(724	)		(14.9	)%
Total		4,132			4,856			(724	)		(14.9	)%
Pound Solids per Box:
Early and Mid-Season		5.26			5.52			(0.26	)		(4.7	)%
Price per Pound Solids:
Early and Mid-Season	$	2.25		$	1.87		$	0.38			20.3	%
Price per Box:
Fresh Fruit	$	8.52		$	7.74		$	0.78			10.1	%
Operating Expenses:
Cost of Sales	$	7,420		$	6,627		$	793			12.0	%
Harvesting and Hauling		2,079			2,465			(386	)		(15.7	)%
Purchase and Resale of Fruit		50			32			18			56.3	%
Grove Management Services		2,734			182			2,552		NM
Other		(4,136	)		(4,466	)		330			(7.4	)%
Total	$	8,147		$	4,840		$	3,307			68.3	%

(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 %

NM - Not ~~Meaningful~~

~~Alico primarily~~meaningful

The Company sells its Early and Mid-Season and Valencia oranges to processors that convert the majority 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. ~~Fresh Fruit~~The Company’s fresh fruit is generally sold 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, including a management fee. Other revenues consist of ~~third-party grove caretaking~~the purchase and ~~the contracting for harvesting and hauling~~reselling of ~~citrus.~~

~~The Company's~~fruit.

Alico's operating expenses consist primarily of cost of sales and harvesting and hauling costs. Cost of 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 costs represent the costs of bringing citrus product to processors and varies based upon the number of boxes produced. Other expenses include the period costs of third-party grove caretaking and the ~~contracting for harvesting~~purchase and ~~hauling activities.~~

reselling of third-party fruit.

The increase in ~~operating revenues~~revenue for the three months ended December 31, ~~2017,~~2020, compared to the three months ended December 31, 2019 was primarily due to the Company generating greater revenue from its grove management services it provides to third parties. On July 16, 2020, the Company executed an agreement with an affiliated group of third parties to provide citrus grove caretaking and harvest and haul management services for approximately 7,000 acres owned by such third parties. Under the terms of this agreement, the Company is reimbursed by the third parties for all of its costs incurred related to providing these services and also receives a management fee based on acres covered under this agreement. The Company records both an increase in revenues and expenses as and when the Company provides these citrus grove caretaking management services. For the first quarter ended December 31, 2020, under this agreement, the Company recorded approximately $2,869,000 of operating revenue relating to these grove management services, including the management fee.

Additionally, the slight increase in revenues generated from the Early and Mid-Season harvest for the three months ended December 31, 2020, compared to the three months ended December 31, 2019, was driven by an increase in the market price per pound solids. The increase in the price per pound solids is due to increased consumption of Not from Concentrate Orange Juice (“NFC”), which has in turn led to reduced inventory levels. As reported by Nielsen data on January 11, 2021, NFC consumption has increased 14% for the twelve-week period ended December 26, 2020, as compared to the similar twelve-week period in the prior year.

Mostly offsetting this increase in pricing generated from the Early and Mid-Season harvest is fewer boxes being harvested as well as pound solids per box being lower for the three months ended December 31, 2020, compared to the three months ended December 31, 2019. While the Company has harvested a greater percentage of its Early and Mid-Season crop through December 31, 2020, measured as a percentage of its estimated full year Early and Mid-Season crop, as compared to the same period in the prior year, the Company, along with the Florida industry in general, is recording a smaller number of boxes harvested as a result of greater fruit drop rate during the current harvest season as compared to the previous year. In addition, the internal quality of the fruit was not as strong as in the previous year resulting in lower pound solids per box.

The Company harvest season to date has not been impacted by the COVID-19 pandemic.

The USDA, in its January 12, 2021 Citrus Crop Forecast for the 2020-21 harvest season, indicated its expectation that the Florida orange crop will decrease from approximately 67,300,000 boxes for the 2019-20 crop year to approximately 54,000,000 boxes for the 2020-21 crop year, a decrease of approximately 19.8%. The USDA anticipates the majority of this decrease relates to the Early and Mid-Season boxes as it has indicated its expectation is for a decrease of 9,650,000 boxes or a 32.6% decline. The Company, through its comprehensive grove management program, anticipates its decline in Early and Mid-Season crop will be in the range of 20-25%.

The increase in operating expenses for the three months ended December 31, 2020, as compared to the three months ended December 31, ~~2016, is~~2019, primarily ~~due~~relates to ~~the timing of when the Early and Mid-Season fruit was harvested.~~grove management services it provides to third parties. As ~~a result of Hurricane Irma,~~mentioned above, on July 16, 2020, the Company ~~commenced~~executed an agreement with an affiliated group of third parties to provide citrus grove caretaking and harvest and haul management services for approximately 7,000 acres owned by such third parties. Under this agreement, for the ~~harvesting of its Early and Mid-Season fruit in late October, as compared to 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~~first quarter ended December 31, ~~2017 as compared~~2020, the Company recorded approximately $2,631,000 of operating expenses relating to these grove management services. Additionally, the increase in operating expenses is attributable to the ~~same period in 2016. The increase from the greater number of boxes being harvested was partially offset by a reduction in 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, as compared to the same period in the prior year.

The USDA, in its January 12, 2018 Citrus Crop Forecast for the 2017-18 harvest season, indicated that the Florida orange crop will decrease from approximately 68,700,000 boxes for the 2016-17 crop year to approximately 46,000,000 boxes for the 2017-18 crop year, a decrease of approximately 33.0%. The significant decline is primarily the result of Hurricane Irma and the related fruit loss experienced as well as the stress on the citrus trees for short-term fruit growth.

We originally estimated our 2018 processed boxes will decrease by 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 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 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 the Early and Mid-Season fruit as well as costs incurred for clean-up and repairs as a result of Hurricane Irma. As a result of commencing the harvesting of Early and Mid-Season fruit earlier in the season and harvesting a greater percentage of boxes, in relation to the estimated total boxes to be harvested for the full season, in the three months ended December 31, ~~2017~~2020, as compared to the same period in the prior year, leading to a ~~greater~~larger percentage of costs ~~were~~being allocated to ~~Cost~~cost of ~~Sales~~sales in the period.

Partially offsetting this increase was a decrease in harvest and haul expenses attributable to a decrease in Early and Mid-season boxes harvested. Additionally, the Company received less proceeds under the CRBG program during the three months ended December 31, 2020, when compared to the three months ended December 31, 2019.

As a result of a lower gross profit percentage generated from grove caretaking management services, as compared to citrus sales generated from groves, the overall gross profit percentage within the Alico 2.0 explored every aspect of Alico’s citrus and ranch operations, including corporate and operational cost structures, grove costs, purchasing and procurement, non-performing and under-performing assets, professional fees, and human resources efficiency. Under this program, we expect to reduce total expenses per acre from $3,314/acre in fiscal 2016 to $2,164/acre when Alico 2.0 is fully implemented, which is expected to be over the next two years. Overall, we anticipate the program should reduce the Company’s cost to produce a pound solid from $2.14 to $1.56. This efficiencyCitrus segment 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 withlower than prior to the ~~geographical footprint~~execution of the ~~citrus groves. However, there can be no assurance that we will be able to achieve~~above-mentioned new caretaking services agreement.

The credit amounts shown in “Other” in operating expenses above represents federal relief proceeds received under the ~~anticipated cost savings under Alico 2.0.~~

~~Conservation~~CRBG program in the quarters ended December 31, 2020 and ~~Environmental Resources~~

2019.

Land Management and Other Operations

The table below presents key operating measures for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

(in thousands)

	Three Months Ended December 31,				Change
	2020		2019		$			%
Revenue From:
Land and Other Leasing	$	727	$	663	$	64			9.7	%
Other		79		167		(88	)		(52.7	)%
Total	$	806	$	830	$	(24	)		(2.9	)%
Operating Expenses:
Land and Other Leasing	$	184	$	201	$	(17	)		(8.5	)%
Water Conservation		—		347		(347	)		(100.0	)%
Other		4		3		1			33.3	%
Total	$	188	$	551	$	(363	)		(65.9	)%

(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~~

Land and other leasing include 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.

The ~~increase~~slight decrease in revenues from ~~the sale of calves~~Land Management and Other Operations for the three ~~month~~months ended December 31, ~~2017,~~2020, as compared to the three months ended December 31, ~~2016,~~2019 is primarily due to a modification to a grazing lease whereby the ad valorem taxes due from the lessee were reduced as a result of the Company revising the grazing lease agreement due to the sale of certain ranch acres previously covered under the agreement. Partially offsetting this decrease were the additional revenues generated from the execution of an ~~increase in~~extension of one of Company’s cell tower leases pursuant to which the ~~number of calves sold, partially offset by a~~leasing rates were increased.

The decrease in ~~price per pound sold.~~

~~In January 2018, the Company sold the breeding herd~~operating expenses from Land Management 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 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 $458,000Other Operations for the three months ended December 31, ~~2017~~2020, compared to the three months ended December 31, 2019 is primarily due to the Company no longer pursuing its dispersed water storage project and, ~~2016, respectively.~~

therefore, incurring no water conservation expenses in the three months ended December 31, 2020. On September 10, 2020, the Company sold approximately 10,700 acres on the western part of Alico Ranch to the State of Florida. Because the acres involved in the sale would have been critical to its planned dispersed water storage project, the Company has decided to no longer pursue permit approval activities for this particular project. Accordingly, the Company anticipates it will have no future expenses incurred relating to the dispersed water storage project.

General and Administrative

Expense

General and administrative ~~expenses~~expense for the three months ended December 31, ~~2017 totaled~~2020 was approximately ~~$3,886,000~~$2,528,000, compared to approximately ~~$3,788,000~~$2,760,000 for the three months ended December 31, ~~2016.~~2019. The ~~increase~~decrease was attributable in ~~general and administrative~~large part to (i) a reduction in payroll expenses for the ~~three months~~fiscal quarter ended December 31, ~~2017, as compared~~2020 of approximately $160,000 relating to one of the senior managers resigning in December 2019 and (ii) a reduction in pension expense related to the ~~same period in 2016, was the~~Company’s deferred retirement benefit plan of approximately $90,000 as a result of ~~an increase~~the Company terminating such plan and paying out each of the ~~following:~~

plan participants in August 2020.

~~separation and consulting agreement expenses of approximately $388,000~~

~~an accrual for paid time off of approximately $120,000, 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 (Expense), net

Other ~~expense,~~income (expense), net for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019 was approximately ~~$375,000~~$2,185,000 and ~~approximately$1,981,000,~~approximately $(1,595,000), respectively. The ~~decrease in the~~shift to other income, net from other expense, net is primarily due to the Company recording, ~~a gain~~in the three months ended December 31, 2020, gains on sale of real estate, property and equipment and assets held for sale of approximately $3,364,000 relating to the sale of ~~its office building in Fort Myers, Florida, of~~ approximately ~~$1,800,000. As part of~~700 acres from the Alico ranch to several third parties and the sale of mineral rights to a third party in the three months ended December 31, 2020. For the three months ended December 31, 2019, the Company ~~has entered into~~recorded a ~~lease arrangement with the buyer~~nominal gain on sale of real estate, property and equipment and assets held for sale. Additionally, a ~~portion~~decrease in interest expense of ~~the office space.~~

~~Benefit for Income Taxes~~

~~The benefit for income tax was approximately $12,417,000 and $1,273,000~~$355,000 for the three months ended December 31, ~~2017~~2020, as compared to the three months ended December 31, 2019, was the result of the reduction of its long-term debt attributable to making its mandatory principal payments.

Income Taxes

The income tax provision was approximately $1,250,000 and ~~2016,~~$361,000 for the three months ended December 31, 2020 and 2019, respectively. The increase in the tax provision for the three months ended December 31, 2020 primarily resulted from ~~approximately $11,300,000 in non-cash tax benefit recorded to remeasure~~ the ~~Company's net deferred tax liabilities~~Company generating greater pre-tax income, compared to the ~~21% corporate tax rate that was enacted~~three months ended December ~~22, 2017.~~

31, 2019.

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 ~~Alico's~~Alico’s fiscal year produce the majority 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,
	2020		2020		Change
Cash and cash equivalents and restricted cash	$	2,601	$	19,687	$	(17,086	)
Total current assets	$	57,794	$	51,899	$	5,895
Total current liabilities	$	18,013	$	21,158	$	(3,145	)
Working capital	$	39,781	$	30,741	$	9,040
Total assets	$	430,182	$	423,937	$	6,245
Principal amount of term loans and lines of credit	$	157,766	$	151,193	$	6,573
Current ratio	3.21 to 1		2.45 to 1

(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

Management believes that a combination of cash-on-hand, cash generated from operations, ~~assets~~asset sales and availability under the 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. Alico has a $70,000,000 working capital line of credit, of which approximately ~~$52,600,000~~$57,560,000 is available for general use as of December 31, ~~2017,~~2020, and a $25,000,000 revolving line of credit, all of which is available for general use as of December 31, ~~2017~~2020 (see Note 5. “Long-Term Debt and Lines of Credit" to the accompanying Condensed Consolidated Financial Statements). If the Company pursues significant growth and other corporate opportunities, insuch as the ~~future,~~transaction whereby it acquired 3,280 citrus grove acres on October 30, 2020 for $16,450,000, it could have a material adverse impact on its cash balances and may need to finance such activities by drawing down monies under 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 impact 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 ~~the industry in which we operate.~~

industry.

Net Cash Used In Operating Activities

The following table details the items contributing to Net Cash Used In Operating Activities for the three months ended December 31, ~~2017~~2020 and ~~2016:~~2019:

(in thousands)	Three Months Ended December 31,
	2020			2019			Change
Net income	$	3,804		$	898		$	2,906
Depreciation, depletion, and amortization		3,851			3,609			242
Gain on sale of real estate, property and equipment and assets held for sale		(3,364	)		(25	)		(3,339	)
Loss on disposal of long-lived assets		443			88			355
Impairment of right-of-use asset	—				87			(87	)
Stock-based compensation expense		307			301			6
Change in working capital		(10,150	)		(11,001	)		851
Net cash used in operating activities	$	(5,109	)	$	(6,043	)	$	934

(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~~decrease in net cash used in operating activities for the three months ended December 31, ~~2017,~~2020, as compared to the same period in ~~2016,~~2019, was primarily due to ~~a non-cash~~an increase in net income and an increase in inventory, which was related to the acquisition of the citrus acres purchased on October 30, 2020. Partially offsetting the decrease in ~~deferred tax liabilities, primarily~~net cash used in operating activities for the three months ended December 31, 2020, as ~~result of new tax legislation which went into effect on December 22, 2017.~~

~~Due~~compared to the ~~seasonal nature~~same period in 2019, was an increase in gain on sale of ~~Alico's business, working capital requirements are typically greater~~real estate, property and equipment and assets held for sale in the ~~first~~three months ended December 31, 2020, relating to the sale of certain sections of the East Ranch. Additionally, the Company had a decrease in accounts payable and ~~fourth quarters~~accrued expenses which was largely due to the timing of ~~its fiscal year.~~when expenses were incurred and paid.

Net Cash ~~flows from operating activities typically improve~~Used In Investing Activities

The following table details the items contributing to Net Cash Used In Investing Activities for the three months ended December 31, 2020 and 2019:

(in thousands)	Three Months Ended December 31,
	2020			2019			Change
Capital expenditures:
Citrus trees	$	(4,593	)	$	(3,349	)	$	(1,244	)
Equipment and other		(469	)		(192	)		(277	)
Total		(5,062	)		(3,541	)		(1,521	)

Acquisition of citrus grove		(16,450	)		—			(16,450	)
Net proceeds from sale of real estate, property and equipment and assets held for sale		3,425			42			3,383
Change in deposits on purchase of citrus trees		64			(194	)		258
Advances on notes receivables, net		122			4			118
Other		25			—			25
Net cash used in investing activities	$	(17,876	)	$	(3,689	)	$	(14,187	)

The increase in the ~~second and third fiscal quarters~~amount of net cash used in investing activities for the three months ended December 31, 2020, as ~~its citrus crops are harvested.~~

compared to the three months ended December 31, 2019, was primarily due to the Company’s purchase of approximately 3,280 gross acres located in Hendry County for a purchase price of approximately $16,450,000. Partially offsetting this increase in capital expenditures were proceeds from the sale of certain sections of the East Ranch received during the three months ended December 31, 2019.

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

The following table details the items contributing to 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 activities for the three months ended December 31, 2017, as compared to the three months ended December 31, 2016, was primarily due to proceeds received from the sale of Alico's corporate office building in Fort Myers, Florida, for $5,300,000. This increase was partially offset by greater capital expenditures in the three months ended December 31, 2017, 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~~2020 and ~~2016:~~2019:

(in thousands)	Three Months Ended December 31,
	2020			2019			Change
Repayments on revolving lines of credit	$	(14,187	)	$	—		$	(14,187	)
Borrowings on revolving lines of credit		23,449			—			23,449
Principal payments on term loans		(2,689	)		(7,132	)		4,443
Treasury stock purchases		—			(238	)		238
Dividends paid		(674	)		(448	)		(226	)
Deferred financing costs		—			(23	)		23
Net cash provided by (used in) financing activities	$	5,899		$	(7,841	)	$	13,740

(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~~shift from cash used in ~~net~~financing activities to cash provided by financing activities ~~for~~is primarily due to the Company drawing down on its lines of credit during the three months ended December 31, ~~2017, as compared~~2020 to fund working capital, capital expenditures and other corporate items. Additionally, the ~~three months ended December 31, 2016, was primarily due to increased repayments on~~Company made a prepayment of one of its long-term debt obligations in November 2019 in the ~~revolving line~~amount of ~~credit and reduced borrowings on the revolving lines of credit.~~

approximately $4,455,000.

Alico ~~drew, on a net basis, $7,123,000~~had approximately $12,204,000 outstanding on its revolving lines of credit ~~primarily to fund working capital requirements and investing activities for the three months ended~~as of December 31, ~~2017.~~

2020.

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,~~2020, there was approximately ~~$10,300,000~~$236,000 in outstanding letters of credit, which correspondingly slightly reduced Alico's availability under the 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,~~2020, the Company had approximately ~~$1,072,000~~$2,955,000 relating to outstanding commitments for these purchases, which 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 the fiscal year ended September 30, 2017.~~

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

Risk

There have been no material changes during this reporting period in the disclosures set forth in Part II, Item 7A in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017,~~2020, as filed with the SEC on December ~~11, 2017.~~

8, 2020.

Item 4. Controls and ~~Procedures.~~

Procedures


(a)	Evaluation of Disclosure Controls and Procedures.

~~Alico's Chief~~

Our Principal Executive Officer and Chief Financial Officer have 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~~our Principal Executive Officer and Chief 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.


(b)	Changes in Internal Control over Financial Reporting.

During the ~~first~~ fiscal quarter ended December 31, ~~2017~~2020, 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.

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,~~2020, as filed with the SEC on December ~~11, 2017.~~

8, 2020.

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

Proceeds

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 purchases 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.

Item 6. ~~Exhibits.~~

Exhibits

Exhibit Number		Exhibit Index

~~Exhibit~~ ~~Number~~ 3.1		~~Exhibit Index~~
~~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 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 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 Alico’s Registration Statement on Form S-8, dated December 21, 2005, Registration No. 333-130575)
~~3.5~~
3.5		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		Eleventh Amendment and Waiver to Credit Agreement dated January 7, 2021

10.2		Danny Sutton Offer letter, dated November 15, 2017

31.1		Certification of ~~Chief~~Principal 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~~Principal 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~~
101.INS	**	Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
~~101.SCH~~	**
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~	**
101.CAL	*	Inline XBRL Taxonomy Calculation Linkbase Document
~~101.DEF~~	**
101.DEF	*	Inline XBRL Taxonomy Definition Linkbase Document
~~101.LAB~~
101.LAB		Inline XBRL Taxonomy Label Linkbase Document
~~101.PRE~~
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, has been formatted in Inline XBRL.
*
**	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.

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~~4, 2021	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~~
		~~John E. Kiernan~~
February 4, 2021	By:	~~Executive~~ /s/ Richard Rallo
		Richard Rallo
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)


☑
	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~~2020

		or


		For the transition period
from____________________	~~from____________________~~	to_________________________



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 100	Fort Myers	FL		33913
(Address of principal executive offices)				(Zip Code)

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

Large Accelerated Filer	☐	Accelerated Filer	☑

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



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



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



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 21
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27 30
Item 4. Controls and Procedures	27 30
Part II - OTHER INFORMATION	31
Item 1. Legal Proceedings	28 31
Item 1A. Risk Factors	28 31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	28 31
Item 3. Defaults Upon Senior Securities	28 31
Item 4. Mine Safety ~~Disclosures~~Disclosure	28 31
Item 5. Other Information	28 31
Item 6. Exhibits	29 32
Signatures	30 33



	~~Page~~
Condensed Consolidated Balance Sheets as of December 31, ~~2017~~2020 (Unaudited) and September 30, ~~2017~~2020	1
Condensed Consolidated Statements of Operations for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019 (Unaudited)	2
Condensed Consolidated Statements of Changes in Equity for the three months ended December 31, 2020 and 2019 (Unaudited)	3
Condensed Consolidated Statements of Cash Flows for the three months ended December 31, ~~2017~~2020 and ~~2016~~2019 (Unaudited)	3 4
Notes to Condensed Consolidated Financial Statements (Unaudited)	4 5



	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 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	%