Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

FORM 10-Q
☑þ

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

For the Quarterly Period Ended December 31, 2022

2023

or

or

o

☐

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

For the transition period

from____________________

to_________________________

For the transition period
from____________________ to _________________________
Commission File Number: 0-261

ALICO, INC.

(Exact name of registrant as specified in its charter)

Florida59-0906081

Florida

59-0906081

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

10070 Daniels Interstate Court

Suite 200

Fort Myers		FL33913

Suite 200

Fort Myers

FL

33913

(Address of principal executive offices)

(Zip Code)

(239) 226-2000

(239)

226-2000

(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

ALCO

Nasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑þYes☐o No

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

Large Accelerated Filer

☐o

Accelerated Filer

☑þ

Non-accelerated filer

☐o

Smaller Reporting Company

☐þ

Emerging Growth Company

☐o

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

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

There were 7,599,4927,620,769 shares of common stock outstanding at February 3, 2023.5, 2024.

Table of Contents

ALICO, INC.

FORM 10-Q

For the three months ended December 31, 20222023 and 2021

2022

Table of Contents

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

2218

Item 3. Quantitative and Qualitative Disclosures About Market Risk

3327

Item 4. Controls and Procedures

3327

Part II - OTHER INFORMATION

35

Item 1. Legal Proceedings

3528

Item 1A. Risk Factors

3528

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

3528

Item 3. Defaults Upon Senior Securities

3528

Item 4. Mine Safety Disclosure

3528

Item 5. Other Information

3528

Item 6. Exhibits

3629

Signatures

3731

PART I

Item 1. Condensed Consolidated Financial Statements

Index to Condensed Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of December 31, 20222023 (Unaudited) and September 30, 20222023

1

Condensed Consolidated Statements of Operations for the three months ended December 31, 2023 and 2022 and 2021 (Unaudited)

2

Condensed Consolidated Statements of Changes in Equity for the three months ended December 31, 2023 and 2022 and 2021 (Unaudited)

3

Condensed Consolidated Statements of Cash Flows for the three months ended December 31, 2023 and 2022 and 2021 (Unaudited)

4

Notes to Condensed Consolidated Financial Statements (Unaudited)

5


Table of Contents

Cautionary Note Regarding Forward-Looking Information
This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains certain forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements, including without limitation, statements regarding future actions, business plans and prospects, prospective products, trends, future performance or results of current and anticipated products, sales efforts, expenses, interest rates, the outcome of contingencies, plans relating to dividends, government regulations, the adequacy of our liquidity to meet our needs for the foreseeable future, our expectations regarding the continued impact of Hurricane Ian, and our expectations regarding market conditions. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms such as such as “may,” “will,” “could,” “should,” “would,” “believes,” “expects,” “anticipates”, “estimates”, “projects,” “intends,” “plans” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including, including, but not limited to: adverse weather conditions, natural disasters and other natural conditions, including the effects of climate change and hurricanes and tropical storms, particularly because our citrus groves are geographically concentrated in Florida; damage and loss from disease including, but not limited to, citrus greening and citrus canker; any adverse event affecting our citrus business; our ability to effectively perform grove management services, or to effectively manage an expanded portfolio of groves; our dependency on our relationship with Tropicana and Tropicana’s relationship with certain third parties for a significant portion of our business; our ability to execute our strategic growth initiatives and whether they adequately address the challenges or opportunities we face; product contamination and product liability claims; water use regulations restricting our access to water; changes in immigration laws; harm to our reputation; tax risks associated a Section 1031 Exchange; risks associated with the undertaking of one or more significant corporate transactions; the seasonality of our citrus business; fluctuations in our earnings due to market supply and prices and demand for our products; climate change, or legal, regulatory, or market measures to address climate change; ESG issues, including those related to climate change and sustainability; increases in labor, personnel and benefits costs; increases in commodity or raw product costs, such as fuel and chemical costs; transportation risks; any change or the classification or valuation methods employed by county property appraisers related to our real estate taxes; liability for the use of fertilizers, pesticides, herbicides and other potentially hazardous substances; compliance with applicable environmental laws; loss of key employees; material weaknesses and other control deficiencies relating to our internal control over financial reporting; macroeconomic conditions, such as rising inflation, the deadly conflicts in Ukraine and Israel, and the COVID-19 pandemic; system security risks, data protection breaches, cyber-attacks and systems integration issues; our indebtedness and ability to generate sufficient cash flow to service our debt obligations; higher interest expenses as a result of variable rates of interest for our debt; our ability to continue to pay cash dividends;; and the other factors described under the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 filed with the Securities and Exchange Commission (the “SEC”) on December 6, 2023 (the “2023 Annual Report on Form 10-K”). Except as required by law, we do not undertake an obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments, or otherwise.
As used in this Quarterly Report, unless otherwise specified or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and “Alico” refer to the operations of Alico, Inc. and its consolidated subsidiaries.

Table of Contents

ALICO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

December 31,
2023		September 30,
2023
(Unaudited)
ASSETS
Current assets:
Cash$18,632 $1,062 
Accounts receivable, net7,886 712 
Inventories41,804 52,481 
Income tax receivable— 1,200 
Assets held for sale69 1,632 
Prepaid expenses and other current assets3,426 1,718 
Total current assets71,817 58,805 
Restricted cash2,630 2,630 
Property and equipment, net361,603 361,849 
Goodwill2,246 2,246 
Other non-current assets2,913 2,823 
Total assets$441,209 $428,353 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$7,041 $6,311 
Accrued liabilities3,633 5,363 
Current portion of long-term debt1,410 2,566 
Income tax payable15,552 — 
Other current liabilities904 825 
Total current liabilities28,540 15,065 
Long-term debt, net83,299 101,410 
Lines of credit— 24,722 
Deferred income tax liabilities, net36,410 36,410 
Other liabilities334 369 
Total liabilities148,583 177,976 
Commitments and Contingencies (Note 12)
Stockholders' equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued— — 
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and 7,616,081 and 7,610,551 shares outstanding at December 31, 2023 and September 30, 2023, respectively8,416 8,416 
Additional paid in capital20,064 20,045 
Treasury stock, at cost, 800,064 and 806,341 shares held at December 31, 2023 and September 30, 2023, respectively(27,099)(27,274)
Retained earnings286,368 243,804 
Total Alico stockholders' equity287,749 244,991 
Noncontrolling interest4,877 5,386 
Total stockholders' equity292,626 250,377 
Total liabilities and stockholders' equity$441,209 $428,353 
    

 

 

December 31,

 

 

September 30,

 

 

 

2022

 

 

2022

 

 

 

(Unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

269

 

 

$

865

 

Accounts receivable, net

 

 

4,369

 

 

 

324

 

Inventories

 

 

28,998

 

 

 

27,682

 

Income tax receivable

 

 

2,199

 

 

 

1,116

 

Assets held for sale

 

 

174

 

 

 

205

 

Prepaid expenses and other current assets

 

 

1,546

 

 

 

1,424

 

Total current assets

 

 

37,555

 

 

 

31,616

 

Property and equipment, net

 

 

370,095

 

 

 

372,479

 

Goodwill

 

 

2,246

 

 

 

2,246

 

Other non-current assets

 

 

3,094

 

 

 

2,914

 

Total assets

 

$

412,990

 

 

$

409,255

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,951

 

 

$

3,366

 

Accrued liabilities

 

 

3,306

 

 

 

9,062

 

Long-term debt, current portion

 

 

3,035

 

 

 

3,035

 

Other current liabilities

 

 

933

 

 

 

1,062

 

Total current liabilities

 

 

10,225

 

 

 

16,525

 

Long-term debt:

 

 

 

 

 

 

Principal amount, net of current portion

 

 

102,902

 

 

 

103,661

 

Less: deferred financing costs, net

 

 

(716

)

 

 

(748

)

Long-term debt less current portion and deferred financing costs, net

 

 

102,186

 

 

 

102,913

 

Lines of credit

 

 

19,045

 

 

 

4,928

 

Deferred income tax liabilities, net

 

 

35,589

 

 

 

35,589

 

Other liabilities

 

 

341

 

 

 

435

 

Total liabilities

 

 

167,386

 

 

 

160,390

 

Commitments and Contingencies (Note 12)

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, no par value, 1,000,000 shares authorized; none issued

 

 

—

 

 

 

—

 

Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares issued and 7,592,937 and 7,586,995 shares outstanding at December 31, 2022 and September 30, 2022, respectively

 

 

8,416

 

 

 

8,416

 

Additional paid in capital

 

 

19,943

 

 

 

19,784

 

Treasury stock, at cost, 823,208 and 829,150 shares held at December 31, 2022 and September 30, 2022, respectively

 

 

(27,802

)

 

 

(27,948

)

Retained earnings

 

 

239,960

 

 

 

243,490

 

Total Alico stockholders' equity

 

 

240,517

 

 

 

243,742

 

Noncontrolling interest

 

 

5,087

 

 

 

5,123

 

Total stockholders' equity

 

 

245,604

 

 

 

248,865

 

Total liabilities and stockholders' equity

 

$

412,990

 

 

$

409,255

 

See accompanying notes to the unaudited condensed consolidated financial statements.
1
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1

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

 

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Operating revenues:

 

 

 

 

 

 

Alico Citrus

 

$

10,268

 

 

$

14,748

 

Land Management and Other Operations

 

 

320

 

 

 

589

 

Total operating revenues

 

 

10,588

 

 

 

15,337

 

Operating expenses:

 

 

 

 

 

 

Alico Citrus

 

 

14,295

 

 

 

13,386

 

Land Management and Other Operations

 

 

94

 

 

 

140

 

Total operating expenses

 

 

14,389

 

 

 

13,526

 

Gross (loss) profit

 

 

(3,801

)

 

 

1,811

 

General and administrative expenses

 

 

2,509

 

 

 

2,584

 

Loss from operations

 

 

(6,310

)

 

 

(773

)

Other income (expense), net:

 

 

 

 

 

 

Interest expense

 

 

(1,148

)

 

 

(901

)

Gain on sale of real estate, property and equipment and assets held for sale

 

 

3,189

 

 

 

8,445

 

Other income, net

 

 

—

 

 

 

9

 

Total other income, net

 

 

2,041

 

 

 

7,553

 

(Loss) income before income taxes

 

 

(4,269

)

 

 

6,780

 

Income tax benefit

 

 

(1,083

)

 

 

(3,300

)

Net (loss) income

 

 

(3,186

)

 

 

10,080

 

Net loss attributable to noncontrolling interests

 

 

36

 

 

 

51

 

Net (loss) income attributable to Alico, Inc. common stockholders

 

$

(3,150

)

 

$

10,131

 

Per share information attributable to Alico, Inc. common stockholders:

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

Basic

 

$

(0.41

)

 

$

1.34

 

Diluted

 

$

(0.41

)

 

$

1.34

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

Basic

 

 

7,593

 

 

 

7,535

 

Diluted

 

 

7,593

 

 

 

7,542

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.05

 

 

$

0.50

 

Three Months Ended
December 31,
20232022
Operating revenues:
Alico Citrus$13,592 $10,268 
Land Management and Other Operations393 320 
Total operating revenues13,985 10,588 
Operating expenses:
Alico Citrus28,107 14,295 
Land Management and Other Operations133 94 
Total operating expenses28,240 14,389 
Gross profit(14,255)(3,801)
General and administrative expenses3,272 2,509 
Loss from operations(17,527)(6,310)
Other income (expense), net:
Interest income95 — 
Interest expense(1,605)(1,148)
Gain on sale of real estate, property and equipment and assets held for sale77,025 3,189 
Total other income (expense), net75,515 2,041 
Income (loss) before income taxes57,988 (4,269)
Income tax provision (benefit)15,552 (1,083)
Net income (loss)42,436 (3,186)
Net loss attributable to noncontrolling interests509 36 
Net income (loss) attributable to Alico, Inc. common stockholders$42,945 $(3,150)
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic$5.64 $(0.41)
Diluted$5.64 $(0.41)
Weighted-average number of common shares outstanding:
Basic7,6167,593
Diluted7,6167,593
Cash dividends declared per common share$0.05 $0.05 
See accompanying notes to the unaudited condensed consolidated financial statements.

2
2Table of Contents

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands)

For the Three Months Ended December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

Non-

 

 

 

 

 

 

Common stock

 

 

Paid In

 

 

Treasury

 

 

Retained

 

 

Alico, Inc.

 

 

controlling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Equity

 

 

Interest

 

 

Equity

 

Balance at September 30, 2022

 

 

8,416

 

 

$

8,416

 

 

$

19,784

 

 

$

(27,948

)

 

$

243,490

 

 

$

243,742

 

 

$

5,123

 

 

$

248,865

 

Net loss

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,150

)

 

 

(3,150

)

 

 

(36

)

 

 

(3,186

)

Dividends ($0.05/share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(380

)

 

 

(380

)

 

 

—

 

 

 

(380

)

Stock-based compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors

 

 

—

 

 

 

—

 

 

 

11

 

 

 

145

 

 

 

—

 

 

 

156

 

 

 

—

 

 

 

156

 

Executives and Managers

 

 

—

 

 

 

—

 

 

 

92

 

 

 

—

 

 

 

—

 

 

 

92

 

 

 

—

 

 

 

92

 

Employees

 

 

—

 

 

 

—

 

 

 

56

 

 

 

1

 

 

 

—

 

 

 

57

 

 

 

—

 

 

 

57

 

Balance at December 31, 2022

 

 

8,416

 

 

$

8,416

 

 

$

19,943

 

 

$

(27,802

)

 

$

239,960

 

 

$

240,517

 

 

$

5,087

 

 

$

245,604

 

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

(in thousands)

For the Three Months Ended December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Total

 

 

Non-

 

 

 

 

 

 

Common stock

 

 

Paid In

 

 

Treasury

 

 

Retained

 

 

Alico, Inc.

 

 

controlling

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Earnings

 

 

Equity

 

 

Interest

 

 

Equity

 

Balance at September 30, 2021 (Restated)

 

 

8,416

 

 

$

8,416

 

 

$

19,989

 

 

$

(29,853

)

 

$

246,163

 

 

$

244,715

 

 

$

5,402

 

 

$

250,117

 

Net income

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

10,131

 

 

 

10,131

 

 

 

(51

)

 

 

10,080

 

Dividends ($0.50/share)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,770

)

 

 

(3,770

)

 

 

—

 

 

 

(3,770

)

Exercise of stock options

 

 

—

 

 

 

—

 

 

 

15

 

 

 

155

 

 

 

—

 

 

 

170

 

 

 

—

 

 

 

170

 

Stock-based compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Directors

 

 

—

 

 

 

—

 

 

 

23

 

 

 

156

 

 

 

—

 

 

 

179

 

 

 

—

 

 

 

179

 

Executives and Managers

 

 

—

 

 

 

—

 

 

 

53

 

 

 

143

 

 

 

—

 

 

 

196

 

 

 

—

 

 

 

196

 

Balance at December 31, 2021 (Restated)

 

 

8,416

 

 

$

8,416

 

 

$

20,080

 

 

$

(29,399

)

 

$

252,524

 

 

$

251,621

 

 

$

5,351

 

 

$

256,972

 

For the Three Months Ended December 31, 2023
Common stockAdditional
Paid In
Capital		Treasury
Stock		Retained
Earnings		Total
Alico, Inc.
Equity		Non-
controlling
Interest		Total
Equity
SharesAmountSharesAmount
Balance at September 30, 20238,416$8,416 $20,045 806$(27,274)$243,804 $244,991 $5,386 $250,377 
Net income—— — — — 42,945 42,945 (509)42,436 
Dividends ($0.05/share)—— — — — (381)(381)— (381)
Stock-based compensation— 19 (6)175 — 194 — 194 
Balance at December 31, 20238,416$8,416 $20,064 800$(27,099)$286,368 $287,749 $4,877 $292,626 
For the Three Months Ended December 31, 2022
Common stockAdditional
Paid In
Capital		Treasury
Stock		Retained
Earnings		Total
Alico, Inc.
Equity		Non-
controlling
Interest		Total
Equity
SharesAmountSharesAmount
Balance at September 30, 20228,416$8,416 $19,784 829$(27,948)$243,490 $243,742 $5,123 $248,865 
Net income (loss)—— — — — (3,150)(3,150)(36)(3,186)
Dividends ($0.05/share)—— — — — (380)(380)— (380)
Stock-based compensation—— 159 (6)146 — 305 — 305 
Balance at December 31, 20228,416$8,416 $19,943 823$(27,802)$239,960 $240,517 $5,087 $245,604 
See accompanying notes to the unaudited condensed consolidated financial statementsstatements.
3
Table of Contents.

3

ALICO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Net cash used in operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(3,186

)

 

$

10,080

 

Adjustments to reconcile net (loss) income to net cash used in operating activities:

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

3,950

 

 

 

3,836

 

Debt issue costs expense

 

 

36

 

 

 

43

 

Gain on sale of real estate, property and equipment and assets held for sale

 

 

(3,189

)

 

 

(8,445

)

Loss on disposal of long-lived assets

 

 

1,915

 

 

 

137

 

Deferred income tax benefit

 

 

—

 

 

 

(4,876

)

Stock-based compensation expense

 

 

305

 

 

 

375

 

Other

 

 

8

 

 

 

—

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(4,045

)

 

 

(2,796

)

Inventories

 

 

(1,316

)

 

 

(2,573

)

Prepaid expenses

 

 

(122

)

 

 

(418

)

Income tax receivable

 

 

(1,083

)

 

 

1,576

 

Other assets

 

 

108

 

 

 

117

 

Accounts payable and accrued liabilities

 

 

(2,822

)

 

 

(6,328

)

Other liabilities

 

 

(224

)

 

 

(336

)

Net cash used in operating activities

 

 

(9,665

)

 

 

(9,608

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(3,453

)

 

 

(4,193

)

Acquisition of citrus groves

 

 

(29

)

 

 

(136

)

Net proceeds from sale of real estate, property and equipment and assets held for sale

 

 

3,287

 

 

 

8,604

 

Change in deposits on purchase of citrus trees

 

 

(301

)

 

 

(196

)

Net cash (used in) provided by investing activities

 

 

(496

)

 

 

4,079

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayments on revolving lines of credit

 

 

(8,902

)

 

 

(16,319

)

Borrowings on revolving lines of credit

 

 

23,019

 

 

 

25,696

 

Principal payments on term loans

 

 

(759

)

 

 

(1,072

)

Exercise of stock options

 

 

—

 

 

 

170

 

Dividends paid

 

 

(3,793

)

 

 

(3,763

)

Net cash provided by financing activities

 

 

9,565

 

 

 

4,712

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents and restricted cash

 

 

(596

)

 

 

(817

)

Cash and cash equivalents and restricted cash at beginning of the period

 

 

865

 

 

 

886

 

 

 

 

 

 

 

 

Cash and cash equivalents and restricted cash at end of the period

 

$

269

 

 

$

69

 

Three Months Ended
December 31,
20232022
Net cash used in operating activities:
Net income (loss)$42,436 $(3,186)
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, depletion and amortization3,804 3,950 
Amortization of debt issue costs120 36 
Gain on sale of real estate, property and equipment and assets held for sale(77,025)(3,189)
Loss on disposal of long-lived assets225 1,915 
Inventory net realizable value adjustment10,846 — 
Stock-based compensation expense194 305 
Other36 8 
Changes in operating assets and liabilities:
Accounts receivable(7,174)(4,045)
Inventories(169)(1,316)
Prepaid expenses(1,708)(122)
Income tax receivable1,200 (1,083)
Other assets2 108 
Accounts payable and accrued liabilities(1,320)(2,822)
Income taxes payable15,552 — 
Other liabilities(188)(224)
Net cash used in operating activities(13,169)(9,665)
Cash flows from investing activities:
Purchases of property and equipment(3,490)(3,453)
Acquisition of citrus groves— (29)
Net proceeds from sale of real estate, property and equipment and assets held for sale79,090 3,287 
Change in deposits on purchase of citrus trees(375)(301)
Net cash provided by (used in) investing activities75,225 (496)
Cash flows from financing activities:
Repayments on revolving lines of credit(44,032)(8,902)
Borrowings on revolving lines of credit19,310 23,019 
Principal payments on term loans(19,383)(759)
Dividends paid(381)(3,793)
Net cash (used in) provided by financing activities(44,486)9,565 
Net increase (decrease) in cash and restricted cash17,570 (596)
Cash and restricted cash at beginning of the period3,692 865 
Cash and restricted cash at end of the period$21,262 $269 
Non-cash investing activities:
Assets received in exchange for services$298 $— 
Trees delivered in exchange for prior services$176 $— 
See accompanying notes to the unaudited condensed consolidated financial statements.
4
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4

ALICO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in thousands, except per share and per acre amounts)

Note 1. Description of Business and Basis of Presentation

Description of Business

Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”), is a Florida agribusiness and land management company owning approximately 73,00054,000 acres of land and approximately 90,000 acres ofalso mineral rights throughout Florida. Alico holds these mineral rights on substantially all its owned acres, with additional mineral rights on other acres. The Company manages its land based upon its primary usage, and reviews its performance based upon two primary classifications: (i) Alico Citrus and (ii) Land Management and Other Operations. Financial results are presented based upon these two business segments.

Basis of Presentation

The Company has prepared the accompanying financial statements on a condensed consolidated basis. These accompanying unaudited condensed consolidated interim financial statements, which are referred to herein as the “Financial Statements,”Statements”, of Alico have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, these Financial Statements do not include all of the disclosures required for complete annual financial statements 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 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. As such, these 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, 2022,2023, as filed with the SEC on December 13, 2022.

The Financial Statements presented in this Quarterly6, 2023 (the “2023 Annual Report on Form 10-Q10-K”).

Operating results for the interim periods presented are unaudited.not necessarily indicative of the results that may be expected for the full year. 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 Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

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 fiscal year produce most of the Company's annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. Because of the seasonality of the business, results for the interim periods presentedany quarter are not necessarily indicative of the results that may be expectedachieved for the currentfull fiscal year ending September 30, 2023.

During the audityear.

Note 2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are fully described in Note 2 – Summary of Significant Accounting Policies in our financial statements for the period ending September 30, 2022, the Company discovered an error in the calculation of the deferred tax liabilities for the fiscal years 2015 through 2019. As disclosed in the Company’s audited Consolidated Financial Statements and Notes thereto included in the Company’s2023 Annual Report on Form 10-K10-K.
Revenue Recognition
The Company recognizes revenue under ASC 606. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:

•Step 1: Identify the fiscal year ended September 30, 2022, this error was corrected and resulted in a cumulative increasecontract with the customer
•Step 2: Identify the performance obligations in the Company’s Retained Earnings of approximately $contract
•2,512,000Step 3: Determine the transaction price
•. As a result,Step 4: Allocate the Retained Earnings balances at September 30, 2021 and December 31, 2021 are captioned as Restatedtransaction price to the performance obligations in the accompanying Condensed Consolidated Statementscontract
•Step 5: Recognize revenue when the company satisfies a performance obligation
5
Table of Changes in Equity (Unaudited).Contents

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 two operating segments: (i) Alico Citrus and (ii) Land Management and Other Operations.

5

Principles of Consolidation

The Financial Statements include the accounts of Alico 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 ( “Silver Nip”), Alico Skink Mitigation, LLC and Citree Holdings 1, 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. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic conditions, historical experience, the experience and judgment of the Company’s management and various other specific assumptions that the Company believes to be reasonable.

Revenue Recognition

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

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

For the sale of fruit, the Company has identified one performance obligation, which is the delivery of fruit to the processing facility of the customer (or harvesting of the citrus in the case of fresh fruit) for each separate variety of fruit identified in the respective contract with the respective customer. The Company initially recognizes revenue in an amount which is estimated based on contractual and market prices, 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 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.

For the three months ended December 31, 2023 and 2022, the Company recognized revenues of $12,901 and $10,079, respectively, at a point in time. For the three months ended December 31, 2023 and 2022, the Company recognized revenues of $1,084 and $509, respectively, over time.

Receivables under contracts, whereby pricing is based on contractual and market prices, are primarily paid at the floor amount and are collected within seven days after the harvest week. Any adjustments to pricing as a result of changes in market prices are generally collected or paid thirty to sixty days after final market pricing is published. Receivables under those contracts where pricing is based off a cost-plus structure methodology are paid at the final prior year rate. Any adjustments to pricing because of the cost-plus calculation are collected or paid upon finalization of the calculation and agreement by both parties. As of December 31, 2022,2023, and September 30, 2022,2023, the Company had total receivables relating to sales of citrus of approximately $4,207,000$7,134 and $124,000,$394, respectively, recorded in Accounts Receivable, net, in the Condensed Consolidated Balance Sheets.

6

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

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

The Company recorded approximately $0$691 and $3,128,000$189 of operating revenue relating to these grove management services, including the management fee, in the three months ended December 31, 20222023 and 2021,2022, respectively, for this group of third-party grove owners noted above. The Company recorded approximately $0$368 and $2,902,000$67 of operating expenses relating to these grove management services in the three months ended December 31, 20222023 and 2021,2022, respectively, for this group of third-party grove owners noted above.

Disaggregated Revenue

Revenues disaggregated by significant products and services for the three months ended December 31, 20222023 and 20212022 are as follows:

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Alico Citrus

 

 

 

 

 

 

Early and Mid-Season

 

$

9,586

 

 

$

10,378

 

Fresh Fruit

 

 

448

 

 

 

879

 

Grove Management Services

 

 

189

 

 

 

3,418

 

Other

 

 

45

 

 

 

73

 

Total

 

$

10,268

 

 

$

14,748

 

 

 

 

 

 

 

 

Land Management and Other Operations

 

 

 

 

 

 

Land and Other Leasing

 

$

281

 

 

$

528

 

Other

 

 

39

 

 

 

61

 

Total

 

$

320

 

 

$

589

 

 

 

 

 

 

 

 

Total Revenues

 

$

10,588

 

 

$

15,337

 

6

Table of Contents

(in thousands)Three Months Ended
December 31,
20232022
Alico Citrus
Early and Mid-Season$12,395 $9,586 
Fresh Fruit and Other506 493 
Grove Management Services691 189 
Total$13,592 $10,268 
Land Management and Other Operations
Land and Other Leasing$314 $281 
Other79 39 
Total$393 $320 
Total Revenues$13,985 $10,588 

Fair Value Measurements
The Company categorizes its financial instruments measured at fair value into a fair value hierarchy that prioritizes the inputs used in pricing the asset or liability into a three tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:
•Level 1 – Observable inputs such as quoted market prices for identical assets and liabilities in active markets;
•Level 2 – Inputs, other than the quoted prices for identical assets and liabilities in active markets, for which significant other observable market inputs are readily available; and
•Level 3 – Unobservable inputs in which there is little or no market data, such as internally developed valuation models which require the reporting entity to develop its own assumptions.
The carrying amounts of the Company’s financial instruments, including cash, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short term and immediate nature of these financial instruments. The carrying amounts and estimated fair values (Level 2) of debt instruments are as follows:
(in thousands)December 31,
2023		September 30,
2023
Carrying AmountEstimated Fair ValueCarrying AmountEstimated Fair Value
Corporate debt
Current long-term debt$1,410 $1,388 $2,566 $2,325 
Long-term debt$83,805 $77,015 $126,753 $115,851 
As of December 31, 2023 and September 30, 2023 the Company did not have any assets held for sale that had been measured at fair value on a non-recurring basis.
Accounting for government grants
The Company recognizes government grants when there is reasonable assurance that: (1) the grant will be received and (2) all conditions will be met. For income-based grants, the Company recognizes the income on a systemic basis over the periods in which we recognize as expense the related costs for which the grant was intended to compensate.
On December 31, 2023, the Company recognized $1,805 of grant money from the Citrus Research and Field Trial Foundation’s (“CRAFT”) program to assist citrus growers in the State of Florida using Oxytetracycline (“OTC”) and other
7
Table of Contents
approved therapies to combat the effect of “greening” of their citrus trees. These funds were recognized as a component of Inventories ($1,381 at December 31, 2023) on the Company’s Condensed Consolidated Balance Sheet and will be recognized as a reduction of Operating expenses ($424 during the three months ended December 31, 2023) on its Condensed Consolidated Statement of Operations, as its fruit is sold; in order to align it to the period over which the expense related to the OTC treatments is recognized. These grant monies were received in exchange for providing certain historical data to the CRAFT Foundation about its citrus groves. The Company may continue, but is not obligated, to participate in future CRAFT programs on the effects of the use of OTC on its Citrus Trees. In January 2024, the Company collected these grant monies from CRAFT.

Concentrations
Accounts receivable from the Company’s major customer as of December 31, 2023 and September 30, 2023, and revenue from such customer as of December 31, 2023 and 2022, are as follows:

(in thousands)Accounts ReceivableRevenue% of Total Revenue
December 31,September 30,December 31,December 31,
202320232023202220232022
Tropicana$5,048 $— $10,875 $8,027 77.8 %75.8 %
The citrus industry is subject to various factors over which growers have limited or no control, including weather conditions, disease, pestilence, water supply and market price fluctuations. Market prices are highly sensitive to aggregate domestic and foreign crop sizes, as well as factors including, but not limited to, weather and competition from foreign countries.
The overall increase in Tropicana revenue, as a percentage of sales, was primarily due to an increase in processed fruit sales during the current quarter.
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 two operating segments: (i) Alico Citrus and (ii) Land Management and Other Operations.
Principles of Consolidation
The Financial Statements include the accounts of Alico 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, Alico Ranch, LLC, Alico Natural Resources, LLC, 734 Citrus Holdings 1, LLC and subsidiaries (“Silver Nip”), Alico Skink Mitigation, LLC and Citree Holdings 1, 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. 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.
8
Table of Contents
Noncontrolling Interest in Consolidated Subsidiary

The Financial Statements include all assets and liabilities of the less-than-100%-owned subsidiary the Company controls, Citree. Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a loss of $1,039 and a net loss of approximately $73,000 and approximately $104,000$73 for the three months ended December 31, 20222023 and 2021,2022, respectively, of which 51%51% is attributable to the Company.

7

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 have historically borne interest at fluctuating interest rates based on LIBOR. Because LIBOR will cease to exist, the Company has recently renegotiated its variable rate loan agreements, to instead utilize fluctuating interest rates based on the 30 day Secured Overnight Financing Rate (SOFR), some with the change having taken effect in late fiscal year 2022, and one with the change having taken effect in early fiscal year 2023. ASU 2020-04 was effective March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, to extend the sunset date from December 31, 2022 to December 31, 2024. The Company is currently assessing the impact of 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 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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”),which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance for income taxes and making other minor improvements. The Company adopted ASU 2019-12 effective October 1, 2021, and the adoption of

None this standard did not have a material impact 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 had a significant adverse impact upon many sectors of the economy, including certain agriculture businesses. While epidemiological conditions in the United States have improved as of December 31, 2022, and certain restrictions on social and commercial activity have been relaxed, a resurgence of the virus, such as variant BA.5, could cause epidemiological and macroeconomic conditions to deteriorate and more severe restrictions to be put in place. It is not possible for the Company to predict the duration or magnitude of any adverse effects due to a resurgence at this time. We will continue to monitor the COVID-19 pandemic and its impacts on our business, financial condition, and results of operations.

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

8

Reclassifications

Certain prior year amounts have been reclassified in the accompanying Financial Statements 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 Alico's fiscal year produce most of the Company's annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. 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.

Note 2.3. Inventories

Inventories consist of the following at December 31, 20222023 and September 30, 2022:

(in thousands)

 

December 31,

 

 

September 30,

 

 

 

2022

 

 

2022

 

Unharvested fruit crop on the trees

 

$

27,987

 

 

$

26,717

 

Other

 

 

1,011

 

 

 

965

 

Total inventories

 

$

28,998

 

 

$

27,682

 

2023:

(in thousands)December 31,
2023		September 30,
2023
Unharvested fruit crop on the trees$38,155 $50,699 
Other3,649 1,782 
Total inventories$41,804 $52,481 
The Company records its inventory at the lower of cost or net realizable value.
For the three months ended December 31, 20222023 and the fiscal year ended September 30,December 31, 2022, the Company recorded approximately $0$10,846 and approximately $6,676,000,$0, respectively, for adjustments to reduce inventory to net realizable value,value. The adjustment for the three months ended December 31, 2023 was due to a significantly lower than anticipated harvest of the Early and Mid-Season crop, as a result of the impactcontinued recovery from the impacts of Hurricane Ian, which impactedIan. The determination of the Company’s unharvestedwrite down of inventory to net realizable value as of December 31, 2023 is based on management’s estimates that are inherently uncertain and subject to change. These estimates reflect management’s consideration of a number of factors, including patterns regarding the physical condition of the citrus crop fortrees, the fiscal yearresults of previous harvests, weather patterns and events, and the use of OTC. As a result, we may experience adjustments to inventory provisions in future periods.
In the three months ended September 30, 2022.

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,December 31, 2023 and December 31, 2022, 2021 and 2020, the Company received $0 and approximately $1,123,000, $4,299,000 and $4,629,000, respectively,$1,300 under the Florida Citrus Recovery Block Grant (“CRBG”) program. The Company received the remaining portion during the first quarter ended December 31, 2022, of approximately $1,300,000. These federal relief proceeds are included as a reduction to operating expenses in the Condensed Consolidated Statements of Operations.

In December 2022, the Consolidated Appropriations Act was signed into law by the federal government; however, the details of the mechanism and funding of any Hurricane Ian relief still remains unclear and, if available, the extent to which we will be eligible. We intend to take advantage of any such available programs as and when they become available. We are currently working with Florida Citrus Mutual, the industry trade group, and government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.
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Note 3.4. Assets Held for Sale

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 at December 31, 20222023 and September 30, 2022:2023:

(in thousands)Carrying Value
December 31,
2023		September 30,
2023
Ranch$69 $1,632 
Total assets held for sale$69 $1,632 

(in thousands)

 

Carrying Value

 

 

 

December 31,

 

 

September 30,

 

 

 

2022

 

 

2022

 

Ranch

 

$

174

 

 

$

205

 

Total assets held for sale

 

$

174

 

 

$

205

 

During the first quarterthree months ended December 31, 2023, the companyCompany consummated the sale of approximately 17,556 acres of land for $79,090 and recognized a gain of $77,025, including 17,229 acres of the Alico Ranch to the State of Florida for $77,631 in gross proceeds. A portion of the proceeds from these sales was used to repay the outstanding balance on the Company’s working capital line of credit (“WCLC”) with Rabo Agrifinance, Inc. (“Rabo”) and the $19,094 Met Life Variable-Rate Term Loans, plus accrued interest.
During the three months ended December 31, 2022, the Company sold approximately 609 acres to various third parties for approximately $3,300,000$3,287 and recognized a gain of $3,189 (including approximately $3,200,000. One of these sales transactions was a sale of approximately 85 acres to Mr. John E. Kiernan, the Company’s President and CEO, on October 20, 2022, for approximately $$439 ($5,161 per acre)). See 438,900Note 13. “Related Party Transactions” ($5,161 per acre). On January 1, 2022, Mr. Kiernan entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to be approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a further information.three-year term commencing on January 1, 2022, and ending on January 1, 2025, and with a yearly rent of $1,860. Additionally,

9

under the terms of the Kiernan Lease Agreement, the Company had granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only

Unless otherwise noted above, during the one-year period January 1, 2022 through January 1,three months ended December 31, 2023, and at a price of $480,000 ($5,161 per acre), which price was based on an independent appraisal obtained by the Company and dated as of November 11, 2021. On August 26, 2022, Mr. Kiernan exercised his option to purchase the Land. Pursuant to exercise of the option, the Company sold what turned out to be a parcel of approximately 85 acres to Mr. Kiernan.

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

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

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

On December 3, 2021, the State of Florida purchased, under the Florida Forever program, approximately 1,638 acres of the Alico Ranch for approximately $5,675,000 pursuant to an option agreement entered into between the State of Florida and the Company. The Company recognized a gain of approximately $5,570,000.

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

general corporate purposes.

Note 4.5. Property and Equipment, Net

Property and equipment, net consists of the following at December 31, 20222023 and September 30, 2022:

(in thousands)

 

December 31,

 

 

September 30,

 

 

 

2022

 

 

2022

 

Citrus trees

 

$

329,808

 

 

$

329,582

 

Equipment and other facilities

 

 

58,560

 

 

 

58,021

 

Buildings and improvements

 

 

7,081

 

 

 

7,374

 

Total depreciable properties

 

 

395,449

 

 

 

394,977

 

Less: accumulated depreciation and depletion

 

 

(138,856

)

 

 

(135,990

)

Net depreciable properties

 

 

256,593

 

 

 

258,987

 

Land and land improvements

 

 

113,502

 

 

 

113,492

 

Property and equipment, net

 

$

370,095

 

 

$

372,479

 

2023:

(in thousands)December 31,
2023		September 30,
2023
Citrus trees$330,957 $328,421 
Equipment and other facilities57,796 57,779 
Buildings and improvements7,081 7,081 
Total depreciable properties395,834 393,281 
Less: accumulated depreciation and depletion(147,204)(144,150)
Net depreciable properties248,630 249,131 
Land and land improvements112,973 112,718 
Property and equipment, net$361,603 $361,849 
For the three months ended December 31, 20222023 and fiscal year ended September 30,December 31, 2022, the Company did not record any impairments.

The Company did recordrecognized a casualty loss on the disposal of approximately $1,400,000 for the year ended September 30, 2022 with respectproperty and equipment of $225 and $1,915, respectively, due to onetree clippings.

10
Table of its groves, which sustained tree loss of approximately $Contents1,300,000, and damage to one of its buildings of approximately $100,000, as a direct result of Hurricane Ian.

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

10

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, 2022 and September 30, 2022:

 

 

December 31, 2022

 

 

September 30, 2022

 

(in thousands)

 

Principal

 

 

Deferred
Financing
Costs, Net

 

 

Principal

 

 

Deferred
Financing
Costs, Net

 

Long-term debt, net of current portion:

 

 

 

 

 

 

 

 

 

 

 

 

Met Fixed-Rate Term Loans

 

$

70,000

 

 

$

414

 

 

$

70,000

 

 

$

435

 

Met Variable-Rate Term Loans

 

 

19,500

 

 

 

107

 

 

 

19,906

 

 

 

113

 

Met Citree Term Loan

 

 

3,950

 

 

 

26

 

 

 

4,013

 

 

 

27

 

Pru Loans A & B

 

 

12,487

 

 

 

169

 

 

 

12,777

 

 

 

173

 

 

 

 

105,937

 

 

 

716

 

 

 

106,696

 

 

 

748

 

Less current portion

 

 

3,035

 

 

 

—

 

 

 

3,035

 

 

 

—

 

Long-term debt

 

$

102,902

 

 

$

716

 

 

$

103,661

 

 

$

748

 

The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at December 31, 2022 and September 30, 2022:

 

 

December 31, 2022

 

 

September 30, 2022

 

(in thousands)

 

Principal

 

 

Deferred
Financing
Costs, Net

 

 

Principal

 

 

Deferred
Financing
Costs, Net

 

Lines of Credit:

 

 

 

 

 

 

 

 

 

 

 

 

RLOC

 

$

—

 

 

$

106

 

 

$

—

 

 

$

110

 

WCLC

 

 

19,045

 

 

 

—

 

 

 

4,928

 

 

 

—

 

Lines of Credit

 

$

19,045

 

 

$

106

 

 

$

4,928

 

 

$

110

 

Future maturities of long-term debt and lines of credit as of December 31, 2022 are as follows:

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2022

 

Due within one year

 

 

 

 

 

$

3,035

 

Due between one and two years

 

 

 

 

 

 

3,035

 

Due between two and three years

 

 

 

 

 

 

22,080

 

Due between three and four years

 

 

 

 

 

 

3,035

 

Due between four and five years

 

 

 

 

 

 

3,035

 

Due beyond five years

 

 

 

 

 

 

90,762

 

 

 

 

 

 

 

 

 

Total future maturities

 

 

 

 

 

$

124,982

 

Interest costs expensed and capitalized were as follows:

(in thousands)

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Interest expense

 

$

1,148

 

 

$

901

 

Interest capitalized

 

 

281

 

 

 

303

 

Total

 

$

1,429

 

 

$

1,204

 

11

Debt

The Company's credit facilities consist of (i) fixed interest rate term loans originally in the amount of $125,000,000 (“Met Fixed-Rate Term Loans”), (ii) prior to the satisfaction of one such loan, variable interest rate term loans originally in the amount of $57,500,000 (“Met Variable-Rate Term Loans”), (iii) a $25,000,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and (iv) a $70,000,000 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. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.

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

The Met Variable-Rate Term Loans are subject to quarterly principal payments of $718,750 and historically bore an interest rate equal to 90-day LIBOR plus 165 basis points (the “LIBOR spread”). For the fiscal year ended September 30, 2022, the LIBOR rate was effective from October 1, 2021 through July 31, 2022.The LIBOR spread was subject to adjustment by Met beginning May 1, 2017 and was subject to further adjustment every two years thereafter until maturity. No adjustment was made at May 1, 2019, or at May 1, 2021. Effective August 1, 2022, the interest rate was renegotiated to the One Month Term Secured Overnight Financing Rate (SOFR) plus 175 basis points (the “SOFR spread”). The SOFR spread is subject to adjustment by Met every 2 years beginning May 1, 2023, until maturity. Interest on the term loans is payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 5.88% per annum and 4.27% per annum, as of December 31, 2022 and September 30, 2022, respectively. The Met Variable-Rate Term Loans mature on November 1, 2029.

With respect to the RLOC, for the fiscal year ended September 30, 2022, the LIBOR-based rate was effective from October 1, 2021 through July 31, 2022 and bore interest at a floating rate equal to 90-day LIBOR plus 165 basis points, payable quarterly. Effective August 1, 2022, the LIBOR-based rate was renegotiated to SOFR plus 175 basis points. The SOFR spread is subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity. The LIBOR spread was adjusted by Met on May 1, 2017 and was subject to further adjustment every two years thereafter. No adjustment was made on May 1, 2019 or on May 1, 2021. In October 2019, the RLOC agreement was modified to extend the maturity to November 1, 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 5.88% per annum and 4.27% per annum as of December 31, 2022 and September 30, 2022, respectively. Availability under the RLOC was $25,000,000 as of December 31, 2022 and September 30, 2022, 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 was based on the one-month LIBOR, plus a spread, which was 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 WCLC agreement was amended on October 27, 2022, and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. There were no changes to the commitment amount. The variable interest rate was 5.87% at December 31, 2022 (representing the rate based on SOFR) and the interest rate at September 30, 2022 was 4.31% per annum (representing the rate based upon LIBOR plus 175 basis points). The WCLC agreement provides for Rabo to issue up to $2,000,000 in letters of credit on the Company’s behalf,

12

of which $248,000 was issued as of December 31, 2022, 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.

There was $19,045,000 and $4,928,000 outstanding on the WCLC at December 31, 2022 and September 30, 2022, respectively. Availability under the WCLC was approximately $50,707,000 and $64,762,000 as of December 31, 2022 and September 30, 2022, respectively.

In 2014, the Company capitalized approximately $2,834,000 of debt financing costs related to a 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. During the three months ended June 30, 2022, the Company expensed approximately $94,000 in deferred financing costs related to the Met Variable-Rate Term Loan prepayment of approximately $15,625,000 on April 29, 2022. All costs are included in deferred financing costs and are being amortized to interest expense over the applicable terms of the obligations. The unamortized balance of deferred financing costs related to the financing above was approximately $627,000 and approximately $658,000 at December 31, 2022 and September 30, 2022, respectively.

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

Credit facilities also include a Met Life term loan collateralized by 1,200 gross acres of citrus grove owned by Citree (“Met Citree Loan”). This is a $5,000,000 credit facility that bears interest at a fixed rate of 5.28% per annum. Principal and interest payments are made on a quarterly basis. At December 31, 2022 and September 30, 2022, there was an outstanding balance of $3,950,000 and $4,013,000, respectively. The loan matures in February 2029. The unamortized balance of deferred financing costs related to this loan was approximately $26,000 and $27,000 at December 31, 2022 and September 30, 2022, respectively.

Transition from LIBOR

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

13

Silver Nip Citrus Debt

Silver Nip Citrus entered into two initial fixed-rate term loans with Prudential Mortgage Capital Company (“Prudential”), with an original combined balance of $27,550,000, bearing interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290,000 is payable quarterly, together with accrued interest. The loans are collateralized by approximately 5,700 acres of citrus groves in Collier, Hardee, Highlands and Polk Counties, Florida and mature on June 1, 2029 and June 1, 2033, respectively.

The Pru Loans A & B are subject to an annual financial covenant whereby the consolidated current ratio requirement is 1.00 to 1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of December 31, 2022.

The unamortized balance of deferred financing costs related to the Silver Nip Citrus debt was approximately $169,000 and $173,000 at December 31, 2022 and September 30, 2022, respectively.

Note 6. Accrued Liabilities

Accrued liabilities consist of the following at December 31, 20222023 and September 30, 2022:

(in thousands)

 

December 31,

 

 

September 30,

 

 

 

2022

 

 

2022

 

Ad valorem taxes

 

$

—

 

 

$

2,024

 

Accrued interest

 

 

951

 

 

 

764

 

Accrued employee wages and benefits

 

 

777

 

 

 

1,713

 

Accrued dividends

 

 

380

 

 

 

3,793

 

Accrued insurance

 

 

853

 

 

 

345

 

Professional fees

 

 

306

 

 

 

303

 

Other accrued liabilities

 

 

39

 

 

 

120

 

Total accrued liabilities

 

$

3,306

 

 

$

9,062

 

Note 7. Income Taxes

On 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, modified the limit on the deduction for net interest expense, and accelerated the timeframe for refunds of AMT credit carryovers. From a federal tax reporting standpoint, the Company had a federal tax net operating loss (“NOL”) in the amount of $2,390,415 for the fiscal year ended September 30, 2020 and, pursuant to the provisions of the CARES Act, Form 1139 was filed for the NOL carryback during fiscal year ended September 30, 2021, resulting in a refund of $580,314, which was received on May 31, 2022.

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

In December 2021, the Company sold 1,638 acres of land to the State of Florida at a price below market value, which resulted in a charitable contribution and related charitable deduction for tax purposes. The charitable contribution generated a tax benefit of approximately $6,300,000, however, the Company does not anticipate it will be able to realize the entire charitable deduction before it expires in 2027. A valuation allowance of approximately $1,400,000 was initially recorded in December 2021 to partially offset the charitable contribution carryover deferred tax asset, resulting in a net benefit of approximately $4,900,000. During fiscal year ending September 2022, the Company utilized approximately $500,000 of the charitable contribution, leaving a charitable contribution carryover of $5,800,000. Also, as of September 2022, the valuation allowance increased to approximately

14

$4,300,000 due to economic hardships from Hurricane Ian, resulting in a net benefit of approximately $1,500,000. As of December 2022, no additional changes were made to the valuation allowance.

2023:

Note 8. Earnings Per Common Share

Basic earnings per share for Alico's common stock is calculated by dividing net (loss) 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, 2022 and 2021, basic and diluted earnings per common share were as follows:

(in thousands except per share amounts)

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Net (loss) income attributable to Alico, Inc. common stockholders

 

$

(3,150

)

 

$

10,131

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding – basic

 

 

7,593

 

 

 

7,535

 

Dilutive effect of equity-based awards

 

 

—

 

 

 

7

 

Weighted average number of common shares outstanding – diluted

 

 

7,593

 

 

 

7,542

 

 

 

 

 

 

 

 

Net (loss) income per common share attributable to Alico, Inc. common stockholders:

 

 

 

 

 

 

Basic

 

$

(0.41

)

 

$

1.34

 

Diluted

 

$

(0.41

)

 

$

1.34

 

For the three months ended December 31, 2022 and the three months ended December 31, 2021, there were no anti-dilutive equity awards excluded from the calculation of diluted earnings per common share.

Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented, so only the basic weighted average number of common shares are used in the computations.

(in thousands)December 31,
2023		September 30,
2023
Accrued employee wages and benefits$1,149 $1,007 
Accrued interest765 1,102 
Accrued insurance684 345 
Professional fees443 307 
Accrued dividends381 381 
Other accrued liabilities211 87 
Ad valorem taxes— 2,134 
Total accrued liabilities$3,633 $5,363 
Note 7. 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, 2023 and September 30, 2023:
(in thousands)December 31, 2023September 30, 2023
Long-term debt, net of current portion:
Met Fixed-Rate Term Loans$70,000 $70,000 
Met Variable-Rate Term Loans— 19,094 
Met Citree Term Loan3,888 3,888 
Pru Loans A & B11,327 11,615 
Deferred financing fees(506)(621)
84,709 103,976 
Less current portion1,410 2,566 
Long-term debt$83,299 $101,410 
The following table summarizes lines of credit and related deferred financing costs, net of accumulated amortization at December 31, 2023 and September 30, 2023:
(in thousands)December 31, 2023September 30, 2023
Lines of Credit:
RLOC$— $— 
WCLC— 24,722 
Deferred financing fees(91)(95)
Lines of Credit$(91)$24,627 
11
Table of Contents
Future maturities of long-term debt and lines of credit as of December 31, 2023 are as follows:
(in thousands)December 31, 2023
Due within one year$1,410 
Due between one and two years1,410 
Due between two and three years1,410 
Due between three and four years1,410 
Due between four and five years1,410 
Due beyond five years78,165 
Total future maturities$85,215 
Interest costs expensed and capitalized were as follows:
(in thousands)Three Months Ended
December 31,
20232022
Interest expense$1,605 $1,148 
Interest capitalized303 281 
Total$1,908 $1,429 
Debt
The Company’s credit facilities consist of fixed interest rate term loans originally in the amount of $125,000 (“Met Fixed-Rate Term Loans”) variable interest rate term loans originally in the amount of $57,500 (“Met Variable-Rate Term Loans”), a $25,000 revolving line of credit (“RLOC”) with Metropolitan Life Insurance Company and New England Life Insurance Company (collectively “Met”), and a $70,000 WCLC with Rabo. At December 31, 2023 and September 30, 2023, $25,000 and $25,000 was available under the RLOC, respectively, and $69,752 and $45,030 was available under the WCLC, respectively.
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 originally included 5,800 gross acres of ranch land. In April 2021, the 5,800 gross acres of ranch land was released as security against the term loans and RLOC and only the 38,200 gross acres of citrus groves remain as security for the term loans and RLOC. The WCLC is collateralized by the Company’s current assets and certain other personal property owned by the Company.
The Met Fixed-Rate Term Loans bear, which bear interest at 3.85%, are interest-only with a balloon payment at maturity on November 1, 2029.
The Met Variable-Rate Term Loans are subject to quarterly principal payments of $406 and bear interest at the One Month Term Secured Overnight Financing Rate ("SOFR") plus 175 basis points (the “SOFR spread”). Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. The SOFR spread is subject to adjustment by Met every 2 years beginning May 1, 2023, until maturity. Interest on the term loans is payable quarterly. The interest rates on the Met Variable-Rate Term Loans were 7.56% per annum and 7.52% per annum, as of December 31, 2023 and September 30, 2023, respectively and were set to mature on November 1, 2029. On December 26, 2023, the Company repaid the outstanding balance of $19,094, plus accrued interest, on these loans.
The SOFR spread is subject to adjustment by lender every 2 years beginning May 1, 2023, until maturity on November 1, 2029. The RLOC is subject to an annual commitment fee of 25 basis points on the unused portion of the line of credit and is available for funding general corporate purposes. The variable interest rate was 7.56% per annum and 7.52% per annum as of December 31, 2023 and September 30, 2023, respectively.
12
Table of Contents
The WCLC is a revolving credit facility and is available for funding working capital and general corporate requirements. The WCLC agreement was amended on October 27, 2022, and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. There were no changes to the commitment amount. The rate at September 30, 2023 was SOFR plus 175 basis points. The variable interest rate was 7.11% per annum and 7.07% per annum as of December 31, 2023 and September 30, 2023, respectively. The WCLC agreement provides for Rabo to issue up to $2,000 in letters of credit on the Company’s behalf, of which $248 and $248 were issued as of December 31, 2023 and September 30, 2023, respectively.
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 The Company'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 were charged at 20 basis points; except from May 18, 2023 through August 8, 2023, when they were charged at 30 basis points.
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 increased annually by 10% of consolidated net income for the preceding years, or $174,628 for the year ended September 30, 2023; (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, a limit on capital expenditures of $30,000 per fiscal year. As of December 31, 2023, the Company was in compliance with all of the financial covenants.
Credit facilities also include a Met Life term loan collateralized by 1,200 gross acres of citrus grove owned by Citree (“Met Citree Loan”). This is a $5,000 credit facility that bears interest at a fixed rate of 5.28% per annum. Principal and interest payments are made on a quarterly basis. Effective February 17, 2023, the Company agreed to defer the next three quarterly principal payments which were previously due May 2023, August 2023 and November 2023 to the maturity date of the loan. The loan matures in February 2029.
Silver Nip Citrus Debt
There are two fixed-rate term loans, with an original combined balance of $27,550, which bear interest at 5.35% per annum (“Pru Loans A & B”). Principal of $290 is payable quarterly, together with accrued interest. The loans are collateralized by 5,700 acres of citrus groves in Collier, Hardee, Highlands and Polk Counties, Florida and mature on June 1, 2029 and June 1, 2033, respectively.
The Pru Loans A & B are subject to an annual financial covenant whereby the consolidated current ratio requirement is 1.00 to 1.00. Silver Nip Citrus was in compliance with the current ratio covenant as of December 31, 2023.
Deferred Financing Costs
Costs incurred to obtain financing are deferred and amortized to “Interest expense” in the consolidated statement of operations over the related financing period using the effective interest method. The Company records debt issuance costs as a direct reduction of the carrying value of the related debt. Financing costs related to the undrawn RLOC are included in "Other non-current assets" in the consolidated balance sheet.
Note 8. Income Taxes
Our effective tax rate for the three months ended December 31, 2023 was a provision of 26.8%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to state income taxes.
Our effective tax rate for the three months ended December 31, 2022 was a provision of 24.3%. Such rate differed from the Federal Statutory rate of 21.0% primarily due to state income taxes.
13
Table of Contents

Note 9. Segment Information

Segments

Operating segments are defined in the criteria established under the 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 two operating segments: Alico Citrus and Land Management and Other Operations.

Total revenues represent sales and services rendered to unaffiliated customers, as reported in the Condensed Consolidated Statements of Operations. Goods and services produced by the Alico Citrus segment, as well as through the grove management services rendered by the Alico Citrus segment,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.

15

Information by operating segment is as follows:

(in thousands)

 

Three Months Ended
December 31,

 

 

 

2022

 

 

2021

 

Revenues:

 

 

 

 

 

 

Alico Citrus

 

$

10,268

 

 

$

14,748

 

Land Management and Other Operations

 

 

320

 

 

 

589

 

Total revenues

 

 

10,588

 

 

 

15,337

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Alico Citrus

 

 

14,295

 

 

 

13,386

 

Land Management and Other Operations

 

 

94

 

 

 

140

 

Total operating expenses

 

 

14,389

 

 

 

13,526

 

 

 

 

 

 

 

 

Gross (loss) profit:

 

 

 

 

 

 

Alico Citrus

 

 

(4,027

)

 

 

1,362

 

Land Management and Other Operations

 

 

226

 

 

 

449

 

Total gross (loss) profit

 

$

(3,801

)

 

$

1,811

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization:

 

 

 

 

 

 

Alico Citrus

 

$

3,827

 

 

$

3,681

 

Land Management and Other Operations

 

 

9

 

 

 

41

 

Other Depreciation, Depletion and Amortization

 

 

114

 

 

 

114

 

Total depreciation, depletion and amortization

 

$

3,950

 

 

$

3,836

 

(in thousands)

 

 

 

 

 

December 31,

 

 

September 30,

 

 

 

 

 

 

 

2022

 

 

2022

 

Assets:

 

 

 

 

 

 

 

 

 

 

Alico Citrus

 

 

 

 

 

$

400,125

 

 

$

396,266

 

Land Management and Other Operations

 

 

 

 

 

 

11,447

 

 

 

11,326

 

Other Corporate Assets

 

 

 

 

 

 

1,418

 

 

 

1,663

 

Total Assets

 

 

 

 

 

$

412,990

 

 

$

409,255

 

(in thousands)Three Months Ended
December 31,
20232022
Revenues:
Alico Citrus$13,592 $10,268 
Land Management and Other Operations393 320 
Total revenues13,985 10,588 
Operating expenses:
Alico Citrus28,107 14,295 
Land Management and Other Operations133 94 
Total operating expenses28,240 14,389 
Gross profit:
Alico Citrus(14,515)(4,027)
Land Management and Other Operations260 226 
Total gross profit$(14,255)$(3,801)
Depreciation, depletion and amortization:
Alico Citrus$3,727 $3,827 
Land Management and Other Operations20 9 
Other Depreciation, Depletion and Amortization57 114 
Total depreciation, depletion and amortization$3,804 $3,950 

(in thousands)December 31,
2023		September 30,
2023
Assets:
Alico Citrus$429,466 $415,030 
Land Management and Other Operations10,257 11,722 
Other Corporate Assets1,486 1,601 
Total Assets$441,209 $428,353 

Note 10. Leases

The Company determines whether an arrangement is a lease at inception. The Company’s leases consist of operating lease arrangements for certain office space, tractor leases and IT facilities, and equipment leases.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.
14
Table of Contents

Any lease arrangements with an initial term of one year or less are not recorded on the Company’s Condensed Consolidated Balance Sheets, and it recognizes lease cost for these lease arrangements on a straight-line basis over the applicable lease term. Many lease arrangements provide the options to exercise one or more renewal terms or to terminate the lease arrangement. TheWhen the options are reasonably certain to be exercised, 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.

16

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

 

2022

 

 

2021

 

Operating leases costs recorded in general and administrative expenses

 

$

30

 

 

$

111

 

(in thousands)Three Months Ended December 31,
Operating lease components20232022
Operating leases costs recorded in general and administrative expenses$37 $30 
The weighted-average remaining lease term and weighted-average discount rate for our operating leases are as follows:

December 31, 20222023

Weighted-average remaining lease term

1.691.6 years

Weighted-average discount rate

5.44 

1.81

%

Note 11. Stockholders' Equity

Stock-based Compensation

Effective January 27, 2015, the Company’s Board of Directors adopted the 2015 Stock Incentive Plan (the “2015 Plan”) which provides for up to 1,250,0001,250 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 executiveseligible participants in various forms including restricted shares of the Company’s common stock and stock options. Awards are discretionary and are determined by the Compensation Committee of the Board of Directors. Awards vest based upon service conditions. Non-vested restricted shares generally vest over requisite service periods of one to six years from the date of grant.

The Company recognizes stock-based compensation expense for (i) Board of Directors fees (generally paid in treasury stock), and (ii) other awards under the 2015 Plan (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 Directors fees was approximately $156,000$138 and $179,000$156 for the three months ended December 31, 2023 and 2022, and 2021, respectively.

Restricted Stock

Stock compensation expense related to the Restricted Stock was approximately $130,000$56 and $136,000$130 for the three months ended December 31, 20222023 and 2021,2022, respectively. There was approximately $564,000$320 and $692,000$376 of total unrecognized stock compensation costs related to unvested stock compensation for the Restricted Stock grants at December 31, 20222023 and September 30, 2022,2023, respectively.
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Table of Contents

Restricted Stock Awards
Restricted Stock AwardsSharesWeighted-
Average
Grant Date
Fair Value
Outstanding at September 30, 202317,540$37.82 
Granted—— 
Vested—— 
Forfeited(5)32.30 
Outstanding at December 31, 2023 (a)
17,535$37.82 
a.

On September 6, 2022,The weighted average remaining contractual term is 1.5 years and the Company awarded 747 restricted shares of the Company’s common stock to the newly appointed Chief Financial Officer of the Company under the 2015 Plan at a fairaggregate intrinsic value of $33.50 per common share, with all shares scheduledRSAs expected to vest on January 1, 2024.is $510.

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

17

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

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

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

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

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

Stock Option Grant

Stock option grants of 118,000 options to certain officers and managers of the Company (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 were to have vested as follows: (i) 25% of the options were to have vested if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $35.00; (ii) 25% of the options were to have vested if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $40.00; (iii) 25% of the options were to have vested 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 were to have vested 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 were not 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 were not achieved by December 31, 2022, then any unvested options were to have been forfeited. During the three months ended December 31, 2022, the stock did not trade above $40.00 per share for twenty consecutive days (the $35.00 per share threshold was met during fiscal year 2020 and thus 25% was previously vested); accordingly, no additional amounts of the 2020 Option Grants were vested as of December 31, 2022. On December 15, 2021, an officer of the Company exercised 5,000 stock options that had previously vested. Additionally, in the three months ended June 30, 2022, three officers of the Company exercised 9,000 options that had previously vested. As of December 31, 2022, because, only the first hurdle under each such option grant had been reached, only 25% of each option grant vested and the remainder of the options have now been forfeited.

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 were to

18

have vested as follows: (i) 3,333 of the options were to have vested 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 were to have vested 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 were to have vested 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 were not 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 would be forfeited. In addition, if the applicable stock price hurdles were not achieved by December 31, 2021, any unvested options would be forfeited. Since the date of grant, the stock did not trade above $40.00 per share for twenty consecutive days; therefore, the 2019 Option grants were forfeited as of December 31, 2021.

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 were to have vested as follows: (i) 25% of the options were to have vested if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $35.00; (ii) 25% of the options were to have vested if the price of the Company’s common stock during a consecutive 20-trading day period exceeds $40.00; (iii) 25% of the options were to have vested 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 were to have vested 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 were not achieved by December 31, 2021, any unvested options would be forfeited. The 2018 Option Grants would also have become vested to the extent that the applicable stock price hurdles were satisfied in connection with a change in control of the Company. Only 25% of the 2018 Options Grants vested for Mr. John Kiernan, (the $35.00 per share threshold was met during fiscal year 2020), and the remaining 67,500 of the 2018 Options Grants were forfeited as of December 31, 2021. The 2018 Option Grants issued to Mr. Trafelet were forfeited as part of a settlement agreement entered into with the Company on February 11, 2019. Forfeitures of all stock options were recognized as incurred.

Number of
Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term
(years)		Aggregate
Intrinsic
Value
Vested and outstanding – December 31, 202338,000$33.75 3.0—
Stock compensation expense related to the options of approximately $18,000$0 and $60,000$18 was recognized for the three months ended December 31, 20222023 and 2021,December 31, 2022, respectively. At December 31, 20222023 and September 30, 2022,2023, there was approximately $0 and $18,000, respectively, of totalwere no unrecognized stock compensation costs related to unvested share-based compensation for the option grants.

The fair value

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

2020 Option Grant

Expected Volatility

26.0

%

Expected Term (in years)

3.61

Risk Free Rate

1.60

%

19

The weighted-average grant-date fair value of the 2020 Option Grant was $3.20. There were no additional stock options grantedwere recognized as incurred.

Total stock-based compensation expense for the three months ended December 31, 2022.

2023 and 2022, which was recognized in general and administrative expense, was $56 and $130, respectively.

The following table illustrates the Company’s treasury stock activity for the three months ended December 31, 2022:

(in thousands, except share amounts)

 

 

 

 

 

 

 

 

Shares

 

 

Cost

 

Balance as of September 30, 2022

 

 

829,150

 

 

$

27,948

 

Issued to employees and directors, net

 

 

(5,942

)

 

 

(146

)

Balance as of December 31, 2022

 

 

823,208

 

 

$

27,802

 

Note 12. Commitments and Contingencies

Purchase Commitments
The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of December 31, 2023, the Company had $3,735 relating to outstanding commitments for these purchases that will be paid upon delivery of the remaining citrus trees.
Letters of Credit

The Company had outstanding standby letters of credit in the total amount of approximately $248,000$248 and $310,000$248 at December 31, 20222023 and September 30, 2022,2023, 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 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, resultscondition.
16
Table of operations or cash flows.Contents

Purchase Commitments

The Company enters into contracts for the purchase of citrus trees during the normal course of its business. As of December 31, 2022, the Company had approximately $5,403,000 relating to outstanding commitments for these purchases that will be paid upon delivery of the remaining citrus trees.

Note 13. Related Party Transactions

Consulting Agreement

On May 17, 2022, Richard Rallo notified the Company of his decision to resign from his role as the Company’s Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) effective as of May 31, 2022. Mr. Rallo’s decision to resign was for personal reasons to eliminate extensive travel and/or avoid relocation to Florida and was not related to any disagreement with the Company or its independent registered public accountants on any matter relating to the Company’s financial or accounting operations, policies, or practices. Mr. Rallo agreed to provide consulting services to the Company through December 31, 2022.

Lease Agreement

On January 1, 2022, Mr. Kiernan, the Company’s President and CEO, entered into a Hunting Lease Agreement and Real Estate Purchase and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”). Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to beleased approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022,, and ending on January 1, 2025,, and with a yearly rent of $1,860$1,860 (in whole dollars). Additionally, under the terms of the Kiernan Lease Agreement, the Company had granted to Mr. Kiernan an option to purchase the Land from the Company, exercisable only during the one-year period January 1, 2022, through January 1, 2023,, and at a price of $480,000$480 ($5,161 per acre), which price is based on an independent appraisal obtained by the Company. On August 26, 2022, Mr. Kiernan exercised his option to purchase the land.

20

Pursuant to the exercise of the option, the Company sold what turned out to be a parcel of approximately 85 acres to Mr. Kiernan on October 20, 2022 for approximately $438,900$439 ($5,161 per acre).

Note 14. Subsequent Events
The Company evaluated subsequent events and transactions that occurred after December 31, 2023, the balance sheet date, up to the date that the unaudited condensed consolidated financial statements were issued and determined there are no additional events to disclose.

17
21Table of Contents

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

The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes thereto.thereto

Cautionary Statement Regarding Forward-Looking Information

We provide forward-lookingand other information included elsewhere 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, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterlyour 2023 Annual 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 express10-K, and in 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 managementfilings with the SEC. and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be” “is likely to,” “believes,” and similar expressions referring to future periods. Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee futureOur actual results level of activity, performance or achievements. Actual resultsoperations 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 foreseendiscussed in forward-looking statements include, but are not limited to: changes in laws, regulation and rules, including tax laws and tax rates; climate change; weather conditions that affect production, transportation, storage, demand, import and exportas a result of fresh product and their by-products, and that may result in impairment expense such as the freeze in the last week of January 2022 or Hurricane Ian in the last week of September 2022; 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,various factors, including, but not limited to, changes due in part to the deadly conflict in Ukraine; changes in interest rates; availability of refinancing; availability of financing for land development activities and other growth and corporate opportunities; onetime events; acquisitions and divestitures; ability to make strategic acquisitions or divestitures;those included our ability to maintain effective internal control over financial reporting; the impact of, and costs related to, any investigations, legal or administrative actions that may result from the restatements described in our2023 Annual Report on Form 10-K for the fiscal year ended September 30, 2022; ability to redeploy proceeds from divestitures; ability to consummate selected land acquisitions; ability to take advantageand other portions of tax deferral options; ability to retain executive officers and to replace departed executive officers; ability to replace the Company’s primary third party grove management customer and even further expand the third party grove management program; ability to complete and implement land use planning activities, including adding to entitlements applicable to owned real estate; seasonality; 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 land values, agricultural or otherwise; the extent to which real estate value appreciates; impactthis Quarterly Report. Additionally, our historical results are not necessarily indicative of the COVID-19 outbreak and coronavirus pandemic on our agriculture operations, including without limitation demandresults that may be expected 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, including without limitation related legislative and regulatory initiatives; availability of and access to governmental loans and incentives; availability of and access to governmental relief programs, particularly those that can be accessed with respect to the impact of Hurricane Ian; settlement of insurance claims; any reductionperiod in the public float resulting from repurchases of common stock by Alico; changes in equity awards to employees; whetherfuture. In the Company's dividend policy, including its recent decreased dividend amounts, is continued or whether the Company’s performance supports the ability to return to the previously increased level of dividends; expressed desire of certain of our stockholders to liquidate their shareholdings by virtue of past market sales of common stock, by sales of common stock or by way of future transactionsfollowing discussion and analysis, designed to consummate such expressed desire; political changes and economic crises; ability to implement ESG initiatives; competitive actions by other companies; increased

22

competition from international companies; changesdollars are 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 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; impact of concentration of sales to one customer; and changes in and effects of crop insurance programs, global trade agreements, trade restrictions and tariffs; and soil conditions, harvest yields, prices for commodities, and crop production expenses. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those Risks Factors described in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, and our Quarterly Reports on Form 10-Q.thousands.

Business Overview

Business Description

Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”) generates operating revenues primarily from the sale of itsour citrus products, providing management services to citrus groves owned by third parties, and grazing and hunting leasing. The Company operatesWe operate as two business segments, and all itsof our operating revenues are generated in the United States. For the three months ended December 31, 2022, the Company2023, we generated operating revenues of approximately $10,588,000,$13,985, loss from operations of approximately $6,310,000,$17,527, and net lossincome attributable to common stockholders of approximately $3,150,000.$42,945. Net cash used in operating activities was approximately $9,665,000$13,169 for the three months ended December 31, 2022.

2023.

Business Segments

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

The Company has

Our two segments are as follows:

•
Alico Citrus includes activities related to planting, owning, cultivating and/or managing citrus groves 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.

Critical Accounting Policies

For the three months ended December 31, 2023 and Estimates

The discussion2022, the Alico Citrus segment generated 97.2% of our consolidated revenues and analysisthe Land Management and Other Operations segment generated 2.8% of our consolidated revenues.

Recent Developments
Florida Forever Program Land Sale
On December 21, 2023, the sale of 17,229 acres 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

23

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.

See Note 1. “Description of Business and Basis of Presentation”Ranch 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. There have been no material changes to the Company’s critical accounting policies and estimates from those reflected in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as filed with the SEC on December 13, 2022.

Recent Developments

Hurricane Ian

On September 28, 2022, Hurricane Ian made landfall on the southwest coastState of Florida was consummated and a majoritywe received gross proceeds of $77,631 (the “Sale”).


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Table of Contents
Debt Retirement
On December 26, 2023. the Company’s grovesproceeds from the Sale were impacted by the storm. The impact of Hurricane Ian has affectedused to repay our Early and Mid-Season fruit production as the Company accelerated the harvest to maximize box production and the Early and Mid-Season harvest will have completed earlier than the prior year harvest season. Approximately 48,900 gross acres of our citrus groves, which are in Charlotte, Collier, DeSoto, Hardee, Hendry, Highlands and Polk Counties, sustained hurricane or tropical storm force winds for varying durations of time. While we lost a small percentage of trees, the force and duration of the storm impacted the majority of the groves. Based upon prior experience with serious storms of this nature, we expect it may take up to two full seasons or more for the groves to recover to pre-hurricane production levels. We maintain crop insurance and are working closely with our insurers and adjusters to evaluate and determine the amount of insurance recovery we may be entitled to, if any. We are also working with Florida Citrus Mutual, the industry trade group, and government agencies on securing potential federal relief programs.

Extension of the Working Capital Line of Credit (“WCLC”) and retire $19,094 of Variable Rate Term Debt and will retain the balance of the proceeds for general corporate purposes. See

Note 4. “Assets Held for Sale” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

Grove Management Agreement
On October 27, 2022, the working capital line of credit agreement (“WCLC”) was amended and the primary terms of the amendment were an extension of the maturity to November 1, 2025, and the conversion of the interest rate from LIBOR plus a spread to SOFR plus a spread, which spread is adjusted quarterly, based on the Company’s debt service coverage ratio for the preceding quarter and can vary from 175 to 250 basis points. There were no changes to the commitment amount.

Sales and Purchase of Land

During the first quarter30, 2023, the company sold approximately 609 acres to various third parties for approximately $3,300,000. One of these sales transactions was a sale of approximately 85 acres to Mr. Kiernan, the Company’s President and CEO on October 20, 2022 for approximately $438,900 ($5,161 per acre). On January 1, 2022, Mr. Kiernan,we entered into a Hunting LeaseCitrus Grove Management Agreement (the “Grove Owners Agreement”) with an unaffiliated group of third parties to provide citrus grove caretaking and Real Estate Purchaseharvest and Sale Option Agreement, with the Company (the “Kiernan Lease Agreement”).haul management services for approximately 3,300 acres owned by such third parties. Under the Kiernan Lease Agreement, the Company was leasing what was originally estimated to be approximately 93 acres of Company owned, largely unimproved land (the “Land”) to Mr. Kiernan for a three-year term commencing on January 1, 2022, and ending on January 1, 2025, and with a yearly rent of $1,860.00. Additionally, under the terms of the Kiernan LeaseGrove Owners Agreement, we are reimbursed by the Company had grantedthird parties for all costs incurred related to Mr. Kiernan an optionproviding these services and receive a management fee based on acres covered under this agreement. The Grove Owners Agreement may be terminated with written notice provided at least 60 days prior to purchase the Landcommencement of the next fiscal year, occurring subsequent to September 30, 2024, and with shorter notice under certain conditions.

Citrus Research and Field Trial Foundation
In January 2024, we received $1,790 from the Company, exercisable only duringCitrus Research and Field Trial Foundation (“CRAFT”) of grower’s support payments in connection with our use of Oxytetracycline (“OTC”), to combat the one-year period January 1, 2022 through January 1, 2023, and at a priceeffect of $480,000 ($5,161 per acre), which price was based on“greening” in our citrus trees.


19
Table of Contents

Condensed Consolidated Results of Operations
The following discussion provides an independent appraisal obtained by the Company and dated asanalysis of November 11, 2021. On August 26, 2022, Mr. Kiernan exercised his option to purchase the land. Pursuant to exerciseour results of the option, the Company sold what turned out to be a parcel of approximately 85 acres to Mr. Kiernan.

Federal Relief Program – Hurricane Ian

In December 2022, the Consolidated Appropriations Act was signed into law by the federal government; however, the details of the mechanism and funding of any Hurricane Ian relief still remains unclear and, if available, the extent to which the Company will be eligible. The Company intends to take advantage of any such available programs as and when they become available. The

24

Company is currently working with Florida Citrus Mutual, the industry trade group, and government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.

Federal Relief Program – Hurricane Irma

The Company was eligible for Hurricane Irma federal relief programs for block grants that were being administered through the State of Florida. The Company has received a total of approximately $26,900,000 in Hurricane Irma federal reliefoperations for the period commencing in fiscal yearthree months ended September 30, 2019 through December 31, 2022. During2023, as compared to 2022:

(in thousands)
Three Months Ended
December 31,
Change
20232022
$
%
Operating revenues:
Alico Citrus$13,592 $10,268 $3,324 32.4 %
Land Management and Other Operations393 320 73 22.8 %
Total operating revenues13,985 10,588 3,397 32.1 %
Gross profit:
Alico Citrus(14,515)(4,027)(10,488)(260.4)%
Land Management and Other Operations260 226 34 15.0 %
Total gross profit(14,255)(3,801)(10,454)(275.0)%
General and administrative expenses3,272 2,509 763 30.4 %
Loss from operations(17,527)(6,310)(11,217)(177.8)%
Total other income, net75,515 2,041 73,474 NM
Income (loss) before income taxes57,988 (4,269)62,257 NM
Income tax provision (benefit)15,552 (1,083)16,635 NM
Net income (loss)42,436 (3,186)45,622 NM
Net loss attributable to noncontrolling interests509 36 473 NM
Net income (loss) attributable to Alico, Inc. common stockholders$42,945 $(3,150)$46,095 NM
NM = Not meaningful

Operating Revenue
The increase in revenue for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, andwas primarily due to a 24.9% increase in pound solids, driven by a 30.1% increase in processed box production, as we begin to recover from the effects of Hurricane Ian.
Operating Expenses
The increase in operating expenses for the three months ended December 31, 2021,2023, as compared to the Company received approximately $1,300,000 and $948,000, respectively, under the Florida Citrus Recovery Block Grant (“CRBG”) program. As ofthree months ended December 31, 2022, was primarily driven by a $10,846 adjustment to reduce inventory to its net realizable value, as a result of lower than anticipated box production from our Early and Mid-Season crop, due to the Company hasimpacts of Hurricane Ian; as well as increased harvest and haul costs driven by our increased box production and approximately $1,300 we received all funds due under the CRBG. These federal relief proceeds are included as a reductionCRBG program in the quarter ended December 31, 2022, which was the last installment of this grant program for the 2017 storm, Hurricane Irma. See Note 3. “Inventories” to operating expenses in the Condensed Consolidated Financial Statements in Part I, Item 1 of Operations.this Quarterly Report.

General and Administrative Expense
20
Condensed Consolidated ResultsTable of OperationsContents

General and administrative expense for the three months ended December 31, 2023 was $3,272, compared to $2,509 for the three months ended December 31, 2022. The following discussion providesincrease was primarily due to an analysisincrease in salaries and wages of Alico's results$607 and consulting fees principally related to real estate entitlement activities of operations$317.
Other Income (expense), net
Other income (expense), net for the three months ended December 31, 2023 and should be read in conjunction with2022, was $75,515 and $2,041, respectively. The increase to other income (expense), net, is primarily due to the accompanying Condensed Consolidated Statementssale of Operations17,229 acres of the Alico Ranch to the State of Florida.
Income Taxes
The income tax provision (benefit) was $15,552 and $(1,083) for the three months ended December 31, 2023 and 2022, respectively. The income tax provision for the three months ended December 31, 2023 was principally due to the sale of 17,229 acres of the Alico Ranch to the State of Florida, while the income tax provision for the three months ended December 31, 2022 and 2021:

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

Change

 

 

 

2022

 

 

2021

 

 

$

 

 

%

 

Operating revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Alico Citrus

 

$

10,268

 

 

$

14,748

 

 

$

(4,480

)

 

 

(30.4

)%

Land Management and Other Operations

 

 

320

 

 

 

589

 

 

 

(269

)

 

 

(45.7

)%

 Total operating revenues

 

 

10,588

 

 

 

15,337

 

 

 

(4,749

)

 

 

(31.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross (loss) profit:

 

 

 

 

 

 

 

 

 

 

 

 

Alico Citrus

 

 

(4,027

)

 

 

1,362

 

 

 

(5,389

)

 

NM

 

Land Management and Other Operations

 

 

226

 

 

 

449

 

 

 

(223

)

 

 

(49.7

)%

Total gross (loss) profit

 

 

(3,801

)

 

 

1,811

 

 

 

(5,612

)

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expenses

 

 

2,509

 

 

 

2,584

 

 

 

(75

)

 

 

(2.9

)%

Loss from operations

 

 

(6,310

)

 

 

(773

)

 

 

(5,537

)

 

NM

 

Total other income, net

 

 

2,041

 

 

 

7,553

 

 

 

(5,512

)

 

 

(73.0

)%

(Loss) income before income taxes

 

 

(4,269

)

 

 

6,780

 

 

 

(11,049

)

 

 

(163.0

)%

Income tax benefit

 

 

(1,083

)

 

 

(3,300

)

 

 

2,217

 

 

 

(67.2

)%

Net (loss) income

 

 

(3,186

)

 

 

10,080

 

 

 

(13,266

)

 

 

(131.6

)%

Net loss attributable to noncontrolling interests

 

 

36

 

 

 

51

 

 

 

(15

)

 

 

(29.4

)%

Net (loss) income attributable to Alico, Inc. common stockholders

 

$

(3,150

)

 

$

10,131

 

 

$

(13,281

)

 

 

(131.1

)%

NM = Not meaningful

25

was driven by the pre-tax loss generated for the period.

The following discussion provides an analysis of the Company’sour operating segments:

Alico Citrus
(in thousands, except per box and per pound solids data)
Three Months Ended
December 31,
Change
20232022
Unit
%
Operating Revenues:
Early and Mid-Season$12,395 $9,586 $2,809 29.3 %
Fresh Fruit and Other506 493 13 2.6 %
Grove Management Services691 189 502 265.6 %
Total$13,592 $10,268 $3,324 32.4 %
Boxes Harvested:
Early and Mid-Season1,047 805 242 30.1 %
Total Processed1,047 805 242 30.1 %
Fresh Fruit31 36 (5)(13.9)%
Total1,078 841 237 28.2 %
Pound Solids Produced:
Early and Mid-Season4,666 3,737 929 24.9 %
Total4,666 3,737 929 24.9 %
Pound Solids per Box:
Early and Mid-Season4.464.64(0.18)(4.0)%
Price per Pound Solids:
Early and Mid-Season$2.66 $2.57 $0.09 3.4 %
Price per Box:
Fresh Fruit$16.32 $12.44 $3.88 31.2 %
Operating Expenses:
Cost of Sales$23,602 $12,486 $11,116 89.0 %
Harvesting and Hauling4,076 2,979 1,097 36.8 %
Fresh Fruit and Other61 (1,237)1,298 (104.9)%
Grove Management Services368 67 301 NM
Total$28,107 $14,295 $13,812 96.6 %
NM = Not meaningful
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The table below presents key operating measures

Components of Results of Operations for the three months ended December 31, 2022 and 2021:

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

 

 

December 31,

 

 

Change

 

 

 

2022

 

 

2021

 

 

Unit

 

 

%

 

Operating Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Early and Mid-Season

 

$

9,586

 

 

$

10,378

 

 

$

(792

)

 

 

(7.6

)%

Fresh Fruit

 

 

448

 

 

 

879

 

 

 

(431

)

 

 

(49.0

)%

Purchase and Resale of Fruit

 

 

38

 

 

 

53

 

 

 

(15

)

 

 

(28.3

)%

Grove Management Services

 

 

189

 

 

 

3,418

 

 

 

(3,229

)

 

 

(94.5

)%

Other

 

 

7

 

 

 

20

 

 

 

(13

)

 

 

(65.0

)%

Total

 

$

10,268

 

 

$

14,748

 

 

$

(4,480

)

 

 

(30.4

)%

Boxes Harvested:

 

 

 

 

 

 

 

 

 

 

 

 

Early and Mid-Season

 

 

805

 

 

 

827

 

 

 

(22

)

 

 

(2.7

)%

Total Processed

 

 

805

 

 

 

827

 

 

 

(22

)

 

 

(2.7

)%

Fresh Fruit

 

 

36

 

 

 

69

 

 

 

(33

)

 

 

(47.8

)%

Total

 

 

841

 

 

 

896

 

 

 

(55

)

 

 

(6.1

)%

Pound Solids Produced:

 

 

 

 

 

 

 

 

 

 

 

 

Early and Mid-Season

 

 

3,737

 

 

 

4,021

 

 

 

(284

)

 

 

(7.1

)%

Total

 

 

3,737

 

 

 

4,021

 

 

 

(284

)

 

 

(7.1

)%

Pound Solids per Box:

 

 

 

 

 

 

 

 

 

 

 

 

Early and Mid-Season

 

 

4.64

 

 

 

4.86

 

 

 

(0.22

)

 

 

(4.5

)%

Price per Pound Solids:

 

 

 

 

 

 

 

 

 

 

 

 

Early and Mid-Season

 

$

2.57

 

 

$

2.58

 

 

$

(0.01

)

 

 

(0.4

)%

Price per Box:

 

 

 

 

 

 

 

 

 

 

 

 

Fresh Fruit

 

$

12.44

 

 

$

12.74

 

 

$

(0.30

)

 

 

(2.3

)%

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Sales

 

$

12,486

 

 

$

8,856

 

 

$

3,630

 

 

 

41.0

%

Harvesting and Hauling

 

 

2,979

 

 

 

2,361

 

 

 

618

 

 

 

26.2

%

Purchase and Resale of Fruit

 

 

29

 

 

 

46

 

 

 

(17

)

 

 

(37.0

)%

Grove Management Services

 

 

67

 

 

 

3,071

 

 

 

(3,004

)

 

 

(97.8

)%

Other

 

 

(1,266

)

 

 

(948

)

 

 

(318

)

 

 

33.5

%

Total

 

$

14,295

 

 

$

13,386

 

 

$

909

 

 

 

6.8

%

The Company sells itsAlico Citrus Segment

We sell our Early and Mid-Season and Valencia oranges to processors that convert most of the citrus crop into orange juice.juice processors. The processors generally buy the citrus crop on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. The Company’s fresh fruitOur Fresh Fruit revenue is generally soldderived from sales to packing houses that purchase the citrus on a per box basis. The CompanyWe also providesprovide citrus grove caretaking and harvest and haul management services to third parties infrom which revenues are recorded as Grove Management Services, including a management fee. Other revenues consist of the purchase and reselling of fruit.

Alico’s operating

Operating expenses for our Alico Citrus segment consist primarily of costCost of sales, harvestingSales, Harvesting and haulingHauling costs and grove management serviceGrove Management Service costs. Cost of salesSales represents the cost of maintaining the citrus groves for the preceding calendar year and does not vary in relation to production. Harvesting and haulingHauling costs represent the costs of bringing citrus product to processors and variesvary based upon the number of boxes produced. Grove management servicesManagement Services costs include those costs associated with citrus grove caretaking and harvest and haul management services provided to third parties. Other expenses include the period costs of third-party grove caretaking and the purchase and reselling of third-party fruit.

Comparison of the Three Months Ended December 31, 2023 and 2022 for the Alico Citrus Segment
The decreaseincrease in revenue for the three months ended December 31, 2022,2023, compared to the three months ended December 31, 2021,2022, was primarily due to a decrease24.9% increase in grove management services andpound solids, driven by a decrease30.1% increase in revenue generatedprocessed box production, as we began to recover from the Early and Mid-Season harvest, with such decrease in harvest revenues being in large part because of the increased fruit drop caused by the impacteffects of Hurricane Ian.

26

The decrease in grove management services is primarily due to a primary group of third-party grove owners, who are affiliated with each other (collectively, the “Grove Owners”), to whom the Company was providing caretaking management services, deciding to exit the citrus business at the beginning of the three months ended June 30, 2022. This decision to exit the citrus business eliminated the need for caretaking management services. As a result, caretaking management services and the accompanying reimbursement of caretaking expenses decreased during the three months ended December 31, 2022, when compared to the same period in the prior year.

The decrease in the Early and Mid-Season Our fruit harvestedproduction for the three months ended December 31, 2022 was primarily drivenadversely impacted by a decrease in pound solids per box and a decrease in processed box production. The Company decided to accelerate the harvesting of the Early and Mid-Season crop to maximize the box production and avoid additional fruit drop caused as a result of the impact of Hurricane Ian on the Early and Mid-Season harvest. The pound solids per box decreased 4.5% and the processed box production decreased 2.7% as compared to the same period in prior year. The Company will complete the harvesting earlier in the current fiscal year, as compared to the prior fiscal year, for its Early and Mid-Season fruit and anticipates an overall decrease in the number of boxes harvested and revenues generated from the Early and Mid-Season fruit for the 2023 harvest as compared to the 2022 harvest.September 2022. Although Hurricane Ian initially impacted the Early and Mid-Seasonfiscal year 2023 harvest, there does not appear to be long-term damage to the citrus trees.

The USDA released its latest forecast on January 12, 2023 and projects the overall orange production in Floridawe expect it may take another season, or more, for the 2023 harvest seasongroves to be down 56% as comparedrecover to the prior harvest season. Overall, the Company, along with the Florida citrus industry in general, is recording a smaller number of boxes harvested due topre-hurricane production levels.

In addition, there was an even greater fruit drop rate, attributed to the hurricanes and disease during the current harvest season, as compared to the previous year. The January 13, 2023 report by Nielsen has indicated the overall consumption for Not from Concentrate Orange Juice (“NFC”), over the four week period ended December 31, 2022, as compared to the same period prior to the COVID-19 pandemic, was down approximately 9.8%; however, the Nielsen report indicated that, for that period overall NFC revenue is up 7.9%, driven by a 19.6% increase in the price per gallon (Nielsen has indicated that the four week period ended December 31, 2022 NFC consumption and revenue has been subject to reclassifying certain products outpound solid of the NFC category due to a change in processing methods. They do not disclose the impact of this reclassification on gallons or dollars consumed).

The Company has also recorded a decrease in revenue from sales of fresh fruit. The decrease in the fresh fruit is primarily due to a decrease in both boxes sold and pricing per box.

The USDA, in its January 12, 2023 Citrus Crop Forecast for the 2022-23 harvest season, indicated its expectation is that the overall Florida orange crop will decrease from approximately 41,050,000 boxes for the 2021-22 crop year to approximately 18,000,000 boxes for the 2022-23 crop year, a decrease of approximately 56.2%. With respect to the Early and Mid-Season crop, the USDA is forecasting a 61.6% decline. It is too soon to project any potential impact to box production and pound solids per box for the Valencia season crop from the recently experienced Hurricane Ian, which affected certain areas of the Company’s citrus acres.

The increase in operating expenses3.4% for the three months ended December 31, 2022,2023, compared to the same period in the prior year, as a result of more favorable pricing in one of our contracts with Tropicana.

For the three months ended December 31, 2023, we also recorded an increase in revenue from sales of Fresh Fruit, primarily due to an increase in pricing per box of 31.2%, partially offset by a decrease in boxes produced of 13.9%, as compared to the three months ended December 31, 2021, primarily relates2022.
We recorded $691 and $189 of revenue from the Grove Owners relating to the increased cost of sales per box realized in the three months ended December 31, 2022, as compared to the same period in prior year. The Company experienced significant cost increases in fertilizer, herbicide and fuel in maintaining its groves. These cost increases, coupled with the timing of the harvest, and the expected lower box production for its Early and Mid-Season harvest, resulted in a higher cost of sales per boxGrove Management Services for the three months ended December 31, 2023 and 2022, respectively. The increase in grove management services revenue was principally due to the signing of the new Grove Owners Agreement in October 2023.
The 89.0% increase in Cost of Sales, as compared to the same period in the prior year. In addition, the Company incurred additional costs related to the clean-up and repairs as a result of Hurricane Ian.

The Company also recorded increases in its harvesting and hauling expenses. The increase in the harvesting and hauling costs is directly relatedyear, was principally due to an increase in the harvesting labor costs, as well as the increased time spent by the harvestersadjustment of $10,846 to fill the boxes

27

��

reduce inventory to its net realizable value as a result of the increased fruit drop caused bycontinued recovery from the impacts of Hurricane Ian, increased harvest and haul costs driven by our increased box production and approximately $1,300 we received under the CRBG program in the quarter ended December 31, 2022, which was the last installment of this grant program for the 2017 storm, See Note 3. “Inventories” to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

For the three months ended December 31, 2022,2023, we also recorded an increase in Harvesting and Hauling expenses per box, which is directly related to a 30.1% increase in boxes harvested and an increase in the cost per box of harvesting labor costs, when compared to the similar period in the prior year.

The decrease in grove management services expense is directly related to the termination of the grove management services by the Grove Owners in June 2022. As mentioned above, the decision by the Grove Owners to exit the citrus business eliminated the need for the caretaking management services for the Grove Owners. The Company

We recorded approximately $0$368 and $2,902,000$67 of operating expenses relating to grove management services for the Grove Owners infor the three months ended December 31, 2023 and 2022, and 2021, respectively. As a result, caretakingThe increase in grove management services expenses decreased significantly during the three months ended December 31, 2022, when comparedwas principally due to the same periodsigning of the new Grove Owners Agreement in the prior year.

October 2023.

The credit amounts shown in “Other”“Fresh Fruit and Other” in operating expenses above primarily represent federal relief proceeds of approximately $1,300 received under the CRBG program in the quartersquarter ended December 31, 2022 and 2021.2022.
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Table of Contents

Land Management and Other Operations

The table below presents key operating measures for the three months ended December 31, 2023 and 2022 for the Land Management and 2021:

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
December 31,

 

 

Change

 

 

 

2022

 

 

2021

 

 

$

 

 

%

 

Revenue From:

 

 

 

 

 

 

 

 

 

 

 

 

Land and Other Leasing

 

$

281

 

 

$

528

 

 

$

(247

)

 

 

(46.8

)%

Other

 

 

39

 

 

 

61

 

 

 

(22

)

 

 

(36.1

)%

Total

 

$

320

 

 

$

589

 

 

$

(269

)

 

 

(45.7

)%

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Land and Other Leasing

 

$

93

 

 

$

140

 

 

$

(47

)

 

 

(33.6

)%

Other

 

 

1

 

 

 

—

 

 

 

1

 

 

NM

 

Total

 

$

94

 

 

$

140

 

 

$

(46

)

 

 

(32.9

)%

NM = Not meaningful

Other Operations segment:

(in thousands)
Three Months Ended
December 31,
Change
20232022$
%
Revenue From:
Land and Other Leasing$314 $281 $33 11.7 %
Other79 39 40 102.6 %
Total$393 $320 $73 22.8 %
Operating Expenses:
Land and Other Leasing$132 $93 $39 41.9 %
Other1 1 — — %
Total$133 $94 $39 41.5 %
Components of Results of Operations for Land Management and Other Operations Segment
Land and Other Leasing includes lease income from leases for grazing rights, hunting leases, a farm lease, a lease to a third party of an aggregate mine, leases of oil extraction rights to third parties, and other miscellaneous income.

Land and Other Leasing operating expenses includes real estate, property taxes, general and administrative expenses including salaries, benefits and legal.
Comparison of the Three Months Ended December 31, 2023 and 2022 for the Land Management and Other Operations Segment
The decreaseincrease in revenues from Land Management and Other Operations for the three months ended December 31, 2022,2023, as compared to the three months ended December 31, 2021, issame period in the prior year, was primarily due to a decrease in grazing and hunting lease revenue due to the salessigning of portions of the Alico Ranch, which resulted in the reduction of land covered under grazing and hunting lease contracts. Additionally, the modification to the grazing leases resulted in a reduction in the ad valorem taxes due from the lessees, as the Company revised the grazing lease agreements due to the sale of certain of the ranch acres previously covered under the agreement.

new farming leases.

The slight decreaseincrease in operating expenses from Land Management and Other Operations for the three months ended December 31, 2022, compared to the three months ended December 31, 2021, is primarily due to the reduction of the ad valorem tax expense due to the Company owning fewer ranch acres as result of the sale of certain acres on the ranch.

General and Administrative Expense

General and administrative expense for the three months ended December 31, 2022 was approximately $2,509,000, compared to approximately $2,584,000 for the three months ended December 31, 2021. The decrease was primarily due to a reduction in expenses related to the Company-sponsored incentive for employees to obtain the COVID-19 vaccine during the three months ended December 31, 2022 of approximately $100,000, as compared to the same period in the prior year. In addition, the Company

28

realized a reduction in stock compensation expense, based upon a reduction in the restricted stock awarded to certain executives, senior managers and employees, and a reduction in other administrative costs. Partially offsetting these decreases was an increase in professional fees.

Other Income, net

Other income, net for the three months ended December 31, 2022 and 2021, was approximately $2,041,000 and $7,553,000, respectively. The decrease to other income, net, is primarily due to the timing of the gains on sale of real estate, property and equipment and assets held for sale. During the quarter ended December 31, 2022, the Company sold approximately 609 acres, in the aggregate, from the Alico Ranch to several third parties and recognized gains of approximately $3,189,000. By comparison, for the three months ended December 31, 2021, the Company recognized gains of approximately $8,445,000 relating to the sale of real estate, property and equipment and assets held for sale. In addition, the Company recognized an increase in interest expense of approximately $247,000 for the three months ended December 31, 2022,2023, as compared to the three months ended December 31, 2021, as a result of2022, was primarily due to an increase in the overall interest rates on its variable term debt and the WCLC.

Income Taxes

The income tax benefit was approximately $1,083,000 for the three months ended December 31, 2022 and the income tax benefit was approximately $3,300,000 for the three months ended December 31, 2021. During the quarter ended December 31, 2021, the Company sold 1,638 acres of land to the State of Florida at a price below market value, which resulted in a charitable deduction for tax purposes. As a result of this charitable contribution, the Company generated a tax benefit. Excluding this tax benefit, the Company would have incurred an income tax provision of approximately $1,578,000.

property taxes.

Seasonality

The Company is

We are 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’sour fiscal year produce most of the Company'sour annual revenue. Working capital requirements are typically greater in the first and fourth quarters of the fiscal year, coinciding with harvesting cycles. 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.
23
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29

Liquidity and Capital Resources

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

(in thousands)

 

December 31,

 

 

September 30,

 

 

 

 

 

 

2022

 

 

2022

 

 

Change

 

Cash and cash equivalents

 

$

269

 

 

$

865

 

 

$

(596

)

Total current assets

 

$

37,555

 

 

$

31,616

 

 

$

5,939

 

Total current liabilities

 

$

10,225

 

 

$

16,525

 

 

$

(6,300

)

Working capital

 

$

27,330

 

 

$

15,091

 

 

$

12,239

 

Total assets

 

$

412,990

 

 

$

409,255

 

 

$

3,735

 

Principal amount of term loans and lines of credit

 

$

124,982

 

 

$

111,624

 

 

$

13,358

 

Current ratio

 

3.67 to 1

 

 

1.91 to 1

 

 

 

 

(in thousands)December 31,
2023		September 30,
2023
Change
Cash$18,632 $1,062 $17,570 
Total current assets$71,817 $58,805 $13,012 
Total current liabilities$28,540 $15,065 $13,475 
Working capital$43,277 $43,740 $(463)
Total assets$441,209 $428,353 $12,856 
Principal amount of term loans and lines of credit$85,215 $129,319 $(44,104)
Current ratio 2.52 to 1 3.90 to 1
Debt ratio0.19 to 10.30 to 1
Sources and Uses of Liquidity and Capital

Alico's

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

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

Management believes that a combination of cash-on-hand, cash generated from operations, and asset sales and availability under the Company'sour lines of credit will provide sufficient liquidity to service the principal and interest payments on itsour indebtedness and will satisfy working capital requirements and capital expenditures for at least the next twelve months and over the long term.

However, this is subject, to a certain extent, on general economic, financial, competitive, regulatory and other factors that are beyond our control.

Borrowing Facilities and Long-term Debt

Alico hasWe have a $70,000,000$70,000 working capital line of credit and a $25,000 revolving line of credit, of which approximately $50,707,000$69,752 and $25,000 was available for general use as of December 31, 2022, and a $25,000,000 revolving line of credit, all of which was available for general use as of December 31, 20222023 (see Note 5.7. “Long-Term Debt and Lines of Credit” to the accompanying Condensed Consolidated Financial Statements). Additionally, effective May 1, 2021, the Company converted its Met Fixed-Rate Term Loans into interest bearing only loans with a balloon payment of the balance due at maturity, which is November 1, 2029. Such conversion has increased available cash andWe may be expected to continue to increase the available cash for the foreseeable future. With the increase in available cash, the Company could utilize the available cash for other possible uses such as payingto pay down indebtedness, pursue citrus grove acquisitions, conduct share repurchases, and possibly reinstatingreinstate increased dividends. If the Company chooseswe choose to pursue significant growth and other corporate opportunities, such as the transaction whereby it acquired 3,280 citrus grove acres on October 30, 2020 for $18,230,000, paying down of indebtedness, engaging in share repurchases or paying increased dividends, these actions could have a material adverse impact on its cash balances and may require the Companyus to finance such activities by drawing down on itsour lines of credit or by obtaining additional debt or equity financing. There can be no assurance that additional financing will be available to the Companyus when needed or, if available, that it can be obtained on commercially reasonable terms. Any inability to obtain additional financing could adversely impact Alico'sour ability to pursue different growth and other corporate opportunities.

30

The level of debt could have important consequences on Alico'sour business, including, but not limited to, increasing itsour vulnerability to general adverse economic and industry conditions, limiting the availability of cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements, and limiting flexibility in planning for, or reacting to, changes in its business and industry.
24
Table of Contents

Alico’s

Our credit facilities are subject to various debt 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$160,000 increased annually by 10% of consolidated net income for the preceding years, or approximately $174,462,000$174,628 applicable for the year ended September 30, 2022;2023; (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, a limit on capital expenditures of $30,000,000$30,000 per fiscal year. As of December 31, 2022,2023, the Company was in compliance with all of the financial covenants.

Cash Management Impacts

Flows

Cash and restricted cash equivalents decreasedincreased from approximately $865,000 as of September 30, 2022, to approximately $269,000$269 as of December 31, 2022.2022, to $21,262 as of December 31, 2023. The components of these changes are discussed below.

(in thousands)Three Months Ended
December 31,		Change
20232022
Net Cash used in operating activities$(13,169)$(9,665)$(3,504)
Net Cash provided by (used in) investing activities75,225 (496)75,721 
Net Cash (used in) provided by financing activities(44,486)9,565 (54,051)
Net increase (decrease) in cash and restricted cash$17,570 $(596)$18,166 
Net Cash Used InProvided By (Used In) Operating Activities

The following table details the items contributing to$3,504 increase in Net Cash Used In Operating Activitiesused in operating activities was principally due to increased interest expense associated with borrowings under our WCLC and the timing of interest payments, in connection with the early repayment of debt, and other payments, for the three months ended December 31, 2022 and 2021:

(in thousands)

 

Three Months Ended
December 31,

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

Net (loss) income

 

$

(3,186

)

 

$

10,080

 

 

$

(13,266

)

Depreciation, depletion and amortization

 

 

3,950

 

 

 

3,836

 

 

 

114

 

Gain on sale of real estate, property and equipment and assets held for sale

 

 

(3,189

)

 

 

(8,445

)

 

 

5,256

 

Deferred income tax benefit

 

 

—

 

 

 

(4,876

)

 

 

4,876

 

Loss on disposal of long-lived assets

 

 

1,915

 

 

 

137

 

 

 

1,778

 

Debt issue costs expense

 

 

36

 

 

 

43

 

 

 

(7

)

Other

 

 

8

 

 

 

—

 

 

 

8

 

Stock-based compensation expense

 

 

305

 

 

 

375

 

 

 

(70

)

Change in operating assets and liabilities

 

 

(9,504

)

 

 

(10,758

)

 

 

1,254

 

Net cash used in operating activities

 

$

(9,665

)

 

$

(9,608

)

 

$

(57

)

The small increase in net cash used in operating activities for the three months ended December 31, 2022,2023, as compared to the same period infor the prior year, was primarily attributable to the lower box production as result of Hurricane Ian, a reduction in grove management fees due to the termination of the grove management services by the Grove Owners, and the recognition of a charitable deduction associated with the sale of certain acres to the State of Florida, which resulted in the Company recording a tax benefit for the quarter ended December 31, 2021. During the three months ended December 31, 2022, because the Company performed services to clean up the groves from the impact of Hurricane Ian, the Company also decided to pull forward tree clippings on older trees that would have been scheduled later in the year, and as a result the Loss on disposal of long-lived assets ended up being higher than in the same period in the prior year.

31

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

The following table details the items contributing to$75,721 increase in Net Cash (Used In) Provided By Investing Activities for the three months ended December 31, 2022 and 2021:

(in thousands)

 

Three Months Ended
December 31,

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

Capital expenditures:

 

 

 

 

 

 

 

 

 

Citrus trees

 

$

(3,149

)

 

$

(3,719

)

 

$

570

 

Equipment and other

 

 

(304

)

 

 

(474

)

 

 

170

 

Total

 

 

(3,453

)

 

 

(4,193

)

 

 

740

 

 

 

 

 

 

 

 

 

 

 

Acquisition of citrus groves

 

 

(29

)

 

 

(136

)

 

 

107

 

Net proceeds from sale of real estate, property and equipment and assets held for sale

 

 

3,287

 

 

 

8,604

 

 

 

(5,317

)

Change in deposits on purchase of citrus trees

 

 

(301

)

 

 

(196

)

 

 

(105

)

Net cash (used in) provided by investing activities

 

$

(496

)

 

$

4,079

 

 

$

(4,575

)

The switch from Net cash provided by (used in) investing activities for the three months ended December 31, 2021,2023, compared to the three months ended December 31, 2022, is primarily due to proceeds from the sale of 17,229 acres of the Alico Ranch.

Net cash usedCash (Used In) Provided By Financing Activities
The increase of $54,051 in investingNet Cash (used in) provided by financing activities for the three months ended December 31, 2023, as compared to the three months ended December 31, 2022, was primarily due to the timingrepayment of ranch sales. The Company received higherthe WCLC and the $19,094 Met Life Variable-Rate Term debt with the proceeds from the sale of real estate, property and equipment and assets held for sale in17,229 acres of the three months ended December 31, 2021, when compared to the three months ended December 31, 2022.

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, 2022 and 2021:

(in thousands)

 

Three Months Ended
December 31,

 

 

 

 

 

 

2022

 

 

2021

 

 

Change

 

Repayments on revolving lines of credit

 

$

(8,902

)

 

$

(16,319

)

 

$

7,417

 

Borrowings on revolving lines of credit

 

 

23,019

 

 

 

25,696

 

 

 

(2,677

)

Principal payments on term loans

 

 

(759

)

 

 

(1,072

)

 

 

313

 

Exercise of stock options

 

 

—

 

 

 

170

 

 

 

(170

)

Dividends paid

 

 

(3,793

)

 

 

(3,763

)

 

 

(30

)

Net cash provided by in financing activities

 

$

9,565

 

 

$

4,712

 

 

$

4,853

 

The increase in cash provided by financing activities for the three months ended December 31, 2022,Alico Ranch, as compared to the three months ended December 31, 2021, was primarily due to the Company increasing thean increase in net borrowings under the working capital line of credit during the three months ended December 31, 2022 as compared toWCLC in the same period in the prior year. This was primarily due to the lower proceeds from the sale of real estate, property

We had $0 and equipment and assets held for sale in the three months ended December 31, 2022, when compared to the prior three months ended December 31, 2021.

The Company had approximately $19,045,000 and $9,377,000$19,045 outstanding on itsour revolving lines of credit as of December 31, 2023 and December 31, 2022, and 2021, respectively.

The WCLC line of credit agreement provides for Rabo Agrifinance, Inc. to issue up to $2,000,000$2,000 in letters of credit on the Company’sour behalf. As of December 31, 2022,2023, there was approximately $248,000$248 in outstanding letters of credit, which correspondingly reduced Alico'sour availability under the WCLC lineWCLC.
Contractual Obligations
Our material cash requirements from known contractual and other obligations are described in the accompanying notes to the financial statements within Item 1 of credit.Part I

of this Quarterly Report. These include principal and interest payments on long-term debt as described in

Note 7. “Long-Term Debt and Lines of Credit”, operating leases as described in Note 10. “Leases” and purchase commitments as described in

32Note 12. “Commitments and Contingencies”

to the Condensed Consolidated Financial Statements included in this Quarterly Report.

Purchase Commitments

25
Table of Contents

Critical Accounting Policies and Estimates
The Company enters into contracts fordiscussion and analysis of the purchaseCompany’s financial condition and results of citrus trees during the normal courseoperations is based upon its unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of its business. As of December 31, 2022,these financial statements requires the Company had approximately $5,403,000 relating to outstanding commitmentsmake certain estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base 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 purchases, eachestimates under different assumptions or conditions.
See Note 1. “Description of which respective commitments areBusiness and Basis of Presentation” to be paid upon the respective delivery.Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for a detailed description of recent accounting pronouncements. There have been no material changes to the Company’s Critical Accounting Policies and Estimates from those reflected in the Company’s 2023 Annual Report on Form 10-K.

26
Table of Contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk

There have been - We are subject to interest rate risk from the utilization of financial instruments such as term loan debt and other borrowings. Our primary long-term obligations are fixed rate debts subject to fair value risk due to interest rate fluctuations. See Note 1. “Description of Business and Basis of Presentation” to these Condensed Consolidated Financial Statements.

We are also subject to interest rate risk on our variable rate debt; however, at December 31, 2023, we had no variable-rate debt outstanding.
In the three months ended December 31, 2023, there were no other material changes during this reporting period in theto our quantitative and qualitative disclosures set forthabout market risk from those discussed in Part II, Item 7A in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as2023, filed with the SEC on December 13, 2022.

6, 2023.

Item 4. Controls and Procedures

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

Our management,

Management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of 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, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this report,December 31, 2023, our disclosure controls and procedures were not effective at the reasonable assurance level solely as a result of the material weakness management identified in our internal control over financial reporting as previously disclosed in our Annual Report on the Form 10-K for the fiscal year ended September 30, 2022.

Material Weaknesslevel.

Changes in Internal Control over Financial Reporting

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

As previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2022, management identified the following material weaknesses in our internal control over financial reporting that continued to exist as of December 31, 2022:

•
The Company identified a deficiency as it related to controls around the completeness and accuracy of the information used in the preparation of its income tax provision.
•
The Company did not design effective controls surrounding the evaluation of misstatements and the impact to the financial statements for all periods presented.

Remediation Plan

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

•
Instituted a process to reconcile the amounts to the underlying support with any differences investigated and resolved prior to completion of the year-end tax provision. This includes the proper documentation, review and approval of the quarterly tax provision workpapers by management.
•
Each quarter, management will document the evaluation of misstatements, if any, and the impact to the financial statements.

33

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

(b) Changes in Internal Control over Financial Reporting.

During the fiscal quarter ended December 31, 2022, other than the changes described above in the “Remediation Plan,”2023 there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27
Table of Contents

34

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, Alicowe have been, and may in the future be involved in, litigation relating to claims arising out of itsour operations in the normal course of business. There are no current legal proceedings to which the Company iswe are a party or of which any of itsour property is subject that it believeswe believe will have a material adverse effect on itsour financial position, results of operations or cash flows. See

Note 12. Commitments and Contingencies to the Condensed Consolidated Financial Statements included in this Quarterly Report for further information.

Item 1A. Risk Factors

There have been no material changes into the risk factors set forth in Part 1,I, Item 1A, “Risk Factors” in Alico'sour Annual Report on Form 10-K for the fiscal year ended September 30, 2022,2023, as filed with the SEC on December 13, 2022.

6, 2023.

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

There were no sales of unregistered equity securities during the period covered by this Quarterly Report on Form 10-Q.

Report.

There were no issuer purchasesrepurchases of the Company’s equity securities during the period covered by this Quarterly Report on Form 10-Q.

Report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not Applicable.

Item 5. Other Information
a)

None.

b)

35None.

c)During the three months ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

28
Table of Contents

Item 6. Exhibits
Exhibit NumberExhibit DescriptionFormFile No.ExhibitFiling DateFiled/Furnished Herewith
3.110-K00-0002613.112/11/2017
3.2S-8333-1305754.212/21/2005
3.3S-8333-1305754.312/21/2005
3.4S-8333-1305754.412/21/2005
3.58-K000-002613.61/15/2021
10.110-K000-0026110.3912/11/2017
10.28-K000-0026110.14/5/2022
10.38-K000-0026110.24/5/2022
10.48-K000-0026110.112/19/2023
31.1*
31.2*
32.1**
32.2**
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.SCHInline XBRL Taxonomy Extension Schema Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
29
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Exhibit Number101.DEF

Exhibit Index

    3.1

Restated Certificate of Incorporation, dated February 17, 1972 (incorporated by reference to Exhibit 3.1 of Alico's filing on Form 10-K dated December 11, 2017)

    3.2

Certificate of Amendment to Certificate of Incorporation, 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

Amendment to Articles of Incorporation, 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

Amendment to Articles of Incorporation, 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

Second Amended By-Laws of Alico, Inc., amended and restated (incorporated by reference to Exhibit 3.6 of Alico’s filing on Form 8-K dated January 15, 2021)

  10.1

Twelfth Amendment and Waiver to Credit Agreement by and among Alico, Inc., Alico-Agri, Ltd., Alico Plant World, L.L.C., Alico Fruit Company, LLC, Alico Land Development Inc., Alico Citrus Nursery, LLC, and Rabo Agrifinance LLC (f/k/a Rabo Agrifinance, Inc.) dated November 19, 2021 (incorporated by reference to Exhibit 10.1 of Alico's filing on Form 10-Q dated February 3, 2022)

  10.2

Amended and Restated Employment Agreement between Alico, Inc., and Mr. Kiernan, dated as of April 1, 2022 (incorporated by reference to Exhibit 10.1 of Alico’s filing on Form 8-K dated April 5, 2022)

  10.3

Annual Performance and Long Term Bonus Agreement between Alico, Inc., and Mr. Kiernan, dated as of April 1, 2022 (incorporated by reference to Exhibit 10.2 of Alico's filing on Form 8-K dated April 5, 2022)

  31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification

  31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Rule 13a-14(a) certification

  32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

  32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

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

*

Inline XBRL Taxonomy Extension SchemaDefinition Linkbase Document

*

101.CAL101.LAB

*

Inline XBRL Taxonomy Calculation Linkbase Document

101.DEF

*

Inline XBRL Taxonomy Definition Linkbase Document

101.LAB

Inline XBRL TaxonomyExtension Label Linkbase Document

*

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

*

104

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

*

104

The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2022, has been formatted in Inline XBRL.

*

Filed herewith.

In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.**Furnished herewith.

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Table of Contents

36

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

ALICO, INC. (Registrant)

February 6, 20237, 2024

By:

/s/ John E. Kiernan

John E. Kiernan

President and Chief Executive Officer

(Principal Executive Officer)

February 7, 2024By:/s/ Bradley Heine

Bradley Heine

February 6, 2023

By:

/s/ Perry Del Vecchio

Perry Del Vecchio

Chief Financial Officer

(Principal Financial and Accounting Officer)

37

31