ALCO - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to Alico's First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, today's conference is being recorded.

On the call today are John Kiernan, President and Chief Executive Officer; and Rich Rallo, Chief Financial Officer. Earlier today, the Company issued a press release announcing its results for the first quarter ended December 31, 2020.

had on to the Investor at not it the Company's have www.alicoinc.com. available is Relations you a review chance release, website If portion of on a is will webcast, call as and This be being available Alico's website well. replay

implied like and in Form and Company mentioned The prepared contain release. undertakes reports XX-K, may these call, to cause actual other in details and statements Such in factors Before statements. on everyone subject no are on differ today on remind those Company results subsequently required would update that today's on begin, such obligation reports forward-looking factors annual except that SEC to Form materially expressed the Important we the X-K to reports as that filed forward-looking quarterly contribute or statements by those or the Company's current the made differences thereto revise any remarks earnings Form the amendments risks, or risk to from statements. XX-Q, include uncertainties cause could the law. with to

call, also the Company financial non-GAAP and EBITDA this and EBITDA. discuss including adjusted During measures will

measures, proceed, issued sir. to call I Please please on Company's press the the Company's release to over For details like to more Mr. CEO, earlier Kiernan. John these that, With the today. refer would turn President and

John Kiernan

Quarter XXXX this and Latonya, us Call you, Alico's everyone, Earnings you, thank First joining Thank for morning. for

in ago, pricing by orange both strong. per range. is compared not-from-concentrate pound fruit by in last to by has citrus pound and pressure an price levels supplies the solid tighter As Robust Florida, for was pricing a of as on These juice above downward driven we by led year our per and well year Mexico. the have juice of the as prices factors year low begin fruit that not-from-concentrate solid, in by Brazil supply from processors. increase citrus consumers retail of retail at inventory citrus being fruit increase juice shows decreased market orange The are consumption published continues year-over-year industry and to double-digit demand, double-digit fiscal continuing consumption $X been is Pricing consumers $X not-from-concentrate increase we experienced consumption data is latest higher our Nielsen subsided. market the early and XXXX, the juice in encouraged Since citrus there hold mid-season remain has the the growth to consumption March XXXX, to steady. in orange

the the rigorous prior crop is to to running as decline our decades and the higher its relating market this much efficiencies, orange by XX.X% decline confident early USDA substantially to by seen, Florida will entire to the operational compared allow early than lower management XXXX/'XX commenced season, which We last of crop the and mid-season percentage program this which by mid-season of USDA's the We're backed same the will couple are Florida crop forecast its growth support be indicated Valencia decrease crop, forecast. these we the and to approximately year box of to in the comprehensive believe At this decrease be XX.X%. and year, in discrete that we this as period the a XXXX, year. and for in much with with knowledge expectation which approximately -- of with estimated pricing December the citrus mid-season in harvested which With will a released will along for begin citrus early of that harvest production of harvest, factors decrease beginning to industry, XXXX processed season the next compared all of weeks. respect of have January, the crop

on Moving quarter. to business our the highlights in

targeted programs realizing This knowledge opportunity citrus our well. including some of feel our us management We've we provide and that Collier entered is citrus criteria aligns next Barron year responsibilities, business to economic harvest over operating is Companies, agreement line citrus top-XX grove approximately we into we grove scale. fiscal is a the allows our and going to Barron expand for acres integrated us services, meet monetize Collier can focusing Florida management for grower, an the to owned economies that services natural extension We by seek another where are with we management Our of our value. haul new for philosophy by and operational of the X,XXX that on grove operators long-term because and grove operational believe agreement Companies. add

to ranch expect quarter, of $XX.X the million. the to our fiscal If in continue sale the Alico third X,XXX would close an of option, pursue option announced XXXX. to of the opportunities purchase beginning approximately Florida Ranch for and state entered year approximately in this strategic agreement We to quarter for acres exercise we into of elects state land the

certain In XXXX. addition, ended in off first XX, sold we have quarter the Ranch prices premium parcels at December smaller

gross additional substantial County, included continue Ranch located completed were a the Alico in citrus will we future. real in with acres plantings, which evaluate estate We near years. new to recent well-maintained On XXXX, October purchased which sales opportunities and Hendry anticipate grove of in XX, the X,XXX

of more production over been are difficult we to plantings years, year in grove, which the part new that, as I growth improved strategy, results our have our will turn detailed industry to and pricing in citrus X.X With only the our in couple to of continued organic capitalize short long-term shareholders. a of planted positively in in pricing Rich we a on will to which is impacting investment has the results. our value time, over position the this expected improvement continue other encouraged to believe four are of This, acre. the financial past We're the under unlock addition begun begin million in citrus increase than our the to our to trees grove period more this years. call per rebound production to discuss care result already for best will we in and have density for after next the additional see While

Rich Rallo

Thank and morning, everyone. you, John, good

As and and the second flows everyone and again like the to the seasonality is earnings and would The of I harvested this typically in recognized quarters are call, of remind is our second fiscal our our well. second business. the of as crop citrus of of in profit majority cash the year, third majority quarters our third

first indicative the not the such, quarterly year of results. for results quarter are As our full

total for ended the quarter revenue to compared the Citrus the XX, to and period year in and previous from of $XX.X increase December due was ended year. revenue $XX was quarter in million primarily was quarters for services. the the million to $XX.X our $XX.X generating grove operating XX, revenue XXXX. the respectively, greater XXXX, For XXXX same million, in million period same December XXXX, revenue prior ended third-party December The XX, the us compared management fiscal

under of receive by harvest expenses incurred with earlier an third third call, record these parties on we these provide discussed to John for terms and approximately reimbursed acres Under a As caretaking owned affiliated caretaking acres this year fee in covered X,XXX grove services into citrus parties the home agreement. growth providing provide third agreement, both parties. to an management this based cost for the we and are management services, and revenues we these agreement management of group our entered we We by also services. when related and last

we recorded XXXX, XX, December ended the quarter including revenue, operating approximately first the fee. For million of $X.X management

reduced XXXX, we due orange XX, pound to fruit. solids the in turn, a quarter increased market of During our levels inventory saw and led along increase prices. price increase per the in and mid-season consumption December is the solids price in has, for increased ended supplies, with per which pound tighter not-from-concentrate juice, significant early The to

the Nielsen the by the not-from-concentrate XX-week in year. data, to orange the latest juice XX% XX-week reported similar DecemberXX, as period for prior consumption ended increased compared XXXX, period As

the consumption increase fruit harvest for We expect, significantly Valencia market based year. the also the will over on this the upcoming season prior that pricing of trends,

quarter the same box to solids XXXX, the XX, pound harvested compared per and in lower the were December year. For fewer ended prior period boxes were

the along current compared percentage we, harvested XXXX, greater and early as percentage December harvest to the with general, the compared estimated during While as period number recording our fruit measured to due prior a full of smaller year, a Florida are of harvested season our XX, as industry, previous of occurring year mid-season same drop mid-season the crop rate crop through in a year. the to greater of in we and a boxes early

third-party USDA crop indicates the decrease The prior the of anticipate prior forecast year. to in will XX% decline to to quarter decrease as for services. boxes to the year, was the in In million same The John orange management early per season down XXXX/'XX from The XXXX, or expenses their as resulting through the December addition, box. operating quality solids XX.X% increase this will range. compared the the to crop as mid-season the management anticipates XX% We, grove fruit XX decline. relates lower harvest earlier, the X.X by the in boxes, not internal majority in of boxes previous our year, forecast be and in in the for ended USDA mid-season grove approximately as is a our mentioned Florida program pound of relate a and strong the XX, crop in decrease comprehensive the period million will primarily early that million citrus boxes the XX.X

XX, quarter As approximately in of affiliated to previously agreement third group recorded $X.X stated, December XXXX. the these parties we to expenses of ended operating have million services an an provide and

harvested period. same full operating in harvesting to the XX, percentage ended percentage compared increase boxes total a leading in cost the larger as December of in the in greater XXXX, to year, the attributable Company of boxes prior the Additionally, to the to being the in sales for of the be period a to relation allocated expenses estimated is current season, costs to quarter

Other XXXX. relating from incurred the and the We December boxes also received $XXX,XXX which quarter offsetting as the be current the increase quarter no operating quarter to ended operations Income this and such, totaled as quarter was large planned the improvement harvest reduction quarter, December Florida of expenses XX, participants water XX, December relating retirement the to the several our ended compared the primarily Grant to ended reduction compared to sale approximately and quarter we XX, of XXXX, when and expense, us to decrease and Block and of assets on a ended senior to the future not parties as to sale Dispersed operations Alico gains net due early related for in December approximately equipment the part compared held $XXX,XXX of approximately in recorded of expense XX, in incurred improved XXX Company other quarter December Recovery leaving the and quarter plan plan $X.X longer land approximately net quarter due approximately December of income, our property program, this Project. during a our haul expenses mid-season Company December in XXXX. managers terminating Citrus Ranch result paying anticipate any XXXX. no the the $XXX,XXX of for The relating to and approximately primarily payroll approximately to other December the $X.X income one expenses, from net million XXXX. is this other December a harvested. for -- XX, conservation for decision the other deferred the was ended XXXX, of the in in each to And XX, out less estate, third ended ended a acres proceeds shift of XX, sale million Partially to was due reduction of segment net in for in expenses a other ended XXXX. million other pursue to for expenses to This December are the August to XX, management XXXX. $X.X under compared Storage to XX, the expense due for quarter The by the the pension benefit decrease expenses $X.X project. decrease resulting of and of is real Water from to do approximately XXXX, in from ended XXXX, million General expenses administrative income, million approximately a recording $X.X were XXXX,

the property on held of equipment gain and quarter only recorded for sale. December For ended XX, and XXXX, estate, sale assets a we nominal real the

realized, of principal in the of long-term expense Additionally, our reduction primarily was $XXX,XXX approximately of payments. mandatory resulting interest a reduction from debt because

December date, we $XX.X During Florida million under Citrus approximately ended of proceeds Recovery the program. relating to the $X.X quarter Program received Irma. To Grant XX, Block XXXX, million have this we under received approximately Hurricane additional

common For is to income the reported time. affirming net common fiscal at we XXXX. million $X.X guidance the for $XXX,XXX quarter Alico XX, attributable approximately approximately XXXX Alico XX, to fiscal year shareholders ended December of its compared stockholders Company The quarter attributable ended net XXXX, income to of December fiscal this

our as forward season, strong, will we Our we flow peak fiscal of cash XXXX. and we remains expect, stronger balance the sheet provide move into in

$XX.X representing XXXX, XX, September a ratio. X.XX:X at capital working was Our million,

steady a debt-to-equity improvement our experienced have we addition, in ratio. In

XXXX, Our to XXXX you were now December to debt-to-equity XX, and I fiscal John and X.X:X, would at back like pass discuss X.XX:X year outlook. XXXX respectively. XXXX ratio our to X.XX:X,

John Kiernan

Thanks, low-cost producer citrus States. Rich. leading of the growers is the Alico of the in and United high-quality, in largest citrus Florida, one

considering for fiscal XXXX. Alico thrives and will announced of affirming and carefully unlocking to additional we value decades to the are We impact of this managing year focus production prices to ensure our higher for on season, that previously come. the continue lower legacy shareholders controlling but guidance for our costs After the

management record our the operating into market Our continued well stringent a general confidence combination track result our of factors as insight is supporting expenses. and of for and administrative increased our as the prices of

to adjusted analysts. to to project the industry $X.X to million between million million $XX continue adjusted we and of from open EBITDA of between We $X.X EBITDA $XX.X million, million, income $XX million net up $XX net $XX Latonya? will And now income and with $X.X line and million. that, questions million

Operator

from Sweeney comes with [Operator Instructions] question ROTH Our Gerry first Capital.

Gerry Sweeney

mids out guidepost early of and was or bit in this in we about the size little year? start sort last we that early you potential sort this production first to first harvested from the quarter think quarter. in the combined of and Obviously, a harvest. quarter -- want mids I the If of the harvest. acres in the year, versus some just that that If more I and early, with a talked you the -- last harvest -- and just and of last the year range be you by quarter reduce would production this good to provided, the mids

John Kiernan

Rich?

Rich Rallo

Yes.

be would I would be early, fair would that So Gerry, say -- the mid assessment. a

Gerry Sweeney

then substantial how curious an do Got play third move mids? keep and mid some for? I And a was quarter, early the out we eye Valencia, How then And -- it. so pricing we as or some obviously, that pricing. think in pricing does looks very there, look to there's some the And good. to nuances early, which Valencia? XQ pricing, in had see things into I out and we forward the just the can compare potentially step-up as start in that to for I'm how at we how does may obviously, sure

Rich Rallo

Yes.

So Gerry, not-from-concentrate and to seen juice the as we've be orange consumption of mentioned, strong. continues

seen similar, So with don't respect be stronger have than in while that for mid what size. to will we we've little early, we pricing, trend a market not bit specifics, Valencia, the if this anticipate the

there's nothing anything that So here I as trend we would think, look forward, different. be that says

Gerry Sweeney

Got it.

John Kiernan

market and yet, increase a season that what prices higher the would mids for Valencia over will which but the season, Again, than were every indication harvest hasn't year. is last substantial early be prices be this started the

Gerry Sweeney

were should and Valencia early at When the and difference Or have mids as why as what gives Yes. drop, cetera. harvest. in fruit look more nearly as Can go acreage, decline the have well lower, you early more the the or et what versus on impacted as you you And Valencia like be that, confidence? less declined you your through sounds that felt side? much potentially the that provides confidence it mid state, some obviously, then confidence Florida not

John Kiernan

the under Rich. hopefully We all will that we that, constant every continue our and drop the saw off trend The season. monitoring -- I day, claim our of groves working early we're in believe taper inspection. take actually Valencia to support and it's is really that go I'll guess facts as we mids, the that, so into

financial So us at forecasted we this extrapolating levels our these current as results confidence season. lower drop gives out, that great for

Gerry Sweeney

one more is -- Are discussions me, sort on quantitative Any that and in I'll along? is you how of you you groves? other qualitative, jump Grove view provide with potential then back it. are Got how moving moving And that? in new for line. that -- in customers, management, can

John Kiernan

all grove They quantitative qualitative. Sure. discussed this selective would at going of have previously We've management meet that set criteria. to can customers. provide point. we we have we're any a don't It's to very be pretty potential to We stringent the on services

and than potential report are when it we on of don't we with we've be time likelihood we'll So having. profitable a it's But fiscal them. targets, in levels. I discussions that been in the will less discussions that there close But either dozen anything at do, are this active this to year. current at have several

Operator

turn At the more closing this there call questions comments. to Mr. the Kiernan no are I queue. like time, back in would to for John over

John Kiernan

for I and support Alico. our just your want for call everyone thank to today joining of

employees efforts a and you special it dedicated best their the Alico of management send to continued to the our can make to thank want be. rest I addition, our for In team

vote. year this call to for hosting quarter Our We we're Thursday, Thank look everybody encouraging mail in stays safe. second on in February will you. May. held in be our XX hope And earnings to proxy results shareholders forward their annual We strongly meeting another Tampa.

Operator

and Thank This you, conference. today's ladies gentlemen. concludes

You time, lines disconnect at participation. for may and your thank you this your

Alico (ALCO) 5 Feb 212021 Q1 Earnings call transcript