ALCO - Earnings call transcript Q2 2021

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Operator

Welcome to Alico's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode.

As a reminder, today's conference is being recorded. Earlier today, the Company issued a press release announcing its results for the second quarter ended March 31, 2021.

If you've not had a chance to view the release, it is available on the industrial relations portion of the Company's website at alicoinc.com. webcast, as replay well. being on be is website Alico's call and will a available This

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

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

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

John Kiernan

have weeks, expect increase a season's pricing harvesting continued both a low increase of of consumption from retail entire from the in commenced the Pricing fruit solid for March consumers a consumption tighter pound thank crop that everyone, the a and $X still orange and box not and of USDA by to in The fruit estimates the supplies solid, We since as by by as pandemic is compared have mid-season decrease the experience approximate encouraged per Debbie, season with continued similar a pound this the throughout juice harvest. Florida and orange industry We're you, concentrate of year for compared in for by Thank double at an morning. year remain but early to harvest finished per than the current Quarter both increased for type more of as driven strongly of ago, process the pricing Valencia continued the year. of for production Alico's XXXX citrus of season The the has as the joining in continued more Florida Valencia along few you, increase XXXX XX.X% us Second We Call and and citrus orange juice crop prior Brazil, end. concentrate mid-season outbreak Florida, citrus The season. prior $X.XX harvest price from early from Earnings total decline not then. was market to the prices fruit crop with range. the in the well last higher the now which in Mexico.

we While anticipate the we as a steep to as be also expecting are estimate. it decline, USDA's don't

respect to in improvements to to months XXXX. with With us growing these and fiscal costs administrative has which X.X our the our decline expect costs, to allowed we of through in first to We XX%, million maintain be and production stringent year continue six range costs the realize general falling approximately to XX% controls, boxes. production of

will as November maturity be XXXX, modified the due balance today to MetLife a in term be loans our we of fixed or in we on rate May earlier will press only to and fixed highlights, release, had a X, balloon of payment business until when our that the be Moving XXXX, interest-bearing refinanced. announced balance principal with

the approximately rate also these incurred prior from prepaid to penalties April penalty, $XX.X to In executing $XX modification, we modify no annual XXXX, fees, Only our but reduced were reducing on loans. modification, the debt nominal interest this we million. balance X.XX%. this X.XX% to principal million of part without As to

debt for to net prepay service million X,XXX taxes modifications of used land principal the to approximately loans of reduce $X acres and these term The MetLife to Florida announced expect sale between of We the million. these of were before $XX.X through month, million fixed the portion $X funds the was ranch completed State balance of our fixed we a annually. XXXX. previously Last

variable which, our term annually. the proceeds these adjacent Over the tax when farmland modifications adjacent assets is million final we debt as terms, proceeds. $X.X made, the already of After annual there farmland the loan in more Alico sales same million announced approximately sell than the of is the than of pending $XX.X retire approximately we XX,XXX land with cash close, ranch XX,XXX and the have Once XX transactions the loans, sold rate years, in remaining $XX will once these of acres to for rate Earlier fixed sale to release completed. our the four be Cash also past be to improve in other are increase will in flow balance XX,XXX to much today expected the near-term under sold. acres sell million expected acres XX,XXX and or parties. proposed noncore modified term as Waco ranch of more to combined acres by from press asset announcing to of subsequent are of substantially approximately ranch negotiations Waco that contract and flow additional different impact

through dividend. Since should from $X.XX our along of term another remain capital these common dividend quarterly XXXX, increasing components tripled fiscal to has year share a its fixed Following with transactions, a which $X.XX matures September Company loan, quarterly history in our repaying XXXX, has a the share. XXXX. The structure debt of

modifications sales board proceeds the land significantly support feels and Our pending that debt prepayments a earlier directors higher discussed the of from confident could and dividend.

still have acquisitions, to or special closed. of dividends Alico enable in the be Alico repurchase believe We any tree make million dividend XXXX. our opportunities pursue by XXXX, at our additional transactions other to to citrus density have since level and any not acres overall citrus fiscal increases tree groves. planting will those looking to policy even approximately substantially attrition dividend be at until sales our there consider new continued will attractive prices, trees policy of of to However, common change as future to our X.X has that of This acquire the need will shares, most realized. end planted the of our plantings, increased asset rate exceeded In quarterly

Company's plan number of of density individual levels XXX,XXX While trees, to fiscal we between evaluate tree decrease the to X an our The at million citrus annual $X expenditures of by is approximate trees. tree XXX,XXX to are and cash could believe reduce plantings total we estimate million. to XXXX continue which reduction approximately the maintenance plantings meet therefore the attrition investment in required capital density our we $X.X the approximately optimal groves, approaching to and among maximum annual

was four season. lower these the X.X our level the mature typically portion With plantings of costs they'll XX last planting at trees growing accelerated we our after seven and a production realize take and or to seasons, plantings, boxes we trees from return and eight level our plantings production will harvested. million instead fruit reach Company's year approximately starting years. to generate million approximately capitalized, approximately in level XXXX. over to the that over potential of meaningful tree the smaller years harvest production believe company the we in years, last annual last Citrus citrus the anticipate be by is four planted our With be usually production long-term to tree fiscal the four when have experienced after each XXXX However, in increased the expensed of

acres reimbursed all approximately of fees based annual and contributes million discuss costs management is management into third-party for performing fee to citrus with more XXXX, an receives we than services. on with Lastly, is a our X,XXX top will caretaking provide well This of citrus grove now its $X.X I July grower out-of-pocket managed. an annually. Alico services. business line agreement XX In entered acres in citrus and

increase We turn our fiscal XXXX. call Rich caretaking the to discuss I'll year, CFO, more services beginning large each pursue to believe for substantially and management are line to business we Rallo, other that, financial detailed With in our this continuing similar over can third-party growers of results.

Rich Rallo

Thank you, and John, everyone. morning, good

flows business calls, the third quarters seasonal, is cash our majority also is in harvested our third year and quarters. second recognized and As of the majority our crop previous second the mentioned of with fiscal the citrus of on profits and and in the

services second compared XXXX and of not the are operating million quarter the year XX, in was respectively. revenues the $XX.X March XXXX. quarter months from generated such, XXXX generated The the March management We year full $XX.X agreement ended for quarter results million XXXX, for entered XX, provide from $XX.X ended March quarterly quarters three In into July same X,XXX our for XX, we revenue and XXXX grove to the our the harvested. provided revenue an XXXX, management these primarily compared March the we services prior greater period was fruit Valencia results. for our and As to Total to ended the for in revenues March XX, to increase to parties. an grove the revenue $XX.X ended indicative third over for million acres. were XX, in services Citrus increase the million due

we record increase call, both we expenses in provide management revenues an mentioned when services. our As previous on these earnings and grove

approximately increase March the agreement, solids been the For harvest solid ended increased in compared under an this supply. months price being as Valencia for the to XX, operating relating XX, offsetting pound box the harvested The revenues recorded increase months XXXX. pricing of including XX, and in as Partially months management to $X.X the ended from services, fewer the increase per this tighter we three as inventory three revenue boxes well per result pound Valencia fee. three consumption is XXXX, driven these by management ended March grove March million a being market of lower in fruit has XXXX

previous we of drop during greater prior the as harvest percentage fruit as our the result a percentage crop, March a in year rate to of compared measured have recording are number full year, the Valencia a of a of our harvested we greater XXXX same While compared crop period boxes through of to a as smaller season Valencia as estimated the year. XX, current harvested

In its boxes decrease year indicated XXXX-'XX crop the to a that the approximately boxes million XX.X%. addition, for year, solids USDA has The year, in pound fruit the as April per quality its forecast as strong X, not the citrus the resulting it decrease crop was is crop XXXX-'XX million XX.X internal in harvest the XXXX-'XX in for Florida previous approximately for expectation will season from the lower crop been box. of orange XXXX XX.X of

earlier operating XX, mentioned John, the to of three less As decline XX% forecasted for management ended months by the to March the months primarily range XX, our be March expenses services. XXXX ended grove Alico's XX%, anticipate in increase by that is we USDA. which substantially the XXXX will to three relates than compared as in The

into As months previously million services in of stated, July X,XXX XXXX $X.X approximately we than XXXX. more the three for XX, to recorded operating acres entered provide an ended agreement March and these of in expenses

three of was of quarter XXXX, expenses Additionally, $X in and in January and expense plan year. of a decrease in The million these retirement the administrative is expenses to Company related result approximately Alico were decrease terminating March XXXX in the resulting to $X.X reduction these and October $XXX,XXX reduction recorded options March stock attributable approximately due respectively. groves XX, part citrus certain operating quarter, haul and whereby expense vested fiscal expense in corporate the and of out in in a and the stock fees deferred compensation offsetting net ended in to as matters. May of estate, participants $XXX,XXX income real to each of a large decrease increases that current operating March XXXX approximately pension approximately plan a $X.X of plan that this XXXX, ended the and XXXX. other Alico's pertaining of March the months compared is to approximately related Company General March the ended boxes $XXX,XXX XXXX. the relating an reduction net such the in increase net $XXX,XXX $X.X XXXX. in other offsetting approximately acceleration other expense in XXXX, a reduction benefit acres Other million, relating $X,XXX,XXX, in expenses was XX, of shift the and additional corporate months expenses fees purchasing to to was for we harvest in due harvested. three to primarily Partially XX, incurring recognizing million the expenses ended for for three XX, other to income and of other XX, in of income for approximately March approximately ended XXXX Alico of Partially was in paying sale property, net a a and sale to legal from equipment August months months advisory SEC assets three other helped million XX, expense The the as

months three a recorded the sale estate, for March loss For ended XXXX, we property, assets sale. and real XX, on and of equipment nominal held

principal of payments. approximately Additionally, months XX, the a of ended months ended XXXX reduction expense decrease resulting primarily three was three $XXX,XXX for as March the March of compared debt the in interest long-term realized mandatory XXXX because XX, from to

reported attributed common respectively. approximately XXXX ended March we $X.X net For of million, the stockholders and million approximately income XXXX, and March Alico XX, to $X.X quarter XX,

projection is adjusting million. of $XX close our for fiscal them are Fiscal fiscal box that September this land and anticipated out of and updating to XXXX $XX.X adjusted the million to The and items and the for expected land is the million. from approximately between increase pending year last $XX other to between income million $XX $X.X initial targeted and nonrecurring and net year the sales XXXX of projection $X.X $XX its XXXX. million to projection reflect transactions ended to million $XX increase projecting to of $X.X to the of significantly initial between now $X.X initial the between decrease year guidance to million, from certain and are Florida month between $XX.X initial The is Fiscal is of of to items million million $XX.X season, projecting adjusted of million ranch We after between ranch net Company expected million Company $XX million projection expected million lower sale production EBITDA, $X.X XX, EBITDA State and before the $XX certain income its end million. to $XX.X its $XX.X expected nonrecurring adjusting strength continues year decrease sheet. million after and balance out between XXXX to financial demonstrate million. again, Alico the to million within of from

capital a million working at March Our than XX, approximately representing ratio. was XXXX, better $XX.X X:X

XX, XX, September X.XX:X.XX, XXXX, debt solid the XXXX, equity respectively. ratio. to ratios continue XXXX, X.XX:X.XX, We to At a maintain X.XX:X.XX, March and and September XX, were

equity $XX.X Additionally, back we you on million which pass approximately I made a improve term will our fixed prepayment loans, our to further rate of will ratio. overall debt John. now to

John Kiernan

up the to questions land to in now are over that, make We've continued progress Thanks, principle year, shareholders. selling our or which process reduced of sales acres rate XX.X, sold headway, greater debt, of by generate the industry initiatives, we analysts. line we'll will far our this year and modified operational open approximately Debbie? for Rich. great of have the With believe We debt fixed our expenses. our our made so term the executing of terms noncore XX,XXX returns favorably reducing this on our from

Operator

session. We with question Capital. first will now [Operator begin the Instructions] Sweeney ROTH comes question-and-answer from Our Gerry

Gerry Sweeney

pricing, Quick John. question on

we third pricing is variability just go pricing as potential do any you I more mentioned up but think that into the That could move we'll was range, prepared $X, industry was I pricing forward? anticipate it, as You year. assume change But of But in believe. from $X we all quarter, I or variability the this and last two over didn't remarks importantly, move that there the year pricing, that? in to catch staying to we about questions. $X or or

John Kiernan

Sure.

we and I February. think fruit, So mid-season in for that that up was already the harvested, wrapped early

number and that So stated that we clearly the is done. locked for

a it our of think season you are right We contracts be contracts as than substantially we higher announced kind remaining with we back on to able do haven't in the that more prices Valencias some gave and hold. pricing three kind we into last going up for really might substantially to was little higher you guidance that four coming it's that, which or season specifics the of light where of but negotiated is of out. we the in to the weeks definitely new be market well, other get claims We go can that part now that

Gerry Sweeney

do it. Got generally mids? a And the Valencias higher carry price Correct? than early to the

John Kiernan

They do.

Gerry Sweeney

Okay.

John Kiernan

So it's $X.X typically. $X.X higher, to

Gerry Sweeney

$X.X to $X.X?

John Kiernan

Typically, and yes. Than early yes. the mid-season,

Gerry Sweeney

years, was the I what was obviously, as that. several mentioned, said Yes, appreciate got double-check to it. want little the helpful. it year, of in No, million you each last X.X a believe, Got Beginning, touch then more curve? trees a bell pace those it. XXXX, that's it and I Just bit planted. to was you amount of And Just our upon that. model, a to or plantings? similar wanted

John Kiernan

graph Sure. you up, it we'll what that investor in around if did XXX,XXX-plus our those Most some years, 'XX, that of pull We 'XX, was talk of and actually we presentations. Rich, 'XX. trees. 'XX, in about want to

Gerry Sweeney

Okay.

John Kiernan

Rich?

Rich Rallo

Yes.

John Kiernan

pull can I okay. too. yes, it up, But

Rich Rallo

Okay. Yes.

XXXX, in pretty then and to Gerry, give take and over that. bit just So subsequent, XXX,XXX we XXX,XXX, it moved subsequent a to much little was

Gerry Sweeney

Got four the years, it. production. kind four three Is then of bearing, mature and years the. over to fruit And to next full they then

John Kiernan

Right.

Gerry Sweeney

Got it.

John Kiernan

correct. is That

Gerry Sweeney

comments that. confirm to you not know it's more we remain end there. it. wanted you And they it? fiscal But think difficult Got a back XX many this year, just little final you out complete it. just how but Do have or some down. I a made. produce the can into I but transactions to of when curious.There's maybe so will that timing. by nail And believe of by a those question, Got of open-ended, then then trees little the I bit sense

John Kiernan

end and of be they're going to staggered between September. Yes, the now

then June, see would of be remainder should handful and the the in later we a than September. summer, no the rest So

Gerry Sweeney

it's is value The years? quality, other say it. land remains, as location, that I sales in fair Is Got compared the final similar several of acres. some last land to XX,XXX the think that you've it made to

John Kiernan

Yes.

real for fair two very than was interest are say. that's higher strong Florida to is land we're open estate. ago, Prices and years that it think in even substantially I it's ranch strong. clearly holding, The

was parcels strong. property day there week. times So and a I just interest ago, or out showing a remains of we're a couple the actually so

of rush that not whatsoever conservation assets. good for So we're we'd opportunistically kind kind a support we really have do remain see out entertaining in buyers to years. of movement to hands of focus, all these and want because any that care that as have prices offers. XXX dispose done in to friendly the We're for of stewards, just We're holding take ESG for love it as

Gerry Sweeney

it. Got

demand the for lots So of land.

So you're obviously. sell it, to not pressed

John Kiernan

Correct, correct.

Gerry Sweeney

Great. I for it. appreciate That's really Got it. it me.

John Kiernan

Gerry. you, Thank

Rich Rallo

you. Thank

Operator

over We closing to end reached answer call the to have Kiernan of would today's for Mr. the like I back and question session. turn any remarks.

John Kiernan

disclosed the you, for just our your thank quarter Thank are Thank want answer August. about you results day, you call available all today and We third information Alico. additional look joining speaking very of can we public and and if today. everyone Debbie. support with one-on-one going I to much. about questions, we any all there's I again to forward in our also of forward, for Rich

Operator

This today's conference. concludes

You and great this lines have may time. for disconnect your day. you a your Thank at participation

Alico (ALCO) 8 May 212021 Q2 Earnings call transcript