ALCO - Earnings call transcript Q3 2021

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Operator

Welcome to Alico's Third 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 third quarter ended June 30, 2021.

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

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

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

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

John Kiernan

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

season. in past As per to solids there pound citrus high trees for been a principally fewer drop related citrus very past saw as we've product available from this quarters, Florida and standpoint. the that reported production the the this in of average decrease as an challenging was a a over being pieces fruit well on rate has several year production for We Alico

XX.X% season. production this Our decline harvested was in past

harvest was latest for as of lower season substantially XX.X% current compared crop orange USDA decline decline forecast for the to year. the the this prior However, the total a than

increase early fruit and the past a pricing mid-season we positive in see season. for substantial the On Valencia of side, market did for both

due well-publicized retail prices in used of supply year. orange declines grow in decreased season. March marketing the to fruit did increase citrus for production levels in thus to pound largely the the revenues for XXXX, fiscal consumption resulted in in by increase increase is which The past So despite solids not-from-concentrate juice our consumers processors at helped this inventory since and Florida pricing of

per fiscal Our in year prior blended the average increase $X.XX fiscal an realized the price year, rose solid to pound $X.XX in XX.X%. current of from

now, normal and reduce consumption We remaining are orange strong inventories of juice right levels. processor further than lower at encouraged is because not-from-concentrate are

next Citrus purchased we In gross citrus or So with covering should believe we in October that agreements Peace XXXX. entered and May recent near Products, prices year above remain of levels. citrus acres, X,XXX new market we June River XXXX, supply into which

fruit for XXXX of under contracts the contract is approximately competitive These realize the our latest XXXX margins continue to largest seasons, to With the with XX% and through contract will XXXX enable season. Company agreements, the their through these harvest supply under portion duration. being harvest

out backing growing of manage and third-party expectations. after line our caretaking our services. and closely remain with costs our XXXX budget administrative and our and these nonrecurring management year, onetime to expenses, continue general costs, proud been fiscal items, we've We in In

has fees. annual and X,XXX million managed. We with in year, us risk reimbursed on with close a line both as entered We Florida our receive third-party out-of-pocket all who This citrus engaged acres $X been of a than this will an for based minimal have fee contribute caretaking for management we financial more for we now net are to into services costs than grower, and parties. has profitable acres, been year more citrus business top relationship XX the to

of business beginning believe and We other this in line XXXX. with arrangements fiscal that can similar substantially continue growers annually large pursue increase to we

Moving future that and measures our returns. we on highlights. will current believe to third business improve several the shareholder implemented In we quarter, our

we of mature two November Some interest-only completed debt loans included: of loans, XXXX, actions which amortizing XXXX. in in these our into of May successfully which modification we converted in

this per modification, we reduced from of approved rate $X.XX cash to previously. of this June our will interest raising per $X modification X.XX%. to X.XX% annual on to our dividend, from part Directors $X improve million. As also quarterly increase In considerable a common common our XXXX, annual share by it approximately flow $X.XX This share Board to debt million

significantly the ranch common assets to quarter, of XXXX. attractive the various sales, maximize the land, XX,XXX maintain restriction that third shares, acres land selling of at we these in our Florida the the felt an In Our by Alico of sold repurchasing now parcels planted and program upcoming and third of approximately citrus debt highlighted four debt support or term none from additional shareholder prepaying million of higher Directors sales of we as through of assets which sale the be acreage from and restricted. financial and/or common of special since over harvest other trees continued, from rate benefits the After dividend. encumbered easement from acres be future business seasons either Alico as returns will have to our by will prices, sales approximately still well to dividends. we acres by last state variable ranch new acquisitions land Net another been penalties, paying proceeds to years, diversifying without used acquiring noncore XX,XXX sale expected is the XX,XXX X.X Board encumbered had the with able the proceeds Alico modifications, the which parties, approximately

page. most participating forward our We initiatives formed future corporate and activities. is website to the also Alico with a We've and environmental, social completed sustainability on UN and safety the to page governance anticorruption. on sustainability principles policy, code joined a now We a have universal responsibility, recently labor to support Company's that rights and Board materiality Global launched environmental a also a which and in framework developed human a manual and initiatives. We committee, vendor ESG of guide ESG Compact continued move published these sustainability of assessment new a sustainability actively conduct, sustainability

As ESG by of we seen actions, result our institutional services. these in scores shareholder a improvements have some

We of are of discuss more final stages I financial turn over the also annual in anticipate Rallo call sustainability detailed Rich completing With the X-year report and to initial our December results. to our will that, our completing map by road sustainability XXXX.

Rich Rallo

majority parties for crop in an the the group is and primarily quarters. and third for the services ended second indicative results. June revenue generated ended primarily fiscal months John, XX, majority of for the with quarters second year, three cash third XXXX. our seasonal in XX, ended the $XX.X July June quarters third management third ended the the flows the $XX.X compared our the harvested agreement as also quarter quarter and June with to services $XX.X you, Interest nature home owned executing management June quarterly of growth XXXX, due result Total for growth our harvested. to of million an the parties. affiliated million such the morning, caretaking XXXX, We recognized services grove of million ended of of from not citrus in XXXX for and XX, revenue good a in citrus XX, XXXX, approximately Thank X,XXX June in operating profit months three business, XXXX, Due full revenue year results The was our respectively. and are and generated revenue everyone. and quarter from The XX, to of the an XXXX, to and was revenue million was XX, June the greater third compared acres to harvest Valencia $XX.X for management and provide increase increase fruit by our

in increase a provides the records reminder, and services. grove expenses as when Alico these Company As revenues and both management an

For year. an fruit the Alico increase The these market revenue of compared to ended XXXX, services, Valencia June price three including prior the to per from months relating management pound the million management sold the harvest approximately its was increase in grove operating as fee. driven by recorded $X.X XX,

orange sold XXXX. box mentioned juice three well pricing citrus XXXX, more USDA XX.X number continued crop turn of drop ended of compared ended being for recorded XX, in for compared boxes and led increased harvested this fewer of as per to to previous months our harvest XX, increase In program, lower decreased primarily XXXX/'XX greater decline management June June with in per three to June comprehensive as John, sold through approximately in effect along season As to the the the a boxes increase which the of the June the we comparison, Partially current the reduced XX.X%. months as forecast inventory due harvested Alico, the latest months for season to ended for XXXX, and Florida during the relates ended primarily in pound harvest XX.X%. smaller current XX, in services. fruit, expenses by to because for a fruit million was in pound a grove grove to supplies the Florida three management citrus earlier from three approximately crop of operating million crop favorable harvest general, XXXX/'XX the months year XXXX/'XX of orange the compared not-from-concentrate a the price managed the XXXX, of tighter XX, The boxes decrease crop offsetting season as year, consumption XX.X increase the approximately boxes year. was levels. its Valencia indicated industry,

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

and boxes Additionally, in offsetting June harvest and the XX, the relating and additional sales million million, of for purchasing respectively. of legal these due to other of acres receipt increase other three a Other for the quarter income income million to in the insurance $X.X XXXX. to year. Valencia gain for May October and of decrease equipment quarter ended a and net groves corporate which Alico XX, is large a expense June a of for other net three other XX, resulted in $XXX,XXX to June due $X.X current and XX, proceeds expense ended June compared $X.X fiscal $XX.X fees in million on XX, shift of these was XXXX, the reimbursement the net property matters. and ended expenses in significant during real approximately XX, The reduction part from of sales amount was XXXX. and $XX.X administrative General attributable as in decrease was expenses ended harvested. The is XXXX, citrus the of primarily haul approximately of relating increases for in approximately approximately from the in was to recognizing June other months attributable legal to resulting mid-season to million and held expense three legal income of net early in assets the months XXXX, June the reduction the months Partially cost estate, sale for operating to approximately expenses Alico ended XXXX, expenses XXXX,

For equipment XXXX, months sale and XX, Company the estate, and assets June property a the for held gain of real sale. recorded nominal three ended on

a long-term expense June June principal as to the months Additionally, three ended and XX, to prepayments. approximately of the XXXX, a in ended primarily our for making compared interest reduction mandatory decrease certain payments was from months XXXX, due debt realized three of XX, $XXX,XXX

we balances expense. of lower working credits, revolving to also capital and on reduced the line our maintained contributed In interest addition, which

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

XX, to previously the income $X.X Our financial quarter guidance, adjusted in to XXXX, respect the range to to This $XX net year for $XX we ended to million, adjusted and reaffirming $XX certain after calls was for fiscal million of expected the increase. the million and $XX.X our of million. strong. out EBITDA representing are balance Alico's remained between $X.X gain compared quarter to million, $X.X adjusting to guidance net to September updated guidance for out between of after With our of adjusting $X.X sheet million the $XX.X be nonrecurring June -- be EBITDA be June items certain a be after million million a ended range XXXX. the XX.X% XXXX, in $XX.X million EBITDA as income items again million and for for XX, nonrecurring expected for adjusted ended XX, the

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

September prepayments This XXXX, by XX, were has June X.XX:X, been At improve. on respectively. continued mandatory XXXX, the XXXX, to XX, improvement continues and ratio debt-to-equity Our payments term debt driven would back approximately including well as and in John. as XX, now ratios X.XX:X certain XXXX September long-term X.XX:X, $XX.X our April loans. the rate our call made, I to being pass fixed to on million like

John Kiernan

Rich. Thanks,

made quarterly we for our business During long-term sell such dividend, which continuing returns our and debt believe shareholders. structure modifying significantly decisions our generate greater quarter, we third the assets, increasing noncore will as off to

flow, continue we As evaluate line we questions analysts. now Katie? shareholder deploy to the we'll ways it the generate up to continue that, industry returns. to continue to open cash will to best to And with drive from

Operator

question Sweeney [Operator We'll from take a Instructions] Capital. ROTH Gerry with

Gerard Sweeney

producer the discuss harvest oranges, the drought. largest environment. is for Since you this through significant Brazil, going done pretty a maybe lot and take a year, of Obviously, maybe could opportunity the macro of

grower versus this up is this sort next XX% last field Any the think how in playing comments down inventories are year. on year Florida from of for time thoughts, I XX%, this setting year?

John Kiernan

Not next just year.

was to near a think affecting you're is it I it's year. little you base. expected just to of this impacts historically There that's but the higher weather be related seeing is past from some got Florida some be I lower going a that able boxes in basically a clearly be fruit drop conditions next normally the to greening a weather had, The think, where than produced. like crop their you And supply related They've contraction bad obviously some output million saw drought Brazil to season year-over-year, term, was forecast. rate. XX.X then and the

shrunk. supply base the So clearly has

clearly above at COVID it's levels bit, erode year of it's The to steady. this during pre-COVID other demand is somewhat demand side that well it's the holding Most a on and rebounded the going side the likely point. but

that Well, Alico position does investing density the has significantly Alico? where So in been our growth. of

trees fruit a starting been fruit going more than its solidify here generate because season. market anybody, the more we're ago stronger have both Those just to years investments four leadership and four to to investments. our and we of we've we relative Alico as because -- And going ago than to grower planting. Brazil, to bearing we is believe is position position simply aggressively years been So did are trees those as because now we've next continue increase competition, trees than in share we going or think actually making strong greater forward. And

Gerard Sweeney

year. now, Okay. Got it. think, Switching good gears to care taking, obviously, it's for been in solid I place a

You lies for maybe grow business. think, that in potentially savings explain business? sound your to and the pretty some confident grower to on of selling that you could present you the I other that have that process terms of you -- in opportunity, Do that cost some ability metrics

John Kiernan

in. I'll start jump then and Rich will

all customer not, They have with really some where we the we go them at basically to criteria. basically could down conduct save It's that some is dollar by think I for employees the it's their conferences. new under operation. of much adjacent But to really Alico going we've walked kind able a get supervisors to if through board on we're end own caretaking likely. task. roof, become of Almost a managers we've potential think labor We better even fertilizer, enough business they employees. And with for a incremental or most and a for through, be line we've an enough just kind of business. for getting fully We show take practices. it our so. partners what fee walked work step scale. I from be think dollar sounds it really discussed experienced we selective their existing additional got it's investor going We to as of profitable businesses. or on financial do is have is often off. and get and to always, daunting chemicals, with we and very to fee Collier fuel, past And We're of kind were And of on starts If more that of they you over those and where economies information at operations large our We that's how than is and scale that critical side, do mass can its horticulture to as management business. of with because be somewhat we And to we economically their are, them of a thumb take has our line in what more is and stepping Because in got sizable board. our the conduct we it and going we're and and look reimbursed like prospective we They little win-win. run someone be end. as where costs. compare we top sit year They're meet kind Barron the really them. the rule going cost competitive a worse to management

So that data that that we're little discipline work anything proposition value it's those have, But a that's corporate when and create and to to instill customer in that with us. are and talking, often core going able than from drive office leverage customers have a to we for there? not looser our practices. add back we're Rich, we what our certainly, a And customers. structures get to the the that's sitting and than we cost bigger little probably that a more not,

Rich Rallo

John. No,

you it. think I covered

through go cost. I with the John partners Gerry, about, talked report of things, on to think and our one sit we

partners did and fact, and in the program. the we very will and that one we be our know really of at do as very our see 'XX, that we strong has You And going get modernization at a successful through during now work program year to it and with looked low-cost our I here, through that been it. we partnership go is are, can add XXXX producers together solid.

beneficial. be turned has it both to really very So sides out from

Gerard Sweeney

pipeline? Got to you that there, do look in front. as I'm that it. out Any on at curious -- just can And -- there's your much program. on on obviously, you much in commentary was see this projections you're the it. as you're leads selling as grow how front, confidence this that can say about we There

John Kiernan

of talking to relatively long customers, to at handful usually, season. So specific can't detail. short a lead season time. a list and it we're we is given prospective And a there's time any But go any into more particularly

a of I be said a we're a acres customers, smaller thousands as to business acres about just As rolling to time a to up this thousands previously, acres announce kind opposed there. win and of since here a lumpy tends talking few and few at

Gerard Sweeney

me, for good question final very and Then I'll line. back this past jump Land it. Got sales been year. obviously in

Forever, have remained that the I You Florida all to you've -- taken have acres. but land at highlight great mean, as XX,XXX importantly care

is anymore. been wetlands past that All is in Does proposition remaining value what or this the versus of discussed versus it the change discussed of unencumbered you've what it past? has the of none and land in land that

John Kiernan

Sure.

or estimates the in The were I that management there. that investor we've was we've historically, previously, easement was given think said ranges asset XX,XXX factored value, As potentially on acres that in realizable. potential ranch when win we've the under net hypothetical our presentations restricted discussed

He it great the well, had going range average to that do cattle now that been the of for a we've previously the that remaining XXX put price stated restricted that good of price or in land it keep property. to so. same had in condition kind think average lower we is picture. point. We really years out those land use is a to because last to going very trying the With we the of knows be a for and going very, So have than we've XX,XXX significantly taken acres the with the pristine do we to grazer higher job that he's hands and acres

Operator

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

John Kiernan

today forward Thank you, much. you, we end call with and in results Alico. today you for to about our fiscal thank look quarter again our appreciate support very speaking of December. for joining year And our everyone, fourth and your We and your time

Operator

conference. This concludes today's

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

John Kiernan	President and CEO
Rich Rallo	CFO
Gerry Sweeney	ROTH Capital

Alico (ALCO) 7 Aug 212021 Q3 Earnings call transcript