ALCO - Earnings call transcript Q4 2021

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Operator

Welcome to Alico’s Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference is being recorded. Earlier today, the company issued a press release announcing its results for the fourth quarter and full year ended September 30, 2021.

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

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

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

the would ahead. company’s that, and release today. information With to company’s to Kiernan. earlier like Please press for go For on more these to – issued I the details Mr. John President the more call turn CEO, over measures, refer please

John Kiernan

per adjusted everyone prior XX% a you, market largely control to over Alico’s items. year of you our rate over due and Thank prior as over expenses, in morning. us and achieved this These XXXX. drop in year. our quality pound throughout the call in are Market specifically, as and earnings XX, Overall, fruit which to the year juice and general quarter for management not financial production year previous non-recurring fruit EBITDA strong XXXX this fiscal steady of administrative prices, the box due the increasing in improved increased we for our expansion continued stringent past significant season year. increase of Florida result fiscal results or consumption box when declined the caretaking fiscal orange pleased the year and fourth not-from-concentrate Rob our were disappointments as ended and We the prices year significantly for the XXXX being the initiative by with higher September thank citrus for our excluding solids despite the the results approximately X% expenses, joining average saw fiscal

As of than in well lower Brazil recognize grown as normal level as fruit improved with juice and or lower of a orange consumption, citrus that of season levels. Florida Mexico, quantities inventories in last process result were current for not-from-concentrate this at we combined

year XXXX. trends encouraged consumption data XXXX are of year Nielsen and consumption orange for continuing remain latest levels and that we is to now demand We shows not-from-concentrate strong and supplies, consumption these in Based the on market XXXX seen will in fiscal those local at consisted fiscal of juice last prices year the should fiscal believe global we near the XXXX/XX with actions recorded harvest improved we financial shareholder significant These improve in executed following. season. remain throughout results, or future our there above Along other were for the believe returns. the that actions

our flow debt, dividend modification improves balance two $X million This term reflects business Our per increase per Board in continued annual to support XXXX. raising level We from by considerable financial our $X.XX continue our million. converting $X.XX fixed this foreseeable November dividend, $X that strategy improved which a strength it future. in to rate into by successfully confidence our share. believe approximately mature Board’s this increase for sheet Directors common will loans the amortizing to interest-only increased our quarterly and common of We approved share latest cash will

which the $XX debt. fixed on prepayment of loans term our We this to repaid million modification, also Additionally, million able tranche debt, part included rate interest our to of X.XX% we for that prior were reduce from of to rate approximately a as X.XX% $XX.X debt modification. of

improved have debt-to-equity we year September It our ago. from of X.XX:X XX, X.XX:X. ratio XXXX, a was As

Over have state the sale $XX a approximately principal approximately acquired to We to which by balances payments defer past new gain maintained X,XXX from having acquired the us further our citrus planted made investment for this debt of acres years, ranch to covering million density of into of citrus years back existing close We May our were have are to purchased and of supply from trees grove will flow Peace and at our using acquisition, million. previous come. this which $X Florida, acres positive proceeds that XX%, the reduced sale. citrus almost making the of gross Citrus operations XXXX. with us of economies and in in to we X Since agreements location citrus entered River and increase over that Products to enabled land scale its allowing leverage office. is well groves, generate XXX,XXX confident cash acres These this we gross X,XXX October

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

which off flow, at generate our for to to ranch rates continue evaluate non-citrus cash return and We premium our land assets improves of sold investors. opportunistically prices

ranch proceeds production approximately assets prices, approximately business on for acres other diversifying and/or we potential acquisitions sale anticipated million acres to have X,XXX from acres closed attractive trees acres land of prepaying ranch tree million of During Forever continues dividends. for the an now under still X Net of million XX,XXX for additional of special approximately new in fiscal approximately them XX Most at XX,XXX the last level. paying the We citrus trees Alico buyers those program, sale the in and and believe have production have be XXX,XXX fiscal plantings interest land. Florida making Florida from with to an from be years variable X.X planted term over XX,XXX approximately high. we potential We week, XXXX repurchasing shares, penalties, year maximize expected our the sale since the approximately shareholder planting we has without closed with XXXX. returns to to acres rate through return aggregate XXXX by of historic enable additional the strategy state own XXXX, our our we of to first long-term used program last sales planted year $X.X of debt either to completed the the the common acquiring year close this recently, We under of acres. fiscal future box box actually, this will fourth sale

continued have our with also move initiatives. We to governance and social forward environmental,

framework launched a Board a company’s website, previously materiality on we which human As inform assessment formed responsibility, and a corporate sustainability guide activities; safety helped and joined and includes rights universal Compact our sustainability manual; sustainability communicated, conduct a principles Global of that to labor ESG the of environmental UN the support have page anticorruption. code completed and future policy, sustainability committee to vendor

report, inaugural We to stages sustainability completing which our this of week. plan are in final later also we the publish annual

I guidance. above asset guidance turn year improved million of to – sales between as $X.X and net guidance as to look items income to-date. million. gains net revise more we compared only The $XX.X between are adjusted financial after certain after event With be who to from is between items expected are be to company’s Rich? $XX.X million million $XX.X above decide is detailed is $XX.X Adjusted gains Rich discuss estimates in to be adjusting adjusting to fiscal the certain transactions $X.X and ahead EBITDA and asset million. any the fiscal reflects million. Rallo, Net guidance results. between additional that closed expected results. year that, The million and projected EBITDA projected realized, over XXXX to $XX our million Alico on EBITDA the for non-recurring adjusted call that sales for for includes be providing adjusted sales to financial As will is income income have will significant certain and and follows. we fiscal prior XXXX, year non may projected for In non-recurring projected $XX

Richard Rallo

and Thank morning John you, good everyone.

fourth our full on of the our to indicative nature due year focus not today. XXXX will is seasonal our results results primarily full I year quarter of As our business,

cash As flows the a with also majority of is and and in in fiscal of the the second the reminder, our harvested recognized of third third citrus profit our majority quarters. and second the crop year quarters

top XXXX, million Citrus increase $XXX.X revenue fiscal operating for The fiscal the to September September to citrus revenue fiscal includes and year $XX.X compared XX, ended the and XX, Valencia year the ended compared in year for total ended due X,XXX approximately grove July grove in entered with by a and revenue caretaking provide into services, and long-term which XX we owned third-parties, to harvested. generated acres increase in was agreement our management fruit $XXX.X the fiscal September respectively. years ended which year our fiscal services $XX.X September million grove from a our X,XXX approximately XXXX For and an million acres services, September XXXX management XX, XX, harvest management XXXX. XX, XXXX the are was was for revenue under XXXX of to home serviced XXXX We grower. ended million

costs all a related of from As providing third incurred receive and fee parties. these agreements, reimbursed the to on for management are these services based acres covered part we

in and provide we both record a As reminder, an services. as these expenses when and we revenues increase

$XX the ended fiscal $X.X year. harvest solid compared the increase services the the fiscal from in market approximately revenue in For XX, price driven Valencia pound The XXXX. September per million to from prior as to ended we the operating year management year XXXX, fruit recorded compared increase million was of XX, September grove an approximately by as

number as pound from levels. tighter $X.XX citrus the increase effect compared prior lower of inventory price being Our year. fiscal fiscal during drop a mentioned in as the prior fiscal result year XXXX, supplies increased harvested turn pricing year. consumption along the smaller of average Largely not-from-concentrate as harvest the to juice XX, reduced fruit, ended the per blended pound industry compared to entire as in Valencia was of for year. to offsetting increase, $X.XX the a the recorded to box previous the was this current as to and fruit solid led general, of per of greater harvested boxes well boxes September year current The due in in fewer orange earlier, season which solids with Florida increased We, for

approximately season not per box. solids in pound in indicated quality crop in that previous the the to decreased final million favorable lower season. by our boxes year the addition, relates increase approximately resulting orange a strong The harvest forecast Florida prior from The to XX.X as XX.X decline the in XXXX XXXX as of citrus the season the In management XX.X% was comparison, crop to year the In internal harvest report the in fruit more for USDA million XX.X%. XXXX/XX harvest fiscal of fiscal compared year its operating current services. for expenses mostly growth as in managed boxes we

top As a approximately grower with previously stated, services we covering management provide acres. entered to X,XXX caretaking into agreement an XX

in services For year approximately $XX.X $X.X XX, the grove September ended operating year million approximately management fiscal recorded compared XXXX, September expenses to as ended million we XX, fiscal XXXX. from of the

compensation in decrease to approximately relating fees other September fees and in as XX, of expense a the the reduction $X.X $XXX,XXX these cost reimbursement incurred of of mid-season expenses XX, attributable of was reduction payroll to approximately the property we in Valencia insurance XX, fiscal out expenses increase $XX.X was the XXXX, net this decrease that in advisory of haul XXXX. from fiscal a million and in administrative in in primarily to to XXXX XXXX, XXXX; primarily May $XXX,XXX additional gains corporate Partially year and for of a August during which result September September fiscal years XXXX. $XXX,XXX amount plan a the deferred fiscal year; and approximately made General a related The $XX of and approximately being in ended proceeds the the income in legal attributable fiscal legal for sales higher $XXX,XXX receipt $XXX,XXX fiscal assets September a due resulting and fiscal compared estate, of of income the and year plan approximately XXXX. stock each previous as and real vested million, realized for offsetting manager boxes expense September in in in benefit ended other participant and to which $XX.X matters; reduction ended reduction pension acres pertaining year October resignation that offsetting in in administrative in approximately was had purchased year the in acceleration retirement fiscal million in and net million XXXX; personnel early relating expenses a in our of to legal for these held recording January sale The Partially expense was approximately corporate XXXX, on $XXX,XXX of year of plan in was respectively. of an options a to the of increases and decrease Other year approximately year sales fiscal XX, year. reduction compared citrus expense fiscal approximately XXXX, and equipment certain terminating in turn stock to resulted year XXXX, paying XX, were Additionally, reduction to and ended in the to senior in harvested. ended fiscal for harvest XXXX this approximately resulted relating XXXX. acres,

assets third assets Alico gains XX,XXX of year for ended XX, the equipment $XX.X several we For September sales $XX.X and By acres ended approximately relating of to property XX, on real and for of of the million. XXXX, ranch of estate sale to gains on fiscal for we the estate, recognized sale approximately property sales approximately fiscal for and XXXX, and real September recorded million parties. sale comparison, the held equipment year held

of year Additionally, a long-term as our was from XXXX, expense million September XXXX, $X the decrease with ended for to of and approximately in prepayments. interest along payments September reduction fiscal XX, making due principal debt year realized to ended of XX, the fiscal the compared other mandatory the

maintained and reduced interest in lower on line expense. our balances addition, In of credit, working we resulted also revolving which

equal ended to approximately to Block September Hurricane relating federal During XX, Recovery statement under of the damage XXXX, of we years in Through million we proceeds additional a consolidated million approximately fiscal XXXX. September insurance of us under under part due $X.X $XX.X portion program. in in this first remaining reduction expenses million. insurance operating relates to to program proceeds Citrus included operations. as $X received approximately expect of XX, and to October the of portion Florida the remaining we this proceeds portion Irma early of that relief be the are received crop XXXX, grant have expenses reimbursement sustained These The fiscal the expense crop estimated are XXXX. funds reimbursement in $X the received receive that XXXX, amount year In approximately to are program the this certain we incurred million, by the of

representing increase. Alico XX, For million, attributable ended approximately a $XX.X years to September income the of XX.X% fiscal XXXX reported $XX.X XX, September respectively, and million approximately and XXXX, net stockholders we

EBITDA fiscal million the to representing ended increase. September Our XX, for XXXX, the September compared was year XX.X% approximately adjusted for $XX.X XX, year ended approximately XXXX, as fiscal $XX.X a million

We balance continue our to strengthen sheet.

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

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

John Kiernan

Rich. you, Thank

fiscal to the on and execute results a we’re will our and to strategies, compared several have business shareholders. benefits Alico. long-term year feel prior both with saw we which able was XXXX for for year We also other stated, financial year, As good improvement its Alico

with for Looking now analysts. results season. that ahead continued will the we up that, And to line can the questions XXXX, we in are fiscal our year citrus this cautiously from to believe ourselves optimistic financial Rob? we industry to positioned and leadership continue we industry have open grow

Operator

Capital. Our Thank your the with from proceed Sweeney first with question line [Operator of Gerry ROTH Please you. Instructions] question. comes

Gerry Sweeney

John morning Good taking call. for Rich. Hi. and Thanks my

John Kiernan

morning, today? you How Good are Gerry. doing

Gerry Sweeney

well, thanks. even question comments but getting volumes back next of and I am had even referring of about sort historical I potentially a million year rate on your to some XX doing just the of not to boxes. Alico

mother acquisition, look of type I X.X think who you take this of year. any said and have given we’ve take potentially but sort And an could about planted What additional Obviously, some some mature. up million million, would a made her they XX it goal, to you time And how production small get over hands could boxes? to to trees. if year? is we call you waves questions – nature it There next then one, need aspirational get will wrapped XX into all you would that couple it. long million there? of to we acquisitions at So to you all get

John Kiernan

is details that Sure. Rich basically dig just into I’ll of that, but – the organic. this let

but is citrus and going any not own that We’re to this XX,XXX acres currently require additional of we operate. on

been We planting. have

We made excess detailed developing the year-to-year. long-term younger X other And million sort are have haven’t The trees of quite trees kind right than of in forecast in of now. any nicely. we ground

want XX could we have going ground to in to be put XX any get of actually back pin a reluctant numbers. it further? So potentially been to million you Rich, to past. we’re in recent take the that we million when at But do

Richard Rallo

Yes.

we just Gerry, planted as mentioned, mention, I’ll you trees. So X.X million

for doesn’t really X That doesn’t until production. until production peak really and X and any see reminder a don’t we really year commence Just year X. everyone,

all over but slowly surely be the will coming continuing into trees next several greater production. to of at have look and produce these you So as production we years,

how see years to buildup several so you wanted is out going can point out. So I in to work that that just

Gerry Sweeney

Got it.

pipeline of of active top to out there? then biggest could you you what these going? or feel And of acquisitions, the seeing are be that or one How does or I are the Okay. or you – sellers space small discussions some made sort how the state. how What’s acquisitions, two there? willing be in And orchard obviously, want in look? pipelines that or some are are imagine three

John Kiernan

day, past as in But it can’t the industry side. a over that, really to we sellers, in by honestly, are mindset Sure. the have of been we really up over been has expensive production built have measure potential balance access Input Florida but sheet. fertilizers the Certainly, capital difficult challenge. particularly We a to here costs Pricing kind a the public years. been speak has company compete on challenge. becoming the competitors citrus XXX-year because, has of to several a is our Alico And blessed a history, bulletproof can’t against. more

at So, reasonable first be in that strike there should to Alico a deal. the prices, sellers basically willing event the are call

demonstrated We have long-term to industry. commitment our the citrus

have commit our ground. resources trees ability more We put assets the in demonstrated to to and

a our generations to team, and We citrus we an management more are for have even day-in acres state. very competent are they the committed staying just workforce strong, in care-takes We We come. the value that and respect best industry to basically And them. in stronger highly the but think competent and day-out.

to in believe is going event that. be that in there So, with to that the going consolidation Alico citrus, be is participating we

Gerry Sweeney

mean tires, kick ring? get am is I I quiet phone do right ever or curious, to just or it now? the the opportunity just – Does you

John Kiernan

it here No, typically us, to fashion quiet, if in properties. quiet. opportunistic good an adjacent economic existing for small isn’t there acquire it parcels really We sense makes and

are serious to it as think we and is very like in business, had because strategy, They industry stronger the their I we them frankly, would their not evaluating conversations competitors they running are citrus have and see competitors. respect with We significant today. Florida large own than

are anything in of no, about that the now do are right parties. not to we all discussions with But strength So, we of active can that. kind any large industry, we promote the

Gerry Sweeney

us large, probably the headed it. small, on costs. fertilizer, on that curious got you do Okay. there board. keep right, an Got hauling little across is different harvest out Even to not but and We just a then eye And front? bit. and mentioned know it, for Anything prices fertilizer inflation, up

John Kiernan

little we are of general costs, costs headaches and abroad chain fertilizer some to now the globally think competing probably supply So, just coming as overall input tied more are such. input the we bit for to inflation. opposed a Certainly,

bases a to labor. have We We we kind of sensitive increase with We our day. every are with We working covered. very people our believe need year. have this workforce wage labor got did

harvest ample as the well. seasons some next hauling going using have labor We as as to certain are be activities our well for that and for some third-party labor several secured caretaking activities already over we

So, factored shared you. for years. the all least I And we kind guidance are issue, wage kind increases have those of of Rich of with next labor that the have of and into already actually de-risked at the couple

forecasting we environment. So, are higher financial inflationary improvement despite a

Gerry Sweeney

Got it.

you couple is know But X,XXX I large customers, run that anyone in a front company. if adding run apologize. just I I of that should a but opportunity? I Just the X,XXX, else to on acres are you think for land say, there How discussions terms that Not new in line. more. management, the don’t

John Kiernan

No. Sure.

still third-party very we value So, that caretaking highly. customer,

perspective. business with overall. discussions every a diversified from day They communication in them a are have We

the is But also fruit few they kind think would with parties personnel any it’s our because to of assets kind customer. the sell sure we of it make doing I with been the end with sense quality our are the kind resources of make manage at quality, that for said other for we want expertise the we that beginning, we [Technical when in we of appreciate day, are Difficulty]. we caretaking it, broad, to line at entertain of us their of have in Yes. which large-scale to business have because discussions we So, economic the bring has we the working citrus with on customers given with citrus But being that And as very time. a table. able to certainly and discriminating kind at

on a decides on That of in advantages they economies provide caretaking, in side. counterbalance that discriminating So, certainly actually we little do That their want kind of out of as an difficulty avenue. are basically third-party having the we sometimes We do operator see can it to and are as growth is they that as citrus if explore somebody very been them of just could our based a strong is on just that scale. disposing not economic family opposed own they for their land and generations. to alternative selling have

So, but those again, to significantly talks nothing ongoing, this are time. report at

Gerry Sweeney

it. smaller land think in big then a obviously, little the the sales, I opportunity than last Got purchases Anything State Florida – some forever through Florida. past. years of been purchase acquisition was a And has of this

curious the if then talks for board and those for tone going – across Florida general just of State the Just are other opportunities. and how tenor the

John Kiernan

the that Florida, obviously, of So, State we sale closed week. on last

since We been in last of winter. process have talks had – and in kind transaction that been

meetings hitch, such basically a some think took a was longer because years. got little deferred proceeded few delayed and Tallahassee a bit a for cabinet value. it without relative of at and it we good that So, approvals to They and

a part basically by from good good We a it’s land will But been are with – conservation fourth that the that’s citizens acquisition for to to overall us, with reserve purposes. for acquire completed intact greater buyers. It’s able we and be state wonderful. that I satisfied We the that’s a was acquired kept be Alico that, the for wildlife Florida, They feeling state. the going be to of is to think and of the be them. know That they think park. very from it had for going decades way. didn’t in

with basically the some share hunters done who have We all quarters out themes to acres on as its that that it over of there want ranch with got sustainability just week. report, we be everyone all and private get the about is we well. contiguous which think with Most ranch of now, the are Southwestern discussions entertaining have kind land last of that again that the a kind that couple in bodes have well over very this is land the side buyers XX,XXX coming and we mindset, some for remaining. beauty remaining factor, well acres somewhat should scarcity time. on east enjoy our intact will is be first and buyers for contiguous, the sharing with our of hopefully recreational there of in We keep as and same But transactions out smaller that particularly potential which Florida, ranch

We property constantly. that are showing

are going generate We hopefully, once that, market prices for holding for better good at or returns out just them. are to realize we higher shareholders we

Gerry Sweeney

it. Got

your Okay. Perfect. year ramp up great appreciate ended Well, nice, up great, and I time.

So, thanks.

John Kiernan

appreciate We support. the Gerry. Thanks

Operator

you. Thank

Marco with question Rodriguez line of Stonegate Please Next from Capital. is with the proceed your question.

Marco Rodriguez

Thank Good morning. you for taking my questions.

John Kiernan

Good morning Marco.

Marco Rodriguez

follow-up, sort that quick and on been kind might to how for provide supply of you as impact actually just your more dynamics? asked one pressures any inflationary you a I and some little inflation. pricing color of any might, but of have lines along these questions potential then answered, if be and did maybe have about can of on of consumption it thinking I my the Most expectations and Wondering relates

John Kiernan

Sure.

not are of the in We sell experts the sell We consumption kind retail inputs, themselves. oranges We dynamics. right.

a So, supermarket shelves, not to position consumers that. comment on relative what really can expect to in of in kind are we their

those being kind However, the end actually under now parties, structured And Tropicana of couple dominant. the within most as for of with at are fruit our some contracts We collar we a the off-take mentioned kind of long-term believe of probably future. higher earlier, collared arrangement. agreements, of a the foreseeable is XX% are we

of could end renewal of up kind if maximum higher will the reset, and harvest those at at higher obviously, was seasons, inflationary would looking still for a be contracts be So, regain. we And the prices. that potentially would be at XXXX environment XXXX revenues and there we

Marco Rodriguez

as active. Got There the sounds I non-core acquisitions of activity. some this thinking terms prior sales activity the lower But had But selling it. coming year of one, year? clarify on of of level And of then little we you last is to bit commentary in like terribly and market’s assets. just be being fiscal about the perhaps the it not a maybe should kind want some versus

John Kiernan

Yes.

So, Alico I is very sellers a which statement precious land. think that’s a ranch opportunistic of resource, our as fair

any are the a Board for rush, is this accountable on time in not of disposing of branch not We table. holding and really us in sort

this year, week. asset a sales. sale last year, did, ranch $XX million, think would substantially what, we realized last to going Rich, that’s I be So we I lower of expect although just

Marco Rodriguez

Thank you. Got it.

Operator

you. Thank

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

John Kiernan

and thank joining today you, about everyone the also on Merry you, our results everyone, of quarter for in speaking a and wish throughout really We forward support and you your February, to first year. call look our Christmas. for Alico Thank with us

Operator

This concludes today’s conference.

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

Alico (ALCO) 7 Dec 212021 Q4 Earnings call transcript