Aliko, a leading agricultural company, reported a significant increase in net income for fiscal year 2024, with earnings per diluted share also rising sharply. However, the company continues to face operational challenges, particularly in citrus production, due to the lingering effects of past hurricanes.
Key Takeaways
- Aliko's net income rose to $7 million, a substantial increase from $1.8 million in 2023.
- Earnings per diluted share increased to $0.91, up from $0.24 the previous year.
- The company improved its adjusted EBITDA loss to $3.8 million, from $16.1 million in 2023.
- Aliko secured a new orange purchase agreement with Tropicana at significantly higher prices.
- The company sold a large portion of its ranch land to the State of Florida for $77.6 million.
Company Performance
Aliko showed strong financial performance in fiscal year 2024, with net income and earnings per share both seeing notable increases. This growth is attributed to strategic land sales and improved operational efficiencies. Despite these gains, the company continues to navigate challenges in citrus production, a key area of its business, as it recovers from the impacts of Hurricane Ian and other weather-related disruptions.
Financial Highlights
- Net income: $7 million, up from $1.8 million in 2023
- Earnings per diluted share: $0.91, up from $0.24 in 2023
- Adjusted EBITDA loss: $3.8 million, improved from $16.1 million in 2023
- General and administrative expenses: $11.1 million, a slight increase from $10.6 million
- Other income net: $78.4 million, significantly up from $6.7 million
Company Outlook
Aliko remains focused on maximizing the potential of its land assets and improving its citrus production capabilities. The company is engaged in a multi-year entitlement process for a substantial grove in Collier County and is evaluating other properties for potential transactions. Despite an inability to forecast the 2025 crop size, Aliko is committed to finding the most profitable uses for its land portfolio.
Executive Commentary
John Kiernan, President and CEO, emphasized the company's commitment to providing stability and optionality for investors through active land management. He acknowledged the disappointing harvest season due to ongoing recovery from Hurricane Ian but expressed optimism as Aliko enters the current harvest season with an extensive number of producing citrus trees.
Q&A
The earnings call did not include a specific Q&A session, leaving some analyst questions about future operational strategies and market conditions unanswered.
Risks and Challenges
- Continued recovery from hurricane impacts remains a challenge, affecting citrus production levels.
- Market volatility in agricultural commodities could influence pricing and profitability.
- The company's reliance on land sales for income growth may not be sustainable long-term.
- Potential regulatory changes in land use and environmental policies could impact operations.
- Uncertainty in crop size forecasting could affect future financial performance and investor confidence.
Full transcript - Alico Inc (ALCO) Q4 2024:
Madison, Conference Call Moderator, Aliko: Welcome to Allico's 4th Quarter and Fiscal Year Ended 2024 Earnings Conference Call. At this time, all participants are in a listen only mode. As a reminder, today's conference is being recorded. This morning, the company issued a press release announcing its results for the Q4 and fiscal year ended September 30, 2024. 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.
This call is being webcast and a replay will be available on Elico's website as well. Before we begin, we would like to remind everyone that the prepared remarks today contain forward looking statements. Such statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied in these statements. Important factors that could cause or contribute to such differences include risk details in the company's quarterly reports on Form 10 Q, annual reports on Form 10 ks, current reports on Form 8 ks and any amendments thereto filed with the SEC and those mentioned in the earnings release. The company undertakes no obligation to subsequently update or revise the forward looking statements made on today's call, except as required by law.
During this call, the company may also discuss non GAAP financial measures, including EBITDA, adjusted EBITDA and net debt. For more details on these measures, please refer to the company's press release issued yesterday. With that, I would like to turn the call over to the company's President and CEO, Mr. John
John Kiernan, President and CEO, Aliko: Kiernan. Thank you, Madison, and thank you everyone for joining us for Aliko's 4th quarter fiscal year ended 2024 earnings call this morning. To begin, I want to recognize that Aweco has more than 125 years of experience as a leader in Florida Agriculture and Land Management. We have consistently stated that Aweco seeks to provide our investors with the benefits and stability of a conventional agriculture investment with the optionality that comes from Active Land Management. As a reminder, we own approximately 53,371 Acres of Land across 8 counties in Florida, as well as approximately 48,700 Acres of Oil, Gas and Mineral Rights in the state.
Since 2022, Aliko has continued to face challenges in recovering from the aftermath of Hurricane Ian. More than half our crops dropped before harvesting in fiscal year 2023 and fiscal year 2024 fruit production did not return to pre EN levels. These lower levels of production remain a concern to management as we begin to harvest the fiscal year 2025 crops and we are evaluating our performance daily. We are unable to forecast the size of the 2025 crops at this time and cannot provide any fiscal forecast for this fiscal year until we have greater visibility about our expected revenues. However, ALLECO is committed to focusing on operating income potential, protecting our balance sheet and preserving our capital to ensure that we have adequate financial resources to invest in the business so that Aliko can continue to provide competitive returns to our stockholders.
Lower production for early and mid season and Valentia Harvest this season resulted in lower levels of pound solids being produced, which required the company to write down $28,500,000 of total inventory related to our 2023, 2024 harvest and $19,500,000 of total inventory related to our 2024, 2025 harvest. On October 9, 2024, Hurricane Milton impacted most of our citrus grows with sustained hurricane or tropical force winds for varying durations of time. The company believes that our grove sustained minimal tree damage. However, there was measurable fruit drop from trees in our northern groves, particularly in Polk and Hardee Counties. At this time, it is not possible to reliably estimate the amount of additional fruit drop, if any, that may occur as a result of Hurricane Milton.
As Aweco reported previously, the company entered into a new 3 year orange purchase agreement to sell oranges to Tropicana at prices that are approximately 33% to 50% higher over the life of the contract than the average price for all the citrus fruits sold to Tropicana last season. In addition, in 2024, we treated nearly all of our producing trees with an oxytetracycline or OTC injection to combat citrus screening, approximately 35% of which were treated for a second consecutive year. Our decisions treat our trees with OTC were supported by scientific research, which indicated that the benefits of OTC trunk injections include a decrease in fruit drop, improved fruit quality and mitigating some of the impacts from citrus screening. We have and will continue to apply to the Florida Citrus Research and Field Trial Foundation for grant monies to offset the cost of these OTC injections. In January 2024, we received grants that covered substantially all the OTC application costs incurred in fiscal year 2023 and to date we received approximately 35% of the money spent during fiscal year 2024.
We have applications pending that would cover the rest of our fiscal year 2024 treatment costs. Despite the recent challenges in our citrus operations, we remain optimistic about the future success of Aliko. In December of 2023, we completed the sale of 17,229 Acres of the Aliko Ranch to the State of Florida for $77,600,000 in gross proceeds, which we used to repay all of our outstanding borrowings under our line of credit due to the impact of Hurricane Ian and the $19,100,000 balance of our MetLife (NYSE:MET) variable term rate debt, thereby strengthening our balance sheet and reducing our required principal payments through fiscal year 2029 to less than $1,500,000 per year. In addition to increase our financial flexibility, in September 2024, we amended our credit agreement with MetLife by extending the maturity of our revolving line of credit until May 1, 2034 and which we believe demonstrates the continued support and confidence in OECO by MetLife. We believe that the revolving line of credit provides us with ample liquidity should we need it to manage significant weather events as well as to ensure that we have time and capital to realize the long term highest and best use of our real estate assets.
We are continuing to evaluate all of our properties to enhance and build value for our stockholders. The multi year entitlement process, which we began in 2023 for our 4,500 Acre Grove in Collier County near Fort Myers is proceeding well under the leadership of our Executive Vice President of Real Estate. While there is considerable work yet to be done, the company has made significant progress including but not limited to the completion of environmental assessments, the development of conservation strategies, the preparation of market assessments to facilitate planning and beginning to conduct selective stakeholder outreach efforts. In addition, other real estate properties in Polk, Highlands and Henry Counties are also being considered for potential transactions. The company remains committed to considering all options for the most profitable use of all the land in our portfolio.
With that, I will turn the call over to Brad Heine to discuss our more detailed financial results.
Brad Heine, Financial Executive, Aliko: Thank you, John, and good morning, everyone. As our Q4 is not indicative of our full year results due to the seasonal nature of our business, I will focus primarily on our full year 2024 results today. As a reminder, the majority of our citrus crop is harvested in the 2nd 3rd quarters of the fiscal year, And as such, the majority of our profit and cash flows are also recognized in the 2nd 3rd quarters. However, due to the timing of the current year harvest, more of the citrus crop was harvested in the 1st and second quarters of this fiscal year. As such, the quarterly results for the Q4 are not indicative of our full year results.
For the fiscal year ended September 30, 2024, the company reported net income attributable to Aliko common stockholders of 7,000,000 compared to net income attributable to Aliko common stockholders of $1,800,000 for the fiscal year ended September 30, 2023. The increase in net income is principally attributable to a gain of 81 point $4,000,000 for the sale of land in the current year as compared to a gain of $11,400,000 in the prior year, partially offset by an inventory impairment charge of $19,500,000 in the Q4 of the fiscal year ended September 30, 2024 related to our 2024, 2025 estimated harvest. In addition, our net income for the fiscal year ended September 30, 2023 was positively impacted by inventory adjustments recorded at September 30, 2022, as a result of the impact of Hurricane Ian, which effectively lowered the inventory to be expensed in the fiscal year ended September 30, 2023, as well as $27,400,000 of crop insurance proceeds, dollars 800,000 in property and casualty insurance reimbursements for Hurricane Ian and $1,300,000 in proceeds from federal relief proceeds received under the Florida Citrus Recovery Block Grant Program in the fiscal year ended September 30, 2023. For the fiscal year ended September 30, 2024, the company had earnings of $0.91 per diluted common share compared to earnings of $0.24 per diluted common share for the fiscal year ended September 30, 2023.
When both periods are adjusted for certain items, including gains on sale of real estate, federal relief proceeds from the 2017 Hurricane Irma and 2022 Hurricane Ian insurance proceeds and net realizable value adjustments, the company had an adjusted EBITDA loss for the fiscal years ended September 30, 20242023 of $3,800,000 $16,100,000 respectively. General and administrative expense for the year ended September 30, 2024 was $11,100,000 compared to $10,600,000 for the year ended September 30, 2023. The increase was principally attributable to an increase in personnel costs, partially offset by lower depreciation, legal and professional fees due to the dismissal of the shareholder litigation in 2023 and lower insurance costs as compared to the same period prior year. Other income net for the years ended September 30, 20242023 was $78,400,000 $6,700,000 respectively. The increase in other income net primarily due to an increase in land sales, including the 17,229 acres of the Aliko Ranch to the State of Florida for approximately $77,600,000 in gross proceeds during the year ended September 30, 2024 compared to 11 point $5,000,000 for the prior year period.
I will now pass the call back to John. Thanks
John Kiernan, President and CEO, Aliko: Brad. Although the last harvest season was disappointing, which we believe is the result of continuing recovery from Hurricane Ian, Aliko enters the current harvest season with more than 4,500,000 producing citrus trees, which have been treated with OTC. This crop will be sold at prices 30 plus percent higher than last season because of the new supply agreement with Tropicana. Our employee base is stable, experienced and focused on delivering results for our shareholders. Lileko has endured another challenging weather season in 2024, but sustained no real damage to our trees.
The company has a strong balance sheet, which we believe will provide us with the time and capital to evaluate and then realize the long term highest and best use of our real estate assets to create long term value for our shareholders. 2 significant entitlement programs and a few other potential land sales are already in progress. We remain committed to providing our investors with the benefits and stability of a conventional agricultural investment with the enhanced optionality that comes through active land management. And with that, we'll now open the line up to questions from industry analysts. Madison?
Madison, Conference Call Moderator, Aliko: Thank you. And we have reached the end of today's question and answer session. I would now like to turn the call back over to Mr. Kiernan for closing remarks.
John Kiernan, President and CEO, Aliko: I just want to say thank you to everyone for joining our call today and for your continued support of Aliko. We look forward to speaking with you about our Q1 results in February.
Madison, Conference Call Moderator, Aliko: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.
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