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Alico, Inc. Announces Third Quarter and Nine Month Financial Results for Fiscal Year 2016 Highlighted by $10.4 million of Net Income, $37.4 million of EBITDA, and $34.2 million of Net Cash Provided by Operating Activities for the Nine Months of Fiscal…

FORT MYERS, Fla., Aug. 04, 2016 (GLOBE NEWSWIRE) -- Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO), today announces financial results for the third quarter and nine months ended June 30, 2016.  For the nine month period, the Company earned $1.25 per share compared to $2.34 per share in the prior year primarily due to lower production volume. When both periods are adjusted for one-time items related to prior acquisitions including transaction costs, litigation, consulting fees, acquired inventory and real estate gains, the Company earned $1.32 per share in the nine month period of 2016 and $2.40 per share in 2015.

 
(in thousands except for per share amounts)                              
                               
  Three Months Ended June 30,   Nine Months Ended June 30,
  2016   2015   Change   2016   2015   Change
                               
Net income attributable to common stockholders $ 4,681     $ 9,176     $ (4,495 )   (49.0 )%   $ 10,404     $ 18,609     $ (8,205 )   (44.1 )%
EBITDA $ 14,587     $ 22,072     $ (7,485 )   (33.9 )%   $ 37,359     $ 46,519     $ (9,160 )   (19.7 )%
Earnings Per Diluted Common Share $ 0.56     $ 1.11     $ (0.55 )   (49.5 )%   $ 1.25     $ 2.34     $ (1.09 )   (46.6 )%
Net cash provided by operating activities $ 22,047     $ 40,296     $ (18,249 )   (45.3 )%   $ 34,185     $ 36,349     $ (2,164 )   (6.0 )%
 

/EIN News/ -- Orange Co. Division Results

Orange Co.'s financial results declined during the period due to lower citrus production volume and costs of sales flat with the prior year level, resulting in higher per unit costs.

Orange Co. 2016 crop production was lower by 17.4% on a pound solids basis and by 11.9% on a box basis for the nine months ended June 30, 2016.  Last month, the USDA estimated the Florida orange crop decreased by approximately 15.8% this season as measured by total boxes produced.  Orange Co.’s early and mid-season pound solids decreased by 22.9% and boxes decreased by 18.2%; its late season Valencia pound solids decreased by 13.4% and boxes decreased by 6.8%.  These declines were due to various factors including extreme weather patterns, such as El Nino and higher than normal temperatures during the early and mid-season harvest, and citrus greening, but partially mitigated by the acceleration of the Company’s late season harvesting activities to address premature fruit drop. 

Citrus production for the third quarter and nine months ended June 30, 2016 and 2015 is summarized in the following table.

                             
(boxes and pound solids in thousands)                            
                           
  Three Months Ended
June 30,
          Nine Months Ended
June 30,
       
    Change     Change
  2016   2015   $   %   2016   2015   $   %
Boxes Harvested:                              
Early and Mid-Season 30     $ (82 )   112     (136.6 )%   3,634     $ 4,442     (808 )   (18.2 )%
Valencias 2,854     4,489     (1,635 )   (36.5 )%   5,195     5,570     (375 )   (6.8 )%
Total Processed 2,884     4,407     (1,523 )   (34.6 )%   8,829     10,012     (1,183 )   (11.9 )%
Fresh Fruit 52     214     (162 )   (75.7 )%   401     460     (59 )   (12.9 )%
Total 2,936     4,621     (1,685 )   (36.5 )%   9,230     10,472     (1,242 )   (11.9 )%
Pound Solids Produced:                              
Early and Mid-Season 19     (374 )   393     (105.1 )%   20,167     26,139     (5,972 )   (22.9 )%
Valencias 17,338     29,269     (11,931 )   (40.8 )%   31,237     36,044     (4,807 )   (13.4 )%
Fresh Fruit     (84 )   84     (100.0 )%                
Total 17,357     28,811     (11,454 )   (39.8 )%   51,404     62,183     (10,779 )   (17.4 )%
                               
Average Pound Solids Per Box 6.02   6.54     (0.52 )   (7.9 )%   5.82   6.21     (0.39 )   (6.3 )%
                               
Price per Pound Solids:                              
Early and Mid-Season   NM       NM         NM       NM     $ 2.17     $ 1.99     $ 0.18     9.1 %
Valencias $ 2.39     $ 2.13     $ 0.26     12.2 %   $ 2.40     $ 2.13     $ 0.27     12.7 %
                               
NM - Not Meaningful                              

Orange Co. focused on efficiency and cost control in 2016 and its costs of production remained flat from the prior year despite the challenges of unusual weather and disease with cost of sales of $65.4 million compared to $65.5 million in 2015 (excluding a $7.2 million adjustment of the fair market value of acquired inventory).  Those costs on a per pound solids basis increased 21.0% from $1.05 to $1.27 because of lower volumes supporting the cost base.

Conservation and Environmental Resources Division Results

For the nine months ended June 30, 2016, Conservation and Environmental Resources (“CER”) revenues of $2.5 million were earned primarily from calf sales with a 731,000 increase in pounds sold generating $1.6 million of increased revenue partially offset by a $0.4 million decrease due to the price per pound declining from $2.16 to $1.67 year over year.  The 731,000 increase in pounds sold was due to the timing of calf sales as CER held an additional 1,000 calves in inventory at September 30, 2015 which would have historically been sold prior to year-end.  CER operating expenses increased by $1.5 million for the nine months ended June 30, 2016 compared to the nine months ended June 30, 2015 due to the timing of additional pounds sold and a $0.5 million increase in water conservation related expenses. 

Other Corporate Financial Information

Alico continues to invest in information technology, management talent and strategic acquisition activities, which has increased its general and administrative costs on a recurring basis by $1.1 million.  Corporate G&A expenses for the nine months ended June 30, 2016 totaled $9.5 million compared to $11.9 million for the nine months ended June 30, 2015, a decrease of $2.4 million.  The decrease relates primarily to $3.7 million in non-recurring professional and legal fees associated with the Orange-Co and Silver Nip acquisitions and $0.6 million in non-recurring consulting expenses in fiscal year 2015 offset by certain fiscal year 2016 expenses including $0.4 million in legal fees related to the shareholder litigation and $0.4 million in prior year bonuses payments.

Other expense, net for the nine months ended June 30, 2016 was $7.2 million compared to $6.1 million of other income for the nine months ended June 30, 2015.  The decrease of $13.3 million is primarily attributable to a $13.0 million decrease in partial gain recognition on the sale of the sugarcane land and a $1.7 million increase in interest expense offset by non-recurring fiscal year 2015 losses, including a $1.1 million loss on extinguishment of debt and a $0.5 million asset impairment.

The Company paid a third quarter cash dividend of $0.06 per share on its outstanding common stock on July 15, 2016, to shareholders of record at June 30, 2016.

The Company ended the quarter with term debt, net of cash and cash equivalents, of $186.9 million.

About Alico

Alico is a holding company with assets and related operations in agriculture and environmental resources, including cattle ranching, water management, and mining. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. Learn more about Alico (NASDAQ:ALCO) at www.alicoinc.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as “plans,” “expect,” “may,” “anticipate,” “intend,” “should be,” “will be,” “is likely to,” “believes,” and similar expressions referring to future periods.

Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from diseases including citrus greening and citrus canker, as well as insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.

                     
Non-GAAP Financial Measures                    
                     
Adjusted EBITDA                    
(in thousands)                    
  Three Months Ended June 30,         Nine Months Ended June 30,
  2016   2015         2016   2015
                     
Net income attributable to common stockholders $ 4,681     $ 9,176           $ 10,404     $ 18,609  
Interest expense 2,470     2,104           7,448     5,739  
Provision for income taxes 3,392     6,644           7,419     11,534  
Depreciation and amortization 4,044     4,148           12,088     10,637  
EBITDA 14,587     22,072           37,359     46,519  
                     
Asset impairment                   541  
Transaction costs 48     407           550     4,260  
Acquired citrus inventory fair value adjustments     3,023               7,225  
Loss on extinguishment of debt     87               1,051  
Payments on consulting agreements 109     704           555     1,204  
Litigation expenses related to shareholder lawsuit 7               410      
(Gains) losses on sale of real estate 284     (1 )         (618 )   (13,471 )
                     
Adjusted EBITDA $ 15,035     $ 26,292           $ 38,256     $ 47,329  
                                     


Adjusted Earnings Per Common Share                    
(in thousands)                    
  Three Months Ended June 30,         Nine Months Ended June 30,
  2016   2015         2016   2015
                     
Net income attributable to common stockholders $ 4,681     $ 9,176           $ 10,404     $ 18,609  
Loss on extinguishment of debt     87               1,051  
Asset impairment                   541  
Transaction costs 48     407           550     4,260  
Litigation expenses related to shareholder lawsuit 7               410      
Acquired citrus inventory fair value adjustments     3,023               7,225  
Payments on consulting agreements 109     704           555     1,204  
(Gains) losses on sale of real estate 284     (1 )         (618 )   (13,471 )
Tax impact (188 )   (1,772 )         (374 )   (310 )
                     
Adjusted net income $ 4,941     $ 11,624           $ 10,927     $ 19,109  
                     
Diluted common shares 8,309     8,284           8,309     7,971  
                     
Adjusted Earnings per Diluted Common Share $ 0.59     $ 1.40           $ 1.32     $ 2.40  
                                     


Adjusted Free Cash Flow                    
(in thousands)                    
  Three Months Ended June 30,         Nine Months Ended June 30,
  2016   2015         2016   2015
                     
Net cash provided by operating activities $ 22,047     $ 40,296           $ 34,185     $ 36,349  
Adjustments for non-recurring items:                    
Transaction costs 48     407           550     4,260  
Payments on consulting agreements 109     704           555     1,204  
Litigation expenses related to shareholder lawsuit 7               410      
Capital expenditures (3,184 )   (4,074 )         (9,115 )   (9,309 )
Adjusted Free Cash Flow $ 19,027     $ 37,333           $ 26,585     $ 32,504  
                                     

Alico utilizes the non-GAAP measures Adjusted EBITDA, Adjusted Earnings per Diluted Common Share and Adjusted Free Cash Flow among other measures, to evaluate the performance of its business. Due to significant depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure, management believes that Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, and Adjusted Free Cash Flow are important measures to evaluate our results of operations between periods on a more comparable basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis and relative to our peers and the broader market, provides useful information to both management and investors by excluding certain items that may not be indicative of our core operating results and operational strength of our business and helps investors evaluate our ability to service our debt.  Such measurements are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-GAAP information provided is unique to Alico and may not be consistent with methodologies used by other companies. Adjusted EBITDA is defined as earnings before interest expense, provision for income taxes, depreciation and amortization adjusted for non-recurring transactions. Adjusted Earnings per Diluted Common Share is defined as Net Income adjusted for non-recurring transactions divided by diluted common shares.  Adjusted Free Cash Flow is defined as cash provided by operations adjusted for non-recurring transactions less capital expenditures. The Company uses Adjusted Free Cash Flow to evaluate its business and this measure is considered an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders. The Company’s definition of Adjusted Free Cash Flow does not represent residual cash flows available for discretionary spending.

ALICO, INC.
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share amounts)
       
  June 30,   September 30,
  2016   2015
ASSETS      
Current assets:      
Cash and cash equivalents $ 12,990     $ 5,474  
Accounts receivable, net 13,965     3,137  
Inventories 44,126     58,273  
Income tax receivable 1,227     2,088  
Prepaid expenses and other current assets 2,693     1,791  
Total current assets 75,001     70,763  
       
Property and equipment, net 377,967     381,099  
Goodwill 2,246     2,246  
Deferred financing costs, net of accumulated amortization 2,511     2,978  
Other non-current assets 1,756     3,002  
Total assets $ 459,481     $ 460,088  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 2,881     $ 4,407  
Accrued liabilities 7,122     13,314  
Dividend payable 498     501  
Long-term debt, current portion 4,493     4,511  
Deferred tax liability, current portion 25     151  
Obligations under capital leases, current portion 277     277  
Other current liabilities 727     974  
Total current liabilities 16,023     24,135  
       
Long-term debt 195,408     200,970  
Deferred tax liability 32,892     25,628  
Deferred gain on sale 28,436     29,122  
Deferred retirement obligations 4,188     4,134  
Obligations under capital leases 588     588  
Total liabilities 277,535     284,577  
       
Stockholders' equity:      
Preferred stock, no par value, 1,000,000 shares authorized; none issued      
Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 shares
issued and 8,309,128 and 8,325,580 shares outstanding at June 30, 2016 and
September 30, 2015, respectively
8,416     8,416  
Additional paid in capital 18,192     19,795  
Treasury stock, at cost, 107,017 and 90,565 shares held at June 30, 2016 and
September 30, 2015, respectively
(4,854 )   (3,962 )
Retained earnings 155,414     146,455  
Total Alico stockholders' equity 177,168     170,704  
Noncontrolling interest 4,778     4,807  
Total stockholders' equity 181,946     175,511  
Total liabilities and stockholders' equity $ 459,481     $ 460,088  
               


ALICO, INC.
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)
(in thousands, except per share amounts)
                   
  Three Months Ended June 30,       Nine Months Ended June 30,
  2016   2015       2016   2015
Operating revenues:                  
Orange Co. $ 45,639     $ 70,761         $ 135,916     $ 146,311  
Conservation and Environmental Resources 877     296         2,528     1,441  
Other Operations 337     613         902     3,000  
Total operating revenues 46,853     71,670         139,346     150,752  
                   
Operating expenses:                  
Orange Co. 31,706     48,666         101,030     109,263  
Conservation and Environmental Resources 1,399     624         3,540     1,992  
Other Operations 65     1,353         212     3,522  
Total operating expenses 33,170     50,643         104,782     114,777  
                   
Gross profit 13,683     21,027         34,564     35,975  
General and administrative expenses 2,747     2,949         9,521     11,931  
                   
Income from operations 10,936     18,078         25,043     24,044  
                   
Other (expense) income:                  
Investment and interest income, net     44             44  
Interest expense (2,470 )   (2,104 )       (7,448 )   (5,739 )
Gain (loss) on sale of real estate (284 )   1         618     13,471  
Loss on extinguishment of debt     (87 )           (1,051 )
Impairment of asset held for sale                 (541 )
Other expense, net (120 )   (112 )       (419 )   (85 )
Total other (expense) income, net (2,874 )   (2,258 )       (7,249 )   6,099  
                   
Income before income taxes 8,062     15,820         17,794     30,143  
Provision for income taxes 3,392     6,644         7,419     11,534  
                   
Net income 4,670     9,176         10,375     18,609  
Net loss attributable to noncontrolling interests 11             29      
Net income attributable to Alico, Inc. common stockholders 4,681     9,176         10,404     18,609  
Comprehensive income attributable to noncontrolling interests                  
Comprehensive income attributable to Alico, Inc. common
stockholders
$ 4,681     $ 9,176         $ 10,404     $ 18,609  
                   
Per share information attributable to Alico, Inc. common
stockholders:
                 
Earnings per common share:                  
Basic $ 0.56     $ 1.11         $ 1.25     $ 2.34  
Diluted $ 0.56     $ 1.11         $ 1.25     $ 2.34  
Weighted-average number of common shares outstanding:                  
Basic 8,309     8,278         8,299     7,969  
Diluted 8,309     8,284         8,309     7,971  
                           
Cash dividends declared per common share $ 0.06     $ 0.06         $ 0.18     $ 0.18  
                                   


ALICO, INC.
CONDENSED COMBINED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(in thousands)
           
  Nine Months Ended June 30,
  2016       2015
           
Net cash provided by operating activities: $ 34,185         $ 36,349  
           
Cash flows from investing activities:          
Acquisition of citrus businesses, net of cash acquired         (265,587 )
Proceeds on sale of sugarcane land         97,151  
Purchases of property and equipment (9,115 )       (9,309 )
Proceeds from disposals of property and equipment         1,016  
Other 164         2,424  
Net cash used in investing activities (8,951 )       (174,305 )
           
Cash flows from financing activities:          
Proceeds from term loans 2,500         182,500  
Repayments on revolving line of credit (53,882 )       (87,031 )
Borrowings on revolving line of credit 53,882         81,031  
Repayment of term loan         (34,000 )
Principal payments on term loans (8,080 )       (15,189 )
Financing costs         (2,834 )
Contingent consideration paid (7,500 )        
Treasury stock purchases (3,141 )       (1,029 )
Dividends paid (1,497 )       (1,381 )
Distributions to members         (298 )
Net cash (used in) provided by financing activities (17,718 )       121,769  
           
Net increase (decrease) in cash and cash equivalents 7,516         (16,187 )
Cash and cash equivalents at beginning of the period 5,474         31,130  
           
Cash and cash equivalents at end of the period $ 12,990         $ 14,943  
                   

 

Investor Contact:
John E. Kiernan
Senior Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com
Non-GAAP Financial Measures

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