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Alico, Inc. Announces Second Quarter and Six Month Financial Results for Fiscal Year 2017 Highlighted by $4.1 million of Net Income, $19.6 million of EBITDA, and $2.7 million of Net Cash Used in Operating Activities for the Six Months of Fiscal Year 2017

FORT MYERS, Fla., May 08, 2017 (GLOBE NEWSWIRE) -- Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO), today announces financial results for the second quarter and six months ended March 31, 2017. For the six month period, the Company earned $0.49 per share compared to $0.69 per share in the prior year primarily due to lower citrus production volume. When both periods are adjusted for certain items including merger and acquisition transaction costs, litigation costs, consulting fees, real estate gains and stock compensation expense, the Company earned $0.43 per share in the six month period of fiscal year 2017 and $0.73 per share in the six months of 2016.

(in thousands, except per share amounts)
Three Months Ended March 31, Six Months Ended March 31,
2017 2016 Change 2017 2016 Change
Net income$5,884 $8,724 $(2,840) (32.6)% $4,141 $5,704 $(1,563) (27.4)%
EBITDA$16,408 $21,347 $(4,939) (23.1)% $19,643 $22,771 $(3,128) (13.7)%
Earnings per diluted common share$0.70 $1.05 $(0.35) (33.3)% $0.49 $0.69 $(0.20) (29.0)%
Net cash provided by (used in) operating activities $14,688 $26,919 $(12,231) (45.4)% $(2,749) $12,138 $(14,887) (122.6)%

Alico Citrus Division Results

Alico Citrus’ Early and Mid-Season fruit harvest was completed in the quarter ended March 31, 2017. Early and Mid-Season 2016-17 box and pound solids production for the six months were down 10.8% and 10.3%, respectively compared to the 2015-16 harvest. However, prices increased by 17.0% to $2.55 per pound solid compared to $2.18 last year. Pound solids per box also increased to 5.58 compared to 5.55 last year.

The Valencia fruit harvest commenced in the quarter. Year-to-date production is not directly comparable to last year due to timing as we have harvested fewer blocks this year compared to the same time in last year’s harvest season. Pound solids per box are improved at 6.09 compared to 5.94 last year.

On April 11, 2017, the USDA estimated that the Florida orange crop, as measured in boxes, will decline by 18.0% for the 2016-17 season compared to last year. We are currently projecting a full season year-over-year decline in box production of approximately 15.0%.

Citrus production for the second quarter and six months ended March 31, 2017 and 2016 is summarized in the following table.

(boxes and pound solids in thousands)
Three Months Ended
March 31,
Six Months Ended
March 31,
2017 2016 % Change 2017 2016 % Change
Boxes Harvested:
Early and Mid-Season2,186 2,293 (4.7)% 3,215 3,604 (10.8)%
Valencias1,225 2,341 (47.7)% 1,225 2,341 (47.7)%
Total Processed3,411 4,634 (26.4)% 4,440 5,945 (25.3)%
Fresh Fruit115 153 (24.8)% 244 349 (30.1)%
Total3,526 4,787 (26.3)% 4,684 6,294 (25.6)%
Pound Solids Produced:
Early and Mid-Season12,510 13,075 (4.3)% 17,950 20,006 (10.3)%
Valencias7,467 13,899 (46.3)% 7,467 13,899 (46.3)%
Fresh Fruit 142 (100.0)% 142 (100.0)%
Total19,977 27,116 (26.3)% 25,417 34,047 (25.3)%
Pound Solids per Box:
Early and Mid-Season5.72 5.70 0.4% 5.58 5.55 0.5%
Valencias6.09 5.94 2.5% 6.09 5.94 2.5%
Price per Pound Solids:
Early and Mid-Season $2.56 $2.27 12.8% $2.55 $2.18 17.0%
Valencias$2.72 $2.42 12.4% $2.72 $2.42 12.4%

Alico Citrus continues to focus on efficiency and cost control. Our cost of sales for fiscal year 2017 are expected to decrease by approximately $1.2 million from the prior year despite the challenges of unusual weather and disease; however, the cost of production per pound solid increased 16.1% to $1.44 for the six months ended March 31, 2017 as compared to $1.24 in the same period last year because of lower volumes supporting the cost base.

Conservation and Environmental Resources Division Results

Conservation and Environmental Resources (“CER”) revenues for the six months ended March 31, 2017 totaled $0.8 million compared to $1.7 million in the six months ended March 31, 2016. The decrease relates primarily to the timing of calf sales. CER held an additional 1,000 calves in inventory at September 30, 2015 which would have historically been sold prior to year-end but were instead sold in the first quarter of fiscal year 2016.

CER operating expenses decreased by $0.9 million for the six months ended March 31, 2017 compared to the six months ended March 31, 2016 due to the timing of additional pounds sold and a $0.1 million decrease in water conservation related expenses.

Other Corporate Financial Information

Alico continues to invest in information technology, management talent and strategic acquisition activities while simultaneously controlling recurring general and administrative costs. Corporate G&A expenses for the six months ended March 31, 2017 totaled $7.2 million compared to $6.8 million for the six months ended March 31, 2016, an increase of $0.4 million. Recurring general and administrative costs increased by approximately $0.9 million in the first six months of fiscal 2017 compared to the first six months of fiscal year 2016. The increase was attributable to executive compensation-related expenses.

Other expense, net was $2.9 million and $4.4 million for the six months ended March 31, 2017 and 2016, respectively. The decrease of $1.5 million is primarily attributable to a $0.9 million increase in gains on real estate sales and a $0.3 million decrease in interest expense.

The Company paid a second quarter cash dividend of $0.06 per share on its outstanding common stock on April 14, 2017 to shareholders of record at March 31, 2017.

During the second quarter, the Company entered into negotiations with a third party to sell approximately 1,000 net plantable acres of farmland in Hendry County, Florida that is currently leased to a vegetable farmer. A non-binding letter of intent has been executed and provides the potential buyer with a period of exclusivity to conduct due diligence. The proposed sale price would result in a significant positive impact on our net income but there is no assurance that a binding agreement will be entered into or that a sale will occur.

The Company ended the quarter with term debt, net of cash and cash equivalents, of $190.8 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.


ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
Three Months Ended March 31, Six Months Ended March 31,
2017 2016 2017 2016
Operating revenues:
Alico Citrus$55,667 $70,982 $72,544 $90,277
Conservation and Environmental Resources487 644 788 1,651
Other Operations46 263 313 565
Total operating revenues56,200 71,889 73,645 92,493
Operating expenses:
Alico Citrus40,923 51,716 55,008 69,324
Conservation and Environmental Resources761 581 1,275 2,141
Other Operations 77 93 147
Total operating expenses41,684 52,374 56,376 71,612
Gross profit14,516 19,515 17,269 20,881
General and administrative expenses3,399 2,849 7,187 6,774
Income from operations11,117 16,666 10,082 14,107
Other (expense) income:
Investment and interest income, net47 47
Interest expense(2,374) (2,475) (4,701) (4,978)
Gain on sale of real estate1,396 760 1,832 902
Other income (expense), net19 (125) (71) (300)
Total other expense, net(912) (1,840) (2,893) (4,376)
Income before income taxes10,205 14,826 7,189 9,731
Provision for income taxes4,321 6,102 3,048 4,027
Net income5,884 8,724 4,141 5,704
Net (income) loss attributable to noncontrolling interests(51) 10 (43) 18
Net income attributable to Alico, Inc. common stockholders$5,833 $8,734 $4,098 $5,722
Per share information attributable to Alico, Inc. common stockholders:
Earnings per common share:
Basic$0.70 $1.05 $0.49 $0.69
Diluted$0.70 $1.05 $0.49 $0.69
Weighted-average number of common shares outstanding:
Basic8,327 8,286 8,326 8,294
Diluted8,327 8,303 8,326 8,309
Cash dividends declared per common share$0.06 $0.06 $0.12 $0.12


ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share amounts)
March 31, 2017 September 30, 2016
ASSETS
Current assets:
Cash and cash equivalents$1,041 $6,625
Accounts receivable, net22,648 4,740
Inventories53,069 58,469
Income tax receivable1,013 1,013
Assets held for sale3,137
Prepaid expenses and other current assets2,629 1,024
Total current assets83,537 71,871
Property and equipment, net372,512 379,247
Goodwill2,246 2,246
Deferred financing costs, net of accumulated amortization264 389
Other non-current assets1,400 1,692
Total assets$459,959 $455,445
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$5,919 $5,975
Accrued liabilities4,238 6,920
Long-term debt, current portion4,500 4,493
Obligations under capital leases, current portion288 288
Other current liabilities339 1,002
Total current liabilities15,284 18,678
Long-term debt:
Principal amount187,338 192,726
Less: deferred financing costs, net(1,872) (1,980)
Long-term debt less deferred financing costs, net185,466 190,746
Lines of credit11,417 5,000
Deferred tax liability34,119 31,056
Deferred gain on sale27,587 27,204
Deferred retirement obligations4,185 4,198
Obligations under capital leases300 300
Total liabilities278,358 277,182
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 8,306,319 and 8,315,535 shares outstanding at March 31, 2017 and September 30, 2016, respectively8,416 8,416
Additional paid in capital18,351 18,155
Treasury stock, at cost, 109,826 and 100,610 shares held at March 31, 2017 and September 30, 2016, respectively(4,586) (4,585)
Retained earnings154,604 151,504
Total Alico stockholders' equity176,785 173,490
Noncontrolling interest4,816 4,773
Total stockholders' equity181,601 178,263
Total liabilities and stockholders' equity$459,959 $455,445


ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
Six Months Ended March 31,
2017 2016
Net cash (used in) provided by operating activities:$(2,749) $12,138
Cash flows from investing activities:
Purchases of property and equipment(5,040) (5,931)
Proceeds from disposals of property and equipment 2,651
Other156 141
Net cash used in investing activities(2,233) (5,790)
Cash flows from financing activities:
Repayments on revolving lines of credit(47,082) (45,132)
Borrowings on revolving lines of credit53,499 50,132
Principal payments on term loans(5,381) (5,381)
Contingent consideration paid (3,750)
Treasury stock purchases(641) (3,141)
Dividends paid(997) (998)
Net cash used in financing activities(602) (8,270)
Net decrease in cash and cash equivalents(5,584) (1,922)
Cash and cash equivalents at beginning of the period6,625 5,474
Cash and cash equivalents at end of the period$1,041 $3,552


Non-GAAP Financial Measures
Adjusted EBITDA
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2017 2016 2017 2016
Net income attributable to common stockholders$5,833 $8,734 $4,098 $5,722
Interest expense2,374 2,475 4,701 4,978
Provision for income taxes4,321 6,102 3,048 4,027
Depreciation and amortization3,880 4,036 7,796 8,044
EBITDA16,408 21,347 19,643 22,771
Consulting agreement expenses238 142 288 446
Gain on sales of real estate(1,396) (760) (1,832) (902)
Litigation expenses related to shareholder lawsuit 3 403
Stock compensation expense232 38 417 75
Transaction costs183 105 201 502
Adjusted EBITDA$15,665 $20,875 $18,717 $23,295

Adjusted Earnings Per Diluted Common Share
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2017 2016 2017 2016
Net income attributable to common stockholders$5,833 $8,734 $4,098 $5,722
Consulting agreement expenses238 142 288 446
Gain on sales of real estate(1,396) (760) (1,832) (902)
Litigation expenses related to shareholder lawsuit 3 403
Stock compensation expense232 38 417 75
Tax impact315 194 393 (217)
Transaction costs183 105 201 502
Adjusted net income$5,405 $8,456 $3,565 $6,029
Diluted common shares8,327 8,303 8,326 8,309
Adjusted Earnings per Diluted Common Share$0.65 $1.02 $0.43 $0.73
Adjusted Free Cash Flow
(in thousands)
Three Months Ended March 31, Six Months Ended March 31,
2017 2016 2017 2016
Net cash provided by (used in) operating activities$14,688 $26,919 $(2,749) $12,138
Adjustments for non-recurring items:
Consulting agreement expenses238 142 288 446
Litigation expenses related to shareholder lawsuit 3 403
Tax impact(178) (103) (207) (559)
Transaction costs183 105 201 502
Capital expenditures(2,683) (2,943) (5,040) (5,931)
Adjusted Free Cash Flow$12,248 $24,123 $(7,507) $6,999

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 consulting agreement expenses, gain on sales of real estate, litigation expenses related to shareholder lawsuit, stock compensation expenses and transaction costs. Adjusted Earnings per Diluted Common Share is defined as net income attributable to common stockholders adjusted for consulting agreement expenses, gain on sales of real estate, litigation expenses related to shareholder lawsuit, stock compensation expenses and transaction costs, all adjusted for estimated taxes, divided by diluted common shares. Adjusted Free Cash Flow is defined as cash provided by (used in) operating activities adjusted for consulting agreement expenses, litigation expenses related to shareholder lawsuit and transaction costs, all adjusted for estimated taxes, 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.


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

Source:Alico, Inc.