UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the Quarterly Period Ended |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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from____________________ |
to_________________________ |
Commission File Number:
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(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer |
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Non-accelerated filer |
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Smaller Reporting Company |
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Emerging Growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
There were
ALICO, INC.
FORM 10-Q
For the three months ended December 31, 2021 and 2020
Table of Contents
PART I
Item 1. Condensed Consolidated Financial Statements
Index to Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 2021 (Unaudited) and September 30, 2021 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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ALICO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
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December 31, |
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September 30, |
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2021 |
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2021 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net |
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Inventories |
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Income tax receivable |
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Assets held for sale |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Long-term debt, current portion |
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Other current liabilities |
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Total current liabilities |
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Long-term debt: |
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Principal amount, net of current portion |
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Less: deferred financing costs, net |
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Long-term debt less current portion and deferred financing costs, net |
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Lines of credit |
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— |
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Deferred income tax liabilities, net |
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Other liabilities |
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Total liabilities |
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Commitments and Contingencies (Note 12) |
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Stockholders' equity: |
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Preferred stock, no par value, |
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Common stock, $ |
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Additional paid in capital |
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Treasury stock, at cost, |
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Retained earnings |
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Total Alico stockholders' equity |
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Noncontrolling interest |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
1
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share amounts)
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Three Months Ended December 31, |
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2021 |
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2020 |
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Operating revenues: |
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Alico Citrus |
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$ |
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$ |
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Land Management and Other Operations |
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Total operating revenues |
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Operating expenses: |
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Alico Citrus |
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Land Management and Other Operations |
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Total operating expenses |
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Gross profit |
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General and administrative expenses |
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(Loss) income from operations |
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Other income (expense), net: |
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Interest expense |
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Gain on sale of real estate, property and equipment and assets held for sale |
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Other income |
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Total other income, net |
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Income before income taxes |
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Income tax (benefit) provision |
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Net income |
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Net loss attributable to noncontrolling interests |
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Net income attributable to Alico, Inc. common stockholders |
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$ |
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$ |
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Per share information attributable to Alico, Inc. common stockholders: |
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Earnings per common share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted-average number of common shares outstanding: |
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Basic |
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Diluted |
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Cash dividends declared per common share |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
2
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
(in thousands)
For the Three Months Ended December 31, 2021
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Additional |
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Total |
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Non- |
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Common stock |
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Paid In |
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Treasury |
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Retained |
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Alico, Inc. |
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controlling |
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Total |
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Shares |
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Amount |
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Capital |
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Stock |
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Earnings |
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Equity |
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Interest |
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Equity |
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Balance at September 30, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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Dividends ($ |
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— |
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— |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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Stock-based compensation: |
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Directors |
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— |
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— |
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— |
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— |
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Executives and Managers |
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— |
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— |
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— |
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— |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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For the Three Months Ended December 31, 2020
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Additional |
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Total |
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Non- |
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Common stock |
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Paid In |
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Treasury |
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Retained |
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Alico, Inc. |
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controlling |
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Total |
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Shares |
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Amount |
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Capital |
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Stock |
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Earnings |
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Equity |
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Interest |
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Equity |
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Balance at September 30, 2020 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income (loss) |
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— |
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— |
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— |
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— |
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Dividends ($ |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation: |
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Directors |
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— |
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— |
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— |
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Executives and Managers |
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— |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
3
ALICO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
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Three Months Ended December 31, |
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2021 |
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2020 |
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Net cash used in operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation, depletion, and amortization |
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Gain on sale of real estate, property and equipment and assets held for sale |
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Loss on disposal of long-lived assets |
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Deferred income tax benefit |
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— |
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Debt issue cost expense |
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Stock-based compensation expense |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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Inventories |
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( |
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( |
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Prepaid expenses |
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( |
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( |
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Income tax receivable |
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Other assets |
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Accounts payable and accrued liabilities |
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( |
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( |
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Income taxes payable |
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— |
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Other liabilities |
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( |
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( |
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Net cash used in operating activities |
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Cash flows from investing activities: |
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Purchases of property and equipment |
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Acquisition of citrus groves |
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Net proceeds from sale of real estate, property and equipment and assets held for sale |
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Change in deposits on purchase of citrus trees |
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( |
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Advances on notes receivables, net |
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— |
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Other |
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— |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities: |
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Repayments on revolving lines of credit |
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( |
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Borrowings on revolving lines of credit |
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Principal payments on term loans |
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( |
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Exercise of stock options |
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— |
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Dividends paid |
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( |
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( |
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Net cash provided by financing activities |
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Net decrease in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of the period |
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Cash and cash equivalents at end of the period |
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$ |
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$ |
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See accompanying notes to the condensed consolidated financial statements.
4
ALICO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Description of Business and Basis of Presentation
Description of Business
Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company", "we", "us" or "our”), is a Florida agribusiness and land management company owning approximately
Basis of Presentation
The Company has prepared the accompanying financial statements on a condensed consolidated basis. These accompanying unaudited condensed consolidated interim financial statements, which are referred to herein as the “Financial Statements", have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to Article 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission ("SEC") for interim financial information. These Financial Statements do not include all the disclosures required for complete annual financial statements and, accordingly, certain information, footnotes and disclosures normally included in annual financial statements, prepared in accordance with U.S. GAAP, have been condensed or omitted in accordance with SEC rules and regulations. Accordingly, the Financial Statements should be read in conjunction with the Company's audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021, as filed with the SEC on December 7, 2021.
The Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited. However, in the opinion of management, such Financial Statements include all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP applicable to interim periods.
Operating results for the interim periods presented are not necessarily indicative of the results that may be expected for the current fiscal year ending September 30, 2022.
Segments
Operating segments are defined in the criteria established under the Financial Accounting Standards Board - Accounting Standards Codification (“FASB ASC”) Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by the Company’s chief operating decision maker (“CODM”) in deciding how to assess performance and allocate resources. The Company’s CODM assesses performance and allocates resources based on two operating segments: (i) Alico Citrus and (ii) Land Management and Other Operations.
Principles of Consolidation
The Financial Statements include the accounts of Alico and the accounts of all the subsidiaries in which a controlling interest is held by the Company. Under U.S. GAAP, consolidation is generally required for investments of more than 50% of the outstanding voting stock of an investee, except when control is not held by the majority owner. The Company’s subsidiaries include: Alico Land Development, Inc., Alico-Agri, Ltd., Alico Plant World, LLC, Alico Fruit Company, LLC, Alico Citrus Nursery, LLC, Alico Chemical Sales, LLC, 734 Citrus Holdings, LLC and subsidiaries, Alico Skink Mitigation, LLC and Citree Holdings 1, LLC (“Citree”). The Company considers the criteria established under FASB ASC Topic 810, “Consolidations” in its consolidation process. All significant intercompany balances and transactions have been eliminated in consolidation.
5
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the accompanying Financial Statements, the disclosure of contingent assets and liabilities in the Financial Statements and the accompanying Notes, and the reported amounts of revenues and expenses and cash flows during the periods presented. Actual results could differ from those estimates. The Company evaluates estimates on an ongoing basis. The estimates are based on current and expected economic conditions, historical experience, the experience and judgment of the Company’s management and various other specific assumptions that the Company believes to be reasonable.
Revenue Recognition
Revenues are derived from the sale of processed fruit, fresh fruit, other citrus revenue, revenues from grove management services, leasing revenue and other resource revenues. Most of the revenue is generated from the sale of citrus fruit to processing facilities, fresh fruit sales and grove management services.
For fruit sales, the Company recognizes revenue in the amount it expects to be entitled to be paid, determined when control of the products or services is transferred to its customers, which occurs upon delivery of and acceptance of the fruit by the customer and when the Company has a right to payment.
For the sale of fruit, the Company has identified one performance obligation, which is the delivery of fruit to the processing facility of the customer (or harvesting of the citrus in the case of fresh fruit) for each separate variety of fruit identified in the respective contract with the respective customer. The Company initially recognizes revenue in an amount which is estimated based on contractual and market prices, if such market price falls within the range (known as “floor” and “ceiling” prices) identified in the specific respective contracts. Additionally, the Company also has a contractual agreement whereby revenue is determined based on applying a cost-plus structure methodology. As such, since all these contracts contain elements of variable consideration, the Company recognizes this variable consideration by using the expected value method. On a quarterly basis, management reviews the reasonableness of the revenues accrued based on buyers’ and processors’ advances to growers, cash and futures markets and experience in the industry. Adjustments are made throughout the year to these estimates as more current relevant industry information becomes available. Differences between the estimates and the final realization of revenues at the close of the harvesting season can result in either an increase or decrease to reported revenues.
For grove management services, the Company has identified one performance obligation, which is the management of the third party’s groves. Grove management services include caretaking of the citrus groves, harvesting and hauling of citrus, management and coordination of citrus sales and other related activities. The Company is reimbursed for expenses incurred in the execution of its management duties and the Company receives a per acre management fee. The Company recognizes operating revenue, including a management fee, and corresponding operating expenses when such services are rendered and consumed.
6
Disaggregated Revenue
Revenues disaggregated by significant products and services for the three months ended December 31, 2021 and 2020 are as follows:
(in thousands) |
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Three Months Ended December 31, |
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2021 |
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2020 |
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Alico Citrus |
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Early and Mid-Season |
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$ |
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$ |
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|
Fresh Fruit |
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Grove Management Services |
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Other |
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Total |
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$ |
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$ |
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Land Management and Other Operations |
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Land and Other Leasing |
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$ |
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$ |
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Other |
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Total |
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$ |
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$ |
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Total Revenues |
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$ |
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$ |
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Noncontrolling Interest in Consolidated Subsidiary
The Financial Statements include all assets and liabilities of the less-than-100%-owned subsidiary the Company controls, Citree. Accordingly, the Company has recorded a noncontrolling interest in the equity of such entity. Citree had a net loss of $
Recent Accounting Pronouncements
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform. The Company’s floating rate notes and variable funding notes bear interest at fluctuating interest rates based on LIBOR. Because LIBOR will cease to exist, the Company will need to renegotiate its loan agreements, but the Company cannot predict what alternative index would be negotiated with its lenders. ASU 2020-04 is currently effective and upon adoption may be applied prospectively to contract modifications made on or before December 31, 2022. The Company is currently assessing the impact of adopting this standard and the impact on its condensed consolidated financial statements.
The Company has reviewed other recently issued accounting standards which have not yet been adopted to determine their potential effect, if any, on the results of operations or financial condition. Based on the review of these other recently issued standards, the Company does not currently believe that any of those accounting pronouncements will have a significant effect on its current or future financial position, results of operations, cash flows or disclosures.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, “Intangibles-Goodwill and Other” (Topic 350), which simplifies the accounting for goodwill impairment. The updated guidance eliminates Step 2 of the impairment test, which requires entities to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value, determined in
7
Step 1. The Company adopted ASU 2017-04 effective October 1, 2020, using the prospective approach, and will apply this standard in future impairment tests.