Alico, Inc. 2024 10-K Report Review

Introduction

Alico, Inc., a prominent agribusiness and land management company, recently released its 10-K report for the fiscal year ending September 30, 2024. This report provides a comprehensive overview of the company's operations, financial performance, and strategic initiatives. Alico operates primarily in two segments: Alico Citrus and Land Management and Other Operations. This review will delve into the key aspects of the report, including business operations, financial performance, risk factors, and strategic initiatives.

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Business Overview

Alico, Inc. is one of the largest citrus producers in the United States, with operations primarily in Florida. The company owns approximately 53,371 acres of land and 48,700 acres of oil, gas, and mineral rights throughout Florida. Alico's business is divided into two main segments:

1. Alico Citrus: This segment involves the production, cultivation, and sale of citrus on owned lands and as a manager of citrus groves for third parties. Alico Citrus is a significant contributor to the company's revenue, accounting for 96.6% of total operating revenues in 2024.
2. Land Management and Other Operations: This segment includes land conservation, environmental services, land leasing, and related support operations. It generated 3.4% of the company's total operating revenues in 2024.

Financial Performance

Revenue and Profitability

For the fiscal year 2024, Alico reported total operating revenues of $46.6 million, a 17.1% increase from the previous year. The Alico Citrus segment saw an 18.1% increase in revenues, driven by higher production and improved pricing. However, the company reported a net income of $6.4 million, a significant increase from $1.7 million in 2023, despite a loss from operations of $67.5 million.

Cash Flow and Debt

Alico's net cash used in operating activities was $30.5 million, primarily due to increased costs and lower insurance proceeds compared to the previous year. The company has a revolving line of credit with a capacity of $95 million, with $86.6 million available as of September 30, 2024. Alico's total debt stood at $92.6 million, with a debt-to-equity ratio of 0.37.

Risk Factors

Alico faces several risks that could impact its operations and financial performance:

• Weather and Natural Disasters: The company's citrus groves are vulnerable to adverse weather conditions, including hurricanes and tropical storms. Hurricane Milton in October 2024 caused measurable fruit drop, impacting the anticipated harvest.
• Citrus Diseases: Diseases such as citrus greening and citrus canker pose significant threats to Alico's citrus operations. The company is testing new treatments, but there is no known cure for these diseases.
• Dependence on Tropicana: Alico's contracts with Tropicana accounted for 86.8% of its revenues in 2024. Any disruption in this relationship could significantly impact the company's financial performance.

Strategic Initiatives

Alico is focused on maximizing stockholder value through strategic growth initiatives, including:

• Citrus Grove Management: The company continues to expand its grove management services, which generated 6.3% of total citrus revenues in 2024.
• Land Sales and Leasing: Alico sold 18,354 acres of land in 2024, generating significant gains. The company is also exploring opportunities for land leasing and conservation.
• Citrus Greening Treatment: Alico is testing a new application of Oxytetracycline Hydrochloride to mitigate the impacts of citrus greening. The company received grant money to cover the costs of these treatments.

Conclusion

Alico, Inc.'s 2024 10-K report highlights the company's strong position in the citrus industry and its strategic focus on growth and value creation. While the company faces significant risks, particularly from weather and disease, its strategic initiatives and financial management provide a solid foundation for future growth. Investors should consider these factors when evaluating Alico's investment potential.

Overall, Alico's 2024 performance and strategic direction suggest a moderate investment potential, with a score of 6.5 out of 10. The company's strong revenue growth and strategic initiatives are promising, but the risks associated with its operations warrant careful consideration.