What changed in this filing

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Item 1. Business

2024-12-02 compared with 2023-12-06 · 76 added, 74 removed, 145 unchanged (51% of the section changed)

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Alico is an agribusiness with a legacy of achievement and innovation in citrus and conservation.

We own approximately 72,000 acres of land in eight Florida counties (Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands and Polk), and also mineral rights throughout Florida.

We hold these mineral rights on substantially all our owned acres, with additional mineral rights on other leased acres.

We own approximately 53,371 acres of land in eight Florida counties (Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands and Polk), and approximately 48,700 acres of oil, gas and mineral rights throughout Florida.

We hold these oil, gas and mineral rights on substantially all our owned acres, with additional mineral rights on other leased acres.

Our principal lines of business are citrus groves and land management.

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Recent Developments

Florida Forever Program Land Sale

On September 18, 2023, we signed an Option Agreement for Sale and Purchase (“Option Agreement”) with the Board of Trustees of the Internal Improvement Trust Fund of the State of Florida for the sale of 17,229 acres of the Alico Ranch.

On September 21, 2023, Florida Governor Ron DeSantis and the Florida Cabinet approved the purchase of this land from Alico, under the Florida Forever Program, for approximately $77,600 thousand.

The sale is expected to close between December 2023 and February 2024, and we intend to use the proceeds from this sale to repay variable rate debt and for general corporate purposes.

Hurricane Ian

On September 28, 2022, Hurricane Ian made landfall on the southwest coast of Florida and a majority of our groves were adversely impacted by the storm.

The impact of Hurricane Ian has affected our year ended September 30, 2023 fruit production as we accelerated the harvest to maximize box production for both our Early and Mid-Season and Valencia harvest, which was completed earlier than the prior year harvest.

Approximately 48,900 gross acres of our citrus groves, which are in Charlotte, Collier, DeSoto, Hardee, Hendry, Highlands and Polk Counties, sustained hurricane or tropical storm force winds for varying durations of time.

While we lost a small percentage of trees, the force and duration of the storm impacted the majority of the groves.

Based upon prior experience with serious storms of this nature, we expect it may take up to two full seasons or more for the groves to recover to pre-hurricane production levels.

We maintain crop insurance and property and casualty insurance and have received, as of September 30, 2023, $27,389 thousand in proceeds for crop claims and $839 thousand relating to property and casualty damage claims.

These insurance proceeds are included as a reduction to operating expenses in the Consolidated Statements of Operations.

Federal Relief Program – Hurricane Ian

In December 2022, the Consolidated Appropriations Act was signed into law by the federal government;

however, the details of the mechanism and funding of any Hurricane Ian relief still remains unclear and, if available, the extent to which we will be eligible.

We intend to take advantage of any such available programs as and when they become available.

We are currently working with Florida Citrus Mutual, the industry trade group, and government agencies on the federal relief programs available as part of the Consolidated Appropriations Act.

Florida Citrus Commission Development

On November 21, 2024, the Florida Citrus Commission passed an emergency rule, based on requests from the Florida Citrus Processors Association and Florida Citrus Mutual, to reduce the minimum Brix value (a measurement of sugar content) for oranges harvested for the period beginning on November 21, 2024 and ending on May 23, 2025 from 8.5 to 7.0 and to eliminate the minimum ratio of total soluble solids to anhydrous citric acid (a measure of maturity).

While it is not possible for us to estimate the potential impact of this ruling, it may increase the amount of the Company's fruit that would be acceptable at the processors.

Hurricane Milton

On October 9, 2024, Hurricane Milton hit Florida and the Company's citrus groves sustained hurricane or tropical storm force winds for varying durations of time.

Based on observations to date, the Company sustained minimal tree damage;

however, there was measurable fruit drop from trees in our northern groves, particularly in Polk and Hardee County.

We will continue to evaluate the impact of Hurricane Milton on our anticipated harvest in assessing any incremental impairment to be recognized at December 31, 2024.

However, an estimate of the amount of any incremental write-down to inventory cannot be made at this time.

Inventory Net Realizable Value Adjustment

On September 30, 2024, we recognized an adjustment of $19,549, to reduce inventory to its net realizable value.

The inventory adjustment is the result of expectations for a significantly lower than anticipated harvest of the Early and Mid-Season and Valencia crops for the 2024-2025 season due to the ongoing challenges posed by Hurricane Ian.

More than half of our crops dropped before harvesting in fiscal year 2023 and fiscal year 2024 fruit production did not return to pre-Ian levels.

These lower levels of production remain a concern to management as we begin to harvest the 2024-2025 crops, and the Company is evaluating our performance daily.

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Amended Credit Agreement with Metropolitan Life Insurance Company

On September 16, 2024, we amended our Credit Agreement (the “Amendment”) with Metropolitan Life Insurance Company, which, among other things (i) increases the borrowing capacity under the revolving line of credit (the “RLOC”) from $25,000 to $95,000 and (ii) now extends the maturity date of the RLOC to May 1, 2034.

This Amendment replaces the Company’s $70,000 working capital line of credit with Rabo Agrifinance, Inc., which was due to mature on November 1, 2025.

Tropicana Orange Purchase Agreement

On June 5, 2024, we entered a new three-year Orange Purchase Agreement (the “Tropicana 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 fruit sold to Tropicana last season.

The Tropicana Agreement is effective June 5, 2024 through July 31, 2027, subject to its terms and conditions, and succeeds existing agreements with Tropicana that expired at the end of July 2024.

Citrus Greening Treatment

In 2022, we began testing a new application of the citrus greening therapy Oxytetracycline (“OTC”), which is used in citrus and other crops.

Although not a cure for citrus greening, this OTC application is expected to mitigate some of the impacts of citrus greening and is expected to decrease the rate of fruit drop and improve fruit quality.

After a review of the new application method by the U.S.

Environmental Protection Agency, the Florida Department of Agriculture and Consumer Services (“FDACS”) granted a special local-need registration (24c) on October 28, 2022.

We began treating our trees on

January 16, 2023, as the product and application devices became available, and as of September 30, 2023, had treated over 35% of our trees.

The extent of any benefit of the OTC application will not be measurable until the completion of the harvest for the year ended September 30, 2024.

Sales of Land

During the year ended September 30, 2023, we sold approximately 2,255 acres to third parties for approximately $12,000 thousand and recognized a gain of $11,432 thousand.

Federal Relief Program – Hurricane Irma

We were eligible for Hurricane Irma federal relief programs for block grants that were being administered through the State of Florida.

We have received a total of $26,963 thousand in Hurricane Irma federal relief through the year ended September 30, 2023.

As of September 30, 2023, we have received all funds due under the Florida Citrus Recovery Block Grant (“CRBG”) program.

These federal relief proceeds are included as a reduction to operating expenses in the Consolidated Statements of Operations.

During the years ended September 30, 2023, 2022 and 2021 we received Hurricane Irma federal relief proceeds of $1,315 thousand, $1,123 thousand and $4,299 thousand, respectively.

In 2022, we began testing a new application of Oxytetracycline Hydrochloride (“OTC”), which is registered with the U.S.

Environmental Protection Agency (“EPA”) under the Federal Insecticide, Fungicide and Rodenticide Act (“FIFRA”) as an active ingredient in pesticide products for the control of certain bacterial diseases in non-food bearing trees;

this new application involves use of OTC-containing products as a therapy to address citrus greening.

On October 28, 2022, after a review of the new application method by the EPA and the Florida Department of Agriculture and Consumer Services (“FDACS”) pursuant to Section 24(c) of FIFRA, FDACS granted a special local-need registration through December 4, 2025, and EPA did not disapprove of FDACS’s grant of this registration.

Although not a cure for citrus greening, this OTC application has been found to mitigate some of the impacts of citrus greening and to decrease the rate of fruit drop and improve fruit quality.

During the year ended September 30, 2024, we treated substantially all our producing trees (approximately 4.5 million) with OTC.

This represents a second round of injections for approximately 35% of our producing trees, which were treated in fiscal year 2023.

We received $1,805 of grant money from the Florida Citrus Research and Field Trial Foundation (the "CRAFT Foundation") in January 2024 that covered substantially all of the costs of the 2023-24 harvest season OTC applications, $1,157 was received in third and fourth quarters of 2024 and $35 received in October 2024, that will cover approximately 35% of the 2024-25 harvest season OTC applications.

In July 2024 the FDACS approved a label change for the OTC product to remove the restriction that the product cannot be applied more than two years in a row.

This change will enable us to apply the OTC treatment in calendar year 2025 to the trees that we started treating in 2023.

In addition, the CRAFT Foundation has approved a third round of grant monies, for which we can apply, that would further mitigate our OTC costs for the year ended September 30, 2024 and future costs for the years ended September 30, 2025 and 2026.

However, it is not yet possible to provide a reliable estimate of any such grant monies at this time.

Extension of Grove Management Agreement

On October 30, 2023, the Company entered into a Citrus Grove Management Agreement (the "Grove Management Agreement") with an unaffiliated group of third parties to provide citrus grove caretaking services for approximately 3,300 acres owned by such third parties.

Under the terms of the Grove Management Agreement, the Company is reimbursed by the third parties for all its costs incurred related to providing these services and receives a management fee based on acres covered under this agreement.

The Grove Management Agreement may be terminated with written notice provided at least 60 days prior to the commencement of the next fiscal year, occurring subsequent to September 30, 2024 and with shorter notice under certain conditions.

On September 20, 2024, the Grove Management Agreement was extended until December 31, 2024.

The Land We Manage

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Our total return profile is a combination of operating income potential and long-term appreciation.

Land holdings not meeting our total return criteria are considered surplus to our operations and efforts are being made to sell such land holdings or to exchange such land holdings for land considered to be more compatible with our business objectives and total return profile, or to lease such land holdings.

Our land holdings and the operating activities in which we engage are categorized in the following table:

Gross Acreage Operating Activities

Land holdings that do not meet our total return criteria are considered surplus to our operations and efforts are being made to sell such land holdings

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or to exchange such land holdings for land considered to be more compatible with our business objectives and total return profile, or to lease such land holdings.

The operating activities on our land holdings and in which we engage as of September 30, 2024, are categorized in the following table:

Gross Acreage (estimated) Operating Activities

Citrus Groves 48,229 Citrus Cultivation

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Citrus Land Lease

On June 29, 2022, we signed three agreements to lease approximately 2,100 citrus acres from the grove owners and thus had the rights to citrus production on such leased acreage for a one-year term at a cost of $157 thousand.

On June 26, 2023, we extended the lease representing approximately 1,115 acres for one-year through June 30, 2024.

Additionally, on the same terms and conditions, we have the right to extend this lease representing 1,115 acres for two one-year periods.

Effective July 1, 2024, we extended a lease representing approximately 637 acres for one-year through June 30, 2025.

We have the right, on the same terms and conditions, to extend this lease for two one-year periods.

This lease expands our current citrus production acreage by approximately 2%, over our owned land production, to approximately 32,000 net citrus acres.

Our citrus acreage is further detailed in the following table:

Our estimated citrus acreage is further detailed in the following table:

Net Plantable

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These include acres that are currently producing, acres that are developing (i.e., acres that are planted with trees too young to commercially produce fruit) and acres that are fallow.

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In an effort to increase the density of our citrus groves, we have planted approximately 2,500,000 new trees since 2017.

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Our sales to the processed market were 92.0% and 94.0%, of Alico Citrus revenues for the years ended September 30, 2024 and 2023, respectively.

The overall increase in the sales to the processed markets as a percentage of citrus revenues during the year ended September 30, 2023, as compared to the years ended September 30, 2022 and 2021, is due to the termination of an agreement to provide grove management services to third-party grove owners, discussed further below.

The overall decrease in the sales to the processed markets as a percentage of citrus revenues during the year ended September 30, 2024, as compared to the year ended September 30, 2023, is due to the signing of the Grove Management Agreement discussed above.

The average pound solids per box was 4.83 and 5.02, for the years ended September 30, 2024 and 2023, respectively.

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In May 2020, we entered into two agreements to supply Tropicana, our largest customer, with citrus fruit.

These new agreements were effective October 1, 2020, expire on July 31, 2024, and succeeded our existing largest agreement with this customer which expired at the end of September 2020.

On June 26, 2023 we renewed another agreement to supply Tropicana with citrus fruit, which expired after the fiscal year 2023 harvest season.

This new agreement was effective August 31, 2023 and expires on August 31, 2025.

These new agreements were effective on October 1, 2020, and expired on July 31, 2024.

These agreements have since been replaced by the Tropicana Agreement, discussed above under “Recent Developments,” which is based on fixed prices per pound solid with escalation clauses over the term of the agreement.

On June 26, 2023, we renewed another agreement to supply Tropicana with citrus fruit, which replaced a prior agreement that had expired after the fiscal year 2023 harvest season.

This new agreement was effective August 31, 2023 and expires on August 31, 2025 and is also based on fixed prices per pound solid with escalation clauses over the term of the agreement.

Our sales to the fresh citrus market constituted 1.2% and 1.5% of our Alico Citrus revenues for the years ended September 30, 2024 and 2023, respectively.

In June 2022, a group of third-party grove owners, who are affiliated with each other (collectively, the “Grove Owners”), for which we were managing groves under a Property Management Agreement executed on July 16, 2020 with the Grove Owners, under which we performed grove management services, terminated the management relationship under the Property Management Agreement with us as the Grove Owners decided to exit the citrus business.

As a result, all grove management services relating to the Property Management Agreement and the accompanying management fee and reimbursed costs associated with performing grove management services ceased on June 10, 2022.

The management fee was paid through June 30, 2022.

We continue to provide grove management services to several small third-party grove-

owners on acres within our groves.

On October 30, 2023, we entered into the Grove Management Agreement and we continue to provide grove management services to several small third-party grove-owners on acres within our groves.

Revenues generated from our grove management services were 6.3% and 3.2% of our total citrus revenues for the years ended September 30, 2024 and 2023, respectively.

On October 30, 2020, we purchased approximately 3,280 gross acres located in Hendry County for a purchase price of $18,230 thousand.

This acquisition allowed us to add additional scale to our then approximately 46,000 gross acres of citrus properties.

Strategically, with these acquired groves neighboring existing Alico groves, we believe that this acquisition will help us with our operation designed to be a low-cost, high-producing citrus grower.

During the year ended September 30, 2024, we sold approximately 798 acres of citrus land for approximately $7,183 and recognized a gain of $4,391.

Revenues from our Alico Citrus operations were 96.6% and 95.7%, of our total operating revenues for the years ended September 30, 2024 and 2023, respectively.

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Our Land Management and Other Operations land holdings total 5,120 gross acres, or 9.6% of our total acreage.

Our Land Management and Other Operations acreage is detailed in the following table as of September 30, 2023:

Our estimated Land Management and Other Operations acreage is detailed in the following table as of September 30, 2024:

Hendry County 1,319

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Glades County 526

During the year ended September 30, 2023, we sold approximately 2,255 acres for $12,000 thousand and recognized a gain of $11,432 thousand (including approximately 85 acres for $439 thousand to Mr.

Kiernan, our President and CEO).

During the year ended September 30, 2022, we sold approximately 9,414 acres for $41,421 thousand and recognized a gain of $39,124 thousand.

During the year ended September 30, 2021, we sold approximately 17,434 acres for $26,664 thousand and recognized a gain of $25,272 thousand (including approximately 7,372 acres for $20,120 thousand to the State of Florida, under the Florida Forever program, for a gain of $5,570 thousand).

Assets Held for Sale to the Consolidated Financial Statements included in this Annual Report for further information on ranch land sales.

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During the year ended September 30, 2024, we sold approximately 17,556 acres of the Alico Ranch (including 17,229 to the State of Florida) for approximately $78,930 and recognized a gain of $77,025.

During the year ended September 30, 2023, we sold approximately 2,225 acres for $12,000 and recognized a gain of $11,432.

Revenues from Land Management and Other Operations were 3.4% and 4.3% of total operating revenues for the years ended September 30, 2024 and 2023, respectively.

Our core business strategy is to maximize stockholder value through continuously improving the return on our invested capital, either by holding and managing our existing land through skilled agricultural production, leasing, or other opportunistic means of monetization, disposing of under productive land or business units and acquiring new land or operations with appreciation potential.

Our objectives are to produce the highest quality agricultural products, create innovative land uses, opportunistically acquire and convert undervalued assets, sell under-productive land and other assets not meeting our total return profile, generate recurring and sustainable profit with the appropriate balance of risk and reward, and exceed the expectations of stockholder, customers, clients and partners.

Our core business strategy is to maximize stockholder value through continuously improving the return on our invested capital and pursuing opportunistic means of monetization, including holding and managing our existing land through skilled agricultural production and disposing of or leasing land or business units.

Our objectives are to produce the highest quality agricultural products, create innovative land uses, opportunistically sell land and other assets not meeting our total return profile, and generate recurring and sustainable profit with the appropriate balance of risk and reward.

Our strategy is based on what we believe are best-management practices of our agricultural operations and the environmental and conservation stewardship of our land and natural resources.

We try to manage our land in a sustainable manner to maximize value creation and to evaluate the effect of changing land uses while considering new opportunities.

We endeavor to manage our land in a sustainable manner to maximize value creation and to evaluate the effect of changing land uses while considering new opportunities.

We believe that our commitment to environmental stewardship is fundamental to our core beliefs.

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As with any agribusiness enterprise, our agribusiness operations and revenues are predominantly seasonal in nature.

The following table illustrates the seasonality of our agribusiness revenues:

The following table illustrates the typical seasonality of our agribusiness revenues.

However, due to the timing of the harvest for the year ended September 30, 2024, more of the citrus crop was harvested in the first and second quarters of this fiscal year.

Year Ended September 30

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Harvest Fresh and Early/Mid Varieties of Oranges X X X X

Harvest Valencia Oranges X X X X

Harvest Valencia Oranges X X X

Significant Customer

Revenue from Tropicana represented 86.8% and 81.3%, of our consolidated revenue for the years ended September 30, 2024 and 2023, respectively.

Revenue in the years ended September 30, 2023 and 2022, from Tropicana, was generated primarily from two separate contracts.

Revenue in the years ended September 30, 2024 and 2023, was generated primarily from two separate contracts with Tropicana.

This revenue was generated from the sale of our citrus product in the processed market.

No other single customer provided more than 10% of our consolidated revenue in the years ended September 30, 2024 or 2023.

The slight increase in Tropicana revenue, as a percentage of sales, for the years ended September 30, 2023 and 2022 is primarily due to the Grove Owners terminating the Property Management Agreement in June 2022.

The increase in Tropicana revenue, as a percentage of sales, was primarily due to an increase in pound solids produced during the year ended September 30, 2024, as we began to recover from Hurricane Ian, which negatively impacted our harvest during the year ended September 30, 2023.

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The orange and specialty citrus markets are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities.

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In addition, we require in our leases that lessees of our property comply with environmental regulations as a condition of leasing.

We are subject to other laws of the United States and the rules and regulations of various governing bodies within the United States, which may differ among jurisdictions.

We are also subject to other non-environmental laws of the United States and the rules and regulations of various governing bodies within the United States, which may differ among jurisdictions.

Compliance with these laws, rules and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods.

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We believe our success depends on our ability to attract, develop and retain key personnel.

The skills, experience and industry knowledge of our employees and the employees of our

independent contractors significantly benefit our operations and performance.

The skills, experience and industry knowledge of our employees and the employees of our independent contractors significantly benefit our operations and performance.

Our management oversees various employee initiatives and also monitors the effectiveness of the personnel provided by independent contractors with which we contract for certain harvesting and hauling services.

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Employee levels are managed to align with the pace of business and consider the services that are provided for us by our independent contractors.

We rely on our independent contractors to manage their respective employee levels so that the harvesting and hauling services they are obligated to perform for us are consistent with the contractual obligations of these independent contractors and enable us to satisfy our harvesting and hauling needs.

We rely on our independent contractors to manage their respective employee levels so that the harvesting and hauling services they are obligated to perform for us are consistent with their contractual obligations and enable us to satisfy our harvesting and hauling needs.

Management believes that through our own employees, coupled with the human capital supplied by our independent contractors, we have sufficient human capital to operate our business successfully.

Management believes that our employee relations are favorable, that our relations with our independent contractors is favorable, and that the relations that the independent contractors and we have with the employees of the independent contractors is favorable.

Management believes that our employee relations are favorable, that our relations with our independent

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contractors are favorable, and that the relations that we and the independent contractors have with the employees of the independent contractors are favorable.

Employee Safety and Well-Being

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The COVID-19 pandemic underscored for us the importance of keeping our employees and the personnel provided by independent contractors safe and healthy.

In response to the pandemic, we have taken actions aligned with the Centers for Disease Control and Prevention to protect our workforce so that our workforce can more safely and effectively perform their work.

Inclusion and Diversity

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We do not include our independent contractors in our number of employees because they are not employees.

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Our employees work in the following divisions:

Alico Citrus 175

Land Management and Other Operations (1)

Corporate, General, Administrative and Other 24

Total employees 199

(1) There is one employee who is included in Corporate, General, Administrative and Other who oversees the Land Management and Other Operations.

None of our employees are subject to a collective bargaining agreement.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business