FORT MYERS, Fla. - Alico, Inc. (NASDAQ:ALCO), a leading Florida-based agribusiness with a current market capitalization of $201 million, announced today it will cease operations of its citrus division, Alico Citrus, following the current 2024/2025 harvesting season. According to InvestingPro data, the company has maintained dividend payments for 20 consecutive years despite industry challenges. The decision comes as the company pivots towards a diversified land usage and real estate development strategy, in response to longstanding financial challenges exacerbated by environmental factors such as citrus greening disease and hurricanes.
The company, which owns approximately 53,371 acres of land across eight counties in Florida, has seen a dramatic 73% decline in citrus production over the past decade. Alico President and CEO John Kiernan cited the impact of Hurricanes Irma, Ian, and Milton, combined with the persistent threat of citrus greening disease, as key factors in the decision to transition away from citrus farming.
As part of the strategic shift, Alico expects to maintain its commitment to the Florida agriculture industry through diversified farming operations and is planning to entitle certain parcels of land for commercial and residential development. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 3.81, though it faces challenges with negative EBITDA of $4.34 million in the last twelve months. For deeper insights into Alico’s financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The company believes this move will enhance investor returns by providing the benefits of a conventional agriculture investment with the added potential of active land management.
The wind-down of Alico Citrus will include a reduction of the citrus production workforce and the management of approximately 3,460 citrus acres by third-party caretakers through 2026. Alico is providing support to affected employees during the transition.
Alico’s management estimates the value of its current landholdings to be between $650 million and $750 million, with 75% of these acres valued for agricultural use. While the company generated revenue of $46.64 million in the last twelve months, InvestingPro analysis indicates the company is currently trading above its Fair Value, with additional ProTips available to subscribers regarding the company’s financial health and growth prospects. The company anticipates positive cash flow for the remainder of the fiscal year, with sufficient cash reserves to meet operating expenses for at least two additional years without the need for further land sales.
The company hosted a conference call and webcast earlier today to discuss the strategic transformation. A replay of the call will be available, and details can be found on Alico’s website.
This strategic shift marks the end of an era for Alico, which has been a significant player in Florida’s citrus industry for more than a century. The company’s new direction aims to provide a more stable future while continuing its legacy of land stewardship and support for local communities.
The information in this article is based on a press release statement from Alico, Inc.
In other recent news, Alico Inc. has announced a significant restructuring of its citrus operations, which will result in a workforce reduction affecting up to 172 employees. The restructuring is part of the company’s strategic shift towards diversified land usage and is expected to cost between $1.5 and $2.0 million. Alico Inc. has also extended the employment contract of its President and CEO, John Kiernan, until September 30, 2027, with an annual base salary of $525,000. The fiscal year 2024 saw Alico’s net income rise from $1.8 million to $7 million, and earnings per diluted share increase from $0.24 to $0.91. The company has secured a new orange purchase agreement with Tropicana at higher prices, sold a large portion of its ranch land to the State of Florida for $77.6 million, and announced a quarterly dividend of $0.05 per share. These recent developments are part of Alico’s strategic efforts to maximize the potential of its land assets, improve its citrus production capabilities, and provide stability for investors. Despite these developments, Alico has expressed uncertainty about the 2025 crop size due to variable operational strategies and market conditions.
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