Alico at LD Micro Invitational: Strategic Shift to Land Management

On Thursday, 10 April 2025, Alico Inc. (NASDAQ: ALCO) presented at the 15th Annual LD Micro Invitational 2025, unveiling a strategic pivot from citrus operations to land management and development in Florida. While emphasizing its robust history and community ties, Alico aims to balance immediate and long-term goals through strategic land allocation, presenting both opportunities and challenges.

Key Takeaways

• Alico is shifting 25% of its land for strategic development, maintaining 75% for agriculture.
• The company has returned nearly $190 million to shareholders since 2015.
• New $50 million share repurchase program announced.
• Alico's board features a mix of legacy and new members with diverse expertise.
• No final decision on whether to develop land internally, partner, or sell.

Financial Performance and Capital Allocation

• Alico has paid dividends for over 50 years, with exceptions in two quarters of 1974.
• Debt reduced by $113 million since 2015.
• Nearly $10 million in shareholder repurchases conducted before the new program.
• A new $50 million share repurchase program will be executed over several years.

Operational Updates

• Alico owns 53,371 acres across 31 locations in eight counties.
• The company donated 20,000 acres to establish Florida Gulf Coast University.
• Alico's land portfolio is being reallocated to support strategic development and agriculture.

Development Projects

• Corkscrew: A master-planned community with commercial space and 4,500 housing units.
• Bonnet Lake: A smaller community with 2,100 housing units.
• Saddlebag: Conversion of 240 acres of citrus operations into 840 homes.
• La Belle and Saddlebag projects are in early planning stages.

Future Outlook

• Alico is exploring options for land development, including internal development, partnerships, or selling entitled land.
• The focus is on obtaining entitlements to maintain flexibility in development strategies.

Q&A Highlights

• CEO John Kiernan emphasized the importance of entitlements in Florida's development landscape.
• The board composition supports Alico's strategic shift with expertise in real estate and agriculture.

For a comprehensive understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 15th Annual LD Micro Invitational 2025:

Operator: Alright. We will begin our next presentation. So let's please give a warm welcome to the CEO of Alico, John Kiernan.

John Kiernan, CEO, Alico: Thank you, Kendall. And thank you, everyone, for joining us today. My name is John Kiernan. I'm the CEO of Alico. Alico is a publicly traded company listed on the NASDAQ with the ticker ALCO.

Yesterday, market cap was about $220,000,000 Our stock is up about 11.8% year to date. We are a agribusiness and land management company all located within the state of Florida. We've been in business for about one hundred and twenty five years. We have very strong ties to agriculture, but more importantly, to conservation and the communities in which we live and operate. Over the last few months, we've been evolving our portfolio of land transitioning from traditionally what has been a citrus operation to reposition the company to about 25% of our land holdings going for strategic development opportunities, balancing both the near and the long term potential, while also basically having 75% of our land remaining into agriculture.

We've been very consistent about this strategy for the last several years where we try to provide investors with the benefits and stability of a conventional agricultural investment combined with the optionality that comes with active land management. And if a picture is worth a thousand words, we can stop right here. This is Florida. Everything in the middle is what we own and this is where we operate. We are in 31 different locations across eight counties.

And as a diversified land company, our 53,371 acres offer what we think is long term, near term, and midterm great potential. We cannot understate our legacy of conservation. Development is somewhat of a controversial topic in Florida, but our conservation pedigree goes back one hundred and twenty five years. What's not on this page is we've also donated close to 20,000 acres about twenty five years ago to establish Florida Gulf Coast University. So we have strong ties to the community in Florida.

We think that translates into good solid relationships at the federal, state, and local levels. And we think this helps us as we basically create timetables on what that 25% of our land potentially could become. We also have a stable management team. Stable as far as seniority, not stable as far as any sort of So again, I've been with the company for about ten years. Started out as the CFO in 02/2015.

And in 02/2019, I was promoted after substantial operational experience to become the CEO. The gentleman in the middle of the page, Mitch Hutchcraft, is a leading expert in the entitlement process all located within the state of Florida. And we still have more credits that we're going to generate by giving up more and more areas within Collier County, but we were one of the charter members of this program, and we're actually cashing in some of these credits for this project itself. So all good. The project itself on the first side, the blue is what's going to get developed first.

That's the East side of about 280,000 square feet of commercial, primarily along the highway. This is Radium on the top here. And about 1,500 acres is going be used for the first village. That's probably about 4,500 houses. Doors, we call it, because some of it's going be multifamily, some will be affordable housing.

But there'll be 4,500 doors on the East Village. Most likely, once it is approved and construction starts, we will start basically the approval process on the West Village. But our strategy was we would tell everybody everything that we're planning so they get the entire big picture because we think the picture actually is what really creates the story. So Bonnet Lake, a little further north, it's kind of under the radar. It's a smaller project.

It's in a different county. They don't have the environmental species issue. And it is going to be a master planned community. It's about 2,100 basically doors that we believe. It's in all these different areas that you see in these pods.

We won't have any commercial space, probably slightly lower price points, but a very significant project for us. We think it will get approved prior to getting the approval on the Corkscrew 1. Saddlebag, you see the picture here. We have some lakefront in the Western side here. But again, not a lot of commercial.

About two forty acres will be used. We'll convert all of our citrus operations and it'll be small. It's about eight forty homes. But again, it's a first step for us and we think it'll be at very good price points because of that lakefront access. It's got some homes going up around it.

This will probably have about two fifty homes. Both the La Belle project here at Plant World and this one over here at Saddlebag, We haven't filed anything yet, so we don't have all that additional detail like we do for these that we can share with you at this time. So why we're here talking today as a public company? Well, we have a strong track record of returning capital to shareholders. That's actually the trick.

This isn't a liquidation play. This is basically how do we reward shareholders for their investment in our company. We've paying dividends for fifty years consecutively. It's actually longer than that, fourteen years longer than that. When we became public in 1960, we paid dividends, but we missed two quarters In 1974, there was an oil embargo that drove everybody crazy and our board got a little nervous, so we stopped two quarters.

But we've always been consistently paying common dividends. We've also basically returned a whole bunch of capital, not only to shareholders, but voluntarily prepaid some debt as well as some mandatory. When I joined the firm in 2015, we had about $215,000,000 worth of debt, which is a result of three very large transactions that merged together to form the largest citrus company in United States. We paid that down. We paid almost $113,000,000 of principal payments down on our debt today.

We've done a shareholder repurchase prior to what we've announced last week to the tune of almost $10,000,000 And again, we just announced that we a which is not launched yet. But because we're in a blackout period, we have to go through earnings release the May. But once we do that, we think over the next several years, we should be able to take down at least $50,000,000 worth of stock in the open market through 10b5s. And then we have done a tender offer in the past as well. So you add all that up, since 2015 when I joined the company, we've given back almost $190,000,000 either through debt repayments or return of capital to shareholders.

We're serious about our shareholder relationship. That's the past. What about the present? Why invest today? We streamline the business.

Simplest terms, basically winding down citrus gives us tremendous flexibility to build that financial foundation. It gives the clear opportunity for shareholders to make their own evaluation of what our assets are worth because we've basically put our homework out there for you in present value terms today. It's all open property. You can drive down. We've got an interactive map on our website, which is alicoinc.com.

You can go on that map, and you can pull up every inch of property that we have. You can see what's around it, what's by it, what's near it, and you can come to your own conclusion. We are open to opportunistic land sales. We've done that in the past. When I joined the firm, in addition to all the citrus that we owned, we also owned a 69,000 acre cattle ranch, which took me two years as the CFO to figure out was losing money for us as a company and certainly wasn't returning capital.

So over six or seven years, we actually disposed of that through opportunistic land sales, where the initial price to a private purchaser basically had tripled by the time we finished it in 2024. So patients can be rewarded for land sales in Florida if you have the opportunity to stay at the table long enough. And we certainly have the liquidity to stay at the table with the portfolio of assets that we have for as long as is necessary. We have a really good management team that's very, very good at what they do. I've got a corporate background.

I have an investment banking background. But more importantly, in ten years, I've established a real estate transaction background. Mitch Hutchcraft has spent thirty seven years basically in the entitlement process. He is the best in the business. So you have a very good team working for you to execute the strategy on behalf of you.

Last but not least, you know, dollars 190,000,000 worth of capital return is nothing to turn your nose up at. You've got some small quarter week dividends that are coming in on a common basis, but the shareholder buyback should give you some hope that we're ready to put our money where our mouth is as far as returning capital to shareholders. And if you look at kind of where we think comps are trading for today, and we can talk about our comps, we think we're trading at an attractive discount. Last but not least, we've got a good strong track record in the land management business. We've repositioned the company, and we think that creates value for shareholders while also basically remaining connected to the local communities that we've built up relationships over the last one hundred and twenty five years.

So we've given guidance over the fiscal twenty twenty five. We're just putting that up there in case you're interested about our legacy business. But there's no new news here that we're releasing today. And then you can come look at us as a public company with a good website. We'll talk about anything you want to do.

So I'll stop there. We've got a few minutes for questions. What can I tell you? Sir? All right.

That sounds very interesting. Reminded me of a little bit of the St. Joe's. Were you guys related to that at all from back in the day? Related to St.

Joes? We're not related to St. Joes. We know St. Joes fairly well.

But that was a huge whole run. It was. It took years to make. I think Jorge Gonzalez has done a great job. If you're unfamiliar, the question was, are we familiar with St.

Joe? Is this a St. Joe kind of play? The difference is St. Joe basically has, pick a number, 15 miles worth of beach access in the Florida Panhandle, which is going to be in the Northwestern corner of the state.

It's going to be West Of Tallahassee. We're in 31 different locations in the center of the state. So we've got a little more geographic diversity. They've done a great job of basically repositioning kind of their assets, which I believe historically was timber, built up a great war chest, and then went into kind of building towns. Not only towns, but they built hospitals, they helped build an airport, and we watched them very carefully.

Can I ask another couple of questions? Sure. Board composition, you just like Logan, you look at a smaller company, you know, who, you know, do you have adult supervision? Do you have a board that's creating value for you? Sure.

So we have a board that has turned over a little bit, but not a lot over the last pick a number since 2013. We've got some legacy board members through the acquisitions. Hank Swack you know, is chairman emeritus for us, and he has been on boards fifty years. He's a tremendous asset. He's been a CEO.

He's very active in the commodity space. He's active on boards even today. Andy Krusen, who is a board member for us as well, is extremely active in the Florida real estate development world. And then we have George Broca, who owns a good chunk of shares. He helped put the deal together with us back in 02/2013.

He's been on corporate boards such as DISH most likely, most recently. On the Florida side, we basically reinvented the board in 2019 with some additional members. You have somebody like Adam Putnam, who is extremely active in politics. He was a congressman for about ten years and then went to Tallahassee and became our commissioner of agriculture for eight years under Rick Scott. And since then, he's actually the CEO of Ducks Unlimited, a very powerful and well respected conservation organization worldwide.

He is now our chairman over the last couple months. Kate English is on our board as well. She's extremely well respected attorney with a specialty in kind of water use and water rights, all located within Florida. And last but not least, we've got Toby Perce, who's on our board, who is basically the Chief Operating Officer for Littmann Farms, which is located in Florida, very, very active and powerful within the global vegetable world. But he also has repositioned acres in the areas that we're talking about for real estate development.

So he has walked miles in our footsteps. He's just way ahead of us and has been invaluable to us as we've looked. So we feel very good about our board. We are a micro cap company, but we don't think we have a micro cap board. And one last question.

Is there anything besides common? What's your cap structure like? It's common. That's it? That's it?

No, no preferred, no classes. We have a crazy structure because all of our board members are up for a vote every year. There's no staggered boards. There's no poison pills. We're as shareholder friendly as we can possibly make it because we want to be accountable to you as our shareholders.

What kind of debt do have? We've got some basically, it's bullet term. It's non amortizing term with MetLife. It's going to mature. It's about $70,000,000 It's going to mature

They also have a very large working capital facility with us as well, all of which we announced two weeks ago. We restructured all the covenants to make them very user friendly for us in light of this new strategy. So we consider them a very, very good partner. Of course. Are you going to develop these labs?

Are you going to find somebody to develop this stuff for you? So we have a question of is Alico going to do the development work ourselves, or will we find someone to basically develop it ourselves? Million dollar question, sir. So thank you for asking. I've been waiting for somebody to ask that question.

Maybe. We don't know. The way it works down in Florida I'm sure it works everywhere, but I'll only speak to Florida is the entitlement is the hard part. And the national real estate development firms don't really seem very interested in non entitled basically properties because there's some risk associated with basically kind of time to market. Once a property is entitled, the rumor is people will jump you on the courthouse steps as you're walking down with your permit to put a big check-in your hand to basically take that property off your hands.

That is one scenario. And we've seen several of our peers with similar properties in Collier County, which is going to be on the Lee County side for this conversation, go through that experience. We have also seen other peers basically partner with one, two, three, four, or five national developers. And there would be some sort of financial arrangement. And last but not least, you know, we can bring in house capabilities in to do these projects ourselves.

We have not made any decision for any of the properties that we described in those first five years on which path we're ready to go. But the first step to maintain all this optionality is to get the entitlement work done. We certainly keep in touch

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