Alico at Planet MicroCap Showcase: Strategic Land Shift

On Wednesday, 23 April 2025, Alico Inc. (NASDAQ:ALCO) presented at the Planet MicroCap Showcase: VEGAS 2025, unveiling a strategic transition from citrus farming to diversified land management. While the shift promises new opportunities, it also marks the end of Alico’s traditional citrus operations. The company aims to capitalize on its vast land holdings, which significantly exceed its current market capitalization.

Key Takeaways

• Alico is transitioning from citrus operations to land development, with a focus on Florida.
• The company estimates its land value between $650 million and $750 million, compared to its $220 million market cap.
• A new $50 million share buyback program has been announced.
• Alico plans to develop 25% of its land, with a focus on environmental stewardship.
• The company owns 49,000 acres of mineral rights in Florida.

Financial Results

• Improved cash flow due to ceasing citrus operations.
• Expected cash reserves will sustain operations for at least two fiscal years without further land sales.
• $20 million in land sales announced this fiscal year.
• Nearly $190 million returned to shareholders since 2015 through dividends and buybacks.

Operational Updates

• Approximately 5,500 acres targeted for development within five years, valued at $335 million to $380 million.
• An additional 7,100 acres planned for development after five years, valued at $140 million to $170 million.
• Corkscrew Grove, a key project, includes plans for 4,500 homes and 1,500 acres for wildlife corridors.

Future Outlook

• Construction at Corkscrew Grove expected to begin in two to three years, pending approvals.
• Alico remains open to opportunistic land sales.

Q&A Highlights

• Alico acknowledges limited real estate development experience but emphasizes its expertise in land sales.
• Future land use includes options to build, sell, or partner with developers.

For a more detailed understanding, please refer to the full transcript below.

Full transcript - Planet MicroCap Showcase: VEGAS 2025:

Operator: All right, folks. We’re going to go ahead and get started. Thank you for being here. Next presenter, we have our next speaker is John Kiernan, and he is from Alico. So please enjoy.

John Kiernan, CEO, Alico: Thank you so much, and thank you for joining us at lunchtime here. This is a great conference, and we’re we’re very pleased to be part of it. Alico is a publicly traded company. We trade on the Nasdaq. We’ve been there since about 1960.

Our ticker is ALCO. Market cap is around $220,000,000. The stock is up about 11% year to date. We got about 7,600,000 shares, and we announced the transition back in January that we’ve navigated through quite smoothly. And let’s talk a little bit about where we are today.

So we go is a Florida based % agriculture and land management company. We’ve been in business for about a hundred and twenty five years. We’ve been public since 1960, but we’ve been around for a hundred and twenty five years. We’ve been evolving our real estate portfolio. So up until January, we were a % citrus, and we’ve transitioned our operations from traditional citrus to reposition about 25% of our land for more strategic development opportunities, which is gonna balance both the near term and the long term growth potential for development, combined with the remaining 75% of that land will remain somehow tied to agriculture in a more diverse manner.

We’ve been very consistent over the last several years that Aweco seeks to provide all investors with the benefits and stability of a conventional agricultural investment along with the optionality that’s gonna come with active land management. So why are we here today? Because Owego owns 50 almost almost 54,000 acres of land in 31 different locations across eight counties all within the state of Florida. You see names that you may be familiar with in Florida, Orlando, Tampa. Naples is down in the Collier County area.

You see West Palm on on the East Coast. But our land is in the center of the state, which we think is kinda where the migration paths are gonna be. This is all agricultural today, but we believe it is gonna be repositioned at least 25% of it in the near term, which we think can lack unlocks tremendous value for you, the shareholder. This is not just a real estate development story. Our legacy and our DNA goes back a hundred and twenty five years where we are tied to our conservation roots.

So and we just give you some highlights over the last forty years, of all the different conservation decisions that we’ve made to really be part of the community and and the Florida ecosystem. What’s not on here is we’ve also, somewhere along the line about twenty five years ago, donated 760 acres of land in Lea County, which is around the Fort Myers area, to basically create the Florida Gulf Coast University, which is the eleventh university in the Florida education system. So key leadership, I’ve been with the company for coming up on ten years. June will be my tenth anniversary. I was brought in to be the CFO after merging three companies together.

The investors realized it needed some help, with some integration and also to take the, the finance department in a different direction, and that morphed into a lot of operational decisions. And I became the CEO after a lot of tough operational decisions were made in 02/2019. Our most recent senior hire is the guy in the middle, Mitch Hutchcraft. Mitch is a, seasoned executive. He spent about thirty five years primarily doing entitlement work in Florida, and entitlement in Florida is a code word for rezoning.

And any decision that has to be made for, a land use has to go through a formal entitlement process, and that is Mitch’s specialty, and he’s been doing that for close to four decades now. Brad Heine has actually done some restructuring work in the past. He’s our CFO. We’re very, very happy to have him. He joined us in 02/2023.

So just briefly, in January sixth of this past year, we announced that we’re gonna be winding down our citrus operations after the 02/2024, ’2 thousand ’20 ’5 harvest, which concluded yesterday. So, Alico has closed the chapter on our citrus operations. We will still do some citrus work, next year on about 10% of the land that we’re currently doing it on, just because it’s it’s very productive for us, but it’s no longer core part of our operations. This transformed our company into a diversified land company, and that’s really where we’ve repositioned ourselves among the investor community. And we focused resources over the last year and a half really on the strategic development of some selected parcels.

We started the entitlement work two years ago on several of these parcels, and we’ll describe them, in another couple minutes. But the real real big news here was that we basically closed the book on our citrus operations in Florida. And down below on the financial outlook, that had some some pretty immediate benefits on behalf of shareholders. One, it really reduced our working capital requirements. It clearly takes us out of kind of the weather and disease dependency that we’ve been fighting for for most recently the the last several years.

And as part of this exercise, management estimated that the land value that we’re holding in present value today was worth somewhere between 650 and $750,000,000. And I said at the top of the hour that, our market cap today is about $220,000,000. We got about a hundred of debt. So, clearly, we think that the present value of our land is worth a substantial premium to basically where we’re trading. This year, in our fiscal year, which ends in September, we’ve already announced about 20,000,000 of land sales.

There’ll probably be a few more in there, but we’ll be generating some cash for that as well as the harvest revenue, which is now profitable for us because we’re no longer investing in next year’s, citrus crop. That will give us enough cash on our books to sustain us for at least two more fiscal years without selling another acre of land. So we’ve got very clear strength right now from a a liquidity perspective. And that allows us really to focus on, on the far side of the page, our highest and best use strategy. And we’ve identified about 25% of our acres that’ll be developed, 10% in the next five years, fifteen percent shortly thereafter, as well as 75% remaining in more diversified agricultural purposes.

So let’s talk about our portfolio. So in the near term, we figured there’s about 5,500 acres within the next five years. Ballpark on value management’s estimate is somewhere between 335 and $380,000,000. And, again, we’ve done a bottoms up analysis using outside appraisers. We discounted everything back using the same discount rates somewhere between 1015%.

We’ve never been very, very specific about that, and we maintain great consistency as we’ve done that DCF analysis. The long term potential is another 7,100 acres, and we think that’s somewhere between 140 and $170,000,000. And again, that’s post five years. Still gonna be developed, just not within the first five. And then everything else in our portfolio is gonna retain some sort of characteristic for agricultural purposes.

That’s about 41,000 acres give or take, about three quarters of what we’re holding today. We put a bogey on that with just agricultural prices somewhere between a hundred and 75 and $200,000,000. Add them all up, 650 to $750,000,000 worth of value. Our stock is trading about 220 today. So the process we went through was, we think, objective.

It was very consistent, and we think it’s conservative. And we literally went acre by acre. We developed a plan for every acre. And when we actually added all those up, we looked at how they broke out by county. We looked at, basically, the consistency of our operating assumptions.

We discounted everything back to to today’s dollars, and, basically, that’s how we came up with price that allowed us to basically prioritize where we’re gonna be spending shareholder resources. And that came down to the first five. So in the next five years, we’ve got Corkscrew, which is about 4,600 acres. That’s down in Collier County. Collier’s where Naples, Florida is if if you guys are keeping up.

Highland County, we’ve got a a grove today for about 600 acres. That’s called Bonnet Lake. In Polk County up in the North, we’ve got a grove almost 250 acres called Saddlebag. And down in Henry County, which is near the town of La Belle, we’ve got a, an 80 acre parcel right now that’s actually being used for cattle, that’s surrounded by, up and coming housing development. So when we add all this together, somewhere between 335 and $380,000,000, again, we think they can be developed in the next five years.

So the Corkscrew Grove is actually the gem in our portfolio. It is the furthest along right now from an entitlement perspective. It certainly has the highest visibility and most likely will command the highest prices. But we’ve laid out about three weeks ago all the details because we started the public filings. We filed the stewardship district bill in in February, which basically think of it as like a homeowner association that’s gonna be able to basically make investments into some of the infrastructure as the development goes forward.

That’s what the Florida state legislature right now. And once that’s approved, it hopefully goes to the governor in this session, to basically get, signed off, in which case we’ll now have an official stewardship district. And then we filed our SRA and our SSA application. That’s with the local government down in Collier County, and, basically, that starts the approval process at the local level. The corkscrew property has to be approved at the local level, which is the county, the state level, particularly on our water usage, and then at the federal level, primarily for endangered species.

And we basically have done all the applications with the exception of the federal, which would be the army corps of engineers. That’ll happen in the next couple of weeks. The environmental aspect of all this is is very, very serious. There’s some protected endangered species down in Southwestern Florida, the Florida panther in particular, as well as some very, very concerned citizens and neighbors. We’ve been extremely consistent with our good stewardship for all the land that we’ve had for a hundred and twenty five years.

We’ve done some great outreach, and we think we’ve designed a community that addresses proactively a lot of the potential concerns that some of these neighbors may have for new development that’s going into their backyard. Most importantly is we’re gonna be giving up about 6,000 acres for wildlife corridors and regional scale connected habitats, which hopefully will improve the population for the Florida panthers. But at the very least, it certainly puts our money where our mouth is that we’re taking our environmental stewardship very seriously. So this community was basically gonna be three parts, really. Parts one and two is gonna be the East Village, which is about 3,000 acres.

Potentially, that’s gonna turn into pick a number. It’s probably about 4,500 homes. We call them doors. And that’ll be the first one to go through, basically, the formal approval process at the county level. The state and the federal, we would try to approve at the same time so we know kinda what the big picture is gonna be.

But the first stage would price basically be our East Village. At the same time, over here on kind of the the Eastern side, we’re laying out 1,500 acres specifically for a Florida habitat for panthers. So somebody said it’s it’s gonna be the biggest dog run-in the history of The United States. Two mile wide in some spots, but it’s connecting two wildlife areas in the North and the South, across our property that basically is gonna give free access, for these panthers to basically go back and forth on, which is gonna be great so they’re not gonna have to cross any roads. And we certainly think combined with an adjacent about five miles down the road, Alico property for another property that we own that we’re basically putting into the rural land stewardship program, which allows us to basically pledge for conservation purposes all of our base development rights against one property that to be used at another.

We think that we’re doing as as good a job as we possibly can be to basically take into account some of these environmental concerns. So they’ll have a good bit of commercial space, but primarily right now in two areas, the East Village and the West Village combined with that panther habitat. Stay tuned. If you wanna follow, just Corkscrew Grove Villages is the Google alert you wanna see. And the company itself will constantly be giving you updates as we have news to report.

We figure another two to three years before we’re ready to put shovels on the ground once final approval is basically gathered. Bonnet Lake up in Highlands County, the 600 acre grove that we have today, primarily could be about another 2,000 plus homes and probably won’t have a lot of commercial space. But you see right here where the community is gonna look like. Saddlebag, we don’t have a lot of detail because we haven’t basically stormed the the public process, so we can’t give you any information. But most likely, that’s gonna be somewhere around 850 homes on about 240 acres.

And, again, that’s a little further up north in Polk County, which has been in the press over the last four or five years. It was a a huge, basically, destination as people are migrating into Florida during the COVID years. They were settling in Polk County, and you see basically the adjacency to Tampa and Orlando makes us a very good attractive place if you’re gonna build new communities. And then Plant World down in the South, again, 83 acres, probably 250 homes. It’s on a good highway.

It’s got some commercial in the vicinity, so we’re probably not gonna have to build a whole bunch of commercial. But, you know, we we don’t have additional detail as far as the specifics that we can share with you right now. So why are we here? That’s great. We talked about all the potential.

Let’s talk about what’s brought us here. Wico has a very strong track record, particularly over the last ten years of returning capital to you, the shareholder. Since 02/2015, when I joined the company, we’ve given back almost a hundred and $90,000,000 of capital through basically shareholder returns or voluntary prepayments of some debt. When I came to the company, we had about 200 plus million dollars of acquisition debt. We merged three companies together.

We paid the act a lot of that and certainly have restructured the rest to give us more flexibility and certainly addresses kind of the the current business operating model. But most importantly, we’ve given shares shareholders back dividends. We’ve done a tender offer, and we’ve done some buyback programs in the past, about $10,000,000. About three weeks ago actually, it’s almost a month now. Sorry.

On March 25, we announced that we have basically pledged over the next three years shareholder buyback program of up to 50,000,000 new dollars. And we said three years because that seems like a good window. It could get increased. We basically will keep you posted as we make progress with that. But we are committed to returning capital to shareholders as we sell land and basically have additional discretionary cash flow to share.

Our intention right now is to return it to shareholders. So why are we here? We’ve already wound down the Citrus operations and basically kinda changes the business profile. We now have a clear path to enhancing value as part of our diversification strategy. We are always opportunistic for as far as land sales go, and we’ve already identified by putting our money where our mouth is, 25% of our land for development, of which 10% in the near term, 15% after five years, and 75% will stay in long long term agriculture where we’ll generate fees as a landlord to other operators who wanna come in and basically pay us to use our land to do sugar, sod, soybeans, corn, green beans, other fruits and vegetables, cattle.

We’ve got a strong foundation here. The management team has been in place. I’ve been here for ten. Mitch has been doing this for close to thirty six or thirty seven years, and our CFO has been basically in the finance industry for almost twenty five. Our cash flow improved overnight in January, so we think we derisked our cash flow model.

Our financial excellence really comes down to a hundred $90,000,000 return of capital. We did that in the past by selling noncore assets. And now it’s returned to our portfolio of citrus. We’ve got more assets to base we potentially dispose of. We’ve always been a consistent dividend payer.

I’m told, I wasn’t here, that we pay dividends every quarter since 1960 with the exception of two quarters in 1974 when the oil embargo was going on. So we say since 1974, which is about fifty years, but we’ve always respected the common dividend as well as we just announced that $50,000,000 shareholder buyback program. I’m sorry. Share buyback program. We’re not buying any of you guys.

Sorry. If you comp us against some of our peers, we think we have an attractive valuation. We could talk about that. And last but not least, we have a very responsible land management program. We are basically members of the community.

We think we can work well with our neighbors. We certainly know how to navigate, basically, the approval processes. It does take time, but we recognize that, basically, you have to invest the time as well as bring the right people to the table, and that’s something that we have a good track record with. We’ve given guidance in the past year. We talked a little bit about our harvesting volumes, not really relevant today.

We talked about the land sales. I already mentioned that. And then our cash balances, the hook here is by the end of this fiscal year in September, we should have enough cash on our books that’ll sustain us if we don’t sell another inch of property for at least two additional fiscal years to cover all the overhead going forward. So with that, I’ll stop and see if we’ve got any questions you’d like to talk about today. Sir?

Yes, sir? Sure. So the the question is, does any of the land have mineral rights as well? So we own about 54,000 acres of land all within the state of Florida. Inclusive of that, but not acre for acre, we own 49,000 acres of mineral rights all within the state of Florida as well.

That sounds great. Of our land is pretty close to the Everglades National Park, so drilling for oil doesn’t make a whole bunch of sense. But we think it enhances the value and certainly gives us optionality as we look in potentially at the agricultural portfolio of what the long term potential highest investees could be for that. So thank you for asking that question. Sir?

Unidentified speaker: And on your something that that they were experiencing with this real estate development, Why should shareholders trust you to do a good job with it?

John Kiernan, CEO, Alico: Sure. Well, appreciate the honesty. The question is we’ve been in business for a hundred and twenty five years. We’ve been public since 1960. You’re saying that we have a lousy return even though we’re up 11% for the year, so we’ll take that with a grain of salt.

We’ve got absolutely no experience in real estate whatsoever. So where do we get off basically saying that you should invest with us because we’re gonna basically rise value for you? Great. So how did we get your hundred $90,000,000 of return of capital over the last ten years? The short answer is when I joined the company, we had a 69,000 acre cattle ranch.

And we basically retained a broker because we had determined it was not strategic to dispose of that. And after a year, and this is a specialist who only does ranches in Florida, couldn’t sell anything. I took the responsibility on myself. We sold one small parcel, about $1,700 an acre. With fast forward six years later, we disposed of 69,000 acres in 26 different transactions for the tune of about $220,000,000, and the last price to a private seller was $6,200 an acre.

So, yes, we’ve never done real estate development work, but we certainly understand the Florida real estate market. And we do have experience of actually selling real estate. So your question is, will we build the houses ourselves? I guess, potentially, that’s one way to leap for that. So where we are in Southwest Florida, you really have three choices.

Once you have entitled land, so you walk out the courthouse steps with your permit that’s been signed off at the federal, state, and local levels, you kinda have three choices before you get to your car. You can basically decide that you’re gonna build it yourself, so you’re gonna invest basically in firm infrastructure. So you’d basically bring in some in house experts that have done this for thirty or forty years. And for the record, that’s how we’re going through the entitlement process is we’ve got about 15 lawyers and engineers and contractors and consultants for our corkscrew property that have only worked in Collier County their entire career and are the best at what they do. And we’re paying good money for them, but we’re listening to what they tell, and we’re on a very smooth path.

So we bring the right resources to the right problem. If we decided to go into the real estate business and build this ourselves, we would do that too. We’d probably bring in house capabilities. It wouldn’t be me reading how to build a real estate community for Dummies book. That probably wouldn’t be that.

Second is you can basically sell it outright to some of the national homebuilders or the state homebuilders where they say, great. You got entitled land. Here’s some money. If you look in the vicinity of where Corsecrew is, that has been the business model the last five years. And there’s been some very similar properties that are very close to where we are.

That literally is what they did. And really, really, really, really high values. And maybe some of the numbers we gave you are reflective of some of those high values, but there’s basically some credibility that that is a possibility that the land, once it’s entitled, could be sold outright the day it gets entitled. The middle would be basically a partnership model where we have entitled land, we could partner with some of the national or local homebuilders, And, you know, we would get upside as they sell houses. We have the entitled land.

They’ve got the expertise. We work together as a team. So all in all, we think that’s how value gets created. We created value as we sold the Aweco Ranch to the tune of we gave you back a hundred and $90,000,000 out of 02/2020, and we’re very, very disappointed about what we’re going to do. And we’re transparent.

Every single step from here to when the entitlement is finished on all the properties that we’re describing, we’re informing you, the shareholders, as a public company. Kinda crazy. All of our peers are private. They don’t talk to about the breath to anything to the press or anybody like that, but we do. And we go to conferences like this ten, twelve times a year, and we have ten, twenty, 30 this week, investor meetings.

So we try to maintain consistency with our message. We try to be very, very transparent, and we’re gonna try every single day to create value for you. Alright? I think I have one minute left. One minute.

Yep. So we’re out of time. So real quick, you’re saying I’ve got 40,000 acres potentially that’s in the agricultural portfolio. How much of that could be repurposed for commercial residential? Depends who you talk to in Florida in the next hundred years, all of it.

Everything in Florida theoretically will have blacktop in a hundred years. In the near term, we don’t think any of it. We think it is really in the first part, which is basically the 12,000 acres that we identified is really where we think the residential or commercial be in the near in the near term. Alright. I’m gonna stop there.

We’ll answer questions in the back, but thank you very much for your participation today.

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