Alico, Inc.

[Pages:49]UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

? Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2019

or

? Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from____________________ to_________________________

Commission File Number: 0-261

Alico, Inc.

(Exact name of registrant as specified in its charter)

Florida

(State or other jurisdiction of incorporation or organization)

59-0906081

(I.R.S. Employer Identification No.)

10070 Daniels Interstate Court, Suite 100, Fort Myers, FL

(Address of principal executive offices)

33913

(Zip Code)

239-226-2000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ?Yes ? No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (?232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ?Yes ? No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

?

Non-accelerated filer

?

Emerging Growth Company

?

Accelerated filer ? Smaller Reporting Company ?

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ?

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ? No ?

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Common Stock

Trading Symbol(s) ALCO

Name of each exchange on which registered NASDAQ Global Market

There were 7,470,031 shares of common stock outstanding atMay 3, 2019.

ALICO, INC. FORM 10-Q For the three and six months ended March 31, 2019 and 2018 Table of Contents

Part I - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

1

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3. Quantitative and Qualitative Disclosures About Market Risk

37

Item 4. Controls and Procedures

37

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

40

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3. Defaults Upon Senior Securities

40

Item 4. Mine Safety Disclosures

40

Item 5. Other Information

40

Item 6. Exhibits

41

Signatures

42

Part 1 - FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

Index to Condensed Consolidated Financial Statements

Page

Condensed Consolidated Balance Sheets as of March 31, 2019 (Unaudited) and September 30, 2018

1

Condensed Consolidated Statements of Operations for the three and six months ended March 31, 2019 and 2018 (Unaudited)

2

Condensed Consolidated Statements of Changes in Equity for the three and six months ended March 31, 2019 and 2018 (Unaudited)

3

Condensed Consolidated Statements of Cash Flows for the six months ended March 31, 2019 and 2018 (Unaudited)

5

Notes to Condensed Consolidated Financial Statements (Unaudited)

6

Current assets: Cash and cash equivalents Accounts receivable, net Inventories Assets held for sale Prepaid expenses and other current assets Total current assets

ALICO, INC. CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

ASSETS

March 31, 2019

(Unaudited)

September 30, 2018

$

606 $

25,260

13,997

2,544

36,111

41,033

1,403

1,391

946

833

53,063

71,061

Restricted cash Property and equipment, net Goodwill Deferred financing costs, net of accumulated amortization Other non-current assets

Total assets

7,004

7,000

342,930

340,403

2,246

2,246

44

136

2,802

2,576

$

408,089 $

423,422

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:

Accounts payable Accrued liabilities Long-term debt, current portion Income taxes payable Other current liabilities

Total current liabilities

$

7,372 $

3,764

5,988

9,226

5,313

5,275

1,468

2,320

437

913

20,578

21,498

Long-term debt: Principal amount, net of current portion Less: deferred financing costs, net

Long-term debt less current portion and deferred financing costs, net Lines of credit Deferred income tax liabilities Deferred gain on sale Deferred retirement obligations Other liabilities

Total liabilities

Commitments and Contingencies (Note 12) Stockholders' equity:

Preferred stock, no par value, 1,000,000 shares authorized; none issued Common stock, $1.00 par value, 15,000,000 shares authorized; 8,416,145 and 8,416,145 shares issued and 7,462,803 and 8,199,957 shares outstanding at March 31, 2019 and September 30, 2018, respectively Additional paid in capital Treasury stock, at cost, 953,342 and 216,188 shares held at March 31, 2019 and September 30, 2018, respectively Retained earnings

Total Alico stockholders' equity Noncontrolling interest

Total stockholders' equity

Total liabilities and stockholders' equity

$

See accompanying notes to the condensed consolidated financial statements.

1

163,599 (1,465 )

162,134 24,962 28,930

-- 3,938

346 240,888

--

8,416 19,733 (32,496 ) 166,193 161,846

5,355 167,201 408,089 $

169,074 (1,563 )

167,511 2,685

25,153 24,928

4,052 --

245,827

--

8,416 20,126 (7,536 ) 151,111 172,117

5,478 177,595 423,422

ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

Operating revenues: Alico Citrus Water Resources and Other Operations Total operating revenues

Operating expenses: Alico Citrus Water Resources and Other Operations Total operating expenses

Gross profit: General and administrative expenses Income from operations Other (expense) income:

Interest expense Gain on sale of real estate, property and equipment and assets held for sale Change in fair value of derivatives Other income, net

Total other expenses, net Income (loss) before income taxes Income tax provision (benefit) Net income (loss) Net loss attributable to noncontrolling interests Net income (loss) attributable to Alico, Inc. common stockholders

Per share information attributable to Alico, Inc. common stockholders: Earnings (loss) per common share:

Basic Diluted Weighted-average number of common shares outstanding: Basic Diluted

Three Months Ended March 31,

2019

2018

Six Months Ended March 31,

2019

2018

$

47,823 $

34,709 $

61,720 $

51,788

698

891

1,580

1,345

48,521

35,600

63,300

53,133

31,582 625

32,207 16,314

4,654 11,660

26,110 1,657

27,767 7,833 3,073 4,760

42,456 1,348

43,804 19,496

8,104 11,392

42,405 2,313

44,718 8,415 6,959 1,456

(1,963 )

(2,239 )

(3,880 )

(4,494 )

1

99

23

1,835

(33)

--

(989 )

--

23

--

10

144

(1,972 )

(2,140 )

(4,836 )

(2,515 )

9,688

2,620

6,556

(1,059 )

2,228

8,150

1,599

(4,267 )

7,460

(5,530 )

4,957

3,208

87

16

123

24

$

7,547 $

(5,514 ) $

5,080 $

3,232

$

1.01 $

(0.67) $

0.68 $

0.39

$

1.01 $

(0.67) $

0.68 $

0.39

7,463 7,469

8,256 8,256

7,471 7,506

8,251 8,310

Cash dividends declared per common share

$

0.06 $

0.06 $

0.12 $

0.12

See accompanying notes to the condensed consolidated financial statements.

2

ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in thousands)

For the three months ended March 31, 2019

Common stock

Shares

Amount

Additional Paid In Capital

Treasury Stock

Retained Earnings

Total Alico, Inc. Equity

Noncontrolling

Interest

Total Equity

Balance at December 31, 2018 Net Income (loss) Dividends ($0.06/share) Treasury stock purchases Stock-based compensation:

Directors Executives Executive forfeiture

Balance at March 31, 2019

8,416 $ -- -- --

8,416 $ -- -- --

--

--

--

--

--

--

20,384

$ (32,817) $ 159,094

$

155,077 $

--

--

7,547

7,547

--

--

(448 )

(448 )

--

--

--

--

(83 )

321

--

255

--

--

(823 )

--

--

238 255 (823 )

8,416 $ 8,416 $

19,733

$ (32,496) $ 166,193

$

161,846 $

5,442 $ (87 ) -- --

-- -- --

160,519 7,460 (448 ) --

238 255 (823 )

5,355 $

167,201

For the six months ended March 31, 2019

Common stock

Shares

Amount

Additional Paid In Capital

Treasury Stock

Retained Earnings

Total Alico, Inc. Equity

Noncontrolling

Interest

Total Equity

Balance at September 30, 2018 Net Income (loss) Dividends ($0.12/share) Treasury stock purchases ASC 610-20 adoption Stock-based compensation:

Directors Executives Executive forfeiture

Balance at March 31, 2019

8,416 $ -- -- -- --

8,416 $ -- -- -- --

--

--

--

--

--

--

20,126

$ (7,536) $ 151,111

$

172,117 $

--

--

5,080

5,080

--

--

(895 )

(895 )

--

(25,576 )

--

(25,576 )

--

--

10,897

10,897

(140 )

616

--

570

--

--

(823 )

--

--

476 570 (823 )

8,416 $ 8,416 $

19,733

$ (32,496) $ 166,193

$

161,846 $

5,478 $ (123 )

-- -- --

-- -- --

177,595 4,957 (895 )

(25,576 ) 10,897

476 570 (823 )

5,355 $

167,201

3

Common stock

Shares

Amount

Balance at December 31, 2017 Net loss Dividends ($0.06/share) Treasury stock purchases Stock-based compensation:

Directors Executives

8,416 -- -- --

-- --

8,416 -- -- --

-- --

Balance at March 31, 2018

8,416

8,416

For the three months ended March 31, 2018

Additional Paid In Capital

Treasury Stock

Retained Earnings

18,890 -- -- --

(82 ) 242

(6,275 ) -- --

(206 )

273 --

148,285 (5,514 ) (494 ) --

-- --

19,050

(6,208 )

142,277

Total Alico, Inc. Equity

Noncontrolling

Interest

169,316 (5,514 ) (494 ) (206 )

191 242

4,720 (16 ) -- --

-- --

163,535

4,704

Total Equity

174,036 (5,530 ) (494 ) (206 )

191 242

168,239

For the six months ended March 31, 2018

Common stock

Shares

Amount

Additional Paid In Capital

Treasury Stock

Retained Earnings

Total Alico, Inc. Equity

Noncontrolling

Interest

Total Equity

Balance at September 30, 2017 Net Income (loss) Dividends ($0.12/share) Treasury stock purchases Stock-based compensation:

Directors Executives

8,416 $ -- -- --

8,416 $ -- -- --

--

--

--

--

18,694

$ (6,502) $ 140,033

$

160,641 $

--

--

3,232

3,232

--

--

(988 )

(988 )

--

(206 )

--

(206 )

(118 )

500

--

382

474

--

--

474

4,728 $ (24 ) -- --

-- --

165,369 3,208 (988 ) (206 )

382 474

Balance at March 31, 2018

8,416 $ 8,416 $

19,050

$ (6,208) $ 142,277

$

163,535 $

4,704 $

168,239

See accompanying notes to the condensed consolidated financial statements. 4

ALICO, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

Net cash provided by (used in) operating activities: Net income Adjustments to reconcile net income to net cash provided by (used in) operating activities: Deferred gain on sale of sugarcane land Depreciation, depletion and amortization Deferred income tax provision (benefit) Gain on sale of real estate, property and equipment and assets held for sale Change in fair value of derivatives Non-cash interest expense on deferred gain on sugarcane land Stock-based compensation expense Other Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses and other assets Accounts payable and accrued expenses Income tax payable Other liabilities Net cash provided by (used in) operating activities

Six Months Ended March 31,

2019

2018

$

4,957 $

3,208

-- 6,951

73 (23 ) 989 -- 223 (51 )

(282 ) 6,922 (4,306 ) (1,835 )

-- 688 856 (300 )

(11,453 ) 4,922 92 370 (852 ) (130 ) 6,068

(12,229 ) 9,194 (620 ) (533 ) -- (1,014 ) (251 )

Cash flows from investing activities:

Purchases of property and equipment Net proceeds from sale of property and equipment and assets held for sale Deposits on purchase of citrus trees Notes receivable

Net cash (used in) provided by investing activities

(9,524 ) 202 (515 ) 50

(9,787 )

(7,438 ) 24,612

-- (379 ) 16,795

Cash flows from financing activities: Repayments on revolving lines of credit Borrowings on revolving lines of credit Principal payments on term loans Treasury stock purchases Payment on termination of Global Ag agreement Dividends paid Capital lease obligation payments Net cash used in financing activities

(41,360 ) 63,637 (5,437 ) (25,576 ) (11,300 )

(895 ) --

(20,931 )

(21,424 ) 21,424 (6,715 )

(206 ) --

(988 ) (8 )

(7,917 )

Net (decrease) increase in cash and cash equivalents and restricted cash Cash and cash equivalents and restricted cash at beginning of the period

(24,650 ) 32,260

Cash and cash equivalents and restricted cash at end of the period

$

See accompanying notes to the condensed consolidated financial statements.

5

7,610 $

8,627 3,395

12,022

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