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| 8-K - 8-K FINANCIAL RESULTS 2Q2016 - ALICO, INC. | a8-kfinancialresults2q2016.htm |
Exhibit 99.1
For immediate release:
Alico, Inc. Announces Second Quarter and Six Month Financial Results for Fiscal Year 2016 Highlighted by $23.2 million of Adjusted EBITDA and $0.91 Adjusted Free Cash Flow per Diluted Common Share for the Six Months of Fiscal Year 2016.
Fort Myers, FL, May 5, 2016 - Alico, Inc. (“Alico” or the “Company”) (NASDAQ:ALCO), today announces financial results for the second quarter and six months ended March 31, 2016.
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||||||||
Adjusted Non-GAAP Measures | |||||||||||||||||||||||||||||
EBITDA | $ | 20,837 | $ | 16,676 | $ | 4,161 | 25.0 | % | $ | 23,220 | $ | 21,037 | $ | 2,183 | 10.4 | % | |||||||||||||
Earnings per Diluted Common Share | $ | 1.02 | $ | 1.04 | $ | (0.02 | ) | (1.9 | )% | $ | 0.72 | $ | 0.92 | $ | (0.20 | ) | (21.7 | )% | |||||||||||
Free Cash Flow | $ | 24,226 | $ | 9,846 | $ | 14,380 | 146.0 | % | $ | 7,558 | $ | (4,829 | ) | $ | 12,387 | NM | |||||||||||||
Free Cash Flow per Diluted Common Share | $ | 2.92 | $ | 1.19 | $ | 1.73 | 145.4 | % | $ | 0.91 | $ | (0.62 | ) | $ | 1.53 | NM | |||||||||||||
GAAP Measures | |||||||||||||||||||||||||||||
Net income attributable to common stockholders | $ | 8,734 | $ | 4,226 | $ | 4,508 | 106.7 | % | $ | 5,722 | $ | 9,433 | $ | (3,711 | ) | (39.3 | )% | ||||||||||||
Earnings Per Diluted Common Share | $ | 1.05 | $ | 0.51 | $ | 0.54 | 105.9 | % | $ | 0.69 | $ | 1.21 | $ | (0.52 | ) | (43.0 | )% | ||||||||||||
Net cash provided by (used in) operating activities | $ | 26,919 | $ | 12,499 | $ | 14,420 | 115.4 | % | $ | 12,138 | $ | (3,947 | ) | $ | 16,085 | NM | |||||||||||||
NM = Not Meaningful
Orange Co. Division Results
Orange Co.’s 2016 crop production is projected to be lower than its previous harvest season. Total pound solids are projected to decline by approximately 15-17% and box production by 11-13%. Orange Co.’s early and mid-season box production finished lower by approximately 17% compared to the prior year, but its late season production is expected to be more stable with a projected box production decrease of approximately 4-6% compared to last year. The USDA estimates the entire Florida orange crop will decrease by 21.5% this season, and Orange Co. believes these declines are due to extreme weather patterns, such as El Nino, as well as citrus greening. Orange Co.’s late season harvesting activities were accelerated this year, and the Orange Co. quarterly financial results have been positively affected by this accelerated activity.
On March 4, 2016, the Florida Commissioner of Agriculture exercised his authority under the Emergency Exemptions provisions of the Federal Insecticide, Fungicide and Rodenticide Act to allow use of certain foliar bactericide applications. Florida growers can use these products until the Environmental Protection Agency completes its review of a specific exemption petition submitted by the Florida Department of Agriculture and Consumer Services. These bactericides are approved and successfully applied on other permanent crops throughout the United States. Orange Co. began application of these bactericides to all of its groves in April 2016. Orange Co. is encouraged by the potential of foliar bactericide treatments to enhance the overall health of citrus trees and thereby mitigate the impact of citrus greening.
Citrus production for the second quarter and six months ended March 31, 2016 and 2015 is summarized in the following table.
(boxes and total pound solids in thousands) | |||||||||||||||||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||||||||||||||||
Boxes | 4,787 | 4,403 | 384 | 8.7 | % | 6,294 | 5,851 | 443 | 7.6 | % | |||||||||||||||||||
Total Pound Solids | 27,116 | 25,872 | 1,244 | 4.8 | % | 34,047 | 33,372 | 675 | 2.0 | % | |||||||||||||||||||
Average Pound Solids Per Box | 5.85 | 6.10 | (0.25 | ) | (4.1 | )% | 5.73 | 5.95 | (0.22 | ) | (3.7 | )% | |||||||||||||||||
Price Per Pound Solids - Early-Mids | $ | 2.27 | $ | 1.96 | $ | 0.31 | 15.8 | % | $ | 2.18 | $ | 1.95 | $ | 0.23 | 11.8 | % | |||||||||||||
Price Per Pound Solids - Valencias | $ | 2.42 | $ | 2.15 | $ | 0.27 | 12.6 | % | $ | 2.42 | $ | 2.15 | $ | 0.27 | 12.6 | % | |||||||||||||
Orange Co.’s total costs of production in fiscal year 2016 are expected to remain in line with the prior year, but the cost per box has increased by approximately $0.12, from $7.00 to $7.12, due to expected decreased box production for the season. To date, operating expenses increased over the prior periods largely due to selling more boxes in the second quarter and first six months of fiscal year 2016 compared to the same periods in fiscal year 2015.
Conservation and Environmental Resources Division Results
For the six months ended March 31, 2016, Conservation and Environmental Resources (“CER”) revenues of $1.7 million were earned primarily from calf sales with a 667,000 increase in pounds sold generating $1.5 million of increased revenue partially offset by a ($0.4) million decrease due to the price per pound declining from $2.18 to $1.68 year over year. The 667,000 increase in pounds sold was due to the timing of calf sales as CER held an additional 1,000 calves in inventory at September 30, 2015 which would have historically been sold prior to year-end. CER operating expenses increased by $0.8 million for the six months ended March 31, 2016 compared to the six months ended March 31, 2015 due to the timing of additional pounds sold.
Other Corporate Financial Information
Alico continues to invest in information technology, management talent and strategic acquisition activities, which has increased its general and administrative costs. Corporate G&A expenses for the six months ended March 31, 2016 totaled $6.8 million compared to $9.0 million for the six months ended March 31, 2015, a decrease of ($2.2) million. The decrease relates primarily to $3.4 million in non-recurring professional and legal fees associated with the Orange-Co and Silver Nip acquisitions in fiscal year 2015 offset by certain fiscal year 2016 expenses including $0.4 million in legal fees related to the shareholder litigation and $0.4 million in bonuses.
Other expense, net for the six months ended March 31, 2016 was $4.4 million compared to $8.3 million of other income for the six months ended March 31, 2015. The decrease of $12.7 million is primarily attributable to a $12.7 million decrease in partial gain recognition on the sale of the sugarcane land and a $1.3 million increase in interest expense offset by non-recurring fiscal year 2015 losses including a $1.0 million loss on extinguishment of debt and a $0.5 million asset impairment.
The Company paid a second quarter cash dividend of $0.06 per share on its outstanding common stock on April 15, 2016, to shareholders of record at March 31, 2016 and repurchased 14,310 shares of common stock at an average cost of $37.62 per share in the quarter.
The Company ended the quarter with term debt, net of cash and cash equivalents, of $196.5 million.
About Alico
Alico is a holding company with assets and related operations in agriculture and environmental resources, including cattle ranching, water management, and mining. Our mission is to create value for shareholders by managing existing assets to their optimal current income and total returns, opportunistically acquiring new assets and producing high quality agricultural products while exercising responsible environmental stewardship. Learn more about Alico (NASDAQ: ALCO) at www.alicoinc.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on Alico’s current expectations about future events and can be identified by terms such as "plans," "expect," "may," "anticipate," "intend," "should be," "will be," "is likely to," "believes," and similar expressions referring to future periods.
Alico believes the expectations reflected in the forward-looking statements are reasonable but cannot guarantee future results, level of activity, performance or achievements. Actual results may differ materially from those expressed or implied in the forward-looking statements. Therefore, Alico cautions you against relying on any of these forward-looking statements. Factors which may cause future outcomes to differ materially from those foreseen in forward-looking statements include, but are not limited to: changes in laws, regulation and rules; weather conditions that affect production, transportation, storage, demand, import and export of fresh product and its by-products, increased pressure from disease, insects and other pests; disruption of water supplies or changes in water allocations; pricing and supply of raw materials and products; market responses to industry volume pressures; pricing and supply of energy; changes in interest rates; availability of financing for land development activities and other growth opportunities; onetime events; acquisitions and divestitures, including our ability to achieve the anticipated results of the Orange-Co acquisition and Silver Nip merger; seasonality; labor disruptions; inability to pay debt obligations; inability to engage in certain transactions due to restrictive covenants in debt instruments; government restrictions on land use; changes in agricultural land values; and market and pricing risks due to concentrated ownership of stock. Other risks and uncertainties include those that are described in Alico’s SEC filings, which are available on the SEC’s website at http://www.sec.gov. Alico undertakes no obligation to subsequently update or revise the forward-looking statements made in this press release, except as required by law.
Investor Contact:
John E. Kiernan
Senior Vice President and Chief Financial Officer
(239) 226-2000
JKiernan@alicoinc.com
Non-GAAP Financial Measures
Adjusted EBITDA | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to common stockholders | $ | 8,734 | $ | 4,226 | $ | 5,722 | $ | 9,433 | |||||||
Interest expense | 2,475 | 2,257 | 4,978 | 3,636 | |||||||||||
Provision for income taxes | 6,102 | 1,127 | 4,027 | 4,890 | |||||||||||
Depreciation and amortization | 4,036 | 3,505 | 8,044 | 6,489 | |||||||||||
EBITDA | 21,347 | 11,115 | 22,771 | 24,448 | |||||||||||
Asset impairment | — | 541 | — | 541 | |||||||||||
Transaction costs | 105 | 274 | 502 | 3,853 | |||||||||||
Acquired citrus inventory fair value adjustments | — | 4,202 | — | 4,202 | |||||||||||
Loss on extinguishment of debt | — | 17 | — | 964 | |||||||||||
Payments on consulting agreements | 142 | 500 | 446 | 500 | |||||||||||
Litigation expenses related to shareholder lawsuit | 3 | — | 403 | — | |||||||||||
(Gains) losses on sale of real estate | (760 | ) | 27 | (902 | ) | (13,471 | ) | ||||||||
Adjusted EBITDA | $ | 20,837 | $ | 16,676 | $ | 23,220 | $ | 21,037 | |||||||
Adjusted Earnings Per Common Share | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net income attributable to common stockholders | $ | 8,734 | $ | 4,226 | $ | 5,722 | $ | 9,433 | |||||||
Loss on extinguishment of debt | — | 17 | — | 964 | |||||||||||
Asset impairment | — | 541 | — | 541 | |||||||||||
Transaction costs | 105 | 274 | 502 | 3,853 | |||||||||||
Litigation expenses related to shareholder lawsuit | 3 | — | 403 | — | |||||||||||
Acquired citrus inventory fair value adjustments | — | 4,202 | — | 4,202 | |||||||||||
Payments on consulting agreements | 142 | 500 | 446 | 500 | |||||||||||
Gains on sale of real estate | (760 | ) | 27 | (902 | ) | (13,471 | ) | ||||||||
Tax impact | 209 | (1,171 | ) | (186 | ) | 1,164 | |||||||||
Adjusted net income | $ | 8,433 | $ | 8,616 | $ | 5,985 | $ | 7,186 | |||||||
Diluted common shares | 8,303 | 8,272 | 8,309 | 7,815 | |||||||||||
Adjusted Earnings per Diluted Common Share | $ | 1.02 | $ | 1.04 | $ | 0.72 | $ | 0.92 | |||||||
Adjusted Free Cash Flow | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net cash provided by (used in) operating activities | $ | 26,919 | $ | 12,499 | $ | 12,138 | $ | (3,947 | ) | ||||||
Adjustments for non-recurring items: | |||||||||||||||
Transaction costs | 105 | 274 | 502 | 3,853 | |||||||||||
Payments on consulting agreements | 142 | 500 | 446 | 500 | |||||||||||
Litigation expenses related to shareholder lawsuit | 3 | — | 403 | — | |||||||||||
Capital expenditures | (2,943 | ) | (3,427 | ) | (5,931 | ) | (5,235 | ) | |||||||
Adjusted Free Cash Flow | $ | 24,226 | $ | 9,846 | $ | 7,558 | $ | (4,829 | ) | ||||||
Diluted common shares | 8,303 | 8,272 | 8,309 | 7,815 | |||||||||||
Adjusted Free Cash Flow per Diluted Common Share | $ | 2.92 | $ | 1.19 | $ | 0.91 | $ | (0.62 | ) | ||||||
Alico utilizes Adjusted EBITDA among other measures, to evaluate the performance of its business. Due to significant depreciable assets associated with the nature of our operations and, to a lesser extent, interest costs associated with our capital structure, management believes that Adjusted EBITDA, Adjusted Earnings per Diluted Common Share, Adjusted Free Cash Flow and Adjusted Free Cash Flow per Diluted Common Share are important measures to evaluate our results of operations between periods on a more comparable basis and to help investors analyze underlying trends in our business, evaluate the performance of our business both on an absolute basis and relative to our peers and the broader market, provides useful information to both management and investors by excluding certain items that may not be indicative of our core operating results and operational strength of our business and helps investors evaluate our ability to service our debt. Such measurements are not prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and should not be construed as an alternative to reported results determined in accordance with U.S. GAAP. The non-GAAP information provided is unique to Alico and may not be consistent with methodologies used by other companies. Adjusted Free Cash Flow is defined as cash provided by operations less capital expenditures adjusted for non-recurring transactions. The Company uses Adjusted Free Cash Flow and Adjusted Free Cash Flow per Diluted Common Share to evaluate its business and this measure is considered an important indicator of the Company's liquidity, including its ability to reduce net debt, make strategic investments, and pay dividends to common stockholders.
ALICO, INC. | |||||||
CONDENSED COMBINED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||
(in thousands, except share and per share amounts) | |||||||
March 31, | September 30, | ||||||
2016 | 2015 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 3,552 | $ | 5,474 | |||
Accounts receivable, net | 24,766 | 3,137 | |||||
Inventories | 46,421 | 58,273 | |||||
Income tax receivable | 2,088 | 2,088 | |||||
Prepaid expenses and other current assets | 1,312 | 1,791 | |||||
Total current assets | 78,139 | 70,763 | |||||
Property and equipment, net | 379,100 | 381,099 | |||||
Goodwill | 2,246 | 2,246 | |||||
Deferred financing costs, net of accumulated amortization | 2,598 | 2,978 | |||||
Other non-current assets | 1,769 | 3,002 | |||||
Total assets | $ | 463,852 | $ | 460,088 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,810 | $ | 4,407 | |||
Accrued liabilities | 10,817 | 13,815 | |||||
Long-term debt, current portion | 4,511 | 4,511 | |||||
Income taxes payable | 4,027 | — | |||||
Deferred tax liability, current portion | 151 | 151 | |||||
Obligations under capital leases, current portion | 277 | 277 | |||||
Other current liabilities | 359 | 974 | |||||
Total current liabilities | 26,952 | 24,135 | |||||
Long-term debt | 195,589 | 200,970 | |||||
Lines of credit | 5,000 | — | |||||
Deferred tax liability | 25,581 | 25,628 | |||||
Deferred gain on sale | 28,432 | 29,122 | |||||
Deferred retirement obligations | 4,170 | 4,134 | |||||
Obligations under capital leases | 588 | 588 | |||||
Total liabilities | 286,312 | 284,577 | |||||
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 8,302,063 and 8,325,580 shares outstanding at March 31, 2016 and September 30, 2015, respectively | 8,416 | 8,416 | |||||
Additional paid in capital | 18,257 | 19,795 | |||||
Treasury stock, at cost, 114,082 and 90,565 shares held at March 31, 2016 and September 30, 2015, respectively | (5,151 | ) | (3,962 | ) | |||
Retained earnings | 151,229 | 146,455 | |||||
Total Alico stockholders' equity | 172,751 | 170,704 | |||||
Noncontrolling interest | 4,789 | 4,807 | |||||
Total stockholders' equity | 177,540 | 175,511 | |||||
Total liabilities and stockholders' equity | $ | 463,852 | $ | 460,088 | |||
ALICO, INC. | |||||||||||||||
CONDENSED COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Operating revenues: | |||||||||||||||
Orange Co. | $ | 70,982 | $ | 58,557 | $ | 90,277 | $ | 75,550 | |||||||
Conservation and Environmental Resources | 644 | 309 | 1,651 | 1,145 | |||||||||||
Other Operations | 263 | 1,146 | 565 | 2,387 | |||||||||||
Total operating revenues | 71,889 | 60,012 | 92,493 | 79,082 | |||||||||||
Operating expenses: | |||||||||||||||
Orange Co. | 51,716 | 46,383 | 69,324 | 60,597 | |||||||||||
Conservation and Environmental Resources | 581 | 623 | 2,141 | 1,368 | |||||||||||
Other Operations | 77 | 1,330 | 147 | 2,169 | |||||||||||
Total operating expenses | 52,374 | 48,336 | 71,612 | 64,134 | |||||||||||
Gross profit | 19,515 | 11,676 | 20,881 | 14,948 | |||||||||||
General and administrative expenses | 2,849 | 3,499 | 6,774 | 8,982 | |||||||||||
Income from operations | 16,666 | 8,177 | 14,107 | 5,966 | |||||||||||
Other (expense) income: | |||||||||||||||
Investment and interest income, net | — | — | — | 2 | |||||||||||
Interest expense | (2,475 | ) | (2,257 | ) | (4,978 | ) | (3,636 | ) | |||||||
Gain (loss) on sale of real estate | 760 | (27 | ) | 902 | 13,471 | ||||||||||
Loss on extinguishment of debt | — | (17 | ) | — | (964 | ) | |||||||||
Impairment of asset held for sale | — | (541 | ) | — | (541 | ) | |||||||||
Other (expense) income, net | (125 | ) | 18 | (300 | ) | 25 | |||||||||
Total other (expense) income, net | (1,840 | ) | (2,824 | ) | (4,376 | ) | 8,357 | ||||||||
Income before income taxes | 14,826 | 5,353 | 9,731 | 14,323 | |||||||||||
Provision for income taxes | 6,102 | 1,127 | 4,027 | 4,890 | |||||||||||
Net income | 8,724 | 4,226 | 5,704 | 9,433 | |||||||||||
Net loss attributable to noncontrolling interests | 10 | — | 18 | — | |||||||||||
Net income attributable to Alico, Inc. common stockholders | 8,734 | 4,226 | 5,722 | 9,433 | |||||||||||
Comprehensive income attributable to noncontrolling interests | — | — | — | — | |||||||||||
Comprehensive income attributable to Alico, Inc. common stockholders | $ | 8,734 | $ | 4,226 | $ | 5,722 | $ | 9,433 | |||||||
Per share information attributable to Alico, Inc. common stockholders: | |||||||||||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 1.05 | $ | 0.51 | $ | 0.69 | $ | 1.21 | |||||||
Diluted | $ | 1.05 | $ | 0.51 | $ | 0.69 | $ | 1.21 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 8,286 | 8,272 | 8,294 | 7,815 | |||||||||||
Diluted | 8,303 | 8,272 | 8,309 | 7,815 | |||||||||||
Cash dividends declared per common share | $ | 0.06 | $ | 0.06 | $ | 0.12 | $ | 0.12 | |||||||
ALICO, INC. | |||||||
CONDENSED COMBINED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) | |||||||
(in thousands) | |||||||
Six Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net cash provided by (used in) operating activities: | $ | 12,138 | $ | (3,947 | ) | ||
Cash flows from investing activities: | |||||||
Acquisition of citrus businesses, net of cash acquired | — | (264,586 | ) | ||||
Proceeds on sale of sugarcane land | — | 97,151 | |||||
Purchases of property and equipment | (5,931 | ) | (5,235 | ) | |||
Other | 141 | 1,093 | |||||
Net cash used in investing activities | (5,790 | ) | (171,577 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from term loans | — | 182,500 | |||||
Repayments on revolving line of credit | (45,132 | ) | (49,942 | ) | |||
Borrowings on revolving line of credit | 50,132 | 63,528 | |||||
Repayment of term loan | — | (34,000 | ) | ||||
Principal payments on term loans | (5,381 | ) | (12,489 | ) | |||
Contingent consideration paid | (3,750 | ) | — | ||||
Treasury stock purchases | (3,141 | ) | (512 | ) | |||
Financing costs | — | (2,895 | ) | ||||
Dividends paid | (998 | ) | (885 | ) | |||
Net cash (used in) provided by financing activities | (8,270 | ) | 145,305 | ||||
Net decrease in cash and cash equivalents | (1,922 | ) | (30,219 | ) | |||
Cash and cash equivalents at beginning of the period | 5,474 | 31,130 | |||||
Cash and cash equivalents at end of the period | $ | 3,552 | $ | 911 | |||