Alico, Inc.

Welcome to Olico's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Last night, the company issued a press release announcing its results for the second quarter ended March 31, 2024. If you have not had a chance to view the release, it is available on the Investor Relations portion of the company's website, at alicoinc.com. This call is being webcast, and a replay will be available on Alico's website as well. Before we begin, we would like to remind everyone that the prepared remarks today contain forward-looking statements. Such statements are subject to risks, uncertainties, and other factors, and may cause actual results to differ materially from those expressed or implied in these statements. Important factors that would cause or contribute to such differences include risk details in a company's quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, and any amendments thereto, filed with the SEC and those mentioned in the earnings release. The company undertakes no obligation to subsequently update or revise the forward-taking statements made on today's call, except what's required by the law. During this call, the company will also discuss non-gap financial measures, including EBITDA, adjusted EBITDA, and net debt. For more details on these measures, please refer to the company's press release yesterday. With that, I would now like to turn the call over to the company's president and CEO, Mr. John Kiernan.

Thank you, Jenny, and thank you, everyone, for joining us for Alico's second quarter 2024 earnings call this morning. I, along with nearly everyone else involved in the Florida citrus industry, am disappointed and frustrated with the production realized this past season. Fruit quality was poor at the beginning of both crop harvests, but improved. Then the rate of fruit drop accelerated. Lower levels of production for early and mid-season and Valencia harvest this season resulted in lower levels of pound solids being sold. which has led to a total inventory write-down of $28.5 million for the fiscal year 2024. We believe that the early and mid-season and Valencia box production was affected by the continued impacts of Hurricane Ian. We managed our costs aggressively over the past year, but the lower revenue base was out of our control for the second year in a row. Alico began treating its citrus trees in January of 2023, with an oxytetracycline product via trunk injection as a citrus greening therapy. In 2023, we treated over 35% of our trees with OTC, which was expected to mitigate some of the impacts of citrus greening and also decrease the rate of fruit drop and improve fruit quality. Although the small crop harvested this season was not impressive, when measured against control groups in each grove, Oleco trees that received an initial OTC application therapy did show measurable improvement in yield. However, quality improvements in reduced fruit drop were not noticeably observed this season. The financial incentives in place to offset OTC treatments in 2024 have encouraged Oleco to double the number of trees it will treat before our next harvest season and we do remain optimistic that production will increase next year. Although some of our significant contracts to supply Tropicana with fruit are expiring shortly, Alico is confident that a new multi-year contract at higher prices per pound solid will be finalized soon and should better reflect current market pricing. Our relationships with our lenders remain strong, We have approximately $95 million of undrawn capacity under a combination of a revolving line of credit, which matures in November of 2029, and a working capital line of credit, which matures in November of 2025, both to provide ample liquidity as our trees continue to recover from Hurricane Ian. We have steady access to workers and contractors, and our employee base is stable. Alico has over 125 years of experience as a leader in Florida agriculture and land management. Outside of our citrus operations, Alico continues to invest resources as it evaluates the long-term highest and best use of our real estate assets. To be clear, Alico will continue to conduct our regular citrus operations at nearly all of our groves for years to come. We will continue evaluating all of our properties to explore creative solutions to enhance and extract value. We seek to provide our investors with the benefits and stability of a conventional agricultural investment with the optionality that comes with active land management. Last year, after evaluating the direct hit it took from Hurricane Ian in 2022, we made a difficult decision to transition our TRB grove in Charlotte County from a proprietary citrus operation to a mix of third-party mining, vegetable, and fruit crop leasing activities. This year, we evaluated another struggling grove and have decided to also move beyond citrus there to realize its highest and best use. In 2022, we entered into a purchase option agreement with a third party ER Jana Industries for the sale of approximately 899 acres of land at a price of approximately $11,500 per acre on our two-by-six grove located in Hendry County, Florida, which expires in January of 2025. It is expected that this option agreement will be exercised by the end of December 2024. It is understood that Jana Industries plans to conduct sand mining operations on the land once regulatory approval has been obtained. Enelico will have the right to lease back most of these acres, including 340 net citrus acres, for de minimis lease payments. In April 2024, we entered into an agreement to sell another approximately 780 acres of land at the 2x6 Grove to a third party, for approximately $7 million or $9,000 per acre. And that includes an option to purchase another 680 acres within 10 months from the closing date of the sale at the same price per acre. But Alico will continue to grow citrus on those 680 acres for the next harvest season. This new transaction, which is expected to close by the end of July 2024, illustrates our strategy of monetizing underperforming citrus groves on a case-by-case basis to redeploy capital to generate better returns for our shareholders. With that, I will turn the call over to Brad to discuss our more detailed financial results.

Thank you, John, and good morning, everyone. As our business is seasonal and the majority of our citrus crop is harvested in the second and third quarters of the fiscal year, with the majority of our profit and cash flows also recognized in the second and third quarters. The quarterly results for the second quarter are not indicative of our full year results. The 14.9% decrease in revenue for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a combination of the timing of the Valencia harvest, which started later than in the prior year to allow the fruit more time to mature, and an acceleration of the harvest in the prior year as a result of Hurricane Ian to try to mitigate the fruit drop. Partially offset by an increase in Grove Management Services revenue as a result of Citrus Grove Management Agreement we entered into on October 30th, 2023 with an unaffiliated group of third parties to provide Citrus Grove caretaking services for approximately 3,300 acres owned by such parties. The 0.7% increase in revenue for the six months ended March 31, 2024, as compared to the six months ended March 31, 2023, was primarily due to an increase in the price per pound solids for both the early and mid-season and Valencia crops, as a result of more favorable pricing in one of our contracts with Trial Kukana, and an increase in Grove Management Services revenue as a result of the new Grove Owners Agreement. partially offset by a decrease in pound solids for the six months ended March 31, 2024 as compared to the prior year period. The 31.3% and 53.6% increase in operating expenses for the three and six months ended March 31, 2024 as compared to the three and six months ended March 31, 2023 was primarily driven by insurance proceeds of $4.8 million for crop insurance claims received during the three months ended March 31, 2023, which was recorded as a reduction of operating expenses, and a combination of the inventory adjustments recorded at September 30, 2022 on the ending inventory balance as a result of the impact of Hurricane Ian, which effectively lowered the inventory to be expensed in fiscal year 2023, and the $4.8 million of proceeds from crop insurance claims received in the prior year period, respectively. General and administrative expenses increased $0.4 million for the six months ended March 31, 2024, compared to the six months ended March 31, 2023, primarily due to increased employee costs. Public income expense net for the six months ended March 31, 2024 increased $72.6 million compared to the six months ended March 31, 2023, primarily due to a gain of $74.9 million on the sale of 17,229 acres of the Alico Ranch to the State of Florida during the six months ended March 31, 2024. By comparison, for the six months ended March 31, 2023, we recognize gains on the sale of property and equipment of approximately $4.8 million relating to the sale of 888 acres in the aggregate from the Alico Ranch to several third parties. For the second fiscal quarter ended March 31, 2024, we reported a net loss attributable to Alico Commons shareholders of 15.8 million compared to a net loss of 7.8 million for the second fiscal quarter ended March 31, 2023, driven by the timing of revenue in the current quarter and insurance proceeds of 4.8 million for crop claims received during the three months ended March 31, 2023. For the six months ended March 31, 2024, We reported net income attributed to Alico common stockholders of $27.1 million compared to a loss attributed to Alico common stockholders of $10.9 million, driven by the gain of $74.9 million on the sale of the remaining 17,229 acres of the Alico Ranch on December 21, 2023, partially offset by the inventory adjustments recorded at September 30, 2022 on the ending inventory balance as a result of the impact of Hurricane Ian. which effectively lowered the inventory expense in fiscal year 2023. A 12.2 million increase in the tax provision for the six months ended March 31, 2024, and the 4.8 million proceeds from crop insurance claims recognized in the prior year. I will now pass the call back to John.