Positive outlook after farm business exceeds expectations


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Alico Inc.’s (ALCO: NASDAQ) fourth quarter 2021 financial results were “above our expectations for a slow seasonal quarter,” wrote Gerry Sweeney, analyst at ROTH Capital Partners, in a research note for 8 December.

The Alberta, Canada-based company owns and manages approximately 84,000 acres dedicated to citrus production, conservation and natural resources. Earlier this month, Alico made $ 5.675 million by selling part of its non-fruit land. Another 32,000 acres are for sale and, according to Sweeney, could be worth more than $ 120 million.

The analyst said the company’s fourth quarter 2021 revenue was $ 4 million, compared to $ 1.3 million estimated by ROTH. Adjusted EBITDA was $ 1.3 million; ROTH was planning $ 1 million. Adjusted earnings per share was $ -0.33, better than the $ -0.48 forecast by ROTH.

The total number of citrus cartons produced in the fourth quarter was down 16.1% year-on-year, due to adverse weather conditions. Production, however, was better than that of Florida as a whole, which was also 21.7% lower than in 2020.

Alico’s forecast for 2022 is $ 3.3 million lower than ROTH’s forecast as Alico is more cautious about ramping up fruit production. Newly planted trees begin to bear fruit after four years and reach maturity after seven or eight years.

“Fruit production is expected to increase, generating revenue and EBITDA, which ALICO continues to return to shareholders or potentially reinvest in other fruit opportunities,” added Sweeney.

As for the price, it will be near or above the 2021 average of $ 2.45, according to Alico management. Current demand should work in Alico’s favor. Demand for citrus fruits is high among juice producers as the drought has led to a decrease in supply from Brazil, which produces the most oranges in the world.

“Combine citrus-free land (optional for sale) with improved citrus production under long-term contracts and Alico’s focus on returning capital to shareholders, and we believe the company offers an exciting opportunity, ”concluded Sweeney.

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Important Disclaimers for ROTH Capital Partners LLC, Alico Inc., December 8, 2021

ROTH creates a market for the shares of Alico, Inc., and as such, primarily buys and sells clients.
ROTH Capital Partners, LLC expects to receive or intend to seek compensation for investment banking or other business relationships with the Covered Companies mentioned in this report within the next three months. Material, information and facts discussed in this report, other than information regarding ROTH Capital Partners, LLC and its affiliates, are taken from sources believed to be reliable, but are in no way guaranteed to be complete or accurate. This report should not be used as a comprehensive analysis of the company, industry, or security discussed in the report. Further information is available upon request. However, this is not an offer or a solicitation of the securities in question. Any opinion or estimate contained in this report is subject to change without notice. An investment in the shares may involve risks and uncertainties which could cause actual results to differ materially from forward-looking statements. Additionally, an investment in the stock may involve a high degree of risk and may not be suitable for all investors. No part of this report may be reproduced in any form without the express written permission of ROTH. Copyright 2021. Member: FINRA / SIPC.


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