Alico reports Q3 EPS (27c), consensus (25c)

Reports Q3 revenue $13.61M, consensus $17.8M. The company said, “We have several reasons to be more optimistic about our production next season. First, since 2017 Alico has planted 2.2 million trees, and nearly all of them are now producing fruit. Second, Alico began treating its citrus trees in January 2023 with an OTC product via trunk injection as a citrus greening therapy. In 2023, we were able to treat over 35% of our producing trees with OTC and in 2024, we treated approximately 4.5 million producing trees. Alico received $1.8 million of grant money from the Florida Citrus Research and Field Trial Foundation in January 2024 that covered substantially all of the costs of the 2023-24 harvest season OTC applications, and $1.1 million was received in June that will cover approximately 34% of the 2024-25 harvest season OTC applications. Although the small crop harvested this past season was not impressive, we believe that the continued recovery from Hurricane Ian was the most significant factor impacting fruit production and quality. We remain cautiously optimistic that being another year removed from the hurricane, along with the combination of a second round of injections for previously treated trees and a first round of injections for trees that were not treated in 2023, will show more significant improvements, not just in yield, but also in reduced fruit drop. In fact, in July it was reported that the Florida Department of Agriculture and Consumer Services approved a label change for the OTC product to remove the restriction that the product cannot be applied more than two years in a row. This change will enable us to apply the OTC treatment in calendar year 2025 to the trees that we started treating in 2023, which would be a relief to Alico and the Florida citrus industry overall. Third, as Alico’s production recovers next season, we will sell our fruit at higher prices. As we previously announced, the Company and Tropicana have extended our relationship for another 3 years. With our new contract to supply Tropicana with fruit, Alico will realize significantly higher prices per pound solid, which better reflect current market pricing, with price increases in the second and third years. This new contract covers production on approximately 65% of our acres. The remainder of our acres are covered by a contract with Tropicana, which expires at the end of the 2024-25 season but which also has higher pricing than the expiring contracts.”