Alico, Inc. (“Alico” or “the Company”) (Nasdaq: ALCO) has announced a strategic transformation to position itself as a diversified land company. This shift aims to maximize the profitability of its vast landholdings by exploring agricultural revenue opportunities beyond citrus production while also preparing certain parcels for commercial and residential development. This decision marks a significant turning point in Alico’s operations, driven by changing environmental and economic realities.
Alico’s Land Portfolio and Citrus Challenges
Alico owns approximately 53,371 acres of land across eight Florida counties and holds 48,700 acres of oil, gas, and mineral rights within the state. For decades, the company has been a major player in the citrus industry through Alico Citrus, its citrus production arm. However, the sector has faced mounting challenges, including citrus greening disease, severe weather events, and fluctuating market conditions. Despite substantial investments in land, trees, and disease treatments, Alico’s citrus production has declined by approximately 73% over the past decade.
“For over a century, Alico has been proud to be one of Florida’s leading citrus producers and a dedicated steward of its agricultural land, but we must now reluctantly adapt to changing environmental and economic realities,” stated John Kiernan, Alico’s President and Chief Executive Officer. “The impact of hurricanes, including Irma in 2017, Ian in 2022, and Milton in 2024, on already weakened trees has led us to conclude that growing citrus is no longer economically viable for us in Florida.”
1Agricultural Transformation Alico, Inc. Unveils Bold Strategic Overhaul to Maximize Land Value
Transitioning to a Diversified Land Strategy
The strategic transformation involves winding down citrus operations and shifting focus to diversified farming and land development. Agricultural Alico plans to cease further capital investment in citrus production after the 2025 harvest season. The company intends to:
- Maintain Agricultural Commitments: Nearly all of Alico’s land holdings will remain agriculturally focused, with non-citrus farming operations taking precedence.
- Enable Land Development: Approximately 25% of its land holdings have potential for commercial and residential development, with about 10% targeted for development within the next five years.
- Optimize Land Value: Management estimates the value of Alico’s current landholdings to range between $650 million and $750 million, with 75% of the acreage dedicated to agricultural use.
Through these initiatives, Alico aims to balance its agricultural legacy with the potential for higher-value land usage, delivering stable returns for shareholders.
Workforce and Operational Adjustments
As part of the transition, Alico will significantly reduce its citrus production workforce, with operations winding down immediately after the 2025 harvest. Approximately 3,460 citrus acres will continue under third-party management through the 2026 season. Recognizing the impact of this decision on employees, Alico is providing support during the transition period.
Mr. Kiernan emphasized, “This strategic transformation is expected to provide Alico with a more stable future while maintaining our deep roots in agriculture. We remain committed to being responsible stewards of our land and communities, just as we have been for over 125 years.”
Commitment to Community and Land Stewardship
Alico’s legacy includes contributions to Florida’s communities and environment. Since 2017, the company has sold approximately 40,000 acres of Alico Ranch to the State of Florida for conservation purposes and donated 760 acres in 1992 to establish Florida Gulf Coast University. Moving forward, Alico plans to continue its tradition of responsible land management, collaborating with local municipalities to develop projects that benefit communities and shareholders alike.
Financial Outlook and Strategic Benefits
Under the new strategy, Alico expects:
- Positive Cash Flow: The company anticipates positive cash flow for the remainder of the current fiscal year, bolstered by pending land sales and cost savings from restructuring.
- Sufficient Cash Reserves: By the end of fiscal year 2025, cash reserves are expected to cover operating expenses for at least two additional years without requiring further land sales.
- Reduced Financial Volatility: With the cessation of citrus operations, Alico’s working capital requirements and financial risks will be significantly lowered.
These steps are expected to enhance shareholder value by stabilizing operations and unlocking the potential of the company’s land assets.
Conference Call and Webcast Details
Alico will host a conference call and webcast on Monday, January 6, 2025, at 8:30 am Eastern Time to discuss this strategic transformation. Participants can join the live call by dialing 1-800-445-7795 in the United States or 1-785-424-1699 internationally. The participant identification code is “ALICO.” A replay will be available three hours after the call by dialing 1-844-512-2921 (U.S.) or 1-412-317-6671 (international) with the passcode 11157835.
Looking Ahead
Alico’s decision to transition away from citrus production represents a bold step toward a more diversified and resilient future. By leveraging its vast land resources for both agricultural innovation and development opportunities, the company aims to honor its rich legacy while adapting to evolving market and environmental conditions. With a renewed focus on sustainable growth, Alico is poised to deliver long-term value for its shareholders and communities alike.
