Alico, Inc.: Form 10-Q for the period ended Dec 31, 2025

The following discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and related Notes thereto and other information included elsewhere in this Quarterly Report, our 2025 Annual Report on Form 10-K, and in our other filings with the SEC. Our actual results of operations may differ materially from those discussed in forward-looking statements as a result of various factors, including, but not limited to, those included our 2025 Annual Report on Form 10-K and other portions of this Quarterly Report. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future. In the following discussion and analysis, dollars are in thousands, except per share and per acre amounts.

Business Overview

Business Description

Alico, Inc., together with its subsidiaries (collectively, “Alico”, the “Company”, “we”, “us” or “our”) currently generates operating revenues primarily from the sale of our citrus products, and through leases of citrus groves, as well as farming, grazing and hunting leases, activities related to rock and sand mining royalties, sod sales, leases of oil extraction rights to third parties, and other miscellaneous operations generating income. We operate as two business segments, and all of our operating revenues are generated in the United States. While Alico Citrus, which holds the Company’s citrus production operations, has substantially wound down operations after the 2024/2025 harvest due to environmental and financial challenges, Alico remains committed to Florida’s agriculture industry, and will focus on its long-term diversified land usage and real estate development strategy.

For the three months ended December 31, 2025 and 2024, we generated operating revenue of $1,887 and $16,894, respectively, loss from operations of $8,555 and $10,824, respectively, and net loss attributable to common stockholders of $3,481 and $9,167, respectively. Net cash used in operating activities was $5,469 and $7,597 for the three months ended December 31, 2025 and 2024, respectively.

Business Segments

Operating segments are defined in the criteria established under FASB ASC Topic 280 as components of public entities that engage in business activities from which they may earn revenues and incur expenses for which separate financial information is available and which is evaluated regularly by our CODM in deciding how to assess performance and allocate resources. Our CODM assesses performance and allocates resources based on its reportable segments.

Our two segments are as follows:

• Alico Citrus includes activities related to planting, owning, cultivating and/or managing citrus groves to produce fruit for sale to fresh and processed citrus markets, including activities related to the purchase and resale of fruit and value-added services, which include contracting for the harvesting, marketing and hauling of citrus; and
• Land Management and Other Operations includes activities related to the leasing of our citrus groves, farming, grazing and hunting leasing, management and/or conservation of unimproved native pastureland and activities related to rock mining royalties and other insignificant lines of business. Also included are activities related to owning and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.

Recent Developments

Land Sales

During the three months ended December 31, 2025, we sold approximately 600 acres of land for $7,653.

On January 14, 2026, we sold approximately 2,950 acres of citrus land for $26,859 ($9,110 per acre) in gross proceeds,

Condensed Consolidated Results of Operations

The following discussion provides an analysis of our results of operations for the three months ended December 31, 2025, as compared to 2024:

(in thousands)

Operating Revenue

The 88.8% decrease in operating revenue for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, was primarily due to our Strategic Transformation and decision to wind down our Citrus division to focus on a long-term diversified land usage and real estate development strategy, partially offset by an increase in rock and sand royalty, farming lease revenue and sod sales.

Operating Expenses

The decrease in operating expenses for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, was primarily driven by our decision to wind down our citrus operations and an inventory adjustment of $7,359, recognized in the three months ended December 31, 2024. See Note 3. Inventories to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report.

General and Administrative Expense

General and administrative expense increased $415 for the three months ended December 31, 2025 as compared to the three months ended December 31, 2024 due to an increase in contract labor and employee costs.

Other Income (Expense), net

Other income (expense), net for the three months ended December 31, 2025 increased $4,969, compared to the three months ended December 31, 2024, as a result of land sales.

Income Taxes

The decrease in the income tax benefit for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, of $1,582 was principally due to the pre-tax loss and adjusted for the change in the valuation allowance, which has been included in the annual effective tax rate computations. Based upon both positive and negative evidence, management determined that it was not "more likely than not" that a portion of deferred tax assets will be realized. This conclusion is based upon an analysis of the Company's deferred tax assets and liabilities due to the cumulative three-year loss position during fiscal year ending September 30, 2026.

The following discussion provides an analysis of our operating segments:

Alico Citrus

(in thousands, except per box and per pound solids data)

Components of Results of Operations for Alico Citrus Segment

We sell our Early and Mid-Season and Valencia oranges to orange juice processors. The processors generally buy the citrus crop on a pound solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. Our Fresh Fruit revenue is derived from sales to packing houses that purchase the citrus on a per box basis. We have historically provided citrus grove caretaking and harvest and haul management services to third parties from which revenues were recorded as Grove Management Services, including a management fee. Other revenues principally consist of the purchase and reselling of fruit.

Operating expenses for our Alico Citrus segment consist primarily of Cost of Sales, Harvesting and Hauling costs and Grove Management Service costs. Cost of Sales represents the cost of maintaining the citrus groves for the preceding calendar year and does not vary in relation to production. Harvesting and Hauling costs represent the costs of bringing citrus product to processors and vary based upon the number of boxes produced. Grove Management Services costs include those costs associated with citrus grove caretaking and harvest and haul management services provided to third parties. As of December 31, 2024, there were no longer any material grove management agreements in effect. Other expenses include the period costs of third-party grove caretaking and the purchase and reselling of third-party fruit, which ceased after fiscal year 2025 as part of our Strategic Transformation.

Comparison of the Three Months Ended December 31, 2025 and 2024 for the Alico Citrus Segment

The 98.1% decrease in Early and Mid-Season revenue for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, was primarily due to our Strategic Transformation and decision to wind down our Citrus division to focus on a long-term diversified land usage and real estate development strategy.

For the three months ended December 31, 2025, we recognized a decrease in revenue from sales of Fresh Fruit and Other of $38, compared to the same period in the prior year, driven by a decrease in the amount of Fresh Fruit that was resold on behalf of grove owners, as we are no longer performing these services.

Revenue for the three months ended December 31, 2025 from the grove owners relating to Grove Management Services decreased 98.3% compared to the prior year period, principally due to the expiration of our grove management agreement on December 31, 2024.

For the three months ended December 31, 2025, we recognized a decrease in Cost of Sales of $13,269, compared to the same period in the prior year, which was driven by our decision to wind down our citrus operations and an inventory adjustment of $7,359, recognized in the three months ended December 31, 2024, as a result of Hurricane Milton which hit in October 2024.

For the three months ended December 31, 2025 Harvesting and Hauling expenses were down 96.3%, compared to the three months ended December 31, 2024 driven by our decision to wind down our citrus operations in fiscal year 2025 and as such harvesting significantly less fruit.

For the three month period ended December 31, 2025, Fresh Fruit and Other expenses decreased $50, as compared to the three months ended December 31, 2024, as we are no longer selling fruit for other grove owners, in fiscal year 2026.

There was a 100.0% decrease in operating expenses relating to grove management services for the three months ended December 31, 2025 and 2024. The decrease in Grove Management Services expenses was due to our grove management agreements. As of December 31, 2024, there were no longer any material grove management agreements in effect.

Land Management and Other Operations

The table below presents key operating measures for the three months ended December 31, 2025 and 2024 for the Land Management and Other Operations segment:

(in thousands)

Components of Results of Operations for Land Management and Other Operations Segment

Land and Other Operations includes lease income from leases for grazing rights, hunting, farming, royalty agreements with third parties of aggregate miners, and other miscellaneous income.

Land and Other Operations operating expenses includes real estate, property taxes, general and administrative expenses including salaries, benefits and legal.

Comparison of the Three Months Ended December 31, 2025 and 2024 for the Land Management and Other Operations Segment

The 76.8% increase in revenues from Land Management and Other Operations for the three months ended December 31, 2025, as compared to the same period in the prior year, was primarily due to an increase in rock sand royalties, farming lease revenue and sod sales in the current period.

The increase in operating expenses from Land Management and Other Operations for the three months ended December 31, 2025 of $28, as compared to the three months ended December 31, 2024 is primarily due to sod sales which did not occur in the prior year period.

Seasonality

We have historically been primarily engaged in the production of fruit for sale to citrus markets, which is of a seasonal nature, and subject to the influence of natural phenomena and wide price fluctuations. The first and second quarters of Alico’s year produce most of our annual revenue. Working capital requirements are typically greater in the third and fourth quarters of the year, coinciding with harvesting cycles. Because of the seasonality of the business, results for any quarter are not necessarily indicative of the results that may be achieved for the full year ended September 30. As a result of the Strategic Transformation, we expect these seasonal patterns to diminish as we continue to wind down our Citrus operations.

Liquidity and Capital Resources

A comparative balance sheet summary is presented in the following table:

(in thousands)

a - Excludes deferred financing costs

Sources and Uses of Liquidity and Capital

Our business has historically generated full fiscal year positive net cash flows from operating activities, although the net cash flow in the first quarter of each fiscal year has been negative because of seasonality and the associated need to expend cash in advance of generating revenues from the harvesting season. In January 2025, we announced a Strategic Transformation in our business focus, to wind down our Alico Citrus division, which holds our citrus production operations, to focus on a long-term diversified land usage and real estate development strategy. In May 2025, we entered into a Mutual Contract Termination Agreement with Tropicana, terminating our agreement with them in its entirety following the fulfillment of all obligations under that agreement concerning the 2024/2025 Crop Year and all outstanding amounts had been settled by June 30, 2025. Sources of cash primarily include cash flows from operations, strategic sales of land and other assets, amounts available under our RLOC, and access to capital markets. Access to additional borrowings under our RLOC is subject to the satisfaction of customary borrowing conditions. As a public company, we may have access to other sources of capital. However, access to, and availability of, financing on acceptable terms in the future will be affected by many factors, including (i) financial condition, prospects, and credit rating; (ii) liquidity of the overall capital markets; and (iii) the state of the economy. There can be no assurance that we will continue to have access to the capital markets on acceptable terms, or at all.

The principal uses of cash that affect our liquidity position have historically included the following: operating expenses including employee costs, the cost of maintaining the citrus groves, harvesting and hauling of citrus products, capital expenditures, property taxes, stock repurchases, dividends, debt service costs including interest and principal payments on term loans and other credit facilities and acquisitions. Our expected principal uses of cash that affect our liquidity position, in light of the Strategic Transformation and the fiscal year 2025 workforce reduction, are expected to include lower employee costs, lower costs of maintaining citrus groves and lower capital expenditures. In addition, on March 25, 2025, our Board approved a stock repurchase program authorizing us to repurchase up to $50.0 million shares of Common Stock, with the amount and timing of repurchases depending on market conditions and corporate needs.

During the fiscal year ended September 30, 2025, we recorded an additional valuation allowance against our deferred tax assets, which is recorded in the annual effective tax rate. We are required to assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss expected to be incurred over a three-year period during the year ending September 30, 2025. Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.

Management believes that a combination of cash-on-hand, cash generated from operations, asset sales and availability under our RLOC will provide sufficient liquidity to service the principal and interest payments on our indebtedness and will satisfy working capital requirements and capital expenditures for at least the next twelve months and over the long term. However, this is subject, to a certain extent, on general economic, financial, competitive, regulatory and other factors that are beyond our control.

Borrowing Facilities and Long-term Debt

We have a $95,000 RLOC, of which $92,500 was available for general use as of December 31, 2025 (see Note 8. Long-Term Debt and Lines of Credit to the accompanying Condensed Consolidated Financial Statements).

Our credit facilities are subject to a Minimum Liquidity Requirement of $5,831 and an LTV Cap of 50.0%. As of December 31, 2025, we were in compliance with all of the financial covenants and were able to draw the entire amount of the RLOC, less current borrowings, and remain under the LTV Cap.

The term loans and RLOC are secured by real property. The security for the term loans and RLOC as of the most recent amendment, consists of approximately 40,428 gross acres of land.

We may utilize available cash and proceeds from asset sales to pay down indebtedness, repurchase stock and for other corporate purposes, subject to market conditions and Board discretion. Any decision regarding share repurchases or dividends will depend on our cash flows, liquidity, credit facility covenants, and other factors, and there can be no assurance that additional financing will be available on acceptable terms, or at all.

The level of debt could have important consequences on our business, including, but not limited to, increasing our vulnerability to general adverse economic and industry conditions, limiting the availability of cash flow to fund future investments, capital expenditures, working capital, business activities and other general corporate requirements, and limiting flexibility in planning for, or reacting to, changes in our business and industry.

Cash Flows

The components of our cash flows are discussed below.

(in thousands)

Net Cash Used In Operating Activities

The $2,128 decrease in Net cash used in operating activities was driven by lower operating expenses, partially offset by lower revenues, during the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, due to our Strategic Transformation which began in January 2025.

Net Cash Provided By (Used In) Investing Activities

The $5,288 increase in Net cash provided by (used in) investing activities for the three months ended December 31, 2025, compared to the three months ended December 31, 2024, was principally the result of land sales in the three months ended December 31, 2025, partially offset by an advance of $5,071 to fund a wildlife-crossing planned as part of the Corkscrew Villages Project (see Note 2. Summary of Significant Accounting Policies to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for details).

Net Cash (Used In) Provided By Financing Activities

The $12,540 change in Net cash (used in) provided by financing activities for the three months ended December 31, 2025, as compared to the three months ended December 31, 2024, was primarily the result of there being no borrowings under the RLOC during the three months ended December 31, 2025.

Contractual Obligations

Our material cash requirements from known contractual and other obligations are described in the accompanying notes to the financial statements within Part I, Item 1 of this Quarterly Report. These include principal and interest payments on long-term debt as described in Note 8. Long-Term Debt and Lines of Credit and operating leases as described in Note 11. Leases to the Condensed Consolidated Financial Statements included in this Quarterly Report.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company’s financial condition and results of operations is based upon its unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires the Company to make certain estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, the Company evaluates the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

See Note 1. Description of Business and Basis of Presentation to the Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report for a detailed description of recent accounting pronouncements. There have been no material changes to the Company’s Critical Accounting Policies and Estimates from those reflected in the Company’s 2025 Annual Report on Form 10-K.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

Limitations on effectiveness of controls and procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) as of December 31, 2025. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors set forth in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, as filed with the SEC on November 24, 2025.