Alico Inc.'s (ALCO:NASDAQ) fourth quarter 2021 financial results were "above our expectations for a seasonally slow quarter," ROTH Capital Partners analyst Gerry Sweeney wrote in a Dec. 8 research note.
The Alberta, Canada-headquartered company owns and manages approximately 84,000 acres devoted to citrus production, conservation, and natural resources. Earlier this month, Alico generated $5.675 million from selling some of its non fruit-bearing land. Another 32,000 acres of it 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 versus ROTH's estimated $1.3 million. Adjusted EBITDA was $1.3 million; ROTH forecasted $1 million. Adjusted earnings per share was -$0.33, better than ROTH's projected -$0.48.
The total boxes of citrus produced in the fourth quarter were down 16.1% year over year, due to unfavorable weather. Production, however, was better than that for all of Florida, which also was lower than in 2020 by 21.7%.
Alico's guidance for 2022 is $3.3 million below ROTH's forecast as Alico is being more conservative about the ramp up of fruit production. Newly planted trees start bearing fruit after four years and reach maturity after seven or eight.
"Fruit production should expand, driving revenue and EBITDA, which ALICO continues to return to shareholders or potentially reinvest in other fruit opportunities," Sweeney added.
As for pricing, it will be close to or higher than 2021's $2.45 average, according to Alico management. Current demand should work in Alico's favor. Demand for citrus is high among juice producers because the drought caused decreased supply from Brazil, which produces the most oranges in the world.
"Combine non-citrus land (optionality on sale) with improving citrus production under long-term contracts and Alico's focus on returning capital to shareholders, and we believe the company offers a compelling opportunity," Sweeney concluded.
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Important Disclaimers for ROTH Capital Partners LLC, Alico Inc., Dec. 8, 2021
ROTH makes a market in shares of Alico, Inc. and as such, buys and sells from customers on a principal basis.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months. The material, information and facts discussed in this report other than the information regarding ROTH Capital Partners, LLC and its affiliates, are 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 complete analysis of the company, industry or security discussed in the report. Additional information is available upon request. This is not, however, an offer or solicitation of the securities discussed. Any opinions or estimates in this report are subject to change without notice. An investment in the stock may involve risks and uncertainties that could cause actual results to differ materially from the 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.
