Alico Shifts Gears: Citrus Industry Challenges Spark Major Overhaul

Alico, Inc. Revamps Operations Amid Citrus Industry Challenges

New Direction for Agribusiness and Land Management Company

Alico, Inc. (NASDAQ:ALCO) shares surged on Monday following the announcement of significant changes to its operations. The Florida-based company is shifting its focus away from citrus production, citing the devastating impact of citrus greening disease on its business.

Winding Down Citrus Operations

Alico’s Board of Directors has approved a plan to reduce its citrus production workforce, effective immediately. This move will result in the elimination of up to 172 positions, with 135 employees affected by January 6, 2025, and the remainder by April 1, 2025. The company expects to manage approximately 3,460 citrus acres through third-party caretakers for another season through 2026.

Land Holdings and Development Opportunities

Alico owns a vast portfolio of land across eight counties in Florida, totaling approximately 53,371 acres. Additionally, the company holds around 48,700 acres of oil, gas, and mineral rights in the state. Alico plans to entitle certain parcels of its land for commercial and residential development, which could unlock significant value.

Challenges in the Citrus Industry

The citrus industry has faced numerous challenges in recent years, including the spread of citrus greening disease. Despite significant investments in land, trees, and disease treatments, Alico’s citrus production has declined by approximately 73% over the last decade. The current harvest is expected to be lower in volume than the previous season.

Leadership Perspective

“Our citrus production has been severely impacted by citrus greening disease, and we’ve made the difficult decision to wind down our Alico Citrus division,” said John Kiernan, Alico’s President and Chief Executive Officer. “We’re committed to exploring new opportunities that will drive growth and value for our shareholders.”

Financial Implications

Alico anticipates incurring charges ranging from $1.5 million to $2.0 million in connection with the workforce reduction. These expenses will primarily cover severance payments, employee benefits, and related costs, with the majority expected to be recorded in the second and third quarters of 2025.

Future Outlook

The company expects its cash reserves to be sufficient to meet future operating expenses for at least two additional years without requiring any additional land sales. Alico’s management estimates that its current landholdings could be worth approximately $650 million to $750 million, with 75% of these acres valued for agriculture usage.

Stock Performance

ALCO shares surged 23.6% to $32.54 on Monday, reflecting investor optimism about the company’s new direction.

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