Welcome to Alico's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, today's conference is being recorded. Earlier today, the Company issued a press release announcing its results for the second quarter ended March 31, 2021. If you've not had a chance to view the release, it is available on the industrial relations portion of the Company's website at alicoinc.com. This call is being webcast, and a replay will be available on Alico's website as well. Before we begin, we would like to remind everyone that the prepared reports today contain forward-looking statements. Such statements are subject to risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied in these statements. Important factors that could cause or contribute to such differences include risks details in the Company's quarterly reports on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K, and the amendments thereto filed with the SEC and those mentioned in the earnings release. The Company undertakes no obligation to subsequently update and revise the forward-looking statements made on today's call except as required by law. During this call, the Company will also discuss non-GAAP financial measures, including EBITDA and adjusted EBITDA. For more details on these measures, please refer to the Company's press release issued earlier today. With that, I'd like to turn the call over to the Company's president and CEO, Mr. John Kiernan.

Thank you, Debbie, and thank you, everyone, for joining us for Alico's Second Quarter 2021 Earnings Call this morning. We remain encouraged by the higher citrus fruit prices per pound solid that have continued throughout the 2021 harvest season. Pricing for the early and mid-season fruit finished the season at $2.14 per pound solid, more than double the market pricing from a year ago, which was in the low $1 range. We're still harvesting the Valencia crop for a few more weeks, but expect a similar type of increase in pricing by season's end. The increase in price is driven by both a continued increase in consumption of not from concentrate orange juice by retail consumers as well as tighter supplies of citrus fruit from Florida, Brazil, and Mexico. The increased consumption of not from concentrate orange juice commenced in March of last with the outbreak of the pandemic and has continued strongly since then. We along with the entire Florida citrus industry have continued to experience a decrease in process box production of both the early and mid-season and Valencia crop as compared to the prior year harvest. The USDA now estimates an approximate 23.3% decline of the total Florida orange crop for the current harvest season as compared to the prior year. While we are also expecting a decline, we don't anticipate it to be as steep as the USDA's estimate. We expect our production decline to be in the range of 15% to 20%, with production falling to approximately 6.3 million boxes. With respect to our growing costs and general and administrative costs, we continue to maintain stringent controls, which has allowed us to realize improvements in these costs through the first six months of fiscal year 2021. Moving on to our business highlights, earlier today in…

Thank you, John, and good morning, everyone. As mentioned on previous calls, our business is seasonal, and the majority of our citrus crop is harvested in the second and third quarters of the fiscal year with the majority of our profits and cash flows also recognized in the second and third quarters. As such, the quarterly results for the second quarter are not indicative of our full year results. Total operating revenue for the quarter ended March 31, 2021 was $55.9 million compared to $50.5 million for the quarter ended March 31, 2020. Citrus revenues were $55.3 million and $49.8 million for the quarters ended March 31, 2021 and March 31, 2020, respectively. The increase in revenues for the three months ended March 31, 2021 compared to the same period in the prior year was primarily due to an increase in the revenue generated from our grove management services and the Valencia fruit harvested. We generated greater revenue from our grove management services we provided to third parties. In July 2020, we entered into an agreement to provide these services for over 7,000 acres. As mentioned on our previous earnings call, we record both an increase in revenues and expenses when we provide these grove management services. For the three months ended March 31, 2021, under this agreement, we recorded approximately $4.7 million of operating revenue relating to these grove management services, including the management fee. The increase in revenues from the Valencia fruit harvest has been driven by an increase in the market price per pound solid as a result of increased consumption and tighter inventory supply. Partially offsetting this increase in pricing is fewer Valencia boxes being harvested as well as pound solids per box being lower for the three months ended March 31, 2021 compared to the…

Thanks, Rich. We've made great progress so far this year executing on our operational initiatives, which we believe will generate greater returns for our shareholders. We reduced the principle of our debt by approximately 10.3, favorably modified the terms of our fixed rate term debt, sold or are in the process of selling over 20,000 acres of noncore land sales this year, and have continued to make headway, reducing our expenses. With that, we'll now open the line up to questions from our industry analysts. Debbie?

We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Gerry Sweeney with ROTH Capital.

Quick question on pricing, John. You mentioned I think in the prepared remarks pricing was up from $1, or we'll assume about $1 last year to $2 and change this year. I didn't catch all of it, but two questions. That was the industry pricing, I believe. But could you just go over that? But more importantly, as we move into the third quarter, do we anticipate pricing staying in that range, or is there any variability or potential variability to that pricing as we move forward?

Sure. So for the early mid-season fruit, that was already harvested, and I think we wrapped that up in February. So clearly the number that we stated for that is locked and done. We haven't really announced kind of where our pricing is coming out. We kind of gave you some guidance that market prices right now for Valencias with three or four weeks to go in the remaining part of the season are substantially higher as well, which you might be able to get into a little more specifics on that, but we definitely think we can back up the claims that it's going to be substantially higher than it was last season in light of the new contracts that we negotiated and other contracts that we do hold.

Got it. And do the Valencias carry a higher price generally than the early to mids? Correct?

They do.

Okay.

So it's $0.2 to $0.4 higher, typically.

$0.2 to $0.4?

Typically, yes. Than the early and mid-season, yes.

Yes, got it. Got it. No, that's helpful. I appreciate that. And then obviously, the last several years, as you mentioned, 1.5 million trees planted. Beginning, I believe, you said in 2018, what was the pace of those plantings? Just to want to double-check our model, and was it a similar amount each year, or was it a little bit more of a bell curve? Just wanted to touch upon that.

Sure. We actually graph that in some of our investor presentations. Rich, if you want to pull that up, we'll talk about what we did in '17, '18, '19, and '20. Most of those years, it was around 400,000-plus trees.

Okay.

Rich?

Yes.

I can pull it up, too. But yes, okay.

Okay. Yes. So Gerry, in 2018, it was just over 300,000, and then we moved to 400,000 pretty much subsequent, give and take a little bit subsequent to that.

Got it. And then fruit bearing, four years, and then they kind of mature over the next three to four years to full production. Is the.

Right.

Got it.

That is correct.

Got it. Got it. And then we can back into how many more those trees produce by some of the comments you made. And then final question, timing. I know it's a little not open-ended, but maybe a little bit difficult to nail down. But just curious.There's 10 or so transactions that remain out there. Do you have a sense of when they will complete it? I think you believe by the end of this fiscal year, but I just wanted to confirm that.

Yes, they're going to be staggered between now and the end of September. So we should see a handful in June, and then the remainder would be the rest of the summer, no later than September.

Got it. The final land that remains, I think it's 33,000 acres. Is it fair to say that land is similar quality, location, value as compared to some of the other sales you've made in the last several years?

Yes. I think that's fair to say. Prices are clearly strong in Florida for open real estate. The ranch land that we're holding, it's substantially higher than it was even two years ago, and interest is very strong. So we're showing parcels of the property a couple times a week. I was actually just out there a day or so ago, and interest remains strong. So we're opportunistically entertaining offers. We're not in any rush whatsoever to dispose of these assets. We're holding out for good prices for buyers that really do have a conservation focus, because we'd love to see kind of all that remain in friendly hands that support kind of the ESG movement and want to take care of it as stewards, just as we have done for 120 years.

Got it. So lots of demand for the land. So you're not pressed to sell it, obviously.

Correct, correct.

Got it. Great. That's it for me. I really appreciate it.

Thank you, Gerry.

Thank you.

We have reached the end of today's question and answer session. I would like to turn the call back over to Mr. Kiernan for any closing remarks.

Thank you, Debbie. I want to thank everyone today for joining our call and for also your support of Alico. Rich and I are available all day, and going forward, if there's any additional questions, we can answer one-on-one about the public information we just disclosed today. We look forward to speaking with all of you again about our third quarter results in August. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.