Welcome to Alico's Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Earlier today, the Company issued a press release, announced its results for the second quarter ended March 31, 2022. If you have not had a chance to view the release, it is available on the Investor 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 remarks 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 those statements. Important factors that could cause or contribute to such differences include risks and details in the Company's quarterly report on Form 10-Q, annual reports on Form 10-K, current reports on Form 8-K and any amendments thereto filed with the SEC and those mentioned in the earnings release. The Company undertakes no obligation to subsequently update or revise the forward-looking statements made on today's call, except as required by the law. During this call, the Company will also discuss non-GAAP financial measures, including EBITDA and adjusted EBITDA. For more details on those measures, please refer to the Company's press release issued earlier today. With that, I would like to turn the call over to the Company's President and CEO, Mr. John Kiernan. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us for Alico's second quarter 2022 earnings call this afternoon. The current citrus harvest season has been a disappointing one for Alico as well as the entire industry in Florida. In late January 2022, a freeze event negatively impacted the current year of Valencia harvest. This is in addition to a harvest season that was already anticipated to produce less fruit than in the prior year, with fewer pieces of fruit available on the citrus trees as well as greater fruit drop, which is believed to be caused by disease and weather. USDA is forecasting a 33.9% decline in the current year of Valencia crop as compared to the same period in the prior year, with a significant portion attributed to the freeze event. We are anticipating our decline to be approximately 12% to 15% year-over-year. We believe the substantially lower rate of decline as compared to the USDA forecast is because of our efficient grove management program as well as certain aggressive and sustained precautionary measures we took during and after the freeze event. We are also encouraged that there does not appear to be long-term measurable damage to our trees. Our production could see a recovery next season, but we will need to continue to evaluate tree health through the summer. We remain pleased that consumption from not-from-concentrate orange juice by retail consumers has remained strong. And this, combined with lower fruit production -- lower production of citrus fruit, had inventory supply at lower-than-normal levels at Florida citrus juice processors. This trend has led to further improved market pricing for both the Early and Mid-Season and Valencia fruit in the current harvest season as compared to the prior year. Our pricing per pound solids for the Early and Mid-Season…

Thank you, John, and good afternoon, everyone. Due to the seasonal nature of our business, the quarterly results for the second quarter are not indicative of our full year results. The majority of our citrus crop is harvested in the second and third quarters of the fiscal year, with the majority of our profit and cash flows also recognized in the second and third quarters. Total operating revenue for the quarter ended March 31, 2022, was $49.6 million compared to $55.9 million for the quarter ended March 31, 2021. Our citrus revenue was $49 million and $55.3 million for the quarters ended March 31, 2022 and 2021, respectively. The decrease in revenue for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, was primarily due to a decrease in the Early and Mid-Season and Valencia fruit harvested and, to a lesser extent, a decrease in revenue generated from Grove Management Services. The decrease in early and mid- and Valencia fruit harvested was primarily driven by a decrease in processed box production and a decrease in pound solids per box. The processed box production decrease was due to greater fruit drop believed to be attributed to disease and weather conditions. And in late January 2022, our groves, along with many of the other groves in Florida, were impacted by a freeze event. Specifically, our Valencia box production, which was anticipated to perform better than the Early and Mid-Season box production on a year-over-year comparable basis, as indicated in the USDA 2021-2022 forecast published prior to the freeze event, was negatively impacted by the freeze event. Because our Early and Mid-Season harvest was substantially complete at the time of the freeze, there was no material impact to our Early and Mid-Season box production. As John…

Thanks, Rich. Well, this has been a difficult harvest season for us as well as, for most part, our citrus growers. We believe that we have taken the appropriate steps, especially our citrus tree replanting program, to generate greater box production in the years ahead. At the same time, we are pleased to see that we have continued to maintain our momentum of opportunistic ranch land sales, and that the sales per acre have increased to the highest levels since we embarked on divesting our ranch land back in 2018. And with that, we would now open the line up to questions from industry analysts. Operator?

[Operator Instructions] And our first question comes from Gerry Sweeney, ROTH Capital.

Just a question, obviously, around the -- I should say, well, the environment for a lot of citrus growers has been very challenging. You guys are obviously holding up relatively well. But just does that environment create any opportunities for either you to acquire some ranch land or to move some of your management services on to other ranches since your performance has been better than, I think, the average that you've highlighted?

So we believe that we are always more competitive, but you're facing a year where we've seen fertilizer cost to skyrocket. So the economics, overall, as we're seeing from our results, are not astronomically great this particular season, and we think a lot of our smaller competitors are facing tremendous economic pressure this year. But we are always on the lookout to expand our services for that third-party caretaking. We just have not seen a lot of activity of people requesting our services for that. On the other hand, we are curious on how there may be some potential to acquire some citrus groves that are in very good shape from some parties that no longer wish to be in the citrus industry. So we're cautiously optimistic that we may be able to expand. We would do that, obviously, at attractive prices. It would have to be somewhere that we could generate superior returns for our shareholders. But we certainly are ready, willing and able, and we've got the firepower to be able to do that. What we are finding is, as some of our competitors are kind of pulling back a little bit, we are finding that we have access to some of their experienced labor force, some people that have spent their careers in citrus. And if other operations are starting to kind of cut back, we have the ability to kind of step in, and we can get some very good, seasoned hands. Obviously, we have fair wages, and they're paid competitively, along with the rest of our Alico team. But we're getting good access to good, experienced labor that way. So a little bit of a silver lining in that cloud.

Got it. And then, obviously, real estate prices are up, as highlighted in the commentary. How is activity for potential ranch land sales? Is it remaining as robust as it has been in the past or in the last couple of quarters?

So we've been pleasantly surprised that it sustained itself. It does not appear to be kind of interest rate sensitive. So these are typically not people borrowing money to acquire these ranch wins. It's been, more often than not, someone taking 1031 money and moving it back into ranch land. And we have a somewhat of a scarce base of acres remaining. But I think it's [due] a little bit to the price increases that we've seen. But our ranch land is still very, very competitive. It's pristine. And we're seeing private buyers now. The state is no longer really pursuing any acres. So these are all private buyers competing for some of the remaining acres that we do have.

Got it. And then the final question, health of the trees. I believe you're cautiously optimistic about tracking some results, I think, through this summer. Do you think we'll have a -- had visibility on the health of the citrus trees by third quarter results? Or do you think it would be a little bit further out even into the fall of next year or this year?

I have my fingers -- yes, I have my fingers crossed that by the first week of August when we do our third quarter results. We should have a high confidence level on being able to make a call. Right now, all systems look good. All indications are that the trees do appear to sustain the freeze with no long-term damage. And we're watching that very, very carefully every day. So hopefully, in about three more months, we have a little bit more information, a little bit more data. And fingers crossed, we hopefully will be able to come out and give you some update there.

Excuse me, 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 closing remarks. Please go ahead.

Thank you. And thank you, everyone, for joining our call today and for your support of Alico. We look forward to speaking with you about our third quarter results in early August. And again, Rich and I are available for any questions and answers, if you just want to contact us directly some time later on today or tomorrow. Thank you very much.

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