Tropicana Supplier Alico Cuts Citrus Operations As Greening Disease Bites, Eyes Growth In Real Estate; Stock Jumps

Alico, Inc. (NASDAQ: ALCO ) shares traded higher on Monday after the Florida-based agribusiness and land management company announced key changes to its operations .

Alico plans to wind down Alico Citrus’ primary operations, which will include reducing most of its citrus production workforce effective immediately.

Alico’s Board approved reducing up to 172 positions, with 135 employees affected by January 6, 2025, and the remainder by April 1, 2025.

Alico expects that approximately 3,460 citrus acres will be managed by third-party caretakers for another season through 2026.

Alico owns approximately 53,371 acres of land across eight counties in Florida and approximately 48,700 acres of oil, gas, and mineral rights in the state.

Alico also expects to entitle certain parcels of its land for commercial and residential development.

The challenges faced by the citrus industry, particularly citrus greening disease, played a significant role in the company’s decision to wind down its Alico Citrus division.

“Our citrus production has declined approximately 73% over the last ten years, despite significant investments in land, trees and citrus disease treatments, and the current harvest will likely be lower in volume than the previous season,” said John Kiernan, Alico’s President and Chief Executive Officer.

On January 3, the company delivered a notice to Tropicana Manufacturing Company, Inc. under the Orange Purchase Agreement, signaling its intent to remove certain acreage from the contract.

The decision follows the company’s evaluation that the affected acreage is no longer economically viable for orange cultivation.

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

Alico expects that cash reserves at the end of the 2025 fiscal year will be sufficient to meet future operating expenses for at least two additional years without any additional land sales being required.

The company expects that approximately 25% of its land holdings have near- and long-term potential for commercial and residential development, with approximately 10% of its acres targeted for development within the next five years.

The company’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.