Alico Inc. to restructure, cut costs, emphasize citrus over cattle ranching

Fort Myers-based Alico Inc. has announced a restructuring designed to transform itself into a more competitive company.

Calling the program Alico 2.0, the publicly traded company said the changes will transform three of its legacy businesses into a single enterprise, Alico Citrus.

The move is aimed at ensuring the company "will remain one of the leaders in the U.S. citrus industry." 

The company has "explored every aspect of Alico's citrus and ranch operations," everything from corporate and operational cost structures to human resources efficiency" to come up with the cost-cutting program.

"Alico has been careful to eliminate costs that it believes will not negatively affect citrus production," the company said in a news release. "In fact, we believe that its new management structure and practices will drive enhanced production." 

The full results of the program will not be realized for two seasons.

The company expects to reduce its total expenses per acre from $3,314 to $2,164 — and to cut production costs from $2.14 to $1.56 per pound solids, which roughly equates to about a gallon of orange juice.

Efficiencies will be achieved through better purchasing, more precise application of fertilizers and chemicals, outsourcing of harvesting, hauling and other tasks, and steamlining grove management.

Alico Citrus also expects to use a more efficient labor model.

As part of the restructuring, the company has shut down its nursery in Gainesville and will sell other assets not considered strategic, including trucks and trailers and real estate. It recently sold its office building in Fort Myers.

The company soon will close its direct cattle operations at Alico Ranch, which has been part of its land holdings for generations. The ranch will be leased to a third-party operator. 

Management has also changed. Danny Sutton has been promoted to president and general manager of Alico Citrus, taking over for Steve Ryan, who the company said has resigned to pursue other opportunities.

Future plans include planting more than 400,000 trees in fiscal 2018, which is expected to drive growth beyond 2020. 

The company was hit hard by Hurricane Irma and estimated production will be down 40 to 45 percent this season compared with last year. It lost only a small number of trees, but they were weakened by the strong winds, which also knocked tons of maturing fruit to the ground. 

Alico has crop insurance and is working closely with its insurers and adjusters on getting relief. It also continues to lobby for federal help for the industry, along with other Florida growers and their allies.

More: Citrus industry feels squeeze from Irma, waits for help

Despite the severe damage, the company said it believes the restructuring will help mitigate the financial harm from Irma.

Alico expects break-even earnings on an adjusted basis in fiscal 2018 (before interest, taxes, depreciation and amortization).

The company said that after the Alico 2.0 program is fully implemented, it expects to generate net income of $17.9 million and earnings of $2 to $2.40 a share.