Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real
estate development and agribusiness company, today announced
financial results for the three-months ended March 31, 2023.
"Activity at the Tejon Ranch Commerce Center (TRCC)
remains strong. Most recently, in conjunction with our joint
venture partner Majestic Realty, we have started construction on a
new 446,000 square foot industrial building that was pre-leased to
Sunrise Brands, a leading apparel company. We expect our new tenant
to take occupancy in early 2024," said Gregory S. Bielli, President
and CEO of Tejon Ranch Co." This building is part of the nearly 2.0
million square feet of space either under construction, recently
completed, or about to begin construction in the next 12 months in
TRCC. Additionally, we are making progress on our plans for the
development of a multi-family residential complex, adjacent to the
Outlets at Tejon."
Commercial/Industrial Real Estate
Highlights
- Industrial portfolio, through the
Company's joint venture partnerships, consists of 2.3 million
square feet of gross leasable area (GLA), and is 100% leased. In
total, TRCC comprises 6.4 million square feet of GLA.
- TRCC commercial portfolio, wholly
owned and through joint venture partnerships, comprises 620,907
square feet of GLA and is 90% leased.
- Construction of a 446,400 square foot
industrial building has commenced, with completion expected in
early 2024; a lease for this building was secured in advance of
construction.
- Design and engineering for Phase 1 of
our planned multi-family residential development at TRCC is
underway. Phase 1 includes 228 of the planned 495 residential
units.
First Quarter
2023 Financial Results
- GAAP net income attributable to common
stockholders for the first quarter of 2023 was $1.8 million, or net
income per share attributable to common stockholders, basic and
diluted, of $0.07. For the first quarter of 2022 GAAP net income
attributable to common stockholders was $4.3 million, or net income
per share attributable to common stockholders, basic and diluted,
of $0.16.
- Revenues and other income, including
equity in earnings of unconsolidated joint ventures, for the first
quarter of 2023 were $14.6 million, compared with $23.2 million for
the first quarter of 2022. Factors affecting first quarter 2023
results include:
- Commercial/industrial real estate
development segment revenues of $2.7 million for the quarter ended
March 31, 2023, compared with $7.3 million for the quarter
ended March 31, 2022, resulting from no land sales in the
first quarter of 2023. In the first quarter of 2022, the Company
sold a 12.3-acre parcel of land within TRCC for $4.7 million.
- Farming revenues of $1.2 million for
the quarter ended March 31, 2023, an 81% increase from
$655,000 for the quarter ended March 31, 2022. The increase
was attributed to higher almond sales and water usage
reimbursements. Comparatively, the Company sold 444,000 and 269,000
pounds of almonds during the first quarters of 2023 and 2022,
respectively.
- Mineral resources segment revenues of
$6.9 million for the quarter ended March 31, 2023, compared
with $12.0 million for the quarter ended March 31, 2022. The
decrease in revenues was primarily attributed to a reduction in
water sales during the first quarter of 2023. Comparatively, the
Company sold 3,050 and 6,970 acre-feet of water during the first
quarters of 2023 and 2022, respectively.
- Equity in earnings of unconsolidated
joint ventures of $1.5 million for the first three months of 2023,
an increase of 25%, from $1.2 million for the first three months of
2022. The improvement was primarily attributed to the Company's
Petro joint venture that generated improvements in both fuel and
non-fuel operating margins.
- Adjusted EBITDA, a
non-GAAP measure, was $6.4 million for the 2023 first quarter,
compared with $11.3 million for the 2022 first quarter.
Tejon Ranch Co. provides Adjusted EBITDA, a
non-GAAP financial measure, because management believes it offers
additional information for monitoring the Company's cash flow
performance. A table providing a reconciliation of Adjusted EBITDA
to its most comparable GAAP measure, as well as an explanation of,
and important disclosures about, this non-GAAP measure, is included
in the tables at the end of this press release.
Liquidity and Capital
Resources
As of March 31, 2023, total capital, including
debt, was approximately $526.8 million. The Company had cash and
securities totaling approximately $75.7 million and $40.6 million
available on its line of credit at the end of the 2023 first
quarter.
2023 Outlook:
The Company will continue to aggressively pursue
commercial/industrial development, multi-family development,
leasing, sales, and investment within TRCC and its joint ventures.
The Company will also continue to invest in its residential
projects, including Mountain Village at Tejon Ranch, Centennial at
Tejon Ranch and Grapevine at Tejon Ranch.
California is one of the most highly regulated
states in which to engage in real estate development and, assuch,
natural delays, including those resulting from litigation, can be
reasonably anticipated. Accordingly, throughout the next few years,
the Company expects net income to fluctuate from year-to-year based
on commodity prices, production within its farming and mineral
resources segments, and the timing of land sales and leasing of
land within its industrial developments.
Water sales opportunities each year are impacted by
the total precipitation and snowpack runoff in Northern California
from winter storms, as well as California State Water Project, or
SWP, allocations. The current SWP allocation is at 100% of contract
amounts, so the Company anticipates that the demand for its water
will be lower than in previous years when the SWP allocation was
significantly lower.
The Company's farming segment will continue to be
impacted by higher production costs related to fuel, fertilizer,
pest control, and labor. Almond prices showed slight improvement in
the 2023 first quarter, however, higher than historically normal
inventory levels is anticipated to have an adverse effect on prices
for the remainder of this year.
The Company remains focused on managing cash
expenditures, including but not limited to, reducing capital
expenditures, consulting services and re-focusing hiring efforts.
In addition, we continue to evaluate opportunities to strengthen
our financial position by entering into new financing arrangements,
as appropriate.
About Tejon Ranch Co.
Tejon Ranch Co. (NYSE: TRC) is a diversified real
estate development and agribusiness company, whose principal asset
is its 270,000-acre land holding located approximately 60 miles
north of Los Angeles and 30 miles south of Bakersfield.
The Company operates in a variety of land-based
business segments, including farming, mineral resources, and ranch
operations, as well as a commercial/industrial mixed use master
plan known as the Tejon Ranch Commerce Center, which is currently
in operation focusing on leasing, commercial/industrial
development, multi-family development, and sales. The Company is
also in the process of developing three additional mixed-use master
planned residential developments in southern California. When all
four master planned developments are fully built out, Tejon Ranch
will be home to 35,278 housing units, more than 35 million square
feet of commercial/industrial space and 750 lodging units.
More information about Tejon Ranch Co. can be found
on the Company's website at www.tejonranch.com.
Forward Looking Statements:
The statements contained herein, which are not
historical facts, are forward-looking statements based on economic
forecasts, strategic plans and other factors, which by their nature
involve risk and uncertainties. In particular, among the factors
that could cause actual results to differ materially are the
following: business conditions and the general economy, future
commodity prices and yields, external market forces, the ability to
obtain various governmental entitlements and permits, interest
rates, and other risks inherent in real estate and agriculture
businesses. For further information on factors that could affect
the Company, the reader should refer to the Company’s filings with
the Securities and Exchange Commission.
TEJON RANCH
CO.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except earnings per
share)(Unaudited)
|
Three Months Ended March 31, |
|
2023 |
|
2022 |
Revenues: |
|
|
|
Real estate - commercial/industrial |
$ |
2,676 |
|
$ |
7,349 |
Mineral resources |
|
6,912 |
|
|
11,968 |
Farming |
|
1,185 |
|
|
655 |
Ranch operations |
|
1,492 |
|
|
1,048 |
Total revenues |
|
12,265 |
|
|
21,020 |
Cost and Expenses: |
|
|
|
Real estate - commercial/industrial |
|
1,695 |
|
|
2,736 |
Real estate - resort/residential |
|
388 |
|
|
423 |
Mineral resources |
|
4,066 |
|
|
7,157 |
Farming |
|
2,013 |
|
|
1,762 |
Ranch operations |
|
1,330 |
|
|
1,315 |
Corporate expenses |
|
2,287 |
|
|
2,415 |
Total expenses |
|
11,779 |
|
|
15,808 |
Operating income |
|
486 |
|
|
5,212 |
Other Income: |
|
|
|
Investment income |
|
456 |
|
|
17 |
Other income, net |
|
334 |
|
|
918 |
Total other income |
|
790 |
|
|
935 |
Income from operations before equity in earnings of unconsolidated
joint ventures |
|
1,276 |
|
|
6,147 |
Equity in earnings of unconsolidated joint ventures, net |
|
1,517 |
|
|
1,213 |
Income before income tax expense |
|
2,793 |
|
|
7,360 |
Income tax expense |
|
1,013 |
|
|
3,046 |
Net income |
|
1,780 |
|
|
4,314 |
Net income attributable to non-controlling interest |
|
6 |
|
|
7 |
Net income attributable to common stockholders |
$ |
1,774 |
|
$ |
4,307 |
Net income per share attributable to common stockholders,
basic |
$ |
0.07 |
|
$ |
0.16 |
Net income per share attributable to common stockholders,
diluted |
$ |
0.07 |
|
$ |
0.16 |
Weighted average number of shares outstanding: |
|
|
|
Common stock |
|
26,647,565 |
|
|
26,431,989 |
Common stock equivalents |
|
1,783 |
|
|
47,507 |
Diluted shares outstanding |
|
26,649,348 |
|
|
26,479,496 |
TEJON RANCH CO. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands, except per share data)
|
March 31, 2023 |
|
December 31, 2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
40,379 |
|
|
$ |
39,119 |
|
Marketable securities - available-for-sale |
|
35,321 |
|
|
|
33,444 |
|
Accounts receivable |
|
1,966 |
|
|
|
4,453 |
|
Inventories |
|
5,744 |
|
|
|
3,369 |
|
Prepaid expenses and other current assets |
|
3,854 |
|
|
|
2,660 |
|
Total current assets |
|
87,264 |
|
|
|
83,045 |
|
Real estate and improvements - held for lease, net |
|
17,142 |
|
|
|
16,940 |
|
Real estate development (includes $116,071 at March 31, 2023
and $115,221 at December 31, 2022, attributable to Centennial
Founders, LLC, Note 15) |
|
324,318 |
|
|
|
321,293 |
|
Property and equipment, net |
|
53,791 |
|
|
|
52,980 |
|
Investments in unconsolidated joint ventures |
|
36,291 |
|
|
|
41,891 |
|
Net investment in water assets |
|
51,187 |
|
|
|
47,045 |
|
Other assets |
|
2,136 |
|
|
|
3,597 |
|
TOTAL ASSETS |
$ |
572,129 |
|
|
$ |
566,791 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Trade accounts payable |
$ |
5,170 |
|
|
$ |
5,117 |
|
Accrued liabilities and other |
|
3,338 |
|
|
|
3,602 |
|
Deferred income |
|
2,310 |
|
|
|
1,531 |
|
Income taxes payable |
|
482 |
|
|
|
— |
|
Current maturities of long-term debt |
|
1,800 |
|
|
|
1,779 |
|
Total current liabilities |
|
13,100 |
|
|
|
12,029 |
|
Long-term debt, less current portion |
|
47,710 |
|
|
|
48,161 |
|
Long-term deferred gains |
|
11,447 |
|
|
|
11,447 |
|
Deferred tax liability |
|
6,880 |
|
|
|
7,180 |
|
Other liabilities |
|
15,940 |
|
|
|
10,380 |
|
Total liabilities |
|
95,077 |
|
|
|
89,197 |
|
Commitments and contingencies |
|
|
|
Equity: |
|
|
|
Tejon Ranch Co. Stockholders’ Equity |
|
|
|
Common stock, $0.50 par value per share: |
|
|
|
Authorized shares - 50,000,000 |
|
|
|
Issued and outstanding shares - 26,710,432 at March 31, 2023
and 26,541,553 at December 31, 2022 |
|
13,356 |
|
|
|
13,271 |
|
Additional paid-in capital |
|
343,438 |
|
|
|
345,344 |
|
Accumulated other comprehensive loss |
|
(2,529 |
) |
|
|
(2,028 |
) |
Retained earnings |
|
107,417 |
|
|
|
105,643 |
|
Total Tejon Ranch Co. Stockholders’ Equity |
|
461,682 |
|
|
|
462,230 |
|
Non-controlling interest |
|
15,370 |
|
|
|
15,364 |
|
Total equity |
|
477,052 |
|
|
|
477,594 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
572,129 |
|
|
$ |
566,791 |
|
Non-GAAP Financial Measure
This press release includes references to the
Company’s non-GAAP financial measure “EBITDA.” EBITDA represents
the Company's share of consolidated net income in accordance with
GAAP, before interest, taxes, depreciation, and amortization, plus
the allocable portion of EBITDA of unconsolidated joint ventures
accounted for under the equity method of accounting based upon
economic ownership interest, and all determined on a consistent
basis in accordance with GAAP. EBITDA is a non-GAAP financial
measure and is used by the Company and others as a supplemental
measure of performance. Tejon Ranch uses Adjusted EBITDA to assess
the performance of the Company's core operations, for financial and
operational decision making, and as a supplemental or additional
means of evaluating period-to-period comparisons on a consistent
basis. Adjusted EBITDA is calculated as EBITDA, excluding stock
compensation expense. The Company believes Adjusted EBITDA provides
investors relevant and useful information because it permits
investors to view income from operations on an unlevered basis
before the effects of taxes, depreciation and amortization, and
stock compensation expense. By excluding interest expense and
income, EBITDA and Adjusted EBITDA allow investors to measure the
Company's performance independent of its capital structure and
indebtedness and, therefore, allow for a more meaningful comparison
of the Company's performance to that of other companies, both in
the real estate industry and in other industries. The Company
believes that excluding charges related to share-based compensation
facilitates a comparison of its operations across periods and among
other companies without the variances caused by different valuation
methodologies, the volatility of the expense (which depends on
market forces outside the Company's control), and the assumptions
and the variety of award types that a company can use. EBITDA and
Adjusted EBITDA have limitations as measures of the Company's
performance. EBITDA and Adjusted EBITDA do not reflect Tejon
Ranch's historical cash expenditures or future cash requirements
for capital expenditures or contractual commitments. While EBITDA
and Adjusted EBITDA are relevant and widely used measures of
performance, they do not represent net income or cash flows from
operations as defined by GAAP, and they should not be considered as
alternatives to those indicators in evaluating performance or
liquidity. Further, the Company's computation of EBITDA and
Adjusted EBITDA may not be comparable to similar measures reported
by other companies.
TEJON RANCH CO.Non-GAAP
Financial Measures(Unaudited)
|
Three Months Ended March 31, |
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
1,780 |
|
|
$ |
4,314 |
|
Net income attributable to non-controlling interest |
|
6 |
|
|
|
7 |
|
Net income attributable to common stockholders |
|
1,774 |
|
|
|
4,307 |
|
Interest, net |
|
|
|
Consolidated |
|
(456 |
) |
|
|
(17 |
) |
Our share of interest expense from unconsolidated joint
ventures |
|
1,175 |
|
|
|
591 |
|
Total interest, net |
|
719 |
|
|
|
574 |
|
Income taxes |
|
1,013 |
|
|
|
3,046 |
|
Depreciation and amortization: |
|
|
|
Consolidated |
|
988 |
|
|
|
967 |
|
Our share of depreciation and amortization from unconsolidated
joint ventures |
|
1,274 |
|
|
|
1,149 |
|
Total depreciation and amortization |
|
2,262 |
|
|
|
2,116 |
|
EBITDA |
|
5,768 |
|
|
|
10,043 |
|
Stock compensation expense |
|
621 |
|
|
|
1,219 |
|
Adjusted EBITDA |
$ |
6,389 |
|
|
$ |
11,262 |
|
Tejon Ranch Co. |
Allen E. Lyda, 661-248-3000 |
Chief Operating Officer/Chief Financial Officer |
Tejon Ranch (NYSE:TRC)
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