Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real
estate development and agribusiness company, today announced
financial results for the three- and six-months ended June 30,
2023.
"We made progress in several areas of our business
this quarter, including higher revenues in our
commercial/industrial operations. By driving costs lower, we
improved net income and Adjusted EBITDA compared with last year’s
second quarter. Furthermore, our balance sheet as of June 30,
2023 remained strong, with cash and securities totaling
approximately $67.0 million and $40.6 million available on our line
of credit," said Gregory S. Bielli, President and CEO of Tejon
Ranch Co. "A particular bright spot this year has been our Outlets
at Tejon joint venture. Through the great work of our team, we
undertook a rebranding effort that uncovered a much broader target
customer base with diverse demographics. Through relentless leasing
efforts, we signed seven new leases with nationally recognized
brands, bringing total occupancy to nearly 90%, up significantly
from 75% at the height of the COVID-19 pandemic. Efforts such as
these exemplify our ability to turn challenges into opportunities,
a characteristic seen not just at the Outlets, but throughout our
Company."
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 91% leased.
- Construction of a
446,400 square foot industrial building has commenced, with
completion expected in the first quarter of 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.
Second Quarter
2023 Financial Results
- GAAP net income
attributable to common stockholders for the second quarter of 2023
was $267,000, or net income per share attributable to common
stockholders, basic and diluted, of $0.01. For the second quarter
of 2022, the Company had a net loss attributable to common
stockholders of $667,000, or net loss per share attributable to
common stockholders, basic and diluted, of $0.03.
- Revenues and other
income, including equity in earnings of unconsolidated joint
ventures, for the second quarter of 2023 were $8.6 million,
compared with $10.9 million for the second quarter of 2022. Factors
impacting second quarter 2023 results include:
- Mineral resources
segment revenues of $1.6 million for the quarter ended
June 30, 2023, compared with $4.1 million for the quarter
ended June 30, 2022. The decrease in revenues was primarily
attributed to a reduction in water sales during the second quarter
of 2023. Due to heavy winter rainfalls, the State Water Project
allocation is currently at 100%, whereas in 2022 it was at 5%,
which severely limits water sales opportunities.
- Farming segment
revenues of $1.0 million for the three months ended June 30,
2023, compared with $1.9 million during the same period in 2022.
The decrease was attributed to a decrease in almond and hay
sales.
- Partially offsetting
the above decreases was an increase in investment income of
$540,000 resulting from a higher invested balances and higher
interest rates, and a $275,000 increase in joint venture results,
which resulted from rent escalations and a new lease at higher
rental rates for the Company's industrial real estate joint
ventures.
- Adjusted EBITDA, a
non-GAAP measure, was $4.5 million for the second quarter ended
June 30, 2023, compared with $2.9 million for the same period
in 2022.
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.
Year-to-Date Financial Results
- GAAP net income
attributable to common stockholders for the first six months of
2023 was $2.0 million, or net income per share attributed to common
stockholders, basic and diluted, of $0.08, compared with net income
attributable to common stockholders of $3.6 million, or net income
per share attributed to common stockholders, basic and diluted, of
$0.14, for the first six months of 2022.
- Revenues and other
income, for the first six months of 2023, including equity in
earnings of unconsolidated joint ventures, totaled $23.2 million,
compared with $34.1 million for the first six months of 2022.
Factors impacting the year-to-date results included:
-
Commercial/industrial real estate development segment revenues of
$5.3 million for the first six months of 2023 compared with $9.8
million for the first six months of 2022, resulting from the
absence of land sales in 2023.
- Mineral resources
segment revenues were $8.5 million for the first six months of
2023, compared with $16.1 million for the first six months of 2022.
The decrease in revenues was primarily attributed to a reduction in
water sales in 2023. The State Water Project allocation is
currently at 100%, whereas in 2022 it was at 5%, which severely
limits water sales opportunities.
- Partially offsetting
the above decreases was an increase in investment income of $1.0
million, resulting from higher invested balances and higher
interest rates. We also recognized a $579,000 increase in joint
venture results, which was due to rent escalations and a new lease
at higher rental rates for the Company's industrial real estate
joint ventures.
- Adjusted EBITDA, a
non-GAAP measure, was $10.9 million as of the six-months ended
June 30, 2023, compared with $14.2 million for the same period
in 2022.
Liquidity and Capital
Resources
- As of June 30,
2023, total capital, including debt, was approximately $528.4
million. The Company had cash and securities totaling approximately
$67.0 million and $40.6 million available on its line of credit as
of June 30, 2023.
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, as such,
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 demand for its water over
the remainder of the year, will be lower than in previous years
when the SWP allocation was significantly less.
The Company's farming operations during 2023 will
continue to be impacted by higher costs of production such as fuel
costs, fertilizer costs, pest control costs, and labor costs.
Higher than historically normal almond inventory levels are
anticipated to have an adverse effect on selling prices for the
remainder of 2023. The current subjective estimate for the 2023
almond crop is 2.6 billion pounds which is consistent with
2022.
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.
(Financial tables follow)TEJON RANCH
CO.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except earnings per
share)(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Real estate - commercial/industrial |
$ |
2,633 |
|
|
$ |
2,462 |
|
|
$ |
5,309 |
|
|
$ |
9,811 |
Mineral resources |
|
1,600 |
|
|
|
4,131 |
|
|
|
8,512 |
|
|
|
16,099 |
Farming |
|
1,025 |
|
|
|
1,921 |
|
|
|
2,210 |
|
|
|
2,576 |
Ranch operations |
|
840 |
|
|
|
755 |
|
|
|
2,332 |
|
|
|
1,803 |
Total revenues |
|
6,098 |
|
|
|
9,269 |
|
|
|
18,363 |
|
|
|
30,289 |
Cost and Expenses: |
|
|
|
|
|
|
|
Real estate - commercial/industrial |
|
1,685 |
|
|
|
1,822 |
|
|
|
3,380 |
|
|
|
4,558 |
Real estate - resort/residential |
|
324 |
|
|
|
423 |
|
|
|
712 |
|
|
|
846 |
Mineral resources |
|
925 |
|
|
|
2,445 |
|
|
|
4,991 |
|
|
|
9,602 |
Farming |
|
1,474 |
|
|
|
3,462 |
|
|
|
3,487 |
|
|
|
5,224 |
Ranch operations |
|
1,338 |
|
|
|
1,250 |
|
|
|
2,668 |
|
|
|
2,565 |
Corporate expenses |
|
2,222 |
|
|
|
2,185 |
|
|
|
4,509 |
|
|
|
4,600 |
Total expenses |
|
7,968 |
|
|
|
11,587 |
|
|
|
19,747 |
|
|
|
27,395 |
Operating (loss) income |
|
(1,870 |
) |
|
|
(2,318 |
) |
|
|
(1,384 |
) |
|
|
2,894 |
Other Income: |
|
|
|
|
|
|
|
Investment income |
|
619 |
|
|
|
79 |
|
|
|
1,075 |
|
|
|
96 |
Other (loss) income, net |
|
(32 |
) |
|
|
(91 |
) |
|
|
302 |
|
|
|
827 |
Total other income (loss) |
|
587 |
|
|
|
(12 |
) |
|
|
1,377 |
|
|
|
923 |
(Loss) income from operations before equity in earnings of
unconsolidated joint ventures |
|
(1,283 |
) |
|
|
(2,330 |
) |
|
|
(7 |
) |
|
|
3,817 |
Equity in earnings of unconsolidated joint ventures, net |
|
1,938 |
|
|
|
1,663 |
|
|
|
3,455 |
|
|
|
2,876 |
Income (loss) before income tax expense |
|
655 |
|
|
|
(667 |
) |
|
|
3,448 |
|
|
|
6,693 |
Income tax expense (benefit) |
|
391 |
|
|
|
(5 |
) |
|
|
1,404 |
|
|
|
3,041 |
Net income (loss) |
|
264 |
|
|
|
(662 |
) |
|
|
2,044 |
|
|
|
3,652 |
Net (loss) income attributable to non-controlling interest |
|
(3 |
) |
|
|
5 |
|
|
|
3 |
|
|
|
12 |
Net income (loss) attributable to common stockholders |
$ |
267 |
|
|
$ |
(667 |
) |
|
$ |
2,041 |
|
|
$ |
3,640 |
Net income (loss) per share attributable to common stockholders,
basic |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.08 |
|
|
$ |
0.14 |
Net income (loss) per share attributable to common stockholders,
diluted |
$ |
0.01 |
|
|
$ |
(0.03 |
) |
|
$ |
0.08 |
|
|
$ |
0.14 |
Weighted average number of shares outstanding: |
|
|
|
|
|
|
|
Common stock |
|
26,713,090 |
|
|
|
26,480,405 |
|
|
|
26,680,508 |
|
|
|
26,456,330 |
Common stock equivalents |
|
87,146 |
|
|
|
47,507 |
|
|
|
65,194 |
|
|
|
57,665 |
Diluted shares outstanding |
|
26,800,236 |
|
|
|
26,527,912 |
|
|
|
26,745,702 |
|
|
|
26,513,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TEJON RANCH CO. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands, except per share data)
|
June 30, 2023 |
|
December 31, 2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
27,342 |
|
|
$ |
39,119 |
|
Marketable securities - available-for-sale |
|
39,651 |
|
|
|
33,444 |
|
Accounts receivable |
|
2,414 |
|
|
|
4,453 |
|
Inventories |
|
7,558 |
|
|
|
3,369 |
|
Prepaid expenses and other current assets |
|
4,324 |
|
|
|
2,660 |
|
Total current assets |
|
81,289 |
|
|
|
83,045 |
|
Real estate and improvements - held for lease, net |
|
16,887 |
|
|
|
16,940 |
|
Real estate development (includes $116,781 at June 30, 2023
and $115,221 at December 31, 2022, attributable to CFL) |
|
327,521 |
|
|
|
321,293 |
|
Property and equipment, net |
|
54,520 |
|
|
|
52,980 |
|
Investments in unconsolidated joint ventures |
|
38,350 |
|
|
|
41,891 |
|
Net investment in water assets |
|
51,157 |
|
|
|
47,045 |
|
Other assets |
|
3,220 |
|
|
|
3,597 |
|
TOTAL ASSETS |
$ |
572,944 |
|
|
$ |
566,791 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Trade accounts payable |
$ |
5,362 |
|
|
$ |
5,117 |
|
Accrued liabilities and other |
|
2,424 |
|
|
|
3,602 |
|
Deferred income |
|
1,884 |
|
|
|
1,531 |
|
Income taxes payable |
|
873 |
|
|
|
— |
|
Current maturities of long-term debt |
|
1,822 |
|
|
|
1,779 |
|
Total current liabilities |
|
12,365 |
|
|
|
12,029 |
|
Long-term debt, less current portion |
|
47,258 |
|
|
|
48,161 |
|
Long-term deferred gains |
|
11,447 |
|
|
|
11,447 |
|
Deferred tax liability |
|
7,177 |
|
|
|
7,180 |
|
Other liabilities |
|
15,620 |
|
|
|
10,380 |
|
Total liabilities |
|
93,867 |
|
|
|
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 - 26,718,773 at June 30, 2023
and 26,541,553 at December 31, 2022 |
|
13,359 |
|
|
|
13,271 |
|
Additional paid-in capital |
|
344,434 |
|
|
|
345,344 |
|
Accumulated other comprehensive loss |
|
(1,767 |
) |
|
|
(2,028 |
) |
Retained earnings |
|
107,684 |
|
|
|
105,643 |
|
Total Tejon Ranch Co. Stockholders’ Equity |
|
463,710 |
|
|
|
462,230 |
|
Noncontrolling interest |
|
15,367 |
|
|
|
15,364 |
|
Total equity |
|
479,077 |
|
|
|
477,594 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
572,944 |
|
|
$ |
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 June 30, |
|
Six Months Ended June 30, |
($ in thousands) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss) |
$ |
264 |
|
|
$ |
(662 |
) |
|
$ |
2,044 |
|
|
$ |
3,652 |
|
Net (loss) income attributable to non-controlling interest |
|
(3 |
) |
|
|
5 |
|
|
|
3 |
|
|
|
12 |
|
Net income (loss) attributable to common stockholders |
|
267 |
|
|
|
(667 |
) |
|
|
2,041 |
|
|
|
3,640 |
|
Interest, net |
|
|
|
|
|
|
|
Consolidated |
|
(619 |
) |
|
|
(79 |
) |
|
|
(1,075 |
) |
|
|
(96 |
) |
Our share of interest expense from unconsolidated joint
ventures |
|
1,227 |
|
|
|
640 |
|
|
|
2,402 |
|
|
|
1,231 |
|
Total interest, net |
|
608 |
|
|
|
561 |
|
|
|
1,327 |
|
|
|
1,135 |
|
Income taxes |
|
391 |
|
|
|
(5 |
) |
|
|
1,404 |
|
|
|
3,041 |
|
Depreciation and amortization: |
|
|
|
|
|
|
|
Consolidated |
|
987 |
|
|
|
1,081 |
|
|
|
1,975 |
|
|
|
2,048 |
|
Our share of depreciation and amortization from unconsolidated
joint ventures |
|
1,339 |
|
|
|
1,093 |
|
|
|
2,613 |
|
|
|
2,242 |
|
Total depreciation and amortization |
|
2,326 |
|
|
|
2,174 |
|
|
|
4,588 |
|
|
|
4,290 |
|
EBITDA |
|
3,592 |
|
|
|
2,063 |
|
|
|
9,360 |
|
|
|
12,106 |
|
Stock compensation expense |
|
884 |
|
|
|
868 |
|
|
|
1,505 |
|
|
|
2,087 |
|
Adjusted EBITDA |
$ |
4,476 |
|
|
$ |
2,931 |
|
|
$ |
10,865 |
|
|
$ |
14,193 |
|
Tejon Ranch Co. |
Brett A. Brown, 661-248-3000 |
Executive Vice President, Chief Financial Officer |
Tejon Ranch (NYSE:TRC)
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