• Tejon Ranch Co. Announces First Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 04 May 2023 09:15:00   America/New_York

    TEJON RANCH, Calif., May 04, 2023 (GLOBE NEWSWIRE) -- 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 SUBSIDIARIES
    CONSOLIDATED 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

     


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