TEJON RANCH, Calif.--(BUSINESS WIRE)--Aug. 8, 2017--
Tejon Ranch Co. (NYSE:TRC), a diversified real estate and agribusiness
company, which is in the process of entitling, planning and developing
three master planned residential communities and a large-scale
commercial center, today released its results of operations for the
three and six months ended June 30, 2017.
“We continue to make notable progress with regard to our real estate
development efforts, which is at the core of our strategy to drive long
term shareholder value,” said Gregory S. Bielli, President and CEO.
“Most notably, our Centennial master planned residential community
achieved a significant milestone with the release of its Draft
Environmental Impact Report, setting in motion a timeline that leads to
Planning Commission and Board of Supervisors hearings."
Second Quarter Financial Results
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the second quarter of 2017 were $7.9
million, a decrease of $0.9 million, or 10.2%, compared with $8.8
million for the same period in 2016. The decrease was mainly due to the
following:
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During the winter of 2017, California experienced above normal rain
fall and snow levels, resulting in a reduction in water market
activity throughout the state. This adversely impacted water sales
opportunities within the company's mineral resources segment by $1.7
million, when compared with the prior period.
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During the second quarter of 2017, revenues from the company's farming
segment increased to $1.5 million from $0.5 million in the same period
in 2016 due to the following:
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The company generated $0.3 million in new revenues associated with
an agricultural land lease that was entered into during the second
half of 2016.
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Additional almond revenues of $0.2 million resulting from marginal
sales volume increase and positive price adjustments on pooled
almond contracts.
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Additional pistachio revenues of $0.3 million resulting from sale
of 2016 pistachio carryover crop.
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Equity in earnings from unconsolidated joint ventures for the second
quarter of 2017 was $1.6 million, a decrease of $0.2 million, or
11.1%, compared with $1.8 million for the same period in 2016. The
decrease was due to a non-cash GAAP loss associated with the company's
TRC-MRC 2 joint venture formed with Majestic Realty Co. during 2016 to
purchase a 626,000 square foot industrial building in TRCC-West.
Net income attributable to common stockholders for the second quarter of
2017 was $26,000, representing net income per common share of $0.00,
compared to net loss attributed to common stockholders of $0.7 million,
or net loss per common share of $0.03, for the same period in 2016. All
per share numbers in this release are diluted earnings per common share.
Year-to-Date Financial Results
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the first six months of 2017 were
$14.1 million, a decrease of $9.3 million, or 39.9%, compared with $23.4
million for the same period in 2016. The decrease was mainly due to the
following:
-
During the winter of 2017, California experienced above normal rain
fall and snow levels, resulting in a reduction in water market
activity throughout the state. This adversely impacted water sales
opportunities within the company's mineral resources segment by $8.4
million, when compared to prior period.
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Farming revenues were $1.9 million for the first six months of 2017,
compared with $1.7 million for the same period in 2016. The $0.2
million increase is primarily due to a new agricultural land lease
entered into during 2017.
-
Equity in earnings from unconsolidated joint ventures for the six
months ended June 30, 2017 was $1.8 million, a decrease of $1.5
million, or 45.8%, compared with $3.3 million for the same period in
2016. The primary drivers of the decrease were:
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The company's TA/Petro joint venture had increased operating
expenses associated with a new fast casual offering.
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Lease terminations at the TRCC/Rock Outlet joint venture triggered
write-offs of tenant related leasing costs, including allowances.
Leases with Express Factory Outlet, Samsonite and Old Navy have
been executed to fill these vacant spaces.
-
Non-cash GAAP loss associated with the company's TRC-MRC 2 joint
venture formed with Majestic Realty Co. during 2016 to purchase a
626,000 square foot industrial building in TRCC-West.
Net loss attributable to common stockholders for the six months ended
June 30, 2017 was $1.9 million, representing net loss per common share
of $0.09, compared to net income attributed to common stockholders of
$0.5 million, or income per common share of $0.03, for the same period
in 2016. All per share numbers in this release are diluted earnings per
common share.
2017 Operational Highlights
-
On May 18, 2017, the Los Angeles County Department of Regional
Planning released the Draft Environmental Impact Report for the
company’s Centennial master planned community for public review and
comment. The comment period ends on August 16, 2017.
-
Vertical construction continued on the 480,480 square foot industrial
building being developed for lease, by the TRC-MRC 1 joint venture,
which the company formed with Majestic Realty Co. in 2016. The
building is on pace to be delivered by the end of September 2017.
-
Construction is underway on an 80-room Hampton Inn located on land the
company sold to a hospitality operator/developer in 2016. The lodging
facility, which is located just north of the Outlets at Tejon, is
expected to be ready for occupancy by mid-2018.
-
Foot traffic for the company's TRCC/Rock Outlet joint venture has
increased year-over-year, recovering from the declines experienced
during the first quarter as a result of the inclement weather.
2017 Outlook:
The company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of June 30,
2017, total capital, including debt, was approximately $427.0 million.
The company also has cash and securities totaling approximately $23.2
million and $10.0 million available on its line of credit.
The company believes the variability of its operating results will
continue through the remainder of 2017 due to the seasonal nature of
farming activities. The company does not expect to generate additional
mineral resource revenue from excess water sales for the remainder of
2017 due to heavy winter rain and snow in California that has provided
additional statewide water resources. Farm revenues may be adversely
impacted in 2017, compared with 2016, due to recent declines in almond
prices and uncertainties related to the overall production of crops. The
increased rainfall in California has, for now, lessened the water burden
faced during the drought. However, the increased rainfall and winter
storms created time constraints during the critical pollination period
for 2017 almond trees. The company expects the harvest of almonds to
begin in early August and at that time will be able to better estimate
the 2017 crop.
The company will continue to aggressively pursue development, leasing,
and investment within the Tejon Ranch Commerce Center and in its joint
ventures. The company continues to invest in its master planned
communities, including the completion of entitlements for Centennial at
Tejon Ranch, preparing applications for state and federal permits for
its Grapevine community, which was approved by the Kern County Board of
Supervisors in December 2016, and in pre-development activities for
Mountain Village at Tejon Ranch. California is one of the most highly
regulated states to engage in real estate development and, as such,
delays, including those resulting from litigation, can be reasonably
anticipated. Accordingly, throughout the next few years, we expect net
income to fluctuate from year-to-year based upon commodity prices,
production within our farming segment, and the timing of sales of land
and the leasing of land within the company's commercial/industrial
developments.
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.
More information about Tejon Ranch Co. can be found on our website at www.tejonranch.com.
To watch a video overview of Tejon Ranch Co., please visit: http://tejonranch.com/investorvideo/
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, 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.
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TEJON RANCH CO.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except earnings per share)
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(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2017
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2016
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2017
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2016
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Revenues:
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Real estate - commercial/industrial
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$
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2,485
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$
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2,159
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$
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4,674
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$
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4,313
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Mineral resources
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1,519
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3,187
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3,520
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11,927
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Farming
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1,501
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502
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1,932
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1,723
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Ranch operations
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860
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1,001
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1,941
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1,839
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Total revenues from Operations
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6,365
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6,849
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12,067
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19,802
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Operating Profits:
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Real estate - commercial/industrial
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583
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445
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1,029
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920
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Real estate - resort/residential
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(500
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)
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(387
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)
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(1,130
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)
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(929
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)
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Mineral resources
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990
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1,387
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1,667
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5,434
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Farming
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243
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(848
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)
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(649
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)
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(1,133
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)
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Ranch operations
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(601
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)
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(541
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)
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(1,013
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)
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(1,050
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)
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Income (loss) from Operating Segments
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715
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56
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(96
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)
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3,242
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Investment income
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95
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120
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198
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238
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Other income
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(149
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)
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37
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31
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88
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Corporate expense
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(2,494
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)
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(3,163
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)
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(5,439
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)
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(6,166
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)
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(Loss) from operations before equity in earnings of unconsolidated
joint ventures
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(1,833
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)
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(2,950
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)
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(5,306
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)
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(2,598
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)
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Equity in earnings of unconsolidated joint ventures, net
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1,560
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1,842
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1,788
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3,297
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Income (loss) before income tax expense
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(273
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)
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(1,108
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)
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(3,518
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)
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699
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Income tax expense (benefit)
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(272
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)
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(380
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)
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(1,604
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)
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232
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Net income (loss)
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(1
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)
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(728
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)
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(1,914
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)
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467
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Net loss attributable to non-controlling interest
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(27
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)
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(40
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)
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(38
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)
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(54
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)
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Net income (loss) attributable to common stockholders
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$
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26
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$
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(688
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)
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$
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(1,876
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)
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$
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521
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Net income (loss) per share attributable to common stockholders,
basic
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$
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—
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$
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(0.03
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)
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$
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(0.09
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)
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$
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0.03
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Net income (loss) per share attributable to common stockholders,
diluted
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$
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—
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$
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(0.03
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)
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$
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(0.09
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)
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$
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0.03
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Weighted average number of shares outstanding:
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Common stock
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20,855,112
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20,724,689
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20,841,627
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20,713,396
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Common stock equivalents
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22,837
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115,693
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44,003
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103,664
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Diluted shares outstanding
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20,877,949
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20,840,382
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20,885,630
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20,817,060
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Non-GAAP Financial Measure
This news release includes references to the Company’s non-GAAP
financial measure “EBITDA.” EBITDA represents our 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 us and others as a supplemental
measure of performance. We use Adjusted EBITDA to assess the performance
of our 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. We believe Adjusted EBITDA
provides investors relevant and useful information because it permits
investors to view income from our operations on an unleveraged 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 our performance
independent of our capital structure and indebtedness and, therefore,
allow for a more meaningful comparison of our performance to that of
other companies, both in the real estate industry and in other
industries. We believe that excluding charges related to share-based
compensation facilitates a comparison of our 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 our control), and the assumptions and the variety
of award types that a company can use. EBITDA and Adjusted EBITDA have
limitations as measures of our performance. EBITDA and Adjusted EBITDA
do not reflect our 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, our computation of EBITDA and Adjusted EBITDA may not be
comparable to similar measures reported by other companies.
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TEJON RANCH CO.
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Non-GAAP Financial Measures
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(Unaudited)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2017
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2016
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2017
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|
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2016
|
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Net income (loss)
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$
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(1
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)
|
|
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$
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(728
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)
|
|
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$
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(1,914
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)
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$
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467
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Net loss attributable to non-controlling interest
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(27
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)
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(40
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)
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(38
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)
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(54
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)
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Interest, net:
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Consolidated
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(95
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)
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(120
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)
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(198
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)
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(238
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)
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Our share of interest expense from unconsolidated joint ventures
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428
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374
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832
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672
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Total interest, net
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333
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254
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634
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434
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Income taxes
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(272
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)
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(380
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)
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(1,604
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)
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232
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Depreciation and amortization:
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Consolidated
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1,132
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1,444
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2,282
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2,810
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Our share of depreciation and amortization from unconsolidated joint
ventures
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1,322
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704
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2,638
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1,373
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Total depreciation and amortization
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2,454
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2,148
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4,920
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4,183
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EBITDA
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2,541
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1,334
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|
|
2,074
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5,370
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Stock compensation expense
|
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883
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1,158
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1,694
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|
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2,131
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Adjusted EBITDA
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$
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3,424
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$
|
2,492
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|
|
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$
|
3,768
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|
|
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$
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7,501
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170808005394/en/
Source: Tejon Ranch Co.
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer
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