TEJON RANCH, Calif.--(BUSINESS WIRE)--Aug. 10, 2015--
Tejon Ranch Co. (NYSE:TRC), a diversified real estate development and
agribusiness company, today released the results of operations for the
three- and six- months ended June 30, 2015.
Six months ended June 30, 2015:
-
Revenue from operations for the six months ended June 30, 2015 totaled
$23,633,000, an increase of $777,000, or 3%, compared to $22,856,000
in revenue for the same period in 2014;
-
Net income attributable to common stockholders for the six month
period ended June 30, 2015 was $2,023,000, or $0.10 per common share,
compared to net income attributable to common stockholders of
$1,987,000, or $0.10 per common share, for the same period in 2014.
All per share references in this release are presented on a fully
diluted basis.
The improvement in net income attributable to common stockholders during
the first six months of 2015, when compared to the same period in 2014,
is primarily the result of increases in commercial/industrial operating
income, an increase in our equity in earnings of the TA/Petro joint
venture, and higher water sales. All per share references in this
release are presented on a fully diluted basis.
Three months ended June 30, 2015:
-
For the second quarter ended June 30, 2015, the Company reported
revenue from operations of $7,000,000, a decrease of $1,321,000, or
16%, compared to $8,321,000 during the same period in 2014;
-
Net income attributable to common stockholders was $406,000, or $0.02
per common share, in the second quarter of 2015, compared to net
income attributable to common stockholders of $874,000, or $0.04 per
common share, for the second quarter of 2014.
The primary driver to the decline in net income for the quarter, as
compared to the same period of 2014, was a decline in farming and
mineral resource revenues, which was partially offset by an improvement
in equity in earnings of joint ventures.
“While our commodity-based business units continue to be important
sources of revenue for the Company, we’re encouraged by the momentum in
our real estate business units, particularly in our
commercial/industrial operations and our joint venture with TA/Petro at
the Tejon Ranch Commerce Center,” said Gregory S. Bielli, president and
CEO. “Additionally, we’re pleased the Outlets at Tejon are proving to be
a catalyst for additional development within the Commerce Center, along
with the progress we’re making on the entitlement efforts of our master
planned communities.
Results of Operations for the First Six Months of 2015:
Total revenue from operations for the first six months of 2015 increased
$777,000, or 3%, as compared to the same period in 2014, largely due to
improved commercial/industrial and mineral resources revenues.
The increase in commercial/industrial revenue of $892,000, or 16%,
during the first six months of 2015, compared to the same period in
2014, is primarily due to a $278,000 improvement in percentage lease
rent from the power plant lease, a $230,000 increase in property
management fees related to the outlet center, and a net $78,000 increase
in commercial lease income as three new tenants came on line during the
period. The increase more than offset the expiration of a communication
lease and a convenience store lease. In addition, we saw an increase in
revenue from grazing leases and game management of $328,000.
Our share of earnings from our joint ventures was $2,806,000, an
increase of $1,220,000, or 77%, during the first six months of 2015 when
compared to the same period in 2014, primarily due to $1,217,000 higher
net income from our TA/Petro joint venture. The improvement in
operations within the joint venture was driven by an increase in diesel
volume of 766,000 gallons and gas volume of 573,000 gallons. We also saw
an improvement in the margin on gas sales for the first six months of
2015. The improvement in gallons sold is being driven by the growing
traffic along Interstate-5 and the expansion of offerings at TRCC such
as the Outlets at Tejon.
Mineral resource revenues improved $444,000 during the first six months
of 2015, or 4%, compared to the same period in 2014, primarily due to an
increase in water sales of $2,462,000 resulting from an additional sale
of approximately 1,700 acre feet of water. This increase was partially
offset by a $1,829,000 decrease in oil and gas royalty payments as a
result of prices declining approximately 52% to an average of $48 per
barrel. We also saw a decline in rock and aggregate royalties of
$244,000 resulting from lower production driven by a decrease in demand.
Farming revenues declined $376,000, or 8%, during the first six months
of 2015, compared to the same period in 2014, due primarily to the
receipt in 2014 of $143,000 in revenue related to a payment received for
tree removal from an oil exploration company. In addition, the Company
saw a decrease in hay crop sales related to the timing of harvest and
sales during 2015.
Operating expenses increased $2,042,000, or 9%, during the period
primarily due to an increase in mineral resources expense of $990,000
and corporate expense of $931,000. The increase in mineral resources was
driven by higher water resource costs primarily due to a $712,000
increase in water cost of sales. The increase in corporate expense is
mainly due to increased staffing costs driven by higher employee benefit
costs and performance based stock and bonus expense during 2015, as
compared to 2014.
Results of Operations for the Second Quarter of 2015:
Total revenue declined $1,321,000, or 16%, during the quarter, as
compared to the same period in 2014, due to a reduction in farming and
mineral resources revenues partially offset by higher
commercial/industrial revenues.
Commercial/industrial revenues improved $472,000, or 18%, during the
quarter, as compared to the same period in 2014, primarily due to an
increase of $393,000 in percentage rent from the power plant lease,
improved rental income of $111,000 related to new leases, and a $304,000
increase in grazing lease and game management revenues. These
improvements were partially offset by a $359,000 reduction in
development fees tied to the 2014 construction of the outlet center.
Our share of earnings from joint ventures increased by $508,000, or 44%,
when compared to the same period in 2014, primarily due to higher net
income from the TA/Petro joint venture as a result of improved
operations as noted in the description of results for the first six
months of 2015.
Mineral resource revenues fell $102,000, or 4%, during the quarter as
reduced oil royalties and rock and aggregate royalties offset water
sales. Water sales were $1,172,000, an increase of $860,000 compared to
2014, which was offset by an $865,000 decrease in oil royalties and a
$121,000 decline in rock and aggregate revenues.
Farming revenues declined $1,601,000, or 55%, during the quarter due to
a drop in pistachio revenues of $1,300,000 as a result of the receipt of
final price adjustments related to the 2013 crop that was received in
the second quarter of 2014. Historically, any price adjustments or
bonuses related to a prior year pistachio crop are received during the
third quarter of each year as the harvest for the new crop year begins.
Comparative revenue also declined due to the receipt in 2014 of a
payment from an oil exploration company for $143,000 for the removal of
trees from an orchard.
2015 Outlook:
Tejon Ranch Co. manages its cash and marketable securities, along with
cash flow, for the pursuit of land entitlement, development, farming and
conservation. As of June 30, 2015, the Company had cash and securities
totaling $39,400,000 and $26,040,000 of availability on a line of credit
to meet any short-term funding needs.
The Company believes the variability of its quarterly and annual
operating results will continue during 2015 due to its farming and real
estate activities and to the majority of projected water sales for 2015
being completed through the second quarter of 2015. As we are in the
early stages of our 2015 crop harvests, we do not have an accurate
estimate of 2015 crop yields or revenue at this time. However, we are
expecting lower yields in 2015 for pistachios and almonds as a result of
the 2015 bloom for these crops being light compared to historical
standards, resulting from a very mild winter that impacted the hours the
trees were dormant.
Many of our projects, especially in real estate, require a lengthy
process to complete the entitlement and development phases before
revenue can begin to be recognized. The timing of projects and sales of
both real estate inventory and non-strategic assets can vary from
year-to-year; therefore, it is difficult for the Company to accurately
predict quarterly and annual revenues and results of operations.
About Tejon Ranch Co.
Tejon Ranch Co. 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 online at http://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, 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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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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SECOND QUARTER ENDED JUNE 30
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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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2015
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2014
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2015
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2014
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Revenues:
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Real estate - commercial/industrial
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$
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3,025
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$
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2,553
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$
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6,387
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$
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5,495
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Real estate - resort/residential
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-
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90
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-
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183
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Mineral resources
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2,652
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2,754
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12,852
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12,408
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Farming
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1,323
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2,924
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4,394
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4,770
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Total revenues
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7,000
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8,321
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23,633
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22,856
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Costs and Expenses:
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Real estate - commercial/industrial
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3,095
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3,336
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6,297
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6,647
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Real estate - resort/residential
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576
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687
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1,327
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1,151
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Mineral resources
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723
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626
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6,417
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5,427
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Farming
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1,244
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1,428
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3,587
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3,292
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Corporate expenses
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2,764
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2,270
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6,287
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5,356
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Total expenses
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8,402
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8,347
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23,915
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21,873
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Operating income (loss)
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(1,402
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)
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(26
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)
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(282
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)
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983
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Other income
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Investment income
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142
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185
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297
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383
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Other income
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17
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20
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55
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47
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Total other income
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159
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205
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352
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430
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Income (loss) from operations before equity in earnings of
unconsolidated joint ventures
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(1,243
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)
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179
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70
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1,413
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Equity in earnings of unconsolidated joint ventures, net
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1,656
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1,148
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2,806
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1,586
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Income before income tax expense
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413
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1,327
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2,876
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2,999
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Income tax expense
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36
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479
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898
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1,020
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Net income
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377
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848
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1,978
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1,979
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Net loss attributable to non-controlling interest
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(29
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)
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(26
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)
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(45
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)
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(8
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Net income attributable to common stockholders
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406
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874
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2,023
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1,987
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Net income per share to common stockholders, basic
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$
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0.02
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$
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0.04
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$
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0.10
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$
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0.10
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Net income per share to common stockholders, diluted
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$
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0.02
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$
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0.04
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$
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0.10
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$
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0.10
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Weighted average number of shares outstanding:
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Common stock
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20,660,797
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20,586,190
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20,653,363
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20,577,280
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Common stock equivalents – stock options
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69,701
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35,406
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64,554
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40,323
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Diluted shares outstanding
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20,730,498
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20,621,596
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20,717,917
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20,617,603
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View source version on businesswire.com: http://www.businesswire.com/news/home/20150810005295/en/
Source: Tejon Ranch Co.
Tejon Ranch Co.
Allen Lyda
Executive Vice President &
Chief
Financial Officer
661-248-3000
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