TEJON RANCH, Calif.--(BUSINESS WIRE)--May 7, 2019--
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, 2019.
The Company is in the process of entitling, planning and developing four
master planned developments. Three of the developments are mixed-use
residential communities and the fourth is a large commercial/industrial
center currently in execution with more than 5.0 million square feet
already developed and an additional 14.3 million square feet available
for development. When all entitlements are approved, the Company's
current and future master planned developments will be home to 34,783
housing units, more than 35 million square feet of commercial/industrial
space and 750 lodging units.
“We achieved a considerable milestone with the final approval by the Los
Angeles County Board of Supervisors of our Centennial at Tejon Ranch
mixed-used residential development,” said Gregory S. Bielli, President
and CEO of Tejon Ranch Co. “Now, all of our master planned developments
have received their initial legislative approval and we look forward to
advancing each of these projects through their various stages to
ultimate build-out. We are also pleased to see continuing demand,
especially out of the Los Angeles basin, for our industrial product at
the Tejon Ranch Commerce Center. To lease more than two-thirds of a
building, even as you’re just breaking ground, is testament to the
market’s favorable view of TRCC,” Bielli added.
First Quarter Financial Results
-
Net income attributable to common stockholders for the first quarter
of 2019 was $0.1 million, or net income per share attributed to common
stockholders, basic and diluted, of $0.00, compared with $1.5 million,
or net income per share attributed to common stockholders, basic and
diluted, of $0.06, for the first quarter of 2018.
-
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the first quarter of 2019 were
$11.9 million, a decrease of $2.0 million, or 14%, from $13.9 million
for the same period in 2018. Factors affecting first-quarter results
include:
-
Strong California winter rainfall reduced water sales
opportunities, causing a decrease in mineral resources revenues of
$3.0 million. Comparatively, the Company sold 4,445 acre feet and
7,442 acre feet of water as of March 31, 2019 and 2018,
respectively. The aforementioned decrease in mineral resources
revenues was partially offset by an increase in commercial
revenues of $0.7 million primarily driven by an increase of $0.4
million in spark spread revenues from the Company's Pastoria
Energy Facility lease.
-
The Company's share of earnings from its joint ventures for the
first three months of 2019 was $0.9 million, an increase of $0.7
million, or 350%, from $0.2 million for the same period in 2018.
Within this increase, $0.6 million was attributed to an increase
in the Company's share of earnings from its TA/Petro joint venture
driven by improved fuel margins. Comparatively diesel margins were
$0.36 and $0.17 per gallon as of March 31, 2019 and 2018,
respectively. Comparatively, gasoline margins were $0.62 and $0.45
per gallon as of March 31, 2019 and 2018, respectively.
2019 Operational Highlights
-
The Company's TRC-MRC 3 joint venture, a partnership with Majestic
Realty Co., has commenced construction of a 579,040 square foot
industrial building. The building is already 67% leased and the tenant
is expected to take occupancy in the fourth quarter of 2019.
-
The Company received final approval of its Centennial mixed-use
residential community upon completion of the finding of facts and the
adoption of other resolutions by the Los Angeles County Board of
Supervisors on April 30, 2019. This also includes a Development
Agreement between Los Angeles County and Centennial, which provides
the Company with vested rights to build the project as approved for 30
years. With this approval, Centennial at Tejon Ranch achieved local
legislative approval for the building of 19,333 residential units and
more than 10.1 million square feet of commercial space.
2019 Outlook:
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of March 31,
2019, total capital, including debt, was approximately $499.6 million.
The Company has cash and securities totaling approximately $68.2 million
and $30.0 million available on its line of credit.
The Company will continue to aggressively pursue development, leasing,
and investment within Tejon Ranch Commerce Center and in its joint
ventures. The Company will also continue to invest in its residential
projects, including the engineering necessary to advance approved tract
maps to a final map status, as well as defining potential capital
funding sources for Mountain Village at Tejon Ranch, advancing
re-entitlement efforts for Grapevine at Tejon Ranch and preparing for
permit applications and potential litigation following Los Angeles
County’s approval of Centennial 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.
Throughout the next few years, the Company expects net income to
fluctuate from year-to-year based on commodity prices, production within
its farming segment, and the timing of sales of land and the leasing of
land within its industrial developments.
The Company believes the variability of its quarterly and annual
operating results will continue during 2019 due to the nature of its
current farming and real estate activities. Nut and grape crop markets
are particularly sensitive to the size of each year’s world crop and the
demand for those crops. Large crops in California and abroad can rapidly
depress prices. Weather conditions can impact the number of tree and
vine dormant hours, which are integral to tree and vine growth. The
Company will not know the impact of current weather conditions on 2019
production until the early summer of 2019. Thus far, the Company has
experienced extended heavier rainfall and colder temperatures during the
almond bloom period when compared to the 2017-2018 winter, which could
negatively impact 2019 almond production. In addition, 2019 is the
alternative bearing cycle for our pistachio trees and a lower than
average crop is anticipated, especially compared to our record high
yields in 2018. Additionally, increased tariffs from China and India,
which are major customers of almonds and pistachios, can make American
products less competitive and push customers to switch to another
producing country.
Water sales opportunities for the remainder of 2019 will be limited
based on winter rain and snow levels, as well as the California State
Water Project, or SWP, water allocations being at a 70% level.
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 the Company's
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.
Some of 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.
TEJON RANCH CO. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except earnings per share) (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
Real estate - commercial/industrial
|
|
|
$
|
2,826
|
|
|
$
|
2,154
|
|
Mineral resources
|
|
|
6,132
|
|
|
9,131
|
|
Farming
|
|
|
815
|
|
|
1,195
|
|
Ranch operations
|
|
|
889
|
|
|
989
|
|
Total revenues from Operations
|
|
|
10,662
|
|
|
13,469
|
|
Operating Income (Loss):
|
|
|
|
|
|
Real estate - commercial/industrial
|
|
|
1,034
|
|
|
835
|
|
Real estate - resort/residential
|
|
|
(648
|
)
|
|
(415
|
)
|
Mineral resources
|
|
|
2,300
|
|
|
4,900
|
|
Farming
|
|
|
(783
|
)
|
|
(643
|
)
|
Ranch operations
|
|
|
(461
|
)
|
|
(400
|
)
|
Income from Operating Segments
|
|
|
1,442
|
|
|
4,277
|
|
Investment income
|
|
|
349
|
|
|
283
|
|
Other loss, net
|
|
|
26
|
|
|
(14
|
)
|
Corporate expense
|
|
|
(2,474
|
)
|
|
(2,732
|
)
|
(Loss) income from operations before equity in earnings of
unconsolidated joint ventures
|
|
|
(657
|
)
|
|
1,814
|
|
Equity in earnings of unconsolidated joint ventures, net
|
|
|
876
|
|
|
167
|
|
Income before income tax expense
|
|
|
219
|
|
|
1,981
|
|
Income tax expense
|
|
|
95
|
|
|
526
|
|
Net income
|
|
|
124
|
|
|
1,455
|
|
Net income (loss) attributable to non-controlling interest
|
|
|
5
|
|
|
(2
|
)
|
Net income attributable to common stockholders
|
|
|
$
|
119
|
|
|
$
|
1,457
|
|
Net income per share attributable to common stockholders, basic
|
|
|
$
|
—
|
|
|
$
|
0.06
|
|
Net income per share attributable to common stockholders, diluted
|
|
|
$
|
—
|
|
|
$
|
0.06
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
Common stock
|
|
|
25,992,374
|
|
|
25,912,819
|
|
Common stock equivalents
|
|
|
17,707
|
|
|
28,509
|
|
Diluted shares outstanding
|
|
|
26,010,081
|
|
|
25,941,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
TEJON RANCH CO. Non-GAAP Financial Measures (Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2019
|
|
2018
|
Net income
|
|
|
$
|
124
|
|
|
$
|
1,455
|
|
Net income (loss) attributed to non-controlling interest
|
|
|
5
|
|
|
(2
|
)
|
Net income attributable to common stockholders
|
|
|
119
|
|
|
1,457
|
|
Interest, net:
|
|
|
|
|
|
Consolidated
|
|
|
(349
|
)
|
|
(283
|
)
|
Our share of interest expense from unconsolidated joint ventures
|
|
|
738
|
|
|
501
|
|
Total interest, net
|
|
|
389
|
|
|
218
|
|
Income taxes
|
|
|
95
|
|
|
526
|
|
Depreciation and amortization:
|
|
|
|
|
|
Consolidated
|
|
|
1,089
|
|
|
1,071
|
|
Our share of depreciation and amortization from unconsolidated joint
ventures
|
|
|
1,109
|
|
|
919
|
|
Total depreciation and amortization
|
|
|
2,198
|
|
|
1,990
|
|
EBITDA
|
|
|
2,801
|
|
|
4,191
|
|
Stock compensation expense
|
|
|
813
|
|
|
948
|
|
Adjusted EBITDA
|
|
|
$
|
3,614
|
|
|
$
|
5,139
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20190507005198/en/
Source: Tejon Ranch Co.
Tejon Ranch Co.
Robert D. Velasquez, 661-248-3000
Senior Vice
President, Finance, and Chief Financial Officer