Tejon Ranch Co. Announces Third Quarter 2023 Financial Results
"The momentum we've built over the last several years at the
Commercial/Industrial Real Estate Highlights
- TRCC 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 94% leased.
- Construction of a 446,400 square foot industrial building is nearing completion, with final completion expected by the first quarter of 2024; a lease for this building was secured in advance of construction.
- Signed a lease with a manufacturer and distributor of industrial components for 240,000 square feet of space currently occupied by Sunrise Brands, an apparel company, which will vacate the space and relocate to the new 446,400 square foot building upon completion.
- Design and engineering for Phase 1 of the Company's planned multi-family residential development at TRCC is underway. Phase 1 includes 228 of the planned 495 residential units.
Third Quarter 2023 Financial Results
- GAAP net loss attributable to common stockholders for the third quarter of 2023 was
$341,000 , or net loss per share attributable to common stockholders, basic and diluted, of$0.01 . For the third quarter of 2022, the Company had net income attributable to common stockholders of$10.2 million , or net income per share attributable to common stockholders, basic and diluted, of$0.38 .- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose operating profit declined
$14.2 million over the comparative period, primarily related to the absence of a land sale during the current period compared to one land sale in 2022. - Partially offsetting this decrease was a
$4.5 million improvement in farming segment operating results, driven by lower cost of sales and lower fixed water charges.
- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose operating profit declined
- Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the third quarter of 2023 were
$12.0 million , compared with$33.9 million for the third quarter of 2022.- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose revenue declined
$19.0 million over the comparative period, primarily related to the absence of a land sale during the current period compared to one land sale last year.
- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose revenue declined
- Adjusted EBITDA, a non-GAAP measure, was
$5.7 million for the third quarter endedSeptember 30, 2023 , compared with$16.3 million for the same period in 2022.
Year-to-Date 2023 Financial Results
- GAAP net income attributable to common stockholders for the first nine months of 2023 was
$1.7 million , or net income per share attributed to common stockholders, basic and diluted, of$0.06 , compared with net income attributable to common stockholders of$13.8 million , or net income per share attributed to common stockholders, basic and diluted, of$0.52 , for the first nine months of 2022.- Commercial/industrial real estate development segment operating profit of
$3.2 million for the first nine months of 2023 compared with$20.8 million for the first nine months of 2022, resulting from the absence of land sales in 2023 compared to two land sales in 2022. - Mineral resources segment operating profit was
$4.6 million for the first nine months of 2023, compared with$7.9 million for the first nine months of 2022. The decrease in operating profit 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 improvement in farming segment operating results of
$5.8 million , attributable primarily to lower cost of sales and lower fixed water charges. - Also offsetting the decreases was
$2.6 million in lower income tax expense over the comparative period, resulting from lower operating income recognized for the year.
- Commercial/industrial real estate development segment operating profit of
- Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the first nine months of 2023, totaled
$35.2 million , compared with$68.0 million for the first nine months of 2022.- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose revenue declined
$23 .5 million over the comparative period, primarily related to the absence of land sales in 2023 compared to two land sales in 2022.
- The primary driver of this decrease resulted from the Company's commercial/industrial segment, whose revenue declined
- Adjusted EBITDA, a non-GAAP measure, was
$16.5 million for the nine-months endedSeptember 30, 2023 , compared with$30.5 million for the same period in 2022.
Liquidity and Capital Resources
- As of
September 30, 2023 , total capital, including debt, was approximately$529.8 million . The Company had total liquidity of approximately$113.2 million , consisting of cash and securities totaling approximately$72.6 million and$40.6 million available on its line of credit as ofSeptember 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 also will continue to invest in its residential projects, including
Water sales opportunities each year are impacted by the total precipitation and snowpack runoff in
The Company's farming operations in 2023 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 from prior years are anticipated to have an adverse effect on selling prices for the remainder of 2023. The current subjective production estimate for the 2023 California almond crop is 2.6 billion pounds which is consistent with 2022.
About
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
More information about
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
(Financial tables follow)
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except earnings per share) (Unaudited) |
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Three Months Ended |
Nine Months Ended |
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2023 | 2022 | 2023 | 2022 | |||||||||||
Revenues: | ||||||||||||||
Real estate - commercial/industrial | $ | 3,397 | $ | 22,352 | $ | 8,706 | $ | 32,163 | ||||||
Mineral resources | 3,118 | 3,139 | 11,630 | 19,238 | ||||||||||
Farming | 2,642 | 4,776 | 4,852 | 7,352 | ||||||||||
Ranch operations | 1,052 | 1,208 | 3,384 | 3,011 | ||||||||||
Total revenues | 10,209 | 31,475 | 28,572 | 61,764 | ||||||||||
Cost and Expenses: | ||||||||||||||
Real estate - commercial/industrial | 2,137 | 6,845 | 5,517 | 11,403 | ||||||||||
Real estate - resort/residential | 367 | 372 | 1,079 | 1,218 | ||||||||||
Mineral resources | 2,000 | 1,745 | 6,991 | 11,347 | ||||||||||
Farming | 2,157 | 8,752 | 5,644 | 13,976 | ||||||||||
Ranch operations | 1,196 | 1,143 | 3,864 | 3,708 | ||||||||||
Corporate expenses | 2,315 | 1,630 | 6,824 | 6,230 | ||||||||||
Total expenses | 10,172 | 20,487 | 29,919 | 47,882 | ||||||||||
Operating income (loss) | 37 | 10,988 | (1,347 | ) | 13,882 | |||||||||
Other Income: | ||||||||||||||
Investment income | 700 | 204 | 1,775 | 300 | ||||||||||
Other (loss) income, net | (30 | ) | 211 | 272 | 1,038 | |||||||||
Total other income | 670 | 415 | 2,047 | 1,338 | ||||||||||
Income from operations before equity in earnings of unconsolidated joint ventures | 707 | 11,403 | 700 | 15,220 | ||||||||||
Equity in earnings of unconsolidated joint ventures, net | 1,161 | 1,991 | 4,616 | 4,867 | ||||||||||
Income before income tax expense | 1,868 | 13,394 | 5,316 | 20,087 | ||||||||||
Income tax expense | 2,215 | 3,221 | 3,619 | 6,262 | ||||||||||
Net (loss) income | (347 | ) | 10,173 | 1,697 | 13,825 | |||||||||
Net (loss) income attributable to non-controlling interest | (6 | ) | (11 | ) | (3 | ) | 1 | |||||||
Net (loss) income attributable to common stockholders | $ | (341 | ) | $ | 10,184 | $ | 1,700 | $ | 13,824 | |||||
Net (loss) income per share attributable to common stockholders, basic | $ | (0.01 | ) | $ | 0.38 | $ | 0.06 | $ | 0.52 | |||||
Net (loss) income per share attributable to common stockholders, diluted | $ | (0.01 | ) | $ | 0.38 | $ | 0.06 | $ | 0.52 | |||||
Weighted average number of shares outstanding: | ||||||||||||||
Common stock | 26,725,628 | 26,491,251 | 26,695,714 | 26,468,099 | ||||||||||
Common stock equivalents | 72,435 | 47,507 | 76,668 | 164,364 | ||||||||||
Diluted shares outstanding | 26,798,063 | 26,538,758 | 26,772,382 | 26,632,463 |
CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) |
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(unaudited) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 43,149 | $ | 39,119 | |||
Marketable securities - available-for-sale | 29,456 | 33,444 | |||||
Accounts receivable | 3,980 | 4,453 | |||||
Inventories | 8,925 | 3,369 | |||||
Prepaid expenses and other current assets | 3,520 | 2,660 | |||||
Total current assets | 89,030 | 83,045 | |||||
Real estate and improvements - held for lease, net | 16,780 | 16,940 | |||||
Real estate development (includes |
330,566 | 321,293 | |||||
Property and equipment, net | 54,941 | 52,980 | |||||
Investments in unconsolidated joint ventures | 31,345 | 41,891 | |||||
Net investment in water assets | 52,507 | 47,045 | |||||
Other assets | 5,104 | 3,597 | |||||
TOTAL ASSETS | $ | 580,273 | $ | 566,791 | |||
LIABILITIES AND EQUITY | |||||||
Current Liabilities: | |||||||
Trade accounts payable | $ | 6,393 | $ | 5,117 | |||
Accrued liabilities and other | 4,504 | 3,602 | |||||
Deferred income | 2,326 | 1,531 | |||||
Income taxes payable | 3,088 | — | |||||
Current maturities of long-term debt | 1,844 | 1,779 | |||||
Total current liabilities | 18,155 | 12,029 | |||||
Long-term debt, less current portion | 46,793 | 48,161 | |||||
Long-term deferred gains | 11,447 | 11,447 | |||||
Deferred tax liability | 7,676 | 7,180 | |||||
Other liabilities | 15,212 | 10,380 | |||||
Total liabilities | 99,283 | 89,197 | |||||
Commitments and contingencies | |||||||
Equity: | |||||||
Common stock, |
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Authorized shares - 50,000,000 | |||||||
Issued and outstanding shares - 26,726,464 at |
13,363 | 13,271 | |||||
Additional paid-in capital | 345,404 | 345,344 | |||||
Accumulated other comprehensive loss | (481 | ) | (2,028 | ) | |||
Retained earnings | 107,343 | 105,643 | |||||
465,629 | 462,230 | ||||||
Noncontrolling interest | 15,361 | 15,364 | |||||
Total equity | 480,990 | 477,594 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 580,273 | $ | 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.
Non-GAAP Financial Measures (Unaudited) |
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Three Months Ended |
Nine Months Ended |
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($ in thousands) | 2023 | 2022 | 2023 | 2022 | |||||||||||
Net (loss) income | $ | (347 | ) | $ | 10,173 | $ | 1,697 | $ | 13,825 | ||||||
Net (loss) income attributable to non-controlling interest | (6 | ) | (11 | ) | (3 | ) | 1 | ||||||||
Net (loss) income attributable to common stockholders | (341 | ) | 10,184 | 1,700 | 13,824 | ||||||||||
Interest, net | |||||||||||||||
Consolidated | (700 | ) | (204 | ) | (1,775 | ) | (300 | ) | |||||||
Our share of interest expense from unconsolidated joint ventures | 1,216 | 725 | 3,618 | 1,955 | |||||||||||
Total interest, net | 516 | 521 | 1,843 | 1,655 | |||||||||||
Income taxes | 2,215 | 3,221 | 3,619 | 6,262 | |||||||||||
Depreciation and amortization: | |||||||||||||||
Consolidated | 1,028 | 1,294 | 3,003 | 3,342 | |||||||||||
Our share of depreciation and amortization from unconsolidated joint ventures | 1,393 | 1,095 | 4,005 | 3,337 | |||||||||||
Total depreciation and amortization | 2,421 | 2,389 | 7,008 | 6,679 | |||||||||||
EBITDA | 4,811 | 16,315 | 14,170 | 28,420 | |||||||||||
Stock compensation expense | 864 | 1 | 2,369 | 2,088 | |||||||||||
Adjusted EBITDA | $ | 5,675 | $ | 16,316 | $ | 16,539 | $ | 30,508 |
Executive Vice President, Chief Financial Officer |
Source: Tejon Ranch Co