--Milestones Achieved with Master Planned Communities--
--Company Further Solidifies Tejon Ranch Commerce Center As
Industrial Hub Connecting Northern and Southern California--
TEJON RANCH, Calif.--(BUSINESS WIRE)--Mar. 9, 2017--
Tejon Ranch Co. (NYSE:TRC), a diversified real estate development and
agribusiness company, today released its results of operations for the
fourth quarter and year ended December 31, 2016.
“During fiscal 2016 we made significant progress in our efforts to
monetize our land, set the stage for future revenue growth, and create
long-term shareholder value,” said Gregory S. Bielli, President and CEO.
“First, our master planned residential community of Grapevine at Tejon
Ranch was unanimously approved by the Kern County Board of Supervisors
in December. We submitted to the Kern County Planning Department
tentative tract maps for our Mountain Village at Tejon Ranch
resort/residential community for review and approval. Our third master
planned residential community, Centennial at Tejon Ranch, continues to
march forward in Los Angeles County,” Bielli noted. “We created
additional synergies at the Tejon Ranch Commerce Center with the opening
of two new fast casual restaurant offerings from Habit Burger and Baja
Fresh. Additionally, we formed two new partnerships with Majestic Realty
Co., which will ultimately increase our commercial/industrial portfolio
by over 1.1 million square feet of industrial space. As we move into
2017, the strides we made last year will further solidify the Tejon
Ranch Commerce Center as an important industrial hub connecting Northern
and Southern California. California is the largest state economy in the
country and we are fortunate to be strategically located between these
two major markets. And the residential units we plan to develop will
help ease a significant housing shortage in California by providing
additional homes for a growing population base.”
Fourth-Quarter Financial Highlights
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Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the fourth quarter of 2016 were
$15.3 million, a decrease of $2.0 million, or 11.6%, compared with
$17.3 million for the same period in 2015. The decrease was mainly due
to the decline in almond sales within the Company’s farming segment
compared with the fourth quarter of 2015.
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Net loss available to common stockholders for the fourth quarter of
2016 was $0.3 million, representing a loss per common share of $0.01,
compared with $1.7 million, or earnings per common share of $0.08, for
the same period in 2015. The decrease was primarily driven by the
decline in farming revenues during the quarter compared with the same
period in 2015.
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Corporate general and administrative expenses for the fourth quarter
of 2016 were $3.3 million, a decrease of $0.3 million, or 8.3%,
compared with $3.6 million for the same period in 2015. The decrease
was mainly due to a one-time non-cash pension settlement charge $0.5
million in 2015 that did not occur in 2016.
Fiscal 2016 Financial Highlights
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Revenues and other income, including equity in earnings of
unconsolidated joint ventures, were $54.3 million in fiscal 2016, a
decrease of $4.1 million, or 7.0%, compared with $58.4 million in
2015. Commercial revenues increased 14.1% year over year, primarily
related to the sale of 2.4 acres of land for $1.2 million within Tejon
Ranch Commerce Center to a hotel developer, the Company recognized
$0.7 million in 2016. In addition, the Company recognized a gain of
$1.0 million from the sale of a non-core operating property. These
increases were offset by a 21.8% decrease in farming revenue,
attributed to lower than expected commodity prices in 2016,
specifically almond prices, which decreased 24.9%, or $0.83 per pound.
Mineral resource revenues also declined $1.0 million year-over-year,
primarily due to slumping oil prices compared with 2015.
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Net income available to common stockholders for fiscal 2016 was $0.6
million, representing earnings per common share of $0.03, compared
with $3.0 million, or earnings per common share of $0.14, for fiscal
2015. The year-over-year reduction was mainly due a decrease in
farming profits of $4.9 million. This decrease was partially offset by
an improvement in equity in earnings of unconsolidated joint ventures
of $0.8 million compared with 2015 and the $1.0 million gain on sale
of a non-core operating property during 2016.
Fiscal 2016 Operational Highlights
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In January 2016, delivered a multi-tenant building located at Tejon
Ranch Commerce Center-East to Habit Burger and Baja Fresh, both of
which began operations in 2016.
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In August 2016, we entered into a limited liability company agreement,
forming a joint venture with Majestic Realty Co. to purchase, own, and
manage a fully-leased, 651,909 square-foot industrial building located
at the Tejon Ranch Commerce Center. The joint venture purchased the
building in September for $24.8 million which was financed through a
$21.1 million promissory note guaranteed by both partners. Each member
of the joint venture has a 50% interest.
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In September 2016, we entered into a second limited liability
agreement, forming a joint venture with Majestic Reality Co. for the
development, ownership, and management of a 480,480 square-foot
industrial building at the Tejon Ranch Commerce Center. The company is
in the process of planning and designing the building. Each member of
the joint venture has a 50% interest.
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In December 2016, the Kern County Board of Supervisors unanimously
approved the development of the company’s Grapevine at Tejon Ranch.
2017 Outlook:
The Company believes its capital structure provides a solid foundation
for continued investment in ongoing and future projects. As of December
31, 2016, total capital and debt was approximately $415.9 million. The
Company also had cash and securities totaling approximately $27.9
million and $22.3 million available on its line of credit.
The Company will continue to aggressively pursue development, leasing,
and investment within TRCC and in its joint ventures, and will continue
to invest in its residential projects, including the completion of
entitlements for Centennial and Grapevine at Tejon Ranch and the
pre-development investment for Mountain Village at Tejon Ranch.
During 2017, the Company will continue to invest funds toward obtaining
entitlements for its land and master project infrastructure, as well as
vertical development within its active commercial and industrial
developments. California is one of the most highly regulated states in
which 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, 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 2017 due to the nature of its
current farming and real estate activities. Mineral resource revenue
from excess water sales is expected to be negatively impacted in 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. As the spring bloom in the orchards has just begun, it is too
early to make any estimate as to farm production for 2017.
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 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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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
December 31,
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Year Ended
December 31,
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2016
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2015
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2016
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2015
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Revenues:
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Real estate - commercial/industrial
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$
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2,905
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$
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2,552
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$
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9,438
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$
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8,272
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Mineral resources
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1,101
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942
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14,153
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15,116
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Farming
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7,606
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11,366
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18,648
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23,836
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Ranch operations
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1,084
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708
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3,338
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3,923
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Total revenues from Operations
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12,696
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15,568
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45,577
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51,147
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Operating Profits:
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Real estate - commercial/industrial
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945
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45
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2,338
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1,578
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Real estate - resort/residential
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(378
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)
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(464
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)
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(1,630
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)
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(2,349
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)
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Mineral resources
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465
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569
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6,357
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7,720
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Farming
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(430
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)
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4,092
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(25
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)
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4,852
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Ranch operations
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(387
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)
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(21
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)
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(2,396
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)
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(2,189
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)
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Income (loss) from Operating Segments
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215
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4,221
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4,644
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9,612
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Investment income
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107
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115
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457
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528
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Gain on sale of real estate
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1,044
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—
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1,044
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—
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Other income
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38
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201
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158
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381
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Corporate expense
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(3,288
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(3,594
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(12,550
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(12,808
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(Loss) from operations before equity in earnings of unconsolidated
joint ventures
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(1,884
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)
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943
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(6,247
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)
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(2,287
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)
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Equity in earnings of unconsolidated joint ventures, net
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1,448
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1,463
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7,098
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6,324
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Income (loss) before income tax expense
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(436
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)
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2,406
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851
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4,037
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Income tax expense (benefit)
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(167
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)
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661
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336
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1,125
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Net income (loss)
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(269
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)
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1,745
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515
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2,912
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Net loss attributable to non-controlling interest
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18
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30
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(43
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(38
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)
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Net income (loss) attributable to common stockholders
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$
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(287
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)
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$
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1,715
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$
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558
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$
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2,950
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Net income (loss) per share attributable to common stockholders,
basic
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$
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(0.01
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$
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0.08
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$
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0.03
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$
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0.14
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Net income (loss) per share attributable to common stockholders,
diluted
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$
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(0.01
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$
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0.08
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$
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0.03
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$
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0.14
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Weighted average number of shares outstanding:
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Common stock
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20,791,520
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20,686,689
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20,737,903
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20,665,792
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Common stock equivalents – stock options
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59,514
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79,544
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46,839
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71,879
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Diluted shares outstanding
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20,851,034
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20,766,233
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20,784,742
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20,737,671
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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
December 31,
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Year Ended
December 31,
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2016
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2015
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2016
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2015
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Net income
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$
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(269
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$
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1,745
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$
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515
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$
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2,912
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Net income (loss) attributed to non-controlling interest
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18
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30
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(43
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(38
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Interest, net:
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Consolidated
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(107
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(115
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(457
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(528
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Our share of interest expense from unconsolidated joint ventures
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380
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280
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1,449
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1,113
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Total interest, net
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273
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165
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992
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585
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Income taxes
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(167
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)
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661
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336
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1,125
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Depreciation and amortization:
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Consolidated
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379
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1,418
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4,549
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5,090
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Our share of depreciation and amortization from unconsolidated joint
ventures
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1,327
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677
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3,630
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2,878
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Total depreciation and amortization
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1,706
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2,095
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8,179
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7,968
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EBITDA
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1,525
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4,636
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10,065
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12,628
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Stock compensation expense
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1,288
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843
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4,585
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3,757
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Adjusted EBITDA
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$
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2,813
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$
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5,479
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$
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14,650
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$
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16,385
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View source version on businesswire.com: http://www.businesswire.com/news/home/20170309006420/en/
Source: Tejon Ranch Co.
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer
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