Tejon Ranch Co. Reports Fourth-Quarter and Full-Year 2017 Results of Operations
--Milestones Achieved with Master Planned Communities--
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--Oversubscribed Rights Offering Strengthens Balance Sheet--
“During fiscal 2017 we made visible and noteworthy progress in our
efforts to monetize our land, set the stage for future revenue growth,
and create long-term shareholder value,” said
Fourth-Quarter 2017 Financial Highlights
-
Net income available to common stockholders for the fourth quarter of
2017 was
$0.3 million , or earnings per diluted common share of$0.01 , compared with a net loss of$0.3 million , or a loss per common share of$0.01 , for the fourth quarter of fiscal 2016. -
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the fourth quarter of 2017 were
$12.6 million , a decrease of$2.7 million , or 17.6%, compared with$15.3 million for the same period in 2016. Factors behind this decrease include:-
Reduced equity in earnings from unconsolidated joint ventures of
$0.7 million arising from increased operating costs and lower fuel margins for the Company's Petro joint venture, lease termination costs for the Outlets at Tejon resulting from a sluggish retail sector, and non-cash GAAP losses associated with the Company's TRC-MRC 2 joint venture. -
Reduced farming revenues of
$0.6 million stemming from a 263,000 pound decrease in almond sales volume. -
During 2016, the Company sold an operating property yielding a
gain on sale of real estate of
$1.0 million . This non-recurring transaction contributed to the decrease in revenues and other income in the current period. -
Lastly, the Company experienced a
$0.6 million reduction in commercial revenues, primarily driven by the absence of a land sale that occurred during the fourth quarter of 2016.
-
Reduced equity in earnings from unconsolidated joint ventures of
-
Despite reduced farming revenues, heavy rains during the 2017 winter
along with credits received from the local water district, through the
State Water Project , drove reductions in water costs improving farming operating profits by$1.8 million . -
Corporate general and administrative expenses for the fourth quarter
of 2017 fell
$0.9 million as a result of lower compensation costs stemming from both a staff rightsizing and a reduction in incentive-based compensation costs.
Fiscal 2017 Financial Highlights
-
Net loss available to common stockholders for fiscal 2017 was
$1.6 million , or a loss per common share of$0.07 , compared with net income of$0.6 million , or earnings per common diluted share of$0.03 , for fiscal 2016. -
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, were
$40.5 million in fiscal 2017, a decrease of$13.8 million , or 25.4%, compared with$54.3 million in 2016. Factors driving this decrease include:-
An
$8.2 million reduction in mineral resources revenues due to limited water sales opportunities given the abundance of rain during the 2017 winter rain season. -
A
$2.9 million reduction in equity in earnings from joint ventures stemming from the same factors discussed in the fourth-quarter financial results summary. -
A
$2.2 million reduction in farming revenues as a result of limited pistachio production given that 2017 was a down bearing crop year. In comparison, 2016 pistachio crop production was near a record high.
-
An
Fiscal 2017 Operational Highlights
-
In
August 2017 , the Company completed construction of utility connections and other infrastructure on a 10-acre lot that will feature an 80-room hotel, currently under construction, and other retail establishments, furthering the growth of theTejon Ranch Commerce Center , or TRCC. -
In
September 2017 , the Company's joint venture withMajestic Reality Co. completed development of a 480,480 square-foot industrial building at the TRCC. The Company is in the process of leasing this building. -
In
October 2017 , the Company completed a successful rights offering, raising$90 million in proceeds. The net proceeds of the offering are being used to provide additional working capital for general corporate purposes, including to fund general infrastructure costs and the development of buildings at TRCC, to continue forward with entitlement and permitting programs for the Company's Centennial atTejon Ranch and Grapevine atTejon Ranch communities and costs related to the preparation of the development ofMountain Village atTejon Ranch . -
In
December 2017 , the Company received approval of Tentative Tract Maps for the first three phases of residential units forMountain Village .
2018 Outlook:
The Company believes its capital structure provides a solid foundation
for continued investment in ongoing and future projects. As of
December 31, 2017, total capital and debt was approximately
The Company will continue to aggressively pursue development, leasing,
and investment within TRCC and in its joint ventures. The Company will
also continue to invest in its residential projects, including the
advancement of entitlements for Centennial at
During 2018, the Company will continue to invest funds in master project
infrastructure, as well as vertical development within its active
commercial and industrial development.
The Company believes the variability of its quarterly and annual operating results will continue during 2018 due to the nature of its current farming and real estate activities. Mineral resource revenue from water sales is expected to improve relative to 2017 as a result of lower than normal 2018 winter rain and snow fall levels. The Company may also experience an increase in oil royalties stemming from the recent rise in oil prices. However, it is difficult to predict whether the higher prices will be sustained throughout 2018. As the spring bloom in the orchards has just begun, it is too early to make any estimate as to farm production for 2018.
About
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, 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
TEJON RANCH CO. | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||
(In thousands, except earnings per share) |
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(Unaudited) |
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Three Months Ended |
Year Ended
December 31, |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||
Revenues: | ||||||||||||||||||
Real estate - commercial/industrial | $ | 2,297 | $ | 2,905 | $ | 9,403 | $ | 9,438 | ||||||||||
Mineral resources | 1,321 | 1,101 | 5,983 | 14,153 | ||||||||||||||
Farming | 7,036 | 7,606 | 16,434 | 18,648 | ||||||||||||||
Ranch operations | 1,028 | 1,084 | 3,837 | 3,338 | ||||||||||||||
Total revenues from Operations | 11,682 | 12,696 | 35,657 | 45,577 | ||||||||||||||
Operating Profits (Loss): | ||||||||||||||||||
Real estate - commercial/industrial | 728 | 945 | 2,874 | 2,338 | ||||||||||||||
Real estate - resort/residential | (554 | ) | (378 | ) | (1,955 | ) | (1,630 | ) | ||||||||||
Mineral resources | 738 | 465 | 3,019 | 6,357 | ||||||||||||||
Farming | 1,337 | (430 | ) | 233 | (25 | ) | ||||||||||||
Ranch operations | (276 | ) | (387 | ) | (1,574 | ) | (2,396 | ) | ||||||||||
Income (loss) from Operating Segments | 1,973 | 215 | 2,597 | 4,644 | ||||||||||||||
Investment income | 173 | 107 | 462 | 457 | ||||||||||||||
Gain on sale of real estate | — | 1,044 | — | 1,044 | ||||||||||||||
Other income | 70 | 38 | 153 | 158 | ||||||||||||||
Corporate expense | (2,425 | ) | (3,288 | ) | (10,141 | ) | (12,550 | ) | ||||||||||
(Loss) from operations before equity in earnings of unconsolidated joint ventures | (209 | ) | (1,884 | ) | (6,929 | ) | (6,247 | ) | ||||||||||
Equity in earnings of unconsolidated joint ventures, net | 715 | 1,448 | 4,227 | 7,098 | ||||||||||||||
Income (loss) before income tax expense | 506 | (436 | ) | (2,702 | ) | 851 | ||||||||||||
Income tax expense (benefit) | 145 | (167 | ) | (1,123 | ) | 336 | ||||||||||||
Net income (loss) | 361 | (269 | ) | (1,579 | ) | 515 | ||||||||||||
Net income (loss) attributable to non-controlling interest | 18 | 18 | (24 | ) | (43 | ) | ||||||||||||
Net income (loss) attributable to common stockholders | $ | 343 | $ | (287 | ) | $ | (1,555 | ) | $ | 558 | ||||||||
Net income (loss) per share attributable to common stockholders, basic | $ | 0.01 | $ | (0.01 | ) | $ | (0.07 | ) | $ | 0.03 | ||||||||
Net income (loss) per share attributable to common stockholders, diluted | $ | 0.01 | $ | (0.01 | ) | $ | (0.07 | ) | $ | 0.03 | ||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||
Common stock | 24,136,930 | 20,791,520 | 21,677,981 | 20,737,903 | ||||||||||||||
Common stock equivalents – stock options | 30,003 | 59,514 | 40,409 | 46,839 | ||||||||||||||
Diluted shares outstanding | 24,166,933 | 20,851,034 | 21,718,390 | 20,784,742 | ||||||||||||||
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) |
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Three Months Ended |
Year Ended |
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2017 | 2016 | 2017 | 2016 | |||||||||||||||
Net income (loss) | $ | 361 | $ | (269 | ) | $ | (1,579 | ) | $ | 515 | ||||||||
Net income (loss) attributed to non-controlling interest | 18 | 18 | (24 | ) | (43 | ) | ||||||||||||
Interest, net: | ||||||||||||||||||
Consolidated | (173 | ) | (107 | ) | (462 | ) | (457 | ) | ||||||||||
Our share of interest expense from unconsolidated joint ventures | 468 | 380 | 1,730 | 1,449 | ||||||||||||||
Total interest, net | 295 | 273 | 1,268 | 992 | ||||||||||||||
Income taxes (benefit) | 145 | (167 | ) | (1,123 | ) | 336 | ||||||||||||
Depreciation and amortization: | ||||||||||||||||||
Consolidated | 1,129 | 379 | 4,551 | 4,549 | ||||||||||||||
Our share of depreciation and amortization from unconsolidated joint ventures | 1,449 | 1,327 | 5,419 | 3,630 | ||||||||||||||
Total depreciation and amortization | 2,578 | 1,706 | 9,970 | 8,179 | ||||||||||||||
EBITDA | 3,361 | 1,525 | 8,560 | 10,065 | ||||||||||||||
Stock compensation expense | 981 | 1,288 | 3,552 | 4,585 | ||||||||||||||
Adjusted EBITDA | $ | 4,342 | $ | 2,813 | $ | 12,112 | $ | 14,650 | ||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20180312005240/en/
Source:
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer