--Milestones Achieved with Master Planned Communities--
--Company Further Solidifies Tejon Ranch Commerce Center--
--Oversubscribed Rights Offering Strengthens Balance Sheet--
TEJON RANCH, Calif.--(BUSINESS WIRE)--Mar. 12, 2018--
Tejon Ranch Co., or the Company, (NYSE:TRC), is a diversified real
estate development and agribusiness company, which is in the process of
entitling, planning and developing three residential mixed use master
planned communities and a large commercial/industrial center, which when
all entitlements are approved, collectively may include up to 35,000
housing units, with 15,450 units currently approved, and more than 35
million square-feet of commercial space, with 25 million square-feet
currently approved, today released its results of operations for the
fourth quarter and year ended December 31, 2017.
“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 Gregory S. Bielli,
President and CEO. “The first tentative tract map for our Mountain
Villageat Tejon Ranch resort/residential community was approved by the
County of Kern. It covers 752 lots within the first three phases of
development. The Specific Plan and Environmental Impact Report for our
mixed-use master planned residential community, Centennial at Tejon
Ranch, was released, setting the stage for hearings before the Los
Angeles County Planning Commission and Board of Supervisors in 2018,”
Bielli noted. “Our joint venture with Majestic Realty also completed a
480,480 square foot industrial building at the Tejon Ranch Commerce
Center. It was finished on-time, on-budget and on-vision, and we are now
in the process of leasing the building. As we move into 2018, the
strides we made in 2017, combined with our strong balance sheet, will
further enhance Tejon Ranch’s position as the next great opportunity in
California.”
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.
-
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.
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 the Tejon Ranch
Commerce Center, or TRCC.
-
In September 2017, the Company's joint venture with Majestic 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 at Tejon Ranch
and Grapevine at Tejon Ranch communities and costs related to the
preparation of the development of Mountain Village at Tejon Ranch.
-
In December 2017, the Company received approval of Tentative Tract
Maps for the first three phases of residential units for Mountain
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 $496.6
million. The Company also had cash and securities totaling approximately
$91.0 million and $30.0 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. The Company will
also continue to invest in its residential projects, including the
advancement of entitlements for Centennial at Tejon Ranch and defending
litigation for Grapevine at Tejon Ranch. As it relates to Mountain
Villageat Tejon Ranch, the Company is working with Kern County to
obtain approvals for the first phase of Farm Village, a 160,000 square
foot commercial center that will serve as the “front door” to Mountain
Village. Farm Village will include fresh culinary offerings, artisan
markets, boutique lodging, and an array of trails, gardens, and
agriculture that will be intertwined to create the most unique, relaxing
and “edu-taining” experience, while fulfilling the needs of Mountain
Village residents.
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. 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. 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 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 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.
|
|
|
|
|
|
|
|
|
TEJON RANCH CO.
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(In thousands, except earnings per share)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
|
|
|
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.
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer
|
View printer-friendly version