Tejon Ranch Co. Reports Second Quarter and Year-to-Date 2018 Results of Operations
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 under development. When all entitlements are approved, the Company's current and future master planned developments will be home to just under 35,000 housing units and more than 35 million square feet of commercial/industrial space. To date, 15,450 housing units, 750 lodging units and 25.3 million square feet of commercial space have received various levels of approval.
“Despite a few headwinds that affected second-quarter results,
Second Quarter Financial Results
-
Net loss attributable to common stockholders for the second quarter of
2018 was
$1.0 million , or a loss per common share of$0.04 , compared with a net loss of$0.2 million , or a loss per common share of$0.01 , for the second quarter of 2017. -
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the second quarter of 2018 were
$6.1 million , a decrease of$1.2 million , or 16%, compared with$7.3 million for the same period in 2017. Factors behind the decrease include:-
Farming revenues decreased approximately
$1.0 million as a result of:-
Almond revenues decreased
$0.5 million resulting from the timing of carryover crop sales. The Company sold 86,000 and 177,000 pounds during the quarters ended June 30, 2018 and 2017, respectively -
Pistachio revenues decreased
$0.3 million , resulting from depressed crop yields for the 2017 pistachio crop. The Company sold 38,000 and 148,000 pounds for the quarters ended June 30, 2018 and 2017, respectively.
-
Almond revenues decreased
-
Equity in earnings from our unconsolidated joint ventures
decreased
$0.9 million to $0.7 million as a result of:-
Our share of the operating results from TA/Petro decreased
$0.6 million due to lower fuel margins driven by higher fuel costs that were not offset by a 15% increase in fuel revenues. -
Our share of the operating results from
TRCC/Rock Outlet Center decreased$0.6 million mostly related to accelerating amortization of lease intangibles driven by the removal of poor performing tenants. The Company is actively seeking replacement tenants. -
The Company saw improvements of
$0.4 million from our TRC-MRC 2 joint venture stemming from the absence of non-cash GAAP losses that were prevalent during the prior year.
-
Our share of the operating results from TA/Petro decreased
-
Farming revenues decreased approximately
Year-to-Date Financial Results
-
Net income attributable to common stockholders for the first six
months of 2018 was
$0.5 million , or earnings per diluted common share of$0.02 , compared with a net loss of$2.1 million , or a loss per common share of$0.10 , for the first six months of 2017. -
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the six months of 2018 were
$20.0 million , an increase of$6.6 million , or 49%, compared with$13.4 million for the first six months in 2017. Factors behind this increase include:-
Moderate drought conditions in
Kern County increased water sales opportunities. The Company sold 7,442 acre-feet of water during the first six months of 2018, generating$8.0 million in revenue. Water sales during the six months ended of 2017 totaled 939 acre-feet, generating$1.2 million . -
Our share of the operating results from the Company's
unconsolidated joint ventures decreased approximately
$1.0 million for the same reasons discussed for the quarter end results.
-
Moderate drought conditions in
2018 Operational Highlights
-
In January, the Company obtained approval from
Kern County on the first phase of theFarm Village which will serve as the “front door” toMountain 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 a unique and relaxing experience while fulfilling the needs of residents ofMountain Village . -
During 2018, approval for expansion of the Foreign Trade Zone (FTZ)
was granted by the
U.S. Department of Commerce . The expanded FTZ now covers all the industrial sites within TRCC, an area totaling 1,094 acres. The FTZ designation allows the user to secure the many benefits and cost reductions associated with streamlined movement of goods in and out of the zone. This FTZ designation is further supplemented by the Economic Development Incentive Policy, or EDIP adopted by theKern County Board of Supervisors . EDIP is aimed to expand and enhance the County's competitiveness by taking affirmative steps to attract new businesses and to encourage the growth and resilience of existing businesses. The EDIP provides incentives such as tax breaks, building supporting infrastructure, or workforce development. -
In March, the Company successfully leased half of a
480,000-square-foot industrial building to
Dollar General . The building was constructed in 2017 through a joint venture formed withMajestic Realty Co. The joint venture is currently in negotiations with a prospective tenant for the remaining space.
2018 Outlook:
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of June 30,
2018, total capital, including debt, was approximately
The Company will continue to aggressively pursue development, leasing,
and investment within
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. It is currently too
premature to predict what our crop production will be as it is too early
in the growing cycle. The Company is also unable to predict the outcome
of ongoing trade discussions with foreign nations nor is the Company
able to predict the resulting impact over crop demand or pricing.
Increased tariffs from
About
More information about
To watch a video overview of
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) |
||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Real estate - commercial/industrial | $ | 2,189 | $ | 2,083 | $ | 4,343 | $ | 4,272 | ||||||||||||||||
Mineral resources | 1,500 | 1,519 | 10,631 | 3,520 | ||||||||||||||||||||
Farming | 542 | 1,501 | 1,737 | 1,932 | ||||||||||||||||||||
Ranch operations | 839 | 860 | 1,828 | 1,941 | ||||||||||||||||||||
Total revenues from Operations | 5,070 | 5,963 | 18,539 | 11,665 | ||||||||||||||||||||
Operating Profits: | ||||||||||||||||||||||||
Real estate - commercial/industrial | 801 | 181 | 1,636 | 627 | ||||||||||||||||||||
Real estate - resort/residential | (433 | ) | (500 | ) | (848 | ) | (1,130 | ) | ||||||||||||||||
Mineral resources | 905 | 990 | 5,805 | 1,667 | ||||||||||||||||||||
Farming | (649 | ) | 243 | (1,292 | ) | (649 | ) | |||||||||||||||||
Ranch operations | (509 | ) | (601 | ) | (909 | ) | (1,013 | ) | ||||||||||||||||
Income (loss) from Operating Segments | 115 | 313 | 4,392 | (498 | ) | |||||||||||||||||||
Investment income | 346 | 95 | 629 | 198 | ||||||||||||||||||||
Other loss, net | (10 | ) | (275 | ) | (24 | ) | (289 | ) | ||||||||||||||||
Corporate expense | (2,464 | ) | (2,368 | ) | (5,196 | ) | (5,119 | ) | ||||||||||||||||
Loss from operations before equity in earnings of unconsolidated joint ventures | (2,013 | ) | (2,235 | ) | (199 | ) | (5,708 | ) | ||||||||||||||||
Equity in earnings of unconsolidated joint ventures, net | 652 | 1,560 | 819 | 1,788 | ||||||||||||||||||||
(Loss) income before income tax expense | (1,361 | ) | (675 | ) | 620 | (3,920 | ) | |||||||||||||||||
Income tax (benefit) expense | (348 | ) | (472 | ) | 178 | (1,804 | ) | |||||||||||||||||
Net (loss) income | (1,013 | ) | (203 | ) | 442 | (2,116 | ) | |||||||||||||||||
Net loss attributable to non-controlling interest | (16 | ) | (27 | ) | (18 | ) | (38 | ) | ||||||||||||||||
Net (loss) income attributable to common stockholders | $ | (997 | ) | $ | (176 | ) | $ | 460 | $ | (2,078 | ) | |||||||||||||
Net (loss) income per share attributable to common stockholders, basic | $ | (0.04 | ) | $ | (0.01 | ) | $ | 0.02 | $ | (0.10 | ) | |||||||||||||
Net (loss) income per share attributable to common stockholders, diluted | $ | (0.04 | ) | $ | (0.01 | ) | $ | 0.02 | $ | (0.10 | ) | |||||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||
Common stock | 25,950,851 | 20,855,112 | 25,931,940 | 20,841,627 | ||||||||||||||||||||
Common stock equivalents | 19,748 | 22,837 | 29,198 | 44,003 | ||||||||||||||||||||
Diluted shares outstanding | 25,970,599 | 20,877,949 | 25,961,138 | 20,885,630 | ||||||||||||||||||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
Net (loss) income | $ | (1,013 | ) | $ | (203 | ) | $ | 442 | $ | (2,116 | ) | |||||||||||||
Net loss attributed to non-controlling interest | (16 | ) | (27 | ) | (18 | ) | (38 | ) | ||||||||||||||||
Interest, net: | ||||||||||||||||||||||||
Consolidated | (346 | ) | (95 | ) | (629 | ) | (198 | ) | ||||||||||||||||
Our share of interest expense from unconsolidated joint ventures | 554 | 428 | 1,056 | 832 | ||||||||||||||||||||
Total interest, net | 208 | 333 | 427 | 634 | ||||||||||||||||||||
Income taxes | (348 | ) | (472 | ) | 178 | (1,804 | ) | |||||||||||||||||
Depreciation and amortization: | ||||||||||||||||||||||||
Consolidated | 1,149 | 1,132 | 2,220 | 2,282 | ||||||||||||||||||||
Our share of depreciation and amortization from unconsolidated joint ventures | 1,135 | 1,322 | 2,053 | 2,638 | ||||||||||||||||||||
Total depreciation and amortization | 2,284 | 2,454 | 4,273 | 4,920 | ||||||||||||||||||||
EBITDA | 1,147 | 2,139 | 5,338 | 1,672 | ||||||||||||||||||||
Stock compensation expense | 828 | 883 | 1,776 | 1,694 | ||||||||||||||||||||
Adjusted EBITDA | $ | 1,975 | $ | 3,022 | $ | 7,114 | $ | 3,366 | ||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180807005309/en/
Source:
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer