TEJON RANCH, Calif.--(BUSINESS WIRE)--Nov. 9, 2017--
Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real estate
and agribusiness company, which is in the process of entitling, planning
and developing three master planned residential communities and a
large-scale commercial center, today released its results of operations
for the three and nine months ended September 30, 2017.
“We maintained our focus in the third quarter on continuing to move
forward with entitlement and land development activities, which are at
the core of our strategic growth plans,” said Gregory S. Bielli,
President and CEO. “Our shareholders continue to show confidence in
those plans, as evidenced by our recently-concluded rights offering
where we raised $90 million in capital. Demand for our shares was more
than double the total shares available through the offering.”
Third Quarter Financial Results
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the third quarter of 2017 were $13.8
million, a decrease of $1.8 million, or 12%, compared with $15.6 million
for the same period in 2016. The decrease was mainly due to the
following:
-
During the third quarter of 2017, revenues from the Company's farming
segment decreased to $7.5 million from $9.3 million in the same period
in 2016 due to the following:
-
Overall pistachio revenues decreased $2.6 million. The Company’s
2017 pistachio crops and yields were negatively impacted by a warm
winter, similar to conditions seen in 2015 and to the alternate
bearing nature of pistachios, resulting in a $4.4 million
year-over-year reduction in 2017 crop pistachio revenues when
compared to the 2016 crop revenues. Record yields in 2016 magnify
the year-over-year comparison. The Company maintains crop
insurance to mitigate weather-related declines in crop production,
and during the third quarter, submitted a claim that is expected
to recover a portion of the decline in revenue. The Company
anticipates hearing from the insurance company as to the amount
during the fourth quarter. Offsetting this decrease was a grower
bonus of $1.5 million associated with our 2016 crop. The Company
recorded a receivable for this amount and expects payment during
the fourth quarter.
-
The reduction was offset by a $0.2 million increase in wine grape
revenues as a result of improved 2017 wine grape yields, and a
$0.4 million improvement in almond revenues that resulted from
selling additional units of the Company’s current-year almond
crop. Our 2017 almond crop yields were consistent with prior year.
Tejon sold 661,000 pounds and 413,000 pounds of almonds,
respectively, as of the quarters ended September 30, 2017 and 2016.
-
In the third quarter of 2017, revenues from the Company’s ranch
operations improved by $0.5 million compared with the same period in
2016. This is largely due to the fact that 2016 revenues were impacted
by a drought clause within its grazing leases.
-
Equity in earnings from unconsolidated joint ventures was $1.7
million, for the third quarter of 2017, compared with $2.4 million for
the same period in 2016. The decrease was due to a non-cash GAAP loss
associated with the Company's TRC-MRC 2 joint venture. The joint
venture was formed with Majestic Realty Co. during 2016 to purchase a
626,000 square foot industrial building in Tejon Ranch Commerce Center
(TRCC)-West. Additionally, there were increased operating costs
associated with new offerings at the Company’s TA/Petro joint venture
and a decline in gas fuel margins.
Net loss attributable to common stockholders for the third quarter of
2017 was $22,000, or $0.00 per common share, compared to net income
attributed to common stockholders of $0.3 million, or $0.02 per common
share, for the same period in 2016. All per share numbers in this
release are diluted earnings per common share.
Year-to-Date Financial Results
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the first nine months of 2017
decreased $11.1 million to $27.9 million, compared with $39.0 million
for the same period in 2016. The decrease was mainly due to the
following:
-
Water sales opportunities within the Company's mineral resources
segment were down $8.4 million, when compared with the same period in
2016, due to the fact that California experienced above normal rain
fall and snow levels during the winter of 2017, resulting in a
reduction in water market activity throughout the state.
-
Farming revenues decreased $1.6 million as a result of reduced
pistachio yields as previously discussed in the third-quarter
financial results summary.
-
Equity in earnings from unconsolidated joint ventures for the nine
months ended September 30, 2017 was $3.5 million, compared with $5.7
million for the same period in 2016. The primary drivers of the
decrease were:
-
Increased operating expenses at TA/Petro associated with a new
fast casual restaurant offering, a one-time worker's compensation
charge, and a decrease on gas fuel margins.
-
Lease terminations at the TRCC/Rock Outlet joint venture triggered
write-offs of tenant related leasing costs, including allowances.
Leases with Express Factory Outlet, Samsonite and Old Navy have
been executed to fill these vacancies.
-
Non-cash GAAP loss associated with the Company's TRC-MRC 2 joint
venture as previously discussed in the third-quarter financial
results summary.
-
Tejon had offsetting improvements within its commercial and ranch
operations segments of $1.1 million as a result of completing
performance obligations associated with a 2016 land sale along with
improvements in grazing lease revenues.
Net loss attributable to common stockholders for the nine months ended
September 30, 2017 was $1.9 million, or $0.09 per common share, compared
to net income attributed to common stockholders of $0.8 million, or
$0.04 per common share, for the same period in 2016. All per share
numbers in this release are diluted earnings per common share.
2017 Operational Highlights
-
On October 27, 2017, the Company completed a rights offering, which
raised $90 million in proceeds. The net proceeds of the offering will
be used to provide additional working capital for general corporate
purposes, including to fund general infrastructure costs and the
development of buildings at Tejon Ranch Commerce Center, to continue
forward with entitlement and permitting programs for the 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.
-
The Los Angeles County Department of Regional Planning is finalizing
responses to comments received during the public review of the Draft
Environmental Impact Report for the Company’s Centennial master
planned community. The responses will become part of the Final
Environmental Impact Report that will be considered first by the Los
Angeles County Regional Planning Commission and later by the Board of
Supervisors.
-
TRC-MRC 1 joint venture has received a certificate of occupancy for
its 480,480 square foot industrial building located in TRCC-East.
2017 Outlook:
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of September 30,
2017, total capital, including debt, was approximately $424.1 million.
The Company also has cash and securities totaling approximately $24.2
million and $13.0 million available on its line of credit. Subsequent to
the end of the third quarter, Tejon completed a rights offering
generating $90 million in proceeds.
The Company believes the variability of its operating results will
continue through the fourth quarter of 2017 due to the seasonal nature
of farming activities primarily related to almond and grape revenue. The
Company expects the majority of its almond revenues during the fourth
quarter of 2017.
The Company will continue to aggressively pursue development, leasing,
and investment within the Tejon Ranch Commerce Center and in its joint
ventures. The Company also continues to invest in its master planned
communities, including the completion of entitlements for Centennial at
Tejon Ranch, preparing applications for state and federal permits for
its Grapevine community, which was approved by the Kern County Board of
Supervisors in December 2016, and in pre-development activities for
Mountain Village at Tejon Ranch. California is one of the most highly
regulated states in regard to real estate development and, as such,
delays, including those resulting from litigation, can be reasonably
anticipated. Accordingly, throughout the next few years, we expect net
income to fluctuate from year-to-year based on commodity prices,
production within the farming segment, and the timing of sales of land
and the leasing of land within the Company's commercial/industrial
developments.
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 on our website at www.tejonranch.com.
To watch a video overview of Tejon Ranch Co., please visit: http://tejonranch.com/investorvideo/
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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Real estate - commercial/industrial
|
$
|
2,432
|
|
|
$
|
2,221
|
|
|
$
|
7,106
|
|
|
$
|
6,534
|
|
|
Mineral resources
|
1,142
|
|
|
1,125
|
|
|
4,662
|
|
|
13,052
|
|
|
Farming
|
7,466
|
|
|
9,319
|
|
|
9,398
|
|
|
11,042
|
|
|
Ranch operations
|
868
|
|
|
414
|
|
|
2,809
|
|
|
2,253
|
|
|
Total revenues from Operations
|
11,908
|
|
|
13,079
|
|
|
23,975
|
|
|
32,881
|
|
|
Operating Profits:
|
|
|
|
|
|
|
|
|
Real estate - commercial/industrial
|
1,117
|
|
|
474
|
|
|
2,146
|
|
|
1,394
|
|
|
Real estate - resort/residential
|
(271
|
)
|
|
(323
|
)
|
|
(1,401
|
)
|
|
(1,252
|
)
|
|
Mineral resources
|
614
|
|
|
458
|
|
|
2,281
|
|
|
5,892
|
|
|
Farming
|
(455
|
)
|
|
1,538
|
|
|
(1,104
|
)
|
|
405
|
|
|
Ranch operations
|
(285
|
)
|
|
(960
|
)
|
|
(1,298
|
)
|
|
(2,010
|
)
|
|
Income (loss) from Operating Segments
|
720
|
|
|
1,187
|
|
|
624
|
|
|
4,429
|
|
|
Investment income
|
91
|
|
|
112
|
|
|
289
|
|
|
350
|
|
|
Other income
|
52
|
|
|
32
|
|
|
83
|
|
|
120
|
|
|
Corporate expense
|
(2,277
|
)
|
|
(3,096
|
)
|
|
(7,716
|
)
|
|
(9,262
|
)
|
|
(Loss) from operations before equity in earnings of unconsolidated
joint ventures
|
(1,414
|
)
|
|
(1,765
|
)
|
|
(6,720
|
)
|
|
(4,363
|
)
|
|
Equity in earnings of unconsolidated joint ventures, net
|
1,724
|
|
|
2,353
|
|
|
3,512
|
|
|
5,650
|
|
|
Income (loss) before income tax expense
|
310
|
|
|
588
|
|
|
(3,208
|
)
|
|
1,287
|
|
|
Income tax expense (benefit)
|
336
|
|
|
271
|
|
|
(1,268
|
)
|
|
503
|
|
|
Net income (loss)
|
(26
|
)
|
|
317
|
|
|
(1,940
|
)
|
|
784
|
|
|
Net loss attributable to non-controlling interest
|
(4
|
)
|
|
(7
|
)
|
|
(42
|
)
|
|
(61
|
)
|
|
Net income (loss) attributable to common stockholders
|
$
|
(22
|
)
|
|
$
|
324
|
|
|
$
|
(1,898
|
)
|
|
$
|
845
|
|
|
Net income (loss) per share attributable to common stockholders,
basic
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
Net income (loss) per share attributable to common stockholders,
diluted
|
$
|
—
|
|
|
$
|
0.02
|
|
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
Common stock
|
20,864,470
|
|
|
20,732,767
|
|
|
20,849,325
|
|
|
20,719,900
|
|
|
Common stock equivalents
|
30,003
|
|
|
128,334
|
|
|
43,951
|
|
|
125,940
|
|
|
Diluted shares outstanding
|
20,894,473
|
|
|
20,861,101
|
|
|
20,893,276
|
|
|
20,845,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Net income
|
$
|
(26
|
)
|
|
$
|
317
|
|
|
$
|
(1,940
|
)
|
|
$
|
784
|
|
|
Net income (loss) attributed to non-controlling interest
|
(4
|
)
|
|
(7
|
)
|
|
(42
|
)
|
|
(61
|
)
|
|
Interest, net:
|
|
|
|
|
|
|
|
|
Consolidated
|
(91
|
)
|
|
(112
|
)
|
|
(289
|
)
|
|
(350
|
)
|
|
Our share of interest expense from unconsolidated joint ventures
|
431
|
|
|
360
|
|
|
1,262
|
|
|
1,031
|
|
|
Total interest, net
|
340
|
|
|
248
|
|
|
973
|
|
|
681
|
|
|
Income taxes
|
336
|
|
|
271
|
|
|
(1,268
|
)
|
|
503
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
Consolidated
|
1,140
|
|
|
1,360
|
|
|
3,422
|
|
|
4,170
|
|
|
Our share of depreciation and amortization from unconsolidated joint
ventures
|
1,333
|
|
|
792
|
|
|
3,970
|
|
|
2,164
|
|
|
Total depreciation and amortization
|
2,473
|
|
|
2,152
|
|
|
7,392
|
|
|
6,334
|
|
|
EBITDA
|
3,127
|
|
|
2,995
|
|
|
5,199
|
|
|
8,363
|
|
|
Stock compensation expense
|
877
|
|
|
1,166
|
|
|
2,571
|
|
|
3,297
|
|
|
Adjusted EBITDA
|
$
|
4,004
|
|
|
$
|
4,161
|
|
|
$
|
7,770
|
|
|
$
|
11,660
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20171109006492/en/
Source: Tejon Ranch Co.
Tejon Ranch Co.
Allen Lyda, 661-248-3000
Executive Vice
President & Chief Financial Officer
|
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