Tejon Ranch Co., (the Company), (NYSE:TRC), a diversified real
estate development and agribusiness company, today announced
financial results for the three- and six-months ended June 30,
2019.
The Company is 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 in construction with nearly
6.0 million square feet already developed and an additional 14.3
million square feet available for development. When all
entitlements are approved and the communities are fully built out,
Tejon Ranch will be home to 34,783 housing units, more than 35
million square feet of commercial/industrial space and 750 lodging
units.
"With last April’s final approval by Los Angeles County, for our
Centennial master planned community, we now look forward to
advancing each of these projects through their various stages to
ultimate build-out. This will include prevailing in litigation and
successfully navigating the ever-changing regulatory environment in
California," said Gregory S. Bielli, President and CEO of Tejon
Ranch Co. "Californians are struggling with a housing shortage and
Tejon Ranch is positioned to be part of the solution."
Second Quarter Financial Results
- Net income attributable to common stockholders for the second
quarter of 2019 was $0.7 million, or net income per share
attributed to common stockholders, basic and diluted, of $0.03,
compared with a net loss attributable to common stockholders of
$1.0 million, or net loss per share attributed to common
stockholders, basic and diluted, of $0.04, for the second quarter
of 2018.
- Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the second quarter of 2019 were
$11.3 million, an increase of $5.2 million, or 85%, from $6.1
million for the same period in 2018. Factors affecting the
quarterly results include:
- Commercial/industrial revenues improved $4.4 million, primarily
as a result of a land contribution to the Company's TRC-MRC 3 joint
venture.
- Earnings from the Company's joint ventures improved $1.3
million, $1.2 million of which is attributed to strong operating
results at TA/Petro, as a result of improved fuel margins.
- Mineral resources revenues decreased $0.8 million primarily as
a result of a water sales price adjustment on water sales earned
during the three months ended March 31, 2019. However, based on
contractual terms of the sale, an adjustment to the price per
acre-foot was made during the second quarter.
Year-to-Date Financial Results
- Net income attributable to common stockholders for the first
six months of 2019 was $0.8 million, or net income per share
attributed to common stockholders, basic and diluted, of $0.03,
compared with net income attributable to common stockholders of
$0.5 million, or net income per share attributed to common
stockholders, basic and diluted, of $0.02, for the first six months
of 2018.
- Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the first six months of 2019
were $23.2 million, an increase of $3.2 million, or 16%, from $20.0
million for the same period in 2018. Factors affecting the
year-to-date results include:
- Commercial/industrial revenues improved $5.1 million, primarily
as a result of a land contribution to the Company's TRC-MRC 3 joint
venture.
- Earnings from the Company's joint ventures improved $2.0
million, $1.8 million of which is attributed to strong operating
results at TA/Petro, as a result of strong fuel margins.
- Mineral resources revenues decreased $3.8 million as a result
of the strong California winter rainfall, which reduced water sales
opportunities. Comparatively, the Company sold 4,445-acre feet and
7,442-acre feet of water as of June 30, 2019 and 2018,
respectively.
2019 Operational Highlights
- The Company's TRC-MRC 3 joint venture, a partnership with
Majestic Realty Co., commenced construction of a 579,040 square
foot industrial building. The building is expected to be completed
during the fourth quarter and is 67% leased.
- The Company received final approval for its Centennial
mixed-use residential community including the completion of the
finding of facts and the adoption of other resolutions by the Los
Angeles County Board of Supervisors on April 30, 2019. This also
included a Development Agreement between Los Angeles County,
Centennial and the Company, which provides the Company with vested
rights to build the project as approved for 30 years. With this
approval, Centennial at Tejon Ranch achieved local legislative
approval for the building of 19,333 residential units and more than
10.1 million square feet of commercial space.
2019 Outlook:
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of June 30,
2019, total capital, including debt, was approximately $499.0
million. The Company has cash and securities totaling approximately
$60.0 million and $30.0 million available on its line of
credit.
The Company will continue to aggressively pursue development,
leasing, and investment within the Tejon Ranch Commerce Center and
in its joint ventures. The Company will also continue to invest in
its residential projects, including the engineering necessary to
advance approved tract maps to a final map status for Mountain
Village at Tejon Ranch, advancing re-entitlement efforts for
Grapevine at Tejon Ranch and defending against lawsuits filed
against the County of Los Angeles and the Los Angeles County Board
of Supervisors' approval of Centennial at Tejon Ranch.
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.
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 2019 due to the nature of
its current farming and real estate activities. Nut and grape crop
markets are particularly sensitive to the size of each year’s world
crop and the demand for those crops. Large crops in California and
abroad can rapidly depress prices. Weather conditions can impact
the number of tree and vine dormant hours, which are integral to
tree and vine growth. During 2019, the Company experienced extended
heavier rainfall and colder temperatures during the almond bloom
period than when compared to the 2017-2018 winter, which could
negatively impact 2019 almond production. In addition, 2019 is the
alternative bearing cycle for our pistachio trees and a lower than
average crop is anticipated, especially compared to our record high
yields in 2018. Additionally, increased tariffs from China and
India which are major customers of almonds and pistachios, can make
American products less competitive and push customers to switch to
another producing country.
Water sales opportunities for the remainder of 2019 will be
limited because of above average winter rain and snow fall which
increased the California State Water Project water allocation to
75%.
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 the
Company's 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. Some of 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 June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Revenues:
Real estate - commercial/industrial
$
6,595
$
2,189
$
9,421
$
4,343
Mineral resources
660
1,500
6,792
10,631
Farming
886
542
1,701
1,737
Ranch operations
805
839
1,694
1,828
Total revenues from Operations
8,946
5,070
19,608
18,539
Operating Income (Loss):
Real estate - commercial/industrial
2,002
801
3,036
1,636
Real estate - resort/residential
(642
)
(433
)
(1,290
)
(848
)
Mineral resources
62
905
2,362
5,805
Farming
61
(649
)
(722
)
(1,292
)
Ranch operations
(588
)
(509
)
(1,049
)
(909
)
Income from Operating Segments
895
115
2,337
4,392
Investment income
329
346
678
629
Other income (loss), net
22
(10
)
48
(24
)
Corporate expense
(2,290
)
(2,464
)
(4,764
)
(5,196
)
Loss from operations before equity in
earnings of unconsolidated joint ventures
(1,044
)
(2,013
)
(1,701
)
(199
)
Equity in earnings of unconsolidated joint
ventures, net
1,971
652
2,847
819
Income (loss) before income tax
expense
927
(1,361
)
1,146
620
Income tax expense (benefit)
218
(348
)
313
178
Net income (loss)
709
(1,013
)
833
442
Net income (loss) attributable to
non-controlling interest
2
(16
)
7
(18
)
Net income (loss) attributable to common
stockholders
$
707
$
(997
)
$
826
$
460
Net income (loss) per share attributable
to common stockholders, basic
$
0.03
$
(0.04
)
$
0.03
$
0.02
Net income (loss) per share attributable
to common stockholders, diluted
$
0.03
$
(0.04
)
$
0.03
$
0.02
Weighted average number of shares
outstanding:
Common stock
26,031,800
25,950,851
26,012,196
25,931,940
Common stock equivalents
—
19,748
16,096
29,198
Diluted shares outstanding
26,031,800
25,970,599
26,028,292
25,961,138
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,
2019
2018
2019
2018
Net income (loss)
$
709
$
(1,013
)
$
833
$
442
Net income (loss) attributed to
non-controlling interest
2
(16
)
7
(18
)
Net income (loss) attributable to common
stockholders
707
(997
)
826
460
Interest, net:
Consolidated
(329
)
(346
)
(678
)
(629
)
Our share of interest expense from
unconsolidated joint ventures
730
554
1,468
1,056
Total interest, net
401
208
790
427
Income tax (benefit)
218
(348
)
313
178
Depreciation and amortization:
Consolidated
1,047
1,149
2,136
2,220
Our share of depreciation and amortization
from unconsolidated joint ventures
1,025
1,135
2,134
2,053
Total depreciation and amortization
2,072
2,284
4,270
4,273
EBITDA
3,398
1,147
6,199
5,338
Stock compensation expense
825
828
1,592
1,776
Adjusted EBITDA
$
4,223
$
1,975
$
7,791
$
7,114
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190801005336/en/
Tejon Ranch Co. Robert D. Velasquez, 661-248-3000 Senior Vice
President and Chief Financial Officer
Tejon Ranch (NYSE:TRC)
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