Tejon Ranch Co., or 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,
2020.
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 in operation with
nearly 6.0 million square feet completed and an additional 14.3
million square feet available for development. When these four
master planned developments 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.
"As an essential business as defined by the state of California,
the vast majority of our operations remained open during the
government shutdown. During the quarter, we worked with our
commercial tenants to negotiate rent deferrals, where appropriate,
and also continued to evaluate opportunities to further reduce
expenses and maximize cash flow, without sacrificing growth. As we
manage through the pandemic, the health and wellness of our
employees and other stakeholders remain a primary focus," said
Gregory S. Bielli, President and CEO. "During the quarter, we sold
land and a building to our Petro joint venture and recognized a
$1.3 million gain. The building is set to be redeployed later this
year, and will generate additional shareholder value in our
commercial operations. We remain steadfastly focused on our real
estate development efforts to help meet California’s ongoing
housing, employment, conservation and lifestyle needs."
Second Quarter Financial Results
- Net loss attributable to common stockholders for the second
quarter of 2020 was $0.3 million, or net loss per share attributed
to common stockholders, basic and diluted, of $0.01, compared with
net income attributable to common stockholders of $0.7 million, or
net income per share attributed to common stockholders, basic and
diluted, of $0.03, for the second quarter of 2019.
- Revenues and other income, for the second quarter of 2020,
including equity in earnings of unconsolidated joint ventures, were
$7.4 million, compared with $11.3 million for the second quarter of
2019. Factors affecting the quarterly results include:
- Commercial/industrial real estate development segment revenues
were $2.1 million for the three months ended June 30, 2020, a
decrease of $4.5 million, or 68%, from $6.6 million for the three
months ended June 30, 2019. The 2020 period did not include land
sale revenues and construction management fee opportunities
associated with the Company’s TRC-MRC 3 joint venture, which
accounted for the decrease.
- Farming revenues were $0.2 million for the three months ended
June 30, 2020, a decrease of $0.7 million or 78%, from $0.9 million
for the three months ended June 30, 2019. For the quarter, the
Company had no sales of almonds or pistachios primarily related to
timing of sales. The third and fourth quarter of each year is when
the majority of our crop sales occur.
- Equity in earnings from unconsolidated joint ventures were $1.2
million for the three months ended June 30, 2020, a decrease of
$0.8 million or 40%, from $2.0 million during the same period in
2019. The change was primarily attributed to a $0.9 million
decrease from the Company's Petro Travel Plaza Holdings joint
venture. While fuel margins improved over the comparison period,
the joint venture experienced significant declines in quick and
full service restaurant margins resulting from closures due to
COVID-19.
- The above decreases were partially offset by an increase in
mineral resources revenues, which were $1.8 million for the three
months ended June 30, 2020, an increase of $1.1 million, or 157%,
from $0.7 million for the three months ended June 30, 2019. In
2019, the Company had an unfavorable water sales adjustment of $1.0
million that was tied to State Water Project (SWP) allocation
levels. In 2020 however, SWP allocation levels were more favorable
to the Company, and resulted in $0.4 million in additional water
sales revenues. Increases in water sales revenues were offset by a
$0.3 million decrease in oil and gas royalties driven by reduced
production and depressed oil prices resulting from a lack of demand
and oversupply over the comparative periods.
- Lastly, the Company recognized a $1.3 million gain from selling
land and a building to the TA/Petro joint venture that will later
be redeployed at the joint venture level.
- Income tax expense was $0.2 million and $0.2 million for the
three months ended June 30, 2020 and 2019, respectively. Despite
having a net loss, income tax expense was recorded as a result of
recognizing a non deductible permanent tax item.
Year-to-Date Financial Results
- Net loss attributable to common stockholders for the first six
months of 2020 was $1.0 million, or net loss per share attributed
to common stockholders, basic and diluted, of $0.04, compared with
net income attributable to common stockholders of $0.8 million, or
net income per share attributed to common stockholders, basic and
diluted, of $0.03, for the first six months of 2019.
- Revenues and other income, for the first six months of 2020,
including equity in earnings of unconsolidated joint ventures, were
$19.3 million, compared with $23.2 million for the first six months
of 2019. Factors affecting the year-to-date results include:
- Commercial/industrial real estate development segment revenues
were $4.4 million for the first six months of 2020, a decrease of
$5.0 million, or 53%, from $9.4 million for the first six months of
2019. The lack of land sales and construction management fees
mentioned above drove a majority of this decrease. Additionally, in
2019, the Company recognized a true-up related to 2018 spark spread
revenues from the Pastoria Energy Facility that was greater than
original estimates. This true-up did not reoccur in 2020.
- The Company's farming segment and equity in earnings in
unconsolidated joint ventures saw a combined decrease of $0.9
million, or 20%, over the comparative period largely for the same
reasons discussed within our second quarter financial results.
- The above decreases were partially offset by an increase in
mineral resources revenues, which were $8.0 million for the first
six months of 2020, an increase of $1.2 million, or 18%, from $6.8
million for the first six months of 2019. In addition to the
factors discussed within the second quarter financial results
above, a tenant of the Company experienced increases in demand for
cement as a result of road construction projects, which increased
royalty revenues.
- Lastly, the Company recognized a $1.3 million gain from selling
real estate to the TA/Petro joint venture as mentioned above
- Income tax expense was $0.7 million and $0.3 million as of June
30, 2020 and 2019, respectively. Despite having a net loss, income
tax expense was recorded as a result of recognizing a discrete tax
accounting item. This item will not have an impact on the Company's
income taxes payable and represents a reversal of excess deferred
tax benefits that were previously taken. The remainder of the
expenses recorded is attributed to the permanent items discussed
above.
2020 Outlook:
Currently, California is taking a more cautious approach toward
reopening than many other states. Spikes in positive COVID-19 cases
during recent weeks have prompted the governor and local health
officials to scale back previously announced re-openings. The
pandemic and its adverse effects have become more prevalent in
locations where the Company, its customers, suppliers or
third-party business partners conduct business. As a result, Tejon
Ranch will likely not see meaningful improvements in its operating
results until the COVID-19 virus is better maintained and/or a
vaccine is approved for nationwide distribution.
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects during this
time of uncertainty. As of June 30, 2020, total capital, including
debt, was approximately $502.1 million. The Company has cash and
securities totaling approximately $49.3 million and $35.0 million
available on its line of credit. The Company is also taking steps
to maximize positive cash flow, in the event a lack of liquidity in
the economy resulting from responses to the COVID-19 pandemic
limits the Company's access to future third party funding.
The price of a barrel of oil is sensitive to global production
levels and demand. Social distancing and the California Department
of Health’s Guidance on Closure of Sectors in Response to COVID-19
on July 1, 2020 arising from the pandemic reduced the demand for
oil, leading to a decline in production as well as lower prices. As
a result, the Company does not expect improvements in oil royalties
for the foreseeable future.
The Company's agribusiness operations are deemed essential and
allowed to operate under the California Department of Health’s
Guidance on Closure of Sectors in Response to COVID-19 on July 1,
2020. A portion of the Company's farm labor force is contracted
from outside parties, and, thus far, COVID-19 has not impacted our
ability to hire outside labor.
For 2020, the almond industry is expecting record production due
to a great bloom cycle and favorable weather. The industry
continues to see strong demand for its product, but the expected
increase in production has begun to negatively impact prices. The
mix of demand has been changed in the near term as a result of
COVID-19 as more product is moving through wholesale markets and
less through high end users such as restaurants. This temporary
trend has also negatively impacted pricing.
For pistachios, 2020 is the alternate bearing year in which the
orchards will produce a greater than average crop, but current
industry estimates for the 2020 crop are less than originally
forecasted. This change in estimate is allowing prices to stay in
line with 2019 crop pricing. Demand has continued to stay strong
for pistachios thus far this year.
The Company will continue to aggressively pursue development,
leasing, sales, and investment within TRCC and in its joint
ventures, and will also continue to invest in its residential
projects, including Mountain Village at Tejon Ranch, Centennial at
Tejon Ranch and Grapevine at Tejon Ranch.
During 2020, the Company will continue to invest funds in master
project infrastructure, defending currently held entitlements, as
well as vertical development within its active commercial and
industrial developments. 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 mineral resources segment, and the timing of
sales of land and the leasing of land within its 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 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, the impact of COVID-19, 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,
2020
2019
2020
2019
Revenues:
Real estate - commercial/industrial
$
2,114
$
6,595
$
4,434
$
9,421
Mineral resources
1,776
660
7,954
6,792
Farming
209
886
1,161
1,701
Ranch operations
676
805
1,539
1,694
Total revenues from Operations
4,775
8,946
15,088
19,608
Operating Income:
Real estate - commercial/industrial
367
2,002
756
3,036
Real estate - resort/residential
(326
)
(642
)
(952
)
(1,290
)
Mineral resources
1,062
62
3,362
2,362
Farming
(890
)
61
(1,640
)
(722
)
Ranch operations
(502
)
(588
)
(1,045
)
(1,049
)
Income from Operating Segments
(289
)
895
481
2,337
Investment income
151
329
379
678
Gain on sale of real estate
1,333
—
1,333
—
Other income, net
(12
)
22
(4
)
48
Corporate expense
(2,494
)
(2,290
)
(5,027
)
(4,764
)
(Loss) from operations before equity in
earnings of unconsolidated joint ventures
(1,311
)
(1,044
)
(2,838
)
(1,701
)
Equity in earnings of unconsolidated joint
ventures, net
1,181
1,971
2,536
2,847
(Loss) Income before income tax
expense
(130
)
927
(302
)
1,146
Income tax expense
196
218
708
313
Net (loss) income
(326
)
709
(1,010
)
833
Net (loss) income attributable to
non-controlling interest
7
2
5
7
Net (loss) income attributable to common
stockholders
$
(333
)
$
707
$
(1,015
)
$
826
Net (loss) income per share attributable
to common stockholders, basic
$
(0.01
)
$
0.03
$
(0.04
)
$
0.03
Net (loss) income per share attributable
to common stockholders, diluted
$
(0.01
)
$
0.03
$
(0.04
)
$
0.03
Weighted average number of shares
outstanding:
Common stock
26,220,575
26,031,800
26,174,775
26,012,196
Common stock equivalents
10,935
—
140,715
16,096
Diluted shares outstanding
26,231,510
26,031,800
26,315,490
26,028,292
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,
($ in thousands)
2020
2019
2020
2019
Net (loss) income
$
(326
)
$
709
$
(1,010
)
$
833
Net (loss) income attributable to
non-controlling interest
7
2
5
7
Net (loss) income attributable to common
stockholders
(333
)
707
(1,015
)
826
Interest, net
Consolidated
(151
)
(329
)
(379
)
(678
)
Our share of interest expense from
unconsolidated joint ventures
638
730
1,318
1,468
Total interest, net
487
401
939
790
Income taxes
196
218
708
313
Depreciation and amortization:
Consolidated
1,164
1,047
2,180
2,136
Our share of depreciation and amortization
from unconsolidated joint ventures
1,031
1,025
2,055
2,134
Total depreciation and amortization
2,195
2,072
4,235
4,270
EBITDA
2,545
3,398
4,867
6,199
Stock compensation expense
1,174
825
2,399
1,592
Adjusted EBITDA
$
3,719
$
4,223
$
7,266
$
7,791
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005716/en/
Tejon Ranch Co. Robert D. Velasquez, 661-248-3000 Senior Vice
President and Chief Financial Officer
Tejon Ranch (NYSE:TRC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tejon Ranch (NYSE:TRC)
Historical Stock Chart
From Apr 2023 to Apr 2024