Tejon Ranch Co. Announces First Quarter 2024 Financial Results

TEJON RANCH, Calif., May 07, 2024 (GLOBE NEWSWIRE) -- Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real estate development and agribusiness company, today announced financial results for the three-months ended March 31, 2024.

"During the first quarter of 2024, the Company continued its strategic focus on unlocking the value of our unique land assets, including commencement of construction of our first residential community, Terra Vista at Tejon, a new multi-family apartment community located immediately adjacent to the Outlets at Tejon. The community will have 228 residences in the first phase with the first units expected to be delivered in the second quarter of 2025. This development marks the Company's evolution as a real estate development company by adding residential communities on the Ranch, adding to the vibrancy of the Ranch, and providing much-needed new housing for the region," said Gregory S. Bielli, President, and CEO of Tejon Ranch Co. "We are also continuing our aggressive fight for our Centennial at Tejon master planned community. While pushing strongly on the litigation front, we have initiated our efforts in Los Angeles County to enhance our existing project approvals by advertising our notice of preparation for a soon-to-be released Supplemental Environmental Impact Report (SEIR),” continued Bielli.

Commercial/Industrial Real Estate Highlights

  • TRCC industrial portfolio, through the Company's joint venture partnerships, consists of 2.8 million square feet of gross leasable area (GLA), and is 100% leased. In total, TRCC comprises 7.1 million square feet of GLA.
  • TRCC commercial portfolio, wholly owned and through joint venture partnerships, comprises 620,907 square feet of GLA and is 95% leased.
  • Construction started in February 2024 on Phase 1 of Terra Vista at Tejon, the Company's multi-family residential development adjacent to the Outlets at Tejon. Phase 1 includes 228 of the planned 495 residential units, with the first units becoming available in the first half of 2025 and the remaining units in this phase coming online soon thereafter. See www.tejonranchliving.com for further information.
  • Construction of a new distribution facility for Nestlé USA is underway on the east side of TRCC, which will total more than 700,000 square feet.
  • Signed a lease with a manufacturer and distributor of industrial components for 240,000 square feet of space that was previously occupied by Sunrise Brands, an apparel company. Sunrise relocated to the new 446,400 square foot building in January 2024.
  • Outlets at Tejon is celebrating its 10-year anniversary in 2024, with occupancy over 90% as of March 31, 2024. We continue to attract new tenants, with America sportswear company Under Armour moving in during the third quarter of 2023.

First Quarter 2024 Financial Results

  • GAAP net loss attributable to common stockholders for the first quarter of 2024 was $0.9 million, or net loss per share attributable to common stockholders, basic and diluted, of $0.03. For the first quarter of 2023, the Company had net income attributable to common stockholders of $1.8 million, or net income per share attributable to common stockholders, basic and diluted, of $0.07.
    • The primary driver of this decrease resulted from the Company's mineral resources segment, in which operating profit declined $2.5 million over the comparative period, mainly due to lower water sales revenue resulting from heavy rainfall in California.
    • Additionally, expenses in resort/residential segment increased by $1.2 million due to higher professional service fees incurred during this period.
    • Partially offsetting this decrease was $0.9 million of tax benefits recorded during this quarter compared to $1.0 million of tax provisions recorded over the comparative period.
  • Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the first quarter of 2024 were $9.5 million, compared with $14.6 million for the first quarter of 2023.
    • The primary driver of this decrease was the mineral resources segment, whose revenue declined $4.4 million over the comparative period due to lower water sales revenue realized during the quarter.
  • Adjusted EBITDA, a non-GAAP measure, was $2.1 million for the first quarter ended March 31, 2024, compared with $6.4 million for the same period in 2023.

Tejon Ranch Co. provides Adjusted EBITDA, a non-GAAP financial measure, because management believes it offers additional information for monitoring the Company's cash flow performance. A table providing a reconciliation of Adjusted EBITDA to its most comparable GAAP measure, as well as an explanation of, and important disclosures about, this non-GAAP measure, is included in the tables at the end of this press release.

Liquidity and Capital Resources

  • As of March 31, 2024, total market capitalization, including pro rata share (PRS) of unconsolidated joint venture debt, was approximately $574.7 million, consisting of an equity market capitalization of $412.9 million and $161.8 million of debt, and our debt to total market capitalization was 28%. As of March 31, 2024, the Company had cash and securities totaling approximately $60.7 million and $108.6 million available on its line of credit, for total liquidity of $169.3 million. The ratio of net debt, including PRS of unconsolidated joint venture debt, of $101.1 million, to trailing twelve months adjusted EBITDA of $17.1 million was 5.9x.

2024 Outlook:
The Company will continue to strategically pursue commercial/industrial development, multi-family development, leasing, sales, and investment within TRCC and its joint ventures. The Company also will continue to invest in to advance its residential projects, including Mountain Village at Tejon Ranch, Centennial at Tejon Ranch and Grapevine 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. Accordingly, throughout the next few years, the Company expects net income to fluctuate from year-to-year based on the above-mentioned activity, along with commodity prices, production within its farming and mineral resources segments, and the timing of land sales and leasing of land within its industrial developments.

Water sales opportunities each year are impacted by the total precipitation and snowpack runoff in Northern California from winter storms, as well as State Water Project, or SWP, allocations. The current SWP allocation is at 40% of contract amounts, with the expectation that the allocation may increase.

The Company's farming operations in 2024 continue to be impacted by higher costs of production such as fuel costs, fertilizer costs, pest control costs, and labor costs. The Company is anticipating higher 2024 almond industry crop production, which may have an adverse effect on 2024 selling prices.

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.

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, external 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.

(Financial tables follow)

(In thousands, except per share data)
 March 31,
 December 31,
Current Assets:   
Cash and cash equivalents$35,552  $31,907 
Marketable securities - available-for-sale 25,119   32,556 
Accounts receivable 3,694   8,352 
Inventories 5,821   3,493 
Prepaid expenses and other current assets 4,477   3,502 
Total current assets 74,663   79,810 
Real estate and improvements - held for lease, net 16,559   16,609 
Real estate development (includes $121,133 at March 31, 2024 and $119,788 at December 31, 2023, attributable to CFL, Note 14) 342,198   337,257 
Property and equipment, net 55,172   53,985 
Investments in unconsolidated joint ventures 30,075   33,648 
Net investment in water assets 58,023   52,130 
Other assets 4,941   4,084 
TOTAL ASSETS$581,631  $577,523 
Current Liabilities:   
Trade accounts payable$9,752  $6,457 
Accrued liabilities and other 3,186   3,214 
Deferred income 2,421   1,891 
Total current liabilities 15,359   11,562 
Revolving line of credit 47,942   47,942 
Long-term deferred gains 11,447   11,447 
Deferred tax liability 8,267   8,269 
Other liabilities 15,894   15,207 
Total liabilities 98,909   94,427 
Commitments and contingencies (Note 11)   
Tejon Ranch Co. Stockholders’ Equity   
Common stock, $0.50 par value per share:   
Authorized shares - 50,000,000   
Issued and outstanding shares - 26,797,440 at March 31, 2024 and 26,770,545 at December 31, 2023 13,400   13,386 
Additional paid-in capital 346,141   345,609 
Accumulated other comprehensive loss (177)  (171)
Retained earnings 107,994   108,908 
Total Tejon Ranch Co. Stockholders’ Equity 467,358   467,732 
Non-controlling interest 15,364   15,364 
Total equity 482,722   483,096 

($ in thousands, except per share amounts)
 Three Months Ended March 31,
  2024  2023
Real estate - commercial/industrial$2,945  $2,676
Mineral resources 2,489   6,912
Farming 865   1,185
Ranch operations 1,107   1,492
Total revenues 7,406   12,265
Costs and Expenses:   
Real estate - commercial/industrial 1,927   1,695
Real estate - resort/residential 1,561   388
Mineral resources 2,116   4,066
Farming 2,067   2,013
Ranch operations 1,227   1,330
Corporate expenses 2,492   2,287
Total expenses 11,390   11,779
Operating (loss) income (3,984)  486
Other Income (Loss):   
Investment income 685   456
Other (loss) income, net (70)  334
Total other income 615   790
(Loss) income from operations before equity in earnings of unconsolidated joint ventures and income tax (3,369)  1,276
Equity in earnings of unconsolidated joint ventures, net 1,513   1,517
(Loss) income before income tax expense (1,856)  2,793
Income tax (benefit) expense (942)  1,013
Net (loss) income (914)  1,780
Net income attributable to non-controlling interest    6
Net (loss) income attributable to common stockholders$(914) $1,774
Net (loss) income per share attributable to common stockholders, basic$(0.03) $0.07
Net (loss) income per share attributable to common stockholders, diluted$(0.03) $0.07

Non-GAAP Financial Measure

This press release includes references to the Company’s non-GAAP financial measure “EBITDA.” EBITDA represents the Company's 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 the Company and others as a supplemental measure of performance. Tejon Ranch uses Adjusted EBITDA to assess the performance of the Company's 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. The Company believes Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from operations on an unlevered 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 the Company's performance independent of its capital structure and indebtedness and, therefore, allow for a more meaningful comparison of the Company's performance to that of other companies, both in the real estate industry and in other industries. The Company believes that excluding charges related to share-based compensation facilitates a comparison of its 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 the Company's control), and the assumptions and the variety of award types that a company can use. EBITDA and Adjusted EBITDA have limitations as measures of the Company's performance. EBITDA and Adjusted EBITDA do not reflect Tejon Ranch's 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, the Company's computation of EBITDA and Adjusted EBITDA may not be comparable to similar measures reported by other companies.

Non-GAAP Financial Measures
 Three Months Ended March 31,
($ in thousands) 2024   2023 
Net (loss) income$(914) $1,780 
Net income attributable to non-controlling interest    6 
Interest, net   
Consolidated (685)  (456)
Our share of interest expense from unconsolidated joint ventures 1,543   1,175 
Total interest, net 858   719 
Income taxes (942)  1,013 
Depreciation and amortization:   
Consolidated 1,006   988 
Our share of depreciation and amortization from unconsolidated joint ventures 1,607   1,274 
Total depreciation and amortization 2,613   2,262 
EBITDA 1,615   5,768 
Stock compensation expense 513   621 
Adjusted EBITDA$2,128  $6,389 

Summary of Outstanding Debt as of March 31, 2024
Entity/BorrowingAmount% SharePRS Debt
Revolving line-of-credit$47,942100%$47,942
Petro Travel Plaza Holdings, LLC 12,36560% 7,419
TRCC/Rock Outlet Center, LLC 20,77650% 10,388
TRC-MRC 1, LLC 21,97950% 10,990
TRC-MRC 2, LLC 21,76650% 10,883
TRC-MRC 3, LLC 33,40450% 16,702
TRC-MRC 4, LLC 61,55650% 30,778
TRC-MRC 5, LLC 53,35450% 26,677
Total$273,142 $161,779

Market Capitalization and Debt Ratios
 March 31,
Period End Share Price$15.41 
Outstanding Shares 26,797,440 
Equity Market Capitalization as of Reporting Date$412,949 
Total Debt including PRS Unconsolidated Joint Venture Debt$161,779 
Total Market Capitalization$574,728 
Debt to total market capitalization 28.1%
Net debt, including PRS unconsolidated joint venture debt, to TTM adjusted EBITDA 5.9 

Tejon Ranch Co.
Brett A. Brown, 661-248-3000
Executive Vice President, Chief Financial Officer

ICR Strategic Communications & Advisory
Stephen Swett, 203-682-8377

RPM Public Relations
Rae Pardini Matson, 559-205-0721