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, 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.
"These are unprecedented times. The COVID-19 pandemic has
created a level of uncertainty rarely experienced outside of
wartime. Our commitment to the health and safety of our employees
and customers remains a top priority,” said Gregory S. Bielli,
President and CEO. “When you look at the revenue diversity of Tejon
Ranch and align it with the state's definition of 'essential' under
California's 'Stay at Home' order, we can say that a majority of
our segments are considered an essential business in California;
our farming segment continues to operate while adhering to the
social distancing mandate; our mineral resource segment continues
to provide much needed resources to support infrastructure
development throughout California; our fueling stations within the
commerce center are also open providing gas and diesel for goods
movement and to travelers."
"The pandemic has also not slowed down the pursuit of our
mission to monetize our land assets through our real estate
developments. We continue to push forward with final maps for
Mountain Village and continue to vigorously defend our entitlements
at Centennial and Grapevine,” Bielli continued.
First Quarter Financial Results
- Net loss attributable to common stockholders for the first
quarter of 2020 was $0.7 million, or net loss per share attributed
to common stockholders, basic and diluted, of $0.03, compared with
net income attributable to common stockholders of $0.1 million, or
net income per share attributed to common stockholders, basic and
diluted, of $0.00, for the first quarter of 2019.
- Revenues and other income, for the first quarter of 2020,
including equity in earnings of unconsolidated joint ventures, were
$11.9 million, which is comparable with the same period in 2019.
Factors affecting the quarterly results include:
- Commercial/industrial real estate development segment revenues
were $2.3 million for the three months ended March 31, 2020, a
decrease of $0.5 million, or 18%, from $2.8 million for the three
months ended March 31, 2019. The decrease in commercial revenues is
attributed to a true-up in the 2019 period related to 2018 spark
spread revenues from the Pastoria Energy Facility that were greater
than their original estimates. This true-up did not reoccur in
2020.
- The above decrease was partially offset by an increase in
equity in earnings of $0.5 million, or 56%, from $0.9 million
during the first quarter of 2019 to $1.4 million for the three
months ended March 31, 2020. The impact of COVID-19 was not a
factor at TA/Petro until the second half of March. In March, the
number of gallons of fuel sold declined 20%. However, because of a
26% decline in fuel costs, TA/Petro experienced a $0.4 million
improvement in net margins when compared to 2019 levels.
- Income tax expense was $0.5 million and $0.1 million as of
March 31, 2020 and 2019, respectively. Despite having a net loss,
income tax expense was recorded as a result of recognizing a
discrete tax accounting item of $523,000. 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.
2020 Outlook:
In March 2020, in response to the COVID-19 pandemic, California
issued the Stay at Home order which shut down all non-essential
businesses and services. The broader implications of COVID-19 on
the Company's future results of operations and financial
performance remain uncertain. The pandemic and its adverse effects
have become more prevalent in locations where the Company, our
customers, suppliers or third-party business partners conduct
business. As a result, Tejon Ranch may experience constrained
customer demand that could adversely impact its business and
financial performance for the foreseeable future.
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects during this
time of uncertainty. As of March 31, 2020, total capital, including
debt, was approximately $502.3 million. The Company has cash and
securities totaling approximately $59.3 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 the responses to the COVID-19 pandemic
limits the Company's access to future third party funding.
Within the oil markets, global oil producers' inability to agree
on oil production cuts caused an immediate shock on oil prices
during March. Social distancing and Stay at Home orders arising
from the pandemic have also reduced the demand for oil, leading to
a decline in oil prices. As a result, the Company expects to see a
significant decline in oil royalties for the foreseeable
future.
The impact of COVID-19 on the Company's crop production and
sales is currently unknown. The Company's agribusiness operations
are deemed essential and are allowed to operate under California's
Stay at Home order. A portion of the Company's farm labor force is
contracted from outside parties. Thus far, COVID-19 has not
impacted our ability to hire outside labor. However, the extent to
which COVID-19 will impact the availability of outside workers in
the near future is unknown. We can also expect a reduction in
demand and pricing, on our almonds and pistachios if global
economies are shut down and trade flows are disrupted for an
extended period of time. If this were to occur, the Company would
have the option to defer sales into later periods as almonds and
pistachios have a longer shelf life than most agricultural
products. Lastly, the Company does not expect any disruption to
wine grape sales as the crop is under multi-year contracts.
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 March 31,
2020
2019
Revenues:
Real estate - commercial/industrial
$
2,320
$
2,826
Mineral resources
6,178
6,132
Farming
952
815
Ranch operations
863
889
Total revenues from Operations
10,313
10,662
Operating Income:
Real estate - commercial/industrial
389
1,034
Real estate - resort/residential
(626
)
(648
)
Mineral resources
2,300
2,300
Farming
(750
)
(783
)
Ranch operations
(543
)
(461
)
Income from Operating Segments
770
1,442
Investment income
228
349
Other income, net
8
26
Corporate expense
(2,533
)
(2,474
)
(Loss) from operations before equity in
earnings of unconsolidated joint ventures
(1,527
)
(657
)
Equity in earnings of unconsolidated joint
ventures, net
1,355
876
(Loss) Income before income tax
expense
(172
)
219
Income tax expense
512
95
Net (loss) income
(684
)
124
Net (loss) income attributable to
non-controlling interest
(2
)
5
Net (loss) income attributable to common
stockholders
$
(682
)
$
119
Net (loss) income per share attributable
to common stockholders, basic
$
(0.03
)
$
—
Net (loss) income per share attributable
to common stockholders, diluted
$
(0.03
)
$
—
Weighted average number of shares
outstanding:
Common stock
26,128,976
25,992,374
Common stock equivalents
133,951
17,707
Diluted shares outstanding
26,262,927
26,010,081
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 March 31,
($ in thousands)
2020
2019
Net (loss) income
$
(684
)
$
124
Net (loss) income attributable to
non-controlling interest
(2
)
5
Net (loss) income attributable to common
stockholders
(682
)
119
Interest, net
Consolidated
(228
)
(349
)
Our share of interest expense from
unconsolidated joint ventures
681
738
Total interest, net
453
389
Income taxes
512
95
Depreciation and amortization:
Consolidated
1,164
1,089
Our share of depreciation and amortization
from unconsolidated joint ventures
1,025
1,109
Total depreciation and amortization
2,189
2,198
EBITDA
2,472
2,801
Stock compensation expense
1,225
813
Adjusted EBITDA
$
3,697
$
3,614
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200504005074/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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