Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real
estate development and agribusiness company, today announced
financial results for the fourth quarter and year-ended
December 31, 2023.
"In 2023, we established an important foundation
for future growth with the closing of a new $160 million unsecured
revolving credit facility with AgWest Farm Credit, based on the
Company's deep agricultural heritage and ongoing ranching and
farming operations. This new credit facility will be available to
fund future real estate construction projects and other operations
at favorable terms," said Gregory S. Bielli, President and CEO of
Tejon Ranch Co. "Additionally, during the fourth quarter of 2023,
we enhanced operations at Tejon Ranch Commerce Center by completing
the construction of a 446,000 square foot pre-leased industrial
building through one of our joint ventures. This new building adds
another income producing asset to our robust portfolio, "We
continue our progress into the first quarter of 2024, with the
start of construction of Terra Vista at Tejon, a new multi-family
apartment community located immediately adjacent to the Outlets at
Tejon at TRCC. Terra Vista at Tejon marks the transition of TRCC to
a mixed-use master-planned community, a significant milestone for
our Company."
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.
- TRCC Commercial portfolio, wholly
owned and through joint venture partnerships, consists of 620,907
square feet of GLA and is 96% leased.
- Construction of a 446,400 square
foot industrial building was completed in December 2023. A lease
for this building was secured in advance of construction.
- 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.
- Construction started in the first
quarter of 2024 on Phase 1 of Terra Vista at Tejon, the Company's
multi-family residential development at TRCC. Phase 1 includes 228
of the planned 495 residential units.
Fourth-Quarter
2023 Financial Highlights
- GAAP net income
attributable to common stockholders for the fourth quarter of 2023
was $1.6 million, or net income per share attributable to common
stockholders, basic and diluted, of $0.06, compared with net income
attributable to common stockholders of $2.0 million, or net
income per share attributable to common stockholders, basic and
diluted, of $0.07, for the fourth quarter of 2022.
- Revenues and
other income, including equity in earnings of unconsolidated joint
ventures, for the fourth quarter of 2023 were $18.8 million, a
decrease of $1.9 million, or 9%, compared with $20.7 million
for the same period in 2022. Factors behind this change included:
-
Commercial/industrial segment revenues decreased $5.3 million,
or 63%, when compared with the fourth quarter in 2022, primarily
attributable to the absence of a land contribution in the fourth
quarter 2023. During the fourth quarter of 2022, the Company
contributed a 27.9-acre land parcel with a fair value of $8.5
million to the Company's TRC-MRC5, LLC joint venture. The Company
recognized profit of $3.0 million and deferred profit of $3.0
million for this transaction.
- The decrease
mentioned above was partially offset by an increase in farming
revenues by $3.4 million, or 61%, when compared to the same
period in 2022. The increase was largely attributed to an increase
in pistachio sales in 2023, as the 2022 crop did not bear fruit due
to a mild winter.
- Adjusted EBITDA,
a non-GAAP measure, was $4.8 million for the quarter ended
December 31, 2023, compared with $7.2 million for the quarter
ended December 31, 2022.
Tejon Ranch Co. provides Adjusted EBITDA, a
non-GAAP financial measure, because 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.
Fiscal 2023
Financial Highlights
- GAAP net income attributable to
common stockholders for fiscal 2023 was $3.3 million, or net income
per share attributable to common stockholders, basic and diluted of
$0.12, compared with net income attributable to common stockholders
of $15.8 million, or $0.60 per share basic and diluted, for
2022.
- Revenues and other income,
including equity in earnings of unconsolidated joint ventures, were
$54.0 million in 2023, a decrease of $34.7 million, or 39%,
compared with $88.7 million in 2022. Factors driving this decrease
included:
- A decrease in commercial/industrial
segment revenue of $28.8 million, or 71%, compared with 2022,
primarily resulting from the absence of land sales in 2023.
- A decrease in mineral resources
segment revenue of $7.1 million, or 33%, compared with 2022,
primarily attributed to lower water sales revenue. The State Water
Project (SWP) allocation was at 100% in 2023, which severely
limited the Company's water sales opportunities. In 2022 the SWP
allocation was 5%. Additionally, the Company experienced a decrease
in royalties due to the lower price per barrel for oil production,
combined with lower production volume of cement and aggregate, when
compared with 2022.
- The decrease mentioned above was
partially offset by a 69% decrease in income tax over the
comparative period, resulting from lower operating income
recognized for the year.
-
Adjusted EBITDA, a non-GAAP measure, was $21.4 million for the year
ended December 31, 2023, compared with $37.7 million for the
year ended December 31, 2022.
Tejon Ranch Co. provides Adjusted EBITDA, a
non-GAAP financial measure, because 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 December 31, 2023, total capital,
including debt, was approximately $531.0 million. As of
December 31, 2023, the Company had cash and securities
totaling approximately $64.5 million and $108.6 million available
on its line of credit.
2024 Outlook:
In January of 2024, the Company announced that
Nestlé USA will start construction on its new distribution center
at TRCC East. The new multi-story building, which will total more
than 700,000 square feet, will be located on the 58-acre parcel of
land that was sold to Nestlé in November 2022.
The Company will continue to aggressively 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 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 along with SWP allocations. The
current SWP allocation is at 15% of contract amounts, with the
expectation that the allocation may increase.
The Company expects its 2024 farming operations
to 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 almond industry inventory
levels, 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 15 miles south of Bakersfield.
More information about Tejon Ranch Co. can be
found online at http://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, 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. AND
SUBSIDIARIESCONSOLIDATED BALANCE
SHEETS(In thousands, except per share data) |
|
|
December 31 |
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current Assets: |
|
|
|
Cash and cash equivalents |
$ |
31,907 |
|
|
$ |
39,119 |
|
Marketable securities - available-for-sale |
|
32,556 |
|
|
|
33,444 |
|
Accounts receivable |
|
8,352 |
|
|
|
4,453 |
|
Inventories |
|
3,493 |
|
|
|
3,369 |
|
Prepaid expenses and other current assets |
|
3,502 |
|
|
|
2,660 |
|
Total current assets |
|
79,810 |
|
|
|
83,045 |
|
Real estate and improvements -
held for lease, net |
|
16,609 |
|
|
|
16,940 |
|
Real estate development (includes
$119,788 at December 31, 2023 and $115,221 at
December 31, 2022, attributable to Centennial Founders, LLC,
Note 17) |
|
337,257 |
|
|
|
321,293 |
|
Property and equipment, net |
|
53,985 |
|
|
|
52,980 |
|
Investments in unconsolidated
joint ventures |
|
33,648 |
|
|
|
41,891 |
|
Net investment in water
assets |
|
52,130 |
|
|
|
47,045 |
|
Other assets |
|
4,084 |
|
|
|
3,597 |
|
TOTAL ASSETS |
$ |
577,523 |
|
|
$ |
566,791 |
|
LIABILITIES AND EQUITY |
|
|
|
Current Liabilities: |
|
|
|
Trade accounts payable |
$ |
6,457 |
|
|
$ |
5,117 |
|
Accrued liabilities and other |
|
3,214 |
|
|
|
3,602 |
|
Deferred income |
|
1,891 |
|
|
|
1,531 |
|
Current maturities of long-term debt |
|
— |
|
|
|
1,779 |
|
Total current liabilities |
|
11,562 |
|
|
|
12,029 |
|
Long-term debt, less current
portion |
|
— |
|
|
|
48,161 |
|
Revolving line of credit |
|
47,942 |
|
|
|
— |
|
Long-term deferred gains |
|
11,447 |
|
|
|
11,447 |
|
Deferred tax liability |
|
8,269 |
|
|
|
7,180 |
|
Other liabilities |
|
15,207 |
|
|
|
10,380 |
|
Total liabilities |
|
94,427 |
|
|
|
89,197 |
|
Commitments and
contingencies |
|
|
|
Equity: |
|
|
|
Tejon Ranch Co. Stockholders’ Equity |
|
|
|
Common stock, $0.50 par value per share: |
|
|
|
Authorized shares - 50,000,000 |
|
|
|
Issued and outstanding shares - 26,770,545 at December 31,
2023 and 26,541,553 at December 31, 2022 |
|
13,386 |
|
|
|
13,271 |
|
Additional paid-in capital |
|
345,609 |
|
|
|
345,344 |
|
Accumulated other comprehensive loss |
|
(171 |
) |
|
|
(2,028 |
) |
Retained earnings |
|
108,908 |
|
|
|
105,643 |
|
Total Tejon Ranch Co. Stockholders’ Equity |
|
467,732 |
|
|
|
462,230 |
|
Non-controlling interest |
|
15,364 |
|
|
|
15,364 |
|
Total equity |
|
483,096 |
|
|
|
477,594 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
577,523 |
|
|
$ |
566,791 |
|
TEJON RANCH CO.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except earnings per share) |
|
Three-Months EndedDecember 31, |
|
Year EndedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
Revenues: |
|
|
|
|
|
|
|
Real estate - commercial/industrial |
$ |
3,052 |
|
|
$ |
8,352 |
|
|
$ |
11,758 |
|
|
$ |
40,515 |
Mineral resources |
|
2,894 |
|
|
|
2,357 |
|
|
|
14,524 |
|
|
|
21,595 |
Farming |
|
9,098 |
|
|
|
5,649 |
|
|
|
13,950 |
|
|
|
13,001 |
Ranch operations |
|
1,123 |
|
|
|
1,095 |
|
|
|
4,507 |
|
|
|
4,106 |
Total revenues |
|
16,167 |
|
|
|
17,453 |
|
|
|
44,739 |
|
|
|
79,217 |
Costs and expenses: |
|
|
|
|
|
|
|
Real estate - commercial/industrial |
|
2,536 |
|
|
|
4,953 |
|
|
|
8,053 |
|
|
|
16,356 |
Real estate - resort/residential |
|
449 |
|
|
|
411 |
|
|
|
1,528 |
|
|
|
1,629 |
Mineral resources |
|
1,694 |
|
|
|
1,622 |
|
|
|
8,685 |
|
|
|
12,969 |
Farming |
|
9,613 |
|
|
|
5,835 |
|
|
|
15,257 |
|
|
|
19,811 |
Ranch operations |
|
1,179 |
|
|
|
1,316 |
|
|
|
5,043 |
|
|
|
5,024 |
Corporate expenses |
|
3,048 |
|
|
|
3,469 |
|
|
|
9,872 |
|
|
|
9,699 |
Total expenses |
|
18,519 |
|
|
|
17,606 |
|
|
|
48,438 |
|
|
|
65,488 |
Operating (loss) income |
|
(2,352 |
) |
|
|
(153 |
) |
|
|
(3,699 |
) |
|
|
13,729 |
Other income: |
|
|
|
|
|
|
|
Investment income |
|
782 |
|
|
|
334 |
|
|
|
2,557 |
|
|
|
634 |
Other (expense) income |
|
(410 |
) |
|
|
50 |
|
|
|
(138 |
) |
|
|
1,088 |
Total other income |
|
372 |
|
|
|
384 |
|
|
|
2,419 |
|
|
|
1,722 |
(Loss) income from operations
before equity in earnings of unconsolidated joint ventures and
income tax expense |
|
(1,980 |
) |
|
|
231 |
|
|
|
(1,280 |
) |
|
|
15,451 |
Equity in earnings of
unconsolidated joint ventures, net |
|
2,252 |
|
|
|
2,885 |
|
|
|
6,868 |
|
|
|
7,752 |
Income before income taxes |
|
272 |
|
|
|
3,116 |
|
|
|
5,588 |
|
|
|
23,203 |
Income tax (benefit) expense |
|
(1,296 |
) |
|
|
1,131 |
|
|
|
2,323 |
|
|
|
7,393 |
Net income |
|
1,568 |
|
|
|
1,985 |
|
|
|
3,265 |
|
|
|
15,810 |
Net income attributable to
non-controlling interest |
|
3 |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
Net income attributable to common
stockholders |
$ |
1,565 |
|
|
$ |
1,984 |
|
|
$ |
3,265 |
|
|
$ |
15,808 |
Net income per share attributable
to common stockholders, basic |
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
|
$ |
0.60 |
Net income per share attributable
to common stockholders, diluted |
$ |
0.06 |
|
|
$ |
0.07 |
|
|
$ |
0.12 |
|
|
$ |
0.59 |
Weighted average number of shares
outstanding: |
|
|
|
|
|
|
|
Common stock |
|
26,739,791 |
|
|
|
26,508,061 |
|
|
|
26,706,824 |
|
|
|
26,478,171 |
Common stock equivalents – stock options |
|
2,789 |
|
|
|
224,778 |
|
|
|
— |
|
|
|
174,748 |
Diluted shares outstanding |
|
26,742,580 |
|
|
|
26,732,839 |
|
|
|
26,706,824 |
|
|
|
26,652,919 |
Non-GAAP Financial Measure
This news release includes references to the
Company’s non-GAAP financial measure “EBITDA.” EBITDA represents
earnings before interest, taxes, depreciation, and amortization, 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 and asset abandonment charges. 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, stock compensation expense, and abandonment charges.
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. 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 December 31, |
|
Year EndedDecember 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
1,568 |
|
|
$ |
1,985 |
|
|
$ |
3,265 |
|
|
$ |
15,810 |
|
Net income attributed to non-controlling interest |
|
3 |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
Interest, net: |
|
|
|
|
|
|
|
Consolidated |
|
(782 |
) |
|
|
(334 |
) |
|
|
(2,557 |
) |
|
|
(634 |
) |
Our share of interest expense from unconsolidated joint
ventures |
|
1,261 |
|
|
|
1,019 |
|
|
|
4,879 |
|
|
|
2,974 |
|
Total interest, net |
|
479 |
|
|
|
685 |
|
|
|
2,322 |
|
|
|
2,340 |
|
Income tax expense |
|
(1,296 |
) |
|
|
1,131 |
|
|
|
2,323 |
|
|
|
7,393 |
|
Depreciation and
amortization: |
|
|
|
|
|
|
|
Consolidated |
|
1,803 |
|
|
|
1,286 |
|
|
|
4,806 |
|
|
|
4,628 |
|
Our share of depreciation and amortization from unconsolidated
joint ventures |
|
1,413 |
|
|
|
1,281 |
|
|
|
5,418 |
|
|
|
4,618 |
|
Total depreciation and
amortization |
|
3,216 |
|
|
|
2,567 |
|
|
|
10,224 |
|
|
|
9,246 |
|
EBITDA |
$ |
3,964 |
|
|
$ |
6,367 |
|
|
$ |
18,134 |
|
|
$ |
34,787 |
|
Stock compensation
expense |
$ |
883 |
|
|
$ |
789 |
|
|
$ |
3,252 |
|
|
$ |
2,877 |
|
Adjusted EBITDA |
$ |
4,847 |
|
|
$ |
7,156 |
|
|
$ |
21,386 |
|
|
$ |
37,664 |
|
Tejon Ranch Co.Brett A. Brown, 661-248-3000Executive Vice
President, Chief Financial Officer
Pondel WilkinsonLaurie Berman,
310-279-5980lberman@pondel.com
RPM Public RelationsRae Pardini
Matson559.205.0721rae@rpm-pr.comRPM-PR.com
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