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Tejon Ranch Co. Announces Third Quarter 2024 Financial Results

TEJON RANCH, Calif., Nov. 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 and nine-months ended September 30, 2024.

“In the third quarter of 2024, we continued the momentum in key areas of the company’s real estate portfolio. The company continues to make progress toward the opening of our first multi-family apartment community, Terra Vista at Tejon, during the first half of 2025. The company also announced a new joint-venture with Dedeaux Properties to develop a 510,500 square foot building in Tejon Ranch Commerce Center. The Outlets at Tejon celebrated their 10th anniversary and currently is over 90% occupied.” said Gregory S. Bielli, President & CEO of Tejon Ranch Co.

Commercial/Industrial Real Estate Highlights

Third Quarter 2024 Financial Results

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.

Year-to-Date Financial Results

Liquidity and Capital Resources

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 advancing 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.

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 almond industry is estimating the 2024 almond crop at 2.6 billion pounds. This estimate along with a lower inventory carry forward has helped to improve pricing. The late spring rains negatively impacted 2024 grape production as the rains occurred during the grape bloom. The timing of the rains also increased cultural costs within grapes to fight higher levels of mildew in the vineyards.

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 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)

TEJON RANCH CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
 
  September 30, 2024   December 31, 2023
  (unaudited)    
ASSETS      
Current Assets:      
Cash and cash equivalents $ 27,369     $ 31,907  
Marketable securities – available-for-sale   13,892       32,556  
Accounts receivable   2,783       8,352  
Inventories   7,550       3,493  
Prepaid expenses and other current assets   4,053       3,502  
Total current assets   55,647       79,810  
Real estate and improvements – held for lease, net   16,340       16,609  
Real estate development (includes $123,302 at September 30, 2024 and $119,788 at December 31, 2023, attributable to CFL)   374,341       337,257  
Property and equipment, net   56,760       53,985  
Investments in unconsolidated joint ventures   34,429       33,648  
Net investment in water assets   56,024       52,130  
Other assets   4,496       4,084  
TOTAL ASSETS $ 598,037     $ 577,523  
       
LIABILITIES AND EQUITY      
Current Liabilities:      
Trade accounts payable $ 11,283     $ 6,457  
Accrued liabilities and other   6,565       3,214  
Deferred income   1,721       1,891  
Total current liabilities   19,569       11,562  
Revolving line of credit   59,942       47,942  
Long-term deferred gains   11,447       11,447  
Deferred tax liability   8,282       8,269  
Other liabilities   15,114       15,207  
Total liabilities   114,354       94,427  
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 – 26,814,680 at September 30, 2024 and 26,770,545 at December 31, 2023   13,408       13,386  
Additional paid-in capital   347,939       345,609  
Accumulated other comprehensive loss   (142 )     (171 )
Retained earnings   107,115       108,908  
Total Tejon Ranch Co. Stockholders’ Equity   468,320       467,732  
Non-controlling interest   15,363       15,364  
Total equity   483,683       483,096  
TOTAL LIABILITIES AND EQUITY $ 598,037     $ 577,523  
 
TEJON RANCH CO. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share amounts)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
    2024       2023       2024       2023  
Revenues:              
Real estate – commercial/industrial $ 3,002     $ 3,397     $ 8,497     $ 8,706  
Mineral resources   3,166       3,118       7,687       11,630  
Farming   3,242       2,642       4,249       4,852  
Ranch operations   1,446       1,052       3,518       3,384  
Total revenues   10,856       10,209       23,951       28,572  
Costs and Expenses:              
Real estate – commercial/industrial   2,088       2,137       6,005       5,517  
Real estate – resort/residential   328       367       2,316       1,079  
Mineral resources   1,812       2,000       5,043       6,991  
Farming   6,252       2,157       9,406       5,644  
Ranch operations   1,223       1,196       3,711       3,864  
Corporate expenses   2,945       2,315       8,794       6,824  
Total expenses   14,648       10,172       35,275       29,919  
Operating (loss) income   (3,792 )     37       (11,324 )     (1,347 )
Other Income:              
Investment income   528       700       1,843       1,775  
Other (loss) income, net   (69 )     (30 )     (210 )     272  
Total other income, net   459       670       1,633       2,047  
(Loss) income from operations before equity in earnings of unconsolidated joint ventures and income tax   (3,333 )     707       (9,691 )     700  
Equity in earnings of unconsolidated joint ventures, net   3,329       1,161       7,611       4,616  
(Loss) income before income tax   (4 )     1,868       (2,080 )     5,316  
Income tax expense (benefit)   1,832       2,215       (286 )     3,619  
Net (loss) income   (1,836 )     (347 )     (1,794 )     1,697  
Net loss attributable to non-controlling interest         (6 )     (1 )     (3 )
Net (loss) income attributable to common stockholders $ (1,836 )   $ (341 )   $ (1,793 )   $ 1,700  
Net (loss) income per share attributable to common stockholders, basic $ (0.07 )   $ (0.01 )   $ (0.07 )   $ 0.06  
Net (loss) income per share attributable to common stockholders, diluted $ (0.07 )   $ (0.01 )   $ (0.07 )   $ 0.06  
 

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.

TEJON RANCH CO.
Non-GAAP Financial Measures
(Unaudited)
 
  Three Months Ended September 30,   Nine Months Ended September 30,
($ in thousands)   2024       2023       2024       2023  
Net (loss) income $ (1,836 )   $ (347 )   $ (1,794 )   $ 1,697  
Net loss attributable to non-controlling interest         (6 )     (1 )     (3 )
Interest, net              
Consolidated   (528 )     (700 )     (1,843 )     (1,775 )
Our share of interest expense from unconsolidated joint ventures   1,532       1,216       4,625       3,618  
Total interest, net   1,004       516       2,782       1,843  
Income tax expense (benefit)   1,832       2,215       (286 )     3,619  
Depreciation and amortization:              
Consolidated   1,216       1,028       3,137       3,003  
Our share of depreciation and amortization from unconsolidated joint ventures   1,695       1,393       4,989       4,005  
Total depreciation and amortization   2,911       2,421       8,126       7,008  
EBITDA   3,911       4,811       8,829       14,170  
Stock compensation expense   1,732       864       4,086       2,369  
Adjusted EBITDA $ 5,643     $ 5,675     $ 12,915     $ 16,539  
 
 
 
Summary of Outstanding Debt as of September 30, 2024
(Unaudited)
 
 
 
Entity/Borrowing Amount % Share PRS Debt
Revolving line-of-credit $ 59,942 100%   $ 59,942  
Petro Travel Plaza Holdings, LLC   11,984 60%     7,190  
TRCC/Rock Outlet Center, LLC   20,626 50%     10,313  
TRC-MRC 1, LLC   21,642 50%     10,821  
TRC-MRC 2, LLC   21,414 50%     10,707  
TRC-MRC 3, LLC   32,952 50%     16,476  
TRC-MRC 4, LLC   61,144 50%     30,572  
TRC-MRC 5, LLC   52,984 50%     26,492  
Total $ 282,688   $ 172,513  
 
Capitalization and Debt Ratios
(Unaudited)
 
  September 30, 2024
Period End Share Price $ 17.55  
Outstanding Shares   26,814,680 
Equity Market Capitalization as of Reporting Date $ 470,598  
Total Debt including PRS Unconsolidated Joint Venture Debt $ 172,513  
Total Capitalization $ 643,111  
Debt to total capitalization   26.8 %
Net debt, including PRS unconsolidated joint venture debt, to TTM adjusted EBITDA   7.4 
       

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

Tejon Ranch Co.
Nicholas Ortiz 661-663-4212
Senior Vice President, Corporate Communications & Public Affairs


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