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Tejon Ranch Co. Announces First Quarter 2019 Financial Results

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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, 2019.

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 execution with more than 5.0 million square feet
already developed and an additional 14.3 million square feet available
for development. When all entitlements are approved, the Company's
current and future master planned developments will be home to 34,783
housing units, more than 35 million square feet of commercial/industrial
space and 750 lodging units.

"We achieved a considerable milestone with the final approval by the Los
Angeles County Board of Supervisors of our Centennial at Tejon Ranch
mixed-used residential development," said Gregory S. Bielli, President
and CEO of Tejon Ranch Co. "Now, all of our master planned developments
have received their initial legislative approval and we look forward to
advancing each of these projects through their various stages to
ultimate build-out. We are also pleased to see continuing demand,
especially out of the Los Angeles basin, for our industrial product at
the Tejon Ranch Commerce Center. To lease more than two-thirds of a
building, even as you're just breaking ground, is testament to the
market's favorable view of TRCC," Bielli added.

First Quarter Financial Results

  • Net income attributable to common stockholders for the first quarter
    of 2019 was $0.1 million, or net income per share attributed to common
    stockholders, basic and diluted, of $0.00, compared with $1.5 million,
    or net income per share attributed to common stockholders, basic and
    diluted, of $0.06, for the first quarter of 2018.
  • Revenues and other income, including equity in earnings of
    unconsolidated joint ventures, for the first quarter of 2019 were
    $11.9 million, a decrease of $2.0 million, or 14%, from $13.9 million
    for the same period in 2018. Factors affecting first-quarter results
    include:
    • Strong California winter rainfall reduced water sales
      opportunities, causing a decrease in mineral resources revenues of
      $3.0 million. Comparatively, the Company sold 4,445 acre feet and
      7,442 acre feet of water as of March 31, 2019 and 2018,
      respectively. The aforementioned decrease in mineral resources
      revenues was partially offset by an increase in commercial
      revenues of $0.7 million primarily driven by an increase of $0.4
      million in spark spread revenues from the Company's Pastoria
      Energy Facility lease.
    • The Company's share of earnings from its joint ventures for the
      first three months of 2019 was $0.9 million, an increase of $0.7
      million, or 350%, from $0.2 million for the same period in 2018.
      Within this increase, $0.6 million was attributed to an increase
      in the Company's share of earnings from its TA/Petro joint venture
      driven by improved fuel margins. Comparatively diesel margins were
      $0.36 and $0.17 per gallon as of March 31, 2019 and 2018,
      respectively. Comparatively, gasoline margins were $0.62 and $0.45
      per gallon as of March 31, 2019 and 2018, respectively.

2019 Operational Highlights

  • The Company's TRC-MRC 3 joint venture, a partnership with Majestic
    Realty Co., has commenced construction of a 579,040 square foot
    industrial building. The building is already 67% leased and the tenant
    is expected to take occupancy in the fourth quarter of 2019.
  • The Company received final approval of its Centennial mixed-use
    residential community upon completion of the finding of facts and the
    adoption of other resolutions by the Los Angeles County Board of
    Supervisors on April 30, 2019. This also includes a Development
    Agreement between Los Angeles County and Centennial, which provides
    the Company with vested rights to build the project as approved for 30
    years. With this approval, Centennial at Tejon Ranch achieved local
    legislative approval for the building of 19,333 residential units and
    more than 10.1 million square feet of commercial space.

2019 Outlook:

The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of March 31,
2019, total capital, including debt, was approximately $499.6 million.
The Company has cash and securities totaling approximately $68.2 million
and $30.0 million available on its line of credit.

The Company will continue to aggressively pursue development, leasing,
and investment within Tejon Ranch Commerce Center and in its joint
ventures. The Company will also continue to invest in its residential
projects, including the engineering necessary to advance approved tract
maps to a final map status, as well as defining potential capital
funding sources for Mountain Village at Tejon Ranch, advancing
re-entitlement efforts for Grapevine at Tejon Ranch and preparing for
permit applications and potential litigation following Los Angeles
County's approval of Centennial 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.

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 the timing of sales of land and the leasing of
land within its industrial developments.

The Company believes the variability of its quarterly and annual
operating results will continue during 2019 due to the nature of its
current farming and real estate activities. Nut and grape crop markets
are particularly sensitive to the size of each year's world crop and the
demand for those crops. Large crops in California and abroad can rapidly
depress prices. Weather conditions can impact the number of tree and
vine dormant hours, which are integral to tree and vine growth. The
Company will not know the impact of current weather conditions on 2019
production until the early summer of 2019. Thus far, the Company has
experienced extended heavier rainfall and colder temperatures during the
almond bloom period when compared to the 2017-2018 winter, which could
negatively impact 2019 almond production. In addition, 2019 is the
alternative bearing cycle for our pistachio trees and a lower than
average crop is anticipated, especially compared to our record high
yields in 2018. Additionally, increased tariffs from China and India,
which are major customers of almonds and pistachios, can make American
products less competitive and push customers to switch to another
producing country.

Water sales opportunities for the remainder of 2019 will be limited
based on winter rain and snow levels, as well as the California State
Water Project, or SWP, water allocations being at a 70% level.

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 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,
2019   2018
Revenues:
Real estate - commercial/industrial $ 2,826 $ 2,154
Mineral resources 6,132 9,131
Farming 815 1,195
Ranch operations 889   989  
Total revenues from Operations 10,662 13,469
Operating Income (Loss):
Real estate - commercial/industrial 1,034 835
Real estate - resort/residential (648 ) (415 )
Mineral resources 2,300 4,900
Farming (783 ) (643 )
Ranch operations (461 ) (400 )
Income from Operating Segments 1,442   4,277  
Investment income 349 283
Other loss, net 26 (14 )
Corporate expense (2,474 ) (2,732 )
(Loss) income from operations before equity in earnings of
unconsolidated joint ventures
(657 ) 1,814
Equity in earnings of unconsolidated joint ventures, net 876   167  
Income before income tax expense 219 1,981
Income tax expense 95   526  
Net income 124 1,455
Net income (loss) attributable to non-controlling interest 5  
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