Market Overview

Tejon Ranch Co. Reports Second Quarter and Year-to-Date 2019 Results of Operations

Share:

Tejon Ranch Co., (the Company), (NYSE:TRC), a diversified real estate development and agribusiness company, today announced financial results for the three- and six-months ended June 30, 2019.

The Company is 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 construction with nearly 6.0 million square feet already developed and an additional 14.3 million square feet available for development. When all entitlements are approved and the communities 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.

"With last April's final approval by Los Angeles County, for our Centennial master planned community, we now look forward to advancing each of these projects through their various stages to ultimate build-out. This will include prevailing in litigation and successfully navigating the ever-changing regulatory environment in California," said Gregory S. Bielli, President and CEO of Tejon Ranch Co. "Californians are struggling with a housing shortage and Tejon Ranch is positioned to be part of the solution."

Second Quarter Financial Results

  • Net income attributable to common stockholders for the second quarter of 2019 was $0.7 million, or net income per share attributed to common stockholders, basic and diluted, of $0.03, compared with a net loss attributable to common stockholders of $1.0 million, or net loss per share attributed to common stockholders, basic and diluted, of $0.04, for the second quarter of 2018.
  • Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the second quarter of 2019 were $11.3 million, an increase of $5.2 million, or 85%, from $6.1 million for the same period in 2018. Factors affecting the quarterly results include:
    • Commercial/industrial revenues improved $4.4 million, primarily as a result of a land contribution to the Company's TRC-MRC 3 joint venture.
    • Earnings from the Company's joint ventures improved $1.3 million, $1.2 million of which is attributed to strong operating results at TA/Petro, as a result of improved fuel margins.
    • Mineral resources revenues decreased $0.8 million primarily as a result of a water sales price adjustment on water sales earned during the three months ended March 31, 2019. However, based on contractual terms of the sale, an adjustment to the price per acre-foot was made during the second quarter.

Year-to-Date Financial Results

  • Net income attributable to common stockholders for the first six months of 2019 was $0.8 million, or net income per share attributed to common stockholders, basic and diluted, of $0.03, compared with net income attributable to common stockholders of $0.5 million, or net income per share attributed to common stockholders, basic and diluted, of $0.02, for the first six months of 2018.
  • Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the first six months of 2019 were $23.2 million, an increase of $3.2 million, or 16%, from $20.0 million for the same period in 2018. Factors affecting the year-to-date results include:
    • Commercial/industrial revenues improved $5.1 million, primarily as a result of a land contribution to the Company's TRC-MRC 3 joint venture.
    • Earnings from the Company's joint ventures improved $2.0 million, $1.8 million of which is attributed to strong operating results at TA/Petro, as a result of strong fuel margins.
    • Mineral resources revenues decreased $3.8 million as a result of the strong California winter rainfall, which reduced water sales opportunities. Comparatively, the Company sold 4,445-acre feet and 7,442-acre feet of water as of June 30, 2019 and 2018, respectively.

2019 Operational Highlights

  • The Company's TRC-MRC 3 joint venture, a partnership with Majestic Realty Co., commenced construction of a 579,040 square foot industrial building. The building is expected to be completed during the fourth quarter and is 67% leased.
  • The Company received final approval for its Centennial mixed-use residential community including the 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 included a Development Agreement between Los Angeles County, Centennial and the Company, 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 June 30, 2019, total capital, including debt, was approximately $499.0 million. The Company has cash and securities totaling approximately $60.0 million and $30.0 million available on its line of credit.

The Company will continue to aggressively pursue development, leasing, and investment within the 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 for Mountain Village at Tejon Ranch, advancing re-entitlement efforts for Grapevine at Tejon Ranch and defending against lawsuits filed against the County of Los Angeles and the Los Angeles County Board of Supervisors' 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. During 2019, the Company experienced extended heavier rainfall and colder temperatures during the almond bloom period than 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 because of above average winter rain and snow fall which increased the California State Water Project water allocation to 75%.

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 June 30,

 

Six Months Ended June 30,

 

2019

 

2018

 

2019

 

2018

Revenues:

 

 

 

 

 

 

 

Real estate - commercial/industrial

$

6,595

 

 

$

2,189

 

 

$

9,421

 

 

$

4,343

 

Mineral resources

660

 

 

1,500

 

 

6,792

 

 

10,631

 

Farming

886

 

 

542

 

 

1,701

 

 

1,737

 

Ranch operations

805

 

 

839

 

 

1,694

 

 

1,828

 

Total revenues from Operations

8,946

 

 

5,070

 

 

19,608

 

 

18,539

 

Operating Income (Loss):

 

 

 

 

 

 

 

Real estate - commercial/industrial

2,002

 

 

801

 

 

3,036

 

 

1,636

 

Real estate - resort/residential

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com