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Farmland Partners Inc. Reports Third Quarter 2021 Results

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Cision

DENVER, Oct. 27, 2021 /PRNewswire/ -- Farmland Partners Inc. (NYSE: FPI) ("FPI" or the "Company") today reported financial results for the three and nine months ended September 30, 2021.

Selected 2021 Highlights

During the nine months ended September 30, 2021, the Company:

  • recorded net income of $(3.1) million, $3.8 million excluding litigation-related items1, compared to $1.2 million, $1.9 million excluding litigation related items2, for the same period in 2020;

  • recorded AFFO of $(8.5) million, $(1.6) million excluding litigation-related items1, compared to $(3.2) million, $(2.4) million excluding litigation related items2, for the same period in 2020;

  • completed five acquisitions, for total consideration of $31.0 million;

  • completed seventeen property dispositions, for total consideration of $31.1 million and total gain on sale of $3.4 million;

  • retained property management for ten out of seventeen disposed properties and closed an additional acquisition in the third quarter, growing the asset management business's assets under management to over $50 million; and

  • sold 1,959,512 shares of common stock at an average price of $13.12 for aggregate net proceeds of $25.4 million under the ATM Program.

__________________________


1

For the nine months ended September 30, 2021, legal and accounting expense included $7.4 million related to litigation and revenue included $0.6 million of litigation settlement proceeds related to Rota Fortunae, resulting in a net impact of $6.9 million.


2

For the nine months ended September 30, 2020, legal and accounting expense included $0.8 million related to litigation.

The Company also:

  • announced the conversion of its 6.00% Series B Preferred Stock into shares of common stock effective October 4, 2021 (FPI press release);

  • reopened its loan program to enhance farmers' access to liquidity;

  • experienced strong farmland values with accelerating appreciation, especially in row crop regions;

  • showed substantial increases in lease renewal rates, reflecting increased farmer profitability; and

  • reached a settlement with Quinton Mathews regarding the falsity of claims that were used to launch the "short and distort" scheme targeting FPI, its management, and its stockholders (FPI press release).

CEO Comments

Paul A. Pittman, Chairman and CEO said: "This was another solid quarter for FPI, but for the litigation expense. We converted the Series B Preferred Stock to common stock after quarter-end, a transaction that creates value for shareholders by improving cash flow, reducing leverage, and increasing equity market capitalization. Strong farmer profits are driving our 2021 lease renewals to an increase of over 10% through approximately 70% of the year's renewals. We are actively pursuing investment opportunities and building a strong pipeline of potential transactions."

Macro Comments

Farmers, particularly in the row crop sector, are experiencing strong profitability driven by increased exports to China and production problems in other parts of the world.

  • Farm Sector Income: According to a USDA report published in September, net cash farm income is forecast to increase by 21.5% to $134.7 billion in 2021.

  • Farmland Appreciation: According to the Chicago Fed's August 2021 AgLetter, the value of good farmland in Illinois increased by 12% from July 2020 to July 2021. Farmland values for the Seventh Federal Reserve District had their largest gain in eight years.

Financial and Operating Results

  • The table below shows financial and operating results for the three months ended September 30, 2021 and 2020. The values are shown as reported and after adjusting for litigation items.
















As reported


Adjusted for litigation (1)



For the three months ended


For the three months ended



September 30,


September 30,

Financial Results:


2021


2020


2021


2020

Net Income (Loss)


$

(2,669)


$

561


$

(439)


$

550

Net income (loss) per share available to common stockholders


$

(0.17)


$

(0.09)


$

(0.11)


$

(0.09)

AFFO


$

(3,236)


$

(1,410)


$

(1,006)


$

(1,421)

AFFO per diluted weighted average share


$

(0.09)


$

(0.04)


$

(0.03)


$

(0.05)

Adjusted EBITDAre


$

3,707


$

5,874


$

5,937


$

5,863














Operating Results:













Total Operating Revenues


$

10,105


$

10,604


$

10,105


$

10,604

Operating Income


$

1,434


$

3,649


$

3,664


$

3,638

Net Operating Income (NOI)


$

8,112


$

8,643


$

8,112


$

8,643
















(1)

Litigation related expense for the three months ended September 30, 2021 and 2020 of $2.2 million and $0.0 million, respectively. There was no revenue from litigation settlement proceeds for the three months ended September 20, 2021 or 2020.

  • The table below shows financial and operating results for the nine months ended September 30, 2021 and 2020. The values are shown as reported and after adjusting for litigation items.
















As reported


Adjusted for litigation (1)



For the nine months ended


For the nine months ended



September 30,


September 30,

Financial Results:


2021


2020


2021


2020

Net Income (Loss)


$

(3,055)


$

1,153


$

3,813


$

1,912

Net income (loss) per share available to common stockholders


$

(0.39)


$

(0.28)


$

(0.18)


$

(0.26)

AFFO


$

(8,493)


$

(3,185)


$

(1,625)


$

(2,426)

AFFO per diluted weighted average share


$

(0.26)


$

(0.10)


$

(0.05)


$

(0.08)

Adjusted EBITDAre


$

12,219


$

19,296


$

19,087


$

20,055














Operating Results:













Total Operating Revenues


$

31,693


$

32,771


$

32,243


$

32,771

Operating Income


$

5,490


$

12,628


$

12,358


$

13,387

Net Operating Income (NOI)


$

26,061


$

27,131


$

26,611


$

27,131
















(1)

Litigation related expense for the nine months ended September 30, 2021 and 2020 of $7.4 million and $0.8 million, respectively. Revenue for the nine months ended September 30, 2021 and 2020 included $0.6 million and $0.0 million, respectively, of litigation settlement proceeds related to Rota Fortunae resulting in a net impact of $6.9 million and $0.8 million, respectively.

  • See "Non-GAAP Financial Measures" for complete definitions of AFFO, Adjusted EBITDAre, and NOI and the financial tables accompanying this press release for reconciliations of net income to AFFO, Adjusted EBITDAre and NOI.

CEO Comments on Litigation

Mr. Pittman stated further: "The continued legal spend on the pending litigation is very frustrating, especially the defense of the meritless class action and derivative claims. We were hopeful that the class action lawyers and plaintiffs would drop their baseless claims once Quinton Mathews (a.k.a. Rota Fortunae) made it clear that his false and defamatory statements drove down FPI's stock price, allowing Mr. Mathews and his clients, including the hedge fund who focused his attention on FPI, to profit as a result of a 'short and distort' scheme. Unfortunately, that did not occur, and the Company has no choice but to continue to vigorously defend itself against these frivolous and unsubstantiated claims and restore its reputation. We have already absorbed the discovery cost in the class action, which is a substantial cost in all litigation, and remain very optimistic that we will dispose of the class action and derivative litigation on motion without trials. Based on our assessment of the case and its status now, while we may have a couple of more quarters before the class action legal battle is completed, we believe the bulk of the spend on the class action is behind us."

Acquisition and Disposition Activity

  • During the nine months ended September 30, 2021, the Company completed five acquisitions for total consideration of $31.0 million.

  • During the nine months ended September 30, 2021, the Company completed the disposal of seventeen properties for total consideration of $31.1 million and total gain on sale of $3.4 million. The Company retained property management for ten of the disposed assets.

Balance Sheet

  • During the nine months ended September 30, 2021, the Company repurchased 25,073 shares of Series B preferred stock at a weighted average price of $25.92 for an aggregate purchase price of $0.7 million.

  • During the nine months ended September 30, 2021, the Company sold 1,959,512 shares of common stock at an average price of $13.12 for aggregate net proceeds of $25.4 million under the ATM Program.

  • On September 28, 2021, the Company announced the conversion of its 6.00% Series B Preferred Stock into shares of the Company's common stock, which was effective on October 4, 2021.

  • As the date of this press release, the Company had 46,419,864 shares of common stock outstanding on a fully diluted basis, after the conversion of its 6.00% Series B Preferred Stock into share of the Company's common stock.

  • The Company had total debt outstanding of $501.0 million at September 30, 2021, compared to total debt outstanding of $508.2 million at December 31, 2020.

Dividend Declarations

  • The Company's Board of Directors declared a quarterly cash dividend of $0.05 per share of common stock and per Class A Common OP unit. The dividends are payable on January 18, 2022, to stockholders and common unit holders of record on January 3, 2022.

Conference Call Information

The Company has scheduled a conference call on October 28, 2021 at 11:00 a.m. (Eastern Time) to discuss the financial results and provide a company update.

The call can be accessed by dialing 1-844-200-6205 (USA), 1-833-950-0062 (Canada), or 1-929-526-1599 (other locations) and referencing the Farmland Partners Inc. Third Quarter 2021 Earnings Conference Call or using the access code 070780. The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of the Company's website, www.farmlandpartners.com.

A replay of the conference call will be available beginning shortly after the end of the event until November 9, 2021, by dialing 1-866-813-9403 (USA), 1-226-828-7578 (Canada), or 1-929-458-6194 (other locations) and using the access code 118846. A replay of the webcast will also be accessible on the Investor Relations section of the Company's website for a limited time following the event.

About Farmland Partners Inc.

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owns and/or manages approximately 167,000 acres in 17 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, South Dakota and Virginia. We have approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014. Additional information: www.farmlandpartners.com or (720) 452-3100.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the federal securities laws, including, without limitation, statements with respect to our outlook, proposed and pending acquisitions and dispositions, the benefits of the conversion of the Company's Series B Preferred Stock to common stock, the potential impact of trade disputes and recent extreme weather events on the Company's results, financing activities, crop yields and prices and anticipated rental rates. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" or similar expressions or their negatives, as well as statements in future tense. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: general volatility of the capital markets and the market price of the Company's common stock, changes in the Company's business strategy, availability, terms and deployment of capital, the Company's ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, availability of qualified personnel, changes in the Company's industry, interest rates or the general economy, adverse developments related to crop yields or crop prices, the degree and nature of the Company's competition, the timing, price or amount of repurchases, if any, under the Company's share repurchase program, the ability to consummate acquisitions or dispositions under contract and the other factors described in the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, and the Company's other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.








Farmland Partners Inc.

Consolidated Balance Sheets

As of September 30, 2021 (unaudited) and December 31, 2020 (audited)

(in thousands except per share amounts)








September 30,


December 31,



2021


2020

ASSETS







Land, at cost


$

931,803


$

924,952

Grain facilities



11,282



12,091

Groundwater



10,214



10,214

Irrigation improvements



52,703



53,887

Drainage improvements



12,606



12,805

Permanent plantings



53,741



54,374

Other



6,783



8,167

Construction in progress



10,153



9,284

Real estate, at cost



1,089,285



1,085,774

Less accumulated depreciation



(37,082)



(32,654)

Total real estate, net



1,052,203



1,053,120

Deposits



2,155



Cash



21,373



27,217

Assets held for sale



518



Notes and interest receivable, net



6,128



2,348

Right of use asset



142



93

Deferred offering costs



76



Deferred financing fees, net



22



87

Accounts receivable, net



7,221



4,120

Inventory



1,705



1,117

Equity method investments



3,424



Prepaid and other assets



1,919



2,889

TOTAL ASSETS


$

1,096,886


$

1,090,991








LIABILITIES AND EQUITY







LIABILITIES







Mortgage notes and bonds payable, net


$

499,533


$

506,625

Lease liability



142



93

Dividends payable



1,715



1,612

Derivative liability



1,239



2,899

Accrued interest



3,103



3,446

Accrued property taxes



2,588



1,817

Deferred revenue



31



37

Accrued expenses



12,767



8,272

Total liabilities



521,118



524,801








Commitments and contingencies (See Note 8)














Series B Participating Preferred Stock, $0.01 par value, 6,037,500 shares authorized; 5,806,797
shares issued and outstanding at September 30, 2021, and 5,831,870 at December 31, 2020



139,116



139,766

Redeemable non-controlling interest in operating partnership, Series A preferred units



119,633



120,510








EQUITY







Common stock, $0.01 par value, 500,000,000 shares authorized; 32,942,696 shares issued and
outstanding at September 30, 2021, and 30,571,271 shares issued and outstanding at December 31,
2020



319



297

Additional paid in capital



374,966



345,870

Retained earnings (deficit)



(11,066)



1,037

Cumulative dividends



(59,579)



(54,751)

Other comprehensive income



(284)



(2,380)

Non-controlling interests in operating partnership



12,663



15,841

Total equity



317,019



305,914








TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS IN OPERATING
PARTNERSHIP AND EQUITY


$

1,096,886


$

1,090,991














Farmland Partners Inc.

Consolidated Statements of Operations

For the three and nine months ended September 30, 2021 and 2020

(unaudited, in thousands except per share amounts)
















For the Three Months
Ended


For the Nine Months Ended



September 30,


September 30,



2021


2020


2021


2020

OPERATING REVENUES:













Rental income


$

8,850


$

8,701


$

27,400


$

27,916

Tenant reimbursements



861



911



2,638



2,655

Crop sales



262



748



715



1,445

Other revenue



132



244



940



755

Total operating revenues



10,105



10,604



31,693



32,771














OPERATING EXPENSES













Depreciation, depletion and amortization



1,911



1,979



5,731



5,982

Property operating expenses



1,993



1,961



5,632



5,640

Cost of goods sold



417



1,332



1,334



2,643

Acquisition and due diligence costs



5





5



11

General and administrative expenses



1,746



1,395



5,258



4,248

Legal and accounting



2,599



287



8,241



1,617

Other operating expenses





1



2



2

Total operating expenses



8,671



6,955



26,203



20,143

OPERATING INCOME



1,434



3,649



5,490



12,628














OTHER (INCOME) EXPENSE:













Other (income) expense



(8)



25



(59)



113

(Income) loss from equity method investment



(15)





(15)



(Gain) loss on disposition of assets



112



...