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Tejon Ranch Co. Announces First Quarter 2022 Financial Results

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Tejon Ranch Co
Tejon Ranch Co

TEJON RANCH, Calif., May 09, 2022 (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-months ended March 31, 2022.

“The momentum we created at our commerce center continues with the formation of another joint-venture with Majestic Realty Co., to construct an approximately 446,400 square foot industrial building within our ever-growing distribution hub located in Tejon Ranch Commerce Center (TRCC),” said Gregory S. Bielli, President and CEO of Tejon Ranch. “With the sale of a 12.3-acre land parcel in the first quarter to Dedeaux Properties, all of the land on the west side of TRCC is now fully absorbed. We plan to continue to build off this momentum as we work to complete our design efforts for the multi-family development adjacent to the Outlets at Tejon, with the start of construction planned for the end of 2022, transforming TRCC into a true mixed-use community.”

"The continued drought in California has brought additional opportunities for us to monetize our water assets, resulting in an increase in water transactions. Water sales from those transactions in the first quarter increased $3.9 million when compared to prior year.”

Real Estate Commercial/Industrial Highlights

  • TRCC Industrial portfolio, through the Company's joint venture partnerships, consists of 1.7 million square feet of gross leasable area (GLA) and is 100% leased.1

  • TRCC Commercial portfolio, wholly owned and through joint venture partnerships, consists of 575,401 square feet of GLA and is 89% leased.

  • New joint venture formation for the development, construction, lease-up, and management of an approximately 446,400 square foot industrial building located within TRCC-East

  • Design and engineering is underway for a multi-family residential community adjacent to the Outlets at Tejon, consisting of up to 495 apartments, with first occupancy expected in late 2023.

  • 629,000 square foot industrial building currently under construction with completion scheduled in the third quarter of 2022.

1 During the first quarter we received notice from a tenant of plans to vacate their current space, concurrently, we received a request from a second tenant wanting to move into a larger space. These two events will free up approximately 240,000 square feet of space during the second quarter.

First Quarter Financial Results

  • GAAP net income attributable to common stockholders for the first quarter of 2022 was $4.3 million, or net income per share attributed to common stockholders, basic and diluted, of $0.16, compared with a net loss attributable to common stockholders of $1.1 million, or net loss per share attributed to common stockholders, basic and diluted, of $0.04, for the first quarter of 2021.

  • Revenues and other income, for the first quarter of 2022, including equity in earnings of unconsolidated joint ventures were $23.2 million, compared with $11.1 million for the first quarter of 2021. Factors affecting the quarterly results included:

    • Commercial/industrial real estate development segment revenues totaled $7.3 million for the first three months of 2022, an increase of $5.1 million, or 230%, from $2.2 million for the first three months of 2021. The increase was primarily attributed to an industrial land sale to a third party.

    • Mineral resources segment revenues were $12.0 million for the three months ended March 31, 2022, an increase of $4.8 million, or 67%, from $7.2 million for the three months ended March 31, 2021. The dry 2021/2022 winter diminished water availability in California and eventually resulted in a State Water Project allocation of 5%. As a result, the Company generated $3.9 million in additional water sales during the quarter ended March 31, 2022. Comparatively the Company sold 6,970 acre-feet and 5,881 acre-feet as of March 31, 2022, and 2021, respectively. The remainder of the increase in revenue was attributed to the timing of property tax reimbursements from the Company's mineral leases.

    • Equity in earnings from the Company's joint ventures were $1.2 million for the three months ended March 31, 2022, an increase of $1.3 million, from losses of $0.1 million during the same period in 2021. The improvement was primarily attributed to the Company's Petro joint venture that saw an increase in overall traffic and fuel sales volumes when compared with the prior year. Additionally, the joint venture's full-service restaurants were open during the first quarter of 2022 but were closed due to COVID-19 mandates during the same period in 2021.

  • Adjusted EBITDA, a non-GAAP measure, was $11.3 million for the 2022 first quarter, an improvement from $3.0 million for the 2021 first quarter.

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 March 31, 2022, total capital, including debt, was approximately $514.6 million. As of March 31, 2022, the Company had cash and securities totaling approximately $56.2 million and $35.0 million available on its line of credit.

2022 Outlook:

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 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 commodity prices, production within its farming segment and mineral resources segment, and the timing of sales of land and the leasing of land within its industrial developments.

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.

The Company operates in a variety of land-based business segments, including farming, mineral resources, and ranch operations, as well as a commercial/industrial mixed-use master plan known as the Tejon Ranch Commerce Center, that is currently in operation focusing on leasing, commercial/industrial development, multi-family development, and sales. The Company also is in the process of developing three additional mixed-use master planned residential developments in southern California. When all four master planned developments are fully built out, Tejon Ranch will be home to 35,278 housing units, more than 35 million square feet of commercial/industrial space and 750 lodging units.

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. 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, the impact of COVID-19, 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.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share)
(Unaudited)

Three Months Ended March 31,

2022

2021

Revenues:

Real estate - commercial/industrial

$

7,349

$

2,228

Mineral resources

11,968

7,176

Farming

655

607

Ranch operations

1,048

1,043

Total revenues

21,020

11,054

Cost and Expenses:

Real estate - commercial/industrial

2,736

1,552

Real estate - resort/residential

423

553

Mineral resources

7,157

5,047

Farming

1,762

1,478

Ranch operations

1,315

1,187

Corporate expenses

2,415

2,291

Total expenses

15,808

12,108

Operating income (loss)

5,212

(1,054

)

Other Income:

Investment income

17

7

Other income, net

918

64

Total other income

935

71

Income (loss) from operations before equity in earnings of unconsolidated joint ventures

6,147

(983

)

Equity in earnings (losses) of unconsolidated joint ventures, net

1,213

(59

)

Income (loss) before income tax expense

7,360

(1,042

)

Income tax expense

3,046

21

Net income (loss)

4,314

(1,063

)

Net income (loss) attributable to non-controlling interest

7

(8

)

Net income (loss) attributable to common stockholders

$

4,307

$

(1,055

)

Net income (loss) per share attributable to common stockholders, basic

$

0.16

$

(0.04

)

Net income (loss) per share attributable to common stockholders, diluted

$

0.16

$

(0.04

)

Weighted average number of shares outstanding:

Common stock

26,431,989

26,313,722

Common stock equivalents

47,507

57,010

Diluted shares outstanding

26,479,496

26,370,732

TEJON RANCH CO. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

March 31, 2022

December 31, 2021

(unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

36,705

$

36,195

Marketable securities - available-for-sale

19,537

10,983

Accounts receivable

3,275

6,473

Inventories

8,270

5,702

Prepaid expenses and other current assets

4,235

3,619

Total current assets

72,022

62,972

Real estate and improvements - held for lease, net

17,207

17,301

Real estate development (includes $113,014 at March 31, 2022, and $112,063 at December 31, 2021, attributable to Centennial Founders, LLC, Note 15)

321,449

319,030

Property and equipment, net

51,426

50,699

Investments in unconsolidated joint ventures

37,348

43,418

Net investment in water assets

50,982

50,997

Other assets

1,594

1,619

TOTAL ASSETS

$

552,028

$

546,036

LIABILITIES AND EQUITY

Current Liabilities:

Trade accounts payable

$

4,271

$

4,545

Accrued liabilities and other

3,047

3,451

Deferred income

2,543

1,907

Income Taxes Payable

4,591

1,217

Current maturities of long-term debt

4,531

4,475

Total current liabilities

18,983

15,595

Long-term debt, less current portion

47,001

48,155

Long-term deferred gains

7,839

8,409

Deferred tax liability

3,596

2,898

Other liabilities

11,727

14,468

Total liabilities

89,146

89,525

Commitments and contingencies

Equity:

Tejon Ranch Co. Stockholders’ Equity

Common stock, $0.50 par value per share:

Authorized shares - 30,000,000

Issued and outstanding shares - 26,473,349 at March 31, 2022, and 26,400,921 at December 31, 2021

13,237

13,200

Additional paid-in capital

345,166

344,936

Accumulated other comprehensive loss

(5,032

)

(6,822

)

Retained earnings

94,142

89,835

Total Tejon Ranch Co. Stockholders’ Equity

447,513

441,149

Non-controlling interest

15,369

15,362

Total equity

462,882

456,511

TOTAL LIABILITIES AND EQUITY

$

552,028

$

546,036

Non-GAAP Financial Measure

This news 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 March 31,

($ in thousands)

2022

2021

Net income (loss)

$

4,314

$

(1,063

)

Net income (loss) attributable to non-controlling interest

7

(8

)

Net income (loss) attributable to common stockholders

4,307

(1,055

)

Interest, net

Consolidated

(17

)

(7

)

Our share of interest expense from unconsolidated joint ventures

591

624

Total interest, net

574

617

Income taxes

3,046

21

Depreciation and amortization:

Consolidated

967

965

Our share of depreciation and amortization from unconsolidated joint ventures

1,149

1,175

Total depreciation and amortization

2,116

2,140

EBITDA

10,043

1,723

Stock compensation expense

1,219

1,276

Adjusted EBITDA

$

11,262

$

2,999


Tejon Ranch Co.

Allen E. Lyda, 661-248-3000

Chief Operating Officer/Chief Financial Officer