TEJON RANCH, Calif.--(BUSINESS WIRE)-- Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real estate development and agribusiness company, today announced financial results for the fourth quarter and year-ended December 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 operation with nearly 6.0 million square feet completed and an additional 14.3 million square feet available for development. When these four master planned developments 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.
“We continue to make significant progress with our execution-stage assets, especially in the Tejon Ranch Commerce Center, or TRCC. With industrial sites ranging from 20,000 to 2 million square feet, the Company has the capacity and proven track record to rapidly deliver quality industrial buildings in a highly trafficked and desirable geographic area. In 2019 we completed construction of a 579,040 square foot industrial building at TRCC with our joint venture partner, Majestic Realty Co., two-thirds of which is already leased. We also saw a prime example of the value generation model we've been sharing with shareholders and the investment community over the past few years. The sale of land and a building held by one of our joint ventures generated approximately $11.7 million of free cash flow. As we continue to create and unlock value at TRCC, we can also redeploy capital to advance our master planned residential communities,” said Gregory S. Bielli, President and CEO.
“Our residential real estate side of the business also continues to advance,” said Bielli. “In 2019 we achieved considerable milestones with Kern County re-approving our Grapevine at Tejon Ranch project following a legal challenge, and also winning final approval from Los Angeles County for our Centennial at Tejon Ranch mixed-use residential real estate development. We are advancing each of our residential projects, even as we move into the litigation phase for Grapevine and Centennial. With Mountain Village, we are in the process of obtaining necessary permits, as well as exploring various capital structures that best align with the Company's core values and objectives. We look forward to making headway this year as we work towards the ultimate build-out of these master planned communities.”
Fourth-Quarter 2019 Financial Highlights
Fiscal 2019 Financial Highlights
Fiscal 2019 Operational Highlights
2020 Outlook:
The Company believes its capital structure provides a solid foundation for continued investment in ongoing and future real estate development projects. As of December 31, 2019, total capital and debt was approximately $507.3 million and the Company also had cash and securities totaling approximately $66.2 million and $35.0 million available on its line of credit.
The Company will continue to aggressively pursue development, leasing, sales, and investment within TRCC and in its joint ventures and will also continue to invest in its residential projects, including Mountain Villageat Tejon Ranch, Centennial at Tejon Ranch and Grapevine at Tejon Ranch.
During 2020, the Company will continue to invest funds in master project infrastructure, as well as vertical development within its active commercial and industrial developments. 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.
More information about Tejon Ranch Co. can be found online at http://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, 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 December 31, |
| Year Ended December 31, | |||||||||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 | |||||||||
Revenues: |
|
|
|
|
|
|
| |||||||||
Real estate - commercial/industrial | $ | 4,751 |
|
| $ | 2,182 |
|
| $ | 16,792 |
|
| $ | 8,970 |
| |
Mineral resources | 1,440 |
|
| 2,409 |
|
| 9,791 |
|
| 14,395 |
| |||||
Farming | 13,028 |
|
| 5,990 |
|
| 19,331 |
|
| 18,563 |
| |||||
Ranch operations | 1,039 |
|
| 1,067 |
|
| 3,609 |
|
| 3,691 |
| |||||
Total revenues from Operations | 20,258 |
|
| 11,648 |
|
| 49,523 |
|
| 45,619 |
| |||||
Operating Profits (Losses): |
|
|
|
|
|
|
| |||||||||
Real estate - commercial/industrial | 143 |
|
| 321 |
|
| 3,831 |
|
| 2,724 |
| |||||
Real estate - resort/residential | (375 | ) |
| (211 | ) |
| (2,247 | ) |
| (1,530 | ) | |||||
Mineral resources | 628 |
|
| 1,586 |
|
| 3,973 |
|
| 8,172 |
| |||||
Farming | 6,179 |
|
| (468 | ) |
| 4,080 |
|
| 2,535 |
| |||||
Ranch operations | (274 | ) |
| (294 | ) |
| (1,707 | ) |
| (1,760 | ) | |||||
Income from Operating Segments | 6,301 |
|
| 934 |
|
| 7,930 |
|
| 10,141 |
| |||||
Investment income | 267 |
|
| 364 |
|
| 1,239 |
|
| 1,344 |
| |||||
Other loss | (1,891 | ) |
| (19 | ) |
| (1,824 | ) |
| (59 | ) | |||||
Corporate expense | (2,837 | ) |
| (2,409 | ) |
| (9,361 | ) |
| (9,705 | ) | |||||
Income (loss) from operations before equity in earnings of unconsolidated joint ventures | 1,840 |
|
| (1,130 | ) |
| (2,016 | ) |
| 1,721 |
| |||||
Equity in earnings of unconsolidated joint ventures, net | 11,529 |
|
| 1,423 |
|
| 16,575 |
|
| 3,834 |
| |||||
Income before income tax expense | 13,369 |
|
| 293 |
|
| 14,559 |
|
| 5,555 |
| |||||
Income tax expense (benefit) | 3,660 |
|
| (13 | ) |
| 3,980 |
|
| 1,320 |
| |||||
Net income | 9,709 |
|
| 306 |
|
| 10,579 |
|
| 4,235 |
| |||||
Net income (loss) attributable to non-controlling interest | 2 |
|
| (1 | ) |
| (1 | ) |
| (20 | ) | |||||
Net income attributable to common stockholders | $ | 9,707 |
|
| $ | 307 |
|
| $ | 10,580 |
|
| $ | 4,255 |
| |
Net income per share attributable to common stockholders, basic | $ | 0.37 |
|
| $ | 0.01 |
|
| $ | 0.41 |
|
| $ | 0.16 |
| |
Net income per share attributable to common stockholders, diluted | $ | 0.37 |
|
| $ | 0.01 |
|
| $ | 0.40 |
|
| $ | 0.16 |
| |
Weighted average number of shares outstanding: |
|
|
|
|
|
|
| |||||||||
Common stock | 26,059,192 |
|
| 25,968,802 |
|
| 26,031,391 |
|
| 25,948,189 |
| |||||
Common stock equivalents – stock options | 96,621 |
|
| 14,758 |
|
| 117,724 |
|
| 27,715 |
| |||||
Diluted shares outstanding | 26,155,813 |
|
| 25,983,560 |
|
| 26,149,115 |
|
| 25,975,904 |
|
Non-GAAP Financial Measure
This news release includes references to the Company’s non-GAAP financial measure “EBITDA.” EBITDA represents earnings before interest, taxes, depreciation, and amortization, a non-GAAP financial measure, and is used by us and others as a supplemental measure of performance. We use Adjusted EBITDA to assess the performance of our 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 and asset abandonment charges. We believe Adjusted EBITDA provides investors relevant and useful information because it permits investors to view income from our operations on an unleveraged basis before the effects of taxes, depreciation and amortization, stock compensation expense, and abandonment charges. By excluding interest expense and income, EBITDA and Adjusted EBITDA allow investors to measure our performance independent of our capital structure and indebtedness and, therefore, allow for a more meaningful comparison of our performance to that of other companies, both in the real estate industry and in other industries. We believe that excluding charges related to share-based compensation facilitates a comparison of our 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 our control), and the assumptions and the variety of award types that a company can use. EBITDA and Adjusted EBITDA have limitations as measures of our performance. EBITDA and Adjusted EBITDA do not reflect our 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. Further, our 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 December 31, |
| Year Ended December 31, | |||||||||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 | |||||||||
Net income | $ | 9,709 |
|
| $ | 306 |
|
| $ | 10,579 |
|
| $ | 4,235 |
| |
Net income (loss) attributed to non-controlling interest | 2 |
|
| (1 | ) |
| (1 | ) |
| (20 | ) | |||||
Interest, net: |
|
|
|
|
|
|
| |||||||||
Consolidated | (267 | ) |
| (364 | ) |
| (1,239 | ) |
| (1,344 | ) | |||||
Our share of interest expense from unconsolidated joint ventures | 609 |
|
| 751 |
|
| 2,785 |
|
| 2,519 |
| |||||
Total interest, net | 342 |
|
| 387 |
|
| 1,546 |
|
| 1,175 |
| |||||
Income taxes (benefit) | 3,660 |
|
| (13 | ) |
| 3,980 |
|
| 1,320 |
| |||||
Depreciation and amortization: |
|
|
|
|
|
|
| |||||||||
Consolidated | 1,474 |
|
| 2,140 |
|
| 5,036 |
|
| 5,424 |
| |||||
Our share of depreciation and amortization from unconsolidated joint ventures | 988 |
|
| 1,156 |
|
| 4,135 |
|
| 4,328 |
| |||||
Total depreciation and amortization | 2,462 |
|
| 3,296 |
|
| 9,171 |
|
| 9,752 |
| |||||
EBITDA | 16,171 |
|
| 3,977 |
|
| 25,277 |
|
| 16,502 |
| |||||
Stock compensation expense | 1,268 |
|
| 647 |
|
| 3,198 |
|
| 3,248 |
| |||||
Asset abandonment charges | 1,604 |
|
| — |
|
| 1,604 |
|
| — |
| |||||
Adjusted EBITDA | $ | 19,043 |
|
| $ | 4,624 |
|
| $ | 30,079 |
|
| $ | 19,750 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200310005266/en/
Tejon Ranch Co.Robert D. Velasquez, 661-248-3000 Chief Financial Officer
Source: Tejon Ranch Co.