TEJON RANCH, Calif.--(BUSINESS WIRE)--Nov. 6, 2018--
Tejon Ranch Co., or the Company, (NYSE:TRC), a diversified real estate
development and agribusiness company, today announced financial results
for the three- and nine-months ended September 30, 2018.
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 14.8 million square feet available
for development. When all entitlements are approved, the Company's
current and future master planned developments will be home to just
under 35,000 housing units and more than 35 million square feet of
commercial/industrial space. To date, the Company has received
entitlement approvals for 15,450 housing units, 750 lodging units and
25.3 million square feet of commercial space at various levels of
approval.
"Tejon Ranch Co. achieved strong financial results in the third quarter
and continued to make solid progress with its real estate development
projects,” said Gregory S. Bielli, President and CEO. “This year's
pistachio crop yield of over four million pounds was a record high. The
pistachio crop, along with our other agricultural commodities, provided
the Company with a significant boost in earnings when compared to the
prior year. Water sales also contributed significantly, as our sales are
$6.7 million higher thus far in 2018 compared to the year prior,” Bielli
said.
"With respect to our development projects, the Los Angeles County
Regional Planning Commission recommended that the LA County Board of
Supervisors approve the Centennial Specific Plan,” Bielli noted. “Our
commercial center continues to expand its portfolio with the successful
lease of the remaining half of a 480,000-square-foot industrial building
to L'Oréal. Additionally, we formed a third joint venture with Majestic
Realty Co. to develop and operate a 580,000-square-foot industrial
building at TRCC-East."
Third Quarter Financial Results
-
Net income attributable to common stockholders for the third quarter
of 2018 was $3.5 million, or income per common share of $0.13,
compared with a net loss of $22,000, or a loss per common share of
$0.00, for the third quarter of 2017.
-
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the third quarter of 2018 were
$17.4 million, an increase of $3.7 million, or 27%, from $13.7 million
for the same period in 2017. Factors behind the increase include:
-
Record high pistachio yields in excess of 4,000,000 pounds improved
farming revenues $3.4 million. Of the 4,000,000 pounds harvested, the
Company sold 3,500,000 pounds of pistachios compared to 643,000 pounds
during the previous year. Yields for 2017 were lower given that 2017
was a down bearing crop year.
-
Equity in earnings from our unconsolidated joint ventures decreased
$0.1 million to $1.6 million. Factors affecting equity in earnings
include:
-
The Company's share of the operating results from TA/Petro
increased $0.2 million due to improving fuel margins resulting
from a 23% increase in fuel revenues.
-
The Company's share of the operating results from TRCC/Rock Outlet
Center decreased $0.4 million mostly related to higher operating
and loan interest costs.
Year-to-Date Financial Results
-
Net income attributable to common stockholders for the first nine
months of 2018 was $3.9 million, or income per common share of $0.15,
compared with a net loss of $2.1 million, or a loss per common share
of $0.10, for the first nine months of 2017.
-
Revenues and other income, including equity in earnings of
unconsolidated joint ventures, for the nine months of 2018 were $37.3
million, an increase of $10.2 million, or 38%, from $27.1 million for
the first nine months of 2017. Factors behind this increase include:
-
Moderate drought conditions in Kern County increased water sales
opportunities, leading to an improvement in the Company’s Mineral
Resources segment. The Company sold 7,442 acre-feet of water during
the first nine months of 2018, generating $8.0 million in revenue.
Water sales during the first nine months of 2017 totaled 939
acre-feet, generating $1.3 million.
-
Record high pistachio yields, as discussed within the quarter end
results, improved farming revenues by $3.2 million.
-
Equity in earnings from unconsolidated joint ventures decreased $1.1
million. Factors affecting equity in earnings include:
-
The Company's share of the operating results from TA/Petro
decreased $0.8 million due to lower fuel margins driven by higher
fuel costs that were not offset by a 15% increase in fuel revenues.
-
The Company's share of the operating results from TRCC/Rock Outlet
Center decreased $1.1 million mostly related to accelerating
amortization of lease intangibles driven by the removal of poor
performing tenants.
-
The Company saw improvements of $1.1 million from our TRC-MRC 2
joint venture stemming from the reduction in amortization costs
that were prevalent during the prior year.
2018 Operational Highlights
-
In January, the Company obtained approval from Kern County on the
first phase of the Farm Village which will serve as the “front door”
to Mountain Village.
-
During 2018, approval for expansion of the Foreign Trade Zone (FTZ)
was granted by the U.S. Department of Commerce. The expanded FTZ now
covers all the industrial sites within TRCC, an area totaling 1,094
acres. The FTZ designation allows the user to secure the many benefits
and cost reductions associated with streamlined movement of goods in
and out of the zone. This FTZ designation is further supplemented by
the Economic Development Incentive Policy (EDIP) adopted by the Kern
County Board of Supervisors. EDIP is aimed to expand and enhance the
County's competitiveness by taking affirmative steps to attract new
businesses and to encourage the growth and resilience of existing
businesses. The EDIP provides incentives such as tax breaks, building
supporting infrastructure, or workforce development.
-
The 480,000-square-foot industrial building constructed in 2017,
through a joint venture with Majestic Realty Co. was fully-leased up
in 2018, with half the space leased to Dollar General and the other
half to L'Oréal USA.
-
In August, the Company received a 4-1 vote from the Los Angeles County
Regional Planning Commission recommending that the LA County Board of
Supervisors approve the Centennial Specific Plan. The Company is
currently working with LA County to advance the application on to the
Board of Supervisors.
2018 Outlook:
The Company's capital structure provides a solid foundation for
continued investment in ongoing and future projects. As of September 30,
2018, total capital, including debt, was approximately $501.4 million.
The Company has cash and securities totaling approximately $79.6 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 (TRCC) and in its
joint ventures. The Company will also continue to invest in its
residential projects, including Mountain Village at Tejon Ranch,
advancing the entitlement of Centennial at Tejon Ranch and defending
litigation for Grapevine at Tejon Ranch.
During 2018, the Company will continue to invest funds in master project
infrastructure, as well as vertical development within its active
commercial and industrial development. 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
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 2018 due to the nature of its
current farming and real estate activities. The Company is currently in
the process of completing its wine grape and almond harvests. Thus far,
the Company expects almond yields to be slightly lower than the previous
year while wine grape yields will remain comparable to prior year. The
Company is also unable to predict the outcome of ongoing trade
discussions with foreign nations nor is the Company able to predict the
resulting impact on crop demand or pricing. Increased tariffs from China
and India which are major customers of almonds and pistachios, can make
American products non-competitive and push customers to switch to
another producing country.
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 our 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.
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.
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TEJON RANCH CO.
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(In thousands, except earnings per share)
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(Unaudited)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2018
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2017
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2018
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2017
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Revenues:
|
|
|
|
|
|
|
|
|
|
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Real estate - commercial/industrial
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$
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2,445
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|
|
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$
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2,432
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$
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6,788
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|
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$
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6,704
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Mineral resources
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1,355
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1,142
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11,986
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|
|
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4,662
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Farming
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10,836
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|
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7,466
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12,573
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|
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9,398
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Ranch operations
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|
796
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|
|
|
868
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|
|
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2,624
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|
|
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2,809
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Total revenues from Operations
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15,432
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11,908
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33,971
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23,573
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Operating Profits:
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|
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Real estate - commercial/industrial
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767
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1,117
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|
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2,403
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|
|
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1,744
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Real estate - resort/residential
|
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(471
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)
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|
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(271
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)
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|
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(1,319
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)
|
|
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(1,401
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)
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Mineral resources
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781
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|
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614
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6,586
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|
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2,281
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Farming
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4,295
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|
|
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(455
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)
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3,003
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(1,104
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)
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Ranch operations
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(557
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)
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|
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(285
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)
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(1,466
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)
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|
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(1,298
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)
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Income (loss) from Operating Segments
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4,815
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|
|
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720
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9,207
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|
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222
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Investment income
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351
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|
|
91
|
|
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980
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289
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Other loss, net
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(16
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)
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(2
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)
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(40
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)
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(291
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)
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Corporate expense
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(2,100
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)
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(2,223
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)
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(7,296
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)
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(7,342
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)
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Income (loss) from operations before equity in earnings of
unconsolidated joint ventures
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3,050
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(1,414
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)
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2,851
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(7,122
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)
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Equity in earnings of unconsolidated joint ventures, net
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1,592
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1,724
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2,411
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|
|
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3,512
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Income (loss) before income tax expense
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4,642
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|
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310
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|
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5,262
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(3,610
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)
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Income tax (benefit) expense
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1,155
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336
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1,333
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(1,468
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)
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Net income (loss)
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3,487
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(26
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)
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3,929
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(2,142
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)
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Net loss attributable to non-controlling interest
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(1
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)
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|
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(4
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)
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|
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(19
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)
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|
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(42
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)
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Net income (loss) attributable to common stockholders
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$
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3,488
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$
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(22
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)
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|
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$
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3,948
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$
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(2,100
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)
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Net income (loss) per share attributable to common stockholders,
basic
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$
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0.13
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$
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—
|
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$
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0.15
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$
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(0.10
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)
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Net income (loss) per share attributable to common stockholders,
diluted
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$
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0.13
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$
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—
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$
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0.15
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|
|
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$
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(0.10
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)
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Weighted average number of shares outstanding:
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Common stock
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25,959,546
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20,864,470
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25,941,243
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20,849,325
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Common stock equivalents
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20,881
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30,003
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31,716
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|
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43,951
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Diluted shares outstanding
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25,980,427
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20,894,473
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25,972,959
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20,893,276
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Non-GAAP Financial Measure
This news release includes references to the Company’s non-GAAP
financial measure “EBITDA.” EBITDA represents our 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 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. 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, and stock
compensation expense. 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, and they should not be considered as
alternatives to those indicators in evaluating performance or liquidity.
Further, our computation of EBITDA and Adjusted EBITDA may not be
comparable to similar measures reported by other companies.
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TEJON RANCH CO.
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Non-GAAP Financial Measures
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(Unaudited)
|
|
|
|
|
|
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Three Months Ended September 30,
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Nine Months Ended September 30,
|
|
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2018
|
|
|
2017
|
|
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2018
|
|
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2017
|
Net (loss) income
|
|
$
|
3,487
|
|
|
|
$
|
(26
|
)
|
|
|
$
|
3,929
|
|
|
|
$
|
(2,142
|
)
|
Net loss attributed to non-controlling interest
|
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(1
|
)
|
|
|
(4
|
)
|
|
|
(19
|
)
|
|
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(42
|
)
|
Interest, net:
|
|
|
|
|
|
|
|
|
|
|
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Consolidated
|
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(351
|
)
|
|
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(91
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)
|
|
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(980
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)
|
|
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(289
|
)
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Our share of interest expense from unconsolidated joint ventures
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|
712
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|
|
|
431
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|
|
1,768
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|
|
|
1,262
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Total interest, net
|
|
361
|
|
|
|
340
|
|
|
|
788
|
|
|
|
973
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Income taxes
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1,155
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|
|
|
336
|
|
|
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1,333
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|
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(1,468
|
)
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Depreciation and amortization:
|
|
|
|
|
|
|
|
|
|
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Consolidated
|
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1,604
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|
|
|
1,140
|
|
|
|
3,284
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|
|
|
3,422
|
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Our share of depreciation and amortization from unconsolidated joint
ventures
|
|
1,119
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|
|
|
1,333
|
|
|
|
3,172
|
|
|
|
3,970
|
|
Total depreciation and amortization
|
|
2,723
|
|
|
|
2,473
|
|
|
|
6,456
|
|
|
|
7,392
|
|
EBITDA
|
|
7,727
|
|
|
|
3,127
|
|
|
|
12,525
|
|
|
|
4,797
|
|
Stock compensation expense
|
|
825
|
|
|
|
877
|
|
|
|
2,601
|
|
|
|
2,571
|
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Adjusted EBITDA
|
|
$
|
8,552
|
|
|
|
$
|
4,004
|
|
|
|
$
|
15,126
|
|
|
|
$
|
7,368
|
|
|
|
|
|
|
|
|
|
|
|
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20181106005297/en/
Source: Tejon Ranch Co.
Tejon Ranch Co. Allen Lyda, 661-248-3000 Executive Vice
President & Chief Financial Officer
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