TEJON RANCH, Calif.--(BUSINESS WIRE)--Nov. 7, 2014--
Tejon Ranch Co. (NYSE:TRC) today released the results of operations for
the nine months ended September 30, 2014, with the Company showing net
income attributable to common stockholders of $3,739,000, or $0.18 per
common share, compared to net income attributable to common stockholders
of $4,991,000, or $0.25 per common share, for the same period in 2013.
Revenue from operations for the nine months ended September 30, 2014 was
$36,708,000, compared to $32,363,000 of revenue for the same period
during 2013. All per share references in this release are presented on a
fully diluted basis.
For the third quarter ended September 30, 2014, the Company had net
income attributable to common stockholders of $1,752,000, or $0.08 per
common share, compared to net income attributable to common stockholders
of $2,292,000, or $0.11 per common share, for the third quarter of 2013.
Revenue from operations for the third quarter of 2014 was $13,852,000
compared to $15,128,000 of revenue during the same period of 2013.
Results of Operations for the First Nine Months of 2014:
Total operating revenue increased $4,345,000, or 13%, during the first
nine months of 2014, as compared to the same period in 2013, largely due
to improved mineral resources revenues that were partially offset by
reduced farming revenues and commercial/industrial revenues.
Mineral resource segment revenues increased $6,746,000, or 84%, during
the first nine months of 2014, compared to the same period in 2013, due
primarily to water sales totaling $7,702,000. During 2013, there were no
water sales. In addition, cement and rock and aggregate royalties
increased $428,000 as a result of expanded production driven by road
construction in the region. These improvements were partially offset by
an $845,000 decrease, or 14%, in oil royalty revenue stemming from lower
production from older wells, the timing of new wells coming on-line in
the second and third quarter of 2014, and the timing of completion of
the expansion of lessees’ production facilities. We also saw a decline
in oil leasehold payments of $488,000 when compared to 2013 due to a
lessee entering the drilling phase of their lease.
The decline in farming revenue of $1,984,000, or 13%, during the first
nine months of 2014, compared to the same period in 2013, is primarily
due to a decrease in production across all crops resulting from various
weather related conditions such as a mild winter, which impacted tree
and vine dormant time and very hot weather in early summer. Drought
conditions within California did not impact our production levels
because we had adequate water supplies for our farming activities.
Almond revenue declined $1,385,000, or 21%, due to a decrease in pounds
sold related to the 2014 crop and too much lower prior year crop carry
forward sales as compared to the same period in 2013. Pistachio revenues
decreased $765,000, or 11%, as a result of a 16% decline in pounds sold
primarily due to reduced production. These reductions in pounds sold
were partially offset by price increases of 10% to 20% on almonds and
pistachios. Wine grape revenue increased $130,000, or 11%, compared to
2013 due to an increase in prices.
Commercial/industrial revenues declined $322,000, or 4% compared to the
same period in 2013 as a result of lower percentage rent from the
Calpine power plant lease being partially offset by an improvement in
development fees from the construction of the outlet center.
More than offsetting the improvement in revenues described above is an
increase in operating expenses of $5,977,000, or 20%, during the first
nine months of 2014, compared to the same period in 2013. The increase
in operating expense is mainly due to increases in mineral resource
expense coming from water cost of sales of $4,523,000 and higher water
contract amortization of $482,000 when compared to the same period in
2013. In addition, we saw increased corporate general and administrative
expense due to higher stock compensation expense during 2014, as
compared to 2013’s lower expense that was largely due to the reversal in
2013 of $2,271,000 of previously recorded stock compensation expense
related to unvested awards that would not vest related to the retirement
of the Company’s then CEO at the end of 2013. These increases in
operating expense were partially offset by reduced farming expenses of
$1,075,000 due to lower cost of sales tied to reduced production and
sales volume related to the 2014 harvest crop.
Overall, net operating income declined $1,632,000, or 54%, compared to
the same period in 2013 as a result of the net increase in operating
expense as described above. This decline in net operating income was
partially offset by a $373,000 improvement in equity in earnings of
unconsolidated joint ventures as we saw improvements in our TA/Petro
joint venture and began to recognize earnings from the Tejon/Rock Outlet
Center LLC joint venture. The net result of operations for the first
nine months of 2014 compared to the same period in 2013 resulted in a
$1,252,000, or 25%, decline in net income attributable to common
stockholders.
Results of Operations for the Third Quarter of 2014:
Revenue declined $1,276,000, or 8%, due primarily to lower farming
revenue and reduced commercial/industrial revenues.
Farming revenues fell $764,000, or 8%, during the third quarter of 2014
compared to the same period in 2013 primarily due to a decline of
$1,630,000, or 12%, in pistachio revenue because of a decline in pounds
sold as a result of lower production, as discussed above, with that
being partially offset by higher prices on almonds and wine grapes.
Prices increased on these crops from 17% to 30% over the prior year.
Commercial/industrial revenue declined $270,000, or 10%, during the
third quarter of 2014 due to a decrease in percentage rent and a
reduction in ancillary revenues such as hunting permit revenue.
The primary drivers of the $540,000, or 24%, decline in net income
attributable to common stockholders for the quarter, as compared to the
same period of 2013, is the decline in revenue as described above and an
increase in operating expense coming from higher stock compensation
costs and higher water contract amortization costs. Those expenses were
partially offset by lower farming cost of sales as a result of reduced
2014 production. Also helping to offset these unfavorable variances is
an improvement in equity in earnings from joint ventures due to improved
operating results within the Petro/TA joint venture as a result of
improved gasoline sales and margins and $255,000 in income from the
outlet center joint venture as operations began during the third quarter
of 2014.
2014 Outlook:
Management believes that the capital structure of the Company provides a
solid foundation for continued investment in our projects. At September
30, 2014, total capital, including long-term debt, was approximately
$390,000,000. As of September 30, 2014, the Company also had cash and
securities totaling approximately $51,000,000.
As reported on a Current Report on Form 8-K on October 17, 2014, the
Company entered into an Amended and Restated Credit Agreement, Term
Note, and Revolving Line of Credit Note with Wells Fargo for a
$100,000,000 credit facility consisting of a new $70,000,000 ten-year
term note and a renewal of the current $30,000,000 revolving line of
credit. Funds from the Term Note are being used to finance the Company’s
purchase of DMB TMV LLC’s interest in Tejon Mountain Village LLC, as
disclosed in the Current Report on Form 8-K on July 16, 2014.
The Company will continue to aggressively pursue development, leasing,
and investment within the Tejon Ranch Commerce Center and in our joint
ventures. The Company is continuing to invest in its residential
projects to complete the entitlements for the Centennial and Grapevine
projects and pre-development investment for Tejon Mountain Village.
The Company believes the variability of its quarterly and annual
operating results will continue during the remainder of 2014 due to its
farming and real estate activities. Prices received by the Company for
many of its products are dependent upon the prevailing market conditions
and commodity prices. Many of the Company’s projects, especially in real
estate, require a lengthy process to complete the entitlement and
development phases before revenue can begin to be recognized. The timing
of projects and sales of both real estate inventory and non-strategic
assets can vary from year-to-year; therefore, it is difficult for the
Company to accurately predict quarterly and annual revenues and results
of operations.
Tejon Ranch Co. 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.
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TEJON RANCH CO.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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THIRD QUARTER ENDED SEPTEMBER 30
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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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2014
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2013
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2014
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2013
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Revenues:
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Real estate - commercial/industrial
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$
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2,572
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$
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2,842
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$
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8,067
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$
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8,389
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Real estate - resort/residential
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199
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410
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786
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881
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Mineral resources
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2,393
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2,424
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14,801
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8,055
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Farming
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8,688
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9,452
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13,054
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15,038
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Total revenues
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13,852
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15,128
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36,708
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32,363
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Costs and Expenses:
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Real estate - commercial/industrial
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3,374
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3,290
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10,021
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9,544
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Real estate - resort/residential
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939
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804
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2,512
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2,378
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Mineral resources
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505
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329
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5,932
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908
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Farming
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5,715
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6,224
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8,585
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9,660
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Corporate expenses
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2,932
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2,736
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8,288
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6,871
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Total expenses
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13,465
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13,383
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35,338
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29,361
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Operating income
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387
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1,745
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1,370
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3,002
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Other income
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Investment income
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138
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216
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521
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729
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Other income
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66
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20
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113
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37
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Total other income
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204
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236
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634
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766
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Income from operations before equity in earnings of unconsolidated
joint ventures
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591
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1,981
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2,004
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3,768
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Equity in earnings of unconsolidated joint ventures, net
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1,707
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1,241
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3,293
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2,920
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Income before income tax expense
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2,298
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3,222
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5,297
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6,688
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Income tax expense
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627
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919
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1,647
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1,752
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Net income
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1,671
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2,303
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3,650
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4,936
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Net income (loss) attributable to non-controlling interest
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(81
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11
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(89
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(55
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Net income attributable to common stockholders
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1,752
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2,292
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3,739
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4,991
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Net income per share to common stockholders, basic
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$
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0.09
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$
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0.11
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$
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0.18
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$
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0.25
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Net income per share to common stockholders, diluted
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$
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0.08
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$
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0.11
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$
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0.18
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$
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0.25
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Weighted average number of shares outstanding:
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Common stock
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20,591,529
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20,140,473
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20,582,082
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20,125,792
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Common stock equivalents – stock options
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32,006
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45,489
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33,100
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40,864
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Diluted shares outstanding
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20,623,535
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20,185,962
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20,615,182
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20,166,656
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Source: Tejon Ranch Co.
Tejon Ranch Co.
Allen Lyda
661-248-3000
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