Tejon Ranch Co. Announces Fourth-Quarter and Year-Ended December 31, 2020 Financial Results

Rhea-AI Summary

Tejon Ranch Co. (NYSE:TRC) reported a net loss for Q4 2020 of $0.1 million, significantly down from a $9.7 million profit in Q4 2019. Total revenues fell by 68% year-over-year to $10.2 million, driven by lower earnings from joint ventures and farming operations. For the full year, the company posted a $0.7 million loss compared to a $10.6 million profit in 2019, with total revenues decreasing 34% to $44.5 million. The outlook for 2021 remains cautious amidst ongoing economic challenges due to COVID-19, although development initiatives are set to continue.

Positive

• The Kern County Board approved permits for 495 multi-family apartment units in 2021.
• Tejon Ranch plans to advance its multi-family housing complex and multiple residential projects.
• As of December 31, 2020, the company maintained a solid capital structure with $58.1 million in cash and securities.

Negative

• Q4 2020 net loss of $0.1 million compared to a profit of $9.7 million in Q4 2019.
• Annual revenue decreased by 34% in 2020, down to $44.5 million.
• The company reported significant declines in farming revenues, particularly from almonds and pistachios.

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, 2020.

The Company is in the process of entitling, planning and developing four master planned developments. When these 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.

"We have now reached the one-year anniversary of the COVID-19 pandemic. From the very beginning, our top priority has been ensuring the health and safety of our employees, customers, suppliers and others with whom we partner, while keeping a focus on our business efforts," said Gregory S. Bielli, President and CEO. "We responded to the pandemic by immediately downsizing our operations to reduce our cost of doing business across the board; provided about $1.0 million in rent deferrals and relief for tenants of our wholly-owned and joint venture properties to keep our tenants in place for the long term; continued to advance the entitlement and development of our master plans, specifically in the litigation challenges that were brought on before the pandemic; and initiated and later entitled a new multi-family housing complex next to the Outlets at the Tejon Ranch Commerce Center to bring needed housing to the area and increase business opportunities to the surrounding retail and industrial development. Despite the challenging circumstances we faced during 2020, we were able to advance the Company's mission and create greater value for the shareholders."

Fourth-Quarter 2020 Financial Highlights

• Net loss attributable to common stockholders for the fourth quarter of 2020 was $0.1 million, or net loss per share attributable to common stockholders, basic and diluted, of $0.00, compared with net income attributable to common stockholders of $9.7 million, or net income per share attributable to common stockholders, basic and diluted, of $0.37, for the fourth quarter of 2019.

• Revenues and other income, including equity in earnings of unconsolidated joint ventures, for the fourth quarter of 2020 were $10.2 million, a decrease of $21.9 million, or 68%, compared with $32.1 million for the same period in 2019. Factors behind this change include:
  • A decrease in equity in earnings from unconsolidated joint ventures of $10.7 million, primarily related to the Company's share of the $17.5 million gain related to an investment property sold in 2019 by the Company's Five West Parcel joint venture, which was dissolved in 2020. Also contributing to the decline was a $1.7 million decrease in the Company's share of earnings from its TA/Petro partnership, attributed to lower fuel volumes, lower fuel margins and a loss of restaurant revenues resulting from California's stay-at-home orders related to the pandemic.
  • An $8.9 million decrease in farming revenues in the fourth quarter of 2020 which was primarily attributed to the following:
    • Almond revenues decreased primarily because of a decrease in the average selling price for almonds, which was driven by the abundant almond supply available within the market. California's 2020 almond crop yielded in excess of 3 billion pounds, surpassing all previous production records. The record yields resulted from favorable blooms along with an increase in new almond plantings seen throughout California in recent years. Although COVID-19 disrupted international trade during its early onset, it ultimately had a minimal effect on the Company's overall 2020 sales volumes. For the fourth quarter, we saw a 15% decline in sales given that third quarter 2019 sales were pushed to the fourth quarter of 2019 as a result of processing delays.
    • Pistachio revenues decreased as a result of recognizing lower final pricing adjustments on the Company's 2019 crop in 2020 when compared to the 2019 adjustment for the 2018 crop. The adjustment is based on pistachio production levels which was far less in 2019 when compared to 2018's record volumes.
    • Wine grape revenues decreased due to reduced production as the Company removed a 313-acre vineyard that provided revenues during the fourth quarter of 2019.
  • Commercial/industrial segment revenues decreased $2.4 million, compared with 2019, as the Company did not recognize the contribution of a land parcel and a building to the TA/Petro joint venture as it did in the prior year.

Fiscal 2020 Financial Highlights

• Net loss attributable to common stockholders for fiscal 2020 was $0.7 million, or net loss per share attributable to common stockholders, basic and diluted of $0.03, compared with net income attributable to common stockholders of $10.6 million, or $0.41 basic and $0.40 diluted, for 2019.

• Revenues and other income, including equity in earnings of unconsolidated joint ventures, were $44.5 million in 2020, a decrease of $22.8 million, or 34%, compared with $67.3 million in 2019. Factors driving this decrease include:
  • A $12.1 million decrease in equity in earnings of unconsolidated joint ventures as a result of dissolving our Five West Parcel joint venture, which sold its building and land in 2019. Additionally, operating results for our TA/Petro joint venture were lower because of lower fuel sales volumes and a loss of restaurant revenues resulting from California's stay-at-home orders related to the pandemic.
  • Commercial/industrial segment revenues decreased $7.3 million compared to 2019, primarily due to $6.6 million of revenues related to contributing two land parcels and one building to the Company's unconsolidated joint ventures. Similar transactions did not occur in 2020.
  • A $5.5 million decrease in farming revenues that was attributed to reduced almond pricing and reduced wine grape sales. Additionally, pistachio production for 2020 was below historical levels, for an on year, due to inadequate dormant hours because of the warm 2020 winter. As such, 2020 pistachio production was lower than 2019 production, which was a down bearing, or off year. As a result, the Company filed a claim with its insurance provider and received proceeds offsetting 2020 pistachio growing costs. Because 2020 was not a down bearing year, the insurance proceeds were larger than those received during down bearing years.

2021 Outlook:

Although stay-at-home orders are slowly being lifted, California continues to take a more cautious approach towards reopening. The Company anticipates a return to normalcy once there is widespread use of a COVID-19 vaccine, which is still in the early phases of roll out. As a result, the Company will need to continue to carefully monitor the performance of its operating segments and continue to manage its tenants. 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, 2020, the Company's balance sheet showed total capital and debt of approximately $502.2 million, with cash and securities totaling approximately $58.1 million and $35.0 million unused and available on its line of credit.

The Company will continue to aggressively pursue development, leasing, sales, and investment within TRCC, including TRCC Residential efforts. On January 6, 2021, the Kern County Board of Supervisors approved two Conditional Use Permits (CUP) which authorizes 495 multi-family apartment units within the Tejon Ranch Commerce Center, immediately north of the Outlets at Tejon. The Company will allocate the necessary resources in 2021 to advance this new project at TRCC. The Company will also continue to invest in its residential projects, including Mountain Village at Tejon Ranch, Centennial at Tejon Ranch and Grapevine at Tejon Ranch. The Company plans to submit a final map covering the first two phases of development at Mountain Village to Kern County during 2021. Once the final map is approved by the County, the Company will be in a position to apply for grading and construction permits for the 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 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,
		2020				2019				2020				2019
Revenues:
Real estate - commercial/industrial		$	2,392			$	4,751			$	9,536			$	16,792
Mineral resources		1,460				1,440				10,736				9,791
Farming		4,168				13,028				13,866				19,331
Ranch operations		1,209				1,039				3,692				3,609
Total revenues from Operations		9,229				20,258				37,830				49,523
Operating Profits (Losses):
Real estate - commercial/industrial		974				143				2,414				3,831
Real estate - resort/residential		(387		)		(375		)		(1,612		)		(2,247		)
Mineral resources		286				628				4,322				3,973
Farming		(26		)		6,179				(1,237		)		4,080
Ranch operations		61				(274		)		(1,204		)		(1,707		)
Income from Operating Segments		908				6,301				2,683 <

FAQ

What were Tejon Ranch Co.'s financial results for Q4 2020?

Tejon Ranch Co. reported a net loss of $0.1 million for Q4 2020, down from a net income of $9.7 million in the same quarter of 2019.

How did the COVID-19 pandemic impact Tejon Ranch Co.'s revenues?

The pandemic contributed to a 68% decline in revenues for Q4 2020, totaling $10.2 million compared to $32.1 million in Q4 2019.

What is the outlook for Tejon Ranch Co. in 2021?

Tejon Ranch anticipates a cautious 2021, monitoring operating segment performance while continuing development projects.

What major developments are planned for Tejon Ranch Co. in 2021?

Plans include advancing a new multi-family housing complex and residential projects such as Mountain Village at Tejon Ranch.

What financial metrics were reported for the full year 2020 by Tejon Ranch Co.?

For 2020, Tejon Ranch Co. reported a net loss of $0.7 million and total revenues of $44.5 million, a 34% decrease from 2019.