Farmland Partners Inc. (NYSE:FPI) Q4 2021 Results Conference Call February 23, 2022 11:00 AM ET Company Participants Paul Pittman - Chairman & CEO James Gilligan - CFO and Treasurer Luca Fabbri - President Conference Call Participants Rob Stevenson - Janney Dave Rodgers - Baird Buck Horne - Raymond James Craig Kucera - B. Riley Securities Ryan Watson - Medium Investment Advisors Operator Good morning, ladies and gentlemen. Thank you for attending today's Farmland Partners Fourth Quarter 2021 Earnings Confer ...

Financial Data and Key Metrics Changes - The company reported an AFFO of negative $0.02 year-to-date, an improvement from negative $0.03 for the same period last year [18][19] - Total indebtedness decreased by $6 million year-to-date, aligning with the company's intent to gradually reduce leverage [21] - The company has approximately $40 million of liquidity available for acquisitions and other purposes as of the end of the second quarter [21] Business Line Data and Key Metrics Changes - The company completed four acquisitions totaling nearly $30 million and sold 15 properties for $31 million, resulting in a gain of $3.5 million [20] - Lease renewals are expected to see increases in low crop rents ranging from 7% to 10%, with some as high as 20% [9][25] Market Data and Key Metrics Changes - Farmer profitability has significantly increased, returning to levels seen in 2012 and 2013, primarily driven by rising grain prices [8] - The Midwest region is experiencing the strongest rent increases, particularly in Illinois, where increases are running at 10% or better [27] Company Strategy and Development Direction - The company is focused on maintaining a diversified portfolio, targeting a mix of 70% row crops and 30% specialty crops [36] - The company is actively pursuing opportunities in the Southeast and Delta regions, while still growing its portfolio in the Midwest [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's position, citing a strong agricultural economy and the potential for continued land value appreciation [10][11] - The company plans to expand its loan program, which has historically met farmers' needs, and aims to grow this business further [13][56] Other Important Information - The company has reopened its loan program after previously suspending it due to litigation concerns, indicating strong demand for such loans [56] - Management discussed ongoing litigation, noting that costs are expected to moderate in the coming quarters [41][42] Q&A Session Summary Question: Can you provide more detail on the leasing spreads and regional performance? - Management indicated that the 7% to 10% increase in rents is based on a conservative estimate, with the Midwest showing the strongest increases [25][26] Question: What does the acquisition pipeline look like? - The company has a pipeline of deals measured in the kind of $50 million plus, indicating a robust acquisition strategy [33] Question: How are drought conditions affecting your markets? - Management noted that row crop regions have experienced adequate rainfall, while specialty crops in California face challenges due to water costs [60][63] Question: What is the company's strategy regarding equity issuance? - Management emphasized the importance of balancing equity issuance with maintaining shareholder value, particularly as stock prices approach NAV [65][66]

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The unaudited consolidated financial statements for Q2 2021 reflect total assets of $1.104 billion, a net loss of $2.9 million, and increased cash from financing activities [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2021, total assets increased to $1.104 billion, driven by higher cash balances, while total equity rose to $323.4 million | Balance Sheet Items (in thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total real estate, net** | $1,052,510 | $1,053,120 | | **Cash** | $40,159 | $27,217 | | **TOTAL ASSETS** | **$1,104,319** | **$1,090,991** | | **Mortgage notes and bonds payable, net** | $500,705 | $506,625 | | **Total liabilities** | $523,013 | $524,801 | | **Total equity** | $323,435 | $305,914 | | **TOTAL LIABILITIES AND EQUITY** | **$1,104,319** | **$1,090,991** | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2021, the company reported a net loss of $2.9 million, primarily due to a significant increase in legal and accounting expenses compared to the prior year | (in thousands, except per share data) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total operating revenues** | $10,013 | $10,517 | $21,589 | $22,168 | | **Total operating expenses** | $9,058 | $6,828 | $17,535 | $13,189 | | *Legal and accounting* | *$2,901* | *$848* | *$5,643* | *$1,330* | | **OPERATING INCOME** | $955 | $3,689 | $4,054 | $8,979 | | **NET INCOME (LOSS)** | **$(2,865)** | **$172** | **$(388)** | **$592** | | **Net loss available to common stockholders** | $(5,804) | $(2,942) | $(6,523) | $(5,679) | | **Basic net (loss) per common share** | $(0.19) | $(0.10) | $(0.21) | $(0.19) | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a comprehensive loss of $2.9 million for Q2 2021, while the six-month period showed a comprehensive income of $1.1 million due to hedging activities | (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (loss)** | $(2,865) | $172 | $(388) | $592 | | **Net change associated with current period hedging activities** | $(266) | $(400) | $942 | $(1,983) | | **Comprehensive Income (Loss)** | **$(2,895)** | **$19** | **$1,084** | **$(1,144)** | [Consolidated Statements of Changes in Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to $323.4 million by June 30, 2021, primarily due to stock issuance, despite a net loss and dividend payments - Total equity rose to **$323.4 million** at the end of Q2 2021 from **$305.9 million** at the start of the year[15](index=15&type=chunk) - In Q2 2021, the company issued **1.955 million shares** of stock, contributing **$25.3 million** to equity[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities decreased to $8.2 million, while financing activities provided $7.4 million, largely due to proceeds from an ATM offering | (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $8,217 | $9,982 | | **Net cash provided by (used in) investing activities** | $(2,701) | $6,707 | | **Net cash provided by (used in) financing activities** | $7,426 | $(17,652) | | **NET INCREASE (DECREASE) IN CASH** | $12,942 | $(963) | | **CASH, END OF PERIOD** | $40,159 | $11,598 | - The company generated **$25.3 million** from its **At-The-Market (ATM) offering** in the first six months of 2021, which significantly boosted cash from financing activities[21](index=21&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on the company's REIT status, accounting policies, real estate transactions, debt, equity, litigation, and subsequent events - The company owns a portfolio of approximately **157,000 acres** and elected to be taxed as a **REIT**[23](index=23&type=chunk)[24](index=24&type=chunk) - During the first six months of 2021, the company completed **four acquisitions** for **$29.9 million** and **seven dispositions** for **$31.0 million** in cash and convertible notes[66](index=66&type=chunk)[68](index=68&type=chunk) - The company is involved in several **class action and derivative lawsuits** related to its FPI Loan Program disclosures. It also settled a lawsuit it filed against **"Rota Fortunae"** for a **"short and distort" scheme**[96](index=96&type=chunk)[104](index=104&type=chunk) - The company sold **1.95 million shares** under its **At-the-Market (ATM) program**, generating net proceeds of **$25.3 million** in the first half of 2021[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's farmland portfolio, Q2 2021 net loss driven by legal expenses, and liquidity bolstered by a $25.3 million ATM offering - The company's portfolio consists of approximately **157,000 acres**, with **70%** dedicated to primary crops (corn, soybeans, etc.) and **30%** to specialty crops (blueberries, citrus, nuts)[162](index=162&type=chunk) - Q2 2021 net loss of **$2.9 million** was primarily driven by a **$2.1 million** year-over-year increase in **legal and accounting expenses**, largely related to litigation against parties involved in a **"short and distort" scheme**[198](index=198&type=chunk)[203](index=203&type=chunk) - The company generated **$25.3 million** in net proceeds from its **At-the-Market (ATM) equity program** through June 30, 2021, enhancing its liquidity for acquisitions and other corporate purposes[222](index=222&type=chunk) | (in thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Income (Loss)** | $(2,865) | $172 | $(388) | $592 | | **FFO** | $(1,054) | $1,258 | $(35) | $3,764 | | **AFFO** | $(3,648) | $(1,406) | $(5,259) | $(1,774) | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, with 34.1% of its debt at variable rates, impacting cash flow by $0.8 million for every 100 basis point increase - The primary market risk exposure is **interest rate risk** associated with variable-rate debt[251](index=251&type=chunk) - As of June 30, 2021, **34.1%** (**$171.5 million**) of the company's debt was subject to **variable interest rates**[252](index=252&type=chunk) - A **100 basis point increase** in interest rates would result in an approximate annual decrease in cash flow of **$0.8 million**[252](index=252&type=chunk) [Item 4. Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal controls over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the reporting period[254](index=254&type=chunk) - There were **no changes** in internal controls over financial reporting during the six months ended June 30, 2021, that have materially affected, or are likely to materially affect, these controls[256](index=256&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 8 of the Consolidated Financial Statements for details on ongoing legal proceedings, including class action lawsuits and litigation against alleged "short and distort" schemes - For details on legal proceedings, the report directs readers to **Note 8** in Part I, Item 1 of the financial statements[257](index=257&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors were reported since the 2020 Annual Report on Form 10-K - **No material changes** to risk factors were reported since the filing of the 2020 Annual Report on Form 10-K[258](index=258&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=51&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered equity sales, repurchased 17,000 preferred shares for $0.44 million, with $40.5 million remaining for repurchases - There were **no unregistered sales** of equity securities during the period[259](index=259&type=chunk) | Period | Total Preferred Shares Purchased (in thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2021 | 17 | $25.98 | | May 2021 | 0 | — | | June 2021 | 0 | — | | **Total Q2 2021** | **17** | **$25.82** | - As of the report date, **$40.5 million** was still available under the authorized share repurchase program[259](index=259&type=chunk)[260](index=260&type=chunk) [Item 3. Defaults Upon Senior Securities](index=51&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults on its senior securities during the reporting period - **None**[261](index=261&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - **Not applicable**[262](index=262&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) No other information was reported for this item - **None**[262](index=262&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL data files - The report includes standard **CEO/CFO certifications** and **XBRL interactive data files** as exhibits[263](index=263&type=chunk)[264](index=264&type=chunk)

Financial Data and Key Metrics Changes - The company recorded total operating revenues of $11.6 million for Q1 2021, slightly down from $11.7 million in Q1 2020, indicating a strong performance despite a reduced portfolio [22] - Total operating income was $3.1 million in Q1 2021 compared to $5.3 million in the same period of 2020, but adjusted for litigation expenses, the performance would have been $5.6 million [22] - The basic net loss to common stockholders was $0.02 per share in Q1 2021, improved from a net loss of $0.09 per share in Q1 2020, and would have been a net income of $0.07 per share without litigation expenses [23] - Adjusted Funds from Operations (AFFO) was negative $0.05 in Q1 2021, compared to negative $0.01 in Q1 2020, but would have been positive $0.03 without legal expenses [23] Business Line Data and Key Metrics Changes - The company initiated an acquisition program, purchasing approximately $2.9 million in assets without incurring debt, indicating a shift towards growth [10] - The company reduced its debt by $20 million and repurchased a small amount of Series B preferred shares, continuing its deleveraging strategy [11] Market Data and Key Metrics Changes - The company anticipates strong rent increases in the coming quarters, with about one-third of the portfolio rolling over this summer and fall, potentially leading to rent increases of 5% to over 15% [11][39] - There is a significant increase in farmer profitability driven by rising commodity prices, particularly in corn and soybeans, which is expected to last for several years [14][17] Company Strategy and Development Direction - The company is transitioning from a focus on asset sales and stock buybacks to a growth-oriented strategy, aiming to increase assets under management and reduce leverage [10][11] - The company is also establishing a substantial off-balance sheet vehicle related to opportunity zones to enhance growth [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term demand for farmland driven by population growth and GDP increases in developing countries, alongside a decline in arable land per person [13] - The company is closely monitoring inflation trends, noting that farmland is a good hedge against inflation, which could benefit investors [20] - Management acknowledged ongoing litigation expenses but remains confident that these will eventually conclude successfully [21] Other Important Information - The net asset value is estimated to be around $14 per share, with expectations of land value appreciation continuing for several years [12] - The company has seen a significant increase in demand for U.S. food products, particularly from China, which is expected to drive commodity prices higher [18] Q&A Session Summary Question: What determined the 14 dispositions? - The majority of the dispositions were assets contributed to the Opportunity Zone Fund, which allows the company to maintain management fees on those assets [26] Question: What are the fees from the asset management business? - The company receives fees based on assets under management from the Opportunity Zone vehicle, which are set to exceed current overhead costs [29] Question: What is the mix of specialty and row crops in the lease rollover? - The lease rollover is more weighted towards row crops this year, with expectations of improved profitability in that segment [44] Question: How do you view the lease roll-ups this summer? - The company expects rent increases of 5% to over 15% for row crops, driven by improved profitability for farmers [39] Question: Are you seeing more competition for bidding on acres? - There is an increase in both prices and volumes in the farmland market, particularly in high-quality land regions like Illinois [56] Question: How are labor shortages affecting profitability? - Labor shortages are a concern, particularly in specialty crops, but the company has not faced significant operational issues [66] Question: How is the drought affecting specialty crops? - The drought's impact is more significant for non-irrigated crops, but the company is positioned well with irrigated land [70]

Farmland Partners Inc. (NYSE:FPI) Q4 2020 Earnings Conference Call March 18, 2021 11:00 AM ET Company Participants Paul Pittman - Chairman & Chief Executive Officer Luca Fabbri - Chief Financial Officer Conference Call Participants Dave Rodgers - Baird Rob Stevenson - Janney Dane Bowler - 2nd Market Craig Kucera - B. Riley FBR Operator Good day and welcome to the Farmland Partners Inc. Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Ins ...