Farmland Partners(FPI) - 2024 Q3 - Quarterly Results

Report Overview and Highlights Third Quarter 2024 Highlights FPI reported lower Q3 2024 net income due to prior year's asset gain, but AFFO turned positive with 14.6% revenue growth and 30.2% expense reduction | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $1.8 million | $4.3 million | (58.1)% | | Net Income per Share | $0.02 | $0.07 | (71.4)% | | AFFO | $1.4 million | ($0.5) million | Positive Turnaround | | AFFO per Share | $0.03 | ($0.01) | Positive Turnaround | | Total Operating Revenues | +14.6% | - | - | | Total Operating Expenses | -30.2% | - | - | - The increase in operating revenues was achieved despite a 6.7% decrease in the average gross book value of real estate, from $1.08 billion in 2023 to $1.01 billion in 2024, due to strategic asset dispositions[2] Subsequent Events (Post-Q3 2024) Post-Q3, FPI completed $308 million farm dispositions, repaid $189.4 million debt, significantly improving leverage and raising 2024 AFFO guidance - Completed 52 farm dispositions for aggregate consideration of $308.0 million[3] - Repaid $189.4 million of debt with a weighted average interest rate of 5.77%, eliminating all floating rate debt exposure and projecting $10.9 million in annual interest savings[3] - Leverage was significantly reduced, with debt as a percentage of gross book value decreasing from 38.8% to 27.1% and the total debt to EBITDAre ratio falling from 10.9 to 5.8[3] - Increased the full-year 2024 AFFO guidance range to $0.24 - $0.30 per share from $0.20 - $0.26 per share[3] CEO Commentary CEO Luca Fabbri attributed strong performance to operational efficiencies and asset sales, which drove debt reduction, increased guidance, and a projected special year-end dividend - The CEO credits strong operating results to efficiencies from portfolio improvements and cost-saving measures initiated in 2023[4] - Asset sales generated gains of approximately $53 million, demonstrating the strong value embedded in the company's portfolio[4] - The company expects to issue a special dividend projected to be between $1.00 and $1.10 per share at year-end[4] Financial Performance Financial and Operating Results Summary FPI's Q3 2024 net income decreased, but AFFO improved, while Adjusted EBITDAre and NOI showed healthy growth for both three and nine-month periods | Metric (in thousands) | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $1,838 | $4,315 | $1,194 | $13,927 | | AFFO | $1,399 | ($465) | $4,713 | ($46) | | Adjusted EBITDAre | $7,649 | $6,317 | $22,752 | $18,804 | | Total Operating Revenues | $13,317 | $11,617 | $36,752 | $35,874 | | Net Operating Income (NOI) | $9,784 | $8,815 | $28,249 | $26,536 | Consolidated Balance Sheet As of September 30, 2024, FPI's total assets slightly increased to $1.027 billion, liabilities rose to $406.5 million, and equity slightly decreased to $519.4 million | Balance Sheet Item (in thousands) | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total real estate, net | $974,646 | $961,531 | | Cash and cash equivalents | $8,090 | $5,489 | | Total Assets | $1,027,123 | $1,022,002 | | Mortgage notes and bonds payable, net | $392,244 | $360,859 | | Total Liabilities | $406,482 | $391,192 | | Total Equity | $519,413 | $528,840 | Consolidated Statements of Operations Q3 2024 total operating revenues increased 14.6% to $13.3 million, expenses fell to $8.1 million, resulting in $1.8 million net income despite lower asset disposition gains | Income Statement Item (in thousands) | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Total Operating Revenues | $13,317 | $11,617 | | Total Operating Expenses | $8,094 | $11,602 | | (Gain) on disposition of assets, net | ($1,980) | ($10,293) | | Interest Expense | $5,496 | $6,230 | | Net Income | $1,838 | $4,315 | | Basic Net Income per Share | $0.02 | $0.07 | Portfolio and Capital Management Acquisition and Disposition Activity In the first nine months of 2024, FPI acquired three properties for $16.3 million with no dispositions, though significant dispositions occurred post-quarter - Acquired three properties for a total of $16.3 million during the nine months ended September 30, 2024[8] - There were no property dispositions during the nine months ended September 30, 2024[8] Balance Sheet, Debt, and Liquidity As of September 30, 2024, FPI's total debt was $394.0 million with $140.2 million liquidity, significantly improving post-quarter with a $189.4 million debt repayment | Metric (in millions) | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Debt Outstanding | $394.0 | $363.1 | | Cash | $8.1 | $5.5 | | Undrawn Credit Availability | $132.1 | $201.1 | | Total Liquidity | $140.2 | $206.6 | - Subsequent to September 30, 2024, the Company repaid debt totaling $189.4 million[8] Dividend Declaration On October 29, 2024, the Board declared a regular quarterly cash dividend of $0.06 per share of common stock - A quarterly cash dividend of $0.06 per share was declared, payable on January 15, 2025, to stockholders of record as of January 2, 2025[9] Outlook and Guidance 2024 Earnings Guidance FPI raised its full-year 2024 AFFO guidance to $0.24 - $0.30 per share, reflecting strong operational performance and recent asset sales and debt reduction | Guidance Metric | Previous Range | Updated Range | | :--- | :--- | :--- | | 2024 AFFO per Share | $0.20 - $0.26 | $0.24 - $0.30 | Special Dividend Projection The company projects a special year-end dividend of $1.00 to $1.10 per share, funded by gains from recent asset sales - A special dividend is projected for year-end 2024 with an expected value between $1.00 and $1.10 per share[4] Non-GAAP Financial Measures Reconciliation of Non-GAAP Measures The report provides detailed reconciliations of GAAP net income to non-GAAP metrics like FFO, AFFO, EBITDAre, Adjusted EBITDAre, and NOI, clarifying adjustments for performance measurement Q3 2024 Reconciliation of Net Income to AFFO (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $1,838 | | (Gain) on disposition of assets, net | ($1,980) | | Depreciation, depletion and amortization | $1,414 | | FFO | $1,272 | | Stock-based compensation | $870 | | Distributions on Preferred units | ($743) | | AFFO | $1,399 | Q3 2024 Reconciliation of Net Income to Adjusted EBITDAre (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $1,838 | | Interest expense | $5,496 | | Depreciation, depletion and amortization | $1,414 | | (Gain) on disposition of assets, net | ($1,980) | | EBITDAre | $6,779 | | Stock-based compensation | $870 | | Adjusted EBITDAre | $7,649 | Definitions of Non-GAAP Measures FPI defines non-GAAP measures including Nareit-standard FFO and EBITDAre, plus company-specific AFFO, Adjusted EBITDAre, and NOI, providing supplemental performance insights - FFO (Funds from Operations): Calculated per Nareit standards, it excludes gains/losses from property sales and real estate depreciation to measure operational performance[22] - AFFO (Adjusted Funds from Operations): FFO adjusted to exclude items not reflective of sustainable operating performance, such as stock-based compensation and acquisition costs[23] - EBITDAre and Adjusted EBITDAre: EBITDAre is calculated per Nareit standards. Adjusted EBITDAre further removes items like stock-based compensation to better reflect ongoing operating performance[25][26] - NOI (Net Operating Income): Calculated as total operating revenues less property operating expenses and cost of goods sold, reflecting performance directly associated with owning and leasing farmland[28] Other Information Conference Call Information A conference call and webcast are scheduled for October 31, 2024, at 11:00 a.m. U.S. Eastern Time to discuss Q3 financial results and provide a corporate update - A conference call to discuss Q3 2024 results was scheduled for October 31, 2024, at 11:00 a.m. (U.S. Eastern Time)[11] About Farmland Partners Inc. Farmland Partners Inc. is an internally managed REIT owning and/or managing approximately 136,000 acres of North American farmland across 15 U.S. states, also providing farmer loans - FPI is an internally managed REIT that owns and/or manages approximately 136,000 acres of farmland in 15 states[14] - The company's business includes owning farmland, making loans to farmers secured by farm real estate, and owning agricultural equipment dealerships[14] Forward-Looking Statements This section contains forward-looking statements regarding the company's outlook, which are not guarantees of future performance and are subject to numerous market, geopolitical, and interest rate risks - The report includes forward-looking statements concerning the company's outlook, which are subject to risks and uncertainties[15] - Key risks mentioned include market factors affecting the special dividend, geopolitical conflicts, trade policies, inflation, interest rates, and weather events[15]