Farmland Partners(FPI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Q1 2025 financial statements show total assets at $810.5 million, net income of $2.1 million driven by asset gains and lower interest expense, and operating cash flow of $6.4 million Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $810.5 million due to reduced cash, while total liabilities fell to $218.5 million primarily from lower dividends payable, with equity stable at $492.2 million Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $810,465 | $868,560 | | Cash and cash equivalents | $21,650 | $78,441 | | Total real estate, net | $714,095 | $717,843 | | Total Liabilities | $218,518 | $272,003 | | Mortgage notes and bonds payable, net | $201,803 | $203,683 | | Dividends payable | $2,890 | $57,253 | | Total Equity | $492,204 | $494,587 | Consolidated Statements of Operations Q1 2025 net income increased to $2.1 million despite lower revenues, driven by a $0.8 million gain on asset disposition and a $2.4 million reduction in interest expense, resulting in $0.03 EPS Q1 2025 vs. Q1 2024 Operating Results (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total operating revenues | $10,252 | $11,990 | | Rental income | $6,970 | $10,207 | | Total operating expenses | $6,399 | $6,843 | | (Gain) loss on disposition of assets, net | $(763) | $86 | | Interest expense | $2,638 | $5,036 | | Net Income | $2,093 | $1,408 | | Net income available to common stockholders | $1,272 | $606 | | Basic and Diluted EPS | $0.03 | $0.01 | Consolidated Statements of Cash Flows Q1 2025 saw $6.4 million cash from operations, $0.1 million from investing activities, and a $63.3 million use in financing, primarily for dividends, leading to a $56.8 million net cash decrease Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities | $6,370 | $11,897 | | Net cash from Investing Activities | $99 | $(14,497) | | Net cash from Financing Activities | $(63,260) | $3,339 | | Net (decrease) in cash | $(56,791) | $739 | | Cash at end of period | $21,650 | $6,228 | Notes to Consolidated Financial Statements The notes detail the company's REIT structure, its 92,400-acre farmland portfolio, revenue recognition, $201.8 million debt, ongoing litigation, FPI Loan Program, share repurchases, and hedging strategies - As of March 31, 2025, the Company owned a portfolio of approximately 92,400 acres of farmland and managed an additional 46,800 acres[26] - The company has a single operating segment, and its chief operating decision makers assess performance using Adjusted Funds from Operations (AFFO), a non-GAAP measure[41][42] - The company has $167.4 million available under its lines of credit as of March 31, 2025, and manages liquidity through cash balances, credit lines, and potential asset sales[36] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 net income growth driven by asset gains and lower interest expense, the company's farmland acquisition strategy, key market factors, strong liquidity with $167.4 million credit availability, and non-GAAP measures like AFFO of $2.3 million - The company's primary strategic objective is to be a leading institutional owner and manager of high-quality North American farmland, delivering returns through cash dividends and asset appreciation[152] - Key factors influencing future results include global food demand, farmland supply constraints, inflation, interest rates, and international trade policies[167][168][192] - Net income for Q1 2025 was primarily affected by dispositions, higher crop sales, increased interest income, proceeds from a solar lease, and lower interest expense, offset by lower income from forfeited deposits[197] Q1 2025 vs Q1 2024 Key Metrics (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Rental income | $6,970 | $10,207 | $(3,237) | (31.7)% | | Total operating revenues | $10,252 | $11,990 | $(1,738) | (14.5)% | | Interest expense | $2,638 | $5,036 | $(2,398) | (47.6)% | | Net Income | $2,093 | $1,408 | $685 | 48.7% | Results of Operations Q1 2025 saw rental income decrease by $3.2 million due to asset sales, offset by a $1.3 million rise in other revenue and a $2.4 million reduction in interest expense, alongside a $0.8 million gain on asset dispositions - Rental income decreased by $3.2 million (31.7%) in Q1 2025 compared to Q1 2024, primarily due to dispositions that occurred in 2024[198] - Other revenue increased by $1.3 million, mainly due to higher interest income from a larger average balance on loans under the FPI Loan Program[199] - Interest expense decreased by $2.4 million (47.6%) due to lower outstanding debt and a reduction in exposure to variable interest rates[207] - A net gain on asset disposition of $0.8 million was recorded in Q1 2025, compared to a net loss of $0.1 million in Q1 2024[205] Liquidity and Capital Resources The company maintains liquidity with $21.7 million cash and $167.4 million credit availability, with Q1 2025 cash flows showing $6.4 million from operations, $0.1 million from investing, and $63.3 million used in financing, including $55.7 million in dividends - As of March 31, 2025, the company had $167.4 million in undrawn availability under its lines of credit[210] - During Q1 2025, the company repurchased 63,023 shares of common stock for approximately $0.7 million, with $55.0 million remaining under the repurchase authorization[213][243] Sources and Uses of Cash (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash from Operating Activities | $6,370 | $11,897 | | Net cash from Investing Activities | $99 | $(14,497) | | Net cash from Financing Activities | $(63,260) | $3,339 | Non-GAAP Financial Measures The company uses non-GAAP measures like FFO and AFFO, reporting Q1 2025 FFO at $2.5 million and AFFO at $2.3 million ($0.05 per share), alongside EBITDAre of $5.2 million Reconciliation of Net Income to FFO and AFFO (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $2,093 | $1,408 | | (Gain) loss on disposition of assets, net | $(763) | $86 | | Depreciation, depletion and amortization | $1,173 | $1,481 | | FFO | $2,503 | $2,975 | | Stock-based compensation | $519 | $525 | | Distributions on Series A Preferred Units | $(743) | $(743) | | AFFO | $2,284 | $2,784 | AFFO Per Share | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | AFFO per diluted weighted average share | $0.05 | $0.06 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, which is managed by an interest rate swap effectively converting its $11.8 million variable-rate debt to a fixed rate - The company's primary market risk is interest rate risk, which it manages through fixed-rate financing and derivative instruments like interest rate swaps[234] - As of March 31, 2025, the company's $11.8 million of variable-rate debt is covered by an interest rate swap, effectively reducing its floating rate exposure to zero[235] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[237] - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[239] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is pursuing ongoing litigation against Sabrepoint regarding an alleged 2018 'short and distort' scheme, with the case recently remanded for further proceedings after a favorable appellate decision - The company is pursuing a lawsuit against Sabrepoint related to an alleged "short and distort" scheme from 2018. On April 25, 2025, the Texas Supreme Court affirmed a lower court's decision that the company's claims are not barred, remanding the case for further proceedings[95][240] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 were reported - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 were reported[241] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 87,000 shares of common stock at an average price of $11.71, with $55.0 million remaining under the repurchase program and no unregistered sales Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share | Approx. Value Remaining in Program (thousands) | | :--- | :--- | :--- | :--- | | Jan 2025 | 67 | $11.72 | $55,011 | | Feb 2025 | 8 | $11.90 | $55,011 | | Mar 2025 | 12 | $11.56 | $55,011 | | Total | 87 | $11.71 | $55,011 | - As of March 31, 2025, the company had $55.0 million of capacity remaining under its share repurchase program[243] Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None[247] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[248] Item 5. Other Information The company reported no adoptions or modifications of Rule 10b5-1 plans during the period - None[249] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The report includes CEO and CFO certifications pursuant to Sarbanes-Oxley Sections 302 and 906, as well as Inline XBRL data files for the financial statements[251]