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Tejon Ranch (TRC) - 2025 Q1 - Quarterly Report
Tejon Ranch Tejon Ranch (US:TRC)2025-05-08 20:37

PART I. FINANCIAL INFORMATION This section provides the company's unaudited consolidated financial statements and management's discussion and analysis for the quarter ended March 31, 2025 Financial Statements This section presents the unaudited consolidated financial statements for the quarter ended March 31, 2025, including balance sheets, statements of operations, comprehensive loss, cash flows, and changes in equity, along with detailed notes Consolidated Financial Statements (Tables) The company's financial statements for the three months ended March 31, 2025, show a net loss of $1.47 million, total revenues of $8.2 million, and total assets of $614.6 million Consolidated Balance Sheet Highlights ($ in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $12,282 | $39,267 | | Total current assets | $45,772 | $69,402 | | Real estate development | $394,780 | $377,905 | | Total Assets | $614,555 | $607,998 | | Revolving line of credit | $74,442 | $66,942 | | Total Liabilities | $126,717 | $119,042 | | Total Equity | $487,838 | $488,956 | Consolidated Statement of Operations Highlights ($ in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Total revenues | $8,209 | $7,406 | | Total costs and expenses | $12,375 | $11,390 | | Operating loss | $(4,166) | $(3,984) | | Net loss | $(1,466) | $(914) | | Net loss per share, basic & diluted | $(0.05) | $(0.03) | Consolidated Statement of Cash Flows Highlights ($ in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,345) | $777 | | Net cash (used in) provided by investing activities | $(32,650) | $3,074 | | Net cash provided by (used in) financing activities | $7,010 | $(206) | Notes to Unaudited Consolidated Financial Statements The notes detail the basis of presentation, accounting policies, and segment information, including real estate development, water assets, legal proceedings, and unconsolidated joint ventures - The company operates and reports on five segments: commercial/industrial real estate development, resort/residential real estate development, mineral resources, farming, and ranch operations24 Accumulated Real Estate Development Costs by Project ($ in thousands) | Project | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Mountain Village | $158,865 | $158,348 | | Centennial | $124,980 | $124,136 | | Grapevine | $42,972 | $42,456 | | Tejon Ranch Commerce Center | $67,963 | $52,965 | | Total | $394,780 | $377,905 | - Net investments in water assets increased to $65.2 million as of March 31, 2025, from $55.1 million at year-end 2024, reflecting ongoing acquisition of water rights and assets45 - Regarding the Centennial project litigation, the company filed a Notice of Appeal on May 26, 2023, with a hearing held on April 3, 2025, and a written decision anticipated on or before July 2, 2025, with rescission of project approvals on hold during the appeal68 - The company has numerous unconsolidated joint ventures, primarily for developing and managing industrial real estate at TRCC (with Majestic Realty Co.) and travel plazas (with TravelCenters of America), accounted for using the equity method8689 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2025 results, noting an increased net loss primarily due to professional fees from a dissident proxy campaign, while emphasizing long-term value creation through real estate development - The primary driver for the $550,000 increase in net loss year-over-year was a $1,083,000 increase in professional and consulting fees incurred to defend the Company from a dissident proxy campaign109 - The company's primary business objective is to maximize long-term shareholder value by developing its land assets into large-scale mixed-use master-planned communities, including TRCC, Mountain Village, Grapevine, and Centennial97 Results of Operations by Segment Performance varied across segments in Q1 2025, with commercial/industrial revenue slightly down, resort/residential expenses significantly lower, mineral resources and farming revenues up, and ranch operations turning a profit Commercial/Industrial Segment Results ($ in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $2,754 | $2,945 | $(191) | (6)% | | Operating Income | $907 | $1,018 | $(111) | (11)% | - Resort/Residential segment expenses decreased by $1,175,000 year-over-year to $386,000, mainly due to a $1,252,000 reduction in professional service fees related to master-planned communities124 Mineral Resources Segment Results ($ in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $2,595 | $2,489 | $106 | 4% | | Operating Income | $510 | $373 | $137 | 37% | Farming Segment Results ($ in thousands) | Metric | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,556 | $865 | $691 | 80% | | Operating Loss | $(992) | $(1,202) | $210 | (17)% | - Ranch Operations revenue increased 18% to $1.3 million, resulting in operating income of $31,000 compared to a loss of $120,000 in Q1 2024140143 Liquidity and Capital Resources The company's liquidity remains solid despite a decline in cash and marketable securities due to funding the Terra Vista apartment project, with significant capital expenditures planned for 2025 - Cash, cash equivalents, and marketable securities totaled $32.9 million at March 31, 2025, a decrease of $20.8 million from year-end 2024, mainly due to funding construction of the Terra Vista at Tejon multi-family apartment community151 - In Q1 2025, the company drew $7.5 million from its line of credit to fund construction projects and ongoing development159 - Estimated capital investment for the remainder of 2025 includes approximately $18.1 million for the Terra Vista project and $8.7 million for infrastructure development at TRCC-East157 - The company's debt-to-total-capitalization ratio was approximately 13.2% as of March 31, 2025162 Non-GAAP Financial Measures The company presents non-GAAP measures like EBITDA and Adjusted EBITDA to provide supplemental performance insights, with Adjusted EBITDA reaching $2.8 million in Q1 2025 Reconciliation of Net Loss to Adjusted EBITDA ($ in thousands) | Line Item | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net loss | $(1,466) | $(914) | | Total interest, net | $1,116 | $858 | | Income tax benefit | $(1,272) | $(942) | | Total depreciation and amortization | $2,710 | $2,613 | | EBITDA | $1,090 | $1,615 | | Stock compensation expense | $666 | $513 | | Shareholder activism expense | $1,083 | $— | | Adjusted EBITDA | $2,839 | $2,128 | Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks primarily from interest rate fluctuations on its variable-rate revolving line of credit and commodity price changes affecting farming inventories and receivables - The company is exposed to interest rate risk on its $74.4 million outstanding balance on the revolving line of credit, which has a variable interest rate of one-month term SOFR plus 2.25%190194 - Farming inventories and accounts receivable are exposed to adverse price fluctuations for almonds, grapes, and pistachios197 Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report199 - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls200 PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the quarterly report Legal Proceedings This section refers to Note 11 of the financial statements for details on legal matters, specifically the ongoing appeal concerning the Centennial project, with a ruling expected by July 2, 2025 - For details on legal proceedings, the report refers to Note 11 (Commitments and Contingencies), with the key litigation involving the Centennial project currently under appeal and a decision expected on or before July 2, 202568202 Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its most recent Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K203 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the reporting period - None reported204 Exhibits This section lists all exhibits filed with the quarterly report, including various corporate governance documents, material contracts, and certifications required by the Sarbanes-Oxley Act - The report includes a list of filed exhibits, such as the Restated Certificate of Incorporation, various agreements, and CEO/CFO certifications (31.1, 31.2, 32)206209