Core Insights - Tejon Ranch Company reported a strong third quarter in 2025, with a net income of $1.7 million, a significant improvement from a net loss of $1.8 million in the same quarter of 2024, reflecting a positive change of $3.5 million [7][8] - The farming segment showed notable growth, with revenues increasing by 34% to $4.3 million compared to $3.2 million in the third quarter of 2024, contributing to the overall recovery in year-to-date earnings [3][7] - The company implemented a 20% workforce reduction, expected to yield annual savings of $2 million, as part of a broader strategy to optimize costs and enhance cash generation from existing assets [4][8] Financial Performance - For the third quarter of 2025, total revenues were $14.7 million, slightly up from $14.6 million in the same period last year, indicating stable performance [7] - Adjusted EBITDA for the third quarter was $5.3 million, down from $5.6 million in the prior year, reflecting ongoing operational adjustments [7][10] - Year-to-date revenues for the first nine months of 2025 totaled $35.4 million, an increase from $33.2 million in the same period of 2024, driven by strong performance in the real estate and farming segments [13] Operational Highlights - The TRCC industrial portfolio is fully leased, comprising 2.8 million square feet of gross leasable area, while the commercial/retail portfolio is 95% occupied [14] - The Terra Vista residential community is progressing well, with 55% of the 180 delivered units leased as of September 30, 2025 [14] - The company anticipates organic growth in traffic and activity due to the upcoming opening of the Hard Rock Tejon Casino, which is expected to enhance overall results [5][6] Strategic Outlook - Tejon Ranch plans to continue pursuing strategic commercial and industrial development, as well as residential projects, with a focus on achieving critical planning milestones [16] - The company acknowledges the regulatory challenges in California that may lead to fluctuations in net income due to the timing of land sales and leasing activities [17] - Water sales opportunities in 2025 are expected to be influenced by hydrologic conditions and state water project allocations, with current allocations at 50% of contract amounts [18]

Financial Data and Key Metrics Changes - For the third quarter of fiscal year 2025, total net revenue was $47.5 million, down from $63.3 million in the same quarter of the previous fiscal year [11] - Agribusiness revenue decreased to $45.9 million from $61.8 million year-over-year, primarily due to pricing pressure in the lemon market [11][12] - Operating loss for the third quarter was $600,000 compared to operating income of $9 million in the previous year [15] - Net loss applicable to common stock was $1 million, down from net income of $6.5 million in the same quarter of fiscal year 2024 [15] - Adjusted net loss for diluted EPS was $400,000 or $0.02 per diluted share, compared to adjusted net income of $7.8 million or $0.42 per diluted share in the same period of fiscal year 2024 [16] Business Line Data and Key Metrics Changes - Fresh-packed lemon sales were $23.8 million, down from $25.8 million year-over-year, with 1.4 million cartons sold at an average price of $17.02 per carton compared to $18.43 in the previous year [12] - Avocado revenue was $8.5 million, down from $13.9 million, with approximately 5.7 million pounds sold at an average price of $1.50 per pound compared to $1.57 in the previous year [13] - Orange revenue increased to $1.7 million from $1.2 million, with 94,000 cartons sold at an average price of $18 per carton [14] - Farm management revenues significantly declined to $100,000 from $3.2 million due to the termination of a farm management agreement [14] Market Data and Key Metrics Changes - The company experienced pricing pressures in the lemon market during the first two months of the quarter but saw improvements in July [5] - The California avocado crop typically experiences alternating years of high and low production, impacting volume this year compared to last year [13] - The company anticipates shortages in several international areas, which may lead to improved pricing in fiscal year 2026 [5] Company Strategy and Development Direction - The company is focused on a two-part value creation strategy: agriculture production optimization and land and water value creation [5] - A strategic partnership with Sunkist is expected to drive $5 million in annual cost savings and EBITDA enhancements starting in fiscal year 2026 [6] - The company is exploring development options for the Linco del Mar property to address housing shortages in Ventura County [8][9] - The company aims to divest additional real estate assets in fiscal year 2026 and expects to receive $155 million from real estate projects over the next five fiscal years [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving volume goals for both lemons and avocados in fiscal year 2025 despite current challenges [5] - The company expects lemons to return to profitability with normalized pricing and fresh utilization levels in fiscal year 2026 [19] - Management highlighted the importance of community-based planning for the Linco del Mar property to stimulate economic growth and create jobs [9] Other Important Information - Long-term debt increased to $63.3 million from $40 million at the end of fiscal year 2024, resulting in a net debt position of $61.3 million [17] - The company recorded $1.7 million in proceeds from selling water pumping rights, generating $1.5 million in gains [9] Q&A Session Summary Question: Expectations of costs associated with Linco del Mar development - Management indicated that costs would be similar to previous developments, estimating $3 to $5 million over three to five years, with most costs capitalized [24][25] Question: Vision for long-term development of Linco del Mar - Management stated that they are currently leading the project and may consider partnerships similar to the Lewis Group in the future [25][26] Question: Normalized pricing expectations for lemons - Management noted that lemon prices rebounded in August and expect supply constraints from Spain and Turkey to support pricing in the upcoming year [30][31] Question: Expectations for avocado volumes in 2026 - Management indicated it is premature to provide specific expectations but noted that significant volume improvement is anticipated in 2027 [33]

Financial Data and Key Metrics Changes - For the first quarter, the company reported net income of approximately $15.1 million and net income to common shareholders of $9.1 million, or $0.25 per share [26] - Adjusted FFO was about $2 million or $0.06 per share, compared to $5.1 million or $0.14 per share in the same quarter last year, indicating a year-over-year decrease [26][27] - Dividends declared per common share remained at $0.14 for both quarters [26] Business Line Data and Key Metrics Changes - Fixed base cash rents decreased by about $5.7 million compared to the prior year quarter due to vacancies and structural changes in leases [27] - The company expects a total year-over-year decline of about $17 million in fixed base rents for fiscal year 2025 compared to 2024, primarily due to lease adjustments [29] - Participation rents recorded during the current quarter amounted to approximately $465,000, primarily from cash collected on wine grape sales [28] Market Data and Key Metrics Changes - The company has about 103,000 acres of farmland across 15 states, with 29 different growing regions, and holds approximately 55,000 acre-feet of water assets [7][8] - The nut sector is vulnerable to tariffs, with 78% of U.S. grown almonds and pistachios exported annually, and the company is monitoring the impact of tariffs on pricing [21][22] - The weakening of the U.S. dollar may help mitigate some negative impacts from tariffs, as it could stabilize prices for U.S. nuts [24] Company Strategy and Development Direction - The company is cautious with new investments due to high interest rates and costs of capital, leading to a slow acquisition activity [9][35] - The current strategy includes adjusting lease structures to minimize fixed costs for tenants while allowing the company to participate in crop revenues [11][12] - The company plans to maintain liquidity and evaluate its dividend based on the 2025 harvest outcomes [33][57] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about high interest rates affecting farming operations and the ability to borrow for planting and harvesting crops [35][80] - The company anticipates inflation in the food sector to continue increasing, which may positively impact the value of underlying farmland over time [38] - Management remains optimistic about the potential for strong crop production in the upcoming year, particularly for almonds and pistachios [14][37] Other Important Information - The company has access to over $180 million of capital, including about $40 million in cash, and nearly $150 million of unpledged properties [31] - The company is currently evaluating options for vacant farms and considering potential new crops to plant [51] - The company has no immediate plans for share repurchases, prioritizing liquidity to manage potential future obligations [55][57] Q&A Session Summary Question: Clarification on $17 million lower revenues in '25 versus '24 - Management confirmed that an additional farm was added to the participation rent structure, contributing to the increased revenue loss estimate for '25 [40] Question: Total participation rents expected in 2025 - Management indicated that the expected participation rents would include the $17 million plus additional amounts based on last year's run rate, but some participation rent would be lower due to lease adjustments [41][43] Question: Details on the $2.4 million termination fee - The termination fee was related to three almond farms that are now vacant, and management is exploring options to generate income from these properties [44] Question: Future asset sales and vacant properties - Management stated that they have listed some farms for sale but do not have contracts in place yet, and they are evaluating options for the vacant properties [49][50] Question: Thoughts on repurchasing shares given cash on hand - Management emphasized the importance of maintaining liquidity and being prepared for future obligations rather than repurchasing shares at this time [55][57] Question: Financing for upcoming preferred stock maturity - Management is considering options for financing the preferred stock due in January 2026, including potential asset sales and refinancing discussions with banks [67][71]