Farmland Partners(US:FPI)2024-07-25 18:38Financial Data and Key Metrics Changes - For Q2 2024, the company reported a net loss of $2.1 million, with a net loss per share of $0.06, which is lower than the same period in 2023 due to prior year dispositions [22] - Adjusted Funds from Operations (AFFO) was $0.5 million, or $0.01 per weighted share, higher than the same period in 2023, positively impacted by lower property taxes and increased citrus sales [22][23] - Total operating expenses decreased by 7%, reflecting effective cost management [18] Business Line Data and Key Metrics Changes - Fixed farm rent decreased due to property dispositions, while direct operations revenue increased due to higher citrus and walnut sales [27][28] - The company disposed of approximately 10.4% of its portfolio, yet operating revenues were down only 1.2%, indicating improved portfolio performance [18] Market Data and Key Metrics Changes - Commodity prices for primary row crops like corn and soybeans are lower than in previous years, leading to challenges for farmers but not a broad economic crisis [9] - In California, while some crops like citrus have seen price increases, challenges remain due to water risks and rising labor costs [10] Company Strategy and Development Direction - The company plans to gradually reduce its exposure to California due to ongoing challenges in that market [13] - The management believes the company trades at a significant discount to its net asset value, with efforts to close this gap through asset sales [14][15] Management's Comments on Operating Environment and Future Outlook - Management anticipates modest rent increases of 5% to 10% for lease renewals, reflecting the current lower commodity price environment [33] - The company expects to see a plateau in farmland values rather than a decline, with no significant risk of asset price decreases in the row crop region [12][35] Other Important Information - The company has undrawn capacity on its lines of credit of approximately $158 million as of the end of Q2 [26] - The forecasted range of AFFO for 2024 is $9.8 million to $12.8 million, or $0.20 to $0.26 per share [30] Q&A Session Summary Question: What are the expectations for rent renewal leases given the current farm economy? - Management expects rent renewals to increase by 5% to 10%, which is lower than previous years due to the current economic environment [33] Question: How does the company view the current distress in the farming economy? - Management noted that while there are some distressed farmers, the overall market remains stable, and high-quality farms continue to have strong demand [35] Question: What is the company's strategy regarding asset dispositions in the upcoming quarters? - The company plans to focus on asset sales in the fourth quarter, with a preference for high-quality farms and a gradual reduction of exposure in California [41][43] Question: How would the company approach acquisitions if capital costs were lower? - If capital costs were lower, the company would consider buying farms, as current market conditions present a good opportunity despite the lack of bargains [39] Question: What is the impact of almond pricing stabilization on the company's revenue? - Management acknowledged some positive movement in almond pricing but emphasized that it is too early to incorporate this into projections [54]