Gladstone Land(US:LAND)2025-05-13 13:30Financial 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 [25] - Adjusted FFO was about $2 million or $0.06 per share, down from $5.1 million or $0.14 per share in the same quarter last year [25] - Fixed base cash rents decreased by about $5.7 million compared to the prior year quarter due to vacancies and structural changes in leases [26] Business Line Data and Key Metrics Changes - The company executed seven new leases or amended existing leases, primarily on permanent crops [8] - The year-over-year decline in fixed base rents is expected to total about $17 million for fiscal year 2025 compared to 2024 [27] - The company anticipates a total year-over-year decline of about $17 million in fixed base rents for fiscal year 2025 compared to 2024, with a reduction of approximately $4 million to $5 million per quarter [27] Market Data and Key Metrics Changes - 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 [20][21] - The company noted that almond prices have risen significantly year over year, while pistachios remained stable or slightly increased [21] - The weakening of the U.S. dollar may help mitigate some negative impacts from tariffs, as it makes U.S. exports cheaper for foreign buyers [23] Company Strategy and Development Direction - The company remains cautious with new investments due to high interest rates and costs of capital, leading to a slow acquisition activity [8][34] - The company plans to continue with the current lease structure for 2025 and may revert to traditional lease structures next year or consider selling some properties [14] - The company believes investing in farmland growing healthy crops aligns with market trends and expects inflation in the food sector to continue to rise [35][37] Management's Comments on Operating Environment and Future Outlook - Management expressed hope for a strong production year, particularly for almonds and pistachios, but acknowledged uncertainty until the fourth quarter [13][14] - The company is focused on maintaining liquidity and ensuring it can meet financial obligations without compromising cash reserves [56][58] - Management indicated that the current farming environment is challenging due to high borrowing costs, which could impact future operations [34][81] Other Important Information - The company has access to over $180 million of capital, including about $40 million in cash on hand [30] - The company declared a monthly dividend of $0.0467 per share for the second quarter of 2025, equating to an annualized yield of 5.8% [32] - The company is evaluating options for vacant farms, including potential new crops and leasing water rights [50] 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 2025 [39] Question: Total participation rents expected in 2025 - Management expects to recover the $17 million loss and anticipates that insurance should cover that amount plus a small profit [40] Question: Details on the $2.4 million termination fee - The fee was related to three almond farms that are now vacant, and management is exploring options to generate income from those properties [42] Question: Additional sales in the second quarter and beyond - Management indicated that while some farms are listed for sale, there are currently no contracts to execute [48] Question: Status of vacant assets - Two of the vacant farms are open ground with low maintenance costs, while the three almond farms are at the end of their productive life [49] Question: Thoughts on share repurchase given cash balance - Management is prioritizing liquidity and is cautious about using cash for share repurchases, focusing instead on maintaining operational flexibility [56] Question: Financing for upcoming preferred stock maturity - Management is considering options including asset sales and refinancing, but is cautious due to high interest rates [71]