TEJON RANCH CO Q4 FY2025 earnings call

Matthew Walker started by noting operating income up but net income down due to one-time costs, then discussed segments. Robert Velasquez covered financials, segment performance details including the new multifamily segment and liquidity. Matthew Walker also talked about board governance changes like proposal for shareholder special meeting, board size reduction, annual meeting on May 13 with on-site and virtual options, and targeting $1M additional overhead savings by 2027

For the quarter, operating income was up compared to the fourth quarter 2024, while net income was down due to one-time proxy defense costs. Overall operating performance was strong. Revenue for the year was $49,600,000 and adjusted EBITDA was $24,200,000, both improved over 2024. Commercial revenue was up, led by two land sales. Farming revenue was up 20% over the same quarter last year and nearly 26% annually, with farming revenues the highest in a decade. Mineral Resources revenue was down due to lower oil and natural gas production volumes and pricing. A new segment for multifamily revenues was introduced, with $536,000 of multifamily revenue recognized during the quarter. Commercial and industrial real estate generated $4.2 million in revenue, portfolio strong. Equity in earnings from unconsolidated joint ventures totaled $2.1 million, down from the prior-year period. Farming had adjusted EBITDA before fixed water obligations increase to $4.4 million from $3.4 million in the same quarter last year

Q: When will TRC management and its self-serving board finally respect and benefit all the shareholders as its prime goal rather than the selfish history of self-enrichment? When will management stop being a disgrace and finally unlock the assets of the company for the benefit of its owners, not its management who, for decades, only sought the benefits for themselves?

A: Matthew Walker addressed governance changes, cost cuts, investor engagement, and alignment efforts.

Q: As of year-end, we have roughly $300,000,000 of invested capital in Mountain Village and Centennial combined. These assets generate no income, and between the associated water costs, land management, and continual development planning, they continue to impede our ability to generate acceptable returns on invested capital. How are you going to grow returns on invested capital to an acceptable level over the next few years while we continue to hold on to these assets? Even with no additional investment, these projects would need to go from generating losses to contributing over $20,000,000 of annual income simply to earn a minimal ROIC. The next question is: We would greatly appreciate hearing how the company will be able to significantly increase ROIC and earnings over the next five years while we continue to have $300,000,000 of capital tied up in these projects?

A: Matthew Walker discussed master-planned communities, capital raising, reentitlement process.

Q: As of year-end, we have close to $600,000,000 of invested capital on its own balance sheet, while our joint ventures, fully owned commercial real estate assets, and Mineral Resources segments generate roughly $20,000,000 of annual recurring profits, or total annual net operating profit after taxes has never exceeded $3,500,000 in any of the past three years. To achieve a sustainable return on invested capital of just 5%, a reasonably low expectation for a shareholder, you would need to either grow total net operating profit to over $30,000,000 per year or remove a substantial amount of capital from the business. How will you be able to achieve this over the next few years?

A: Matthew Walker talked about active asset management, advancing business plan at TRCC, monetizing land.

Q: Given that the Tejon Ranch property is in proximity to Los Angeles, will the company consider holding an Investor Day at the company headquarters rather than in New York, as was done previously?

A: Matthew Walker mentioned annual meeting on May 13 at Ranch, hybrid format, property tours.

Q: How much is estimated to be needed to fund the development of Centennial, as well as separately, Mountain Village? And will a shareholder rights offering be considered as a way to fund some of this to limit dilution of future profits?

A: Matthew Walker said future all-in development cost not disclosed publicly, plan to use third-party joint venture equity.

Q: What level of confidence do you have that Los Angeles County will approve the Centennial development, and what timeline do you project for potential approval?

A: Matthew Walker expressed high confidence, mentioned long-standing partnership with County, moving into public environmental review phase this year.

Q: As California continues to tighten regulations on traditional rodenticides, including the 2021 restriction on second-generation anticoagulants, how is Tejon Ranch approaching wildlife-friendly or nonlethal rodent control methods across its almond, pistachio, and cattle operations? And is this an area where you see potential for innovation or outside partnership as proof of your broader sustainability and environmental stewardship commitments?

A: Matthew Walker discussed integrated framework emphasizing prevention and habitat management.

Q: Have there ever been any outbound efforts or inbound inquiries to monetize the Mountain Village and Centennial, or the land held under the conservation agreement? What is the status, and what is your thinking about this?

A: Mentioned past capital raising for Mountain Village, open to inbound inquiries.

Q: Are you satisfied with the pacing and absorption of the apartments? Will you expand into phase two or bring in a partner?

A: Matthew Walker said pleased with Terra Vista lease-up, 70% leased, plan to expand phase two, capital allocation decision.