Q4 2025 Tejon Ranch Co Earnings Call
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Greetings and welcome to the town Ranch company's fourth quarter 2025 earnings call.
At this time all participants are in a listen only mode.
If anyone should require operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce Nick <unk> Senior Vice President of corporate Communications. Please go ahead.
Good afternoon, and welcome to the Hone Ranch company's fourth quarter 2025 earnings call. My name is Nick Ortiz joining me today are Matt Walker, President and CEO, and Robert Velasquez, Senior Vice President and Chief Financial Officer. Today's press release 10-K. In this webcast are available on our Investor Relations website, a replay will be.
Posted after we conclude that site is IR, Dr Hung ranch dot com.
Today's remarks May include forward looking statements. These statements are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1095 and are subject to risks and uncertainties that could cause actual results to differ materially. These factors are detailed in our SEC filings, including our most recent forms 10-Q and 10-K.
We assume no obligation to update any forward looking statements. We may reference non-GAAP measures. These measures should be considered in addition to not as a substitute for GAAP results reconciliations to the most directly comparable GAAP measures and reasons why we use non-GAAP are included in today's filings and are posted on our website again.
IR dot to hone ranch dot com.
After prepared remarks, we'll address questions shareholders were invited to submit questions by E mail and with that I'll turn the call over to match.
Good afternoon, I'm, Matt Walker, President and CEO of <unk> company. Thank you for joining us for this our second earnings call, we'll be using the same format as last November I'll share my perspective ill turn it over to our CFO, Robert Velasquez, who will cover our financials and then I'll answer your question as we did last quarter, we'll be answering.
Shareholder questions that are asked.
So moving onto this quarter I'd like to talk about where we've been and where we're headed.
For the quarter, our operating income was up compared to the fourth quarter 2024.
Net income was down.
Reflects onetime proxy defense cost, but our overall operating performance was strong which will explain as we go through our segment.
For the year are $49 $6 million in revenue at $24 2 million and adjusted EBITDA, both improved over 2024.
Our company's economic driver remains our commercial real estate business commercial revenue was $2 million for the quarter three.
<unk>.
For the year.
<unk> sales, one of which was the whole site.
Our backend payment on our equity transaction from 2025.
And farming, we had one of the stronger years in recent memory and this was supported by an on bearing Europe for pistachios.
<unk> revenue was up 20% over the same quarter last year and up nearly 26% annually.
Pleased to report that our farming revenues were the highest in a decade.
Income from our joint ventures was down for the quarter and down for the year.
Our industrial real estate Jbs performed well our travel center JV with Ta Petro was impacted by reduced current truck traffic on Interstate five.
This led to lower fuel sales at fuel margin as well as lower sales in our travel centers and restaurants.
On the positive side, we have seen encouraging signs from the outlet centers.
With December generated the highest retail sales of any month since we opened in 2014.
There are many factors at play, but among them is the positive impact of the new hard rock casino, which opened in November.
So far the casinos impact has been extremely encouraging and we look forward to further positive benefits from the casino in 2026.
Last call I talked about commitments made by the board with respect to corporate governance.
Today I'm pleased to report that our board is delivering on those commitments.
First as I Hope you saw this morning, we filed an 8-K announcing our proposal to provide shareholders with the right to call special meetings.
We are proposing that our shareholders or groups of shareholders owning at least 25% of the outstanding shares and call for a special meeting.
Our proposal is consistent with the majority of public companies and we think it better aligns us with our shareholders.
Shareholders will be able to vote on this proposal as part of their proxy ballot prior to the annual meeting in May.
Second I have spoken in the past about our board size and composition, we filed an 8-K earlier this month announcing the decision by our board to reduce in size from tend to die also the board decided that two board members can be best if they are elected this bag, which stepped down by May 2027.
Which would bring to our board five Dow just stuck.
In addition, as part of our board size reduction the board voted to eliminate our executive Committee. These.
These changes reinforced that our board is committed to positively governance change.
Next we will be holding our annual meeting on site at the ranch on May 13th.
We by each of our shareholders to attack.
We'll also provide an opportunity for our shareholders to attend virtually.
It will be a good opportunity to see our assets up close and also a chance to spend time with our management team and board.
Following the annual meeting we will be hosting tours of the ranch Couldnt at Taylor Ranch Commerce Center.
The Terabits apartment.
Apartment community in the hard rock Casino, we hope you can join us.
Registration information will be provided with your proxy statement.
Last year, we completed a number of cost saving measures looking ahead I want to communicate that we're not done yet we're continuing to streamline our operations and have targeted an additional $1 billion of overhead savings by the end of 2027.
When you add all this up our operating business is showing signs of positive momentum. However, I want to emphasize that cost improvement alone is not our only goal as a company we must put more of our assets to work generated higher cash flow producing more earnings and increasing value for our shareholders.
I would describe my first year at the company are setting the table. This consisted of taking a close look at all aspects of the business formulating a strategy and then communicating that strategy to the market.
This year, we are working on activating those plan.
Right now is an exciting time for the company as we look to grow our revenue base and realize the benefits of our cost savings to drive more earnings growth.
With all of this as a backdrop I would like to turn over to Mike <unk>, Our Chief Financial Officer, Robert Blasket. So that he can go through the quarterly financials.
Robert Thank.
Thank you, Matt and good afternoon, everyone.
I'll focus my remarks on our fourth quarter results.
Some additional detail on segment performance and then briefly discuss liquidity.
For the fourth quarter of 2025 net income attributable to common stockholders was $1 6 million or six cents per diluted share.
<unk> to $4 5 million or <unk> 17 cents per diluted share in the fourth quarter of 2024.
Revenues and other income, including equity and earnings from unconsolidated joint ventures increased 8% to $23 3 million compared to $21 6 million in the same quarter last year.
Adjusted EBITDA for the quarter was $11 4 million and <unk>.
Kris over 90% compared to $10 5 million in the prior period.
Turning briefly to segment performance commercial and industrial real estate generated $4 2 million in revenue for the quarter compared to $4 1 million in the prior year period.
Operationally the portfolio remains strong with the industrial portfolio re leased.
The commercial portfolio, approximately 98% leased which includes the outlets at the hone at 93% occupancy at year end.
Equity and earnings from unconsolidated joint ventures totaled $2 1 million in the fourth quarter compared to $3 3 million in the prior year period, reflecting lower earnings from a travel center joint venture.
Farming revenues for the quarter were $12 2 million, an increase of 26% compared to $9 7 million in the fourth quarter of 2024, reflecting the impact of the pistachio harvest.
On period year cycle, as well as improved performance across other permanent crops.
Adjusted farming EBITDA before fixed water obligations.
Increased to $4 4 million in the fourth quarter from $3 4 million in the same quarter last year with margins improving modestly as higher crop production drove operating leverage.
Mineral resources revenue totaled $2 4 million for the quarter compared to $2 5 million in the prior year period, reflecting lower oil and natural gas production volumes and pricing.
I'm pleased to introduce a new reporting segment and a milestone for the company.
For the first time, we are reporting a segment dedicated to our multifamily revenues and expenses.
As lease up activity at service after <unk> gained momentum we evaluated whether the business warranted its own segment and concluded that it did.
Here's worth being spent.
During the quarter. The company recognized 536000 of book by family revenue, reflecting leasing activity at service at home.
Which commenced leasing early in 2025 days.
Phase one of the projects consisting of 228 units was completed during the year and the property continues to progress with Lisa.
Turning briefly to our balance sheet as of December 31, 2025, cash and marketable securities totaled approximately $24 9 billion.
Available capacity on our revolving line of credit facility was approximately $66 1 billion.
Total liquidity was therefore propylene $91 million.
We believe our liquidity position and provide sufficient flexibility to continue advancing development initiatives, while maintaining balance sheet discipline.
With that overview I will turn it back to that.
Thanks Robert.
To close our direction is clear.
<unk>, our core business tightening our cost structure and concentrating on leveraging our assets to generate recurring cash flow.
At the same time, our board has made significant progress in governance and shareholder alignment.
We remain committed to providing you our shareholders with clear communication and accountability.
So with that we will now respond to the questions that have been submitted so please just give us a moment to get those pulled up.
Alright.
Thank you match, we received 11 questions from investors before the deadline will read each one estimated as we did last quarter and identified its a matter before we begin I just want to thank all of our investors who submitted questions for their engagement or first question when will Trc management, and it's self serving board finally respect and benefit.
All the shareholders as its prime goal rather than the selfish history itself enrichment when will management stopped being a disgrace and finally unlock the assets of the company for the benefit of its owners not as management, who for decades only saw the benefits for themselves the questions from Samuel Koenig.
Okay.
I understand the question Samuel and I understand the sentiment and the frustration behind it.
I've been at the company for just over a year now and in that time scrutinized our operations looking for opportunities to grow our revenue base and reduce our cost.
We've been able to reduce our workforce by 20% we've cut millions from our overhead. We've also taken a much more proactive approach with our shareholders.
We've held an Investor day last October our hosting earnings calls like the one we're having right now.
Those include a format, where individual shareholders like yourself can engage in a direct dialogue with management.
We have provided additional financial disclosures like the ones that Robert just mentioned plus investments scorecards and hurdle metrics to better explain our business to shareholders. These are all examples of the company's new approach you alluded to accountability with executive compensation.
Right now we're in the process of finalizing our proxy statement when its released I think youll see how our existing compensation structure is responsive to the company's financial performance and how it addresses the accountability issue and a meaningful way.
In addition, we've been we've been working on a revised compensation plan, which will be covered in the upcoming proxy that further aligns us with shareholders and increasingly ties our performance to share price improvement.
Moreover, I personally made adjustments to my comp to further align myself with shareholders. Furthermore, a few weeks ago as.
As we discussed just a few seconds ago, our board chaired its plan for governance reform.
The board size, we are limited to the Executive Committee today, we announced the proposal for shareholder meeting right.
Our board is.
On top of that we had increased representation from our shareholder base compared to where we were a few years ago. I think you should know that our board isn't monolithic and our board members have diverse opinions and they are an effort to assure them. So these are just a few of the things that we're working on between management and the board to enact change for the better.
Taken in aggregate, we've made a positive difference in the last year.
Can't speak to all the things that you mentioned before I joined the company, but what I can tell you in the answer to your question is I do think that we're on our way to demonstrating accountability and creating value for our shareholders.
Next question.
Next question as California continues to tightened regulations on traditional rodenticides, including the 2021 restrictions on second generation anti Coagulants, how is to hone ranch approaching wildlife friendly or non lethal relative control methods across its almonds pistachios 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. The question is from Eli female.
So one of the things that I've grown to appreciate on the ranch in my first year here is how interconnected the various businesses are and how important it is to take a long term view of the branch and its stewardship.
The ranch really is a special place that requires active management. Our team has been doing this for nearly 200 years.
The vast majority of our branches also part of the <unk> Ranch Conservancy.
That means we've got numerous rules and restrictions that are designed to protect the ranch and the wildlife that calls the ranch.
See some of that wildlife outside of my window as we speak.
Your question gets to how we balance our farming business with our game management business.
We take we take our responsibility to grow crops seriously.
And to do so in a sustainable manner, just as we're committed to safely operate.
High quality hunting program and one that respects the stewardship of our wildlife resources, we approach pesticide and wildlife.
Integrated framework, we emphasize prevention and habitat management over reliance on any single tour chemical approach.
All of that so if the regulatory environment evolves. We're then well positioned to adapt because that philosophy is already embedded in how we operate and everything that we do here.
We have two questions from the same investor I mean read them. Both before you respond Matt the first question.
As of year end, we have roughly $300 million of invested capital in mountain village in Centennial combined these assets generate no income and between the associated water costs land management and continued development planning they continue to impede our ability to generate acceptable returns on invested capital. How are you growing to grow 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 million of annual income simply to earn a minimal ROIC.
This is the next question we would greatly appreciate hearing how the company will be able to significantly increase ROIC return on invested capital and earnings over the next five years, while we continue to have $300 million of capital tied up in these projects both questions are congested legal.
Thanks for your questions Justin.
Nick Let me take those together, they're important topics and I want to recognize that there are varying opinions on this let.
Let me share our perspective and build on what I have said and what I've written in the past our master planned communities have been an important component of our overall business plan for several decades.
Youre right they required a significant.
Capital investment.
My goal is to move our communities into active implementation. So that they can begin to generate cash flow and a return on our invested capital as you noted.
The reality is that this is going to take a few more years.
There are many examples of public companies, who are operating in this master planned communities space from Florida to Texas to right here in California.
Each of them has had to go through some degree of upfront effort to complete their approvals to complete their design and to finish their infrastructure before they can start producing revenue and all of that takes time and capital.
No different and we've consistently communicated that to the market.
Fortunately, we have other businesses that also generate cash and we hope to increase that while our community development ramps up.
When you look at the other companies developing Npcs you can see that there's a significant cash flow thats generated which achieves an attractive ROIC and.
And we'd expect that our master planned communities can generate significantly more than the $20 million.
The annual income that you mentioned.
Also our business plan is to utilize third party joint venture at least so that should help a little bit too.
On mountain village, we have started the capital raising process.
And on Centennial first and foremost our approaches to complete a re entitlement effort, which will result in significant value creation and preserve the value of our investment to date as we mentioned in our press release that project is advancing through the re entitlement process and will soon be entering a more public.
Stage, and we expect to be in front of Los Angeles County later this year.
Right.
Our next question have there ever been any outbound efforts or inbound increase to monetize the mountain village Center.
The land held under the conservation agreement what is the status and what you are thinking about this this is a question from David Ross. Thanks, Thanks, David as we mentioned before in my answer to the previous question.
They have been.
Outbound capital raising efforts in the past related to mountain village.
As I've mentioned in my letter last fall and in my previous remarks today, we're in the process right now of capital raising for that project.
As it relates to inbound inquiries, we're always happy to chat with anyone who has an interest in our business, including our land.
As I, just previously mentioned centennial's and a little bit different position given its ongoing re entitlement status.
Of that project.
Alright. Our next question is given the large amount of investments. The company has made in the mountain and Centennial over the last 30 years, we didn't the highest and best use of capital B to monetize these assets and focus on the Grapevine and T. RCC, how do you justify the alternative this is a question from Paul Ross.
Hi, Paul.
I don't look at mountain village in Centennial as being mutually exclusive with great fine and Trc.
Commerce Center is already a huge focus for us and I think you can see from our notable investment at parent Vista.
We're committed economically and strategically to Trc.
We're also committed to expanding and developing out Trc's, Ian we plan to do so the same goes with great fine.
Tried to state the case for mountain village and Centennial.
What I would add is that with respect to any of the company's assets. The ones I've spoken about are the ones I haven't we need to maintain flexibility. So that we can adapt to market conditions and any.
<unk> that might arise.
So that we're deploying our capital on a go forward basis in the most advantageous way possible I've tried to be clear that capital allocation is one of the most important things that we do here at General branch company.
Are you satisfied with the pacing and absorption of the apartments, we will expand into phase II or bring in a partner. This is a question from Stuart Ross.
Stuart I appreciate the question, Yes, we are pleased with our current lease up on Vista and I'm happy to say that we are now 70% leased.
We're approaching our one year anniversary, which is exciting we brought on gray star to manage the apartments. So we're benefiting from the horsepower of the nature of the nation's largest multifamily owner and manager. So they are leveraging their platform and la northern La county to expand into current.
County, We've also done a good job with programming and events and things like that and our tenants really enjoy living there and we hope to.
Have them for years to come on.
On phase two yes.
The plan is to expand into our second phase it really for us comes down to our capital allocation and prioritization decision.
There are a number of ways that we can proceed.
Fortunately the amenity complex from phase one is already in place. So there are efficiencies that would come in developing that second phase.
Your next question as of the end of this year. The company is close to $600 million of invested capital on its own balance sheet or joint ventures fully owned commercial real estate assets and mineral rights segments generate roughly $20 million of annual recurring profits. Our total annual net operating profit after taxes is never.
Ceded $3 $5 million in any of the past three years to achieve a sustainable return on investment invested capital of just 5% are reasonably low expectation for a shareholder you would need to either grow total net operating profit to over $30 million per year or removed a substantial amount of capital from the business.
Or will you be able to achieve this over the next few years. This is a question for David here.
Thanks, David.
Let me see if I can provide some additional thoughts on top of what I already said earlier on this topic.
Youre, absolutely right Big picture, we need to take more of our company's balance sheet, and we need to convert those assets into cash flow production and this needs to happen as quickly as possible and believe me I feel the urgency.
Beyond our master planned communities and I think this is what you were getting at.
As we need to increase our cash flow from all of our non NPC assets as well. So there are a number of ways that we can address this.
First we need to drive bottom line improvements across our existing operating assets through active asset management.
Doing all sorts of things, we're renegotiating contracts looking for lower cost alternatives, we're finding better ways to be more efficient across our different segments.
Second we need to continue to advance our business plan as I mentioned before particularly at Trc, where we've got a consistent track record of producing high yielding commercial real estate assets, particularly in the industrial sector.
This is a priority for us and we are working hard to move forward and it's critical.
That we do this and it's a critical way for us to increase our cash flow.
Third we need to think outside of our commercial real estate box and we need to leverage our key differentiator.
Got it.
And we need to monetize that land.
So our teams hustling you'd be surprised that who is interested in utilizing our land.
Overall, it's a balanced approach and it's going to take a combination of singles and doubles and more than that to move the cash flow needle to where it needs to be whether you're talking about EBITDA or no Pat or net income.
Okay.
Our next question given that the town 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. This question is from Richard gradually.
Good question, Richard I think you're I think you're onto something I've got some good news to report on this front, which we've talked about a little bit before.
There really isn't any substitute to seeing <unk> ranch firsthand.
A lot to see in.
Even for the people who have toured over the past couple of years with US I think theres reason to come out.
As I mentioned earlier, we're pleased to share that our upcoming annual meeting.
Beyond may 13th it's gonna be Reits here at the ranch.
It'll be a hybrid format. So shareholders can participate in person or remotely we're going to have a lot of the same components that we did for last October Investor Day in New York, So we'll be giving a presentation about the company will take your questions just as we did in New York.
But since we're on site will also be hosting property tours of the ranch our goal is to make it immersive and informative.
It'll be a great way for shareholders to interface with our management team, while also getting a closer look at some of our recent additions in these would include our.
Sure.
<unk> and our new neighbours at the hard rock.
Casino, which ought to be packed no matter what it is that we have.
Good for them.
And before.
We're going to be sending out details on the event. Shortly so we'll be taking reservations for our tours so stay tuned.
And then Azure.
As it applies to a dedicated Investor day, we'll start planning for that after our annual meeting so.
Your feedback Richard as noted and appreciated.
How much I'm sorry next question how much is estimated to be needed to fund the development of centennial as well as separately to hone mountain village and Willis shareholder rights offering be considered as a way to fund some of this so as to limit dilution of future profits. This is a question from Bob Edwards.
Thanks, Bob.
We have not disclosed publicly the future all in development cost of mountain village or Centennial.
I can appreciate the desire for you to see that it's something that we would intend to share closer to groundbreaking.
With any large scale master planned community construction is phased and we recycle the cash flow on the front end to minimize how much equity is required.
And as I noted earlier in the call. We would plan to use third party joint venture equity as opposed to a rights offering to avoid dilution of our shareholders.
Okay.
Our 11th and final question.
What level of confidence do you have that Los Angeles County will approve the continued development and what timeline do you project for potential approval. This is a question from Stephen Chin.
Hi, Stephen Good question.
First on Centennial some already but let me answer your question with some more detail.
First off we're not going to prejudge any regulatory outcome and we want to be respectful of the process before it proceeds, but we will say this.
Our confidence in advancing Centennial to approval is high.
It is important to note that our relationship with La County remains genuinely strong throughout this entire process.
We've built a long standing partnership with the county, which has been extremely productive.
Challenge at this stage isn't really the county.
The pace of any legal process that may unfold and that's that's a distinction that's worth.
Okay.
Okay.
Relates to Centennial, we've been working hard.
To prepare a comprehensive plan.
Okay.
Okay.
Okay.
This is Mike.
What's encouraging is that the list of open issues continues to narrow we've been through all this.
Correct.
<unk>.
Valley Regional area planning process, which identified the site for economic development and growth.
We worked on the general plan, there's been new case law on fire protection you name. It we've consistently taken the approach that we should show up engage and then move through the process. Just like we have successfully done at Trc Mountain village and our grapevine.
Which are all today fully entitled and fully litigated.
This year at Centennial will be moving into a more public phase of environmental review and as I mentioned before we hope to be in front of La County, and the board of Supervisors later this year.
Centennial does shine, a spotlight on something broader and Thats California's need to modernize its environmental review framework. We're active in those conversations at the state level and we think there is real momentum at last to enact positive perform but we're not waiting for a policy miracle.
We've demonstrated that we know how to get through with seaport processes. We've done it handful multiple times and we are confident that we will get centennial approved.
Yeah.
So if that's all I'd like to thank everyone for providing your questions as I mentioned earlier, we also look forward to our upcoming annual meeting in May right here at the ranch and we hope you will join US here. So thank you very much and have a good day.
Thank you. This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.
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