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FP

Farmland Partners Inc. (FPI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 culminated in a transformative year: FPI delivered $61.5M net income (+94% YoY), AFFO of $14.1M (+73%), and executed $312M of farm dispositions driving a ~$54.1M gain; leverage fell from $363.1M to ~$204.6M and floating-rate debt was eliminated .
  • Operating performance improved despite a smaller portfolio; total operating revenues rose to $58.2M (+1.3% YoY), NOI to $46.9M (+6.5% YoY), and Adjusted EBITDAre to $35.9M (+7.4% YoY) .
  • Board declared a one-time special dividend of $1.15 per share, paid January 8, 2025, reflecting monetization of appreciated assets and strong execution; quarterly dividend of $0.06 maintained going into 2025 .
  • Management guided 2025 AFFO per share to $0.25–$0.30, above the current $0.24 annualized dividend rate; projected annual interest savings of ~$10.9M from Q4 debt paydown support earnings durability and potential capital returns .

What Went Well and What Went Wrong

What Went Well

  • Significant deleveraging and cost efficiency: Debt cut by ~$158.5M in 2024 and floating-rate exposure eliminated; projected ~$10.9M annual interest savings from Q4 actions .
  • Strong monetization of assets and shareholder returns: ~$312M dispositions generated a ~$54.1M gain; $1.15 special dividend and buybacks at ~$12.25/share highlight capital discipline and confidence in intrinsic value .
  • Quote (CEO): “Proceeds from the properties we sold in 2024 allowed us to reduce leverage… and repurchase stock at what we believe to be a significant discount to fair value” .

What Went Wrong

  • Portfolio shrink drove lower fixed farm rent and required mix-shifts; management noted variable payments expected to decrease in 2025 given citrus/row crop outlook and absence of sold grape farms .
  • California remains a challenged region (water, labor/regulatory, crop over-planting), with institutional appetite constrained; management expects to “lighten our exposure” if pricing is fair .
  • G&A rose due to one-time severance ($1.4M) and $2.1M special bonus, partially offset by lower compensation/travel; renewal rates were roughly flat in 2024 after very strong increases in prior years .

Financial Results

MetricQ2 2024Q3 2024Q4 2024FY 2024FY 2023
Total Operating Revenues ($USD Millions)$11.445 $13.317 $21.474 (FY-$36.752) $58.226 $57.466
Net Income ($USD Millions)$(2.052) $1.838 $60.256 (FY-$1.194) $61.450 $31.681
NOI ($USD Millions)$8.814 $9.784 $18.672 (FY-$28.249) $46.921 $44.052
NOI Margin %77.0% (8.814/11.445) 73.5% (9.784/13.317) 86.9% (18.672/21.474) 80.6% (46.921/58.226) 76.7% (44.052/57.466)
Adjusted EBITDAre ($USD Millions)$6.521 $7.649 $13.130 (FY-$22.752) $35.882 $33.403
Adjusted EBITDAre Margin %57.0% (6.521/11.445) 57.4% (7.649/13.317) 61.1% (13.130/21.474) 61.6% (35.882/58.226) 58.1% (33.403/57.466)
Basic Net Income per Common Share ($)$(0.06) $0.02 N/A (not disclosed)$1.19 $0.55

Segment/Revenue Mix

Revenue Category ($USD Millions)Q2 2024Q3 2024Q4 2024FY 2024FY 2023
Rental Income$9.539 $9.753 $17.620 (47.119–29.499) $47.119 $49.185
Crop Sales$0.935 $2.616 $0.816 (5.027–4.211) $5.027 $2.257
Other Revenue$0.971 $0.948 $3.038 (6.080–3.042) $6.080 $6.024

KPIs and Balance Sheet

KPIQ2 2024Q3 2024Q4 2024 / FY 2024FY 2023
AFFO ($USD Millions)$0.530 $1.399 $14.074 (FY) $8.140
AFFO per Share ($)$0.01 $0.03 $0.29 (FY) $0.16
Adjusted EBITDAre ($USD Millions)$6.521 $7.649 $35.882 (FY) $33.403
Total Debt Outstanding ($USD Millions)~$393.0 ~$394.0 ~$204.6 (Dec 31, 2024) ~$363.1
Debt/EBITDAre RatioN/AN/A6.3 (FY 2024) 11.5 (FY 2023)
Liquidity ($USD Millions)$163.8 $140.2 (Sept 30) $245.8 (Dec 31) $206.6

Notes:

  • Q4 2024 quarterly values for revenues, NOI, and Adjusted EBITDAre are derived as FY 2024 minus nine months ended Sept 30, 2024; outsized Q4 net income reflects realized gains on dispositions .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
AFFO per ShareFY 2024$0.20–$0.26 $0.24–$0.30 Raised
Special DividendFY 2024$1.00–$1.10 projected $1.15 declared (paid Jan 8, 2025) Raised and finalized
Quarterly DividendQ4 2024 / Q1 2025$0.06 declared (Oct 29, 2024) $0.06 declared (Feb 18, 2025 for Apr 15) Maintained
AFFO per ShareFY 2025N/A$0.25–$0.30 New 2025 outlook
Projected Interest Savings2025 run-rateN/A~$10.9M annual savings from Q4 debt actions New projection

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 2024)Trend
Deleveraging & Interest SavingsPlanned asset sales, debt reduction, improved EBITDA; increased 2024 guidance ~$189.4M debt repaid post-Q3; floating-rate exposure eliminated; ~$10.9M projected annual savings Improving
Asset Sales & Capital ReturnsAnnounced/closed $289M sale; projected special dividend $1.00–$1.10 $1.15 special dividend declared; further buybacks Improving
Rent Renewals & Variable RentsStrong lease renewals offset lower fixed rent from dispositions 3-year renewal avg +12.4%; 2024 roughly flat; variable payments expected lower in 2025 Mixed
California Exposure & Water/RegulatoryCalifornia highlighted as challenged; cautious stance Maintain cautious approach; likely to lighten exposure if pricing fair; near bottom but uncertain Stabilizing (watch)
FPI Loan ProgramGrowing loans to support cash flow; undrawn lines used prudently Increased demand & focus; asset-based lending at high rates/fees; incremental inquiries Improving
USDA Programs & Macro PolicyResilient farm economy; monitoring macro Crop insurance vital; SNAP debates; minimal direct impact on FPI tenants; contracts honored Stable
Commodity Prices (Corn/Soy)Resilient pricing supported renewals Recent corn price uptick aids rent negotiations in row-crop portfolio Improving

Management Commentary

  • CEO (Luca Fabbri): “2024 was a very strong year… we successfully executed on our strategies to reduce overhead, enhance operational efficiencies, and selectively dispose of assets… reduce leverage… and repurchase stock at… discount to fair value” .
  • Executive Chairman (Paul Pittman): “Farmland is a function of current yield plus appreciation… two years in a row, we’ve delivered… we’ve delevered substantially and bought back quite a bit of stock” .
  • CFO (Susan Landi): AFFO up on lower property taxes, lower interest from debt reductions, increased avocado/citrus sales, and variable rents; G&A increased from $1.4M severance and $2.1M special bonus; no 2025 interest rate resets .

Q&A Highlights

  • Portfolio strategy and regional mix: Illinois remains core with high appreciation; Delta (NE LA/SE AR) attractive for current yield; cautious on High Plains (water) and California (water/regulatory/overplanting) .
  • John Deere dealership properties: provide ~6–6.5% current yield and appreciation optionality; selective expansion only if particularly attractive .
  • Incremental borrowing rate: ~6% currently; could be lower if termed out .
  • USDA program dynamics: Crop insurance sustains food security; FPI avoids tenants abusing programs; minimal direct exposure to IRA cost-sharing freezes; expect contractual obligations honored .
  • Lease renewals: 3-year average +12.4%; 2024 ~–0.8% given portfolio changes; expects ability to push rents with higher grain prices .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS/Revenue was unavailable due to access limitations; as a result, we cannot provide beat/miss analysis versus consensus at this time [GetEstimates error].
  • Given outsized Q4 gains on asset sales, GAAP EPS comparability to run-rate AFFO should be adjusted in models to reflect non-recurring disposition gains .

Key Takeaways for Investors

  • Deleveraging and elimination of floating-rate exposure materially reduce earnings volatility and support ~$10.9M annual interest savings, enhancing AFFO durability into 2025 .
  • Capital returns signal confidence: $1.15 special dividend plus buybacks at ~$12.25/share capitalize on portfolio appreciation and market discount; monitor additional buybacks .
  • 2025 setup: AFFO per share $0.25–$0.30 exceeds current $0.24 dividend rate, implying coverage and optionality for dividend review across the year .
  • Mix shift: Lower fixed rent from dispositions offset by strong renewals, citrus/avocado/walnut sales in direct operations; variable payments expected to moderate—model accordingly .
  • Asset allocation: Favor Midwest row crops (Illinois core); cautious on California—potential for further pruning; Delta attractive for yield—watch deployment .
  • Loan program: Asset-based lending growth supports cash flow with high rates/fees under strong collateral discipline; incremental demand noted .
  • Trading implications: Stock-sensitive catalysts include further asset monetization, incremental buybacks, affirmation or raise of 2025 AFFO guidance, and updates on rent renewals tied to grain prices .