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GLADSTONE LAND Corp (LAND)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 was intentionally back-weighted due to lease restructurings; operating revenue fell 42.3% YoY to $12.3M and diluted EPS was a loss of $0.384, both missing consensus; EBITDA was roughly in line to modestly ahead of estimates on S&P Global data .
  • Management expects the “large majority” of 2025 revenue and earnings to be recognized in Q4 as participation rents replace fixed base rents on certain Western permanent crop farms .
  • AFFO turned negative to $(3.45)M ($(0.095)/share) vs +$3.70M ($0.103/share) YoY, reflecting lower fixed base rents, vacancies, and higher property operating costs tied to water rights protection and direct-operated/non-accrual farms .
  • Liquidity remains strong (> $150M immediately available capital) and debt is largely fixed-rate; monthly common dividend maintained at $0.0467 per share for Q3 2025—near-term stock catalysts center on nut crop pricing and Q4 participation rent realization .

What Went Well and What Went Wrong

What Went Well

  • Participation rent strategy on eight Western permanent crop properties positions LAND to capture upside from strong pistachio demand and improving almond pricing; pistachio base price matched 2024 and almond prices rebounded 5–10% YoY into the season .
  • Water security improved; purchased 1,530 acre-feet in CA post-quarter, and the team has built groundwater storage and recharge infrastructure to buffer SGMA impacts and future drought cycles .
  • New leases added during Q2 are expected to increase annual NOI by ~$166K (+9.3% vs prior leases), and over 99% of borrowings are fixed-rate with a 3.39% weighted average rate locked ~3.3 years, reducing interest sensitivity .

What Went Wrong

  • Operating revenue declined 42.3% YoY to $12.3M and diluted EPS loss widened to $(0.384) vs $(0.186) YoY; AFFO turned negative due to lower fixed base rents, vacancies, direct operations, and water-rights protection costs .
  • Occupancy fell to 95.9% from 99.3% YoY; farms owned and acres declined due to portfolio pruning—fewer assets mean lower fixed rent contribution .
  • Cash from operations decreased by ~$12.0M YoY, reflecting lower fixed cash rent collections and heightened expenses on vacant/direct-operated/non-accrual properties .

Financial Results

Core Financials vs prior quarters

MetricQ4 2024Q1 2025Q2 2025
Total operating revenues ($USD Thousands)$21,096 $16,804 $12,296
Net income (loss) ($USD Thousands)$539 $15,108 $(7,878)
Diluted EPS ($USD)$(0.151) $0.252 $(0.384)
AFFO ($USD Thousands)$3,362 $2,035 $(3,450)
AFFO per share ($USD)$0.093 $0.056 $(0.095)

Year-over-Year (Q2 2025 vs Q2 2024)

MetricQ2 2024Q2 2025YoY Change
Total operating revenues ($USD Thousands)$21,297 $12,296 $(9,001) (42.3%)
Net income (loss) ($USD Thousands)$(823) $(7,878) $(7,055) (857.2%)
Diluted EPS ($USD)$(0.186) $(0.384) $(0.198) (106.6%)
AFFO ($USD Thousands)$3,703 $(3,450) $(7,153) (193.2%)
AFFO per share ($USD)$0.103 $(0.095) $(0.199) (192.3%)

Margins (S&P Global)

MetricQ4 2024Q1 2025Q2 2025
EBITDA Margin %91.0%*92.5%*87.9%*
Net Income Margin %2.6%*90.6%*-64.3%*
Values retrieved from S&P Global.*

KPIs

KPIQ4 2024Q1 2025Q2 2025
Farms owned (#)157 150 150
Acres owned (#)111,190 103,001 103,001
Occupancy rate (%)96.2% 95.9% 95.9%
Acre-feet water assets owned (#)55,387 55,350 55,306
Cash distributions declared per common share ($)0.140 0.140 0.140
Cash flows from operations ($USD Thousands)11,582 4,467 3,949

Estimates vs Actuals (Q2 2025, S&P Global)

MetricConsensus EstimateActualSurprise
Revenue ($USD)$15.62M*$12.25M*Miss: $(3.37)M (−21.6%)*
Primary EPS ($USD)$(0.218)*$(0.389)*Miss: $(0.171)*
EBITDA ($USD)$10.67M*$10.77M*Beat: +$0.10M (+0.9%)*
Values retrieved from S&P Global.*
Note: Company-reported Q2 revenue was $12.30M; slight variance vs S&P’s actual likely reflects classification timing or normalization differences .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue/Earnings timingFY 2025Prior cadenceMajority recognized in Q4 due to participation rents Shifted to Q4 (raised reliance on participation rents)
Fixed base cash rentsFY 2025 vs 2024N/A~$(17)M reduction expected vs 2024 Lowered
Participation rent realizationFY 2025–2026N/A~60–65% in 2025; remainder mostly Q4 2026 New disclosure
Monthly common dividendQ3 2025$0.0467$0.0467 per month (July–Sept) Maintained
Debt cost/structureOngoingN/A>99% fixed; WAC 3.39% locked ~3.3 years Reinforced fixed-rate posture

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Lease structure shift to participation rents7 leases in 2024 moved to higher crop-share; Q1 continued restructuring and noted vacancies/direct operations 6 modified leases plus 2 operated properties; majority of 2025 earnings to Q4 Increasing reliance on crop-share; earnings back-weighted
Water security and SGMA preparednessAdded 8,987 acre-feet in 2024; infrastructure build-out Ongoing storage and recharge investments; superior water security across portfolio; purchased 1,530 acre-feet post-Q2 Strengthening buffer; optionality in drought cycles
Permanent crop markets (almonds, pistachios, wine grapes)Stronger production but pricing pressure; 2025 recognition expected in H2 Pistachio base price steady; almond prices rebounded 5–10% YoY; wine grapes weak but some pricing inquiries Mixed-to-improving (almonds/pistachios better; wine grapes weak)
Portfolio pruning and dispositions12 farms sold in 2024; further Michigan blueberry sales pending One Florida property under contract; potential additional sales if lease terms unsatisfactory Continued pruning; focus on lease quality
Debt/Liquidity disciplineRepaid ~$33.6M loans in 2024; ATM common issuance modest Refinanced $10.6M; repaid $10.4M maturing bond; >$150M liquidity Stable, conservative balance sheet

Management Commentary

  • “With the approach we've taken on certain of our western permanent crop farms, our earnings for 2025 will be more dependent on participation rents… the majority expected to be recognized in the fourth quarter.” – David Gladstone, CEO .
  • “We expect above average crop yields… pistachio base price… is the same as last year's… almond market momentum… pricing really come back… up 5% to 8%….” – Bill Reiman, EVP West Coast Operations .
  • “Adjusted FFO was negative $3.4M… year over year decline… driven by changes to lease structures… vacancies… lost revenue from farms sold… fixed base cash rents… down by about $6.8M from the prior year quarter.” – Lewis Parrish, CFO .
  • “Over 99% of our borrowings are at fixed rates… weighted average rate of 3.39% locked in for another 3.3 years… we currently have over $150,000,000 of available capital.” – Lewis Parrish, CFO .

Q&A Highlights

  • Participation rent timing and magnitude: Management pencils ~60–65% of reduced fixed base rent shift realized in 2025 with remainder mostly in Q4 2026; leases won’t auto-convert back to fixed—negotiations later in 2025 .
  • Series D term preferred strategy: Options include payoff via sales, LOC, or allow rate step-up temporarily; evaluating market rates and costs .
  • Water usage/variance: Minor quarter-over-quarter reduction due to tenant transition and irrigation needs; broader strategy centers on stored water and infrastructure .
  • SGMA impact: Team focused on supplemental water, adjudications, and infrastructure; portfolio water security viewed as among the best in California, mitigating bifurcation in land values .
  • Liquidity floor: Target maintaining at least ~$50M of availability over the next 12 months given operating needs and amortization schedule .

Estimates Context

  • LAND missed Q2 2025 revenue and EPS vs Wall Street consensus; EBITDA was slightly above consensus on S&P Global data. Expect estimate revisions to reflect heavier Q4 weighting and crop-price updates:
    • Revenue: $12.25M actual vs $15.62M estimate (−21.6% miss)*
    • EPS: $(0.389) actual vs $(0.218) estimate (miss)*
    • EBITDA: $10.77M actual vs $10.67M estimate (slight beat)*
      Values retrieved from S&P Global.*
  • With management reiterating the Q4-heavy earnings profile and pistachio/almond commentary, sell-side models likely shift revenue/EPS into Q4 and factor higher participation rent yields .

Key Takeaways for Investors

  • Near-term earnings cadence is atypical: expect a weak Q3 and a strong Q4 as participation rents are recognized on harvest/sales; positioning for Q4 is the key trading catalyst .
  • Portfolio quality focus continues—vacancies and non-accruals pressuring AFFO in H1; expect resolution via new leases or asset sales; watch Florida sale and negotiations on Western farms .
  • Water strategy is a differentiator under SGMA; stored water and infrastructure investments mitigate drought risk and should support long-term valuations and tenant performance .
  • Balance sheet risk is contained: >99% fixed-rate debt, 3.39% WAC locked ~3.3 years; liquidity >$150M provides runway to manage harvest cycle and potential disposals .
  • Commodity exposure matters: pistachio demand strong, almond prices recovering; wine grapes remain weak—participation rents tether outcomes to crop volumes/prices; monitor international trade dynamics and tariff risks .
  • Dividend maintained at $0.0467/month; payout sustainability hinges on Q4 participation rent realization and 2026 lease normalization progress .
  • Watch estimate revisions: post-miss, models should push revenue/EPS into Q4 and adjust for participation rent split (60–65% in 2025 per CFO) .

Notes:

  • No additional relevant LAND press releases were identified for Q2 2025 beyond the 8-K Exhibit 99.1; the unrelated Landis+Gyr item is a different company (SIX: LAND), not Gladstone Land (Nasdaq: LAND) .