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TR

TEJON RANCH CO (TRC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered a return to profitability with net income of $1.7M and $0.06 EPS, versus a net loss of $1.8M and $(0.07) EPS in Q3 2024; revenue rose to $11.97M YoY from $10.86M, driven primarily by stronger farming results and steady mineral/real estate contributions .
  • Results were above Wall Street consensus: EPS of $0.06 versus $0.01 consensus and revenue of $11.97M versus $9.53M consensus; the beat was underpinned by almond and wine grape strength and normalized yields, plus stable JV contributions despite lower highway traffic impacting TA/Petro .*
  • Non-GAAP Adjusted EBITDA was $5.28M (vs $5.64M in Q3 2024) on lower stock comp and improved segment performance; management emphasized cost discipline with a ~20% workforce reduction in October, targeting ~$2.0M annual savings and further ~$1.5M overhead reductions next year .
  • Strategic catalysts: Terra Vista multifamily is now fully delivered (228 units) and more than half leased; Hard Rock Tejon Casino opens imminently, expected to lift TRCC traffic benefiting retail, outlets, and travel centers; industrial GLA is 100% leased and commercial/retail 95% occupied .

What Went Well and What Went Wrong

What Went Well

  • Farming segment revenue increased to $4.34M (+34% YoY), with normalized yields across almonds and wine grapes; pistachios entered an up-bearing year, contributing materially to the improved agricultural profile .
  • TRCC industrial portfolio (2.8M sq ft) remained 100% leased; TRCC commercial/retail 95% occupied; Outlets at Tejon at 90%, underscoring resilient recurring income and leasing fundamentals .
  • Management push for efficiency: ~20% workforce reduction to save ~$2.0M annually, plus targeted ~$1.5M recurring overhead savings in 2026; CEO emphasized “operate leaner, invest efficiently and generate more cash” .

What Went Wrong

  • Equity in earnings from unconsolidated JVs declined YoY for the nine-month period, mainly from TA/Petro due to reduced I‑5 traffic and lower demand (port shipments and local travel), pressuring travel center-related earnings .
  • Mineral resources revenue was stable in Q3, but down $0.41M year-to-date versus 2024, reflecting headwinds; water sales opportunities were limited by State Water Project allocations at 50% .
  • Adjusted EBITDA in Q3 decreased modestly to $5.28M from $5.64M last year, reflecting mixed JV performance and corporate expenses despite improved farming; management noted more to do to improve margins .

Financial Results

Core Income Metrics (YoY, QoQ, and vs Estimates)

MetricQ3 2024Q2 2025Q3 2025Consensus (Q3 2025)
Revenue ($USD)$10.86M $8.31M*$11.97M $9.53M*
Net Income ($USD)$(1.84)M $(1.71)M*$1.67M —
Diluted EPS ($)$(0.07) $(0.064)*$0.06 $0.01*

Values marked with * retrieved from S&P Global.

Segment Revenues (Q3 2025 vs Q3 2024)

Segment Revenue ($USD)Q3 2024Q3 2025
Real Estate – Commercial/Industrial$3.00M $3.12M
Mineral Resources$3.17M $3.17M
Farming$3.24M $4.34M
Ranch Operations$1.45M $1.34M
Total Revenues$10.86M $11.97M

Adjusted EBITDA (Non-GAAP)

MetricQ3 2024Q3 2025
Adjusted EBITDA ($USD)$5.64M $5.28M

KPIs and Operating Metrics

KPIQ3 2025
TRCC Industrial GLA Leased100%
TRCC Commercial/Retail Occupancy95%
Outlets at Tejon Occupancy90%
Terra Vista Units Delivered/Leased180 delivered as of Q3; 55% leased; now 228 units delivered post-Q3 with >50% leased
Cash & Securities~$21.0M
Liquidity (Cash + LOC Availability)~$89.1M
Debt to Total Capitalization32.0%

Margins (SPGI)

MarginQ1 2025Q2 2025Q3 2025
Gross Profit Margin %0.85%*10.17%*7.05%*
EBITDA Margin %(39.31%)*(35.68%)*(2.87%)*

Values marked with * retrieved from S&P Global.

Estimates vs Actual (Q3 2025)

MetricConsensusActualSurprise ($)Surprise (%)
Revenue ($USD)$9.53M*$11.97M $2.44M+25.6%
EPS ($)$0.01*$0.06 $0.05+500%

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Operating Expenses (Payroll)Forward annualizedNone disclosed~$2.0M annual savings from ~20% workforce reductionRaised (improved cost savings)
Overhead (Recurring)FY 2026 targetNone disclosed~$1.5M recurring overhead savings targetedRaised (improved cost savings)
Water SalesFY 2025—Limited by SWP allocation at 50% impacting opportunitiesMaintained qualitative caution
Quantitative Revenue/EPS GuidanceFY/QtrNot providedNot providedMaintained (no formal guidance)
TRCC Occupancy CommentaryAs of Q3 2025—Industrial 100%, Commercial/Retail 95%, Outlets 90%Informational status (not formal guidance)

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
Cost DisciplineActivism costs pressured YTD; no formal call commentary; nine-month narrative focused on expenses in Resort/Residential down YoY and activism costs up ~20% workforce reduction; ~$2.0M annual savings; targeting ~$1.5M overhead reductions in 2026; “operate leaner” Improving efficiency
TRCC Platform StrengthContinued leasing progress; Nestlé distribution facility completed; emphasis on TRCC as growth nucleus Industrial 100% leased; Commercial/Retail 95%; Outlets 90%; Terra Vista lease-up on plan; casino opening expected to increase traffic Reinforcing narrative
Farming PerformanceUSDA almond crop outlook up; favorable pricing; normalized yields seasonally Segment revenue up 34% YoY; normalized yields across crops; positive adjusted farming EBITDA before fixed water obligations YoY Recovery in place
JV Dynamics (TA/Petro, Majestic)JV earnings variability noted; industrial JV contributions ongoing TA/Petro earnings pressured by lower I‑5 traffic; Majestic industrial JV stable; management exploring more on-balance-sheet development Mixed; planning to shift
Governance & TransparencyNo prior calls; investor engagement planned First-ever quarterly call; CEO letter lays out governance steps (board size reduction, special meeting right proposal) Improving disclosure

Management Commentary

  • “We had a strong quarter, driven by a rebound in farming and steady results across our core operating segments… we’ve taken decisive steps to reduce expenses, including a 20 percent reduction in our workforce… to operate leaner, invest efficiently and generate more cash from the assets we already control.” — Matthew Walker, CEO .
  • “Our industrial portfolio remains 100% leased… Outlets at Tejon maintain a 90% occupancy… The Hard Rock Tejon Casino… will be a real game changer. The casino should increase traffic to TRCC, benefiting all of our retail assets…” — Matthew Walker .
  • “Total revenues were $12 million, up 10% year-over-year… improvement… driven primarily by strong farming results, stable commercial and industrial leasing, and steady performance from our mineral resources and joint venture operations.” — Robert Velasquez, CFO .
  • “As part of our G&A review, we recently completed a workforce reduction that will save more than $2 million per year… lowered our headcount by 20%.” — Matthew Walker .

Q&A Highlights

  • Capital allocation and MPC strategy: Management reiterated openness to monetization where it maximizes value but prefers JV structures to avoid dilution; initial phases may not show book profits due to heavy infrastructure, with long-term earnings potential “orders of magnitude” higher .
  • TRCC focus and residential expansion: Terra Vista Phase 1 completed (228 units); Phase 2 entitled (~170 units); casino employment drives apartment demand; plan to build more residential at TRCC .
  • Farming economics: Emphasis on adjusted EBITDA and fixed water obligations; farming has produced positive cash flow historically; integrated water approach provides flexibility across cycles .
  • Governance and shareholder rights: Board evaluating special meeting right (25% threshold) and potential board size reduction; increased transparency via earnings calls and investor event .
  • Dividends/buybacks: CEO aims to grow cash flow to re-enable dividends and repurchases over time; acknowledges long-run share price underperformance .

Estimates Context

  • EPS beat: $0.06 actual vs $0.01 consensus; revenue beat: $11.97M actual vs $9.53M consensus; beats driven by improved farming yields (almonds, wine grapes, pistachios), stable leasing, and JV contributions despite TA/Petro traffic headwinds .*
  • Coverage appears limited for TRC; expect estimate revisions to move higher for farming contribution and recurring TRCC income given casino opening tailwind and Terra Vista lease-up trajectory .*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Q3 inflection to profitability with clear cost actions; look for sustained margin gains as $2.0M payroll savings and ~$1.5M overhead reductions flow through 2026 .
  • Structural TRCC strength (100% industrial, 95% commercial/retail, 90% outlets) plus casino opening should lift footfall and ancillary revenues; immediate near-term trading catalyst .
  • Farming normalization materially improved results; monitor 2026 crop/pricing and water allocation dynamics for continued upside in segment cash flow .
  • JV mix: TA/Petro earnings are traffic-sensitive; Majestic industrial JVs stable; management evaluating on-balance-sheet development to capture 100% of economics over time .
  • No formal numerical guidance; use occupancy, liquidity ($89.1M) and capital allocation disclosures to frame downside protection and optionality in development pipeline .
  • Narrative shift: first quarterly call, enhanced transparency, governance initiatives — supports re-rating potential as investors gain clarity on execution and capital discipline .
  • Medium-term thesis: TRCC expansion and Grapevine/Mountain Village JV execution can step-change earnings power; watch forthcoming investor milestones and JV progress for valuation unlock .