Executive Summary

Q4 2015 revenue was $15.57M, up 7% year over year on stronger almond sales; diluted EPS was $0.08 vs $0.09 in Q4 2014, with net income pressured by lower equity income from JVs and higher corporate G&A including a one-time pension settlement .
Segment mix: Farming drove the quarter (73% of revenue), while mineral resources declined on oil-price weakness; commercial/industrial was flat year over year .
2016 outlook flagged headwinds: oil royalties expected down on lower average oil prices; farm revenues may be adversely impacted by recent declines in almond prices; quarterly/annual variability to persist given development and agriculture timing .
Liquidity and investment capacity remain solid: total capital of ~$406.1M, cash and securities ~$34.7M, and full $30M revolver availability as of year-end—supporting continued entitlement and TRCC build-out .

What Went Well and What Went Wrong

What Went Well
- “We achieved several significant milestones…progress with Mountain Village, Centennial, and Grapevine…foundation for future growth” — CEO Gregory S. Bielli (press release) .
- Q4 revenue grew 7% YoY, led by increased almond sales; farming operating profit rose year over year (Q4 farming OP $4.09M vs $2.92M in Q4 2014) .
- TRCC portfolio expanded: rentable square footage up 6% in 2015; multi-tenant building delivered and additional construction authorized, supporting future commercial revenue .
What Went Wrong
- Q4 diluted EPS fell to $0.08 (vs $0.09 YoY), as equity in earnings from unconsolidated JVs declined and corporate G&A rose; Q4 corporate G&A was $3.59M (+52% YoY), including a $0.5M pension settlement and compensation changes .
- Mineral resources revenue fell YoY in Q4 (to $0.94M from $1.45M), reflecting ongoing oil-price weakness; management expects further oil royalty pressure in 2016 .
- Farming cost inflation: 2015 farming expenses increased 17% YoY, driven by commodity cost of sales and higher fixed water costs amid California drought .

Financial Results

Metric	Q4 2014	Q2 2015	Q3 2015	Q4 2015
Revenue ($USD Millions)	$14.56	$7.00	$11.95	$15.57
Net Income to Common ($USD Millions)	$1.92	$0.41	$(0.79)	$1.72
Diluted EPS ($USD)	$0.09	$0.02	$(0.04)	$0.08
Net Income Margin (%)	13.2%	5.8%	-6.6%	11.0%

Segment breakdown (Q4):

Segment	Q4 2014 Revenue ($USD Millions)	Q4 2014 Operating Profit ($USD Millions)	Q4 2015 Revenue ($USD Millions)	Q4 2015 Operating Profit ($USD Millions)
Real estate – commercial/industrial	$2.55	$0.82	$2.55	$0.05
Real estate – resort/residential	—	$(0.91)	—	$(0.46)
Mineral resources	$1.45	$0.97	$0.94	$0.57
Farming	$9.79	$2.92	$11.37	$4.09
Ranch operations	$0.76	$(0.68)	$0.71	$(0.02)
Income from operating segments	—	$3.13	—	$4.22

KPIs and mix drivers:

KPI	Q2 2015	Q3 2015	Q4 2015
Equity in earnings of unconsolidated JVs ($USD Millions)	$1.66	$2.06	$1.46
Corporate G&A expense ($USD Millions)	$2.76	$2.93	$3.59
Farming revenues ($USD Millions)	$1.32	$8.08	$11.37
Mineral resources revenues ($USD Millions)	$2.65	$1.32	$0.94

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Oil royalty revenue	FY 2016	Not quantified	Expected to be negatively impacted vs 2015 due to lower average oil prices	Lowered
Farm revenues (almonds)	FY 2016	Not quantified	May be adversely impacted due to declines in almond prices	Lowered
Earnings variability	FY 2016	Not specified	Quarterly/annual variability to continue given development/agriculture timing	Maintained
Investment focus	FY 2016	Continue entitlement and TRCC build-out	Continue investing in entitlements (Centennial, Grapevine) and TRCC vertical development	Maintained

Earnings Call Themes & Trends

Note: No Q4 2015 earnings call transcript was found; themes derived from Q2/Q3 10-Q and Q4 press release/10-K.

Topic	Previous Mentions (Q2 2015)	Previous Mentions (Q3 2015)	Current Period (Q4 2015)	Trend
Entitlements and development	Active entitlement spend across Grapevine, Centennial, TMV; TRCC leasing/building pipeline	Continued investment; water supply agreements; legal win at Ninth Circuit on TMV land title	Board approved Mountain Village tract mapping; AVAP final approval supporting Centennial; TRCC building expansions authorized	Advancing
Oil-price exposure	Oil down ~52% YoY to ~$48/barrel; reduced royalties	Mineral revenue down 45% YoY; expenses up for water-related staffing	2016 oil royalties expected lower vs 2015	Negative
Farming crop dynamics	Mixed: higher almond price sales; pistachio weakness; rising farming costs	Pistachios down due to mild winter; wine grapes and almonds offset; farming costs up	Q4 almond strength drove revenue; 2016 almond price declines flagged	Mixed to cautious
TRCC leasing/rentable base	New leases (Carl’s Jr., Starbucks, pizza); % rent recovery; property management fees from Outlets	Ongoing marketing; logistics value proposition; pipeline continues	Rentable square footage +6%; new multi-tenant building completed and more construction authorized	Positive
Regulatory/legal (water, AVAP)	Significant water sales; drought context; entitlement timing	Water delivery/agreements; legal affirmation on TMV land title	Groundwater adjudication settlement approved (under appeal); AVAP approvals; entitlement timelines into 2016+	Progress with normal CA litigation risk

Management Commentary

“During fiscal 2015, we achieved several significant milestones and made meaningful progress toward executing our overall strategic vision…we have established a strong foundation for future growth and long-term shareholder value creation.” — Gregory S. Bielli, President & CEO .
“Water sales continued their strong momentum from the prior year…however, we experienced lower than expected revenues from our mineral resources segment…our diversification proved beneficial as we offset the shortfall…by increasing our rentable square footage in our commercial segment by 6% in 2015.” .
2016 outlook: Total capital ~$406.1M; cash and securities ~$34.7M; full availability on $30M revolver. Expect continued investment in TRCC and residential entitlements; anticipate variability in quarterly/annual results given commodity prices, farm production, and timing of land sales/leasing .

Q&A Highlights

No Q4 2015 earnings call transcript was located; therefore, no Q&A highlights or clarifications are available for this quarter [ListDocuments: earnings-call-transcript returned none].

Estimates Context

S&P Global consensus estimates for Q4 2015 EPS and revenue could not be retrieved due to data access limits at the time of analysis; as a result, we cannot provide “vs. estimates” comparisons for this quarter. We attempted to fetch “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q4 2015 but received a daily request limit error from SPGI. Estimates unavailable at this time [GetEstimates error].

Key Takeaways for Investors

Q4 showed healthy top-line growth (+7% YoY) driven by almond sales; however, bottom-line was held back by lower JV equity earnings and elevated G&A tied to pension settlement and compensation changes .
Mix shift continues toward farming and leasing; mineral resources remain cyclical and oil-price sensitive, with management guiding to lower oil royalties in 2016—a watch item for near-term earnings volatility .
TRCC execution provides recurring revenue durability: expanded rentable base (+6%) and new retail/restaurant openings support lease growth and property management fee streams in 2016–2017 .
Entitlement milestones at Mountain Village, Centennial, and Grapevine are advancing; despite California regulatory timelines and litigation risks, sustained investment underpinned by solid liquidity positions the company for long-term real estate value creation .
Farming cost inflation and water dynamics (drought) require close monitoring; 2016 almond price softness may pressure farm revenue despite operational gains—watch pricing and crop yields into the harvest cycle .
With estimates unavailable, trading catalysts hinge on commodity price trends (oil/almonds), TRCC leasing newsflows, and entitlement approvals; expect headline sensitivity around regulatory actions and water-related developments .

Additional sources: Q4 2015 press release (Business Wire) hosted on TRC IR site .

TEJON RANCH CO (TRC)·Q4 2015 Earnings Summary