Tejon Ranch Co. (TRC, Financial) filed Annual Report for the period ended 2011-12-31.
Tejon Ranch has a market cap of $562.72 million; its shares were traded at around $28.49 with a P/E ratio of 35.21 and P/S ratio of 15.85.
For 2011, we had net income attributable to common stockholders of $15,894,000, which is an increase of $11,719,000 when compared to 2010. The improvement in net income is due to an increase in revenues of $27,585,000. The increase in revenue was driven by the sale of conservation easements for $15,750,000, a land sale for $4,340,000, an increase in our royalties over the prior year of $5,541,000 and a $2,436,000 increase in farm revenues. Oil royalties improved due to higher prices and production and farming revenues improved due to higher almond and grape revenues. These revenue improvements were partially offset by an increase in operating expenses of $11,950,000. The increase in operating expenses is primarily due to an increase in stock compensation expense when compared to 2010. During 2010, stock compensation expense included a $6,327,000 reversal of cost and in 2011 we recognized stock compensation expense of $5,507,000.
Actual final orchard crop selling prices are not determined for several months following the close of our fiscal year due to supply and demand fluctuations within the orchard crop markets. Adjustments for differences between original estimates and actual revenues received are recorded during the period in which such amounts become known. The net effect of these adjustments increased farming revenue by $1,882,000, $1,144,000, and $579,000 in 2011, 2010 and 2009, respectively. The adjustment for 2011 includes $1,335,000 related to pistachios due to improving prices related to an aggressive industry marketing campaign, it also includes $531,000 from almonds due to increased demand which pushed almond prices higher. The adjustment for 2010 includes $823,000 related to pistachios due to an improving price market resulting from low industry inventories, and $287,000 from almonds as increased demand pushed prices higher. The adjustment in 2009 was due to $252,000 in additional bonus payments and price adjustments on pistachios and $327,000 in adjustments related to almonds as prices continued to increase prior to the contract settlement.
Farming segment profits improved $775,000 during 2011 when compared to 2010. The improvement is primarily due to $1,819,000 increased almond profits, $1,247,000 increased winegrape profits and $664,000 lower water costs. These increases were partially offset by $2,837,000 lower pistachio profits. The increase in almond profits is due to an increase of approximately 2.5 million pounds of almonds sold during 2011, of which 1.5 million are from prior year crops, which were partially offset by a slight decline in prices. The improved winegrape profits were primarily due to a 19% increase in price and an 11% increase in production. The reduced pistachio profits were primarily due to a 35% decrease in pounds sold, while an increase in prices helped to partially offset the decline in production. There was approximately 413,000 pounds of pistachio inventory at December 31, 2011 and no pistachio inventory at December 31, 2010. Almond inventory was approximately 1,880,000 and 2,017,000 pounds at December 31, 2011 and 2010, respectively. During 2011, farming costs increased $1,661,000. This increase was due to higher cost of sales that is related to the increase in the number of pounds of almonds sold. This higher cost of sales was partially offset by a $614,000 decline in fixed water costs due to the receipt of refunds tied to the final closing of the SWP 2009 water year.
Equity in earnings of unconsolidated joint ventures increased $375,000 to $916,000 during 2011 when compared to 2010. The increase is primarily due to a $667,000, or 55%, increase in earnings from our TA/Petro joint venture as a result of a 9% increase of non-fuel margins and an 11% increase in fuel margins. The increase in fuel margins was mainly due to a 36% and 24% increase in average price per gallon for diesel and gasoline, respectively, while fuel volumes fluctuated slightly when compared to 2010.
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Tejon Ranch has a market cap of $562.72 million; its shares were traded at around $28.49 with a P/E ratio of 35.21 and P/S ratio of 15.85.
Highlight of Business Operations:
In 2011, we sold 51% of our grape crop to one winery, 36% to a second winery and the remainder to two other customers. These sales are under long-term contracts ranging from one to thirteen years. In 2011, our almonds were sold to various commercial buyers, with the two largest buyers accounting for 57% and 25%, respectively of our almond revenues. In 2011, the majority of our pistachios were sold to two customers, purchasing approximately 78% and 20% of the crop, respectively. We do not believe that we would be adversely affected by the loss of any or all of these large buyers because of the markets for these commodities, the large number of buyers that would be available to us, and the fact that the prices for these commodities do not vary based on the identity of the buyer or the size of the contract.For 2011, we had net income attributable to common stockholders of $15,894,000, which is an increase of $11,719,000 when compared to 2010. The improvement in net income is due to an increase in revenues of $27,585,000. The increase in revenue was driven by the sale of conservation easements for $15,750,000, a land sale for $4,340,000, an increase in our royalties over the prior year of $5,541,000 and a $2,436,000 increase in farm revenues. Oil royalties improved due to higher prices and production and farming revenues improved due to higher almond and grape revenues. These revenue improvements were partially offset by an increase in operating expenses of $11,950,000. The increase in operating expenses is primarily due to an increase in stock compensation expense when compared to 2010. During 2010, stock compensation expense included a $6,327,000 reversal of cost and in 2011 we recognized stock compensation expense of $5,507,000.
Actual final orchard crop selling prices are not determined for several months following the close of our fiscal year due to supply and demand fluctuations within the orchard crop markets. Adjustments for differences between original estimates and actual revenues received are recorded during the period in which such amounts become known. The net effect of these adjustments increased farming revenue by $1,882,000, $1,144,000, and $579,000 in 2011, 2010 and 2009, respectively. The adjustment for 2011 includes $1,335,000 related to pistachios due to improving prices related to an aggressive industry marketing campaign, it also includes $531,000 from almonds due to increased demand which pushed almond prices higher. The adjustment for 2010 includes $823,000 related to pistachios due to an improving price market resulting from low industry inventories, and $287,000 from almonds as increased demand pushed prices higher. The adjustment in 2009 was due to $252,000 in additional bonus payments and price adjustments on pistachios and $327,000 in adjustments related to almonds as prices continued to increase prior to the contract settlement.
Farming segment profits improved $775,000 during 2011 when compared to 2010. The improvement is primarily due to $1,819,000 increased almond profits, $1,247,000 increased winegrape profits and $664,000 lower water costs. These increases were partially offset by $2,837,000 lower pistachio profits. The increase in almond profits is due to an increase of approximately 2.5 million pounds of almonds sold during 2011, of which 1.5 million are from prior year crops, which were partially offset by a slight decline in prices. The improved winegrape profits were primarily due to a 19% increase in price and an 11% increase in production. The reduced pistachio profits were primarily due to a 35% decrease in pounds sold, while an increase in prices helped to partially offset the decline in production. There was approximately 413,000 pounds of pistachio inventory at December 31, 2011 and no pistachio inventory at December 31, 2010. Almond inventory was approximately 1,880,000 and 2,017,000 pounds at December 31, 2011 and 2010, respectively. During 2011, farming costs increased $1,661,000. This increase was due to higher cost of sales that is related to the increase in the number of pounds of almonds sold. This higher cost of sales was partially offset by a $614,000 decline in fixed water costs due to the receipt of refunds tied to the final closing of the SWP 2009 water year.
Equity in earnings of unconsolidated joint ventures increased $375,000 to $916,000 during 2011 when compared to 2010. The increase is primarily due to a $667,000, or 55%, increase in earnings from our TA/Petro joint venture as a result of a 9% increase of non-fuel margins and an 11% increase in fuel margins. The increase in fuel margins was mainly due to a 36% and 24% increase in average price per gallon for diesel and gasoline, respectively, while fuel volumes fluctuated slightly when compared to 2010.
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