Tejon Ranch NYSE: TRC reported second-quarter net income of $2.6 million, or $0.10 per share, compared with a $1.7 million loss in the prior-year period, as revenue increased across its operating segments and the company recorded income from a land contribution to a joint venture with Dedeaux Properties.
President and CEO Matthew Walker said adjusted EBITDA increased approximately 47% year over year, while corporate expenses declined significantly. He said more than half of the reduction reflected the absence of nonrecurring costs from the prior year, but that core corporate expenses were still down 18% during the first six months of 2026.
Dedeaux transaction supports industrial-development strategy
The quarter's revenue growth was led by the contribution of land at Tejon Ranch Commerce Center to the Dedeaux Properties joint venture. The transaction generated $6.9 million in revenue, according to Walker.
Chief Financial Officer Robert Velasquez said Tejon Ranch contributed land with a fair market value of $9.9 million to the venture, resulting in $6.9 million of revenue and $2 million of profit recognized in the quarter. Another $3 million of profit was deferred because it relates to the company's retained ownership interest in the joint venture.
The joint venture is developing a 510,000-square-foot Class A industrial building. Walker said walls were being tilted up during the week of the call, and the company expects an early 2027 delivery. He described the venture as an example of Tejon Ranch's strategy of contributing land to projects, retaining an economic interest and expanding its income-producing portfolio with limited net capital spending.
Walker said Southern California industrial-market fundamentals have been improving, while the company committed to the project during a period when much of the market was on the sidelines.
In response to a shareholder question about whether Tejon Ranch would seek larger ownership stakes in future projects, Walker said the company would consider opportunities on a case-by-case basis. In the Dedeaux venture, Tejon Ranch was able to take a 60% stake without additional net cash investment because of the value of its contributed land, he said. The company is also focused on return on invested capital when assessing capital commitments.
Recurring operations and costs
Velasquez said the company's recurring operations also improved during the quarter. Joint-venture equity earnings rose 21% to $3.1 million, driven by TA/Petro, better outlet-center results and steady contributions from the company's fully leased industrial portfolio.
Tejon Ranch's multifamily segment turned to positive net operating income, according to Velasquez, with occupancy at the Terra Vista apartments exceeding 80% during the month of the call. Walker said July marked the strongest new leasing performance at Terra Vista in nine months.
Walker also cited increasing traffic and sales at the company's outlet centers and higher travel-center revenue, which he attributed in part to a halo effect from the Hard Rock Casino Tejon.
Excluding land and water sales costs, which vary with transaction activity, expenses declined nearly 18% year to date, Velasquez said. Excluding corporate expenses and new Terra Vista operations, segment expenses declined about 8%.
The company changed its financial disclosure for farming operations to present results before and after fixed water obligations. Velasquez said those water assessments are incurred regardless of farming activity, and the farming operation was profitable before those fixed costs during the second quarter.
Tejon Ranch ended the quarter with approximately $79 million of liquidity and a debt-to-capital ratio of 16.3%, Velasquez said. Trailing 12-month adjusted EBITDA was $29.8 million, up 21% from a year earlier.
Water monetization and technology initiatives
Walker said management is reviewing the company's water assets and looking to increase returns from them. Tejon Ranch holds surface water, groundwater, water contracts and excess water stored in two water banks. The company has recently made opportunistic sales of excess water and plans to continue pursuing strategic and opportunistic sales when market conditions permit, he said.
The company is also considering infrastructure investments intended to make its water assets more liquid while minimizing capital outlays, Walker said. Tejon Ranch expanded its water-related disclosures in its quarterly financial statements.
Separately, Walker said Tejon Ranch has rolled out an enterprise artificial-intelligence platform across desktop users after initially testing it with a smaller group. He said the company has seen improvements in efficiency and performance across multiple business areas, including research, testing new revenue opportunities and automating manual processes. Walker cautioned that AI output requires fact-checking and is not a solution to every business challenge.
Centennial timeline and shareholder-value discussion
Addressing shareholder concerns about the company's stock performance and development strategy, Walker said he was not satisfied with the share price and acknowledged that long-term performance “is simply just not acceptable.” He said Tejon Ranch reduced its employee count by 20% last year and has reduced its board size from 13 directors to nine, with plans to reach seven directors by next May.
Walker said his first 18 months as CEO have involved an ongoing strategic review of the company and that the board has supported management's efforts to assess each business line. He said management is evaluating capital allocation using projected total shareholder return, in addition to measures such as net present value, to weigh the timing and long-term effects of investment decisions.
On Centennial, the company's planned community development in Los Angeles County, Walker said the recirculated partial draft environmental impact report is open for public comment. Tejon Ranch aims to bring the project before the Los Angeles County Planning Commission and then the Board of Supervisors before the end of 2026.
He said potential renewed litigation remains an uncertain factor after the entitlement process, followed by mapping, infrastructure design, financing and implementation. Walker declined to provide a construction start date, saying any estimate would be speculative. If Centennial advances, he said it would likely use a joint-venture structure similar to the industrial Parcel 1B project, leveraging Tejon Ranch land and a partner's capital.
Walker also said Tejon Ranch evaluates a range of potential land uses, including data centers, but did not disclose any specific data-center discussions or plans. He confirmed that a consulting contract with Mr. Bielli had ended and that no related expense was included in second-quarter results.
About Tejon Ranch (NYSE:TRC)
Tejon Ranch Corporation NYSE: TRC is one of California's largest private landowners, with a diversified portfolio spanning agriculture, real estate development and natural resource operations. Headquartered in Lebec, California, the company's holdings encompass approximately 270,000 acres in Kern and Los Angeles counties. Established in 1937 on the historic Rancho Tejon land grant, Tejon Ranch has leveraged its strategic location along Interstate 5 to build a multifaceted enterprise serving both local and regional markets.
In agriculture, Tejon Ranch grows a variety of row crops and permanent plantings, including almonds, pistachios, table grapes and citrus.
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