Tejon Ranch Co. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Tejon Ranch Co. filed its 2023 10-K, detailing water asset transactions and interest rate swap terminations.</b>

AI Summary

TEJON RANCH CO (TRC) filed a Annual Report (10-K) with the SEC on March 6, 2024. Tejon Ranch Co. reported the sale of water purchased in prior periods for $1.32 million in 2023, with a profit of $0.5 million classified as a deduction from operating activities. The company received a $3,715,000 cash termination fee from Bank of America, N.A. on October 23, 2023, related to an interest rate swap agreement. An interest rate swap agreement with Wells Fargo Bank, N.A. was terminated on June 27, 2022, resulting in a $1,123,000 cash termination fee. The company's practices for classifying cash inflows and outflows related to water asset activity are supported by ASC 230-10-45-22. The filing covers the fiscal year ending December 31, 2023.

Why It Matters

For investors and stakeholders tracking TEJON RANCH CO, this filing contains several important signals. The company's detailed accounting for water asset sales and the classification of related cash flows provides transparency into its operational and investing activities. The termination fees from interest rate swaps indicate significant financial risk management activities and potential shifts in hedging strategies.

Risk Assessment

Risk Level: medium — TEJON RANCH CO shows moderate risk based on this filing. The company's reliance on specific accounting guidance for water assets and the impact of interest rate swap terminations suggest potential financial complexities and risks associated with fluctuating market conditions and asset management.

Analyst Insight

Investors should review the detailed accounting policies for water assets and the financial impact of interest rate swap terminations to understand the company's risk exposure and cash flow management.

Key Numbers

• 1.32 million — Water Sale Proceeds (2023 cash inflow from sale of water purchased in prior periods)
• 0.5 million — Water Sale Profit (Profit related to water purchased in prior periods, deducted from operating activities)
• 3,715,000 — Bank of America Termination Fee (Cash termination fee received on October 23, 2023)
• 1,123,000 — Wells Fargo Termination Fee (Cash termination fee received on June 27, 2022)

Key Players & Entities

• TEJON RANCH CO (company) — FILER
• Bank of America, N.A. (company) — interest rate swap agreement
• Wells Fargo Bank, N.A. (company) — interest rate swap agreement
• ASC 230-10-45-22 (regulatory) — Accounting Standards Codification
• SEC (regulator) — Securities and Exchange Commission

FAQ

Risk Factors

• Water Asset Classification [medium — financial]: The company's classification of cash inflows and outflows related to water assets relies on specific accounting guidance and judgment, potentially leading to varied interpretations.
• Interest Rate Swap Terminations [medium — financial]: The termination of interest rate swaps with Bank of America and Wells Fargo resulted in significant cash inflows but also indicates a reduction in hedging activities against floating interest rates.

Key Dates

• 2023-12-31: Fiscal Year End — Reporting period for the 10-K filing
• 2024-03-06: Filing Date — Date the 10-K was officially submitted to the SEC
• 2023-10-23: Interest Rate Swap Termination — Termination of swap with Bank of America, N.A.
• 2022-06-27: Interest Rate Swap Termination — Termination of swap with Wells Fargo Bank, N.A.

Key Financial Figures

• $0.50 — ange on which registered Common Stock, $0.50 par value TRC New York Stock Exchange
• $266 — ge of Annual Minimum Rent 2024 3 6,810 $266 3.83% 2025 5 61,708 552 7.95% 2026 8
• $175,000 — ic's interest in this joint venture for $175,000; the joint venture was subsequently dis
• $15.2 m — y during the fourth quarter of 2021 for $15.2 million, and was dissolved in 2022. TRCC
• $3.50 — es over a six-year period starting with $3.50 per square foot in 2017. Industrial ren
• $0.25 — er the same six year period starting at $0.25 per square foot in 2017. Current entitl

Filing Documents

• trc-20231231.htm (10-K) — 2596KB
• exhibit21listofsubs202310k.htm (EX-21) — 13KB
• exhibit231dtconsent202310k.htm (EX-23.1) — 2KB
• exhibit232rsmconsent202310k.htm (EX-23.2) — 2KB
• exhibit3112023ceocertsecti.htm (EX-31.1) — 11KB
• exhibit3122023cfocertsecti.htm (EX-31.2) — 11KB
• exhibit3132023caocertsecti.htm (EX-31.3) — 11KB
• exhibit322023certsection13.htm (EX-32) — 8KB
• exh97clawbackpolicy.htm (EX-97) — 10KB
• a20231231ptpfinancials-229.htm (EX-99.1) — 185KB
• exh97clawbackpolicy001.jpg (GRAPHIC) — 128KB
• exh97clawbackpolicy002.jpg (GRAPHIC) — 78KB
• exh97clawbackpolicy003.jpg (GRAPHIC) — 30KB
• exh97clawbackpolicy004.jpg (GRAPHIC) — 221KB
• exh97clawbackpolicy005.jpg (GRAPHIC) — 206KB
• trc-20231231_g1.jpg (GRAPHIC) — 17KB
• trc-20231231_g10.jpg (GRAPHIC) — 102KB
• trc-20231231_g11.jpg (GRAPHIC) — 310KB
• trc-20231231_g12.jpg (GRAPHIC) — 1787KB
• trc-20231231_g13.jpg (GRAPHIC) — 4019KB
• trc-20231231_g14.jpg (GRAPHIC) — 1024KB
• trc-20231231_g15.jpg (GRAPHIC) — 14880KB
• trc-20231231_g16.jpg (GRAPHIC) — 596KB
• trc-20231231_g2.jpg (GRAPHIC) — 40KB
• trc-20231231_g3.jpg (GRAPHIC) — 2071KB
• trc-20231231_g4.jpg (GRAPHIC) — 1302KB
• trc-20231231_g5.jpg (GRAPHIC) — 45KB
• trc-20231231_g6.jpg (GRAPHIC) — 46KB
• trc-20231231_g7.jpg (GRAPHIC) — 46KB
• trc-20231231_g8.jpg (GRAPHIC) — 82KB
• trc-20231231_g9.jpg (GRAPHIC) — 88KB
• 0000096869-24-000005.txt (&nbsp;) — 84875KB
• trc-20231231.xsd (EX-101.SCH) — 86KB
• trc-20231231_cal.xml (EX-101.CAL) — 133KB
• trc-20231231_def.xml (EX-101.DEF) — 463KB
• trc-20231231_lab.xml (EX-101.LAB) — 840KB
• trc-20231231_pre.xml (EX-101.PRE) — 693KB
• trc-20231231_htm.xml (XML) — 2079KB

BUSINESS

BUSINESS 4 ITEM 1A.

RISK FACTORS

RISK FACTORS 28 ITEM 1B. UNRESOLVED STAFF COMMENTS 34 ITEM 1C. CYBERSECURITY 35 ITEM 2.

PROPERTIES

PROPERTIES 34 ITEM 3.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 39 ITEM 4. MINE SAFETY DISCLOSURES 39 PART II 40 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 40 ITEM 6. RESERVED 40 ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 40 ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 58 ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 59 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 59 ITEM 9A.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 60 ITEM 9B. OTHER INFORMATION 60 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 60 PART III 60 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 60 ITEM 11.

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 60 ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 60 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 61 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 61 PART IV 62 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 62 ITEM 16. FORM 10-K SUMMARY 62

(a)(1) - FINANCIAL STATEMENTS

ITEM 15(a)(1) - FINANCIAL STATEMENTS 70

(a)(2) - FINANCIAL STATEMENT SCHEDULES

ITEM 15(a)(2) - FINANCIAL STATEMENT SCHEDULES 70 2 Glossary The following initialisms or acronyms may be used in this document and shall be defined as set forth below: AKIP Advance Kern Incentive Program ASC Accounting Standards Codification ASU Accounting Standards Update AVEK Antelope Valley East Kern Water Agency CFL Centennial Founders, LLC CBD Center for Biological Diversity CEQA California Environmental Quality Act CFD Community Facilities District CNPS California Native Plant Society EBITDA Earnings Before Interest Tax Depreciation and Amortization EIR Environmental Impact Report FTZ Foreign Trade Zone GAAP Generally Accepted Accounting Principles in the United States GHG Green House Gas GSP Groundwater Sustainability Plan LIBOR London Interbank Offered Rate MV Mountain Village at Tejon Ranch NOI Net Operating Income NLER Net Liabilities to Equity Ratio PEF Pastoria Energy Facility, LLC RCL Revolving Credit Line RWA Tejon Ranch Conservation and Land Use Agreement SEC Securities and Exchange Commission SOFR Secured Overnight Financing Rate SWP State Water Project TCWD Tejon-Castac Water District TRC Tejon Ranch Co. TRCC Tejon Ranch Commerce Center TRPFFA Tejon Ranch Public Facilities Financing Authority WRMWSD Wheeler Ridge Maricopa Water Storage District 3 PART I

Forward-Looking Statements

Forward-Looking Statements This annual report on Form 10-K contains forward-looking statements, including without limitation, statements regarding strategic alliances, the almond, pistachio and grape industries, the future plantings of permanent crops, future yields, prices, and water availability for our crops and real estate operations, future prices, production and demand for oil and other minerals, future development of our property, future revenue and income of our jointly-owned travel plaza and other joint venture operations, potential losses to the Company as a result of pending environmental proceedings, the adequacy of future cash flows to fund our operations, and of current assets and contracts to meet our water and other commitments, market value risks associated with investment and risk management activities and with respect to inventory, accounts receivable and our own outstanding indebtedness, ongoing negotiations, and other future events and conditions. In some cases, these statements are identifiable through the use of words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "target," "can," "could," "may," "will," "should," "would," "likely," and similar expressions such as "in the process," "designed to," "well positioned," or "envisioned to." In addition, any statements that refer to projections of our future financial performance, our anticipated growth, and trends in our business and other characterizations of future events or circumstances are forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. These forward-looking statements are not a guarantee of future performance and are subject to assumptions and involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company, or industry results, to differ materially from any future results, performance, or achievement implied

BUSINESS

ITEM 1. BUSINESS Company Overview We are a diversified real estate development and agribusiness company committed to responsibly using our land and resources to meet the housing, employment, and lifestyle needs of Californians and create value for our shareholders. Current operations consist of land planning and entitlement, land development, commercial land sales and leasing, leasing of land for mineral royalties, water asset management and sales, grazing leases, farming, and ranch operations. These activities are performed through our five reporting segments: Our prime asset is approximately 270,000 acres of contiguous, largely undeveloped land that, at its most southerly border, is 60 miles north of downtown Los Angeles and, at its most northerly border, is 15 miles east of Bakersfield. We create value by securing entitlements for our land, facilitating infrastructure development, strategic land planning, monetization of land through development and/or sales, and conservation in order to maximize the highest and best use for our land. We are involved in eight joint ventures that either own, develop, and/or operate real estate properties. We enter into joint ventures as a means to facilitate the development of portions of our land. 4 Business Objectives and Strategies Our primary business objective is to maximize long-term shareholder value through the improvement and monetization of our land-based assets. A key element of our strategy is to entitle and then develop large-scale mixed-use master planned residential and commercial/industrial real estate projects to serve the growing populations of Southern and Central California. Our mixed-use master planned residential developments have been approved to collectively include up to 35,278 housing units, and more than 35 million square feet of commercial space. We have obtained entitlements on MV and the first approved final map for the project consisting of 401 residential lots and parcels for hospitality, a

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View this 10-K filing on SEC EDGAR