Earnings call transcript Q4 2022

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Operator

Welcome to the Farmland Partners Inc., Q4 2022 Earnings Call. [Operator Instructions]. Thank you.

Now, let me turn the call over to, Paul Pittman, Chairman and CEO. Go ahead, Paul, you may begin.

Paul Pittman

to earnings Partners conference welcome full quarter and XXXX year call morning the fourth Farmland and Good and webcast. taking see and important formal and you these press our strategy you releases. appreciate the interactive format join and to We less a us our calls, thinking we to than them opportunity an more in as share with time for public filings

Christine turn it Christine? over Garrison, Counsel, for now General remarks. some will I our preliminary customary to

Christine Garrison

everyone to distributed on call. Thank yesterday. you, section you Paul website the fourth posted was thank release of press earnings The been under our Relations sub after the announcing the has and The closed Investor header to our Presentations. supplemental Events quarter package market and

listen remind the presentation, XXXX herein to remarks made and this of subsequent you call. updated as be the to who of February we are recording this will For today, XX, that those not

will future development impact outlook broader statements dispositions business, we well and our including dispositions, financing make of statements, our call, on comments markets. as the and as acquisitions rents for identified business activities, of agricultural this our and performance and During potential forward-looking the opportunities acquisitions, to our related portfolio,

year and X-K is in Form our which company's XX, most operating the certain comparable financial report furnished to discuss the exhibit as full available non-GAAP GAAP these also adjusted are February will earnings an current We on dated release EBITDAre. quarter fourth of website to adjusted measures, measures income, including non-GAAP XXXX. as FFO, net FFO, Definitions announcing and is well our and press on EBITDAre measures reconciliations included as

of with, can or and difficult our documents review are certain actual the release risks furnished which predict uncertainties press results risk filed materially generally and control. These these subject Listeners and and cause we are uncertainties, discussed that distributed in yesterday and to we listeners our statements SEC. the beyond are expectations advise in have to cautioned differ risks to from current to factors our many to

turn I like President, our Luca to would to now the Fabbri. Luca? call

Luca Fabbri

brief I Thank us. make you, about some the behind remarks Christine. year will very

prices and has year the Partners addressing the that factor rates a really interest P&Ls in XXXX But the the low in because Global blessing key Farmland farming U.S. marginally side, crop the in partly in are the particular. in pool highlighted to very have general teens. strong world-class high has very U.S. strong U.S. in has agriculture But relatively company biggest infrastructure yields as industry agriculture affected events geography. throughout on in U.S. inflation demand, only our These a absolute led increase the for to of whole, agriculture high agriculture global been to and the XXXX, a especially in low general of talent businesses also certain thanks row farmers. due leverage cost of role increases food inputs. the enjoys, in plays XXXX, the

of we XX% crops we renewal [indiscernible]. in specifically row translated into seen in company is pricing our the general season fixed across strong which, profitability class an either the also profitability strong in board as from, sector that very a for the have have benefited we asset of rents helped farmer course, the rents rents farmland especially strong The for cash have and rolled, the greatly increases whole but has in of

to putting significantly strong very, We able our a were at the to as More position. very in a relationships we the year, us looking earlier deliver strong with increases. interest for were FPI, strengthen general were lenders, we pike it's liquidity down able in year been the in rate

strong the renewals. mentioned I rent

course that will our experienced be that of have we we row side, are P&L. permanent interest so also, in we But faced opposite delivering have On what the experiencing crops. it negative impacted the of despite have costs, crops higher

Our drought, leading at markets lingering time, been high low in same while weighted the experienced still portfolio well permanent have due as low to crops of has several has combination years is globally, there yields, which impacts in demands of permanent yields. heavily California, crop COVID a to experienced as

due debt. been Overall, somewhat in our equity capital, and activity the high acquisition XXXX, to both has modest, of cost mostly

to potential been that have our we transactions particularly acquisitions, actually very We able the were but attractive. have choosy in been capture

With Chairman the outlook. pass that, CEO, on for remarks the floor to will I some and Paul Pittman,

Paul Pittman

Thank you, Luca.

here incredibly rainy problem this year, a and California. and The from our specialty deal Coast. But year, all That substantial a about we is, challenge. talk us comes is, stock translates the as year. drought crops was a it on bad get about to talk that drought last to sort that that pail said this quite significant which year, of really it's you reflecting sense know, obviously, be which as those So a will is are there's sort I is we in that Luca where snowy been morning in the bit gets behind is into faced Luca P&L, has and strong following West have of in revenue of pretty the the it as next price of

crop us And interest the of behind doing to relatively year, in guidance. our will is rates in as performance with XXXX lack you AFFO increased calendar added a So that specialty cost damage to challenged rainfall what's XXXX the of see the for the the year. the lead

volumes price. that a the set substantially. in it XXXX hopefully crop XXXX. specialty But hard little a we're to strong see, does said, would a effect, substantial That what unfortunately, being predict going volumes an see because of return doesn't be recovers pretty to until have stage we'll for sort But

The our bigger the appreciation of broadly here. return. up without strong the yield amongst what's question. and appreciation. the certainly asset and So very probably inflation properties has even current probably Farmland despite seen values components Farmland among asset have of the crops, has, It kind row appreciation, specialty occurring some asset the drought, two to the drives we thinking degree, about always is it's and crop of And two. very,

we're about I'm What a huge and very shareholder. disappointed

I'm in personally are and on away taken with the time the the is farm strong of crop frustrated at volatility, portfolio, specialty volatility things being side, point all very side. in the this the economy very crop happening our therefore, the So in on row by negative

to specialty at fundamentally and investor's a the an perspective, are farmland of large leading that from price trading very We own And from said, is best vastly portfolio. we This the being discount. world. the undervalues some as something of stock sort relatively in the stop That XX% we've our do to stockholder, are a wagging having perspective, got assets XX%, that's my tail the the being in these assets to our of dog. smaller crops, of piece

row on years and especially effect year the It's performing was and for another that's at of crop, is be causing as And involved crop boom be the for side. important a value, crop as of frankly strongly. as to the of ago, is it least was side is specialty volatility do whether the got, business. quite us the times will flow. there side. want to row should the crop given our a continue couple where on evaluate we we've said, company on crop negative What of And in go This I this to seriously specialty store of stable remember AFFO ebb business that we a long-term engine to

or sort is underlying the of what's crop there's of successful tenant of therefore, no businesses, of that take two as almost two on I can that the of so business. It's the least at so, tale row you very and business on in could different of the a and up rents that underlying side. specialty is two to sort very, But, really terms different the away said, base powerful and operations happening the our many from and side our sides industries, it caused crop the effect so of get away, not in really the set the hurting take volatility structure story structures to

The out We through market is, buy stock in can in we stock. opinion our do a we today, ago, here than and here is, we're in best there farmland Farmland years better again, our buying by frankly, the can value few best high-quality value my were the farms.

on So focus it's we of as something company. really a kind to need

XXXX Because my up So the going our is of the underlying that been the farm P&L unfortunately the this assets, that recover. that very is recovery the show economy But perspective side, overwhelming the side is until winter. has lessened to a the bit drought really substantially strong will majority not crop year. specialty of impact crop row quite on

turn out comments past seeing to willing there But to what to it James, do. deeper go going go Q&A, I'm regarding to and and obviously, this performance. over we the into through we're what to year to past intend try and quarter During

James Gilligan

you, to a year greater rates, XXXX. XXXX including on I'm today, build and summary Thank of and items guidance review Paul. and full number interest going capital QX for of detail of structure XXXX, cover revenue

I'll my in refer to comments. the supplemental package

the said Christine Events Relations As website and sub Investor the Presentations. supplemental the section header is of our available under in

share a that few I'll two. Page First, metrics financial on appear

$X.XX was per $XX months common 'XX, for million. an 'XX, December XX.X for of compared AFFO share of an X.X increase million XX, 'XX an $X.XX. XX.X XX XXXX, to million to the ended increase $X.XX compared positive million, to for was X.X negative income was to Net compared For stockholders income net million, of million. increase $XX.X available

$X.XX performance operations and goods increased expense, to on was number reduced $X.XX farms XXXX. compared XXXX, XXXX due of under for Improved AFFO per of litigation was was and an increased in stock. to to to weighted of higher average due distributions preferred Cost fix increase compared auction greater $X.XX. revenue, rents, direct sold share in the 'XX, reduced brokerage

in the XXXX, General to or due late XXXX. largely of say in expenses we internally higher Associates MWA were administrative Wise as Murray acquisition

XXXX, should in was million of between of XX, XXXX compared XXXX, For be periods. noted in XX.X the lower income million the December compared accounting X.X decrease net disposition It the ended a all million. QX 'XX, three decrease to QX the QX to gain X.X was net for income months million assets X.X for on

disposition by stockholders per moment is of noted on $X.XX for Net to to 'XX again ago. difference of QX in assets $X.XX, a available share decrease common impacted as $X.XX compared a gain this was the income

insurance AFFO rents, operations, AFFO weighted operating QX of average $X.XX property premiums. to higher franchise direct income, fees, was $X.XX X.X expenses, million interest of compared for are was lower management higher decrease higher taxes, XXXX. a 'XX, lower $X.XX. QX state QX property million variable 'XX items rents, increased compared 'XX, showed due an for expenses by share X.X increase fixed largely general to XX.X compared to per million, offset higher and profits administrative spending taxes Those and litigation higher and and to QX

was XX was our Next, I comments to a million make debt capital of December Page XXXX, share Since million. reduced $XX Total ahead XX, will diluted million. February December as at XXXX, structure. about XX, over Fully by XX, of XXX.X we've debt to count shares. skip couple XX.X

at facility, in we have the the the between look MetLife of million and you bottom $XXX Mid Rutledge on Farm undrawn facility, capacity page, of the credit If credit excess Credit today. table the America

balance X, These page As approximately already of XX. have have that to approximately X, at up million four MetLife loans reset been in notes bottom X.XX% to. million to The reset the rates million million million prepay X, reset has X, without XXXX. XXX representing and been also penalty, X.XX%. that XXX shown loan show in agreed per increased loans of of to that numbers The flexibility XXX XX% the to has been are quarters, and X principal year. we previous of original debt, $XXX the reset have with X

our Next, XX income an to Page provide I to of will overview turn statement.

we last payments, to profit top to on shown numbers XX. easier and was the effort the Fixed on presented categories make operations, Page Over direct variable other payments, and year This understand. business gross an the table items.

it because it the categories. presentation may to the have different detail not did out the model this little made out difficult However, building comprise blocks that business a

table down across blocks just both what for does columns GAAP line on categories and second you categories. rows makes the The see Reading Page makes that. and It the can GAAP supplemental revenue, XX reading line items. see shows items the you the the building supplemental up up can what and

farm properties for differences the page dispositions. blocks shows at XX A the XXXX bottom quarter with building Page rent periods. the by decreased few these acquired described previous fixed and on and we XXXX as between to to page our with the increased of renewed points describe comments highlight and the leases

farms construction parties with fees manage a of Illinois to for XXXX. phase, asset its to XXXX more Solar tenant increased declined direct in in XXXX converted state acres dispositions the increased we operations. and commenced reimbursements Management in is project as large compared that third

we acquired for brand. Deere four equipment those John balance as XXXX, on the QX transactions, treatment land In buildings appear classifies under loans. agricultural acquisitions as dealerships financing and The Ohio, in they so sheet, accounting the

Now accounts for impacts income. in interest This the fourth on in the income quarter it of income statement, interest XXXX. increase the

payments down by and lower the due during QX Variable lower nuts to yields harvest. were caused prices in tree and performance grapes

that in as insurance farms XXXX to citrus XXXX a moment in mentioned addition, and Direct have produced operations the converted as crop of citrus sold, XXXX. payments because farms combination sales, converted cost goods In operations, direct up in it crop operations variable ago. to of was direct a of

compared before year years. activity of same the in the for the compared XXXX. farms, the brokerage million same bottom up period other non-comparable increased farms crop the items row include farms, not January the XXXX. show on we row mean It is This X, and this in to Other portfolio case payments group between farms auction fixed we were When the in the does of crop row a table, increase or crop the we or that in specialty of talked crop beginning dispositions, approximately dollars about XXXX farms. At between periods. acquisitions, being full

Ohio operations guidance and insurance than due to due taxes lag period fourth harvest performance October on a taxes higher lower franchise actual the have credit range Direct pricing expected yields Property profit of property payments the the to dealership acquisitions the in than in at Next ag from fourth XX, compare higher the bottom state notes required operating in page. in were XXXX. equipment expenses with we compared gross on to projected was the quarter up crop and the projected expectations and quarter. Page than the QX lower to allowance

On building described have those same for the on Page we XX. XXXX next page, XX, blocks outlook the using Page

signed On leases side, will full and farm fixed a increases to rent that acquired XXXX. the due contribute revenue year new farms XXXX in in

Solar wind while up with reimbursements be XXXX. and tenant are will recreation slightly, pretty consistent

Ohio and mentioned and variable Paul direct equipment with direct before. and year's contribution yields a the due operations full in Lower and pricing due increases from Interest income to due the operations decrease is variable decreasing The supply noted comments. The demand to to dealerships XXXX. poor payments are weather items in his imbalances.

have from XXXX. XXXX. occur base approximately or to is X.X in On side will down accounting and occurred XXXX and higher already with assumptions to insurance spend interest and million Litigation of to be higher higher estimate is decreases line will resets of operating expense in expenses up due increasing in litigation an rates G&A premiums. floating $XXX,XXX tax property rate spend. debt due Interest are on with Legal that the XXXX. expense in lower property

of result in XXXX. the XXXX per AFFO spreads. $XX.X XXXX. $X.XX range $X.XX to is in range, $XX.X compared assumptions X.X detail and curves the behind This provides and million compared expense. million bottom We $X.XX to in estimated forward of in page Bloomberg, the use share treasuries to on three-year The interest in the to AFFO remaining resets historical plus an greater

comments Operator, up now session. the for all my wraps This this Thank Q&A you can begin you participating. morning.

Operator

from Dave [Operator the We Baird. Thank have Instructions]. Thank of first now Rodgers question you. you. the of line

Dave Rodgers

the stock And that's the actually off guidance belief I than drag like that how with are and NOI negative you to to that And around it and anticipated. big I do maybe lower on start disappointing, if expense the maybe a portfolio. chose I think wanted that recently. little that what impact not a guess specialty obviously having seems of reinvest certainly, But that sell today, you is the Paul, in pretty the more your crops would that. those the comments follow-up some specialty to a far the you and capital, is crops that? your interest communicated I and big you've is guess the gives sense then, on But

Paul Pittman

this evaluating. something Look, Yes. is we're

So to are that but comments our no one specialty considering we we're going take crop, should from it. exit certainly

the side, big using rolled picture And got crop anecdotally, the that row here's I'm rolls did last over leases, and those on we a to did increase crop it. we exactly and to Luca leases. a I new well. XX%, we on average So think in over go you little year, row We alluded rolled things as James these the take the think, that fixed bit recall approximately a please range. rents got we this, don't on cash and I XX% the so number something model if But in when X-year

So inflation, commodities of on and rents essentially asset rapidly due the us side, high crop strong appreciating worldwide driving crop row yields row increasing to on the key an and prices positive growing is crop have to these on side. and high values results, shortages returns crops the the

large in to we complicated marketing the we it's the most and exception what with experiencing crop revenue the next and specialty of shows year up unraveled all specialty the long because of the mixed citrus, tails. portion the up crops in turn these of revenue side, are or of the a When

impact financial or is XXXX greater really to having negative the the impact than a So drought XXXX during the year. impact of equal drought the

drought. year the by 'XX hurt gets the So 'XX

excess the off nuts, And happened the then many a parts world on crops, of is these got what has big of in many of 'XX had on tree year. in coming that, supply especially. the top We've crop we

relatively to frankly, we due yield 'XX year project on drought this basis. the the worldwide of to So double-whammy price due the imbalances as during a low low relatively you've got and supply-demand

question, in has is to as we CEO, us now So Dave, times, rent shareholder talking XXXX what you dampen and as company, as to a in analyst back of and years but to time. maybe on there's basically, do happens the what your me with it rent. reason way is talking and you're through volatility. And is to something out lived Because for them you've gotten on And XXXX, all been row to your the and Chairman we through get decreases. crop us, not rent a the bad frustrating that core the 'XX very and substantially about figure diversification many the fixed is 'XX, can't on somewhere side, want try cash to going the bad you're an increase, your about it's big is, what a

And in side, crop row volatility it come will drastically bad doesn't so create our reduce era the and in P&L. the and again,

because the And the side, price swings. hurting nature get of those of us, think those big it's and crop stocks. The and leases the hurting we specialty these of I way frankly are, it's

to be I got get we've your frankly we've figure joint go that to other some But stop ventures, There's leases. a away. hope got might have that might happening, structuring answers to be be that lot question. dispositions, to problem of out So choices. might our how way of

Dave Rodgers

guess mid wanted you're cap value farm the appreciation into where implied think consistent are fact is I high color. of to appreciate largely the thought is. one time I of that that comes And And wonder of to in your go now where to the from in part rate back think X/Xrds going with rates over other comment have which owning you question a you the yields maybe debt And the about repricing Xs, cap moved. I made I land. as where I Yes. you that

kind the move So aggressive you and underlying cost we've prices I'm in curious, view again, debt there how that farm market moving of the with seen.

Paul Pittman

is occurred I Yes. rates just common rates. it gradually is even on, will reason done it market much, The But that crop These damper They And they interest history has really the interest probably say of put a not it suggests stop many put It a continued yet on row is that the prices. higher will to and sense hasn't good it damper respects of the farmers are if institutions. asset on values high farmland in with values. news growth when Farmers and on very and row are appreciate must. asset the cash. with crop for the these purchases side. amount side, drive quite won't at The the the overwhelming reverse profitable. all, the

Those bought And farms very hands. so are strong in they farms.

just interest it see come I going so we values don't haven't yet certainly rates, seen And side. with row and happen off asset think on high the to crop you're

doing that's confident will us than I the years. a of equal rates new now going be what and in us us back of place in it's high of more to for But the cap excess average dampened our hard mean even for These hard is debt goes we're at mean X.X%. company row public know that's I very cost or X.X% to it's like farms. for that's market to not in we continue. It's about. the going when negative down. as into particular, in capital though of appreciation really capital because Institutions XX amount farms or cost a change. I spread, have greater to us purchasing the statistic crop a And of it's annual are when farmland buy to

primarily. worldwide Ukraine, high-quality Illinois to it commodities South is demand key farmland, the all the supply/demand money the not is money. is issues. by drought the assets, Back you down other cap take see town problem asset changing. a to get trading climbs, a volatility X.X class rural really American countercyclical don't of right And food of It's around the by Street It's driven And Wall you rates world institutional kinds I when it. on It's at driven small or cap. America that It's high. today underlying

that long-term drive get is figure crops the unfortunately, well to a continuing underlying creator. is how side. our investment, that we're people store it high-quality very, farmland not to What So wealth convert got stock very that a a capital, the into value is do communicating we've volatility on very reason of some of be to to viewed and great part specialty out the great U.S. for price. And good is asset by

Operator

comes Your Janney. from Rob Stevenson from next question

Unidentified Analyst

This is for Rob [indiscernible] Stevenson.

Just wanted to more dealership if four please see you could the equipment agricultural acquisitions? provide X insight on

Paul Pittman

Yes.

John So the in acquired estate, key called States. John four operations. in real of, Ohio. Deere estate those to transaction not we is network acquired real We separate the the operator Deere think, We United the dealerships. of They really different The have XX dealerships driving Ag-Pro. in largest those do company excess is underneath dealerships. Ag-Pro I dealerships dealership the several is a The bought X points. that something reason

the the and pretty certainly current crop on cases, yield is rate -- on farmland is certainly First farmland. cap than row those stronger strong return on most in experienced you

where get was there tied economy is in feel frankly particularly, particular. good row like John a the of really underlying long-term we of dealerships strongly the to are them, Deere asset. in dealerships are driver locations, big pretty those couple that Second crop farm appreciation

tenants, think appreciate appreciate is credit quality think sort farmland is value. that to thesis assets It very of up we our crop will obviously general quite matches So with high. value valuable. it continue row We these

world, we that the of of terms agriculture. network. And how more lot mean, But frankly reach a the to wrapping in It's one strongest the addition, dealer the John in use that of through it Deere, flag can bit in kind dealer network whole farmers us relationships. whole frankly. brand we're to in a out little brands I farmers, ourselves in strongest lot of that's networks a that certainly more

remain want percentage benefits do. there's row to high-quality really over be So that tiny any investments of what means. that on synergistic door time. crop and will of business some in we it of opening appreciate farm that generally assets to by sort we because cracking making of a focus will the It core and the our lot But sector. really a most farmland is what not

our long-term really it's So core the of story.

Operator

[Operator Instructions].

comes the question Craig Securities. Kucera B. of from Riley next of Our line

Craig Kucera

here calls play? apologize are you resetting in James, caps the know resets in there's a How I you I remaining about right But with a into in the or I lot interest quarter. debt do resets first here this, in announced that if 'XX thinking that now. of missed that swaps the press release going the on 'XX, come and you dealing had

James Gilligan

looked We've little a Yes. at that bit.

Our we kind of think the where them when using will guidance. how and we provide assumptions kind forward also we're in are spreads is, kind we're dates. of come sort the What at noted likely at looking upon reset we looking of we're curves, supplemental to about historical of those those

So of modeled that's them how we've kind now.

different fashion. of conversations a new that in deal have with debt the We not lender, of lot had only a incumbent to sort but also potential lenders with ways on

so where in those get everyone's can. ideas approach competition to and bear with resets quiver all good we to can. our that we arrows bring we're continuing And Frankly, the

Craig Kucera

look of maybe sell sense per to sales about your make think a higher those at kind a $XX when discount in it does that things. of to and And we do think you but Paul, increase tend improve guidance $XX as take Got you do Or maybe long-term know And value about how costs has million million sales, that to on interest can asset share maybe the environment? as it. are I results? you most very to such farmers and how to your asset rate deep a debt

Paul Pittman

sales Look, certainly about a do asset variety we the We we about yes. asset time. So think balance sales. all of think things when

money There's good a and sell asset and could you're buy price stock. we own into this correct. and and a getting value and back low we for asset are fair is, we rates are out First lot assets cap flowing really there the class a of

type is don't farm. jewels the sell A+ farm philosophy call an farms. or If crown it's an Our generally we what A

a underperforming And or looking that's a love the it many, stuff of many asset unless reason it's we're But a dearly back is, we're actually not farm pretty overpredict to redeploy you a point it's where buybacks almost think debt pay given that view. of financial sales. want get sort profit that you with, or what's into in farm where been kind Don't can impossible reduction from why we're I to at dedicated it if buy morning. to of is. the is a that But trimming certain which happened we see is of amount, into and capital the stock guidance frankly this portfolio that parts

Operator

Instructions]. [Operator

back questions. no I'd further we As it like to CEO. to Pittman, and hand have Paul Chairman

Paul Pittman

all mean for you are. us I'm of phone call as today. as price Thank you this disappointed this morning, you. stock performance in joining many for the Thank I

it is things that financial think challenging agriculture. but year. of perspective almost important year, is to a crops grow that outdoors. view, the be It point production strong we as predicted, was of more XXXX nature will but XXXX, a have from these sounds keep very I a in trite,

And so here a subject and driven we of happened which volatility has will be weather by pricing. commodity

in appreciation. that side. value the occurring for long-term asset long-term global in up portfolio we performance That the values as farmland demand Farmland is the seeing On appreciation demand and crop it go hand, return. that still row will as and sector continues not in terms value other to And are the rapidly to frankly, all up. asset go averages specialty food know in of drives that And it crop of continue all and the therefore, is occurring is there probably we just is asset of the side

citrus, yields for worldwide a performance year you in a positive and terms almonds it the And demand of things even though tough like pistachios crop of and and outlook. long-term that, still have

you're asset And don't in in see of the will XX-month values, period but think terms be continue to get time front to story of in so. long-term see will through this. so a of going a P&L reductions challenging to It And positive it significant real and going I you're we'll us. be

will example. that XX U.S. in at remain least, in continues XXXX will U.S. and row with in world, crop demand given going for On rent what and months farmland what's be production opinion the on our for to U.S. the happen for positive year, Ukraine/Russia around do elevated crops for the farm the the and we and side, rolls particular, next in

With for that, thank conclude, all and I'll your time. you

Operator

Thank a for lovely day. have today's conclude does you joining. Please That all call.

You may lines. your now disconnect

Farmland Partners (FPI) 23 Feb 232022 Q4 Earnings call transcript