Farmland Partners Inc. Reports Third Quarter 2022 Results

FPI Significantly Improves Operating Performance and Raises Guidance

DENVER–(BUSINESS WIRE)–Farmland Partners Inc. (NYSE: FPI) (“FPI” or the “Company”) today reported financial results for the three and nine months ended September 30, 2022.

Selected Q3 2022 Highlights

During the three months ended September 30, 2022, the Company:

• increased net income by $3.8 million to $1.1 million, or $0.01 per share available to common stockholders, compared to $(2.7) million, or $(0.17) per share available to common stockholders, for the same period in 2021;
• increased AFFO by $5.7 million to $2.5 million, or $0.05 per share, from $(3.2) million, or $(0.09) per share, for the same period in 2021;
• decreased debt by $16.0 million, while maintaining $48.0 million of undrawn capacity under its Rutledge line of credit;
• renewed approximately 60% of leases expiring in 2022 at average rent increases in excess of 15%; and
• increased the bottom and top end of 2022 AFFO guidance range to $0.27 to $0.31 from $0.26 to $.30.

Subsequent to Q3 2022

• On October 13, 2022, the Company closed on a $75 million undrawn line of credit, all of which is currently available, providing additional liquidity.

CEO Comments

Paul A. Pittman, Chairman and CEO, said: “The third quarter of 2022 was another outstanding quarter for FPI—AFFO increased $5.7 million and operating income was up over 200% compared to Q3 2021. Operations benefited from higher rents on fixed leases, increased auction and brokerage fee revenue, increased direct operations gross profit, and lower litigation expenses. Our outlook for 2022 remains positive, and we have increased both the bottom and top ends of our guidance range issued in July. Farmland values continue to show meaningful appreciation across row-crop regions and the farm economy remains strong, partly driven by inflationary pressure. Inflation, which is generally positive for farmland values, is also leading to increased interest rates, which will impact many borrowers, including FPI, in 2023.”

Financial and Operating Results

• The tables below show financial and operating results for the three and nine months ended September 30, 2022 and 2021. The values are shown as reported and after adjusting for litigation items.

			As reported										Adjusted for litigation (1)
			For the three months ended										For the three months ended
			September 30,										September 30,
Financial Results:			2022			2021				Change			2022			2021				Change
Net Income (Loss)			$	1,119		$	(2,669	)		NM			$	1,199		$	(439	)		NM
Net income (loss) per share available to common stockholders			$	0.01		$	(0.17	)		NM			$	0.01		$	(0.11	)		NM
AFFO			$	2,498		$	(3,236	)		NM			$	2,578		$	(1,006	)		NM
AFFO per weighted average common shares			$	0.05		$	(0.09	)		NM			$	0.05		$	(0.03	)		NM
Adjusted EBITDAre			$	7,131		$	3,707			92.4	%		$	7,211		$	5,937			21.5	%
Operating Results:
Total Operating Revenues			$	13,140		$	10,105			30.0	%		$	13,140		$	10,105			30.0	%
Operating Income			$	4,725		$	1,434			229.5	%		$	4,805		$	3,664			31.1	%
Net Operating Income (NOI) (2)			$	9,352		$	7,695			21.5	%		$	9,352		$	7,695			21.5	%

(1)		Legal and accounting expense for the three months ended September 30, 2022 and 2021 included $0.1 million and $2.2 million, respectively, related to litigation. Revenue for the three months ended September 30, 2022 and 2021 included $— million and $— million, respectively, of litigation settlement proceeds related to the Rota Fortunae case.
(2)		Please note change in the definition of NOI to include cost of goods sold.

			As reported										Adjusted for litigation (1)
			For the nine months ended										For the nine months ended
			September 30,										September 30,
Financial Results:			2022			2021				Change			2022			2021				Change
Net Income (Loss)			$	5,250		$	(3,055	)		NM			$	6,500		$	3,813			70.5	%
Net income (loss) per share available to common stockholders			$	0.05		$	(0.39	)		NM			$	0.08		$	(0.18	)		NM
AFFO			$	5,764		$	(8,493	)		NM			$	7,014		$	(1,625	)		NM
AFFO per weighted average common shares			$	0.11		$	(0.26	)		NM			$	0.14		$	(0.05	)		NM
Adjusted EBITDAre			$	19,649		$	12,219			60.8	%		$	20,899		$	19,087			9.5	%
Operating Results:
Total Operating Revenues			$	39,387		$	31,693			24.3	%		$	39,387		$	31,143			26.5	%
Operating Income			$	12,496		$	5,490			127.6	%		$	13,746		$	12,358			11.2	%
Net Operating Income (NOI) (2)			$	28,815		$	24,727			16.5	%		$	28,815		$	24,177			19.2	%

(1)		Legal and accounting expense for the nine months ended September 30, 2022 and 2021 included $1.2 million and $7.4 million, respectively, related to litigation. Revenue for the nine months ended September 30, 2022 and 2021 included $— million and $0.6 million, respectively, of litigation settlement proceeds related to the Rota Fortunae case.
(2)		Please note change in the definition of NOI to include cost of goods sold.

• See “Non-GAAP Financial Measures” for complete definitions of AFFO, Adjusted EBITDAre, and NOI and the financial tables accompanying this press release for reconciliations of net income to AFFO, Adjusted EBITDAre and NOI.

Acquisition and Disposition Activity

• During the nine months ended September 30, 2022, the Company completed twelve property acquisitions for total consideration of $36.9 million.
• During the nine months ended September 30, 2022, the Company completed five property dispositions for cash consideration of $16.9 million and total gain on sale of $3.9 million.

Balance Sheet

• During the nine months ended September 30, 2022, the Company sold 8.6 million shares of common stock at a weighted average price of $14.13 for aggregate net proceeds of $121.3 million under its “at-the-market” offering program.
• As of October 21, 2022, the Company had 55,821,431 shares of common stock outstanding on a fully diluted basis.
• The Company had total debt outstanding of $410.5 million at September 30, 2022, compared to total debt outstanding of $513.4 million at December 31, 2021.
• The company had Series A preferred units of $109.4 million outstanding after the redemption of $10.0 million of Series A preferred units during the nine months ended September 30, 2022.
• The Company had liquidity of $56.9 million, consisting of $8.9 million in cash and $48.0 million in undrawn availability under its Rutledge credit facility at September 30, 2022, compared to cash of $30.2 million at December 31, 2021. On October 13, 2022, the Company closed on a $75 million undrawn line of credit, all of which is currently available, providing additional liquidity.

Dividend Declarations

• The Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share of common stock and per Class A Common OP unit. The dividends are payable on January 17, 2023, to stockholders and common unit holders of record on January 2, 2023.

Conference Call Information and Supplemental Package

The Company has scheduled a conference call on October 25, 2022, at 1:00 p.m. (Eastern Time) to discuss the financial results and provide a company update.

The call can be accessed by dialing 1-844-200-6205 (USA), 1-833-950-0062 (Canada), or 1-929-526-1599 (other locations) and using the access code 038967. The conference call will also be available via a live listen-only webcast and can be accessed through the Investor Relations section of the Company’s website, www.farmlandpartners.com.

A replay of the conference call will be available beginning shortly after the end of the event until November 4, 2022, by dialing 1-866-813-9403 (USA), 1-226-828-7578 (Canada), or +44 (20) 4525-0658 (other locations) and using the access code 793610. A replay of the webcast will also be accessible on the Investor Relations section of the Company’s website for a limited time following the event.

A supplemental package can be accessed through the Investor Relations section of the Company’s website.

About Farmland Partners Inc.

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of September 30, 2022, the Company owns and/or manages approximately 190,600 acres in 18 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, and Virginia. We have approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014. Additional information: www.farmlandpartners.com or (720) 452-3100.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements with respect to our outlook and the outlook for the farm economy generally, proposed and pending acquisitions and dispositions, financing activities, crop yields and prices and anticipated rental rates. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the on-going war in Ukraine and its impact on the world agriculture market, world food supply, the farm economy, and our tenants’ businesses; general volatility of the capital markets and the market price of the Company’s common stock; changes in the Company’s business strategy, availability, terms and deployment of capital; the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all; availability of qualified personnel; changes in the Company’s industry, interest rates or the general economy; adverse developments related to crop yields or crop prices; the degree and nature of the Company’s competition; the timing, price or amount of repurchases, if any, under the Company’s share repurchase program; the ability to consummate acquisitions or dispositions under contract; and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and the Company’s other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Farmland Partners Inc. Consolidated Balance Sheets As of September 30, 2022 (Unaudited) and December 31, 2021 (in thousands)
		September 30,				December 31,
		2022				2021
ASSETS
Land, at cost		$	969,360			$	945,951
Grain facilities			10,918				10,754
Groundwater			12,602				10,214
Irrigation improvements			53,431				52,693
Drainage improvements			12,528				12,606
Permanent plantings			53,698				53,698
Other			6,995				6,848
Construction in progress			14,125				10,647
Real estate, at cost			1,133,657				1,103,411
Less accumulated depreciation			(43,224	)			(38,303	)
Total real estate, net			1,090,433				1,065,108
Deposits			269				58
Cash			8,869				30,171
Assets held for sale			34				530
Notes and interest receivable, net			5,910				6,112
Right of use asset			368				107
Deferred offering costs			53				40
Accounts receivable, net			6,632				4,900
Derivative asset			2,014				—
Inventory			3,123				3,059
Equity method investments			4,149				3,427
Intangible assets, net			2,060				1,915
Goodwill			2,706				2,706
Prepaid and other assets			1,256				3,392
TOTAL ASSETS		$	1,127,876			$	1,121,525
LIABILITIES AND EQUITY
LIABILITIES
Mortgage notes and bonds payable, net		$	408,372			$	511,323
Lease liability			368				107
Dividends payable			3,333				2,342
Derivative liability			—				785
Accrued interest			3,578				3,011
Accrued property taxes			2,856				1,762
Deferred revenue			111				45
Accrued expenses			8,855				9,564
Total liabilities			427,473				528,939
Commitments and contingencies
Redeemable non-controlling interest in operating partnership, Series A preferred units			109,408				120,510
EQUITY
Common stock, $0.01 par value, 500,000,000 shares authorized; 54,319,217 shares issued and outstanding at September 30, 2022, and 45,474,145 shares issued and outstanding at December 31, 2021			531				444
Additional paid in capital			646,999				524,183
Retained deficit			(2,189	)			(4,739	)
Cumulative dividends			(70,705	)			(61,853	)
Other comprehensive income			3,205				279
Non-controlling interests in operating partnership			13,154				13,762
Total equity			590,995				472,076
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS IN OPERATING PARTNERSHIP AND EQUITY		$	1,127,876			$	1,121,525

Farmland Partners Inc. Consolidated Statements of Operations Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited) (in thousands except per share amounts)
		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2022				2021				2022				2021
OPERATING REVENUES:
Rental income		$	9,081			$	8,850			$	27,823			$	27,400
Tenant reimbursements			883				861				2,470				2,638
Crop sales			2,471				262				4,316				715
Other revenue			705				132				4,778				940
Total operating revenues			13,140				10,105				39,387				31,693
OPERATING EXPENSES
Depreciation, depletion and amortization			1,665				1,911				5,076				5,731
Property operating expenses			2,115				1,993				6,128				5,632
Cost of goods sold			1,673				417				4,444				1,334
Acquisition and due diligence costs			24				5				86				5
General and administrative expenses			2,505				1,746				8,613				5,258
Legal and accounting			407				2,599				2,479				8,241
Other operating expenses			26				—				65				2
Total operating expenses			8,415				8,671				26,891				26,203
OPERATING INCOME			4,725				1,434				12,496				5,490
OTHER (INCOME) EXPENSE:
Other (income)			(366	)			(8	)			(380	)			(59	)
(Income) from equity method investment			—				(15	)			(16	)			(15	)
(Gain) loss on disposition of assets			48				112				(3,948	)			(3,355	)
Interest expense			3,891				4,014				11,461				11,974
Total other expense			3,573				4,103				7,117				8,545
Net income (loss) before income tax expense			1,152				(2,669	)			5,379				(3,055	)
Income tax expense			33				—				129				—
NET INCOME (LOSS)			1,119				(2,669	)			5,250				(3,055	)
Net (income) loss attributable to non-controlling interests in operating partnership			(25	)			115				(135	)			127
Net income (loss) attributable to the Company			1,094				(2,554	)			5,115				(2,928	)
Nonforfeitable distributions allocated to unvested restricted shares			(16	)			(14	)			(47	)			(42	)
Distributions on Series A Preferred Units and Series B Preferred Stock			(728	)			(3,055	)			(2,408	)			(9,175	)
Net income (loss) available to common stockholders of Farmland Partners Inc.		$	350			$	(5,623	)		$	2,660			$	(12,145	)
Basic and diluted per common share data:
Basic net income (loss) available to common stockholders		$	0.01			$	(0.17	)		$	0.05			$	(0.39	)
Diluted net income (loss) available to common stockholders		$	0.01			$	(0.17	)		$	0.05			$	(0.39	)
Basic weighted average common shares outstanding			53,495				32,551				49,908				31,355
Diluted weighted average common shares outstanding			53,495				32,551				49,908				31,355
Dividends declared per common share		$	0.06			$	0.05			$	0.17			$	0.15

Farmland Partners Inc. Reconciliation of Non-GAAP Measures Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)
		For the three months ended September 30,								For the nine months ended September 30,
(in thousands except per share amounts)		2022				2021				2022				2021
Net income (loss)		$	1,119			$	(2,669	)		$	5,250			$	(3,055	)
(Gain) loss on disposition of assets			48				112				(3,948	)			(3,355	)
Depreciation, depletion and amortization			1,665				1,911				5,076				5,731
FFO			2,832				(646	)			6,378				(679	)
Stock-based compensation and incentive			351				334				1,595				919
Deferred impact of interest rate swap terminations			19				126				113				437
Real estate related acquisition and due diligence costs			24				5				86				5
Distributions on Preferred units and stock			(728	)			(3,055	)			(2,408	)			(9,175	)
AFFO		$	2,498			$	(3,236	)		$	5,764			$	(8,493	)
AFFO per diluted weighted average share data:
AFFO weighted average common shares			55,000				34,298				51,563				33,124
Net income (loss) available to common stockholders of Farmland Partners Inc.		$	0.01			$	(0.17	)		$	0.05			$	(0.39	)
Income available to redeemable non-controlling interest and non-controlling interest in operating partnership			0.01				0.10				0.06				0.31
Depreciation and depletion			0.03				0.06				0.10				0.17
Stock-based compensation and incentive			0.01				0.01				0.03				0.03
(Gain) on disposition of assets			0.00				0.00				(0.08	)			(0.10	)
Distributions on Preferred units and stock			(0.01	)			(0.09	)			(0.05	)			(0.28	)
AFFO per diluted weighted average share		$	0.05			$	(0.09	)		$	0.11			$	(0.26	)

		For the three months ended							For the nine months ended
		September 30,							September 30,
(in thousands)		2022			2021				2022				2021
Net income (loss)		$	1,119		$	(2,669	)		$	5,250			$	(3,055	)
Interest expense			3,891			4,014				11,461				11,974
Income tax expense			33			—				129				—
Depreciation, depletion and amortization			1,665			1,911				5,076				5,731
(Gain) loss on disposition of assets			48			112				(3,948	)			(3,355	)
EBITDAre		$	6,756		$	3,368			$	17,968			$	11,295
Stock-based compensation and incentive			351			334				1,595				919
Real estate related acquisition and due diligence costs			24			5				86				5
Adjusted EBITDAre		$	7,131		$	3,707			$	19,649			$	12,219

Farmland Partners Inc. Reconciliation of Non-GAAP Measures Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)
		For the three months ended September 30,								For the nine months ended September 30,
($ in thousands)		2022				2021				2022				2021
OPERATING REVENUES:
Rental income		$	9,081			$	8,850			$	27,823			$	27,400
Tenant reimbursements			883				861				2,470				2,638
Crop sales			2,471				262				4,316				715
Other revenue			705				132				4,778				940
Total operating revenues			13,140				10,105				39,387				31,693
Property operating expenses			2,115				1,993				6,128				5,632
Cost of goods sold			1,673				417				4,444				1,334
NOI			9,352				7,695				28,815				24,727
Depreciation, depletion and amortization			1,665				1,911				5,076				5,731
Acquisition and due diligence costs			24				5				86				5
General and administrative expenses			2,505				1,746				8,613				5,258
Legal and accounting			407				2,599				2,479				8,241
Other operating expenses			26				—				65				2
Other (income)			(366	)			(8	)			(380	)			(59	)
(Income) from equity method investment			—				(15	)			(16	)			(15	)
(Gain) loss on disposition of assets			48				112				(3,948	)			(3,355	)
Interest expense			3,891				4,014				11,461				11,974
Income tax expense			33				—				129				—
NET INCOME (LOSS)		$	1,119			$	(2,669	)		$	5,250			$	(3,055	)

Non-GAAP Financial Measures

The Company considers the following non-GAAP measures as useful to investors as key supplemental measures of its performance: FFO, NOI, AFFO, EBITDAre and Adjusted EBITDAre. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of the Company’s operating performance. FFO, NOI, AFFO, EBITDAre and Adjusted EBITDAre, as calculated by the Company, may not be comparable to other companies that do not define such terms exactly as the Company.

FFO

The Company calculates FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT. NAREIT defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, plus real estate related depreciation, depletion and amortization (excluding amortization of deferred financing costs), and after adjustments for unconsolidated partnerships and joint ventures. Management presents FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from sales of depreciable operating properties, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. The Company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs. However, other equity REITs may not calculate FFO in accordance with the NAREIT definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO.

AFFO

The Company calculates AFFO by adjusting FFO to exclude the income and expenses that the Company believes are not reflective of the sustainability of the Company’s ongoing operating performance, including, but not limited to, real estate related acquisition and due diligence costs, stock-based compensation and incentive, deferred impact of interest rate swap terminations, and distributions on the Company’s Series A preferred units. For the avoidance of doubt, $5.7 million non-cash redemption of Series B Participating Preferred Stock in Q4 2021 is not included in AFFO.

Changes in GAAP accounting and reporting rules that were put in effect after the establishment of NAREIT’s definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of the Company’s operating performance. Therefore, in addition to FFO, the Company presents AFFO and AFFO per share, fully diluted, both of which are non-GAAP measures. Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO.

Contacts

James Gilligan

ir@farmlandpartners.com

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