管理層發言
Hello, everyone. Thank you for joining us, and welcome to the Farmland Partners, Inc. Q2 2026 Earnings Call. (Operator instructions were given.) I will now hand the conference over to Luca Fabbri, President and Chief Executive Officer. Luca, please go ahead.
Thank you, Erica, and good morning, and welcome to Farmland Partners Second Quarter 2026 Earnings Conference Call and Webcast. We fully appreciate you taking the time to join us for these calls because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine?
Thank you, Luca, and thank you to everyone on the call. The press release announcing our second quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, July 30, 2026, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business, rents and the broader agricultural markets. We will also discuss certain non-GAAP financial measures including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non-GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the company's press release announcing second quarter 2026 earnings, which is available on our website, farmlandpartners.com and is furnished as an exhibit to our current report on 8-K dated July 29, 2026. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?
Thank you, Christine. This was actually a pretty good quarter for us and, frankly, a very mundane quarter. No real surprising events. Everything is kind of performing as expected and as projected. So you'll hear me back at the Q&A, but I'm going to turn it over to Luca, so we don't end up repeating the same things.
Thank you, Paul. This was a pretty strong quarter performance-wise to the extent that we actually even marginally adjusted guidance upwards on the low end for the remainder of the year for AFFO. But as Paul said, a relatively uneventful quarter as typically Q2 and Q3 of the year are in the middle of the year. We continue evaluating asset dispositions through the end of the year, especially noncore assets like in California. And we're also actively monitoring the conditions in the agriculture world as far as timing of our lease renewals. We have held back so far in pushing lease renewals for the next year because financial conditions are not ideal, among our tenants. But we do have very, very strong tenants in our pool. This is not the first year of relatively middling performance in their financials. So there is nothing particularly new that we expect, but we are hoping for a little bit of better news before we kick off the lease renewal cycle in higher gear. And with that, I will now turn the call over to our CFO, Susan Landi, for her overview of the company's financial performance. Susan?
Thank you, Luca. I'm going to cover a few items today, including the summary of the 3 and 6 months ended June 30, 2026, a review of our capital structure and updated guidance for 2026. I'll be referring to the supplemental package, which is available in the Investor Relations section of our website under the subheader Events and Presentations. First, I want to share a few metrics that appear on Page 2. For the 3 months ended June 30, 2026, net income was $3.1 million or $0.07 per share available to common stockholders versus $7.8 million or $0.15 per share available to common stockholders for the same period in 2025. AFFO was $1.7 million or $0.04 per weighted average share compared to $1.3 million or $0.03 per weighted average share for the same period in 2025. For the 6 months ended June 30, 2026, net income was $3.8 million or $0.08 a share available to common stockholders versus $9.9 million or $0.18 a share available to common stockholders for the same period in 2025. AFFO was $3.8 million or $0.09 per weighted average share compared to $3.6 million and $0.08 per weighted average share for the same period of 2025. Page 5 shows a more comprehensive look at the main drivers of these changes year-over-year. On the revenue side, we were positively impacted by higher interest income, which is due to higher average balance on the loans under the FPI loan program and financing receivables, an increase in the amortization of points and higher proceeds from oil and gas royalties. These increases were partially offset by lower rental income due to asset dispositions occurring in the prior year. Operating expenses declined on a quarter-to-date and year-to-date basis over prior year. Some of these declines are to be expected with the property dispositions that occurred in the prior year, but there were also other reductions to G&A and legal fees, including a reduction in property impairment charges. These declines were partially offset by an increase in the provision for credit loss allowance related to loans under the FPI loan program. Overall, we saw a reduction in net income and EPS for both quarter-to-date and year-to-date basis. The primary driver for the reduction relates to a decrease in the net gain on disposition of assets as a result of fewer property dispositions in the current year versus the prior year. AFFO per weighted average share is up by $0.01 for the 3 and 6 months ended period of the current year. On Page 12, there are a few capital structure items that I'd like to point out. The first is that we had undrawn capacity on the lines of credit of approximately $122 million at the end of Q2 2026. There were repayments of $8 million during the quarter, but no borrowings. We had one MetLife loan with a rate reset occurring during the second quarter. In addition, one loan was extended by 1 year. The average rate on these loans decreased from 5.64% to 5.25%. Moving on to Page 15, it will show you the updated outlook for 2026. The assumptions are listed at the bottom of the page. On the revenue side, changes from the April guidance include an increase in our outlook on variable lease payments. On the expense side, changes from the April guidance include increases as a result of additional provision for credit loss allowances on loans receivable and an increase in impairment related to updated market valuations in connection with one of our West Coast properties, and these were partially offset by a $3.6 million gain on a property disposition. The forecasted range of AFFO is $13.5 million to $15.3 million or $0.31 to $0.35 per share, which is an increase from the prior quarter on the low end of the range. The high end of the range remains unchanged. This summarizes where we stand today. We will keep you updated as we progress through the year. This does wrap up our comments for this morning. Thank you all for participating. Operator, you can now begin the Q&A session.
So operator, while you're compiling that roster, this is Paul. I'm just going to chime in on a couple of questions that we got via e-mail and give those answers, and then we'll go to questions and answers from the audience. So we got a question regarding how we're managing the building of reserves as it relates to credit losses. While we, as a business matter, think we will collect 100% of all of our outstanding loans, our loan program, as you all know, is a relatively high-risk program. We're making loans to people who are in distress. We're often getting 15% or 20% interest rates. And so we believe it's prudent to gradually build those reserves with a certain hope to reverse them. But it's better to build those reserves and reverse them later than not to build any reserves and then get caught holding the bag. So it's really nothing unusual. The size of our loan program today is reasonably large — it's about $60 million total. And so that's why you're seeing these reserves build. In this particular quarter, I don't think the additional reserve was particularly high. The other question we got via e-mail was a question about legal expense, which shows up on the P&L, legal and accounting at about $312,000. And is that indicative of some significant litigation that's going on? The answer is no. That $312,000 is two-thirds either audit or tax fees, which show up in the second quarter. That's when we get those. So that's really the bulk of it. The litigation was only about $25,000 of that $312,000. We continue to have a litigation on a farm in Louisiana with some prior tenant dispute. And we also have, of course, the litigation regarding Sabrepoint that continues to go on. But as you can see from that $25,000 spend, there's not a whole lot happening right now in either of those cases. With that, we can go to whatever Q&A came in with you, operator.
分析師問答
The first question comes from the line of Craig Kucera with Lucid Capital.
I appreciate the color on the credit loss provision. But I'm curious, that was affiliated with one operator that I think you mentioned had some trouble. Was this for the same borrower or a different line?
No, we're building it related to the same borrower we've talked about in the past. We evaluate every borrower, but the bulk of it is related to that same borrower. We're continuing to monitor the situation. One of the things you're up against in any distressed situation is that as long as the principal that we deal with — meaning the individual human being that we're dealing with — keeps control of the situation, we're making loans with relatively steep terms, with what we think is strong collateral and with people who have strong intent to pay it back. And so far in our loan program, which we've been running for about a dozen years, we haven't had anybody not pay us. But the risk you face is that someone loses control of their situation to bankruptcy, for example, or something else. Then you're dealing not with a loan made to a person we know and who intends to pay us back, but with a nameless, faceless court process. That's really where and why we feel it prudent to build reserves over time as we're watching these borrowers in some sort of trouble. Our fear is that they lose control of their situation and then our security position from a legal standpoint doesn't really change, but from a practical standpoint it does change. And that's what's going on here.
Okay. That's helpful. I appreciate that. So I know you guys mentioned you're looking to do more dispositions out of California, but where was the disposition this quarter? Was that on the West Coast? Or was that elsewhere?
Luca, do you want to take that one?
Yes. No, it was elsewhere. The strong gain was related to the fact that this is a solar development on the farm, and we actually sold the farm to the developer itself. The value to them was much higher than the agricultural value. So we locked in that gain.
That was in Illinois, correct?
That is correct.
In Illinois farm.
Okay. Now I was going to be impressed if you had booked a $3.5 million gain out of California. So I just wanted to double check that.
We would have celebrated as well, trust me, Craig.
Right. So there was an increase in your expectations regarding citrus and avocado revenue flowing through the guidance on variable payments. Is that more of a pricing or a volume situation that you're expecting?
The increase in variable rent is actually more related to almonds in particular. As the year moves along, we get better visibility on both yield and pricing. So we tend to be cautious on variable rents at the beginning of the year. We've had some poor performances a couple of years ago on almonds, for example. As the year goes along, we get a little more visibility into expected performance, and that's exactly what happened in this case.
The next question comes from the line of John Massocca with B. Riley.
Maybe sticking with the assets that have a little bit more of a variable revenue stream. Just to clarify then, is the commentary around some of the citrus and avocado what's driving the slight decrease in maybe expectations for crop sales and a little bit of crop insurance coming into the guidance?
Susan, do you want to chime in on the specific details because the big mover this quarter was on the almond side?
Yes. As far as the direct operations go, there was a little bit of a decline due to a softening market within citrus and yields being down a little bit due to weather events in California.
Okay. That makes sense. And then given the capacity you have today with regards to debt availability versus how the stock has performed, how are you thinking about the buyback? Is that something that's more levered to disposition proceeds? Or would you be comfortable using leverage to reactivate that program?
Our buyback program is first driven by stock price and then by cash availability. We can, at any point in time, enter the market for buybacks if we think the price is highly accretive to the remaining shares outstanding. At this price, we think it is pretty accretive. But borrowing costs are reasonably steep, mid-5s, give or take a few basis points. So you want to borrow money to buy back a stock that's yielding on the dividend roughly 3.4% versus a 5.5% borrowing — that's a challenging spread. To answer your question specifically, we will borrow to run a disciplined buyback program from time to time. But even if we're technically borrowing to execute on a given day, we have to sell assets to backfill because we don't want to run that negative spread for a long period of time.
Okay. And then bigger picture, I know we talked about this last quarter, but as some of the macroeconomic volatility and elevated energy prices have persisted, how is that impacting your tenants? You mentioned you're holding off a little bit on pushing renewals given the financial situation in the broader farming industry. Has that changed at all since we last talked or become a little more negative since then, or is it the same theme as around March of this year?
It's pretty much the same theme, but let me give you a little more context. If farmers are doing very well in early summer, we will aggressively pursue leasing in the summer because you never know what's going to happen come fall. You could have a huge bumper crop and prices go down. Even if farmers make it up on volume, they're often depressed by lower prices. Alternatively, if crop prices are ho-hum in early summer, you hang back and maintain optionality. We think this won't be the same kind of bumper crop we've seen in the last couple of years, due to weather in the United States and worldwide weather shocks because it's a global market. Our tendency is to hold back now; we believe there's a materially better chance of upside than downside, so why not wait. I would expect this year's leasing process to be a lot like last year's: a flat year in most cases, maybe up a little. We often have cost of living adjustments in our leases over the term, so even without bumping rent materially in a renegotiation, the COLA clause gives increases over years. That's what we think will happen right now, with some hope it turns out better than that, which is why we're not trying to lock in leases yet. By the time we get to September, we have to get started on it because we'll run out of time otherwise.
Okay. And then with regards to some of the West Coast properties, particularly the tree nut assets, is there any read-through to the increase in your variable rent expectations and thoughts that that market is firming such that disposition opportunities could loosen up? Or is that still a challenged market from a transaction perspective?
It is a challenged market from a transaction perspective, but probably less challenged than it was 6 months ago. California agriculture is in a very difficult spot — perhaps the worst I've seen in my lifetime. It's a combination of bad policy in the state, actual decline in water availability, political constraints on water, and a state that is not supportive of how farm labor must work. The cost of farm labor is going up dramatically. So you're seeing real pressure on everybody that owns land in California, and specialty crops are particularly affected. The almond price adjustment reflects simple supply and demand for this year's almond crop and international crops in the last 12 months. I don't think that makes a big dramatic improvement in the market for tree nuts or citrus in California, but it does help cash flow on those assets this year. Our perspective — we've held this view for several years — is that compared to other fund managers, we have quite a bit less exposure in California as a percentage of our total portfolio. We are on a process of gradually liquidating California properties because we are long-term bearish on California's outlook, and we think it's prudent to reduce exposure and either use that capital to buy back stock or reinvest in the core Midwest.
There are no further questions at this time. I will now turn the call back to Luca for closing remarks.
Thank you, Erica, and thank you, everybody. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Have a great rest of your day.
This concludes today's call. Thank you for attending. You may now disconnect.