Please note this event is being recorded. I would now like to turn the conference over to Nick Ortiz, investor relations. Please go ahead.

Good afternoon and welcome to Tohon Ranch Company's third quarter 2026 earnings call. My name is Nick Ortiz. Joining me today are Matt Walker, President and Chief Executive Officer, and Robert Velasquez, Senior Vice President and Chief Financial Officer. Today's press release, 10Q, and this webcast are available on our investor relations website. A replay will be posted after we conclude. That site is ir.tohonranch.com. Today's remarks, including responses to questions, include forward-looking statements. These statements are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Key factors are detailed in our SEC filings, including our most recent Forms 10Q and 10K. We assume no obligation to update any forward-looking statements. We will also reference non-GAAP measures. These measures should be considered in addition to, not as a substitute for, GAAP results. Reconciliations to the most directly comparable gap measures and reasons why we use non-gap measures are included in today's filings and are posted on our website. Again, it's ir.tohomeranch.com. After prepared remarks, we'll address questions. Shareholders were invited to submit questions by email in advance. I'll now turn the call over to our CEO, Matthew Walker.

Thanks, Nick, and good afternoon. Let me go through the results and point out a few highlights, then turn it over to Robert, and then I'll wrap up by talking about our plan going forward. For the third quarter, revenue, net income, and adjusted EBITDA were all ahead of last year, with comparable results year to date. Looking at each of our individual operating segments tells a similar story, with steady to positive growth across our portfolio. I'd like to provide some context. Tohono Ranch Company is involved in a number of different diverse businesses, some of which are more passive like our ground leases and royalties, while others are more active like ranch operations in our apartments. We benefit from the diversification of those cash flow streams, as well as their compounding growth. So net-net, it's encouraging to see consistent improvement across the board this quarter. I do want to make sure we're transparent about what's recurring and what's exceptional because a portion of our improvement reflects timing and non-recurring items. Notably, this includes our land sale contribution and the industrial joint venture with Dato Properties in the second quarter. In farming, as Robert will discuss, we benefited from the unusually high crop insurance proceeds as well as bonus pricing on last year's pistachio crop. Setting those items aside, what remains is a set of operating businesses that performed well this quarter. In terms of highlights, at our Commerce Center, Building 1B, that's the one that we're developing with Datto Properties, it remains under construction and is on track for completion early next year. Its deal structure, namely a joint venture targeting a high return on invested capital, which leverages third-party equity, is a model we intend to repeat. Next door to TRCC, the Tohono Indian Tribe and Hard Rock International have broken ground on the next phase of the Hard Rock Casino Tohono with a new 406-room hotel and entertainment venue. The tribe's ongoing investments into their regional destination will continue to have a wide-ranging positive impact on our business at the Commerce Center and expand our customer base. With our water sales, we were aggressive early this year and offloading a good portion of water that would otherwise be banked. We successfully captured demand before the water market changed dramatically as the strong El Nino winter is becoming realized. We remain poised to meet future demand when conditions permit. Moving over to our residential communities, in late September, the Kern County Board of Supervisors approved an amendment to the grapevine-specific plan that updates the land use mix and phasing. With this, we are one step closer to a mapping process in bringing the first phase of grapevine to market. At Centennial, we are processing an updated application with Los Angeles County and expect to be before the Regional Planning Commission in the coming months and shortly after in front of the Los Angeles County Board of Supervisors. We are also continuing to seek capital partners for the fully entitled Tehillon Mountain Village. With that, I'll turn it over to Robert to take you through the quarter in more detail.

Thank you, Matt. Net income attributable to common stockholders was $3.3 million, or $0.12 per share, compared to $1.7 million, or $0.06 per share, a year ago. That's an improvement of $1.6 million. Adjusted EBITDA nearly doubled to $10.4 million compared to $5.3 million last year. The press release and the 10Q provide the segment details, so I'll focus on three areas, earnings quality, cost management, and our balance sheet. First, earnings quality. As Matt mentioned, our results benefited from some unusual items, particularly in farming. Our revenue includes $3.9 million of crop insurance proceeds and $2.6 million of bonus price adjustments related to last year's pistachio crop. I should also point out that an earlier harvest moved wine grape sales into the third quarter that would ordinarily occur later this year. So this accentuated the quarter's variances. This spring's warm weather also impacted almond nut sizing, which will be reflected in the total yield, which we will report at year end. That said, we continue to see positive contributions across our operations. Mineral Resources revenues increased 25% with operating income up nearly 58%. And National Savant exercised a 20-year extension on its lease, continuing our longstanding partnership with them. Our commercial and industrial portfolio remains well leased with industrial occupancy at 100% and commercial occupancy at 95%. At Terra Vista, leasing continues to progress and multi-family revenue increased to $924,000 compared to $181,000 last year. Second, costs. We continue to focus on managing expenses and improving operating efficiencies. Corporate expenses, including share based compensation adjustments, declined 40% for the quarter and 22% year to date after adjusting for non-recurring costs in the prior year. For the quarter, adjusted farming EBITDA before fixed water obligations was 2.6 million compared to 425,000 last year. Third, the balance sheet. We ended September with approximately $74.4 million of liquidity, including $8.8 million in cash and marketable securities and $65.6 million available under our revolving credit facility. Total debt was $94.4 million, Thank you for joining us. Some of that improvement reflects the timing of land sales and other items that won't necessarily repeat, but it also reflects progress across several of our operating businesses and our efforts to control costs. Our results will continue to fluctuate from quarter to quarter given the nature of our businesses. Our focus remains on improving recurring earnings, managing expenses, and putting capital to work where we believe it will generate the greatest returns for shareholders. With that, I'll hand it back to Matt for some additional remarks.

I'll close my comments by saying a few words about where we go from here. A number of you have reached out to me and told me in so many words, you like what you've seen, but you want to see more. And by more, you mean real transformational change. So what's your plan? Plan will unfold over time. At a high level, here is what we're trying to achieve. We want Tohono Ranch Company to evolve from a conglomerate real estate operating company to take on many of the best characteristics of successful land companies. This means leveraging our land's unique characteristics, including our key location as the gateway between Northern and Southern California with much and contribution. We want to feed the TRCC flywheel across industrial, retail, multifamily, and our travel centers, benefiting from superior regional population and jobs growth. Operationally, we must continue to be disciplined. And with some things, it is addition by subtraction. And by that, I mean, if we simply eliminate doing the things which lose money, our performance will improve. We have to do things differently. So to pursue these objectives, we must clean up our balance sheet, convert land to recurring income, and reduce our drag. We're moving forward on the first stages of implementing this plan. I know that many of you want more details, more clarity, and really more accomplishments more quickly. So do I. What I can tell you is that we will be reporting on our progress on a number of initiatives as those efforts advance. I don't take anything for granted and I want to thank all of you for your patience during this transitional time. With that, we'll turn over to shareholder questions that were submitted in advance.

Please give us a moment to pull those up.

Matt, we received four questions from investors. The first question is from David Ross with Praxis Partners. Question is, we applaud your efforts to reduce costs, but at the end of the day, cash flow is still negative and net debt continues to increase, 16 million year to date. When will management and the board acknowledge the need to materially cut debt and cut costs further to drive earnings and free cash flow, free cash flow per share?

So David, to answer your question, I can say that management as well as our board very much understand the importance of maintaining conservative leverage. Any reductions to the principal balance of our credit line are going to follow cash generating activities. and looking at the detail, while our net debt did increase, the actual borrowings only increased by $500,000. So we used our cash flow from operations and cash flow that was available and marketable securities all to substantially fund our operations. And when you examine our cash flow statement, we generated more than $7 million in cash from operations this year, versus consuming about $4 million of cash from operating activities. So that's a positive difference of $11 million. And then if you exclude the expenditures for the construction of our Terra Vista apartments, we use something like $14 million less cash than the prior year. So no doubt there's still work to be done, but we think this is a step in the right direction. It remains critically important to maintain conservative debt loads, particularly for a company like ours which has an emphasis in land and particularly given our income levels. The interest costs are very real to us.

Next question, Nick.

We seem to have lost Nick. Let me see if I can pull up the question. The next question is from Paul Ross. Nick, you still there?

I got it.

I got it, Matt. I apologize.

I was on mute. The board and management continue to make sure that shareholders do not benefit from stock appreciation. Pahone has an asset, the Commerce Center, that was said to be worth $20 per share during the proxy fight. Therefore, the 250,000 acres of land is worth negative $4 per share. Since the management and board are unwilling to bring out the value, I would recommend that you hire an investment banker to monetize the asset.

Thanks, Paul. I think what you're referring to is a presentation that I made last year where we estimated that the net asset value of the Tohono Ranch Commerce Center was somewhere between $14 and $20 a share, and we base that on 2024 financials. So that's just one part of our business, and that excludes our water assets, and it highlights what I said before, that we believe our business is materially undervalued, and this would include much of the undeveloped land within our 270,000 acres. Where I would disagree with you is your comment that management and the board are unwilling to bring out the value in the land. I mentioned earlier how we're bringing our first phase of grapevine closer to mapping so that we have an asset with value that can be readily monetized through a number of different potential implementation structures. We'll be in front of LA County in the near future on Centennial. and we're confident that our efforts there will bring us another important step closer to realizing value of that asset. And as I also mentioned, we're in the capitalization process with Mountain Village with the assistance of third party investment banking resources. So there is progress, but I agree with you, we need to find and monetize value where we can.

All right. Our next question is from David Speer with NITOR Capital Management. So the question is, Matt, a question on earnings, power, and costs. Over the last 12 months, The home share of joint venture EBITDA was roughly $16 million. Excluding farming, the wholly owned businesses brought in roughly another $27 million of mostly recurring revenue, much of it fairly passive. Yet by our math, those businesses are carrying about $30 million a year of cash costs, including corporate, the MPCs, and capitalized interest. Once you back out farming and water... So the wholly owned side spends more than it takes in, and the $16 million of JV EBITDA is largely absorbed. While you've reduced costs, it seems substantial further reductions need to be on the table for the company to deliver durable earnings. How do you respond to that?

Thanks, David. I appreciate the question. You've identified one of the big challenges that we have in our company today. We have a portfolio of businesses which generate cash. And we also have a portfolio of businesses which, along with our corporate overhead, consume cash. So my approach has been to immediately reduce the cost which we can control. We started that process. And as we look at our budget for the coming year, we're going to continue to reduce all of our controllable costs. The next step is to look at our capital spending and especially our discretionary capital spending as part of that. I mentioned this in my earlier remarks. We need to balance the CapEx spend with what our anticipated cash flow is going to be. And as we look to next year, we are asking the hard questions about what's absolutely essential. For example, what can we do to make an asset productive and cash flow producing? What can we do so that we create underlying land value? Or what can we do so that we preserve important optionality in the future? And then the final step, which is the hardest, is to make decisions on where we grow our revenue and how to generate cash. Because at the end of the day, it's all about the cash and how much capital allocation is necessary for that effort. And then where are the trade-offs? What's the capital required? What's the risk? The investment horizon? our return on invested capital. So you're right, David, in as much as we too need to continue to reduce our costs and reduce our capital expenditures and then work to increase our revenues so that we can generate durable earnings. And I'm going to be reporting more on this as I am able to.

Our final question comes from Phil Goldstein with Bulldog Investors. Mr. Goldstein asks, I think almost all shareholders and management of TRC believe that the share price has been languishing far below the intrinsic value of the company for many years. What is the plan for narrowing the gap before I die? By the way, my life expectancy is less than eight years.

Well, Phil, I didn't think I needed any more sense of urgency than I already had, but I do believe that you just gave me another reason. Look, you bring up a good point. Our shares trade below the intrinsic value of the asset. We share your frustration. In my earlier prepared remarks, I tried to lay out at a high level the things that we need to do in order to change the share price for the positives. It's disciplined deployment of capital. It's a conversion of assets into cash flow. And it's the continued reduction of cost. We're working on all three of those. And as I said before, as soon as I'm able to share more detail, I will. And for everyone's benefit, I hope that the company will see this change in way less than the eight years that you mentioned. And I hope that you've got a lot more than eight years ahead of you. So on that note, thank you to all of our shareholders for submitting your questions. We look forward to reporting back to you for our fourth quarter results early next year. Have a good day, everyone.

The conference is now concluded. Thank you for attending today's presentation.

You may now disconnect.