Earnings call transcript: Gladstone Land tops Q3 2026 estimates, shares rise premarket

Gladstone Land beat Wall Street’s expectations in the third quarter of 2026, reporting earnings per share of $0.142 on revenue of $31.47 million, well above forecasts for a loss of $0.16 per share and revenue of $16.25 million. The agricultural REIT said strong almond and pistachio pricing, along with earlier-than-usual recognition of pistachio bonus income, lifted results. Shares rose 5.38% in premarket trading to $7.25 from the previous close of $6.88.

Gladstone Land reported net income of about $11 million, or $0.14 per share to common shareholders, in the third quarter. Adjusted funds from operations rose to $15.1 million, or $0.35 per share, from $1.4 million, or $0.04 per share a year earlier.

The company said the improvement was driven mainly by higher participation rents and stronger results from direct farming operations. Participation rents rose by about $11.4 million from a year earlier, helped by stronger almond and pistachio prices and the early announcement of a 2025 pistachio crop bonus by the company’s primary processor.

Gladstone Land owns about 98,000 acres across 143 farms in 14 states, with nearly 56,000 acre-feet of water assets, all in California. Management said the portfolio remains positioned to benefit from strong permanent-crop economics, especially in almonds and pistachios, even as wine grapes continue to face pressure from oversupply.

Gladstone Land’s third-quarter EPS of $0.142 beat the forecast of a $0.16 loss by $0.302 per share. On the company’s reported basis, that was a 188.75% surprise. Revenue of $31.47 million topped the $16.25 million estimate by $15.22 million, or 93.66%.

The size of the beat was notable, but management said part of the upside came from timing. The company recognized some pistachio-related revenue earlier than usual after its processor announced a bonus sooner than expected. That helped lift the quarter, but it also means some of the benefit may have shifted out of future periods rather than created entirely new income.

Even so, the results were a clear improvement from the prior year. AFFO per share rose from $0.04 to $0.35, showing stronger cash generation across the portfolio.

The stock rose 5.38% in premarket trading to $7.25, up $0.37 from the previous close of $6.88. The shares remained near the low end of their 52-week range of $6.83 to $13. At current levels, the stock trades at just 0.45 times book value and appears undervalued based on InvestingPro’s Fair Value analysis, suggesting potential upside for patient investors. The company is featured on InvestingPro’s Most Undervalued stocks list.

The move suggests investors welcomed the earnings beat, but the reaction was not dramatic. That may reflect caution about how much of the quarter’s strength was tied to timing of crop-related payments rather than a fully repeatable improvement in core rent income. Investors also appear to be watching the company’s refinancing needs and the uneven outlook for some crop categories.

Management said Q4 participation rents are expected to range from about Q3 levels on the low end to around Q4 2025 levels on the high end, depending largely on the timing of crop insurance payments. The company said most insurance proceeds tied to 2026 pistachio damage should be recognized in Q4, though some could slip into early 2027.

The company also said it expects smaller earnings patterns in 2027 than in 2025, with much of the related revenue likely to be recognized in the second half of 2027.

On capital management, Gladstone Land said it has more than $105 million of immediately available capital and more than $110 million of unpledged properties that could be used as collateral. InvestingPro assigns the company a "Fair" overall financial health score of 1.95 out of 5, with particular strength in its cash flow score of 2.85. For investors seeking deeper analysis, LAND is among the 1,400+ US equities covered by comprehensive Pro Research Reports, which transform complex Wall Street data into clear, actionable intelligence. It also said about $130 million of MetLife loans are set to reset in January 2027, with a potential increase of about 250 basis points if refixed at current levels.

The company declared a Q4 monthly dividend of $0.0467 per share, which it said implies an 8.1% annualized yield at the recent closing price of $6.88. The dividend commitment remains noteworthy given the company’s 11-year track record of consecutive dividend increases, according to InvestingPro analysis. InvestingPro subscribers have access to over 15 additional ProTips on LAND, along with comprehensive financial health scores and Fair Value estimates.

“We currently own about 98,000 acres across 143 farms and nearly 56,000 acre-feet of water,” Chief Executive David Gladstone said, underscoring the scale of the portfolio and its California water exposure.

Chief Financial Officer Lewis Parrish said adjusted FFO “was $15.1 million, or $0.35 per share, compared to $1.4 million, or $0.04 per share” a year earlier. He said the increase was driven mainly by the earlier pistachio bonus announcement, which allowed the company to recognize revenue sooner than usual.

Parrish also said the company would face “roughly 250 basis points of an increase” if it refixed its MetLife loans today, highlighting the refinancing pressure ahead.

Analysts focused on whether the strong quarter would carry into the fourth quarter and beyond. One question centered on participation rents, with management saying Q4 could range from Q3-like levels to Q4 2025 levels depending on insurance timing.

Another major topic was debt refinancing. Management said most of the repricing exposure is tied to MetLife loans and that it is talking with both MetLife and other lenders while also considering property sales to reduce debt.

Analysts also asked about the breakdown of variable lease payments, with management estimating that about 70% of the $17 million paid in the quarter was tied to the 2025 pistachio bonus.

Questions on lease structure showed a possible shift back toward traditional leases. Management said it does not expect additional modified leases for 2027 and is already moving one smaller almond farm back to a standard lease.

Analysts also pressed management on the farmland transaction market. Executives said it remains a buyer’s market, with few institutional buyers and slow deal flow, making asset sales a “grind” rather than a quick fix.

Finally, questions on preferred stock repurchases and solar agreements highlighted capital allocation flexibility. Management said preferred repurchases will remain variable, depending on liquidity needs and borrowing costs, while solar option deals could become a growing source of alternative income.

Sherry, Conference Operator, Gladstone Land Corporation: Good morning. Welcome to Gladstone Land Corporation Third Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Mr. David Gladstone, Chief Executive Officer. Thank you, sir. You may begin.

David Gladstone, Chief Executive Officer, Gladstone Land Corporation: Well, thank you, Sherry. That was a nice introduction. This is David Gladstone, and thank you for calling in today. First, we’ll hear from Catherine Gerkis. She’s our Director of Investor Relations, and she’ll discuss certain terms regulating regulatory matters that are involved with us. Catherine, go ahead now.

Catherine Gerkis, Director of Investor Relations, Gladstone Land Corporation: Thanks, David, and good morning, everyone. Today’s call may include forward-looking statements, which are based on management’s estimates, assumptions, and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday, for more detailed information. You can also sign up for our email notification service and find information on how to contact our investor relations department. We are also on X @GladstoneComps, as well as Facebook and LinkedIn. Keyword for both is The Gladstone Companies.

Today, we’ll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on property, plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and adjusted FFO, which further adjusts core FFO for certain non-cash items, such as converting GAAP rent to normalized cash rent. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance. Now, I’ll turn it back to David Gladstone.

David Gladstone, Chief Executive Officer, Gladstone Land Corporation: Oh, thank you, Catherine. That was very nice. Let’s start out with just letting you know we currently own about 98,000 acres across 143 farms and nearly 56,000 acre-feet of water. That’s about 18 billion gallons of water that we have. It’s mostly out in California. The farms are in 14 different states, and our water assets, well, they’re all in California, where they need to be. We are acquiring one property subsequent to quarter end, but that was not good news other than part of a positive, as kind of an endi