Investor Presentaiton
Non-GAAP Financial Measures (Continued)
FARMLAND
PARTNERS
EBITDAre and Adjusted EBITDAre
The Company calculates Earnings Before Interest Taxes Depreciation and Amortization for real estate ("EBITDAre") in accordance with the standards established
by NAREIT in its September 2017 White Paper. NAREIT defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income
tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment write-downs
of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to
reflect the entity's pro rata share of EBITDAre of unconsolidated affiliates. EBITDAre is a key financial measure used to evaluate the Company's operating
performance but should not be construed as an alternative to operating income, cash flows from operating activities or net income, in each case as determined in
accordance with GAAP. The Company believes that EBITDAre is a useful performance measure commonly reported and will be widely used by analysts and
investors in the Company's industry. However, while EBITDAre is a performance measure widely used across the Company's industry, the Company does not
believe that it correctly captures the Company's business operating performance because it includes non-cash expenses and recurring adjustments that are
necessary to better understand the Company's business operating performance. Therefore, in addition to EBITDAre, management uses Adjusted EBITDAre, a
non-GAAP measure.
The Company calculates Adjusted EBITDAre by adjusting EBITDAre for certain items such as stock-based compensation and real estate related acquisition and
due diligence costs that the Company considers necessary to understand its operating performance. The Company believes that Adjusted EBITDAre provides
useful supplemental information to investors regarding the Company's ongoing operating performance that, when considered with net income and EBITDAre, is
beneficial to an investor's understanding of the Company's operating performance. However, EBITDAre and Adjusted EBITDAre have limitations as analytical tools
and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP.
In prior periods, the Company has presented EBITDA and Adjusted EBITDA. In accordance with NAREIT's recommendation, beginning with the Company's
reported results for the three months ended March 31, 2018, the Company is reporting EBITDAre and Adjusted EBITDAre in place of EBITDA and Adjusted EBITDA.
Net Operating Income (NOI)
The Company calculates net operating income (NOI) as total operating revenues (rental income, tenant reimbursements, crop sales and other revenue), less
property operating expenses (direct property expenses and real estate taxes), less cost of goods sold. Since net operating income excludes general and
administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other income and losses and extraordinary items, it
provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and leasing Farmland
real estate, providing a perspective not immediately apparent from net income. However, net operating income should not be viewed as an alternative measure
of the Company's financial performance since it does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, other
income and losses.
FPI
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