Q1 2020 Earnings Call
Good day, ladies and gentlemen, and welcome to the pure cycle Corporation, 2021st quarter Financial results Conference call.
All lines have been placed in listen only mode on the floor will be open for your questions and comments following the presentation.
If you should require assistance throughout the conference. Please press Star zero at this time and it's my pleasure to turn the ports your host for today Mr. Mark hurting Sir the floor is yours.
Hi.
Yes, and I'd like to welcome you all to our first quarter earnings call. The bid out of cycle for US says that we typically usually do two calls a year, but because of the results that we haven't kind of the uniqueness if somebody's results that I thought it might be important to share some of the color up all of these things in kind of.
Give me an update on what we're doing and where we're headed so with that we do have a slide deck for this if you move over to if he can get to over to our website get over to recycle water dot com and in the Investor tab, you'll find that there is this a slide deck for this presentation.
What I will try to do is I'll try and no to transition of the slide death, we worked through the presentation.
So our first slide second side actually is our.
Safe Harbor statement, a where that statements are not historical facts and incorporate in red references presentation are forward looking statements and I think you're all familiar with our safe Harbor statement.
Kind of run through the that's the kind of the company story, because I'm I'm certain that most of you are fairly familiar with the the company in the assets you know there there in here and you know we already water utility company.
With that segment that also developed land and we've been developing our Sky Ranch project, we broke ground on that this year and I'm going to give you kind of a lot of color on how that's gone this year as well as providing water for industrial sales and some oil and gas royalties.
Slide four is just a summary of our water utility assets and kind of a depiction of where we're at NRC box here in the Denver Metro area were in sort of the South East area and as you can see both in terms of where assets are located in our service area at the Lowry range growth in the Metropolitan area has kind.
I have grown out to where all of our assets are so we find ourselves to be located in the right.
Segment of the Metroplex lets drill down specifically to Sky Ranch. So our master plan community is about 930 acres. It's right on the I 70 core door, it's about 60 miles east of downtown indirectly south of or the Denver International Airport or we have a mixed use community.
So we have zoning for somewhere around 3500 homes and that'll be up product mix a range of product mix ranging from single family detached too.
Single family attached to multifamily housing we have a about half a mile of frontage. So by 160 acres. If you include the usability of.
Property right adjacent to the Interstate for commercial development and well total if you look at all types of uses between.
Residential commercial multifamily you know we estimate that that's about 5000 single family equivalent connections, which really give us a marker in how we work connections to our water utility.
Oh, so let's talk a little bit about what a what's new and an update to our Q1 results.
We delivered about 372 finished lots. So we are far ahead of our schedule in terms of what our original forecast was each of our three builders have accelerated their take down of lots and so we have capitalized on some good weather towards the back half of the year and continue to complete infrastructure.
It's curbs and gutters to deliver those finished lots. So we've been paid up through Q1 for 372 of those 506 slots, we're about 90% complete on all what utilities and draw utilities. So really the only thing we have left on the remaining hundred 34 a lot.
You're going to beat the high ticket items that you're going to be a card gutter and pay for it and so those we will capitalize on weather dependent opportunities as we work through the rest of the the winter here, but are we have a good inventory for each of our three builders to continue to sell Watson to sell homes out there.
We have about 40 residents now in the community. So we're delivering not only finished lots in the homebuilders are delivering homes, but we've got a residents and water and sewer customers and taxpayers in our community today, We've got about 152 building permits issued and sold about 170.
Five water and wastewater tap so even beyond the number of homes under construction that you know they keep applying for those building permits or keep processing water sewer caps based on the volume so that gives us a leading indicator of their continued success on selling homes in the community a we expect to deliver the remaining.
Portion of that by say September of 2020, which will in some cases accelerate a lot deliveries by as much two years or so we're pulling forward lots that were expected to liver and maybe late 2020 120 early 2022 time frame so that gives us the six or an idea.
The success of our first space some of our key infrastructure components are complete we completed we wouldn't really had been able to get going without the Offsite road infrastructure, but also completed the water and water treatment facilities. So those are all complete and in service moving to the next slide.
What I really want to highlight here is kind of the average we're getting about six to eight homes per builder per month. So that gives you quite an absorption for the community as a whole.
I guess, some a lot matrix here for a updating our analysis on this and you know we did have some inflators from our original take downs schedules from our our homebuilder purchases. So our average home prices up a bit just because it doesn't later so we're seeing about a little a little favorable margin on the price of the.
<unk> that we're delivering and then also wanted to highlight kind of how the first quarter went down with some of the Reimbursables as some of you follow the company closely will have noted our press releases back in.
November before the holidays, we were able to close on financing a portion of the public improvements that we have installed for this community and if you take a look at just the amount of money that we were repaid the 10000 $10.5 million that averages out at about another 20020 almost $21000 per lot.
In Reimbursable costs, and then we still have other reimbursables that are yet to be paid that'll be paid from future bond offerings and that probably.
It's a wee bit better than the 20000 that we're projecting but I do want to note how that ultimately how we're going to end up on some of the lot sales on this first day. So that gives you kind of a picture of how the first state is kind of worked its way through.
Moving onto the second phase will highlight some of the financial results that will go back to the or to the Skyfonts development I do want to talk a little bit about some oil and gas activity because there's been a tremendous amount of activity in oil and gas a couple of the big announcements.
I have been that Conoco Phillips has entered into a an agreement with.
The company called Stonepeak resources or to sell their position in this field.
Crestone I think that a acquisition is expected to close sometime end of February 1st part of March timeframe or and I think most of you know that Occidental petroleum entered into agreement to acquire Anadarko Petroleum, who also has significant ownership interests of minerals in this area as well.
And just kind of gives you a framework of what I've tried to do is highlight the different operators that we have in this area. So this slide really does emphasized sort of each of the individual operators and they're kinda positioning here I you know I think we have three significant operators with substantial positions in this area.
Yeah, and then maybe three more smaller operators that have other positions in there so where the field was at one point almost exclusively dominated by one operator I think we have as many as six operators in this field now.
Yes, as you'll note in the a in a in the financial section, our our industrial oil and gas water sales have been very very light and I think that's probably.
Indicative of a couple of things one debt that this transaction had been in the works and so I think conoco had some expectation that they were going to hand off the torch to another operator in this area at the end of a sort of the summer. They had a left they had drilled 13 wells, but had not frac those yet so.
So we still have an inventory of wells that have been drilled but not yet fracked and whether that was going to be conoco that was gonna frac. Those are crestone, that's going to frac. Those I think that was dependent on whether or not they were able to strike that deal and whether that deal closes.
As you know, we average about a little over $200000 about 210 $220000 per well as we sell water to each of these wells and you know that's about a 2.7 2.8 million dollar number and that's really going to be the variance that we saw from our prior year end and at first quarter.
Her first and second quarter. This year numbers in terms of why those are little bit weaker than what we anticipate.
So what we'll see is how crestone attacks this field to how they position their assets and they'll have probably a little bit different program. Then conoco in terms of how they operate but I think it's still very attractive field. You know one of the things that has been interesting it's sort of really de analytics on.
Oil and gas deliveries and how well these wells are producing and the amount of oil that in this part of the base and so we're still very bullish on industrial water segments for oil and gas.
Yeah, let me move on to kind of the next phase. So slide nine really starts to introduce phase two of Sky Ranch and while we're still finishing the balance of the phase one lots, which will take us through delivery of those.
Through our fiscal year end homebuilders will still be building homes on those through the next two years I think they're gonna be inventory and some of those they'll probably be out of Oh excuse me lots to deliver sometime in 2021, and they're going to want you know kind of us to continue to work towards delivering additional lots.
Our existing portfolio builders are very excited for phase two as our a number of other builders. So it's been exciting to see the level of interest that this project has garnered in the Metro area. We've got as many as 10 different builders, who are extremely interested to come into the community. They have seen the success that we've had in the first phase.
Yes, they're anxious for more of the same and continued delivery of those lots.
If you take a look at what we're doing in the second phase we've got a bit more acreage there which will include some of the commercial acreage and then you know a lot more of the residential we'll have some schools sites in there and so a mix of products being detached attached and multifamily in the second phase.
We're working some of the land plans and the construction drawings through the process, we hope to have.
Grading permit for sometime this summer and so beyond the site or doing some grading sometime late summer early fall and then take an opportunity to really complete those it takes about 910 months to do all of the a excavation and dirt work on that and so deliver lots about that same timeframe.
When we're going to want to see some of those new lots opening up from sort of the sale out phase one and then them opening up in phase two so that they can continue to deliver those and then also adding additional builders to the portfolio. So where we think we have three builders was a good mix in the first phase we may have six seven different builders just because.
As of the product mix and the number of units that were offering in the second phase and then we'll see how the commercial takes off we've got a number of inquiries about commercial opportunities.
Those are gonna be slightly different.
Opportunities for us in terms of how the developers look at those.
If we take a look at sort of the we've done some early costing of that and so we think our costs for phase two are gonna be sort of inflation adjusted inline with what we have on our phase one costs.
Well have the percentage of Reimbursables, so that much of the investment that we make in public improvements in phase two are gonna be slightly less than they were in phase one because we had some off sites in phase one that apply both to a phase one as well as phase two so some of the drainage won't be as heavy.
In the second phase as we saw in phase one so when you take a look at kinda at a high percentage of the Reimbursables that we had in phase one some of those will crossover into phase two.
And then the nice part about it is we do have continued capacity in our water utilities out there both our sewer system and our water system are very they have capacity in each of those we'd like we won't have much investment into the sewer system and we might have a small incremental investment into the water system to kind of continue to expand that.
You know at an annual basis, so that we keep up with the capacity and the demand on that so that would give you a little bit more color on phase two and kind of some timing and some costing estimate I know everybody is going to want the key question, which is gonna be well how much you're going to tell you lots for and you know I think we'll probably have some price adjustments from our first phase I don't want to.
Provide too much color on that because we're still working with a number of players on that yet and so as we get those commitments finalized then I'll have a little bit more color and a little bit more detail for you as it relates to where those revenue side of the opportunities are.
If you move onto page 10, I'm going to highlight some of our financial metrics because it gives you kind of a year over year growth and we've had very good growth rate for the company over the last few years, so investments into sort of the water assets or you can see kind of that continued growth from 16, we've almost doubled the this.
Sides of our water utility investments over that period of time, taking a look at our liquidity we continue to really.
Be good stewards of your invested capital here. So you know what you say is investment over those years of investing into the Sky Ranch project and now we're rebuilding that up so that last column in each of these invest each of these charts are going to really be indicative of the quarter end result, as compared to all the other columns would you're gonna be the yearend results.
Moving onto slide 11 that gives you kind of an idea of our operating revenues. So last year, we had a terrific year, we had a $20 million an operating revenue in Q1, we've got half that already in Q1. So we got to $10 million, an operating room revenue and then just kind of the continued growth.
In earnings per share a and then sort of net income after tax so very good or financial metrics for Austin for our shareholders.
A page 12, we'll drill down on some of the specifics of each of the individual segments are a land and development segments, we had a Q.
Q1, 20 over Q2 or two 120 over Q1 19. So we have a significant increase almost a seven fold increase in revenues for Q1 20, our municipal revenues and those are both a usage revenues as well as happy so now with the delivery of lots were getting.
Significant monetization of our copies in that area. So you see that can the high growth in the papeete, you'll see the the softening of the a frac revenue and sort of that explanation of the transactional nature of Ah that sales of the assets here in this part of the basin and then some improvement in our royalties.
The improvement in our royalties were we had a four new wells that came online that that pool one eight.
The pooling so we had one quarter section of the eight.
Quarter sections in that in that well interest. So you know continued or opportunities and growth in oil and gas royalties from the 640 acres that we had with Sky Ranch. So total EBITDA of 7.6 million in Q1 20 as opposed to just 600000 in a Q1 19th.
If you move to slide 13, you know what I did want to do is kinda spend a little bit of time walking you through the bonding transaction and sort of the accounting there because.
That's a that's a little unique and both in terms of how the bond pricing gets that and how the have the net proceeds are and then how we recognize that on our balance sheet. So all three of those things are are very detailed very complicated, but I'll give you an overview of each of those so we did engage citicorp, who did a terrific job for us.
Our underwriters took a look at evaluating the bonding capacity and when they evaluate the bonding capacity. They took a late they take a look at the entire capacity of what we're building in this phase so all 506 homes and what they do as they estimate the home values. So we sort of have a feel for that based on the number of transactions that.
We had up to that point in time to give them what will be the total assessed value. The total combined value of all 506 homes and then they take that number and apply that to the total number of mills that are set by the municipality and the projected interest rate to come up with a determined capacity for the bonds.
So that was where that 13.5 million dollar number comes from it comes from the total assess value of all 506 homes and that would be you know the sale price of each of the individual homes multiplied by the mills multiplied by an interest rate.
And then they take a look at tax receipts or one year in arrears. So what will do is have to capitalize interest for a period of time on that and so they take a look at what that capacity is gonna be the absorption capacity of all of those 506, Tom so that they accrue amount of interest so that they can pay those bonds currently every quarter.
When they become due up until the tax we see start to flow in that year lag and then he's net that out against their fees and get us. The 10.5 million. So that's kind of how you take a look at how that bonding goes for the first 506 homes.
And then how we account for that is again another unique area. So what we do is a GAAP guidance allows us to take the total cost that we've incurred as of that date. So as of the date that we issued those bonds as a percentage of the total cost of the project. So this is the total cost not the total revenue than total cost of the project as opposed.
What are forecasted total cost did and that percentage, we book as the amount that we've held to income because the total cost is what we've spent into the project. So we received that cost number in there and then the difference of that rolls into income so the remaining amount.
It is deferred held into inventory and then we'll really be released as we sell the remaining lots. So our inventory number was 60% of that cost had been occurred. So we rolled we had already rolled that out of the inventory number so 60% of bond proceeds rolled into the income category 40%.
Those costs, where you have to be incurred so that was held in deferred until we recognize that revenue. So what that will do in the subsequent quarters is it will increase our profit margins for the remaining hundred and 50 odd lots 54 58 lots.
And so on margins because we take a look at what those margins were assuming that we get none of the reimbursables and that was going to be about a 6% margin and now on the remaining portion of that we're gonna have to see those margins increased significantly up to about 27%.
So it's a big complicated as to how we apply those proceeds but what you'll end up seeing is it the timing difference between Q1 and the balance of the delivery of the lots, which if we if we see the continued to absorption that we have in the market. We should sell all the lots by our end of fiscal year end.
Then you have to balance sheet and the statement of operations on a couple of things to note in the statement of operations are.
Sort of the tax expense. So we are now in a tax liability position, we use the remaining ano wells that we carried over from our fiscal year end in 2019, we had about two and half million dollars of remaining and our wells and so now we have tax accruals here on after so you'll see a bit of that where we can sense.
Some of that money over to Onco, Sam and then a key indicators on our earnings per share. So you'll see the remaining bond proceeds come out of that that other $4.2 million, which is gonna be deferred revenue held in inventory will roll out in two earnings per share is on subsequent quarters. So those are going to be some of the.
Highlights of the balance sheet and the income statement.
So those are going to be kind of the highlights of the quarter was a terrific quarter from our perspective, we were able to really executing on a number of fronts not only on the delivery of lots in a particularly opportunistic area, where we had a mild fall <unk>, we've got slammed with a bit of weather over.
For the Thanksgiving holiday, and then had a little bit more temperate weather in December . So we continue to take advantage of delivering infrastructure for finished lots and then kind of how we handle the the reimbursables and the bond transaction from our first phase so with that I'm going to turn the call back over to Jeff since the if you guys have any question.
And then like me to drill down on any of the specifics.
Certainly ladies and gentlemen, if you had a question or comments it as star one on your telephone keypad at this time.
If you're using a speaker phone we asked how opposing your question you pick up your handset to provide the best sound quality.
Again that a star one for any questions or comments at this time.
So far I don't have any questions signals, but as a reminder to star one for any questions or comments.
A question from Jeffrey Scott Scott asset management.
Mark harder.
Great Jeff how are you.
Very well thank you.
Couple of questions.
Hi.
Can you size the infrastructure expenditures for phase two floors.
Okay nice size the infrastructure show in dollar terms that.
Not just yeah, if you take a look at.
Let me set aside that I'll bifurcate that out between what the commercial deliveries going to look like versus the rest of the residential delivery and so I would see and in the rest of the rest of the residential delivery, we're probably a little more than two times the size of the first phase. So if you take a look at though.
A lot delivery and so if we if we took out some of the heavy public improvements like the drainage channel and things like that would probably delivery of the 506 lots would be around.
Call it $30 million. So maybe we're looking at a little bit of economies of scale and maybe twice that investment for the delivery of the next increment of that and what we would try to do is is really similar to phase one phase that so there's gonna be opportunities where weekend grade out a sale.
The whole area for residential to capitalize on economies of scale and then incrementally deliver.
Sub phases within that phase. So we did that even in phase one we delivered phase one 506 slots, while we were technically set up to deliver in three phases, but we LT ultimately because of the success ended up delivering it in two phases, just because of the acceleration, but will similarly, bifurcate that out where we have.
Commitments from builders were going to try and looked at the same a contractual format, where we're going to have a lot development agreement will get paid a third a third a third type a transaction. So that we can continue to have the builders optimize their cash flow so that.
They're not paying for all of that infrastructure upfront. Neither a mine. So we're partnering in delivering that on a real time basis and you know I think we have adequate capital if I if I ultimately.
Run through the analysis I think we believe we have added adequate capital to run all of phase two.
On the same platform that we did what phase one.
Okay sounds good you talked about 40 residence is that 40 human beings or is that 40 houses.
40000, so 40 families out there I don't I don't have a census count out there.
You know, it's it's predominantly family. So we're seeing lots young lung young kids that are loving the ER the updated the plate structures that we've got at our park.
Yep.
But it's it's 40 houses that are better inhabited now.
Correct.
Yeah, I forgot driven through it and I'm I've been surprised that a you know the amount of activity, it's really going very well from a Saturday to success.
Yeah coming out of the ground it or you know, it's exciting to see and it's not you know, it's you know, whereas I'm sure you saw.
One of the Investor days, we had maybe a couple of years ago, you're like Wow. This is the middle nowhere and all of sudden now you've got a 150 homes in the middle and it doesn't feel like that at all.
No I mean I drove through it kind of 10 days ago, and Oh I was surprised that just the change from what I drove through it in.
August .
Yeah, Yeah, yeah, yeah. So.
The next questions, it's really kind of chicken and egg that the first houses go in there the lots or are a little bit less valuable because there's no commercial and then a wants commercial is once residents hearing there there's more interest on the commercial side because you have just this market that that's growing up.
And then.
Once the commercial it was in the next set of residential is even more valuable because there's commercial there where do you kind of standard going back on that spectrum, how and what do you. How are you thinking about the comparative values going forward.
Does it make sense.
Does it it's a you know sort of the cyclical value that you create with a master plan community and you're right when you're leading with that you've got a you've got a residential opportunity and you know it may have a value that would be discounted compared to when you're in and urbanized area and you've got all the convenience of commercial.
Facilities and so two things happened one you assess value of your existing customer base goes up so resale of homes are certainly have a significant price appreciation that has to that as you know it has two effects wanted to it certainly has the advantage to the original home buyer, but from our perspective it.
Also adds more tax revenue to help pay more of the reimbursable than we already financed in the first phase and then the other side, which you're alluding to is your lots become more valuable because your homebuilders have the ability to build the same house and sell it at a higher price and so we want to participate in that and so how we.
To do that one Jeff is you know we want to try and have a base price for our house and then also have a participation with the builders on sort of any price appreciation over a certain number and then that way I'm not I'm not forecasting it at their expense and they're not benefiting the price.
Appreciation at my expense will partner with them on that to be able to you know incentivize us to provide a great you know curb appeal community and the community as it continues to have price appreciation for even the same product that they're going to be building.
And you'll get that agreement for phase two.
That's what we're looking at yeah. That's that's how we're you know we're trying to structure. This as the same lot delivery agreement yet you know get a bump in the price and then also have a backend true up on home values sales.
It is it's the residential developments to date sufficient that commercial people have been coming to you or you still been having to go out to them.
Oh.
Got a 50 50, I'd say you know there's some cotton tire kickers that are just sort of looking to lock up.
On long options, which are really not of interest to us we're really looking at users builders on the thing rather than trying to sell it to somebody who is going to sell it to somebody so we want to be a little bit more patient with that because we've got you know we really are monetizing the project very nicely and I don't want to Miss out on sort.
To under valuing the commercial which then continues to grow and value because of what we're doing on the residential.
Yeah, I mean that that was my impression from you know my little drive through that.
You know once phase two starts to be very visible commercial becomes extremely valuable.
Yes, no Oh about 2.3 million.
Square footage commercial how much how much is going to be in phase two and then how much is going to remain.
So I was I would sort of segment that has to say that's commercial and that'll be through the throughout the rest of the project.
While were while because we're planning that upfront you know that's going to be that that 480 80 acres occurs but I will say that a portion of that commercial will develop in phase two and a portion of that commercial will develop in phase three.
Okay I'll, let somebody hop on thanks, very much Mark I appreciate it.
Thanks, Jeff.
And one final reminder, if you had a question or comment it is star one on your telephone keypad at this time.
And Mr. hurting I have no other questions holding I'll turn the conference back to you for any additional or closing comments.
Okay. If we get one the that wanted to jump in there at the end.
We just said absolutely rubbish less your line is up and please go ahead Sir.
A more fine job.
Inquiring about subsequent quarters this year.
That possibly you won't have a cab reimbursement so their earnings might be less than this quarter could you comment on that.
So good question, that's what we've tried to Smoothes out. So what you saw was we recognized 60% of those revenues on Q1, and then we'll have that 40% the remaining 40% of those bond proceeds which will go over the rest of the year, so it'll be less but it's still.
Well, we'll have some of those bond proceeds to even out some of those EEP yes.
Subsequent quarters and you're right you know these bond events happen periodically there's there's kind of of there's kind of an optimization a when these are the on the right time to do and some of that has to do with the fact that you want to be kind of right mid stage, where you've had some construction that got started.
You know what those homes are selling force so that they have a good forward indicator to bond buyers to give them guidances to say here's the JV here's the sales here's the mill levees and here's the bonding capacity. So you get all of that right and then there was a window, where you're not going to improve on that because you've got a year lag. So even though you might have.
A few more homes, it's still not going to give you more bonding capacity because they already price that into it and so we'll see that same cycle in phase two it might be a little bit bigger because we might wait and see that we have instead of 500 homes, maybe we're looking at projecting out you know 900.
Thousand on something like that and then see how that will look for the next phase of the bond reimbursable. So those are gonna be lumpy, but then when they occur you know you'll see how we record that in revenue for those present in the same percentage based on the percentages the cost to the public improvements to date compared to the.
Percentage of the total public improvements that we're gonna, making the project.
Okay.
It's hard thing to get my hands around but I I, Yeah, I'm sure you're right. Thank you.
I wish I wish I could have an easier ways to explain the gap process on that and it's something that you know that's about as simplistic. If that's how I understand it I think there's probably if I had our SCPA explain it to we'd all be lost.
[laughter]. Thank you.
Well, we're trying to Jeffrey Scott Scott asset management.
Mark just one quick follow up what are the the real estate taxes on your kind of your average house if there are 325000.
Very well, but I'd say very modest.
For those that are in new Jersey, downright steel, but [laughter].
[laughter] based on a based on the though that the mill levees.
And this will be kinda total mill levies not just our mill levies, but we have overlapping districts in jurisdictions in here it would be around.
Say 30 $804000 a year.
$4000 them on it on a 345000 all else Yeah, I thought I'd call. It say, maybe a 350000 dollar house.
Okay I appreciate it thanks Mark.
Yep.
Well I did so I've got another.
Dot Okay, Oh, that's gonna be disappointed if that didnt make.
Have a question.
Thanks, Hi, your line is open.
Thanks.
I just I think is that kind of a follow up on the previous wonder if you look at that number you haven't the inventory.
4 million that's it isn't on the balance sheet, though right. So we're I'm still kind of confused and so where is it.
[noise], if you I think it isn't the inventory and.
It's not any inventory.
Oh, you know platform.
If you look at sites. So what happens is that that that $4 million will be recognized with inventories. So as we roll it's a deferred revenue component.
And what happens is as we sell additional lots.
We're going to pull that $20000 per lot.
Into the Rev. Rec for each lot we sell from here forward, that's our margins go from 6% to 27%.
I'm, sorry, I don't get so we can get this $4 million asset if you're going to move it from you know sort of I I was thinking that it should be moving some of the balance sheet to the income statement, but it's not on the balance sheet here or is it on the balance sheet and see incorporated to me.
One of these other numbers thats not an investment in water systems is not in land in middle interest not another the long term assets or is it maybe it's another long term assets, where where is that inventory number.
So what what we had to do was reduced the cost of that infrastructure. So you lower that cost out of there.
And then that that money it's received it into the assets. So we have the cash for it but then as we recognize it from the balance sheet. So we're at that on the balance sheet is in cash and then where rolls into the income statement is gonna be a higher margin in how we're delivering the lot.
Okay. Okay.
Okay.
Okay.
Oh, yes.
<unk> Trust me, we struggle because there's not a lot of precedent for how this stuff happens and and so if I. If I give you kind of the three different scenarios for this and maybe this will help to for all Oh all of you understand.
If we issued the bonds upfront before we incurred any of that cost.
Then that money would be in inventory all through the process.
And so you take it ratably down if we issued the bonds. After we sold all of the lot.
And then all of that would go to cash and then run down into the balance sheet. When we issue it in the middle of it some of it goes to cash some of it goes to the income statement and so it's it's that timing of if it was all upfront it'd be running through inventory our average lot. If it was all after.
You'd be in cash in it would roll through the income statement in its entirety and then Inbetween, we do it on a percentage basis.
Yeah.
Just haven't told was trying to figure out what you know I'm kind of trying to go who has to do or what the businesses working so much of this deal is taxis are no onetime obviously a onetime.
Revenue income statement income numbers and I.
Yeah, I guess, if I kind of looked at that get your other side that you had on on slide 11.
Well since 911.
I'm, sorry slide 10.
Where are you had 100 investments in cash its age you tend to go back to 16, you might think about this right. He would like to 16, it's sort of you know if you had to the cash plus 100 investments you're at what does that 56 million ish and if you kind of fast forward to today your water investments.
Just cash is sort of 73 million sober about sort of four years.
We've kinda gone up that 17 million Bucks is that is that is that.
<unk> plus maybe yeah, yeah, no because that just wondering how has it yeah.
Oh, it was and that sort of.
What we you know because we really haven't spent too much I mean, I know, there's some things in terms of the big water channel and stuff like that the we will get some benefit in the second phase and obviously.
Get some.
Income going forward, but that 4 million that we're going to be sure is income is already in the cash statement. So.
So we kinda like though I guess I'm thinking out loud here, sorry, but so Brett we're at nine cents a share ish.
For the sort of that this event will probably be you could add that in towards the next two quarters. So it's a 36 cents on top of that it yet so it's 17 million plus a little bit you know is where we're at after phase one is that sounds about right.
Oh, the tracking your numbers, but yeah I think that's right.
Okay.
Okay. That's.
Okay.
Okay, [laughter] <unk> I got one more if it's just a I'm thinking about flying out for your Ah you got to you got a year end meeting next week is that is that right.
Yeah, you preempted my close [laughter], Oh, I'm, sorry, yeah, Yeah, our shareholder we do have our shareholder meeting coming up next week, so if you're all.
You know passing through town are interested to come out and take a look a it's it's on a the 15th it'll be at two o'clock at downtown that are Attorney's office. It Davis Graham and stubs, so they'll be the address where that on our proxy materials, but I'd certainly invite you all to have an opportunity to come out meet the board.
You know I ask any other detailed questions to the extent that we can give you some more color of kind of how the first half of this is gone and what we expect to see kind of on phase two in the build out and sort of what maybe some of these implications of the repositioning some of these oil and gas assets would be.
Thank you.
Okay.
So with that I think I will you know again. Thank you all for your continued support a we wouldn't be here without all of your support and I know we have a lot of long term shareholder. So I do want to thank you for your your trust and your commitment over the years and we hope to continued to deliver positive results through the rest of this year.
And moving forward. So if any of the if you me you have a question that you didn't quite a be able to get the on through the through the technology of the call certainly don't hesitate to give me a color for you or listen to this on a rebroadcast don't hesitate to just give me a call directly.
So with that I, Thank you and I will close the call.
Ladies and gentlemen, we thank you for your participation you may disconnect at this time and have a great day.
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