Q4 2021 Pure Cycle Corp Earnings Call
[music].
Good day, ladies and gentlemen, and welcome to the pure cycle Corporation year ended August 31st 2021 earnings call.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments. After the presentation. It is now my pleasure to turn the floor over to your host Mark Harding, Sir the floor is yours.
Thank you very much.
And welcome good afternoon.
I'd like to welcome you all to our 2021 year end earnings call then a housekeeping upfront for those of you that are listening in on the call I have a slide deck for this if you can log into our website and pure cycle water dot com there'll be a banner across.
Homepage. There then it'll be a click on that I'll direct you to the slide presentation itself.
Got this enabled so that I can actually advance the slides through the website itself. So youll be able to keep up with us as we go along if you are logged on to the website alone without logging into the call you can hear the audio but you won't be able to press in four.
Questions and answers. So if you do want to log into the audio presentation, you've got to have the dial in number on that.
So with that.
Get started.
First thing we always wanted to do is get the lawyers out of the room and.
Note, our safe Harbor statement, which.
Statements that are not historical facts contained or incorporated by reference in this presentation are forward looking statements I'm sure. All of you are familiar with the Safe Harbor statement forward looking statements.
So with that.
Wanted to kind of highlight the various business aspects of the company, we have three lines of businesses.
At a DNA level. The company is a water utility company. So we develop water and wastewater services in the Denver Metropolitan area.
<unk> portfolio of water rights here in Denver in an area of the.
The country, where you can own water as a real property right.
Taking a look at those our water portfolio, we measure our level of service in terms of the number of connections we define those as single family equivalents and we shorten those two <unk>. So our portfolio conserve approximately 60000, ssds, which will define what that translates to in terms of.
Of connections.
And accounts for us.
In addition to the water portfolio.
Provide land development opportunities so we own.
About 780, 780, plus or minus acres of land started out at about 930 acres, but we have been two years into the development and we've been able to sell lots to national homebuilders that have constructed homes. So we have about 150 acres that.
Excuse me, we've constructed about 500 homes.
In total the project has about 3400 resident residential units, which will be a mix of detached residential units attached units duplexes multifamily whole bunch of different types of products that.
Run the spectrum of price points on that.
And then we also have a commercial area associated with a project, where we have a little over 2 million square feet of commercial zoned for that which will accommodate retail commercial and light industrial uses for that.
And then finally, our new segment is to really kind of leverage the land development segment and the successes that we've seen there as we continue to build a great Masterplan community. We are holding back some lots from our homebuilders and then working and partnering with our homebuilders and other home builders.
To be able our homebuilder partners and independent of our Homebuilder partners.
That we contract with directly to construct homes that we will.
Retain enter into sort of the single family home rental market. So we've got some.
Exciting details to update you on that as well.
I do want to note for those that have not been to our website. We do have a very robust website at pure cycle water dot com and it really gives you a lot of information there is a bunch of presentations on there theres some videos on there theres. Some podcasts on there that really do walk you through.
A lot of the detail of the company so.
Outside this call they will certainly be a resource for you all to kind of.
Continue to monitor the success of the company.
With that let me open up and talk a little bit about the wholesale water and wastewater segment, where we construct.
Construct and we go cradle to grave with this where we.
On a portfolio of water together with all of the infrastructure that diverts treats distributes that water.
<unk>.
Two fee instruments for that we get a connection fee, which is paid by our homebuilders.
Pay that connection fee at the time of the building permit and that really covers the cost of the wholesale system. All of the large infrastructure that goes to a water utility system and here in Colorado, that's kind of the pricing mechanism for that as opposed to building that into the property tax area of <unk>.
What we do that a little bit differently here, we have these connection charges.
Different providers in the area referenced those as either system development fees or tap fees are all the same mechanism of that.
Water tap fees as well as sewer tap fees. So those are those large capital fees. So on a combined basis that are about $32000 per connection and then doing some of the math for you on that if you take a look at that on the 60000 connections that we have that's a little more than $2 billion worth of topline capital attributable to that.
And we use those dollars to construct that system.
And probably we will spend about $1 billion of that in building all of the facilities that serve those 60000 connections once we get a connection we have an annual usage rates and Thats. What you are accustomed to paying you'll get your monthly water and sewer bills and so here in Colorado.
Excuse me and really in our particular service areas.
We get about $1000 per connection on the water side and we'd get about $500 per connection on the sewer side. So every SFV generates about $500 per year.
Per customer on that.
We collect that water back from them and then we retreat that and then we actually we use that water supply. So we have a zero discharge system, where we're bringing all of that water back and reusing that through outdoor irrigation and some of our industrial customers. So.
Very substantial FTE component to our business through water.
Conservation and water reuse.
Can you talk a little bit this will show you I won't detail. This too much but you can study this at your leisure and it's kind of a definition of where we're at in the metropolitan area and some of our service areas, where we provide service to Sky Ranch to the Lowry Ranch and then also.
Service area that we picked up through an acquisition a couple of years ago called the wild Pointe. So those are kind of some of those things some of the metrics on.
The wholesale facilities that we have in our system and we are.
We have licensed operators that operate and manage both our water and our wastewater systems for our customers.
Kind of.
Chart of some of the growth potential that we have if we have 60000 connections where are we today, we're just getting started.
About 650 <unk> water connections is so we have a long long runway in this opportunity for us.
Yes.
And those customers come from residential customers they come through commercial customers, both either at Sky Ranch our at the.
Albert Highway 86.
Albert County.
Connections and then.
Just through other opportunities as the Lowry Ranch, our service area continues to build out those will be where those customer connections will be coming from this is kind of a projection of just the 5000 connections that relate to Sky Ranch alone. So we've got a projected build out of all of those 5000 connections.
Within a nine year time horizon eight more years left on that so.
We'll talk a little bit about that in our in our land development update but.
Very successful Master plan project at Sky Ranch.
One of the often questions I get and certainly something that impresses folks when they come and kick the tires on the company is kind of the proximity of where our service area of the Lowry Ranch is in comparison to the Metropolitan area and this is kind of a good shot for you on that.
<unk> is really at the southwest corner of our service area and it kind of gives you a feel for.
Developments, which has encroached on that so.
The left side of that roadway is in the city of Aurora and then the right side of that is predominantly everything relating to our service area. So.
Certainly a very attractive piece of land, it's in the right location at the Metropolitan area.
The Lowry ranch itself is owned by the state of Colorado.
That asset is held in trust with the Colorado State Land Board and they operate.
And develop their assets as fiduciary for the public education system here in Colorado. They have a number of trust beneficiaries the largest of which is K 12 public education. So they are responsible for the land development side and we're responsible for all of the utilities attributable to that so that kind of gives you.
Feel for it as if you were if you were able to come.
As you come out and take a look at this thing really where our service area is in comparison to the metropolitan area.
This will just highlight some of the investments that we continue to make in our water utility our water and our wastewater utilities.
We've had tremendous growth over the most recent years, mostly attributable to.
Adding capacity for Sky ranch, and adding capacity for our industrial water customers through oil and gas.
Little bit of.
Tracking on our tap fee revenue year over year over the most recent years and these are going to be tasks that are going to be sold both in sky ranch as well as wild Pointe our service areas there.
Yeah.
Drill down a little bit in our land development as I mentioned, we had originally 930 acres were down to about 780 because of continuing development of single family lots. It can accommodate about 3200 I think 3200, if you look at the multifamily that might bump up to about 3400.
On that as well, but a couple of million square feet.
Commercial development opportunities and that can translate.
We're estimating about 1800 smbs it could be significantly more than that depending on what type of commercial users we get in there.
I think we are ideally located where in an area of the Denver Metropolitan area, where all of the activity is occurring.
Along the I 70 corridor, we have about a half a mile of frontage along I 70, with an interchange right at our development. So we're in the sweet spot of all of the growth activity in the Denver area.
Drilling down on our first date. This will give you a kind of an aerial view of that we had an original 509 lots we have approximately 375 occupied houses out there and then.
The number of tap sold will give you kind of those the difference between those two it's about.
90, plus or minus units that are under construction. So we have 100 homes currently under construction of the 500 and.
<unk> total lots that were available in phase one we're estimating that.
We have two of the three homebuilders that are completely sold out of their lots of the other the final homebuilder has a few remaining lots that were estimating those are going to be pretty much sold out by the end of Q2 'twenty. Two so those are those are growing fast any available lots that are out there are going fast.
Little bit of highlight about.
What we've received to date so we have.
$36 million in lot fee revenue to date, we've recognized almost $14 million in tap fee revenues attributable to that and then we also have.
Some reimbursable so as we build the public improvements under the roads curbs and gutters the drainage that will be owned by other governmental entities, we get reimbursed for that so in the first phase we have about $20 million worth of Reimbursable of which we have received about $10 5 million of those to date, we'll receive the balance of those as the project continues to build out.
These are our portfolio of homebuilders that are on that JV Taylor Morrison enrichment.
First state take.
Taking a look at our second date, we opened up our second phase, which is a total of about 850 lots 804 of those lots are lots that are going to be contracted for by our homebuilder partners than we have.
Portfolio here <unk> is returning we have D. R Horton challenger and Lamar all building in our second Phase and then we've retained about 46 lots in there with an additional 100 lots that can be added to that as we continue to expand into that so those 46 lots are going to be those lots that we're going to hold for our.
Single family rental market segment of this thing.
We expect to deliver our first lots later this year, we will probably have some model home lots available for our homebuilders. So they can start constructing those model homes that start to hit the season.
Full speed.
Round February March timeframe.
The lot revenue.
Two our contracts on the 804 lots will generate about $70 million to the company about $21 million in tap themes, we have about $61 million worth of Reimbursable costs that we'll get back attributable to the roads curbs and all those improvements that will construct.
So we have an estimated $73 4 million in total development costs attributable to our second phase. This is kind of sub phase it a little bit. So what we're looking for is to deliver lots as our builder wants our builder partners want them and so they like to take them down in a certain pace attributable to those so.
Carved up the project very nicely for us almost in four equal installments.
Yes.
It gives me where we're under construction on phase one and phase two so we're we're almost complete with our utilities and the grading work in phase one we're still doing the grading work of phase III, and then will rollover our utilities into phase III and have these each incremental phase sequentially develop their lots in there.
Kind of micro phases. The P&L for you if you take a look at the lot revenue attributable each phase the number of tap fee connections attributable to those total costs attributable to infrastructure in each of those phase and some of that's not quite the linear so a lot of times you end up having some more upfront cost in phase one then.
Do in phase four but that'll give you an idea of kind of the sequencing of <unk>.
<unk> out and providing all that public improvements and then also the reimbursable for each of those phase. So when you look at that total phase two lots of 850 and that will give you a kind of the full color about how that whole thing works and the gross margin potential of being close to $80 million for this particular phase and then.
Some other statistics about the total number of lots by our builders the types of lots that they are and how they distribute those out in terms of a percentage as a whole. So this is kind of very helpful. Information to kind of give you an understanding of how we run and manage this business segment.
If you want to go down into really what we're working on in phase. The first sub phase of this second phase Theyre very terribly named and we probably should do a better job of that but.
As many of you who follow the company we have a.
Okay.
And agreement structure, where we have.
Either a lot development agreement, where our homebuilder partners will pay us in three installments or a finished lot delivery and so depending on.
What's your preference is and what your tolerance is per lot.
If we are carrying that cost until a finished lot delivery, where the homebuilders paying that all of that.
<unk> price than we do include some of our.
Capital cost attributable to that so that prices are significantly more than the lot development agreement lot prices. We have so some of that is going to be distributed here.
Have closed on the planet lots for the three builders that we have in our LDA structure.
That's been the first take down the second takedown, we're projecting to close that one out at the end of this first quarter 'twenty two so it's our second payment when we deliver the wet utilities and then the final payment will be.
For the three builders that are under the <unk> structure, and then one builder that is.
He is under the finished lot delivery structure, so that'll be the big payment.
So, we'll see that and it doesn't always come in all at once those will be coming in at a block at a time. So we really do deliver those on a real time basis, but you'll see some of that revenue trickle in we expect all of that to be completed next summer. So $18 4 million will be the sort of the lot delivery pricing mechanism for this first.
<unk> give you a little bit more color by builder of this first sub phase in their product type as well.
Moving on.
Many of you've heard us talk about our single family rental.
<unk> and really what we're looking for here, we would not be in this segment, if we werent the land developer and and what we're looking for is really to continue to roll through the equity value that we're building in the lots of themselves and being able to take the sum of that appreciation of the community in the law.
And in the home in there so we're seeing tremendous price appreciation here at Sky Ranch.
Homebuyers, who bought 18 months ago, they are seeing as much as 30% of appreciation in their home value in 18 months and that really is attributable to the community growth naturally in the metropolitan area and growth in this particular market segment. So really that's our strategy on that.
Want to kind of.
Build shareholder value by that and also build recurring revenue attributable to a really highly appreciated asset value. Some of the things that we like about that our steady increases in lease prices that while other rental types continue to kind of either maintain or see a little bit of weakness.
We have a variety of product offerings in there, where we have detached homes Townhomes duplexes.
A number of square foot and bedroom configurations.
And ultimately what we're seeing is tremendous demand because as we we started with three homes that are in our first phase.
We constructed does.
In a competitive.
Process and now have delivered those three homes on budget and in time and all three homes were rented with lifting it within 14 days. So we're seeing tremendous demand for that within the market segment and here's just some general statistics about the Denver market, which continued to show you strength in the price appreciation of these <unk>.
Family homes, and then just a constrained availability in the marketplace. So we very much do like this market segment and we like the fact that it's an opportunity for us to leverage our balance sheet, where we can finance the vertical cost of that with some very inexpensive money.
Where we have lines of credit that are available to us through our lender, where we can borrow money at $3 75, and these houses are appreciating at 5% 6% per year. So you've got even just all by itself a natural arbitrage there, but then the monthly income on this thing when you take a look at it we've got a positive cash flow for.
Every unit that we have.
And so when we get $500 per connection of recurring revenue on our utility customers.
The single family rental market gives us about 10 times that $15000 almost $16000 per single family House on recurring revenue. So those are very nice adds for the company and shareholder value in this little bit more statistics about it we delivered.
Those three elms and just the difference between the cost of the house.
Capital cost of the house for US was about $320000 in the market value of those homes appraised at almost $350000 so tremendous opportunity for us.
We're able to.
Use 70% loan to value for financing does so our bank likes it.
So far.
It's worked very well for us on all aspects of it were estimating constructing somewhere between 12 and 20 homes per year as we get into our second phase.
This is kind of give you a progression of each of the three hubs that we've got so if you take a look at it start date in March to delivery of those homes in November.
There was a.
Terrific opportunity for us to kind of.
Execute on the concept of this and see if we can not only get these things built but get these things leased out and they look great. So you can visit our website, we will have some more.
Detailed photos of kind of the floor plans and how they position themselves, but very nice product on that.
A little bit about oil and gas so we do provide water too.
Oil and gas operators in this area, we've got a number of operators in this in this field the largest of which is Ah is a brand new company, which was a combination of three previous companies that the company called <unk> a public company.
They've got a very large leasehold position in here.
It's attractive because it's got a number of formations in.
The ability to drill horizontally.
With spacings at 40 acre spacing, then they drill 10000 foot, maybe sometimes as much as 15000 foot laterals on this.
We have a tremendous amount of of capacity in this field that we have.
Over 10000, well capacity if they drill at a full buildout spread of 40 acre spacing on that.
And then we're averaging about $250000 worth of water sales for each well that gets fracked and so there's been about 120 wells frac to date.
Oil prices.
Excuse me are much more attractive at $80 a barrel than they were at $45 a barrel. So we see a lot more activity.
In the field right now this is kind of just.
An illustration of our wholesale system, where we have a very large footprint.
Water that we can distribute across.
Full with the county, all the way from County Road County Line Road on the bottom side of the scale all the way to <unk>, which is the northern side and we have the ability to get water on the other side of the highway as well. So that's been a very nice segment for us and we continue to work with our oil and gas partners in that as well.
Fiscal 2021.
I'd say it was a terrific year for us.
By every metric that we can measure taking a look at completing out the.
First filing of what we were doing at Sky Ranch.
It was a challenging year for all companies in terms of employee employee retention employee growth and so.
I'd say our team has continued to deliver throughout the throughout the challenge.
We're in the office because were critical in a type of company that Youre, turning valves and you're you're building things. So we've got a full.
Our portfolio of folks that do a terrific job for us.
And then also just the launch of a brand new business line in full execution from start to finish on that so great year and not only in terms of the operating side, but also on the financial side. So I always like to highlight our good years, when we're talking about the financing of it.
Our revenues of $17 million.
If you take a look at those revenues.
Difference between $17 million and so this is this is a difficult one to explain but I do want to spend some time on it is $17 million in revenues, but we have $20 million and net income.
For those of US who are not CPA as you sort of say well how does that happen.
Really that's because we recognize.
The we were able to book the receivable from the Reimbursable that we had on our balance sheet and so that does fall into the net income line on that and then we have kind of the rest of the gross margins on both the revenue attributable to our operations as well as.
The receivables attributable to those so.
The Sky Ranch receivables.
Currently sit on our balance sheet at about $25 million total number of utility customers are about 650, so very good year financially for us as well.
We have both the balance sheet and the.
Income statement is attributable to this I won't spend any time really detailing that but what does come out on this is <unk>.
Very strong liquidity position.
High degree of asset potential with almost no liabilities. The one liability we have in here was that income tax payable so that always hurts that you've got a you've got a <unk>.
Contribute to the federal coffers on this thing, but happy to happy to be in a position of a tax paying entity as opposed to accruing losses on a year over year basis.
So with that what I'd like to do is turn it back over to the operator and if you've got some question see if I can drill down on.
Color for any of you that want us little bit more detail on any of the any of the things that our year end is concluded for us.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.
Ask that while posing your question. Please pickup your handset listening on speaker phone to provide optimum sound quality.
Hold while we poll for questions.
Your first question for today is coming from Bill Miller Bill Your line is live.
Marc terrific quarter, great year, congratulations on all fronts.
Thank you Bill.
<unk>.
And days review or are you said, well, we have a lot of opportunities to acquire more land and acquire more.
Metro districts or take out.
Some of the utilities sort of supplying water, but don't have the water and I wonder where that stands.
B.
We are still very active in those endeavors, you have got a lot going on already I don't know whether you want.
I wanted to be or should be or anything else, but second and perhaps more importantly, we've got all this cash.
Receivables you've got.
Extraordinary liquidity.
Yes.
I understand why you are not.
Going back more stock if you have acquisitions, you could always borrow.
To make the acquisition if you wanted to do it for cash, which I assume you would.
Secondly, your.
Always able to get.
I'm answering.
Because of the strength of your balance sheet. So you ought to be able to buy back a bunch of stock and have the firepower.
To do any kind of acquisition activity that you werent. So could you please respond.
I will.
Break that apart into three segments there.
So.
And talking about.
What's on our wish list certainly channeling the board and sort of saying, Okay. Now now you've got Sky Ranch and you've got a great.
Opportunity on.
Building out Sky Ranch.
Let's continue to follow up on that end and Thats true I think our team is great and.
The combination of water and land developments have really proven dividends for us on that and so we do have an appetite to continue to do that and we are in the market for additional acquisitions on that.
I would say that there is there is a number of potential acquisitions and.
While the market is.
Certainly strong because housing is strong.
It doesn't it doesn't frighten us at all because I think we know we can bring value to that particular acquisition by virtue of the fact that we have water that will combined with it so our particular.
Taste in that side of the equation would be to find land opportunities that don't have water bring our water to them and be in a position to zone entitle them and then build that mountain so.
We are aggressive about that.
It does it does take a willing seller on that side and sometimes it takes a little bit of hand holding to get.
The sellers, who are really long standing some in some cases.
Centennial.
Families that have held these land holdings for very long time so.
That's a key part of the equation. So bill we are very aggressive about that and hope to be able to talk a little bit more detail about that as we announce that to the market.
We are out in evaluating other utility operations, where we can combine and take over their utilities and help bolster their utilities and their growth potentials in other markets kind of like what we did with wild Pointe. So those two are out there I do say that every call, but they really are out there and we really are.
Active in that market segment.
The strength of the balance sheet, yes, we do have.
Our strong balance sheet, and we are able to develop.
This without any borrowing costs, but that barrel cost available to us and one of the things I didn't highlight in our presentation was this graph, which shows our stock performance year over year and if you look at it.
From this time last year, we've had a significant increase in our stock price, which we're delighted about I mean the market is.
I wouldn't say the market is fairly valuing us, but theyre better valuing us and so.
We're trading at the seven to $8 a share.
Opposed to $15 a share buyback.
Buyback potential might be significant different discussion, but.
It is something that we talk about it every board meeting and talk about whether or not it's appropriate for us to be in the market and competing with people that want to buy stock.
That balance and we try to strike that balance to say, we're really trying to build a broader and diversified shareholder base.
For the time being our conclusion has been not to compete with them and let them have an opportunity out there, but theres still ways to deliver significant shareholder value by a repurchase program. So it's not lost on us that that's a potential but it's just it hasn't risen to a point of action item yet.
Right right.
Yes.
<unk>.
There was a third one you had mentioned as well as.
As you know.
Probably between.
Last year and this year the <unk>.
Chris you've made.
Is not.
Reflected in your stock price I mean, you're undervalued before Youre still undervalued if you look at the cash.
Generation.
New endeavors you have.
Alright.
Sure.
Recurring revenue in terms of rentals.
Sales.
We're a much stronger company in every way than you were a year ago.
Got my years Bill.
Okay, but.
If that's the case.
Given your projections for next year.
Youre going to be.
Even more.
More.
Relation through next year.
Right now so.
I mean.
Yes, there is variation in the actual of you're buying back stock.
To me.
Validation of everything you are saying.
Yep.
And so the one thing I would layer on to that is that it is helpful for us to add some.
Some powder to pursue these acquisitions with and so.
It depends on the size of the acquisition, but some sizes are bigger than others.
We want to continue to maintain some liquidity so demonstrating some strengthened and how we're making these proposals for acquisition. So.
I'll leave it there because I can't give you too much more color beyond that but.
That certainly is something that continues to be on our on our agenda.
Okay.
Your next question is coming from Elliot Knight.
Elliot Your line is live.
Thank you Hi, Mark.
Elliot nice to talk to you.
Thank you.
Could we talk a little bit about the oil and gas and the Frac what the fracking is going on.
Cause logically.
Given what's going on.
In the oil industry worldwide and in the U S. This should be an ideal time.
For companies to be fracking.
Getting the flush production.
Their money back and moving on.
Yes.
What's going on.
Pure cycles.
Water.
Frac water supply.
What's going on particularly in permitting.
My understanding is that there was a hiatus in permitting.
But there preceding that in anticipation of the high end a hiatus.
Industry.
Nick.
So extra.
We're very aggressive in seeking permits whats going on in that.
So thats a good question and one that I can give you a kind of a bit of an update on and certainly you as a recovering oil and gas handling with will appreciate your Colorado has had.
Kind of.
A bit of a.
I'll call it.
And environmentally.
Sensitive way of approaching oil and gas and so we have experimented and taken a look at changing and updating our regulations at a statewide level over the last say three or four years and I think most of that has settled down and the industry has a fairly stronger appreciation of how they can move forward. So.
That that had constrained a lot of activity together with a $45 oil price and so a lot of that activity occurred when oil was low now that oil is not low.
Youre right.
These are much more aggressive about developing the supplies and while it is an opportunity to develop supplies while oil at $80. A barrel I think this slide probably tells you a better story of what it is that we are doing what the industry has to do is stay ahead of growth right and so what we're seeing is.
This whole metropolitan area is growing from west to the east right. We only have we do live on a notion here in Denver right. We have the Rocky mountains, which prevent us from growing west. So all of that growth has to go east and as it grows east it competes with oil and gas and so all of the.
<unk> the setbacks.
The controls that these oil and gas companies.
Have had to work through while we updated those regulations.
Really concentrate on being ahead of urban development and so while oil price is important to them now that they've got all of that stuff settled out there aggressively developing so that they stay ahead of a lot of that development. So the permitting of this is much more robust than it has in.
Any other year, so youre seeing.
Thousands of well permits come in so that theyre getting their pad sites set and certainly from this particular area in the Denver. This is kind of we're probably the most central player in an urbanized.
Urbanized area and the state of Colorado, you can take a look at this rapid county is one but then as you extend to the north.
Around the airport and upper and some of the northern communities all of that growth is moving towards the east and so all of these oil and gas companies really are looking about being very aggressive about getting their pads and getting their wells drilled and then kind of continuing to work their way east. So you will see.
A significant increase in our oil and gas revenues in 2022.
The guidance that I'd give you on that.
Hi.
Our high year for that was right around $3 $5 million I think we will exceed that this year in terms of oil and gas sales.
And then I think 'twenty 'twenty three 'twenty four look very very good for us because they are bringing those rigs in their drilling all those wells they've got the permits there doing everything that they need to be doing so while this is the starting of what is to be much more robust activity than maybe the past three or four years.
I see that trend continuing.
Even at the risk of a lower oil price because of this urbanization and the fact that the Denver area continues to encroach in these areas. So they want to stay ahead of that so that's how I would describe the oil and gas and really the <unk>.
Bust nature of it is compared to what we've seen previously.
So silver to us is <unk>.
Onboard with this obviously.
Must be reflecting what their plans are is that fair.
Yes, that's fair.
They are really concentrating on drilling to.
To stay ahead of that encroachment.
So.
If you look at where the well pads are going to be located there going to be located.
Theyre drilling actually their horizontal legs are going to be going under communities theyre going to be offset from their pad site, but there their laterals are going to be under those areas that they already have homes on and then they will continue to March their way east.
Okay. Thank you.
Yeah.
Once again, if there are any questions or comments. Please press star one.
You do have a follow up question coming from Elliot Knight early.
Your line is live.
Thank you well if nobody else is going to ask a quick question.
Mark would you talk and update us on the timetable for commercial.
Development of your commercial properties.
Question.
So.
The commercial we've got a very very nice detailed master plan of our commercial site and kind of laying it out as to all the mix of uses in there. We're the logical retail uses our retail use is going to be.
Grocery maybe big box store availability for like.
AUM depot, Walmart Sam's club that type of stuff as well as some of the some of the lower commercial light.
Fast casual dining and things like that and then still leaving aside some of that for.
Mixed type development, where one of the high demand areas. In this economy now is starting to be distribution centers and I think thats being born out of the supply chain crisis, and the fact that.
We migrated to adjust in time model and then the world frankly.
Were you ordered something and then we started to make it and we were able to get it to you in a relatively quick order and people are a little punchy about that because that thing is broken and so there is a stronger need and were seeing a very high demand for distribution centers, where they can start to inventory things, whether that's going to be.
The actual distributor over like an Amazon or Walmart or somebody like that or something in between entity. So we've got a little bit state set aside for that.
We probably will be starting to look at some of those transactions.
Next year and then following into 'twenty three.
I would say some of that retail is probably 'twenty three 'twenty four time frame just because they need a certain number of rooftops. If you look at it.
A large grocery store.
Their metrics are they need a $1 million a day volume in that and then they translate that into the number of rooftops and so.
We've been very good about reaching out to all of these folks and getting on their map, making sure that they put pens in our project and so they.
Whether it's grocery whether it's the big box, whether it's the distribution centers.
We have been very active on marketing those out to all of those and so a lot of those folks are going to be.
In our Q and as we continue to build that out get more rooftops and surrounding properties getting more rooftops, where the logical we're really the only.
Site because of the interchange in that area that they'll be able to do that type of development activity. So while it.
We've had a ton of marketing on it we've had a ton of planning on it we've got a ton of conversations.
Conversations with the right folks on it.
It's still a little bit off but.
We wanted to make sure that we didn't wait for them to call us that we were in front of them and making sure that we set those plans so that they make their plans accordingly.
Okay, and last but not least.
I'd be remiss, if I didn't mention you've talked about stock buybacks, there are such things as cash dividends.
Even a modest.
Dividend and annual dividend.
Would make pure cycle, a dividend paying stock and I truly continue to believe that would really be a help so I hope you.
Consider cash dividends I do appreciate that you are right and then and it opens up a whole new segment of.
Funds and buyers and holders and that sort of stuff and really.
We took a look at that strategically and dividends if you'd like to do through your annual revenues right. You don't want to you don't want to.
Necessarily do you land sales are you tap sales through a dividend model, but that was one of the that was one of the driving factors not driving but thats certainly one of the factors on the BTR segment and that's Super charges, our recurring revenue to allow us to take a look at those dividends ahead of where the dividends would have otherwise.
<unk> themselves from our utility segment so.
Foremost on our minds you're right.
It is also one of those conversations that come up at each board meeting.
That is music to my ears. Thank you Mark.
And I'm sure others, others listening yes.
Indeed.
You do have another follow up question coming from Bill Miller Bill Your line is live.
Mark.
Recurring revenues.
So attractive.
Factors.
Okay, you can model in the future.
Given the current.
Limited recurring revenues from what you're saying.
Sales to Europe.
Single family houses why not.
<unk> dramatically or significantly or whatever you want to use.
Your own rental business.
Correct Yep.
Without being able to study the financials for very long before the call.
So when youre thinking about that right.
And cash flow.
To the best of circumstances, you are getting right.
$100 a year per house.
In the Permian facility segment sure sure.
Good Good question Bill you walk that fine line from competing with your customers and actually.
Being a customer.
Developing your whole whole product for us.
And we are looking at accelerating that so given given how we performed on the first three.
While its only three at the end of the day there was.
There was significant demand at the high end of our rental range right. We were forecasting this out to be.
$2400, a month and I think.
Rent it out at $2800, a month and we probably could have had a little bit of strength, there as well, but we were more interested in making sure that we got occupants there so that we.
Our understanding how that whole process works you know moving into the second phase while we reserved 46 of those there is a portion of that second phase that we're looking at that can be between 100 and 160 units. So you could see as much as 200 units.
Coming to market on that second phase and that is all in right if youre looking at.
$500000 200 units on that it's a big number.
And so we're going to we're going to pursue that we're going to do it smart we are going to do it incrementally we're going to do it.
So while we don't get too far over our skis, but still being aggressive to deliver that and bolster that recurring revenue and then start to talk a little bit about that D word on.
The private or the previous call.
Okay.
Interest rates right.
Right.
I can't Cuddle, and Bill Im peddling.
Okay well.
The point is basically is.
Really emphasize.
Rental units yes.
Yes.
Moving to our computing some degree that.
That should be.
Okay.
Sure.
Returns for your revenue or so dramatically better.
Yes in your house.
Capturing and just depreciation of the asset.
Well, that's not really important because that gives you more leverage for higher rates.
Good work.
There are no more questions in queue.
Great.
So wrapping this up certainly.
If you listen to this on a replay and something came up that piqued. Your interest don't hesitate if you have any.
Technology challenges.
Calling for a question don't hesitate to give me a call and.
Happy to happy to drill down on any of the specifics of what it is that we're doing we're very excited.
I think it's been a terrific year, it's been a better year in terms of performance of the of the stock certainly the volume is up so we.
We are trading on average about $1 million worth of equity a day. So the liquidity is certainly enhanced on all of that and so I think we'll continue to do more outreach on investor relations conferences.
I'm looking at an opportunity to get to New York, maybe even yet this year, maybe get to New York.
Sometime in December and if we do that we will certainly send out a note and see if we can't.
Huddle up for.
Lunch or something like that.
Get to get to be face to face again for a change so.
Again, we want to thank you all for your continued support and continued interest in the company and with that I would say stay tuned for some more great results in 2022. So thank you all.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Thanks Ali.
Yes.