Q3 2025 Pure Cycle Corp Earnings Call

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Operator: This meeting is being recorded and or transcribed. before moving into the Q&A session. We'll ask that everybody mute. You've been muted. To unmute yourself, press star six.

This meeting is being recorded and our transcribed good morning, everybody and welcome to pure cycle Corporation third quarter earnings call.

Start with a presentation from our CEO Mark regarding.

Before moving into the Q&A session.

Speaker Change: Well ask that everybody in New York.

Speaker Change: You've been muted too on mute yourself press star six.

Operator: I'm sure the mics are open, but we ask that you stay muted until you're called on.

Speaker Change: Sure. The mics are open, but we ask that you stay muted and tell your called on and with that I'll turn the presentation over to our CEO Mark Harding.

Mark Harding: And with that, I'll turn the presentation over to our CEO, Mark Harding. Thank you. Good morning. Welcome to our third quarter earnings call with me today.

Mark Harding: Thank you hi, good morning.

Mark Harding: Welcome to our third quarter earnings call with me today.

Mark Harding: You just heard Marc Spezialy as our CFO, as well as our controller, Serena Finnegan. So, if you have any hard questions, they'll help us chime in on that. We do have a deck for this. So, for those of you that are on this live, you can see the deck by going to our website. On the landing page, there'll be a tab that you can click onto. I'll advance through the slides as I go through the presentation. And then for those that are listening to this on the replay, I'll try and note those slide transitions so you can kind of match the audio together with the slide deck.

Speaker Change: Just heard Mark B Riley as our CFO as well as our controller Serena been again, so if you have any hard questions they'll help us.

Mark Harding: And on that.

Mark Harding: We do have a deck for this so for those of you that are on this slide you can see the deck by going to our website on the landing page there will be a tab that you can click on to all advance through the through the slides as I go through the presentation and then for those that are listening on the replay.

Mark Harding: I'll try and note the slight transition. So you can kind of match the audio together with the slide deck.

Mark Harding: So with that, we'll get started.

Mark Harding: So with that we will get started.

Mark Harding: Our first slide is always to get the lawyers out of the room. So y'all familiar with forward looking statements, statements that are contained or incorporated by reference in this are forward looking statements that have that meaning by the Security and Exchange Commission. I want to jump and really kind of highlight our leadership team. So this is your leadership team. We have a tremendous amount of experience in all of the business segments that we have, a very consistent and constant team that I have the pleasure of working with day in and day out. But they are really responsible for delivering the results for the company.

Mark Harding: Our first slide as always to get the lawyers out of the room. So you all are familiar with forward looking statements statements that are contained or incorporated by reference in this are forward looking statements that meeting by the security and Exchange Commission.

Mark Harding: Wanted to jump on really kind of.

Mark Harding: Highlight our leadership team. So this is your leadership team there we have a tremendous.

Mark Harding: Amount of experience in all of the business segments that we have a very consistent and constant.

Mark Harding: That I had the pleasure of working with day in and day out, but they are really responsible for delivering the results of the company and so it's it's a delight to continue to work with our team.

Mark Harding: And so it's a delight to continue to work with our team, as well as our board. As many of you know, that have been following the company, we really do punch above our weight on some outstanding leadership and expertise in our board from all disciplines of what it is that the company does. So I do want to give them credit for their continued stewardship of the company, the company's capital and kind of delivering the results that we experience.

Mark Harding: As well as our board as many of you know that have been following the company, we really do punch above our weight on some outstanding leadership and expertise in our board from all disciplines of what it is that the company does so.

Mark Harding: I do want to give them credit for their continued stewardship.

The company, the company's capital and kind of delivering the results that we experience.

Mark Harding: So let me jump right into the financials, third quarter, taking a look at it both in terms of the quarter and then year to date. Quarterly revenues, 5 million, continued to deliver terrific results on gross profits, about a 63% margin there. So 3.2 million in gross profits. Do wanna note a couple of the highlights. One of the key things that we're seeing this year one of the diversifications that the company has is that we do have some mineral estate. So we've seen some tremendous results from our mineral estate this year. And that was a result of drilling additional wells in 2024 that came online.

Mark Harding: So let me jump right into the financials third quarter, taking a look at it both in terms of the quarter and then year to date.

Mark Harding: Quarterly revenues of $5 million.

Mark Harding: Continued to deliver terrific results on gross profits of about 63% margin. There so $3 2 million and gross profits do want to note a couple of the highlights.

Mark Harding: One of the key things that we're seeing this year is one of the diversification that the company has is that we do have some mineral estate. So we've seen some tremendous results from our mineral estate. This year and that was a result of drilling additional wells in 2024 that came online.

Mark Harding: So quarterly results, a little over a million dollars there. If you take a look at it from year to date, close to $6 million on that. So that's a nice bump to the financial performance on that. A little bit over 2 million in net income on the quarterly basis, about 9 cents per share. And then you take a look at that on a year over year basis or year to date basis, that's about 7 million. So 29 cents earnings per share on the fiscal year 2025. Taking a look at the trending revenues, they're slightly down from previous quarters.

Mark Harding: Quarter quarterly results, a little over $1 million. There if you take a look at it from year to date close to $6 million on that so that's.

Mark Harding: A nice bump to the financial performance on that.

Mark Harding: Over $2 million and net income on a quarterly basis about nine cents per share and then you take a look at that on a year over year basis, our year to date basis, that's about $7 million.29 earnings per share on the fiscal year 2025.

Mark Harding: Taking a look at that trending revenues, they're slightly down from previous quarters and the principal reason for that is just the weighted deliveries that we have four lots in filing six.

Mark Harding: And the principal reason for that is just the weighted deliveries that we have for lots in filing six. You know, our largest home builder, D.R. Horton, had a weighted inventory of lots that they have. They are on a finished lot structure for us. And so, taking a look at how those deliver, we're on schedule and on pace on delivering those lots. We'll deliver those lots by our fiscal year end, and that'll catch up, but there's a little bit of a weighted delivery on that. This particular filing, they have about 70 lots, where traditionally they have about 45.

Mark Harding: Our largest homebuilder D R Horton had.

Mark Harding: Our weighted inventory loss that they have they are on.

Mark Harding: Finished lot structure for us and so.

Mark Harding: Taking a look at how those deliver we're on schedule and on pace on delivering those lots will deliver those lots by our fiscal year end.

Mark Harding: That will catch up but there is a little bit of a weighted delivery on that this particular filing they have about 70 lots where traditionally they have about 45. So its almost twice the number of lots that they have on that structure. So that skews the results a little bit it's not necessarily indicative of any of the year to.

Mark Harding: So, it's almost twice the number of lots that they have on that structure. So, that skews the results a little bit. It's not necessarily indicative of any of the year-to-date performances. It's just that particular filing had a weighted average on that. So, when you take a look at it on a quarter-over-quarter basis, that's going to be weighing in a little bit on that side. So, this will give you that look, about $5 million in this quarter, and then when you take a look at gross profit, about 3.2. Those are kind of carrying forward. Taking a look at it from a net income and an earnings per share quarter of a quarter, again, those are going to be the same, the same results in there, just showing that that inventory of that.

Mark Harding: <unk> performance is it just that particular filing kind of weighted average on that so when you take a look at it as a quarter over quarter basis, thats going to be weighing in at a little bit on that side. So just to give you that look about $5 million in this quarter and then when you take a look at gross profit about three point to observe kind of carrying forward.

Mark Harding: Taking a look at it from a net income and earnings per share quarter over quarter again, those are going to be the same the same results in there just showing that that inventory of that and a lot of that a lot of that work that the company does on Thats in web hits in the work in progress on the financial statements it'll just.

Mark Harding: And a lot of that, a lot of that work that the company does on that's in WIP, it's in the work in progress on the financial statements, it'll just roll into realizing that revenue as we get into this fourth quarter here.

Mark Harding: Roll into realizing that revenue as we get into this fourth quarter here.

Mark Harding: Take a look at the fiscal year-to-date performance. We're showing again some seasonality in that, you know, we do finish all of our phases in that fourth quarter, mostly just because it's a seasonality for us in Colorado, where it's difficult to do concrete and asphalt in the winters. But we are on pace. This kind of shows you a little bit of where we're at in terms of our fiscal year 2024, cumulative for 2025, and then our guidance on that. So, our guidance on 25 was around $30.1 million, or $31 million on that, and then gross profit right around that $23.7.

Mark Harding: Take a look at.

Mark Harding: The fiscal year to date performance, we're showing again some seasonality in that.

Mark Harding: We do we do finished all of our.

Mark Harding: Our phases in that fourth quarter, mostly just because it's a seasonality for us in Colorado, where it's difficult to do concrete and asphalt in the winters, but.

Mark Harding: We are on pace. This kind of shows you a little bit of where we're at in terms of our fiscal year 2020 for Q.

Mark Harding: For 2025, and then our guidance on that so our guidance on 25 was around $31 million.

Mark Harding: Our $31 million on that and then gross profit right around that $23 seven and so we will still finished all of that work and then.

Mark Harding: And so, we will still finish all that work, and then as our builders close on that stuff, we'll be able to recognize that revenue rolling through on our fourth quarter. Again, carrying that forward to net income and earnings per share, cumulatively to date, $7 million on net income, 29 cents a share on earnings per share. And then that will have a catch up just due to the delivery of all those finished lots. We have about 220 lots coming to completion. We've got a bunch of those finished already, and then we'll punch out the remaining lots probably late this month and the first part of August with an 831.

Mark Harding: Builders closed on that stops, we'll be able to recognize that revenue rolling through on our fourth quarter.

Mark Harding: Again carrying that forward to net income and earnings per share.

Mark Harding: Cumulatively to date $7 million on net income 29 a share.

Mark Harding: Earnings per share and then that will that will have a catch up just due to the delivery of all of those finished lots. We have about 220 lots coming to completion, we've got a bunch of those finished already and then we'll punch out the remaining lots probably late this month and the first part.

Mark Harding: August with any 31 year end.

Mark Harding: Let's drill down a little bit, talk about each of our segments individually, taking a look at the water utility segment. Really, this is driven by three different revenue sources. 1 is the annual customer growth, so we continue to add customers to our segment, and those are recurring customers. These are monthly billings to our water and wastewater billing sides. And then we have a segment that we have, it's not a defined segment, but a group of water customers that are industrial customers, and this year is a little bit light comparatively to the previous years, and that was forecasted.

Mark Harding: Let's drill down a little bit talk about each of our segments individually, taking a look at the water utility segment.

Mark Harding: Really this is driven by.

Mark Harding: Three different revenue sources, one is the annual customer growth. So we continue to add customers to our segments and those are in our recurring customers. These are monthly billings.

Mark Harding: Our water and wastewater billing sides.

Mark Harding: And then we have a <unk>.

Mark Harding: That we have with not not a defined segment, but a group of water customers that our industrial customers and this year is a little bit light.

Mark Harding: Comparatively to the previous years and that was forecasted we did know that that was going to be a permitting year for most of our operators in this area, where our largest operator has been permitting a significant number of wells.

Mark Harding: We did know that that was going to be a permitting year for most of our operators in this area, where our largest operator has been permitting a significant number of wells, close to 200 wells on the Lowery Ranch that they're looking to develop, and that's just a lot of permitting pad sites, infrastructure, take away facilities, those sorts of things. So they've been prepping into a lot of that over this fiscal year, and we'll see that more normalized coming in fiscal 2026, and then TAP fees, and TAP fees are very strong this year. Really, because of the delivery of filing 5, which is our phase 2B in that, we had about 230 lots that we delivered last year.

Mark Harding: The 200 wells on the Lowry ranch that Theyre looking to develop.

Mark Harding: That's just a lot of.

Mark Harding: Permitting.

Mark Harding: Pad sites infrastructure.

Mark Harding: Takeaway facilities those sorts of things so they've been prepping into a lot of that over this fiscal year, and we will see that more normalized coming in fiscal 2026.

Mark Harding: And then choppy and tap fees are very strong this year really because of the delivery of.

Mark Harding: Filing five which is our phase II b and that we had about 230 lots that we delivered last year builders are.

Mark Harding: Builders are vertical on those. I think we've got probably about 120 homes up in that of the 230 that they had delivered. So, when they need a building permit, they're actually pulling those TAP fees that are showing and really have that kind of lag effect of the delivery of the lot to TAP fee revenue on that side.

Mark Harding: Vertical on those I think we've got probably about 120 homes.

Mark Harding: Of the 230 that they've had delivered so.

Mark Harding: When they need a building permit they're actually pulling those tap fees that are showing and really have that kind of.

Mark Harding: Lags effect up the delivery of a lot tap fee revenue on that side.

Mark Harding: It's a little bit on the oil and gas side. As I mentioned, 25 was forecasted to be weaker due to the concentration of permitting at the Lowry Ranch and should return to those normal levels in 26 and continuing, right? So, you know, when you're taking a look at that number of wells, we generate about. $280,000, $300,000 per well. And you're looking at, you know, close to 100, somewhere 180 to 200 wells on the Lowry property. So it'll take them a while to continue to fully drill that out. But that'll be a nice segment for us continuing forward.

Mark Harding: It's a little bit on the oil and gas side.

Mark Harding: As I mentioned 25 was forecasted to be weaker due to the concentration of permitting at the Lowry ranch and should return to those normal levels in 2006 and continue bank right. So when you're taking a look at that number of wells.

Mark Harding: We generate about 280 $300000 per well and Youre looking at.

Mark Harding: Most 200 somewhere 180 to 200 wells on the Lowry property. So it will take them a while to continue.

Mark Harding: To fully draw that out, but that'll be a nice segment for us continuing forward and it continues to be.

Mark Harding: And it continues to be a really favorable relationship both for us, because we have and continue to invest in our water facilities out there. And it allows oil and gas opportunity, the oil and gas Operators to be able to handle their programs, which are really very large water customers without it being at the expense of anybody else's customers. So we don't have to, we don't have to have our other customers conserve that so that we can make sure that we provide water for the oil and gas sector. So it's a very, very partnership relationship.

Mark Harding: Really favorable relationship both for us because.

Mark Harding: Because we have and continue to invest in our water facilities out there and it allows oil and gas opportunity here.

Mark Harding: Oil and gas.

Mark Harding: Operators to be able to handle their programs, which are really very large water customers without it being at the expense of anybody else's customers. So we don't have to we don't have.

Mark Harding: Our other customers can serve that so that we can make sure that we provide water for the oil and gas segment. So it's a very very partnership relationships.

Mark Harding: Take a look at it on our land development segment. So we do have all the lots for Phase 2C being delivered in fourth quarter. So you'll see a bit of that on the catch up side, but really punching out on all of what is about 900 lots on Phase 2 for us.

Mark Harding: Take a look at it on our land development segment.

Mark Harding: So we do have all of the lots for phase two C.

Mark Harding: Being delivered and fourth quarter, so youll see a bit of that on the catch upside but.

Mark Harding: Really punching out on all of <unk>.

Mark Harding: <unk> is about 900 lots on phase III for us if we.

Mark Harding: We finished 2A in 2023, 2B in 2024, 2C in 2025, and 2D, we have 2D and 2C going on at the same time. And so we've done a number of the activities in 2D. We might have a slide that might update this a little bit. No, I guess I don't. Let me go back on that. So on 2D, we've got the earthwork done, all the grading work done. We're midway, maybe three quarters of the way through on delivering the wet utilities. And then we'll move over to the road, curb and gutter package sometime this fall and then continue to deliver those.

Mark Harding: We finished two way in 2023 to be in 2024 to see in 2025 and two D.

Mark Harding: We have two D to C going on at the same time.

Mark Harding: And so we're not what we've done a number of the activities into D might have a slide that might update this a little bit and is that no I guess they don't let me go back on that so on two D. We've got.

Mark Harding: The Earth work done all the grading work done we're midway maybe three quarters of the way through on delivering the wet utilities and then we'll move over to the road curb and Gutter package sometime this fall and then continue to deliver that was really what I want to highlight here is kind of this particularly in <unk>.

Mark Harding: And really what I want to highlight here is kind of this, particularly in markets like this, and I'll highlight the market a little bit later in the presentation. But in times where you have real time deliveries without having strong inventories on one side or the other, it really highlights the company's business model for builders and the public builders in particular, because their pro fomers are really scrutinized on their ability to have turns on their lots and the investments in their lots. And what we try to do is keep pace with that such that neither they nor us are maintaining too long of an inventory on that.

Mark Harding: <unk> like this and I'll say I'll highlight the market a little bit later in the presentation, but and in times, where you have real time deliveries without having strong inventories on one side or the other it really it really highlights the company's business model for builders and the public builders in particular because there.

Mark Harding: They are they are pro forma as our really scrutinize on their ability to have turns on their lots and the investments in their lives and what we tried to do is keep pace with that such that neither day, nor us are maintaining too long of an inventory on that and we can be just as real time as possible to deliver those homes. So.

Mark Harding: And we can be just as real time as possible to deliver those homes. So you're going to see a little bit of that and our phasing on that and I'll talk a little bit more about that later in the presentation.

Mark Harding: Youre going to see a little bit of that in our phasing on that and I'll talk a little bit more about that later in the presentation.

Mark Harding: Single-Family Rentals. Again, we talk a lot about this segment.

Mark Harding: Single family rentals.

Mark Harding: Again, we talk a lot about this segment's a little bit slower growth on bringing online some of these new units and the.

Mark Harding: A little bit slower growth on bringing online some of these new units and the The reason for that has been that our local jurisdiction in Arapahoe County updated their building code regulations last summer, and it had a lot of new electrical standards that it took a bit longer to get through the permitting process. We're seeing that necessarily on the bill for rent on our builder partners that are building the units that we reserve for ourselves, as well as some of our builders in general. So some of that phasing on Phase 2B, I'm getting more of those lots into homes and more home sales on that are a function of kind of that delayed process.

Mark Harding: The reason for that has been that they are.

Mark Harding: Our local jurisdiction and rapid county updated their building code regulations set last summer and it had a lot of new electrical.

Mark Harding: Electrical standards that it took a bit longer to get through the permitting process, we're seeing that necessarily on the build for rent on our builder partners that are building the units that we reserve for ourselves as well as some of our builders in general so some of that phasing on phase two b I'm getting.

Mark Harding: More of those lots.

Mark Harding: Into homes and more home sales on that are a function of kind of that delayed process.

Mark Harding: A process that typically takes two weeks has been taking up to six months. I think most of them are through that process now. The process that they do is they get their masters approved, which are, this is the type of home that we're going to put out there without that home being identified on any specific lot. Once the masters are approved, then each individual building permit goes very smoothly.

Mark Harding: A process. It typically takes two weeks has been ticking up to six months I think they're most of them are through that process now.

Mark Harding: The process that they do is they get their masters approved which are this is the this is the type of home that we're going to put out there without that home being identified on any specific loss. Once the masters are approved then each individual building permit goes very smoothly, but so we'll see.

Mark Harding: So we'll see a lot more traction on our single family rentals in first quarter next year and then continuing through 2026, but we're still on pace for the same number of units that we're looking for on our single family unit to get up to about that 100 units after Phase 2. take a little bit more.

Mark Harding: A lot more.

Mark Harding: Traction on our single family rentals, and first quarter next year, and then continuing through 2026, but we're still on pace for the same number of units that were looking for on a single family unit to get up to about that 100 units after phase II.

Mark Harding: I'll take a little bit more for those of you are going to be a little bit newer im going to elevate this up a little bit now that we've gone through kind of the quarter and then we'll highlight some of the specifics about what we think about the market and things like that but we operate in three business segments.

Mark Harding: For those of you who are going to be a little bit newer, I'm going to elevate this up a little bit now that we've gone through kind of the quarter, and then we'll highlight some of the specifics about what we think about the market and things like that. But we operate in three business segments. We have water, wastewater, where we own a valuable portfolio of water rights here in Colorado. Our portfolio can serve up to about 60,000 single-family equivalents. And as you'll see in inventory levels, we're really just getting started on some of that. We're starting that through the development of Sky Ranch, but also some exciting things are happening in and around our service area.

Mark Harding: We have water wastewater, where we own a valuable portfolio of water rights here in Colorado.

Mark Harding: Our portfolio can serve up to about 60000 single family equivalents and as Youll see in inventory levels are really just getting started on some of that we're starting that through the development of Sky Ranch, but also some exciting things are happening in and around our service area. So we have a lot of potential for providing services to the library ranch on.

Mark Harding: So we have a lot of potential for providing services to the Lowry Ranch on the service area, if and when that develops. We have a land development segment. That's really where a lot of the activity is focused, where we are cradle-to-grave, where we do the utilities on that. We go horizontal with all of the infrastructure, the roads, curbs, and gutters. And then in some cases, our third segment is the single-family rentals. We go vertical with those houses, and we maintain those houses in our portfolio to rent out for single-family homes. And really, the changing dynamics, and this is really shifting between, is it more favorable to buy a home or is it more favorable to rent a home?

Mark Harding: Service area, if and when that develops we have a land development segments, that's really where a lot of the activity is focused where we our cradle to grave, where we do the utilities on that we go horizontal.

Mark Harding: With all of the infrastructure of the roads curbs and gutters and then in some cases, our third segment is the single family rentals. We go vertical with those houses and we maintain those houses in our portfolio to rent out for single family homes.

Mark Harding: And really the changing dynamics and this is really shifting between is it more favorable to buy a home or is it more favorable to rent a home, we really try to vertically integrate ourselves in both those segments. So that we can really service both sides of that.

Mark Harding: We really try to vertically integrate ourselves in both those segments, so that we can really service both sides of.

Mark Harding: Let me highlight a little bit more color on the water segment. So our water systems, we have about $65 million in total water assets. And really that's split between the water rights portfolio. We continue to grow that portfolio by tucking in acquisitions where appropriate. So we have about $32 million in the water rights portfolio. $24 million in water and wastewater systems. Those are brick and mortar. Those are pumps, wells, water treatment facilities, tanks, distribution facilities, that sort of stuff. And then that $9 million in wastewater, we have two wastewater systems that we really reuse 100% of our water.

Mark Harding: Let me highlight a little bit more color on the water segments are.

Mark Harding: Water systems are about $65 million.

Mark Harding: And total water assets.

Mark Harding: And really that's.

Mark Harding: Split between the water rights portfolio, we continue to grow that portfolio by tuck in acquisitions, where appropriate so we have about $32 million and water rights portfolio.

Mark Harding: $24 million in water and wastewater systems those are brick and mortar those are pumps wells water treatment facilities tanks distribution facilities that sort of stuff and then that $9 million in wastewater we have two wastewater systems that we.

Mark Harding: Really we used 100% of our water. So every drop of water that comes to our wastewater system, where cleaning it up.

Mark Harding: So every drop of water that comes to our wastewater system, we're cleaning it up. We bring that back to a regulation quality where we can reuse that water supply. We have a dual distribution system throughout Sky Ranch where we can deliver that highly treated effluent water to our parks and open spaces to irrigate our outdoor parks and open spaces. So we really capitalize on good stewardship of our water resources in a water short area.

Mark Harding: We bring that back to a regulation quality, where we can reuse that water supply we have a dual distribution system throughout sky Ranch, where we can deliver that highly treated.

Mark Harding: <unk> water to our parks and open spaces to irrigate our outdoor parks and open spaces SaaS, we really capitalize on.

Mark Harding: Good stewardship of our water resources in a water short area.

Mark Harding: This is a little bit about the water utility segment and kind of the capacities that we have. Acre feet of production, we have about the ability to produce about 3000 acre feet a year. And depending on our largest customer being the industrial segment. You know, this year, you see a little bit weaker deliveries of water just because of the known and forecasted gap in industrial water sales. But we do have plenty of pedal that we can continue to provide industrial water for oil and gas customers and then taking a look again to highlight the amount of water that the company has the unallocated amount of water on that.

Mark Harding: This is a little bit about the water utility segment in Canada capacities that we have acre feet of production, we have about the ability to produce about 3000 acre feet a year.

Mark Harding: And depending on our largest customer being the industrial segment. This.

Mark Harding: This year, you see a little bit.

Mark Harding: Weaker deliveries of water just because of the.

Mark Harding: The known and forecasted.

Mark Harding: GAAP and industrial water sales, but we do have plenty panel that we can continue to provide industrial water for oil and gas customers and then taking a look again to highlight the amount of water that the company has the unallocated amount of water.

Mark Harding: On that we do get two revenue sources from that so if you look at these two systems.

Mark Harding: We do get 2 revenue sources from that. So, if you look at these 2 systems, the, the production capacity allows us to get that year over year revenue. And then the portfolio of our water translates into how many units we can serve of that 60000 and we get a strong connection fee for that that that connection fee continues to to rise really translating to the scarcity value of water and the cost of delivering that water to customers. But that is about 40000 dollars per connection female and taking a look at how that translates into the full capacity of that.

Mark Harding: The production capacity allows us to get that year over year revenue and then the portfolio of our water translates into how many units we can serve up that 60000.

Mark Harding: And we get.

Mark Harding: Our strong.

Mark Harding: Our connection fee for that connection fee continues to rise really translating to the scarcity value of water and the cost of delivering that water to customers, but that is about $40000 per connection fee now and taking a look at how that translates into the.

Mark Harding: Full capacity of that that's about $2 3 billion to $4 billion.

Mark Harding: That's about 2.3Billion, 2.4Billion dollars worth of connections. You know, we add, we'll have about a 1Billion dollars of investment as we build that system out, but we're really using a very, very small capacity of that portfolio. So, that kind of gives you a flavor for those of you that are new to the company of really where the, the outlet for the company is.

Mark Harding: Our two connections we add.

Mark Harding: We'll have about $1 billion of investment as we build that system out, but we're really using a very very small.

Mark Harding: The capacity of that portfolio. So that kind of gives you a flavor for those of you that are new to the company of really where the the outlook for the company is.

Mark Harding: I do want to highlight one new development. I know some of you have seen a number of these things, but if you take a look at the mapping to the right of this, that pink shaded area, we call it light red, but it looks more pink. That's really our service area. That's the Lowry Ranch. Above that, in the blue, is the Sky Ranch property. That dark line is I-70, and about four miles north of that is the Denver International Airport, so it gives you kind of a proximity of where we're at in the Denver metropolitan area, and we've shown a number of times, you know, kind of this graphic where development has encroached this Lowry Ranch property, and there was that one outfall, or an out parcel on the Lowry Ranch down in that southeast corner.

Speaker Change: Do you want to highlight one new development.

Mark Harding: Some of you have seen a number of these things but.

Speaker Change: If you take a look at the the mapping to the right of this that debt.

Mark Harding: Pink shaded area.

Speaker Change: We call it light red, but it looks more pink.

Mark Harding: That's really our service area, that's the Larry Ranch.

Mark Harding: That in the Blue is the Sky Ranch property that dark line as I 70, and about four miles north of that is the Denver International Airport. So it gives you a kind of a proximity of where we're at in the Denver Metropolitan area and and we've shown a number of times kind of this graphic where.

Mark Harding: Development has encroached this lowry range property in there was that one outfall or an out parcel on the Lowry range down in that southeast corner was a half section of ground that was privately owned that property is now under development and so what you're really seeing is just kind of a surrounding our.

Mark Harding: It was a half section of ground that was privately owned. That property is now under development, and so what you're really seeing is just kind of a surrounding of our service area, and it just highlights the location that the company's assets are in in the Denver metropolitan area. As those of you who've been to Denver know, we effectively live on an ocean. We can only grow in one direction. We can only grow to the east. We have a natural barrier of the Front Range, the mountains on our west side, and so we find ourselves in the right part of town, not only with land interests that we own, but also our water assets and our service area.

Mark Harding: Our service area and it just highlights the location that the.

The company's assets are in the Denver Metropolitan area as as those of you who've been to Denver no.

Mark Harding: There were effectively live on an ocean, we can only grow and won one direction. We can only grow to the east we have a natural barrier of the front range. The mountains on our west side and so we find ourselves in the right part of town not only with the land interest that we own but also our water assets in our service areas.

Mark Harding: So that's been a new development. For those of you that are joining us on our investor tour next week, you'll get a chance to see some of this firsthand, but it's an exciting development where we continue to see the Denver metropolitan area grow out and beyond our service area. Talking a little bit about our land development segment, we do inventory land interests and we'll take land interest from raw land, add our water resources to it, and then be able to get the zoning and go horizontal with that zoning so that we develop finished lots for our home builders.

Mark Harding: That's a that's been a new development for those of you that are joining us on our Investor Tour next week, you'll get a chance to see some of this firsthand, but it's.

Mark Harding: Exciting development, where we continue to see the Denver Metropolitan area grow out and beyond our service areas.

Mark Harding: Talking a little bit about our land development segment, we do.

Mark Harding: Inventory land interests, and we will take our land interest from raw land at our water resources to it and then be able to get the zoning and go horizontal with that zoning set of redevelop finished lots for our homebuilders and in that segment the.

Mark Harding: And in that segment, the interesting thing is, and we're becoming more of a unicorn in that segment because there are fewer and fewer developers that are actually doing the horizontal work. I mean, they're doing the hard work of actually contracting for the grading, contracting for building the wet utilities, ultimately streets, curbs, gutters, all that to a finished lot. And really it makes us not only an entity that does that, but also an entity that's doing that in concert with how the public home builders are looking for that metric to be done. And so, you know, what we're seeing is a very strong partnership and a strong relationship with our home builder partners in markets that tend to be cyclical.

Mark Harding: The interesting thing is and we're becoming more of a unicorn in that segment because there are fewer and fewer developers that are actually doing the horizontal work. They are doing the hard work of actually contracting for the grading contracting for building the wet utilities ultimately streets curb scatter is all of that too.

Mark Harding: Finished lots and really it makes us.

Mark Harding: Not only an entity that does that but also an entity thats doing that in concert with how the public homebuilders are looking for that metric to be done and so what we're seeing is a very strong.

Mark Harding: Partnership and a strong relationship with our homebuilder partners in markets that tend to be cyclical and so they're appreciative of US you know.

Mark Harding: And so they're appreciative of us, you know, handling that portion of this work element, us being able to deliver those lots on a, you know, as a real time basis, as the market continues, the market demands that stuff. And so what we see is we can dial up and dial down on those as the market continues to flex in that space. So that's been very, I guess, satisfying to see how our business model really is capitalizing on that partnership and not really imposing hard decisions on builders where they, you know, may or may not be able to move forward given the level of sales or given the level of inventory that they might be running.

Mark Harding: Handling that portion of this work element us being able to deliver those lots on a.

Mark Harding: As a real time basis as the market continues.

Mark Harding: The market demands that stuff and so what we see is we can dial up and dial down on those as the market continues to flex in that space. So that's been <unk>.

Mark Harding: Very I guess satisfying to see how our business model really is capitalizing on that partnership and not really imposing hard decisions on builders, where they may or may not be able to move forward given the level of sales are given the level of inventory that they might be running with.

Mark Harding: If you want to highlight Phase 2, so this is a little bit of an update on that Phase 1. As we've talked about fully complete Phase 2, we've delivered all those lots and we've got about 115 homes up and sold. Phase 3, Phase 2C there, about 228 lots. And you can see most of the roads, curbs and gutters are finished. So we're just punching out some of those items on Phase 2C for delivery by the end of the month. And then Phase 2D, we're making continual progress on that and we're able to dial that up and dial that down depending on how sales and inventory continue to go.

Mark Harding: If you want to highlight phase II so.

Mark Harding: Little bit of an update on that phase one as we've talked about fully complete phase two we have delivered all of those lots and and we've got about 115 homes up.

And sold phase three phase two C. There about 228 lots and you can see most of the roads curbs and gutters are finished so we're just punching out some of those items on phase III C for delivery by the end of the month and then phase II D. We're making continued progress on that.

Mark Harding: And we're able to dial that up and dial that down depending on how sales and inventory continue to go but we have that took product that's available and we don't have to.

Mark Harding: But we have that product that's available and we don't have a tremendous amount of infrastructure that is new to that side just because we're continuing to expand. And so most of that major arterial roads and water and wastewater and stormwater systems are already developed. So we do have that ability to continue to add those. We've got new builders in Phase 2D that do want those lots as quickly as we can deliver them. And then we've got returning builders in Phase 2D that would like to eat through a little bit of their inventory and we have the ability to do both of those.

Mark Harding: Tremendous amount of infrastructure that is new that new to that side, just because we're continuing to expand and so most of that major arterial roads and water and wastewater and storm water systems are already developed so we do have that ability to continue to add those we've gotten.

Mark Harding: New builders in phase II D that do want those slots as quickly as we can deliver them and then we've got.

Mark Harding: Returning builders in phase III D that we'd like to eat through a little bit of their inventory and we have the ability to do both of those so very very.

Mark Harding: So very real-time in terms of our ability to deliver land development and finish lots.

Mark Harding: Very real time in terms of our ability to deliver land development and finished lots.

Mark Harding: Another exciting announcement for this year is groundbreaking on our high school. As many of you know, you know, one of the most important things when we started this project was to really have a full K-12 campus on site, such that all the kids in the community have access to that. It's centrally located, so families can walk to the school. And we've had our K-8 open in partnership with National Heritage Academy out of Michigan. And they've been terrific partners.

Mark Harding: Another exciting announcement for this year is groundbreaking on our ice scope as many of you know.

Mark Harding: One of the most important things when we started this project was to really have a full K 12 campus.

Mark Harding: <unk> such that all the kids in the community have access to that is centrally located so families can walk to.

Speaker Change: To the school.

Mark Harding: And we've had our K eight open.

Mark Harding: <unk> shipped with National Heritage Academy at Michigan.

Mark Harding: And they've been terrific partners and so this was a groundbreaking on getting the high school under construction. So they will be going vertical on that over the next 12 months and looking for bringing those classrooms online for school year of 'twenty, six 'twenty set but thats very exciting.

Mark Harding: And so this was a groundbreaking on getting the high school under construction. So they will be going vertical on that over the next 12 months and looking for bringing those classrooms online for the school year of 26-27. But that's very exciting, you know, getting a continuing with the development model and very exciting for our home builders. You know, this is a highly attractive model for new families that are coming out that the local schools are here. There's a full K-12 campus for them.

Mark Harding: Adding getting are continuing with the development model in and very exciting for our homebuilders you know this is a.

Speaker Change: Hi, highly attractive model for us.

Mark Harding: For new families that are coming out that debt, there's local schools are here.

Speaker Change: There's a full two K 12 campus for them.

Mark Harding: Taking a little bit on some of the things we've been talking about for those, this is an illustration on how the one project that we have, our main development project, Sky Ranch, builds out. And so, when you take a look at the inventory for both residential lots, as well as commercial lots, and we do have quite a bit of commercial on this as well. We've got about 3,200 single-family equivalents zoned for the property, but we also have about 2 million square feet of commercial. We do have an interchange that's at the site. We're in the final stages of finishing a permit for removing that interchange and making it larger.

Speaker Change: Taking a little bit on some of the things that we've been talking about for those.

Speaker Change: As an illustration on how the one project that we have the our main <unk>.

Speaker Change: <unk> project Sky Ranch builds out and so when you take a look at the inventory for residential loss as well as commercial loss and we do have quite a bit of commercial and this is why we've got about 3200 single family equivalents zone for the property, but we also have about 2 million square feet of commercial we do have an interchange.

Speaker Change: That the.

Speaker Change: At the site.

Speaker Change: We're in the final stages of finishing a permit for re moving at interchange and making it larger and so we've got.

Mark Harding: We have not started any of the commercial development yet. Some of that's going to be predicated on having a little bit more of the residential development. Some of that's going to be predicated on finishing the interchange. But taking a look at the revenues on that, when you take a look at what we've done to date on the residential, we're about 22% done. So, still plenty of pedal left on the residential side.

Speaker Change: <unk>.

Speaker Change: We have not started any of the commercial development, yet some of thats going to be predicated on having a little bit more of the residential developments some of thats going to be predicated on finishing the interchange, but taking a look at kind of the revenues on that when you take a look at what we've done to date on the residential were about 22% done so still plenty of pedal left on the.

Speaker Change: Residential side really nothing started on the commercial and when you combine those two and how we tried to illustrate the commercial is an equivalency to the single family rental or not single family single family equivalents. So it's about an 1800. So we have about 5000 overall lots that we have out at Sky Ranch.

Mark Harding: Really, nothing started on the commercial. And when you combine those two, and how we try to illustrate the commercial is an equivalency to the single-family rental, or not single-family, the single-family equivalents. So, it's about an 1,800. So, we have about 5,000 overall lots that we have out at Sky Ranch. And so, we're still very early on on that. And when you take a look at the sold in that category, that generates something close to about $620 million of income for the company. So, still very early on and continuing to really put up some very good margins on that because of how we're delivering that.

Speaker Change: And so we're still very early on on that and when you take a look at kind of the sold in that category.

Speaker Change: That generates something close to about $620 million.

Speaker Change: Income for the company, so still very early on and continuing to really put up some very good margins on that because of how we're delivering that that we really don't have a large financing cost occurred with that we have.

Mark Harding: We really don't have a large financing cost occurred with that. We have good relationship with our building partners to continue to develop that.

Speaker Change: Good relationship with our building partners continue to develop that so that.

Mark Harding: So, that gives you kind of a full scoping of that whole project.

Speaker Change: That gives you kind of the full scoping of kind of that whole project.

Mark Harding: Taking a look at the single family rental market, you know, why we like that segment, very high margin opportunity for us, we maintain the equity in both the water systems, as well as the land development costs on that. So, when we've got all those horizontal improvements, we're really holding that value, which can be as much as $150,000 per lot. And then we're partnering with our home builder partners who are building their product on each individual phase, and they're building that product for us. And it's a good partnership for them, because they have already sold the home, they have those margins built in, and they also, and sometimes can rent back that facility to use that home as a model home for folks.

Speaker Change: Taking a look at the single family rental market why we like that segment very high margin opportunity for us we maintain the equity in both the water systems as well as the land development costs on that so when we got all those horizontal improvements were really holding that value which can be.

Speaker Change: Much as $150000 per Watt and then we're partnering with our homebuilder partners who are building.

Speaker Change: Their product.

Speaker Change: On this on each individual phase and they are building that they are building that product for us and it's a good partnership for them because they have already sold the home. They they have those margins built in and they also and sometimes scans can rent back that facility to use at home as a as a.

Speaker Change: Model home for folks so it's been a very good model for us and good model for a homebuilder partners and so we will continue to add to that portfolio, taking a look at kind of how we want to build those numbers.

Mark Harding: So, it's been a very good model for us, and a good model for our home builder partners. And so we'll continue to add to that portfolio, taking a look at kind of how we want to build those numbers. We really have only 14 units started. We've got 5 under construction with another 14 that are close to final permits on that in phase 2B. And then we have probably 35, 38 more units coming on in 2C. So, you're going to see a strong acceleration in that segment over the next 18 months. If you take a look at kind of how that growth is going to go.

Speaker Change: And we really have only 14 units started we've got five under construction with another 14 that are close to final permits on that phase.

Speaker Change: To be and then we have probably $35 38.

Speaker Change: More units coming on and to see so you're going to see a strong acceleration in that segment over the next 18 months.

Speaker Change: If you take a look at kind of how that growth is going to go so from from really a modest start on phase one with four homes.

Mark Harding: So from from really a modest start on phase one with four homes, continuing to add those numbers in each of those phases, up to what we're going to have is 98 homes from phase 2d. So you can see a lot more traction and a lot more velocity in that single family rental portfolio over the next 18 months or so.

Speaker Change: Continuing to add those numbers in each of those phases up to what we're going to have is 98 homes from phase two D. So you're going to see a lot more traction in a lot more velocity in that single family rental portfolio over the next.

Speaker Change: 18 months or so.

Mark Harding: Liquidity kind of continue, want to highlight, you know, stewardship of the invested capital. So, you know, we have a terrific balance sheet, a high degree of liquidity, very important in volatile markets, right? We have the ability not only to continue to invest in our own systems and make sure that we've got the proper inventory of finished lots for our homebuilders, but then also opportunities where you have weakening market segments present opportunities for growth, where, you know, we take a look at how can we deploy that capital. And I've talked, you've heard me talk a bit really about where our priorities are on our capital stack.

Speaker Change: Liquidity kind of continue want to highlight.

Speaker Change: <unk> chip of the invested capital.

Speaker Change: We have a terrific balance sheet.

Speaker Change: A high degree of liquidity.

Speaker Change: Important in volatile markets right. So we have the ability not only to continue to invest in.

Speaker Change: In our own systems and make sure that we've got.

Speaker Change: The proper inventory of.

Speaker Change: Finished lots for homebuilders, but then also opportunities where you have.

Speaker Change: Weakening market segments presents opportunities for <unk>.

Speaker Change: <unk>, where we take a look at how can we deploy that capital and I've talked you've heard me talk a bit really about where are our priorities are on our capital stack and we really look at using that liquidity to invest into our business segments to deliver finished lots to deliver water and wastewater.

Mark Harding: And we really look at using that liquidity to invest into our business segments, to deliver finished lots, to deliver water and wastewater systems so that we can continue to meet the demands of our heavy users, oil and gas customers. Take a look at opportunities to invest into additional water rights, but more importantly, opportunities to invest in additional land acquisition opportunities. You know, I know there's a lot of you continue to monitor that well, and, you know, I'm a bit cautious on. what kind of discussions I lead to in a public call, but we're very active on casting our nets out with opportunities with landowners in and around our area that we might be able to provide water service to for those opportunities, but really maintaining that liquidity so that, you know, we continue to grow the business.

Speaker Change: Systems. So that we can continue to meet the demands of.

Speaker Change: Our heavy users oil and gas customers.

Speaker Change: Take a look at opportunities to invest into additional water rights.

Speaker Change: But more importantly opportunities to invest in additional land acquisition opportunities.

Speaker Change: I know, there's a lot of you continue to monitor that well and and.

Speaker Change: A bit cautious on what.

Speaker Change: What kind of discussions I lead to in a public call, but we're very active on casting our nets out with opportunities with landowners in and around our area that we might be able to provide water service to look for those opportunities, but really maintaining that liquidity. So that we we continue.

Speaker Change: To grow the business and so we were very I guess seeing some of the benefits of that.

Mark Harding: And so, you know, we were very, I guess, seeing some of the benefits of that cautious capital strategy to make sure that we're able to execute our results of our business model. And that's, that's really the fundamental premise of what it is that we're doing.

Speaker Change: That cautious.

Speaker Change: Capital strategy to make sure that we're <unk>.

Speaker Change: To execute our results of our business model and that's that's really the fundamental premise of what it is that we're doing.

Mark Harding: move over to Outlook. So the next few slides are kind of carryover slides from our year-end presentation, and really what we were trying to do is give investors a look at how we look at the company and how we're managing our capital structure, both for the current year, for the short-term outlook being that three to five year where we're really strong in investing in our inventory of lots, and then the longer term where, how does Sky Ranch build out? And how are we going to look at additional service areas, whether that's going to be the Lowry Ranch service area or other acquisition opportunities?

Speaker Change: You move over to outlook.

Speaker Change: Yeah.

Speaker Change: So this is probably the most interesting slide for all of us to say well how is the housing market.

Speaker Change: The headwinds in the housing market are I'd say the biggest one is just consumer confidence.

Speaker Change: Is is the homebuyer confident enough to pull the trigger on that.

Speaker Change: Or when you take a look at consumer confidence.

Speaker Change: The companion opportunity for us in that area is a market segmentation, where we are one of the few entry level masterplan communities available not only in entry level Master planned community, but one where we're actually the partner with our homebuilders, where we're doing the horizontal <unk> and that again.

Speaker Change: I don't know how other markets our positioning on this but homebuilders.

Speaker Change: All of the National Homebuilders that we work with that said.

Speaker Change: How appreciative they are of us as our model because there are very few folks that are in a position to deliver.

Speaker Change: Both the horizontal infrastructure and the horizontal infrastructure to segment that entry level buyer.

Speaker Change: Mortgage rates I think mortgage rates are always.

Speaker Change: Of interest to the homebuyer, but I wouldn't say that they have been as.

Speaker Change: As a bit of a headwind as it has been in the last couple of years.

Speaker Change: The transition from a low interest rate margin Mark.

Speaker Change: <unk> to a more normalized interest rate market has has really occurred and so that homebuyer isn't trying to time the market on seeing if mortgage rates are going to move a half a point or not half a point I think that that's you know it does it does have an incentive for those that are on the sidelines that are trying to jump in but it is.

Speaker Change: Really less of a headwind than it has been historically affordability is always.

Speaker Change: A headwind and it really doesn't matter, whether it's colorado or anywhere else I mean.

Speaker Change: Just the affordability of homeownership these days and really again that that that companion metric for us on an opportunity side is our market segmentation and then we do have a bit more of a rising inventory, mostly just because of the slowing of the market.

Speaker Change: We have a low.

Speaker Change: Market segmentation is good for us we have a low inventory in the Denver area of entry level almost anemic, we're probably one of the only ones that have that and then I will highlight our phased deliveries so that neither us nor our homebuilders are being forced with high levels of inventory.

Speaker Change: That translates I put these metrics up in phase two a b C and D. And then we do have.

Speaker Change: Another fifth phase phase III, two E that will come online as well, but when you take a look at this particular highlight you know.

Speaker Change: What we were seeing is really real time delivery when we would deliver the lots within that year nearly all of those lots would be vertical if you take a look at that metric from <unk> and <unk>, we're seeing a little bit of a slowdown on that sir that have as many lots vertical and sold and <unk> that we've seen I think.

Speaker Change: Two reasons, one you have a weakening market, but then secondly, we had that that new building permit process. So.

Speaker Change: I think it was the homebuilders got caught off guard on that and it took a little bit longer for them to get their masters approved on phase two b.

Speaker Change: To see those delivery of lots are going to be at.

Speaker Change: At the end of this fiscal year. So August of this year and then two D. As we highlight here we have some new builders in there that we're gonna be delivering some losses. This year as well and then we can face the balance of those deliveries and then again phasing into to eat and it really is it kind of depends we've seen some of our homebuilders who got.

Speaker Change: In early and they they had all their building permits so they took their entire inventory and built that out on spec in or selling goes out.

Speaker Change: Got some builders that because of their market segmentation.

Speaker Change: And the price points.

Speaker Change: They sold they sold their entire inventory even before they went vertical which is almost unheard of.

Speaker Change: Had our.

Speaker Change: Paired product out there the duplex is out there.

Speaker Change: Our homebuilder that has that product was able to sell all of their lots even before then.

Speaker Change: They broke ground on that so that was a price sensitive.

Speaker Change: So we continue to see strength and those.

Speaker Change: Deliveries of that entry level market and we're also seeing we have we have several segments in that entry level, where it's.

Speaker Change: A paired product or a townhome product and then smaller single family homes that maybe 800 square feet two larger single family home. So even in that entry sub 500 market you still got some micro segmentation in there and we're seeing very attractive results, mostly just because.

Speaker Change: There is no inventory of product at this at this price point.

Speaker Change: So the next few slides are kind of carryover slides from our year end presentation and really what we were trying to do is give.

Speaker Change: Give investors.

Speaker Change: Look at how we look at the company and how we're managing our capital structure. Both for the current year for the short term outlook being that three to five year, where we're really strong in investing in our inventory of lapse and then the longer term, where how does sky ranch build out and how are we going to look at.

Speaker Change: The additional service areas, whether that's going to be the Lowry lie.

Speaker Change: Flowery branch service area or other acquisition opportunities and so on.

Mark Harding: And so this kind of highlights that in terms of those areas on the water utility side, and then taking a look at the land development side.

Just kind of highlights that in terms of those areas on the water utility side.

Speaker Change: And then taking a look at the land development side some of the key drivers in that I won't highlight those as I know we've highlighted that in our last three calls.

Mark Harding: Some of the key drivers in that, I won't highlight those, as I know we've highlighted that in our last three calls. And then also taking a look at it from single family rentals, we look to get to that close to 100 homes over that period of time. and then translating that into really what we think that outlook does for the company. And so this showed a little bit of a trending analysis of how we were building that from 2023 to 2024 results, and then 2025 results and kind of shows how we're how we're positioning ourselves on that, you know, we're looking to deliver it.

Speaker Change: And then also taking a look at it from single family rentals, we love to get to that close to 100 homes over that period of time.

Speaker Change: And then translating that into really what we think that outlook does for the company and so this show that a little bit of a trending analysis of how we were building that from 2023 to 2024 results and then 2025 results and kind of shows how we're how we're positioning ourselves on that we're.

Speaker Change: Looking to deliver pretty close I'd say within within a short part of what that 2025 guidance was looking like that.

Mark Harding: pretty close, I'd say, you know, within a short putt of what that 2025 guidance was looking like. That will depend on, you know, kind of the home builders coming and particularly closing on the last balance of those lots on the end of August, and then what it looks like in that kind of short-term area where we can continue to build out some of that residential. We're going to complete that interchange and then take a look at some of the entry of some of the commercial in there. So that kind of gives you a little bit of a projection of how that translates into the balance sheet in terms of revenues, as well as earnings per share.

Speaker Change: That will depend on kind of the homebuilders coming in and particularly closing on the last balance of those loss on the end of August and then what it looks like in that kind of short term area, where we can continue to.

Speaker Change: Build out some of that residential we're going to complete that interchange and then take a look at some of the entry of some of the commercial in there. So that kind of gives you a little bit of a.

Speaker Change: Our projection of how that translates into the balance sheet in terms of revenues as well as earnings per share.

Mark Harding: And then, you know, how that drives shareholder value. So continuing to kind of highlight those in terms of the water revenue, this is the recurring revenue side of it, and then the single family rental revenues, and then asset growth through that showing that, you know, build out of Sky Ranch. So, you know, one of the secrets to the company continues to be the hidden value, the stored value, and these highly appreciated assets that the company has been able to acquire over the years, both in terms of the water assets, as well as the land assets that we have.

Speaker Change: And then how that drives shareholder value so continuing to kind of highlight those in terms of.

Speaker Change: The water revenue. This is the recurring revenue side of it and then the single family rental revenues and then asset growth through that showing that build out of Sky ranch. So.

Speaker Change: One of the one of the secrets to the company continues to be the hidden value of the stored value and these are these highly appreciated assets that the company has been able to acquire over the years. Both in terms of the water assets as well as the land assets that we have and whether we're serving land interests, where we're the developer.

Mark Harding: And whether we're serving land interests where we're the developer, or whether we're serving land interests where others are the developer, or in our service area on the Lowry property, you know, it continues to build value and really deliver results for housing in the Denver market.

Speaker Change: But whether we're serving land interests, where others are the developer or in our service area on the Lowry property.

Speaker Change: 10 years to build value and really deliver results for housing in the Denver market.

Mark Harding: reallocation of capital for, we continue to repurchase shares, probably a little bit lighter in Q3, mostly just conserving that cash for making sure that we're delivering that for our business model, but we continue to really be in the market to repurchase shares on a programmatic basis.

Speaker Change: Reallocation of capital for we continue to repurchase shares.

Speaker Change: Probably a little bit lighter in Q3, mostly just.

Speaker Change: Conserving that cash for making sure that we're delivering that for our business model, but we continue to really be in the market to repurchase shares on a programmatic basis.

Mark Harding: So with that, what I'm going to do is remind everybody, if you're registered, we have both a physical tour where we'll actually drive around and show you some of the phases that we're doing, you know, kind of where the market's at in Colorado, some of the water assets that we have. So there'll be that.

Speaker Change: So with that what I'm Gonna do is remind everybody. If you if you are registered.

Speaker Change: We have both a physical tour, where we will actually drive around and show you. Some of the bases that we're doing kind of where the market's at in Colorado.

Speaker Change: Some of the water assets that we have so there would be that and then.

Mark Harding: And then right around 12, I think we'll have kind of a virtual Q&A. And I know a number of folks registered for that. So that's an opportunity just to have a more fireside chat with kind of how the company's inventories are going and how the market looks. So that'll be on July 16th. If you haven't registered for that, please do so that we can make sure that we have the proper links for everybody.

Speaker Change: Right around 12, I think we will have kind of a virtual Q&A and I know a number of folks register for that so that's an opportunity just to have a more.

Speaker Change: Fireside chat with kind of how the companies.

Speaker Change: Inventories are going and how the market looks so that'll be on July 16th if you haven't registered for that please do so that we can make sure that we have the proper links for everybody, but what I'll do is I'll open it up for some Q&A and see if we can provide a little additional color.

Mark Harding: But what I'll do is I'll open it up for some Q&A and see if we can provide a little additional color. Thank you, Mark.

Operator: And just as a reminder to everybody on the call, so you do have the ability to unmute yourself. Now, if you look at the top bar and see the microphone button, you can click on that and unmute yourself and turn on your camera. If you wish, if you're on a phone, you can dial star 6 and with that, if there's any questions, we'll take those now.

Speaker Change: Thank you Mark and just as a reminder to everybody on the call. So you do have the ability to on mute yourself now if you look at the top bar and see the microphone button.

Speaker Change: You can click on that and on mute yourself and turn on your camera if you wish.

Speaker Change: If you're on a phone you can dial star six and with that if there's any questions. We'll take those now.

Unknown Attendee: Hello? Bye, Elliot.

Speaker Change: Hello.

Elliot: Hi Elliot.

Elliot Knight: Hi there, Mark, I've got a couple of questions. Pure Cycle has a couple of reservoir sites and Is anything going on with them? Has any development started on them? Um, no, not really. They certainly were a component of what we continue to do in our water utility. And so we had, we've acquired some water rights up in Weld County that we're looking to develop in concert with our surface reservoirs. You know, there's, there's some regional opportunities with the surface. Reservoirs, I would say, you know, are mostly confined to kind of partnership opportunities that we may or may not have with partners that we have with the South Metro Water Supply Authority.

Elliot: Are there Mark I've got a couple of questions.

Elliot: Yes.

Elliot: Pure cycle has a couple of rigs.

Elliot: Reservoir sites.

Elliot: And.

Elliot: Is anything going on with them.

Elliot: Development started on them.

Elliot: No not really I. They certainly were a component of what we continue to do in our water utility and so we had oh.

Elliot: We've acquired some water rights up in Weld County that we're looking to develop in concert with our surface reservoirs.

Elliot: There's some regional opportunities with the surface relevant reservoirs.

Elliot: Reservoirs I would say those are mostly confined to kind of partnership opportunities that we may or may not have with.

Elliot: Partners that we have with the south Metro water supply authority. So.

Mark Harding: So, as many of you who really drill down into the company's assets, we have, we have a water supply called the Wise Water Supply, and that's in concert with about 13 different water providers in the South Metropolitan area. And there's, there's groups and subgroups of that that look at kind of shared infrastructure where we're looking at shared infrastructure on delivering water rights that we've acquired over the last 5 to 7 years to bring that down into the reservoirs and perhaps make capacity available for other opportunities in that.

Elliot: As many of you who really drill down into the company's assets we have.

Elliot: We have a water supply called the wise water supply and that's in concert with about 13 different water providers in the south metropolitan area, and Theres groups and subgroups of that look at kind of shared infrastructure, where we're looking at shared infrastructure on delivering water rights that we've acquired.

Elliot: Over the last five to seven years to bring that down into the reservoirs and perhaps make capacity available for other opportunities in that but those are going to be long range asset. So I'd say those are going to be more build out assets that really will be consistent with.

Mark Harding: But those are going to be long range assets. So I'd say those are going to be more build out assets that really will be consistent with developing up to that 60,000 residential unit capacity. Okay. And then on slide 20, I'll... where you said it was at least looking at the map as I saw it. lower left-hand corner. And you said, this is a new parcel that is now being developed. Where will the water be obtained for that? Where's the owner going to obtain water? Great question. And I failed to mention that that particular property was annexed to the city of Aurora.

Elliot: Developing up to that 60000 residential unit capacity.

Elliot: Okay, and then on slide 20.

Elliot:

Elliot: Where you said it was at least looking at the math because I saw it.

Elliot: The lower left hand corner and you said this is a new parcel.

Elliot: Is now.

Elliot: Now being developed where we'll go more we've gotten paid.

Elliot: <unk> for that where the owner.

Elliot: Water.

Elliot: Great question.

Elliot: And I failed to mentioned that particular property was annex to the city of Aurora.

Mark Harding: as long as 20 years ago. So it's been in that utility service area. So they'll get their water from the city of Aurora. But, you know, as you can see, it really does surround the Lowry property. And that's a, you know, beautiful people project that those are going to be, you know, those are not entry level homes, I guess, let me put it that way. But, you know, terrific vistas out there, they sit high, they're going to look out over the Aurora Reservoir, which is owned by the city of Aurora, as well as one of the reservoirs that we have, that we'll ultimately build.

Elliot: As long as 20 years ago. So it has been in that.

Elliot: Utility service area, so they'll get their water from the city of Aurora, but as you can see really does surround the valery property and that's a you know.

Elliot: Beautiful people project that those are going to be you know those are not entry level homes I guess, let me put it that way.

Elliot: But.

Elliot: Terrific.

Elliot: This goes out there they sit high they're going to look out over.

Elliot: The Aurora reservoir, which is owned by the city of Aurora as well as one of the reservoirs that we have that will ultimately bell. So it's a it's a really exciting project to see it get started but.

Mark Harding: So it's a really exciting project to see get started. But it is in the city of Aurora.

Elliot: It is in the city of Aurora.

Unknown Attendee: And actually one one other question in the 10k that was filed.

Elliot: Alright, it actually one one other question in the 10-K that was filed.

Elliot Knight: I noticed the footnote that there's something over 1000 acre feet of water that I guess is you're trying to have permitted and it was turned down. which is negotiating with people. Yes, there how much water is involved? And when do you think that might be resolved? So that, you know, we were applying for a new water right there. and so.

Elliot: I noticed a footnote that there something over 1000 acre feet of water.

Elliot: I guess, yes, sure try to have her better.

Elliot: Oh.

Elliot: And it was turned down.

Elliot: Because it goes everywhere people.

Yes, that's fair how much water is involved and when do you think that might be resolved.

Elliot: So that we.

Elliot: We were applying for a new water right there.

Elliot: So.

Mark Harding: Water, you know, it just it continues to get more and more challenging to develop water resources. We were doing a new water right that was allowing us to take some more water out of the Box Elder Creek, which flows through the Lowry Range and augment that farther up north with some of the supplies that we've acquired up in the Welk County area. And it was a very complicated exchange. And we did not prevail on that. But we had three other claims that were in there. And so that was held in suspension. And we've been working with the groups that were opposing what we were doing on Box Elder to try and find a resolution to that.

Elliot: Water. It just it continues to get more and more challenging to develop water resources, we were doing a new water right that was allowing us to take some more water out of the box elder Greek which flows through the Lowry range and augment that.

Elliot: Further up north with some of the supplies that we've acquired up in the Weld County area and it was a very complicated exchange and so we did not prevail on that but we had other we had three other claims that were in there.

Elliot: So that would that was held in suspension and we've been working with the groups that were opposing what we were doing on box elder to try and find a resolution to that I think.

Mark Harding: I think there's a path forward for both us and them, so that they get some interesting things that are helpful for their systems. We get the things that we were looking for. But we'll wait to see how that plays out. Okay, it's a work in progress. It is a work in progress.

Elliot: I think there is a path forward for both us and them so that they get some interesting things that are helpful for their systems, we get the things that we were looking for but we'll.

Elliot: We'll wait till see how that plays out.

Elliot: It's a work in progress.

Work in progress.

Elliot Knight: Thank you. You bet.

Elliot: Thank you.

Elliot: You bet.

Operator: Just a reminder, if you have a question, go ahead and hit the mic button to unmute yourself.

Elliot: Just a reminder, if you have a question go ahead and hit the button on mute yourself.

Mark Harding: Well, it must be an early morning presentation. If we have no other folks that want to weigh in on any of the specific color. I do know we do have a number of folks that have registered for the Investor Day, and then we'll have another opportunity as all of you digest our earnings call here and in our presentation, that that may trigger some more questions next week. So we do have a number of opportunities to weigh in, and don't hesitate to give me a call directly. You know, we want to make sure that everybody gets an opportunity to understand the company.

Elliot: But must be an early morning presentation.

Elliot: Okay.

Elliot: If we have no other.

Elliot: Folks that.

Elliot: I want to weigh in on any of the specific color I do know we do have a number of folks that have registered for the investor day.

Elliot: And then we will have another opportunity as all of you Digest.

Elliot: Our earnings.

Elliot: Paul here and in our presentation that that may that may trigger some more questions next week. So we do have a.

Elliot: A number of opportunities to weigh in and don't hesitate to give me a call directly.

Elliot: We want to make sure that everybody gets an opportunity to understand.

Elliot: The company.

Mark Harding: You know, we're well positioned for some significantly valuable assets and really investing to monetize those assets. And as I keep mentioning, you know, I think our business model really shines. It shines not only with how we are delivering what is a truly difficult product, right? You have to, we're spending, you know, 80, $90,000 to deliver these lots. And, you know, you want to make sure that that cycle matches demand and how that works. And so when. When a lot of that infrastructure is in place, the water system, the wastewater system, making sure that, you know, we have the ability to dial that up, dial that down for customers like oil and gas customers that can be cyclical.

We are well positioned for some significantly valuable assets and really investing to monetize those assets and as I keep mentioning I think our business model really shines.

Elliot: <unk> not only with how we are delivering what is a truly difficult product right. You have to yeah, we're spending 80 $90000 to deliver these lots.

Elliot: And you want to make sure that that cycle matches demand and and how that works and so when.

Elliot: A lot of that infrastructure is in place the water system. The wastewater system, making sure that we have the ability to dial that up dial that down for customers like oil and gas customers that that can be cyclical.

Mark Harding: And, you know, there can be a lot of activity going on in one given year. There can be, you know, years where you have a little less activity. And so our ability to float with those big, big accounts like that is truly unique. And we're well served in being able to add capacity. We don't overextend ourselves on those areas. And then we really look for opportunities to continue to deploy that capital to continue to grow the company. So I think we're, you know, this is a terrific illustration of the flexibility of how we manage these highly valuable assets and long term assets.

Elliot: And that can be a lot of activity going on in one given year there can be.

Elliot: Years, where you have a little less activity and so our ability to float with those big Big accounts like that is truly unique and we are well served and being able to add capacity. We don't we don't overextend ourselves on those areas and then we really look for opportunities to continue to.

Elliot: Deploy that capital to continue to grow the company so.

Elliot: This is a this is a terrific.

Elliot: Illustration of the flexibility of how we manage these these highly valuable assets and long term asset sales.

Mark Harding: So if anything comes up, don't hesitate just to give me a holler or weigh in on our call or on our chat, fireside chat next week. But I'll give you all a last call for ringing in on today's call. Okay.

Elliot: If anything comes up don't hesitate to give me a holler or weigh in on our call are on our our chat fireside chat next week.

Elliot: But.

Elliot: Well I'll give you all a last call for.

Elliot: Ringing in on todays call.

Elliot: Okay.

Mark Harding: Well, with that, I will bid you all a continued healthy and prosperous summer. Get out and have some fun and look forward to seeing all of those of you that registered next week. So with that, take care and we will be speaking soon.

Elliot: Well with that I will bid you all a continued healthy and prosperous summer get out and have some fun and.

Elliot: Look forward to seeing all of those of you that are registered next week, so with that take care and we.

Elliot: We will be speaking soon.

Operator: The meeting will start shortly.

Elliot: The meeting will start shortly you are not allowed to on mute. This meeting is no longer being transcribed. This meeting is no longer being recorded.

Operator: You are not allowed to unmute.

Operator: This meeting is no longer being transcribed.

Operator: This meeting is no longer being recorded.