Q4 2025 Pure Cycle Corp Earnings Call

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Hey, good morning, everyone and welcome to peer cycles year end Investor presentation. If you. Please mute your line is Mark Harding goes through the presentation and then at the end, we'll we have a video and then we'll open it up to Q&A, so with that I'll hand, it off to Mark Hardy. Thank you. Thank you Mark a welcome everyone.

We're delighted to share with you our fiscal 2025 earnings presentation. This morning.

With me today is our CFO, Mark Thies Alley, and our controller Serena Finnegan. So if you have any tough questions. We'll have them help weigh in on the AR on the answers for all of that but.

We really are excited to give you kind of some insights as to how we were working through the fiscal year and it's been an exciting year and a couple of fronts that will detail. Our first I wanted to get the lawyers out of the room and remind everybody that this presentation includes forward looking statements I'm pretty sure you're all familiar with the forward looking statement.

And that's so with that we'll get to highlighting the important thing. The most important thing is I get the privilege of working with just an outstanding team of professionals.

Mark together with Serena and then you know those spoke about their kind of grind out day in and day out to make sure that our we stay on track and really have a good customer experience in all three of our business segments. So great to work with them and then al just to remind everybody that we punch above our weight.

It's with our advisers and our board of directors, we've got a great team.

Our highly experienced and specialized boards of directors that continues to really emphasize you know how our best in class performance is for each of our business segments. So we're privileged to work with a great team and and you from a shareholder standpoint should get a lot of comfort as.

Two the continuity and really the the caliber of the company's management and directors.

Let me.

Start out with kind of some of the themes for this presentation and I'd say you know continued profitability you know what you've got 25 straight quarters of profitability and in this quarter and this year is no different.

Really continued growth in each of the revenue segments are especially in the recurring revenue segment and that's really one of the most important components of what it is that we're doing building a stable earnings from both water and wastewater our land development aside our rental income from our single family home So terrific.

<unk> growth in that.

Also you know in our land development resiliency, our business model and when you see a changing market dynamics as we've seen this year. You know you you stress test your business model and one of the things that we're gonna highlight is kind of the flexibility of our business model to be able to risk on risk off turn the.

Volume up turn the volume down to really match, our customers' needs in that segment and that's the most that's the highest delivery segment for that so that flexibility continues to demonstrate its a its use and its resiliency in our business model and then.

Our capital position and liquidity continued strong stewardship of shareholder capital. So we'll continue to emphasize those positions and make sure that you know we have a solid foundation for delivering results year over year.

Okay with that.

Dive right into the Q4 results and as all of you know our Q4 is typically our strongest quarter and that that has a lot to do with seasonality and really how we deliver because of the or weather conditions here in Colorado.

Concrete and asphalt paving really do cycle themselves into making sure that you get that down before winter season.

Perfect cycling would be kind of Q1 at end of November, but our our yearend happens to be end of August so sometimes that works to our advantage, sometimes things spillover from year over year.

So revenue for Q4 again, it was our highest quarter slightly slightly down mostly due to the housing headwinds in pushing some of that revenue recognition from a percent completion into Q1 2026, so both revenue and gross profit.

<unk> up but slightly off from what we saw in 2024.

I'm, taking a look at our net income and earnings per share again profit margins are still remaining and and really that is some of the diversity to the companys revenue streams, and we'll talk a little bit more about that but Q over Q and.

In Q4 again.

Our highest quarter and solid performance on both our net income and earnings for the quarter.

So let's take a look at kind of how that normalizes itself for the overall year end performance yearend slightly below expectations and again that was mostly due to the headwinds of housing pushing some of the percent complete and so as most of you know we operate on a percent complete because we develop lots over.

At the.

About a year's delivery schedule, sometimes that works within our fiscal year, sometimes that carries over and last summer I think what we look to do is really dial up some of those deliveries. So we had as many as three different phases of our land development going on at the same time delivering what.

What we were looking for in 2024, and then having.

Two phases in 2025 and spilling over into 2026 delivering at the same time so.

<unk> strong results again, but slightly below expectations on revenue and gross profit.

But then moving into kind of the thing that matters. The most.

Our net income and earnings per share, which actually exceeded our expectation. So again. The most important metric is earnings per share slightly above what our forecast was and that's largely due to oil and gas royalty income coming in.

A much stronger than projected and the reason for that was we had the completion of an additional seven six or seven wells into the largest portion of our royalty of states.

And those wells came online and started producing in 2025 and that really did exceed that expectation. We knew that those were there, but you never have clear visibility as to the price of oil and then how that's going to result in an and so.

One of the things that we continue to show us that diversity of revenues to the company, where we have multiple shots on goal here and are able to drive revenue and earnings from our assets in a number of different ways.

Let me let me go over kind of the earnings bridge of water that are where the.

Headwinds and <unk>.

<unk> came in from each of the revenue sources. So our forecasted net income was right around $12 five.

Slightly lower revenue from our land development segment and that wasn't that we lost that revenue was really more of that it was pushing into 2026. Some of that was Q1 'twenty 'twenty six but.

That's going to be in the first half of 2026.

Slightly higher cost of revenue and that's really driven by a little bit by tariffs a little bit by inflation. So.

So we saw a little bit of a slightly higher costs on that but then lower G&A expenses. So those things that we can control.

Particularly when we have a headwind type environment, we pay a lot of attention to SG&A and then were given a little bit of tailwind from royalties on the oil and gas to allow us to bring that net income.

I mean, uh, let me go over kind of the earnings Bridge of where that uh where the the headwinds and and and um Tailwind came in from each of the revenue sources. So our forecasted net income was right around 12.5. Uh slightly lower revenue from our Land Development segment and that wasn't that we lost that Revenue. It was really more of that. It was

Even not only above slightly above that forecast, but continuing to drive earnings to the company.

Want to move into kind of taken the view up a few feet and really highlight each of the business segments. So that you get a flavor for not only where our investments are going but how each of these segments are performing so in our water utility segments.

Really the main drivers there or.

Where we get our revenue from and so the recurring revenue side of it we have a little over 600 commercial connection points on their out of a total of 60000 potential given our water portfolio. So we're just getting started on that.

Industrial water sales, so water sales to oil and gas customers and then connections and that's largely driven by our Orlando element business and we'd get a tap fee revenue, it's attributable to that and then.

We we pay a lot of attention to sgna and then, uh, we're giving a little bit of Tailwind from royalties on the oil and gas to allow us to bring that net income, you know, even not only above slightly above that forecasts but uh, continuing to drive earnings to the company.

Delivering high margins there as we continue to invest year over a year into our water system and really deploy that capital that we're receiving from maybe some of the onetime sales to oil and gas to make sure that we'd get high margins and continued profitability into our chassis connections.

Want to move into kind of taking the view up a few feet and really highlight each of the business segments. So that you get a flavor for not only where our investments are going, but how each of these segments are performed. So, in our water utility segments, um, really the main drivers there are

If you look at kind of how that portfolio.

Our water portfolio performs.

We've talked about this a number of times, we believe we can serve 60000 connections probably.

It can be a little bit stronger than that given.

The trending in the amount in water consumption per single family equivalent, but we continue to really pace our guidance on this at 60000 connections and as most.

Most of you know who are familiar with the company we get two fee income from that we get a large upfront capital fee component in our tap fees now are combined water and wastewater tap fees are right around that $40000. Mark. So those continue to grow and appreciate based on the scarcity value of water and the cost of Incrementals.

where we get our revenue from. And so the recurring Revenue side of it, we have a little over 1600, uh, commercial connection points on their out of a total of 60,000 potential, given our water portfolio. So we're just getting started on that, uh, industrial water sales, so water sales to oil and gas customers, uh, and then connections and that's largely driven by Our Land Development business and we get tap fee, revenue attributable for that. And you know, delivering High margins there as we continue to invest year-over-year into our water system and and really deploy that Capital that we're receiving from maybe some of the 1-time sales to oil and gas, to make sure that we get high margins and continued profitability into our tapi connections.

Delivering those supplies, which are farther and farther out and harder and harder to bring onboard and then annual revenues in our annual revenues are pretty consistent we're probably growing that a bit that's about $600 per connection per year and so when you take a look at that.

Connection of 60000, that's about $2 $5 billion worth of topline revenue process about $1 billion to build that full system over time.

And then our connections year over year revenue. So overall, we're still.

Very small fraction of our total capacity.

Little over two 5%.

We're really deploying dependent compared to our capital and our capacity and then the production year over year, we continue to invest in that system. We.

If you look at kind of how that portfolio, um, our water portfolio performs. Um, we've talked about this, uh, a number of times, we believe we can serve 60,000 connections. Probably, uh, can be a little bit stronger than that given, um, the trending in the amount and water consumption per single family equivalent, but we continue to really Pace our guidance on this at, uh, 60,000 connections. And as most of, you know, who are familiar with the company we get 2 feeding from from that we get a large 1 up front, Capital fee component and our tax fees. Now are combined Water and Wastewater. Tap fees are right around that $40,000 Mark so those continue to grow and appreciate based on the scarcity value of water, and the cost of incrementally delivering those supplies, which are farther and farther out and harder and harder to to bring on board and then annual revenues and our annual revenues are pretty consistent. We're probably growing that a bit that's

We had a pretty light year, which we knew that was a forecastable.

GAAP in oil and gas deliveries. So we still have plenty of pedal on what we've developed in our production capacity to deliver that water as that water increases and we'd look to see a bit of increase in that in 2026.

About 1600 per connection uh, per year. And so when you take a look at that, you know, the the connection of 60,000 that's about 2 and a half billion dollars worth of Topline Revenue costs about a billion dollars to build that full system over time.

Has that applies to kind of fiscal year ends year over year really the interesting thing about the water side is some of the diversity and the mix of customers. When you take a look at that we're sort of looking at the domestic customers, which is that dark blue and that'll be what we're delivering to that 1600 can.

<unk> year over year, some of the oil and gas deliveries and then that's happy deliveries, which are attributable to Orlando elements segment, and so while our overall revenues stay in line the mix of that as you can see between year over year.

And then uh our connections year-over-year Revenue. So overall we're still very small fraction of our, our total capacity, you know, close a little over 2 and a half percent uh of what we're really deploying, depending compared to our Capital, uh and our capacity. And then the production year-over-year we continue to invest in that system. Uh, we had a pretty light year which we knew that was a forecast, uh, Gap in oil and gas delivery. So we still have plenty of pedal on what we've developed in our production capacity to deliver that water as that water uh increases and we look to see a bit of increase in that in 2026.

He is variable and so youre going to see.

Diversity, there that allows us to kind of continue to grow that asset base not only from the recurring standpoint, but also in capitalizing on other business segments and being able to put some of that idle capacity to use either through oil and gas or in the development side and then a good customer growth again, we got about a 22.

Percent CAGR on a customer grows so we continue to really.

Leverage out building that.

Recurring in perpetual customer growth in the recurring revenue side.

Just a small snapshot.

A snapshot of the oil and gas side.

Did no excuse me we.

Has that applies to kind of fiscal year ends year-over-year. Um really the interesting thing about uh the Water side is some of the diversity in the mix of customers. Uh when you take a look at that we're sort of looking at the domestic customers which is that dark blue and and that'll be what we're delivering to that 1600 connections year-over-year, some of the oil and gas deliveries and then the Taffy deliveries, which are attributable to our land of element segment. And so while our overall revenues stay in line, the mix of that as you can see between year-over-year um is variable and and so you're going to see, you know uh diversity there, that allows us to kind of continue to grow that asset.

We did have a forecastable decline for oil and gas deliveries in 2025 and that was largely due to a strong push of permitting oil and gas wells on the Lowry ranch in our service area.

Oil and gas operators have close to 200 permits.

Now that they're actually drilling so we have a drill rig that is for.

For the time being committed to drilling nothing but pad sites on the Lowry ranch.

Set base, not only from the recurring standpoint, but also in capitalizing on other business segments, and being able to put some of that idle capacity to use either through oil and gas or in the development side and then, uh, good customer growth. Again, we got about a 22% Kar on our customer growth. So we continue to really, uh, leverage out building that, uh, recurring and and Perpetual customer growth in the recurring Revenue side.

And so we do see.

For 2026, a significant increase in oil and gas deliveries for that segment. So you'll look forward to seeing some of that action in 2026.

Uh, just a small uh, snapshot of the oil and gas side. Um did not excuse me.

Let me move over to the land development segment.

Yeah.

Taking a look at each of the phases of that.

One of the carryover is on phase to see so we did deliver the 228 lots of phase III C that we had forecasted for 2025, and we had a small about 800 grand of deferred revenues that spilled over into Q1 and that was a function of sort of the.

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The regulatory climate and permitting and getting some what templates on some of the lots that we had for one of our builders, but that did come in in Q1.

A strong push of Permitting oil and gas Wells on the Lowry Ranch in our service area, and oil and gas operators, have close to 200 permits, uh, now that they're actually drilling. So we have a drill rig that is, uh, for the time being committed to drilling nothing but pad sites on the Lowry Ranch. Um, and so we do see, uh, for 2026 a significant increase in oil and gas deliveries for that segment. So you'll look forward to seeing some of that action in 2026.

Let me move over to the Land Development segment.

Overall sales in land development, where off than from our expectations and that was largely attributable to some of the headwinds that we're seeing in housing and really trying to.

Provide that customer service to our homebuilders and making sure that we're pairing inventories at appropriate levels, where we're not over investing in roads, curbs and gutters and theyre not inventory finished lots beyond sort of those annual increments that we like to deliver them to and they like to receive them.

Taking a look at 2026 were working on completing phase two D and so we'll see where about 43% on that so that was some of the Rev. Rec in 2025, but you'll see the completion of that rolling into 2026, and then visibility from there taking a look at not only two D but to eat.

Pegging a look at each of the phases of that, uh, 1 of the carryovers on phase 2C. So we did deliver, the 228 lots of phase 2C. That we had forecasted for uh 2025 and we had a small about, you know, 800 Grand of deferred revenues that spilled over into q1. And that was a, a function of sort of the um, the regulatory climate and permitting and, and getting some lot templates on. Uh, some of the lots that we had for 1 of our Builders. Uh, but that did come in in q1.

Which is going to be the next phase.

On the land development side. This is kind of a breakout of which phase is contributing to the revenue streams.

As we had this phase two we sub phase that out we initially had that sub base into four sub phases, but we were able to add a fifth one with that with this two <unk>, but it really does show you that that bulk of twenty-five deliveries less than phase to see in some of those forecastable revenues that we had that we were able.

Overall sales and Land Development were off, then from our expectations and that was largely attributable to some of the headwinds that we're seeing in housing and really trying to provide that that that customer service to our homebuilders and making sure that we're pairing inventories out of proprietary levels where we're not over investing in roads, curbs and gutters and they're not inventorying finished, Lots Beyond sort of those annual increments that we like to deliver them to and they like to receive in.

To dial down just a bit because of the housing headwinds will push into the first half of phase twos too deep on that and so it gives you kind of the total land development revenues and how those are occurring.

Uh, taking a look at 2026. We're working on completing phase 2D and so we'll see. We're about 43% on that. So that was some of the red wreck uh, in 2025 but you'll see the completion of that rolling into 2026. Uh, and then visibility from there, uh, taking a look at not only 2D but 2E, which is going to be the next phase.

For the trailing three fiscal years.

So it kind of gives you a profile of some of the development in and really how that's maturing and you're seeing.

This slide where we're carrying it forward on not only the land development side, but then kind of how that vertically integrates ourselves into the water side from the tap fees.

We haven't fully.

<unk> received all of the southeast from Phase two b. So we still have some contribution on those from those deliveries which were in 2024 that'll come in in 2006, and then taking a look at to see in two D. On the tap fees for that and then also single family rentals and last year was a bit of a struggle for us.

On the land development side, this is kind of a breakout of which phase is contributing to the revenue streams. Um, as as we had this Phase 2, we sub-phase that out. We initially had that subbase into 4 sub-phases. But we were able to add a fifth 1 with that with this 2 e, but it really does show you, you know, that that bulk of 25 deliveries was from phase 2C and some of those uh, forecast revenues that we had that we were able to dial down just a bit because of the housing headwinds, we'll push into the

the first half of phase, 2 2 deep on that and so gives you kind of the total land development revenues and how those occurring uh for the trailing 3, fiscal years

Single family rentals again, another regulatory issue for us as the county, which is our jurisdiction updated their building codes and really had.

Difficult time processing homebuilder permits on that and so we're through that phase.

Most of our homebuilders have got what we call Masters approve so each housing plan will be approved and then they can build that same house different elevations. So that they change the look of that but.

So kind of gives you a profile of some of the development and and really how that's maturing and you're seeing uh this slide where we're carrying it Forward on, not only the land of element side, but then kind of how that vertically integrates ourselves into the water side from the tap fees. Uh, you know, we have fully, uh, uh, received all the tapes from phase 2B. So we still have some contribution on those from those deliveries which were in 2024. That'll come in in 26.

The building departments approval of that master allows them to build that on any number of different lots and so each of our builders have got their masters approves, we still accelerate into our single family rentals. So youll see a substantial increase in the number of single family rentals in 2026 and <unk>.

Through 2027, I'll highlight a little bit more of that later.

But I wanted to do is this this'll help illustrate kind of how our percent completion works and most of our builder contracts are structured in a slow funding agreement, where we get paid in three installments, we get paid once we do the plan, which is a recordable.

And then taking a look at 2 C and 2 D on the top piece for that and then also single family rentals. And and last year was a bit of a struggle for us on single family rentals. Again, another regulatory issue for us as the county, which is our jurisdiction, updated their building codes and really had, uh, a a, a difficult time. Processing home builder, permits on that. And so, we're through that phase. Um, most of our home builders, uh, have got what we call Masters uh approved. So each housing plan will be approved and then they can build that same house, different elevations, so that they change the look of that. But the building departments approval of

<unk> property interest to an individual lots of paper a lot, but it is that they own that address lot.

And then we use those funds.

To be able to really do the land development side. So we're really working in partnership with our homebuilder partners to be able to deliver these on a real time basis as we complete the wet utilities, which includes the overlap grading and over exploration for the soils then we make that second payment and then as we.

That master allows them to build that on any number of different lots. And so, each of our builders has got their masters approved, which they'll accelerate into our single-family rentals. So, you'll see a substantial increase in the number of single-family rentals in 2026, and into 2027. I'll highlight a little bit more of that later.

What I wanted to do is this. This will help illustrate kind of.

The roads curbs and gutters, we get that finished lot payment and so this kind of shows you some of the timing of how those how those payments go and really that work product over the POC and sometimes those will stay in quarters, sometimes they'll spans yearend and when you take a look at delivering each of these individual increments of what's it's not.

Once we do the plat, which is a recordable property interest to an individual lot, it's a paper lot. Um, but it, it is that they own that address lot.

Always clean enough to deliver in one fiscal year, but it does deliver in eight and at year may be 12 month period as opposed to matching with our fiscal year, but that kind of gives you an illustration of how some of that.

How we can dial up and dial down to the market depending on how the strength of that market goes.

This is kind of the location of where our next phase is going to be so it's going to be directly across that phase III E and thats about another 150 lots that'll be directly across from the high school. The important component of this is we're really almost complete with most.

Of the major infrastructure on that the roadways, where complete percentage of some of the other phases. So this should be a high a high margin area because most of the off sites in and Arterials are all completed and the roadways are completed the water sewer all that system expansions are already too.

And then we use those funds to be able to really do the land development side. So, we're really working in a partnership with our home builder Partners to be able to deliver these on a real-time basis. As we complete, the wet utilities, which includes the overlap grading and the, uh, over execution for the soils, then we make that second payment. And then as we deliver the rose curbs and gutters, we get that finished spot payment. And so this kind of shows you some of the timing of how those do, how those payments go and really that work, product over the p. And sometimes those will stay in quarters. Sometimes they'll spans year in and when you take a look at, you know, delivering each of these individual increments of lots. It's not always clean enough to deliver in 1 physical year, but it does, uh, deliver in 8. And that Year may be 12 month period as opposed to matching with our fiscal year, but that kind of gives you an illustration of how some of that.

How we can dial up and dial down to the market depending on how the strength of that market goes?

This property, so that'll be a nice base for us.

One of the key milestones for 2025 was really groundbreaking for high school and as you can see from that aerial drone shot it's right adjacent to our primary school. So it's a full campus. It's a full K 12 campus.

And really excited to continue to work with the National Heritage Academy, There are charter partner and really.

That's one of the high value commodities for our development here is that we've got a full one.

<unk> K 12 campus right onsite for the development and outstanding delivery of education here at Sky Ranch. So we're very grateful for that we're very grateful for our charter, which is the better school district in a partnership with Vet School district on bringing bringing this.

Um, this is kind of a location of where our next phase is going to be, so it's going to be directly across that Phase 2 e. Uh, and that's about another 150 Lots, that'll be directly across from the high school. The important component of this is we're really almost uh, complete with most of the major infrastructure on that. The roadways were complete pursuant to some of the other phases. So this should be a, a high high margin area because most of the offsites and, and arterioles are all completed in the roadways are completed. The water sewer, all that, uh, system expansions are already to this property, so that'll be a nice uh, phase for us.

Yes.

Education system to Sky Ranch.

I continue to want to kind of illustrate our service area and kind of where Sky ranch is in the metropolitan area and so the.

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Map on the right here the black line at the top of that really is the I 70 corridor and Sky Ranch is the development in the blue there in that kind of illustrates really where we are.

Uh, one of the key milestones for 2025 was really groundbreaking for high school, uh, and as you can see from that aerial drone shot, it's right adjacent to our primary school. So it's a full campus. It's a full K-12 campus, uh, and I'm really excited to continue to work with the National Heritage Academy, our charter partner, uh, and really, uh, that's one of the high value, uh, commodities for our development here is that we've got a full walkable K-12 campus right on site for the development. And now standing delivery of education here at Skye Ranch. So we're very grateful for that. We're very grateful for our charter.

We talk often about the fact that the Denver really situates itself on kind of an ocean like framework, because we can't grow west and so all the growth is concentrated to the eastern plains area and really our assets, whether it's our land development assets. Our service area are located in the.

which is the Bennett School District, and our partnership with Venice School District on bringing, uh, bringing this uh, this

Education system to Sky Ranch.

The most ideal.

Section of the Denver Metropolitan area, and the aerial to the right really kind of shows the encroachment of development on our service area. This is owned by the state of Colorado in its development and its revenue opportunities really benefit the.

Uh I continue to want to kind of illustrate our service area and and kind of where Sky Ranch is in the metropolitan area. And so the the the map on the right here, the black line at the top of that really is the I70 corridor.

Education system here in Colorado, the K 12 education system, but you can continue to see all of the development that's that surrounds the surface area for that so our assets are ideally positioned in the right location and we continue to really look forward to how these will grow and monetize.

Over time, both for the state land board as well as <unk>.

Expand our systems.

As I mentioned, we want to talk a little bit about single family rentals and so this kind of illustrates.

Where that portfolio of single family rentals are a.

That two phase.

Hey, sorry phase two a really was where we had the 14 units we have about four units in filing one, but then 10 units in a and really the acceleration of how D. C D and E are going to add to the portfolio and so.

And Sky Ranch is the the development in the blue there. And that kind of illustrates really where we are. You know, we we talked often about the fact that that that Denver really situates itself on kind of an ocean like framework because we can't grow West. And so, all the growth is concentrated to the Eastern Front Plains area and really our assets. Whether it's our Land Development assets, our service area are located in the most ideal, uh, section of the Denver, metropolitan area. And and uh, the aerial to the right really kind of shows the encroachment of development on our service area this is owned by the state of Colorado and it its development and its uh Revenue opportunities really benefit the the education system here in Colorado, the K through 12 education system, but you can continue to see all of the development that's that surrounds the service area for that.

With that bit of a delay because of the.

The building code upgrade we have about 40 homes under contract now that.

So our assets are ideally positioned in the right location and, and we continue to really look forward to how these will will grow and monetize over time, both for the state land board, as well as, uh, expand our systems.

We're delivering from several of our homebuilders and what we've tried to do is pace that out so that they can deliver those on five units a month.

Five units delivered in Q1 of 2026 and of the deliveries that was delivered in late October I think we've got three of those leased two of them are on the market, but we're continuing to show strength in the rental market on single family rentals, and then those will phase out and deliver those units through fiscal 2000.

26 <unk>.

Steady rental income stream from that and we really like that asset light depreciation model, where we can lever up the vertical costs of that and continue to keep our balance sheet clean and strong. So this is what youre going to see in 2026 and the real story for performance on 2026 is continued pacing with our land.

Our homebuilder partners in our land segment, and then acceleration of growth in the single family rental segment.

It's a bit above the fiscal year performance year over year. So we're seeing slight increase in growth on the rents but for the most part our occupancy is very very low I think we've got a 97%.

Occupancy.

For the portfolio to date, and then continued asset appreciation and the nice thing about.

Add to the portfolio. And so, um, with that bit of a delay because of the uh the building code upgrade, we have about 40 homes under contract. Now that uh are delivering from several of our home builders. And you know what we've tried to do is paste that out so that they can deliver those on 5 Eunice a month. Um, we had 5 units delivered in q1 of 2026 and, uh, of the delivery is those delivered in late, October? I think we've got 3 of those least 2 of them are on the market. But we're continuing to show strength in the rental market, on the single family rentals, and then those will Pace out and deliver. You know, those units through fiscal 2026 uh steady rental income stream from that, we really like that uh asset light appreciation model where we can lever up the vertical costs of that and continue to keep our balance sheet clean and strong. So this is

This this segment is.

We carried forward the equity of the Lotte as well as the water utility side, and then our leveraging up the vertical costs of that and really.

What you're going to see in 2026 and the real story for performance on 2026 is continued pacing with our land, uh, our home builder partners, and our land segment, and then acceleration of growth in the single family, rental segment.

Have a nice relationship on that because we have a high loan to value ratio. There and then that asset continues to appreciate.

Gather with a market we're seeing continued growth in that not only just because of the housing growth, but also because of the continued investment that we have in the community.

It's a bit above the uh fiscal year performance year-over-year. So we're seeing, you know, slight increase in growth on the rents. Uh, but for the most part, our occupancy is very very low. I think we've got a 97%, uh, occupancy. Uh, uh,

Those are the kind of show you the growth of each of the phases and how we do that and so that phase to be where we were looking for a stronger growth in 2025 really pushed over into 2026. So we will have a bit more than 31 hours will probably have 40 homes accelerate in that area and then.

For the portfolio to date. And then continue to asset appreciation. The nice thing about, um, this uh, this segment is

And how it continues to grow from phase two b and C. So those are where we're looking for for 2006 and then continuing on through the second phase and if you take a look at this whole portfolio as it relates to the overall development, we're looking at being in that 8% to 10% of the total homes and so we have about 3000.

We carry forward the equity of the lot as well as the water utilities side and then our leveraging of the vertical cost of that. And really uh have a nice relationship on that because we have a high loan to value ratio there. And then that asset continues to appreciate uh together with the market, we're seeing continued growth in that not only just because of housing growth, but also because of the continued investment that we have in the community.

Single family equivalent.

And it's out there somewhere in that 250 to 300 pounds would be our target for this portfolio.

Talk a little bit about our stewardship of shareholder capital and our balance sheet. We continue to invest into these assets. So you'll see continued asset growth and strength to the company.

Water segment is around $68 million land development segment that continues to mature so as we're bringing assets into the portfolio. We're also taking them off our balance sheet, because we are selling them, but we continue to make sure that we maintain liquidity in it.

This is going to show you the growth of each of the phases and how we do that. And and so that phase 2B where we were looking for a stronger growth in 2025 really pushed over into 2026. So we'll have a bit more than the 31 homes. We'll probably have 40 Holmes accelerate in that area, uh, and then you know how it continues to grow from Phase 2, B and C. So, those are where we're looking for for 26 and then continuing on through the second phase and and if you take a look at this, whole portfolio, as it relates to the overall development, we're looking at being

As our capital stack goes we wanted to make sure that we're investing into monetizing. These legacy assets that we acquired over the years and really generate the high margin incomes from each of the segments and then continuing to build into our single family rental and continuing to maintain a strong.

In that 8 to 10% of the total homes. And so, if we have about 3,000, uh, single family equivalent, uh, units out there somewhere in that, 250 to 300 homes would be our Target for this portfolio.

On liquidity portfolio are really balanced out between our cash which is inclusive of restricted and unrestricted and restricted gas is really.

Just letters of credits that we have for performance to the local municipality on on the roads curbs and gutters, it's how we've warranty out those during our our one year warranty period.

And then the note receivable that we get as that comes in periodically in in sort of increments as we build assess value within the community more homes more assessed value more tax revenue that's available for us to issue bonds through the local municipality and reimburse us for all of those receivables.

Talk a little bit about uh stewardship of shareholder capital and our balance sheet. Uh you know, we continue to invest into these assets so you'll see continued asset growth and strength to the company. You know, water segments is around 68 million Land Development, you know, that continues to mature. So as we're bringing assets into the portfolio, we're also taking them off our balance sheet because we're selling them, but we continue to make sure that we maintain liquidity and I as our Capital stack goes, you know, we want to make sure that we're investing into monetizing these Legacy assets that we acquired, uh, over the years. And, and really generate the high margin incomes from each of the segments. And then, you know, continuing to build into our single family rental and continuing to maintain a strong liquidity portfolio. Uh, really balanced out between our our cache, which is inclusive of restricting and unrestricted and restricted.

And then a small amount of debt our debt is really attributable to most of the.

Single family home rental side of the business. So continued strong bal.

Balance sheet.

Capital allocation, if you take a look at.

How that composite makes itself out.

Cash and investments in the note receivable and then just growth in the infrastructure you know, making sure that our water systems continue to grow so that we can continue to add those recurring customers.

And then we continue to reinvest in ourselves.

A little more.

Our conservative in 2025, mostly because of the housing headwinds and wanting to make sure that we're pacing.

Gas is really, you know, just uh, letters of credit that we have for performance to the local municipality on, on the roads, curbs and gutters. It's, it's how we warranty out those during our, our 1-year warranty period. Uh, and then the note receivable that we get, as that comes in periodically, in, in sort of increments, as we build assessed value within the community, more homes, more assessed value, uh, more tax revenue that's available for us to issue, bonds, through the local municipality and reimburse us for all of those receivables. Uh, and then, you know, small amount of debt, or debts really attributable, to most of the, uh, single family home, rental side of the business. So continued, strong, uh, balance sheet.

Had a lot of chips on the table last summer really dialing up the absorption of our lots and we wanted to make sure that we werent.

It's pushing our homebuilder customers into a risk profile that really.

Shifted most of that from our risk to their risk. So we wanted to balance that out so we were a little bit.

A little bit more conservative than I think we would have otherwise been but we continue to reinvest in the share repurchase program.

Give you kind of a profile of how we were performing quarter over quarter in that.

And then you know the diversity I think one of the things that we wanted to continue to emphasize is the number of ways that we generate revenue from these assets whether that's on the utility segment, where we have number of segments sub segments in there whether that's the domestic side of the business or the industrial side of the business.

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Rental income revenue from our single family homes, and Youre going to see a strong acceleration of that land development and the synergies that we get on doing.

Cash in Investments and the note receivable and then just growth in the infrastructure, you know, making sure that our water systems continue to grow so that we can continue to add those recurring customers. Uh, and then, you know, we continue to reinvest in ourselves, uh, probably a little more, uh, uh, conservative, uh, in 2025 mostly because of the housing headwinds and wanting to make sure that we're pacing. Uh, we had a lot of chips on the table, uh, last summer really dialing up the absorption of our lots. And we wanted to make sure that we weren't, um, pushing our our home builder, customers into a risk profile that, that really, um, shifted most of that from our risk to their risk. So we wanted to balance that out. So we were a little bit, uh, a little bit more conservative than I think we would have otherwise been, but we continue to reinvest in the the share repurchase program.

Doing a just a fantastic job of the master planned community in adding value to the community and really partnering with our homebuilder customers and then making sure that we are good stewards.

Um, give you kind of a profile of how we were performing quarter over quarter in that.

Of your capital.

Taking a look at kind of how we see things rolling out not only this year, but then you know how it's going to roll out through our midyear forecast as well as a builder forecast I think we tried to foreshadow. Some of this last year, but 2026, if you take a look at the recurring we do.

Um and then you know, the diversity, I think 1 of the things that we want to continue to emphasize is the number of ways that we generate revenue from these assets. Whether that's on the utility segment, where we have number of segments, sub-segments in there, whether that's the domestic side of the business or the industrial side of the business. Um, rental income rental,

You have an expectation of continued recurring revenue growth not only from our water customers, but also some of our single family rental and that's going to become a bidder or <unk>.

Or component of our recurring revenue you're going to see that continue to accelerate where we're going up to one.

Revenue from our single family homes and you're going to see a strong acceleration of that uh, Land Development and the synergies that we get on, you know, doing a a just a fantastic job of the master plan community, and adding value to the community and, and really partnering with our home builder customers. And then, you know, making sure that we are good stewards of of your capital.

100 units in phase two and then maybe up as many as 250 to 300 units through build out and so that will continue to add to the asset growth. So when you take a look at.

How that translates that asset growth is a tremendous opportunity for the company.

And particularly compared to the.

The percent of each of these assets that we're currently developing and so as we can accelerate that development, we do that and we try and pace that with making sure that our inventories are appropriate.

So there's a little bit more highlight on kind of how the profitability trends from each of our business segments. The water. The land development and then also kind of continued emphasis on recurring revenues. So youll see that continued emphasis continued growth where we're looking at 2026th depending on.

On sort of these housing headwinds that might be slightly slightly down from 2025.

Um, taking a look at kind of how we see things rolling out, not only this year, uh, but then, you know, how it's going to roll out through a mid-year forecast, as well as a builder forecast. I think we tried to foreshadow some of this, uh, last year but, uh, 2026. If you take a look at, uh, the recurring. We do have an expectation of continued recurring Revenue growth. Not only from our water customers, but also some of our single family rental and that's going to become a bitter, a bigger component of our recurring Revenue, you're going to see that continue to accelerate where we're going up to, you know, 100 units, uh, in the phase 2. And then maybe up as many as 250 to 300 units, through buildout and so that'll continue to add to the asset growth. So, when you take a look at, you know, how that translates that asset growth is a tremendous opportunity for the company uh and and particularly compared to, you know, the percent of each of these assets that

We do believe we have some pedal.

In the oil and gas deliveries this year, so we'll see.

We're currently developing. And so, as as we can accelerate that development, we do that and we try and paste that with making sure that our inventories are appropriate.

How that goes we didn't want to be overly optimistic just because of the visibility of the price of oil, but we're really.

Optimistic about continued monetization and continued growth in this segment and really the transition going up to this what would be a China that change to the the monetization of these assets are we continue to pace our growth on the residential side, but moving into 2028.

With the delivery of our interchange, which we are working through on the permit process, but were fairly close of getting that finalized.

And we'll work through the financing of that through the Metro district. So we've reserved some bonding capacity in that to make sure that we have the funds that are available to bond that out in 2026 start construction of that in 2027, and then really layer in and almost double the deliveries of our Atlanta.

<unk> revenues, maintaining the same pace with our residential development, but then also delivering a like amount of equivalent lots for our commercial development and then the valuation on those commercial lots.

So, it's a little bit more highlight on, uh, kind of how the profitability trends from each of our business segments, the water, the Land Development, and then also kind of continued emphasis on recurring revenues. So, you'll see that continued growth, we're we're looking at 2026 to depending on sort of these housing, headwinds, you know, that might be slightly uh, slightly down from 2025. Um, we do believe we have some pedal in the oil and gas deliveries this year so we'll see, uh, how that goes. We didn't want to be overly optimistic just because of the visibility of the price of oil. But uh, we're we're really optimistic about continued monetization and continued growth in this segment and really the transition going up to, you know, this what would be a a tenant change to the the monetization of these assets. Are we continue to Pace our growth on the residentials?

We're forecasting that to be about two times the valuation of our residential loss. So that's the real Delta and how we look to change the composition of the land development, how we're almost doubling the Atlanta about a little more than doubling that land development revenue is because of the bringing online.

That commercial lots and that's a function of two things one is gonna be.

Rooftops most of the most of the commercial players are going to want a certain number of rooftops to be able to <unk>.

<unk> generated revenues from what their investments are going to be but then also access and making sure that we have a large volume of transportation access and really capitalizing on our location being right on the Interstate with an interchange and exit ramp right, where our project is so that's kind of how we do.

<unk> gained some leverage ability and some scale ability to the land development and the water development side of the businesses.

A lot. Uh, we're forecasting that to be about 2 times the valuation of our residential, lots. So that's the real Delta and how we look to change the composition of the Land Development. Now we're almost, you know, doubling that land about a little more than doubling that Land Development revenue is because of the

Valuation sensitivity. So 2026 gross revenue, we're going to we're going to show a range there of 26% to 30, and that's going to be a function of kind of some of that sensitivities on lot deliveries as well as some of the industrial water sales activity. So range of earnings per share that corresponds to.

That upside in the timing of acceleration is really going to be how.

How we look to deliver.

Deliver and maintain those inventories of lots so that we're not investing into that.

The bringing online that commercial, lots and, and that's a function of 2 things. 1 is going to be, um, rooftops. Most of the most of the commercial players are going to want a certain number of rooftops to be able to uh generate revenues from what their Investments are going to be. But then also access and making sure that we have uh a large volume of Transportation access and really capitalizing on our location being right on the interstate with an interchange, an exit ramp right where our project is. So that's kind of how we get gain some leverage ability, and some scalability to the Land Development and the water development side of the businesses.

The capital cost of delivering those in advance of having those deliveries for our homebuilder customers in and really we started out with delivering these this project with.

It started out with three builders for builders and now our portfolio is closer to seven builders and so each of the builders would like to maintain a year's worth of inventory, which allow us to have a bit more of an acceleration to our land development side that serves more diversity of product mix and so as the.

Evaluation sensitivities, so, 2026, gross revenue. We're going to we're going to show range there of 26 to 30 and that's going to be a function of kind of some of that sensitivities on lot deliveries as well, as some of the industrial water sales activities. So range of earnings per share that corresponds to that upside and the timing of the acceleration is really going to be you know, how we look to

Community continues to mature we look forward to continuing to serve.

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The whole portfolio of our builders.

Our short term outlook and spend a lot of time I think we've covered a lot of what this is but you know there's water segment growth, we're going to take a look at the three to five year period, where we're going to get up to about half of our total water recurring customers Sky Ranch in total will be about 5000.

Total connections so we look to see that come into about that.

2500 units land development side, we should get too we're right around that.

18% of complete so we will probably get closer to 30%. So we're looking at doubling of that.

Uh deliver and maintain those inventories of lots so that we're not investing into that. Uh, the capital cost of delivering those in advance of having uh those deliveries for our home builder customers. And and really we started out with delivering these this project with started out with 3 Builders 4 Builders and now our portfolio is closer to 7 Builders. And so each of the builders would like to maintain a Year's worth of inventory, which allow us to have a bit more of an acceleration to Our Land Development side. That serves more diversity of product mix. And so as the community continues to mature, we look forward to continuing to serve the uh the the whole portfolio of our builders

And then once we've got that commercial and play you'll see that accelerate through the longer term. So build out of Sky Ranch is in that seven to 10 year window, but in the short term, we looked at kind of getting up to about that 30% and then having a faster acceleration once we're layering into the commercial component and then single family rental.

See up to about 100 units in this short term outlook.

Longer term.

Kind of gives you a perspective of the total build out and then when you take a look at our build out potential really monetizing.

Our net revenues from land development get close to $700 million.

Uh, short-term Outlook, uh, you know, spend a lot of time. I think we've covered a lot of what this is, but, you know, water segment growth. We're going to, you know, take a look at this the the 3 to 5 year period where we're going to get up to about half of our total water recurring, customers Sky Ranch in total will be about 5,000 total connections. So we look to see that to come into about that. Uh, 2500 units, uh, Land Development side. You know, we should get to we're right around that 18% of complete. Uh, we'll probably get closer to 30%, so we're looking at doubling of that. Uh, and then once we've got that, uh, commercial in play, you'll see

And the recurring revenue is going to be around that $15 $16 million and thats really a function of kind of the you take a look at a $250 million market cap and really what we've got in production of our assets. It really is the story for US we've got a tremendous asset here.

Accelerate through the longer term. So build out a Sky Ranch is in that 7 to 10 year window. But in the short term, we look at kind of getting up to about that 30% and then having a a faster acceleration. Once we're layering into the commercial component and then single family rental, you know, we we see up to about 100 units in this short-term Outlook.

We're very we're very aggressive about making sure that we're building this thing out and monetizing it and making sure. We can do that as quickly and as profitably as we can.

So one of the things we want to do is give you a kind of a video to where here and really just kind of give you a view I'll, probably try and stop and kind of highlight a couple of the areas on there. So if we want to get that started this will be an aerial representation as you can see this is our first phase and so this was the more mature.

Side of the community it really kind of gives you a separate here.

Gives you a kind of a profile of where we're at relative the metropolitan area and the growth of the Metropolitan area you see the mountains in the background and that's what we get to wake up to every day, which is wonderful but the other key aspect here is if you see kind of at the top of the development there.

Longer term. Uh, you know this kind of gives you a total buildout and then when you take a look at our buildout potential, really monetizing, you know our our net revenues from Land Development, get close to 700 million. And you know the recurring revenue is going to be around that 15/16 million and that's really a function of kind of the, you know, you take a look at a 250 million dollar market cap and really what we've got in production of our assets, it really is the story for us. We've got a tremendous asset here. We're very, uh, you know, we're very aggressive about making sure that we're building this thing out and monetizing it. And and, and making sure we can do that as quickly. And as profitably as we can.

To illustrate I don't know if you could see the cursor, where our wastewater treatment plant is.

Right, there and really that's.

Our unique assets in and of itself because 100% of the water that comes from our community is treated and reuse thing. So you don't see any stream. That's discharged two that we bring that back we use 100% of that water supply either through year gating, our open space, which you can see.

Our beautiful open space here for our community or taking that back and selling that to our individual customers.

If you continue on on that you'll see because it's Pat.

Panoramic view kind of the continued growth will stop it right here in this kind of gives you a perspective of really the deliveries of the phases of the land development segment.

Right to the left there where the cursor as that was phase two eight and that delivered in 2020.

Three and then to that the next side that's to be and then what we delivered in 2026 was to see you can see the roads finished lots you can see some vertical homes just starting in that from one of our new builders.

You can see the cursor where our wastewater treatment plant is uh right there and and really that's uh a unique asset in and of itself because 100% of the water that comes from our community is treated and reused. And so you don't see any stream that's discharged to that we bring that back, we reuse 100% of that water supply, either through irrigating our open space, which you can see our beautiful open space here for our community or taking that back and selling that to our individual customers.

Those are Taylor Morrison lots in there and then you can kind of see two D. Under construction, where we're really starting we're finishing up the wet utilities, there and we'll be moving into roads curbs and gutters on that.

Continuing on we will see kind of that all the land and you can see that.

So if you continue on on that, you'll see. So panoramic view of kind of the continued growth. We'll stop it right here and this kind of gives you a perspective of really the deliveries of the phases of the Land Development segment. Uh right to the left there, where the cursor is that was Phase 2 a and that delivered in 2020.

Thats farm there that continues to be our portfolio. So that's the continued growth of.

The project and so that'll be our build out plenty of inventory of land that we have on the residential side. So that will continue to grow on the residential side.

And then you can kind of get a perspective of.

How our infrastructure there we've got most of the main road ways.

Well, that's the Boulevard area.

The cursor is that's kind of the oil and gas.

3. And then to that the next side that's 2B. And then what we delivered in 2026 was 2C, you can see the roads finished Lots. You can see some vertical homes. Just starting in that from 1 of our new Builders. Uh, I think those are Taylor Morrison Lots in there and then you can kind of see 2D under construction where we're really starting. We're finishing up the wet utilities there and we'll be moving into uh Rose curbs and gutters on that.

And that we bring all our water are treated water back to that reservoir there at the top and that maintains the flow for our irrigation system and those are kind of some of our oil and gas wells that we have in the site. So Colorado has a rich history of coexisting with the oil and gas and residential and commercial development.

We can see kind of rolling into phase III E. There right next to us.

To eat rolling right.

Yeah, we're good there.

Roll right into there and that's our water tank, but thats phase III V will be between our water tank in the school that gives you kind of a sense of there is a primary school and then the construction of the high school and that kind of shows you. You know we got most of the road network developed for that we'll have a little bit of extension on the road up.

Through the high school and continuation of one of the boulevards.

Continuing on, we'll see kind of that all the land, you can see that. That's that's that's that's Farm there. That continues to be our portfolio. So that's the continued growth of the project. And so that'll be our buildout plenty of inventory of land that we have on the residential side. So that'll continue to grow and the residential side. Um, and then you can kind of get a prospective of, you know, how our infrastructure is there. We've got most of the main roadways developed, that's the boulevard area, stop where the cursor is, that's kind of the oil and gas. Um, and that we bring all our water, our treated water back to that Reservoir there at the top and that's maintains the flow for our irrigation system. And and those are kind of some of our oil and gas Wells that we have in the site. So Colorado has a rich history of coexisting with the oil and gas and residential and Commercial development.

And so there's kind of gives you.

Good feel for you know that campus is right in the middle of where we're looking to go right in the middle of all of Sky Ranch.

We can see kind of rolling into phase 2. E there, right next to, oh,

2 E rolling, right?

Yeah, we're good. There.

There you go.

So really accessible for all the students.

Be able to walk there. This is kind of a view of the commercial area right. So we're really flying into that 150 acres, which is adjacent to the Interstate it gives you a strong <unk>.

So follow what the transportation access is in and the value of that transportation access up in the top of that as the airports. So it kind of gives you a feel for how close we are to the airport were four miles directly south of the airport.

Roll right into there. That's our, our water tank, but that's Phase. 2 e, will be between our water tank and the school that gives you kind of a a sense of, you know, there's our primary school and then the construction of the high school. And then kind of shows you, you know, we got most of the road network, uh, developed for that. We'll have a little bit of extension on the road up through the high school and continuation of, uh, 1 of the boulevards.

And so this kind of gives you a good feel for you know that campus is right in the middle of where we're looking to go uh right in the middle of all Sky. Ranch,

And then kind of where that interchange is going to go it's going to go straight along the alignment of the Blvd, there where the yes, so where the existing interchanges will keep that up and operating we'll build the other interchange and then we will ultimately remove the existing interchange, but it gives you a kind of a flavor for really all of the.

there you go.

Physical features of the Sky Ranch development.

So with that what I'm Gonna do is kind of turn it over and see if there's any questions. We'll open up everybody's Mike and I guess, if you have a question just shout it out.

We can't use that yes, you have to I'm sorry the.

The technology here is just unusual Mike and then shouted out more will drill down on some of the details.

So raise your hand, and you can type it in.

The comments section.

Uh, so really accessible for all the students to, you know, be able to uh, walk there. This is kind of a view of the commercial area, right? So, we're really flying into that 150 acres, which is adjacent to the interstate. It gives you a strong uh, profile of what the transportation access is. And and the value of that Transportation access up in the top of. That is the airport. So it kind of gives you a feel for how close we are to the airport. We're 4 miles directly, south of the airport, uh, and then kind of where that interchange is going to go. It's going to go straight along the alignment of the boulevard there. Where the yeah, so where the existing interchange is, we'll keep that up and operating, we'll build the other interchange and then we'll ultimately remove the existing interchange, but gives you kind of a flavor for really all of the physical features of the Sky, Ranch development.

So with that, what I'm going to do is kind of turn it over and see if there's any questions we'll open up everybody's mic and uh I guess if you have a question just shout it out.

Oh, yeah, if you're having any trouble raise your hand, we'll try try to assist you.

Yeah. This concludes obviously our slides so we'd like to provide this opportunity to anybody who has questions.

We can't mute them, unmute them. Yeah, you have to unmute. So, the the technology here is just unmute your mic, uh, and then shout it out and we'll, uh, we'll drill down on some of the details.

Uh huh.

Or raise a hand, and you can type it in uh the the comment section.

See if you can unmeet yours and ask your question.

There at all.

Sure.

Johan.

You bet.

Okay.

Raise your hand. We'll try try to assist you but yeah, this concludes our slide. So we'd like to provide this opportunity to anybody who has questions.

Yes.

Your question please.

Oh I see that you're on mute are you able to talk to you. So we know everything is workwear, Oregon.

To see if you can unmute yours.

Ask a question.

Right, correct and UN mute and see if your mitral works.

Greg Blind are.

Didnt worked out test stands out doesn't work there you go okay at least I know were working.

Okay.

Yeah anyway. This is Greg van and I'm wondering if you're a longtime shareholders I just wanted to test it to see if people are having problems with the technology I came in late in the call. So after re listen to the replay in order to.

In order to call you back and ask questions well one one quick question.

I see that you're on. Mute are you able to talk to? So we know everything's working.

Has developed and maybe you said this in the beginning but with a haphazard housing sales in your area slowed down due to affordability or or the I guess my sense is the builders are still building. So you could have answered that that'd be great.

Correct. Correct. Can you unmute and see if your mic works?

Greg, Ward.

That's a good that's a good question because really you have to you have two variables in the housing industry and and I think Denver is probably on the high side of.

It worked out. Testing this out. Does it work? Ah there you go. Okay, at least I know we're working. Yeah. Um anyway, this is Greg Venit. I'm 1 of your longtime shareholders. I I just wanted to test it to see if uh people are having problems with the technology. I came in late in the call, so I'll have to re listen to the replay in order to

In order to call you back and ask questions, 1 quick question.

On affordability when you take a look at most housing markets.

Markets and you know Denver's in probably the top 10 cities of housing markets people generally take a look at Denver is pretty high in affordability and that has been a challenge for US I would say that's also one of our strengths because we have that entry level price.

Points and all of the markets that the builders are looking to serve when you have an interest rate sensitive market and when you are looking to buy down interest rates on higher mortgages, you know the incentive packages that they can offer really have more impact on <unk>.

Entry level house than they do at kind of a move up house and so I would say the resiliency of our builders and our project is strengthened by the fact that we are in that affordable market segment and you know that's not that's not saying much when you have to say affordability is anything.

Has developed and maybe you said this in the beginning, but with, uh, have housing sales in your area, slowed down due to, uh, affordability or, um, or the, I guess my sense is the builders are still building. So you could have answer that, that would be great. That, that's a good. Uh, that's a good question because really you have 2, you have 2 variables and, and the Housing Industry. And, and I think Denver's probably on the high side of unaffordability, when you take a look at most housing markets and and you know, Denver's in probably the top 10 cities of housing markets. People generally take a look at Denver is pretty high in affordability, and that has been a challenge for us. I would say that's also 1 of our strengths because we have that entry-level price point and

Less than 500000, that's still a high high number for an entry level house, but we are one of <unk>.

Robley in that 4% of homes that are delivered on an annual basis are in doubt affordable price segments. So that's why I think we're performing slightly.

Of all of the markets that the builders are looking to serve when you have an interest rate sensitive market. And when you're looking to buy down interest rates on higher mortgages, you know, the incentive packages that they can offer really have more impact on an entry-level house than they do at kind of a move up house. And so

Slightly better than maybe some of the other master planned communities and then also our business model being able to time that out. So yes housing has some headwinds.

We've probably manage that a little bit better just because of how we can deliver lots on an incremental basis.

I just I was looking at that point out Oh, sorry, Greg.

No that's all right Glen pointed out.

We're just going to point out there are a number of individuals who have dialed in.

And so if you you can dial star six on your phone to be on muted in teens, if youre not aware of that.

I'll, let I'll, let somebody else ask a question a.

Great.

Thanks for your question.

I would say the resiliency of of our Builders and our project is is strengthened by the fact that we are in that affordable market segments. And, you know, that's that that's not saying much when you have to say affordability is, is anything less than 500,000? You know, that's still a high high number for an entry-level house. But we are 1 of, you know, uh uh, probably in that 4% of homes that are delivered on an annual basis are in that affordable price segment. So that's why I think we're performing you know slightly better than maybe some of the other master plan communities and then also our business model being able to time that out. So yes, housing has some headwinds, uh We've we've probably managed that a little bit better just because of how we can deliver Lots on a incremental basis.

I just I also wanted to point out. Oh, sorry. Go Craig.

Mark Let me ask you another acquisitions.

No, it's all right. Go ahead and point it out.

And land acquisitions, and where you are on those and.

Any progress throughout the quarter I know, it's hard to time, when you're going to have the ability to acquire land.

And at what price Youre willing to pay for it and then additionally on the commercial side I know you have a big hockey stick in 28 was there anything that sir.

I was just going to point out there are a number of individuals who have dialed in, um, and so if you you can dial Star 6 on your phone to be unmuted in teams, if you're not aware of that. So

<unk> materialize with.

And in commercial players throughout the last couple of quarters.

I'll let I'll let somebody else asked a question. Um, great thanks for your help. Thanks for your question.

Greg Weingarten, bringing AE.

Good questions.

As he takes a look at these acquisitions you know as as we have commented we we really do have our nets out and we're saving a bit of liquidity.

Let me ask you another acquisition.

Just for that and you know I'd love to be very detailed about that but I would say our conversations continue to strengthen with the.

Land Acquisitions and where you are on those and, um, any progress throughout the quarter. I know it's hard to time when you're going to have the ability to acquire land.

Our target areas of acquisitions.

You know if it's an interesting profile. If you had if you add the nation as potential acquisitions. Your sandbox much much bigger our sandbox is very small and very targeted and that's and that's on purpose. Because we think that that's where we can provide the best leverage on that and.

you have a big hockey stick in 28, was there anything that's uh, materialized with

Any commercial uh, players throughout the last couple quarters.

Greg Winegard bringing a heat, good questions. Um,

Yes, we would like to be as aggressive.

You know that we do have the ability to probably pay more for land than any other developer just because of our ability to bring value to that land from our water portfolio, but you know we also like to make sure that we're paying for that on land acquisitions that we find.

To be appropriate for the timing of development. So we're balancing that out to give you that flavor for it in and you know I'd say I'm more optimistic this year than I was last year, but I say that every year. So we hope that we can.

Can't see sudden movement in that area to your second question in terms of the commercial we we are in the market. You know we do have a we do have listings.

You know, as he takes a look at these Acquisitions, you know. As as we have commented we we really do have our Nets out and and we're saving a bit of liquidity uh just for that. And you know, I'd love to be very detailed about that. But I would say our conversations continue to strengthen with uh our target areas of Acquisitions. You you, you know it it it it's an interesting profile. If you had if you had the nation as potential Acquisitions, your your sandbox, much, much bigger. Our sandbox is very small and very targeted and and you know, that's in that's on purpose because we think that that's where we can provide the best leverage on that and and yes, we would like to be as aggressive. Um, you know, that we do have the ability to probably pay more for land than any other developer just because of our ability to bring you know, value to that land from our water.

With the commercial folks that are really represent 70, 80% of the transactions that are in the Denver area.

We are seeing interest from a lot of those you know our interest and the commercial is to go directly to the end user there are a lot of folks would like to get between us and the end user and really those arent as interesting to us as really going strictly to the end user on that.

Just because of our value propositions and our balance sheet is strong, but we want to make sure that we.

We maintain some flexibility to participate in some of that on the commercial side so whether.

Whether we sell the land, whether we partner and participate in some of those horizontal improvements or other types of structures that we're looking life looking at for some of those commercial transactions understanding Greg that those are going to take some lead times and so there may be transactions that were pursuing that would be in 2026.

Portfolio. But, you know, we also like to make sure that we're paying for that on land Acquisitions that we find to be appropriate for the timing of development. So we're balancing that out, uh, to give you that, that flavor for it. And, and, you know, I I say I'm I'm more optimistic this year than I was last year, but I say that every year. So, um, you know, we we hope that we, uh, can see some movement in that area, uh, to your second question. In terms of the commercial, we, we are in the market, you know, we do have, uh, we do have listings, uh, with the commercial folks that uh, really represent 70 80% of the transactions that are in the Denver area. Um, we are seeing interest, uh, from a lot of those, you know, our interest in the commercial, is to go directly to the end user. Uh, there are a lot of folks that like to get between us and the end user um, and, and really those aren't as interesting.

2027 that would really start to monetize and show that.

Show that scale of revenue growth in 2028.

Yeah, I would just add to that though the that the growth you're seeing that we're projecting in 2028 is mostly a factor of.

Being able to open up the phase three with the interchange.

And last to do necessarily with some of the timing. So we still have a strong portfolio of commercial lots that aren't really showing up enough project Jackson's yet.

To us as really going Strictly To the End user on that just because of uh value propositions and you know our balance sheet is strong but you know we want to make sure that uh we maintain some flexibility to participate in some of that on the commercial side. So um, whether we sell the land, whether we partner and participate in some of those horizontal improvements are the types of structures that we're looking like looking at, for some of those commercial transactions, understanding Greg, that those

But good question Greg.

Thanks, Mark it's interesting because the near term weakness that you're seeing from some of the homebuilders.

Are going to take some lead times. And so there may be transactions that were pursuing, that would be in 2026 2027, that would really start to monetize and show that uh show that scale of of Revenue growth in 2028.

Maybe a long term benefit for you guys in that the land may not be as expensive as it was when things were so hot.

That I would just add to that, though, is that the growth you're seeing that we're projecting in 2028 is mostly a factor of.

I think that's true and as much as I'd like to say you know, we're we're very disciplined in what we pay and it's also a function of you know.

Being able to open up face 3 with the interchange and less to do necessarily with some of the timing. So we still have, you know, a strong portfolio of commercial. Lots that aren't really showing up in the projects yet.

Having people understood.

All of the all of the folks that we talk to.

That's a good question.

Usually come back with a and it's an appropriate retort to a land acquisition is look it's going to be worth more tomorrow than it is today and when you get you get cycles and you know a lot of these folks.

Thanks, Mark. It's interesting because the near-term weakness that you're seeing from some of the home. Builders

<unk> has seen cycles in the past in some of these cycles are short lived in months. Some of these can be long lived.

Uh, may be a long-term benefit for you guys in that the land may not be as expensive as it was when things were so hot.

In terms of several years and so if they're if they're close to looking at selling and they see a cycle regardless of price I think that that's a psychological determination for us to say listen it's.

I think that's true. And and as much as I'd like to say, you know, we're, we're very disciplined in what we pay. And it's also a function of

It's time, it's time, we need to move on and that's really I think what we're seeing more than you know a function of how we can capitalize on a weak market and the benefit there I I I I want to be disciplined but I also want to make sure that this is a transaction that works for both them and us and sometimes that's more timing than it is.

you know, having people, you know, all of the all of the folks that that we talked to

Matt.

Yeah.

Mark Let me ask you a question this is Greg Bennett again.

For land acquisitions you.

usually come back with the and it's an appropriate. Retort to a land acquisition is look, it's going to be worth more tomorrow than it is today and when you get you get cycles and and you know, a lot of these folks uh have seen Cycles in the past and some of these Cycles are shortlived in months. Some of these can be long lived and in terms of several years, and so if they're, if they're close to looking at selling and they see a cycle regardless of the price, I think that that's a psychological determination for is to say, listen,

You basically it's dirt and.

And then are you looking at.

Acquisitions, where they don't have any access to water and your the value creator.

Or would you guys consider buying.

Dirt that already has access to water.

I would say, we would probably wait those acquisitions, where we can bring added value for water.

Action that works for both them and us and sometimes that's more timing than it is.

Amount.

We.

I feel very confident about our land development segment, and and really building that value in the land of element. So if we were for example, buying a piece of property that were in and incorporated area, where we were getting water service water and wastewater service from another provider, we would still do well.

Mark, I'll let me ask you a question. This Greg Bennett again.

For land acquisitions.

You're basically, it's dirt.

And are you looking at?

Acquisitions where they don't have any access to water and you're the value Creator or would you guys consider buying?

In that scenario.

But I wouldn't give us that the vertical integration of leverage on accelerating not only that segments and and monetizing investments in land, but also monetizing investments in water.

Dirt that already has access to water.

Not to say that we wouldn't consider that but I think that there's plenty of opportunity for us to be more aggressive on acquisitions, where we can bring water to the table.

So the person who owns that dark now are you the only logical provider of water or <unk> or can they get water.

From somebody else's for competition.

Are you the only provider is that your.

Your moat.

I would say I would say, we're the best provider, but we're not the only right I mean, they they could come out they can go out and find water themselves and do the heavy lift of building a water utility that's probably not any of the land interest that we're seeing it isn't it.

I would say we would probably wait those Acquisitions where we can bring added value for water. You know, we I I I I feel very confident about our Land Development segment and and really building that value in the Land Development. So if we were for example, buying a piece of property that we're in and Incorporated area, where we were getting water, service Water, and Wastewater service from another provider we would still do well in that scenario, um, but it wouldn't give us the the vertical integration of Leverage on accelerating. Not only that segment and and monetizing investments in land. But also monetizing investments in water. Um, not to say that we wouldn't consider that but I think that there's plenty of opportunity for us

To be more aggressive on Acquisitions where we can bring water to the table.

Isn't a picnic and it's as you've seen through what we've done over the last 30 years at it it's a it's a.

so, the person who owns that dirt now

Are you the only logical provider or water or or can they get water?

It's a difficult and expensive proposition to build your own utility.

From somebody else's or competition.

are you the only provider is that your

But you know there's there's competition from the neighboring city city of Aurora, a that's probably our only competition. So if if if they now look to value a are providing water service to them. They would they would have to consider an annexation and you know that.

Your remote.

That carries with it its own risks and its own course.

Which then way into kind of the cost of land and so we can deliver lots much cheaper and unincorporated raffo county than any developer could deliver in the city of Aurora, just because of our structure and I think that continues to emphasize.

I would say I I I would say we're the best provider but we're not the only right? I mean, they they could come out, they can go out and find water themselves and and, and do the heavy lift of building a water utility. That's probably not any of the land interests that we're seeing it. It isn't, it isn't a picnic, uh, and it's as you've seen through what we've done over the last 30 years. It it, it's a it's a

The price of a home and the affordability of that home. So when other people look at it they have to look at it through the full development cycle and you sort of say am I competing for developing 800000 dollar homes or am I competing for developing 400000 dollar homes, which is what we're looking at and so we have a.

Canada, the advantage to doing that which then translates into being the best choice.

It's a difficult and expensive proposition to build your own utility. Uh, but you know, the there's there's competition from the neighboring city city of Aurora. Uh, that's probably our only competition. So if if if they don't look to Value uh our providing water service to them, they would, they would have to consider an annexation and you know that that carries with its own risks and its own costs, uh which then weigh into kind of the cost of land. And so you know we can deliver Lots much cheaper

So a home a new home and the Aurora area is $300000 or $200000 more than Sky Ranch is that the way it'll it'll vary, but I would bet that some of the newer.

and unincorporated rappo County, then uh any developer could deliver in the city of Aurora, just because of our structure and I think that continues to emphasize

Newer projects that are getting started in Aurora are getting starter started at that that much much higher price point some of the some of the homes that are directly adjacent to us might only be 60 or $70000 more so youll run that you'll run a gamut on that but we certainly have the better location.

The price of a home and the affordability of that home. So when other people look at it, they have to look at it through the full development cycle and you sort of say, am I competing for developing 800,000 homes? Or am I competing for developing 400,000 homes? Which is what we're looking at. And so we have a competitive advantage to doing that which then translates into, you know, being the best choice.

We have better cost basis, we are better.

Utility rates.

You know overall structure as is much cheaper and much more efficient.

Unincorporated than it is in the incorporated area.

The future for commercial development.

Our along I 70, where youre going to build the interchange.

Is there other commercial development that you see in the future that could be competition for you or are you.

Are you the bullseye do you have the bullseye.

On commercial.

So some interchanges benefit all land in the area and we have kind of a strong foot print in there, but there are other lands that are adjacent to us that we don't own that are looking to develop and they will have to pay their pro rata share of the cost of that interchange too.

So a home, a new home in the Aurora area is $300,000 or $200,000 more than Sky Ranch is that the way it'll it'll vary you know? But I would the the some of the newer projects that are getting started. Uh, in Aurora are getting started started at that that much much higher price point. Some of the some of the homes that are directly adjacent to us might only be 60 or 70,000 dollars more, so you'll run that you'll run a gamut on that. But, you know, we certainly have the better location. We have better cost basis. We have better, uh, utility rates, uh, you know, overall structure is, is much cheaper and much more efficient, uh, in unincorporated than it is in in the Incorporated area.

Um, the future for commercial development.

Um,

We might be advancing that but ultimately as they come online they'll have to reimburse us for are covering that cost upfront and so that was our structure is that we wanted to make sure. Our timing was our timing and that we would be advantaged in there and then somebody else coming in there would have that cost curve.

Are along I70 where you're going to build the interchange. Is there other commercial development that you see in the future that could be competition for you? Or are you

Are you the bullseye? Do you have the bullseye?

Commercial property.

<unk> as well that would they would have that off site.

Investment, which would accelerate some of the reimbursable repayments to us as a competition came online. So we wanted to equalize that to say, we weren't carrying them, but at the end of the day as they come online I think we have a competitive advantage.

Okay. Thank you I'll, let somebody else ask the question. Thank you Beth.

Okay.

Hey, Mark can you hear me okay.

Matt Rider at Adirondack here and ask a question on slide 34, the profitability trend side.

When I look at 2026, I mean, it seems like every category of the revenues up a little bit.

I forget the earnings forecast is down a little bit.

China.

Is it the margin differences between the different segments as you know.

Benefit all lands in the area and and we have kind of the a strong footprint in there. But there are other lands that are adjacent to us that we don't own, um, that are looking to develop and they will have to pay their Pro rata share of the cost of that interchange too. We might be advancing that but ultimately as they come online, they'll have to reimburse us for our our covering that cost upfront. And so that was our structure is that we wanted to make sure our timing was our timing and that we would be advantaged in there. And then somebody else coming in there would have that cost component as well. That would they would have that off-site um investment which would accelerate some of the reimbursable repayments to us as at competition came online. So we wanted to equalize that to say we weren't carrying them but at the end of the day as they come online, I think we have the competitive advantage.

Okay, thank you. I'll let somebody else ask the question. Thank you. You bet.

It seems like you're buying back some shares so I don't think it's a share count things I was just curious as to what I'm kind of missing here.

Yeah, and so the you're right what we're sort of looking at is there.

The 2025 had high profitability because of kind of the oil and gas and that's almost 100% margin and and even though we're increasing the revenues in both land development and water.

Hey Mark, can you hear me? I can it's Matt Riner at a question on slide 34. The profitability trend slide.

um,

when I look at 2026, I mean it seems like every category, the revenue is up a little bit.

Not yet we're not likely to see the same earnings per share of bump that we saw in 2025 because of that profitability of the oil and gas royalties that Dennis the real differentiator. Okay. I think I think the comparison.

um, but yet the earnings forecasts is down a little bit and I'm just trying to

Is it the margin differences between the different segments is it? You know I mean it seems like you're buying back some shares. I don't think it's a share count thing. So I was just curious as to what I'm kind of missing their

Yeah. The comparison from 24 to 26 will be pretty.

Pretty analogous and at 25, you know, we we were delighted that we exceeded our forecast because you never want to put a forecast out there and not need it on the earnings per share and so we were excited to do that and it really came through the diversity of the revenue streams of the company.

Yeah, Okay. Thank you.

Okay.

Okay.

I'll, just remind everybody if you're dialing in on the phone at star six.

Yeah. And so the you're right um what we're sort of looking at is the 2025 had a high profitability because of kind of the oil and gas and that's almost 100% margin and and even though we're increasing the revenues in both land developments and water, you know it's not it we're not likely to see the same earnings per share bump that we saw in 2025 because of that profitability of the oil and gas royalties. That's that's the real differentiator. Okay I think I think the comparison, yeah, the comparison from 24 to 26 will be pretty.

We have a question.

Yeah.

Yeah.

Okay, well, if if we have no other questions here you know I know.

Pretty, pretty analogous in it. 25, you know, we we were we were delighted that we exceeded our forecasts because you never want to put a forecast out there and not meet it uh on the earnings per share. And and so we were excited to do that. Um and it really came through the diversity of the revenue streams of the company.

Yep. Okay. Thank you.

We'll post the presentation for those of you that are going to hear.

Okay.

Hear this on a rebroadcast or listen to it again and inspire a question.

Okay.

Certainly don't hesitate to give me a call and we can drill down on any of their questions.

Um, I'll just remind everybody if you're dialing in on the phone. It's star 6.

if you have a question,

Again, I really want to emphasize the value of our leadership team and our management team and really all all of the employees in the company you know we they we have a great group of professionals that bring their a game each each and every day and it allow us to really.

um, okay, well if, uh, if we have no other questions here, you know, I know uh,

<unk>.

we'll we'll post the presentation for those of you that are going to

Fine tune the delivery of this you know the businesses that we're in all three of these businesses are about as capital intensive as you can be in a business segment and you're investing into hard assets youre investing into inflation resistant assets that really continue to Mont.

Its eyes, and sometimes you have a little bit of excess capacity in a water or sewer system that then you can help monetize that through delivery to your industrial customers.

Some of those investments that we have in big infrastructure, whether that's going to be boulevards or whether it's going to be you know land horizontal development upgrading or even an interchange those do come back to us and so we're very cautious about how we make sure that we can finance those and carry those forward. So that we can.

Hear this on a rebroadcast or you know, listen to it again and and you know, inspire a question certainly don't hesitate to give me a call and and we can drill down on any of the questions. You know. I I again uh really want to emphasize the value of our leadership team. You know, our management team and really all all the employees in the company, you know, we, they we have a, a great group of professionals that bring their a game, each each and every day, and it allow us to really

um,

And really deliver these lots on an on demand basis, and you know while that development cycle can take a year from the time you break ground at the time you get a building permit that's that's pretty quick in this world of land development and and we're pleased to be able to kind of match those inventory deliveries.

With our homebuilder customers. So you know the resiliency is and really the timing have really tested and really shine.

Shined and kind of what when when you get these markets that have headwinds can you can you not only deliver continue to deliver your product, but also you know match those deliveries to what your customers are looking for so we see a lot of that performance.

This year and we're thrilled to continue to advance on monetizing each of these segments so with that.

Closeouts and.

Wish you all happy holidays, as we close out the year.

On an on-demand basis. And, you know, while that development cycle can take a year from the time, you break grounds at the time, you get a building permit. Uh, that's that's pretty quick in this world of Land Development. And and we're pleased to be able to kind of match those inventory deliveries, with our, our home builder customers. So, you know, the, the resiliency and really, the timing have really tested the uh, and really, uh, shine and kind of what when, when you get these markets that have headwinds. Can you, can you not only, uh, deliver continue to deliver your product but also, you know, match, those deliveries to what your customers are looking for. So we see a lot of that performance uh, this year and we're we're thrilled to continue to advance on monetizing each of these segments. So with that, I'm going to close out and uh, wish you all happy holidays as we close out the year.

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