Good morning, everyone, and welcome to Pure Cycle Corporation's second quarter 2026 earnings call. As in prior quarters, we'll start the call with a presentation from our CEO, Mark Harding, and then we'll provide time for questions and answers afterwards. Your call has been forwarded to voicemail. The person you're trying to reach is unavailable. At the tone, please record your message. When you have finished recording, you may hang up. Yeah, if I could ask everybody to mute their call. It looks like everybody's joining unmuted right now. Okay. All right. Sorry about that. We'll start the earnings call with a presentation from Mark Harding, and then we'll open up the lines for questions and answers afterwards. Without further ado, I'd like to introduce Mark Harding, our CEO. Thank you. Good morning, everyone. My wingmen today are Marc Spezialy, our CFO, and our controller, Serena Finnegan. If you have any tough questions, we'll have a solid team to weigh in on all of the details here. For those of you that are looking at this, we do have a deck for this. It's on our website. I think it's on our landing page. You can click on that and then we'll be able to advance through the presentation and give you the details on it. With that, I'll start with our forward-looking statements. Statements that are not historical facts, contained or incorporated by reference in this presentation are forward-looking statements as that is the meaning of the Securities Exchange Act. Most of you are familiar with that. Next slide. I want to continue to emphasize the team that we get to work with, an outstanding team of professionals that really bring their game every day. It helps us, it helps drive value for the corporation. A continued shout-out to our management team. Also, our board of directors. I do want to welcome our newest board member, Dan Roller, and look forward to working with him. He is actively engaged in really working with the directors and the team, so we look forward to working with him. Let's take a look at kind of the investment snapshot here. We continue to deliver shareholder returns and returns on our assets through consistent and profitable results. Continuing our streak with a 27th continuous profitable quarter here. We're growing our revenues, our recurring revenues, and durable revenues through all three business segments. We continue to grow our asset base by delivering lots to our national home builder customers as close to a just-in-time basis and really doing that to really match market demands, and we do see a lot of cyclical nature in the housing market. Water is a little bit more tempered in that, but we continue to really focus on our assets and monetizing our assets and build shareholder value really through our strong balance sheet and strong liquidity position. Let's dive right into the results. We really had a great quarter and this year has been a more tempered year, to be able to even out our revenues and our cash flows on this. That's really been a function of a very, very mild winter. For my fellow skiers, we're mourning the loss of a ski season, but we're celebrating the opportunity for us to really do a lot of the work that we can't do seasonally in the winter by a lot of the concrete work and the asphalt work. What you see is kind of a more even paced development where we're able to, through our cost of completion on our project, be able to even out these cash flows on it. Quarter-over-quarter revenue, this first six months, about $5.1 million in revenue, about $2.8 million in gross profit. Really, those are driven by those percent completions on delivering our lots to our customers. We're about as much as six months ahead of schedule on some of the lot deliveries on that. A lot of our builders are equally thrilled with that because they were able to get out in the field and put up some model homes for this spring season. Taking a look at net income and earnings per share. Again, those are going to match, really exceeding our guidance typically on quarter-over-quarter, just because of the advancements on our projects on that. Net income, a little over $1 million, earnings per share, about $0.05 per share. Really this is up by about 36%, really driven by all segments. Mostly land, but water as well as single-family rentals. We're adding a few more of our rental segments in there, and we'll have a little bit more color on that later. Also seeing a bit of an uptick in our water through industrial water sales to oil and gas operators this year. Taking a look at just the comparison to our guidance, our full year guidance. We're right at that 50% of our guidance through halfway through the year. That's a bit unusual for us just because the winter quarters usually are our weakest quarter of the year just because of the seasonality of weather out here. We're about $14.3 million in total revenue of our close to $30 million forecast or guidance, and then profit at about $9 million to our about $19 million guidance on that. Really terrific results year-over-year. Moving to net income and earnings per share also, we see those pacing more evenly through the year. Margin results are showing a bit more moderated because we have advancements in investments into the delivery of lots slightly ahead of our contract delivery. Those will normalize through the rest of the year and really help us temper those flows. Specifically with the quarter end results, what I'd like to do is kind of drill down to each of these segments and talk a little bit about what it is that each of these are driving for us. One of the things I recently heard was an acronym called HALO, which is used to describe some companies in the context of this, it's heavy asset, low obsolescence, and I found that pretty descriptive over our company. You can't get a more low obsolescent asset than water utilities. We'll drill down on the water utilities and talk specifically about what we're seeing in that growth and margin opportunities. We really deliver water to customers kind of in three various segments. We have our domestic deliveries, which is your potable water that we deliver to residential and commercial users. We have our industrial segment, which delivers water to our oil and gas operators. We have continued customer growth, which is our connection fees, and those are one-time fees that are paid by our home builder customers, and then that just adds to the customer growth of the overall segments. Taking a look at revenues on a quarter, year-to-date basis, we continue to see some customer growth, corresponding revenues driven by the connection fees, which is really adding new customers to the system. Our oil and gas revenues are up this year, and I think we'll see a very strong performance in industrial water sales. Just monthly water and wastewater sales continue to grow, and that's really a function of continued growth in the rates as well as the number of customers for that. Detailing out the industrial segments, our oil and gas sales are up significantly over last year's, primarily because last year was largely a permitting year for our operators, mostly our largest operator, who was working to secure as many as 200 permits in and around our service area. Really that's translated into increased drilling and increased fracking this year, which is really turning out quite well for them given the rise in oil prices. They couldn't have timed that better for bringing a lot of that new supply online. The outlook looks very good for this year. I think we'll exceed our guidance that we had taken a look at this year. I think it's going to continue into the future, right? We have a dedicated rig to our service area, which is drilling some of those 200 well permits, and that'll probably take them somewhere around three years to drill all those wells. Our revenue per well continues to strengthen. We do have a multi-year contract with our operators to deliver these water supplies, so it allows us to do some strength and planning and then also making sure that our infrastructure is capable of not only meeting our industrial, but the domestic demands on that. One of the things that we like to highlight in our water segment is the capacity that we have and the fact that we continue to grow in developing this capacity. Yet we're still only using a small fraction of our portfolio while we generate significant revenues from these segments and really at very attractive margins when we're really looking at that variable demand for oil and gas. They do have a preferential pricing on that, where we do get a premium on that to make that water supplies available to them as they need that in the volumes that they need. Let me move into highlighting our land development segment. This is a nice aerial of our high school at Sky Ranch that's being constructed, so we're very excited about that. It'll really deliver not just. It's a full K-12 campus. We've got the primary school, which is a K-8, as well as our high school there, and really, a lot of the relocation and customer feedback on buying in the community is a function of the school campus that we have here. We're delighted to continue to work with our charter school operator, National Heritage Academy. They're terrific partners in bringing educational excellence at Sky Ranch. Talking a little bit about how we're delivering lots. This fiscal year, really focusing on punching out phase II-C, which was about 228 lots, and we're about 95% complete with that. Then also phase II-D, which we're almost 80% complete on that. Really that's the big advancements for this quarter. Over the winter months, we were able to get a lot of that infrastructure in the ground. Very proud of our portfolio of homebuilder customers, all of the major home builders, including Lennar, D.R. Horton, KB, Taylor Morrison, Challenger, Pulte, Oakwood, all bring entry-level homes to the Denver market. Phase II started out with about 780 homes, but through some product alignments and diversification, that's really grown to about a little over 1,000 lots in that area. We do see a significant uptick in our density out at Sky Ranch, and that's terrific for us. Not only does that allow us to deliver more lots, but it allows us to increase the assessed value, which really has an impact on generating additional capacity, bonding capacity within the district to repay our reimbursables on that, which you see us continue to grow. Let's drill down a little bit on that land development by phase. Period-over-period, the revenues really did crush it. We really are generating significant Q2 revenues, more of a function of that mild winter and an opportunity for us to kind of turn up the volume and get that pavement down and finish those lots so that the home builders can get those building permits and really start getting their model homes up for the selling season. We do see an uptick in traffic out at Sky Ranch. All our builders are seeing an uptick on that and a little bit more of a conversion to that. There's lots of reasons that housing has variable demands, whether that's interest rate sensitivities, and we see a little bit of volatility in the interest rate segment. I think that still is the number one incentive that our home builders are offering, is a mortgage buydown. I think they're hitting that sweet spot of trying to buy down those mortgages right below that 5% range, so that 4.99%. When you see a lot of that adjustment from the Federal Reserve on interest rates, that may not have as big an impact on this particular segmentation of it, just because that's the primary incentive that our home builders are offering our first-time buyers in converting those into sales. The pace of our land development will normalize through the rest of the year. We really do have a little bit to complete in that phase II-D, and then are really moving into grading the next phase, which is going to be phase II-E. We've got another good slide on the visual aspect of completing out each of these. As you see, you can see that in the lower left cell there, where we've got a number of homes that are up and constructed for that phase II-C and then phase II-D, while it's a little bit out of the picture on this, we do have model home lots being developed in there. We have really two active phases that are complete where they're developing lots. We've got about maybe 430 lots available for home builders to really tap the market on a variety of products. We've got all phases of the products, whether they're a standard detached 45 foot front load, 45 foot rear load, 35 foot rear load, duplexes, townhomes. We really have a very strong portfolio of diversity of product type out there, which is really creating opportunities for almost every type of home buyer in that. Moving on to kind of the development timeline here. This gives you kind of an overview of our phasing. As most of you know, most of our contracts are geared towards a system of developing a portion of the infrastructure in phases and then having, once that's complete, having our home builder customers reimburse us and support the next phase of the development activity. We get payments at the plat stage, which is when we finish the recorded plat, and there's a real property interest that they acquire. A second payment, which is at the completion of wet utilities, once we're done with the water, sewer, and storm facilities on the phase. Finally, that third payment at finished lot phase. That's where you saw some of those lots being pulled forward on being able to finish a number of those lots on Q2. As I started to allude to, we are starting phase II-E, so our grading contractor is mobilizing on site. We'll be hitting that this month. Really those are about 160 lots that we're looking for delivery and continuing pacing that so that each of our builders can have a year's worth of inventory. Those will be 2027 lots, so we expect those to deliver sometime in the summer of 2027. That phase II-E here is to give you kind of an orientation of where that's at. It's directly across the street from our school, and this is really more of an infill site. We have most of the infrastructure done on that. A lot of the road network is done. Most of the main lines on the water and the sewer system are already in place. That's our peak hour water storage tank and pump station there in the picture as well. That's a very streamlined process for us to be able to bring this online. It's about another $14 million in lot revenues, correspondingly, $4.3 million in tap fees and about $240,000 in recurring revenue from the number of customers that we have on that. This was kind of a celebratory opportunity for us, together with National Heritage Academies, really on a groundbreaking for that, and really partnering with our local school district, the Bennett School District, as well as the National Heritage Academies to bring this K-12 campus to our development. I wanted to show continuing one of the most underappreciated assets I think we have in our portfolio is our service area. As many of you have heard me talk through the years, the Denver metro area continues to grow out on the Eastern Plains. We really live on an ocean. We can't grow west as a metropolitan area, so really moving to the east side of it. This really kind of gives you an illustration of the level of activity that's occurring around our service area on the Lowry Ranch. As you all know, the state of Colorado owns the Lowry property. It is owned in the school trust, and they develop their assets to generate revenue for the public education system here in the state of Colorado. There's a couple of parcels that are really just highlighted here, one on the south side of the property, and that kind of gives you. That bottom picture is an orientation looking north. That is a very active development on that. That's about a half section, 320 acres. Also properties that you've seen what's occurring on the west side with all the development from the City of Aurora that's on the west side, but then also projects starting on the north side of the property as well. There's substantial opportunities all around the property and it's well-positioned for whenever the state looks to find opportunities for the Lowry Range. We are the exclusive water and wastewater provider for this particular property. Having been able to develop Sky Ranch, I think we can demonstrate that we would love to partner with them on opportunities for land development, should that occur. We really do want to kind of give you a perspective of kind of the growth of the metropolitan area and how that grows in relationship to where some of our assets are, whether that's Sky Ranch or whether that's our service area at Lowry. Moving into our third segment, single-family rental. There's a bit of an update, and what I'd probably call a realignment, for a couple of reasons in the single-family rental segment. As many of you know, the current administration has had some strong comments about corporate ownership of homes. I probably would push back a little bit on that, on kind of the justification for that, but they were sort of concerned about corporate ownership and what that is doing to housing affordability. We took a strong look at how we were positioning the growth trajectory of this particular segment and really decided to slow our growth of this segment and take a look at these assets in a couple of ways. We wanted to really get a strong look at what the return on the investment is for these segment assets. As they settle in, as we've got them constructed, as we've got them leased out, we really want to understand, well, what is the return for this particular asset and is that going to meet an acceptable level of threshold here for the company and making sure that that delivers the returns that the shareholders are looking for in that. What we've done is pushed back a number of those lots that we were having our home builder customers build for us. As an illustration here, this kind of shows you the lots that were identified in blue are the ones that are either constructed or under construction, and so that'll total up to be about 60 units. The lots that we have that are kind of highlighted in this light yellow, light green color, those are the lots that we kind of re-evaluated and were able to resell back to each of the home builders that are building their product classes in there. What we've done is kind of pare that back from a growth strategy up to about 90 units and really scale that back to about 60 units. That'll allow us to have a little stronger performance on the revenue from the land development segment because we're getting about $100,000-$110,000 a lot on that. We'll see that come back to the company and then really take a look at really what the performance is on this segment, be able to get our returns on that and really report that to you and make a decision as to how this segment continues in the future. That's been really the key realignment here is to take a more measured growth approach to our single-family rentals on that. We've got 19 homes completed to date and they are all completely rented. We are seeing extremely strong demand for rentals in this unit, so I'm very optimistic about the continued performance of it. Each of the homes as we bring them on market are already rented. I think we've got homes rented for home deliveries that we're seeing up through August right now. We do continue to see that as a strong performer in the segment. This will instruct us on how the appreciation of the homes are going as we continue to add value to the community, not only from the schools, but then all the commercial development and open space and trails and the recreational opportunities that we deliver. We are seeing continued strong growth of these home values and that's an opportunity for us to really measure that within the overall segment. One of the most attractive features of the single-family rentals is our recurring revenues and the asset appreciation. Period-over-period revenues are up 20%, mostly as a result of additional units. We continue to see growth in the monthly rentals on this, and what we really like to do is make sure that we get all these units fully leased and have 100% occupancy in that. Showing the growth trajectory, this is kind of how each of the phases are performing and this is a bit of an update from our previous position on that, where we were growing up to about 90 homes. I think we really took a look at that and pared back almost all of the units in phase II-D, a portion of the units in phase II-C. Really just as a reactive element to some of the pressures that this segment was receiving on corporate ownership and then also opportunities to demonstrate to you all what the return on this segment is going to look like. Talk a little bit about shareholder value, our assets, and what we have in use, and really a little bit about where we're headed. As most of you know, we are extremely hawkish about our equity, with our last issuance being more than 15 years ago, and so we really do fund our operations through our balance sheets. If you take a look at really all of the components of this, we maintain a strong balance sheet, believe our assets are significantly more valuable than their recorded value. That's mostly because they're legacy assets. They've been acquired many years ago, several decades ago. Taking a look at each of these individual segments, if you take a look at our water segment, we have about $74 million, call it $75 million in total assets, and that's about 44% of the total assets of the company. When you take a look at what's developed and what that contribution is, that's only about 4% developed. You see how the potential that we have left in the water segment and really the opportunity that we have to continue to grow that segment in our business. Land segments. We acquired Sky Ranch in 2010. It's about a $5 million acquisition of the land. We did get some water beneath that as well. Taking a look at the developed land for sale, how we do the percent completion on that. That represents about 6% of our total assets, and it's about 20% developed. While we continue to generate strong returns year-over-year on that, we still have a good amount of land that we are developing more homes and then the commercial value on that. Really terrific opportunities to continue to grow the land development segment. As many of you know, we continue to look for other opportunities in the land development segment. Taking a look at our single-family home segment. That's a relatively small segment, about a total of 5% of the total assets and had a little detailed discussion about that on how we're going to really mark that performance of that segment. Really the biggest opportunity for us here is our total liquidity here. Taking a look at the cash and receivables, it's about a 44% asset and largely held in that note receivable from the municipality where we continue to develop the infrastructure. Those public improvements are reimbursable to us, and we take a look at building the assessed value through adding additional homes there. Our next opportunity for monetizing some of that asset is likely to be in 2027, where we're taking a look at financing and refinancing. We'll have a financing on the interchange. As many of you know, we talked about how we're going to construct a new interchange on the interstate there, but also being able to refinance some of the phase II bonds and really capitalize on the opportunity. We financed our first bonds on phase II at about 780 units, and growing that to the 1,000, 1,030 units gives us an opportunity to have a significant reimbursement for refinancing those bonds now that they'll be mature and more assessed value than we originally planned in the first financing. That'll be a great opportunity for us moving forward. The low obsolescence in the recurring revenue really come from water and wastewater revenues and rents from our single-family home rental segments. You do have strong, sticky revenue on those sides. Really a lot of the growth revenue from selling lots to national home builders as well as the connection charges to add our customer growth into our water utility segment. Talk a little bit about shareholder value. We consistently grow our balance sheet, income statement quarter- over- quarter, year- after- year, and really generate industry-leading margins from all segments, whether that's going to be the water segment, the land development segment, and the single family rental segments. We're very targeted to continue to monetizing our assets, taking a look at where we're at in our guidance. We're taking a look at our guidance for 2026 at about $2.7 million in recurring revenue and asset growth, bringing that a little over $160 million. Those still look strong. Profitability trends, we continue to build shareholder value on really each of these segments and really on pace for delivering our fiscal year-end results. We will share some guidance on 2027 at our Q3, as we get a little bit clearer picture of how the phase II-E is going to come along and the tap fees and the oil and gas deliveries for fiscal 2027 become a little clearer for us. Taking a look at that total gross revenue. Our guidance is going to be in that $26 million- $30 million range. We're still supporting that earnings per share in that same range, $0.43-$0.52. Upside in some of that acceleration of that's really going to be probably the timing of the delivery of lots as well as, I think, oil and gas. Really, I think the strength and the price of oil will really reinforce the fact that our operators are going to really try and capitalize on that, keep those rigs in active service on our service area and in and around our service area. We don't have just the one operator. We do have several operators that are looking at programs in multi-well pad sites this year, so we believe we'll have a very strong performance on that industrial segment. We continue to reinvest and repurchase shares. We believe our stock is undervalued, significantly undervalued. We're encouraged by some of the recent strength in the stock and really do believe that the assets do have continued support and really focused on continuing to deliver that shareholder value. Some of the ways of doing that are really going to be the development of our commercial opportunities, getting this interchange completed. We're really at the final stages of that permitting process, and getting that into CDOT and Arapahoe County, who are our regulatory agencies here. It does allow us to accelerate not only the commercial opportunities, but also continuing on the residential side. That's another thing to keep a lookout in the next fiscal year. I did want to give you a revised view. We're trying to keep this view as part of our format to kind of share with you the progress that we make. It's about a minute long, but it'll give you an opportunity to see. Gives you a perspective. That should be an all white picture there in the background, and it's just not. That gives you an illustration of the dry year that we've had, and it also gives you a picture. You can see the landscaping is fairly dry throughout the community. It's pretty typical, but I think we're going to have a challenging year for some of our water supplies and other providers. I think we're strong in our position and our portfolio, but other providers are going to see very seasonal water deliveries. Just kind of drills in on that phase II-C number. We've probably got more than a third of these homes permitted and started. Then also gives you where we're taking a look at phase II-D, where you've got home builders really starting construction activity on that project as well. Really this is the unusual aspect. We would not expect to have all these roads paved and these lots available for that. We were able to capitalize on that this year with the mild winter, and so that's a great opportunity for us and our home builders. Moving into phase II-B, we're nearly complete here. We've probably only got maybe half a dozen home lots that are yet to be constructed in that phase, and then this kind of rolls up into a good view of the high school and the construction progress on that. We've enjoyed that opportunity as well. They are ahead of schedule with the mild winter that we've had as well. That will open up in August for our school kids for the next 2026-2027 school year. That's exciting for us. Ultimately kind of a shot at where we're going to be with that interchange and our commercial properties up there in that area. We are actively marketing our commercial properties. We've got both retail and industrial brokers engaged and are seeing some exciting opportunities. We're out there pitching a lot of the retail and some industrial opportunities for distribution centers. A number of different types of uses, whether that's going to be a heavy water user or just access to that interstate is a terrific asset for us. With that, I guess all those are our prepared remarks. What I'd like to do is open it up for Q&A. I think the easiest way to do the Q&A is if you want to unmic and just shout out a question, and then we'll coordinate seeing how that technology works for everyone. With that, I'll turn it over to you all. Mark, it's Elliott. Hi, Elliott. Hi there. I've got several questions for you. Most important, on your last call, you made it clear that completion of the new interchange is very important. You sound encouraged. Could you give us a real detailed update? Yeah. Drilling down in that. The interchange, we've been working on that. The government always has an acronym for it, and in Colorado it's called a 1601 permit process. You do that in conjunction with the Colorado Department of Transportation, and it's a comprehensive effort, right? You go through every component of your interchange design, what the load capacities are going to be, what the traffic movements are going to be, what the distance setbacks are for signals to the interchange, the environmental aspects of it. We're now at about a 30% design of that interchange. We really have a solid idea of how the cost estimates are going to be and then really how do you fund that. It's a private permittee. The Sky Ranch CAB will be the permittee for that. We work together with Arapahoe County because they'll be the administration of that. It's in the jurisdiction of Arapahoe County. We should be submitting that 1601 to CDOT. We've submitted every component of that as we go along for their review and their concurrence. What we hope to do is have that ready sometime this June, and then really be in a position of going to final design on that. That'll probably take through the end of the year. Take a look at funding that bonding of that. We've got specific mills that have been set aside within the community to be able to bond that. We have that as a component of the 1601, and then start construction in 2027, with a completion in 2028. That would be the timeline. Okay. That slipped a little bit from completion in 2028, because on the last call, I think you were thinking in late 2027. Yeah. Yes. Okay. That probably has slipped just a little bit, but we continue to be able to deliver each individual phase. I think we won't really miss any of our cadence on lot deliveries on that. Sure. I think what we've tried to do is work concurrently with some of our commercial opportunities, because those have a lead time as well, and we want to make sure that we can bring those online as we're constructing the interchange. Okay. On your last call, you mentioned data center. Mm-hmm. No mention of it today. Could you please update us? Anything you can tell us there? Yes. It's not that we're not continuing to pitch that, but Colorado's probably not as attractive as a state on some of these larger hyperscaler data center type opportunities, and it's really twofold. One, the ones that we were very active pitching, really are looking for tax incentives, and so the state has a bill before the legislature. They have two competing bills. They have one bill that is seeking incentives and one bill that's seeking to disincentivize. Colorado just has a dysfunctional relationship with itself on being able to set a consistent policy. They are heavy water users, which is something that we certainly have an opportunity to support. They're also heavy power users, and Colorado probably is a little more challenged than other areas on bringing on additional power, particularly gas turbine-based power in the area. Those are the risk elements that some of the data centers that we have been marketing to are sharing with us. We still like the opportunity. There still are data centers that are being built in this area. We'll compete with that and see where it lands. It's not just the data centers. We have water and bottling opportunities. Those are going to be heavy water customers that we're pitching to. Just the overall distribution centers and things like that for our commercial industrial opportunities. Okay. Thank you. Last question. I was delighted to see that you've added another 1,600-plus acre-feet of water. You acquired little bits and pieces of water, I think, in the last few years. The company continues to say it has 30,000 acre-feet of water. It must have more than that, doesn't it? How much does it have? We do. You're astute to keep tabs on that. We've probably increased that portfolio about 10%, and so we're maybe closer to 3,300 or 33,000 acre feet of water. Correspondingly, we do have the ability to probably provide service to more than 60,000 connections. Those are very important metrics. Those are longer tails on it, but when you take a look at how we scope that opportunity, we talk about $40,000 of connection charge at 60,000, which is about $2.5 billion. That number's probably gone up considerably. It's probably closer to $3 billion worth. But those are longer lead. That carries us out and continues to add to the real depth of that segment of the business. As we get closer to that 25,000 connections within the company, we can really detail out really how much more of that we have to serve. I think a couple of areas for that, the Denver area growing out in and around Sky Ranch, in and around Lowry, which is our service area, are really the key opportunities for us to continue to add to that portfolio, add customers in that portfolio. Thanks very much. You bet. I see Jeff's got his hand up. Good morning. How are you? I'm great, thanks. Nice to see you. Quick question. As I recall, you were going to wait for the commercial development until the interchange was actually finished. Did I understand that you're currently actively marketing the commercial opportunities? We are, yes. Is that an acceleration of what you had wanted to do? Well, I think we had that timeline, and as Elliot highlighted, we were looking at getting that 1601 permit this summer, and I think we'll look to get that towards the end of the year. We had already set that up in motion, right? We want to be in front of these users. It's not something that you can just directly turn on and say, "Okay, get out there and start building your building," or your retail use or whatever it is. We really want to make sure that it is a highly attractive site, and we want to be regionally specific. We want all of those folks that are looking at sites and interchanges to be appreciating what it is that we're putting into this opportunity and put it into their scope in planning. We do have some capacity to get started on it. It's not 100% conditioned on the interchange being developed. We have an existing interchange that does have service capacities, and we do have opportunities where we can add maybe it would be a non-traffic sensitive type user to the site, someone like a distribution center, that would have the appreciation, "Okay, we could use the existing interchange, to get our building permitted and started," and then as that gets completed, really would have that truck traffic. That's what we were trying to do, is parallel that process and make sure that this doesn't have that long lead time and really deliver just in time. Okay. Thank you. You bet. Jacob. Hey, Mark. Just quick, do you have any expectation on the timing of the next receivable? Great question. We'll take a look at what that capacity is from the 2022 bonds. Those typically have a five-year call provision, and that's where they start to burn off in 2027. Taking a look at really the differential that we had in our first filing and our second filing, we think there's somewhere around $10 million-$12 million worth of additional reimbursables from refinancing just what we've already financed there. As we move into phase III, we'll take a look at because that will be that 2027 timeframe as well, as we complete that interchange and really start processing permits into phase III, that could be as much as $20 million. I think we get about $10 million of refinancing of one bonds, and then probably another $20 million of fresh financing moving into phase III. Awesome. Can you talk about the builders' appetite for lots right now? We delivered the current phase ahead of schedule. We know new home demand's been kind of sluggish given interest rates. I guess I'm just wondering, is there any risk of an air pocket between this phase and then starting the next phase if it takes a while for the builders to deliver the lots that you delivered ahead of schedule? How does that impact the timing of starting the next phase? That's a great question. Really, what we saw as a result of kind of this pull back in the market, I'd say consumer confidence is the number one factor on decisions to buy houses. Interest rates always impact that, but that's not, I think, at our segment, where home builders are able to buy down mortgages, and at an entry-level point, that's a little less costly for them. When you're buying down a mortgage at four, maybe a point at a $450,000 home is a lot less than if you're buying down that point at a $800,000 home. That sensitivity for us isn't so much in interest rate, but more consumer confidence. What we were able to do is pull in new home builders to the portfolio. We had four home builders, four national home builders that were part of the portfolio as we started phase II. We now have seven, and those three new ones that are in the mix on this thing are really into filing 2D, and so they have one year of inventory, and we're looking at 2027 deliveries, they may not be in 2C but they're in 2D and then the other four were in 2C and 2D, and so they are a little bit long on that annual inventory, but the other ones are a little short on that annual inventory. That gives us the opportunity to roll phase II-E in because they're the ones that want those 2027 deliveries working on the 2026 deliveries that they already have. That's an opportunity for us to bring in more builders. We really like having that yearly deliveries for them and a number of builders in there. They're bringing diversity of product. It's not cannibalizing the market. It's really having an opportunity where we have a very robust portfolio of builders. Awesome. Thanks, Mark. You bet. If we had to mute everybody at the beginning of the call. If you have dialed in on a phone and you're trying to ask a question, you would enter star six on your keypad. We'll unmute you. You can just unmute your mic and shout out if you've got a question. There was a question in the chat related to a slight decline in some recurring revenue from 2025 to 2026. I looked into that, and it looks like we have some commercial customers, non-oil and gas, that are off-site of Sky Ranch that are governmental buildings that can fluctuate from year- to- year, and that looks like what's causing that slight decline. Obviously, we're not seeing a decline on the average house per residential house in Sky Ranch, nor we forecasting any kind of decline there, even with water restrictions that are coming forward. It happens to be just a slight anomaly between some off-site customers that are showing that slight decline. Okay. Well, if there aren't any other. Craig. Oh, Craig. Mark, how are you? Hello. Great. Fine, thanks. Go ahead. A couple of quick questions for you. One on the land acquisition. Any updates from any of the potential spots you're looking at and/or from Lowry? I know you discussed Lowry, but nothing else except for just the fact that everything's built out already, and that's the next logical spot. Then secondly, when it comes to stock buyback, I know you guys have been buying back stock, but really just to maybe offset the, not to reduce share count. Any thoughts to stepping that up at a quicker pace with the stock still sitting here? A couple of good questions. We are taking a look at new acquisitions. Really, there are a number of land areas in and around Sky Ranch and other areas. There's a sort of way of taking a look at that where we go out and we buy the land and hold that in inventory. Is that the best use for our shareholder capital? Because some of those projects would be very long-term in being able to do that. There's some we're trying to get opportunities. I think a priority of opportunities where we can either get those in a partnership, get those in a way, acquisitions in a way where that doesn't become a big drain on tying up shareholder capital for many, many years on that. There's still opportunities in there. Most of those guys really aren't that excited about that type of structure. What we want to do is time those out. If we've got an opportunity that we can buy cheap land, but that land doesn't look to turn over for 7-10 years, that may not be our highest priority. There are opportunities where that has come up, and we sort of said, "Well, we like that land interest, and we might not be the buyer today, but we might be the buyer in five years." It doesn't matter where we may have to pay a little bit more in five years, but it's also five years closer to when that would be looking for development. We're really being disciplined about that type of opportunity. We did highlight Lowry and we continue to see great opportunities there. That is controlled by the states and we'll work with them and whatever their timeline is on something like that. We'll be reactionary to that. On the share buyback, we took a look at what our trading windows are, and we wanted to open up some flexibility on that to be able to be more aggressive on particular areas. There's certainly a lot of restrictions on the windows that we can repurchase those shares, and we wanted to be a little bit more flexible for that. We did modify our window of trading activity. Really, Greg, I think our continued focus is capital stack to be in a position to reinvest in the company. Our balance sheet and our liquidity and our flexibility here has been really demonstrated by being able to do that this winter and having the capital to be able to do that. You did see a real change in the liquidity, where we were dropping that liquidity down substantially because we did deliver in advance of those. As that comes back and that liquidity continues to reimburse, there are opportunities for us to increase our share buyback. That's something that we continue to evaluate and we will take advantage of as appropriate. Daniel Aronson. How's the world in Minneapolis? Can't quite hear you, Dan. I think we also had a question from the caller. It's the caller ending in 6191. I think you tried to ask a question. Yeah, I did. This is Greg Bennett. Could you go through the economics? You're de-emphasizing the rental program, but what is the unlevered rate of return in the rental program? Am I correct? The loan that you have against these properties is a floating rate loan. Yeah, I'm just curious. You've never mentioned what the places rent for or what capital you have tied up in them. Yeah. Can you go through the economics of that? Yes. Yeah. I'll give you kind of a high level version of that. Typically what we see is we're carrying forward some of that equity in the lot and the water. When we go out and we contract with our home builders to build us those homes, they're coming in around $350,000, is really the cost that vertical construction is on that home. The home typically appraises somewhere in that $530,000 range. We have about a $180,000 margin in there. A lot of that's just kind of the equity value of that. We do have a credit instrument for that. It's a fixed rate credit instrument, not a variable rate one. We do have a facility that we're using that credit facility and not our cash to be able to do that. It's about a 6.5% credit facility. Our first few were done at a very low credit facility, right around that 4.5% rate. It was much better at that rate. The rentals on these cover the debt service on that and provide us a margin. Typically, these homes are renting around $3,000. I'll just use that as a kind of a round number. Some are a little lower, some are a little higher, depending on the number of bedrooms and the square feet of that. When you take a look at all of those, we don't have a lot of holding costs on those. Our rate of return on that, somewhere in the 8%-10% range. We want to dial that in. We want to see, okay, how is that performing? What is the capital appreciation of those homes? If those homes are appreciating at 4% or 5% together with the rental incomes, we want to see what those segments are performing at and making sure that that meets our investment threshold. That's really the pause of continued growth of that segment, is to get a good handle on how that segment is performing and report that out and make a determination at management and the board level as to is that adequate and do we want to keep moving forward with it. Okay. Second question. You mentioned in your comments in the oil and gas segment, the impression I got is that you contracted out for the drilling companies. Is that firm take or pay? Or let's just say oil prices go down to $60 a barrel or $50 a barrel. Is the contract a take or pay, or can they say, "No, we're not going to take the water. We've decided to slow down our drilling operation"? Yeah. Great question. The oil and gas companies really will pay a premium for you to be at their beck and call. When we price our spot oil and gas or industrial deliveries, that's about 3 x, 3x, what we price it out at our residential customers. The downside of that is, sometimes they don't bet on that call. No, we don't have a very fixed amount of take or pays, and we're one of the very few providers that can dial up and dial down on their systems, and that makes us very attractive to them. The premium that I think we charge them for that flexibility is really good for them and good for us. As you saw last year, we had relatively weak oil and gas deliveries compared to 2023 timeframe or 2024 timeframe. It is a variable demand. It is hard for us to forecast because it takes a significant amount of lead time for them to get their permits in line, get their rigs committed in. What we will see is, we will see some pretty robust demand through 2026, and we will see a pretty healthy opportunity in 2027 given what they've drilled to date. I think we're pretty confident about the next two years on that. Forecasting out beyond that, as you highlight, is a real function of how oil and gas is doing in the overall commodity index. Okay, final question. I'm in a car, but I didn't see your slide. In the very beginning of your presentation, you gave an aerial view, I guess, of Aurora or some of the properties, I guess, that are south of Sky Ranch that were undergoing development of home sites. My impression was they were undergoing development of home sites. Is that correct? That is correct. Yeah. The stuff that's been permitted south of the Sky Ranch that's actively being developed, what's the time for. How many units is that? What's the absorption? Is that thousands of units? And is that like a five-year plan for. These are other companies, or it's Aurora. But what's the timeframe. That's right. To get all those units? Yeah. Yeah. You're correct. There's a lot of land in and around this area, right? The I-70 corridor is probably the highest development corridor in the metro area. It has a reason for that being the case. One, it has transportation, secondly, it has available land. There are a number of projects which are thousands of residential units, and they're all around our area. The Denver area is adding around 15,000-17,000 units a year. I would say, this sub-market's probably a third to 40% of that demand, whether it's in Aurora, whether it's in Arapahoe County. It really is the strongest development segment in that area, and it will continue to be that way. It will add 6,000-7,000 units a year in this corridor for the next 50 years, right? There's no other area to develop. We worry less about how do we compete necessarily at Sky Ranch to the next developments. I think we have a lot of advantages that bring us into a higher performing master plan community than other areas. At the end of the day, it's all going to absorb. This happens to be, we're targeted in the right segments of the Denver Metro area. We're offering the right product, we're offering the right model for delivery of lots to our home builder customers. We worry less about, is that project going to absorb in conjunction with our project absorbing, and are we going to see any competition in that area? I would say that's not the biggest metric for us. What we really want to do is be the right developer, being that we're doing the horizontal work, we're doing it exactly the way our customer wants it with annual lot deliveries. We're adding to the builder portfolio so that we have all of the builders in our projects. Whether we have one project at Sky Ranch, or we have multiple projects where there are other, Sky Ranch Two, Lowry, any of the other projects, we want to make sure that we continue to pace those deliveries and maintain what will be a very long tail of land development. Yeah, I guess my question was more, when do other parties have to come to you for water? Okay. If you don't own that land, right? Yeah. Misunderstood that. If they're in the city of Aurora, which as you can see, most of the land directly south of Sky Ranch is in the city of Aurora. They will not come to us, right? They will get their water from the city of Aurora. Those land areas that are not incorporated into the city and unincorporated Arapahoe County, Lowry, they will get their water from us. I would say it's maybe an even split of opportunities that are gonna be competing with us, that are gonna get their water from Aurora, and then opportunities that we are competing for to be the developer or just the water utility provider, because they're in unincorporated Arapahoe County, whether we develop it or another developer develops it. Okay. Thank you, Mark. Appreciate the good work. You bet. bet. Yeah. Hey, Mark. I think I figured out my- There you go. ... microphone settings here. Perfect. Congratulations to you and the team on another solid quarter here. Sort of following up on the question with regard to water. You've got capacity. Obviously, you've got great variability with industrial water sales. Can you just refresh us, what your obligations are to WISE and what the opportunity there is? Especially if, I think you alluded to earlier in your comments, that this might be a challenging year when it comes to water supplies in other areas. Do you have the ability to sell through the WISE program or draw from the WISE program? We do have the ability to draw from the WISE program. That's an addition, as Elliot identified earlier, that's one of the acquisitions of water supply that's added to the portfolio. I think our full subscription in there is about 900 acre feet of water. That system's fully built. We have capacity within that system. We have, in addition to the 900 acre feet, we have three MGD of pipeline capacity in there. The WISE is a kind of a partnership among 12 different water providers in the Denver metro area. What we've done over the last several years is, there are opportunities where we want more water, like if we have very heavy oil and gas demands in the winter, and other of the WISE participants do not have real high water demands because their summer irrigation season hasn't quite kicked in. There are opportunities for us to get more water out of WISE. Then sometimes, when the heavy irrigation season's going on and we have light oil and gas or industrial water deliveries, our domestic deliveries are relatively modest. They're probably 25% of the total capacity that we deliver in any given year. We have opportunities to sell water to the other WISE participants. We go both ways in WISE, where we're able to trade for more water or trade for less water in that opportunity within WISE. Is there opportunities for that to expand? Yes. We're looking at partnerships and regional partnerships for storage. As many of you who've been following the company for a long time know, we have some very valuable storage reservoirs. Those are opportunities for us to develop and store other water supplies as our partners look to develop those water supplies, have a higher treatment capacity where we can deliver more than our subscription of WISE into that. That will grow over time for opportunities for us to expand. It would be a spot water type market, but opportunities for as oil and gas over the next 10 years starts to mature out, and if they recycle in and refrac those wells, that will continue to build in the next cycle of the development of this Niobrara formation. Then also opportunities for us to be spot and peak water deliveries to other WISE participants. We look at all those opportunities, and that interconnect of that system is a very important aspect of that. Okay. That's great. Thank you. Appreciate it. You bet. Well, terrific questions, and I want to thank you all for your continued engagement. We continue to really pace the development of our assets and really are looking forward to build out at Sky Ranch. We're looking forward to continuing to expand in the land development and really monetizing our service area and more water opportunities and really building this in. We couldn't be more excited about our runway and really the market penetration that we've seen as a utility provider in the Denver area, as well as a land developer in the Denver area. I think that's gonna continue to generate really handsome returns for us and returns for the shareholders. If you didn't get on the call, if you're listening to this on a rebroadcast and a question arises, certainly don't hesitate to give us a call. We will have our annual investor day this coming July. Do we have a date set on that? I think it's like. I believe so. Third week. Third week of July. Be on the lookout for that. I think it's typically on a Wednesday. I know I did get one shareholder that was looking for combining that with a Friday activity, but we'll send some information out as it gets a little bit closer to that. Again, thank you all for your continued investor confidence, and we look forward to the next steps.