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Presentation

Marc Stephen Spezialy: Good morning, everybody, and welcome to Pure Cycle Corporation’s third quarter earnings call. We’ll start with a presentation from our CEO, Mark Harding. Before moving into the Q&A session, we ask that everybody mute — sorry about that. We went ahead and muted everybody. And when we get to the Q&A session, we’ll make sure that the mics are open, but we ask that you stay muted until you’re called on. And with that, I’ll turn the presentation over to our CEO, Mark Harding.

Mark W. Harding: Thank you. Good morning. Welcome to our third quarter earnings call. With me today, you just heard Marc Spezialy, as our CFO; as well as our Controller, Cyrena Finnegan. So if you have any hard questions, they’ll help chime in on that. We do have a deck for this. So for those of you that are on this live, you can see the deck by going to our website on the landing page, there’ll be a tab that you can click on to. I’ll advance through the slides as I go through the presentation, and then for those that are listening to this on the replay, I’ll try and note the slide transition, so you can kind of match the audio together with the slide deck. So with that, we’ll get started. Our first slide, as always, to get the lawyers out of the room.

So you all are familiar with forward- looking statements, statements that are contained or incorporated by reference in this are forward-looking statements at that meaning by the Securities and Exchange Commission. I want to jump on really kind of highlight our leadership team. So this is your leadership team there. We have a tremendous amount of experience in all of the business segments that we have, very consistent and constant team that I have the pleasure of working with day in and day out, but they are really responsible for delivering the results for the company. And so it’s a delight to continue to work with our team as well as our Board. As many of you know that have been following the company, we really do punch above our weight on some outstanding leadership and expertise on our Board from all disciplines of what it is that the company does.

So I do want to give them credit for their continued stewardship of the company, the company’s capital and kind of delivering the results that we experienced. So let me jump right into the financials. Third quarter, taking a look at it, both in terms of the quarter and then year-to-date. Quarterly revenues, $5 million, continued to deliver terrific results on gross profits, about a 63% margin there, so $3.2 million in gross profits. I do want to note a couple of the highlights, one of the key things that we’re seeing this year is, one of the diversifications that the company has is that we do have some mineral estate. We’ve seen some tremendous results from our mineral estate this year, and that was a result of drilling additional wells in 2024 that came online.

So quarterly results a little over $1 million there. If you take a look at it from year-to-date close to $6 million on that. So that’s a nice bump to the financial performance on that. A little over $2 million in net income on a quarterly basis, about $0.09 per share. And then you take a look at that on a year-over-year basis. On a year-to-date basis, that’s about $7 million, so $0.29 earnings per share on the fiscal year 2025. Taking a look at the trending revenues. They’re slightly down from previous quarters. And the principal reason for that is just the weighted deliveries that we have for lots in filing 6, our largest homebuilder, D.R. Horton had a weighted inventory of lots that they have. They are on a finished lot structure for us. And so taking a look at how those deliver, we’re on schedule and on pace on delivering those lots.

We’ll deliver those lots by our fiscal year-end, and that will catch up, but there’s a little bit of a weighted delivery on that. This particular filing, they have about 70 lots where traditionally, they have about 45. So it’s almost twice the number of lots that they have on that structure. So that skews the results a little bit. It’s not necessarily indicative of any of the year-to-date performance. It’s just that particular filing had a weighted average on that. So when you take a look at it at a quarter-over-quarter basis, that’s going to be weighing in a little bit on that side. So this will give you that look about $5 million in this quarter. And then when you take a look at gross profit, about $3.2 million, those are kind of carrying forward.

Taking a look at it from a net income and an earnings per share quarter-over-quarter. Again, those are going to be the same results in there, just showing that inventory of that. And a lot of that work that the company does on that’s in WIP. It’s in the work in progress on the financial statements. It will just roll into realizing that revenue as we get into this fourth quarter here. Take a look at the fiscal year-to-date performance. We’re showing again some seasonality in that. We do finish all of our phases in that fourth quarter, mostly just because it’s a seasonality for us in Colorado, where it’s difficult to do concrete and asphalt in the winters. But we are on pace. This kind of shows you a little bit of where we’re at in terms of our fiscal year 2024 cumulative for 2025 and then our guidance on that.

So our guidance on ’25 was around $30.1 million — or $31 million on that, and then gross profit right around that $23.7 million. And so we will still finish all that work and then as our builders close on that stuff, we’ll be able to recognize that revenue rolling through on our fourth quarter. Again, carrying that forward to net income and earnings per share. Cumulatively to date, $7 million on net income, $0.29 a share on earnings per share. And then that will have a catch-up just due to the delivery of all those finished lots. We have about 220 lots coming to completion. We’ve got a bunch of those finished already, and then we’ll punch out the remaining lots probably late this month and the first part of August with an 8/31 year-end. Let’s drill down a little bit.

I’ll talk about each of our segments individually. Taking a look at the water utility segment. Really, this is driven by 3 different revenue sources. One is the annual customer growth. So we continue to add customers to our segments, and those are recurring customers. These are monthly billings to our water and wastewater billing sides. And then we have a segment that we have, not a defined segment, but a group of water customers that are our industrial customers. And this year is a little bit light comparatively to the previous years, and that was forecasted. We did know that, that was going to be a permitting year for most of our operators in this area, where our largest operator has been permitting the significant number of wells, close to 200 wells on the Lowry Ranch that they’re looking to develop.

And that’s just a lot of permitting pad sites, infrastructure, takeaway facilities, those sorts of things. So they’ve been prepping into a lot of that over this fiscal year, and we’ll see that more normalized coming in fiscal 2026. And then tap fees. And tap fees are very strong this year really because of the delivery of filing 5, which is our Phase 2B in that. We had about 230 lots that we delivered last year. Builders are vertical on those. I think we’ve got probably about 120 homes up in that of the 230 that they had delivered. So when they need a building permit, they’re actually pulling those tap fees that are showing, and really have that kind of lag effect of the delivery of the lot to tap fee revenue on that side. Just a little bit on the oil and gas side.

As I mentioned, ’25 was forecasted to be weaker due to the concentration of permitting at the Lowry Ranch and should return to those normal levels in ’26 and continuing, right? So when you’re taking a look at that number of wells, we generate about $280,000, $300,000 per well, and you’re looking at close to — somewhere 180 to 200 wells on the Lowry property. So it will take them a while to fully drill that out, but that will be a nice segment for us continuing forward, and it continues to be a really favorable relationship, both for us because we have and continue to invest in our water facilities out there and it allows oil and gas opportunity, the oil and gas operators to be able to handle their programs, which are really very large water customers without it being at the expense of anybody else’s customers.

So we don’t have to have our other customers conserve that so that we can make sure that we provide water for the oil and gas segment. So it’s a very partnership relationship. Take a look at it — on our land development segment. So we do have all the lots for Phase 2C being delivered in fourth quarter. So you’ll see a bit of that on the catch-up side but really punching out on all of what is about 900 lots on Phase 2 for us. We finished 2A in 2023, 2B in 2024, 2C in 2025. And 2D, we have 2D and 2C going on at the same time. And so we’re not — we’ve done a number of the activities in 2D. We might have a slide that might update this a little bit. Is that? No, I guess, I don’t. Let me go back on that. So on 2D, we’ve got the earthwork done, all the grading work done, we’re midway, maybe 3/4 of the way through on delivering the wet utilities and then we’ll move over to the road, curb and gutter package sometime this fall and then continue to deliver those.

And really, what I want to highlight here is kind of this — particularly in markets like this, and I’ll highlight the market a little bit later in the presentation. But in times where you have real-time deliveries, without having strong inventories on one side or the other, it really highlights the company’s business model for builders and the public builders in particular because their pro formas are really scrutinized on their ability to have turns on their lots and the investments in their lots. And what we try to do is keep pace with that, such that neither they nor us are maintaining too long of an inventory on that, and we can be just as real time as possible to deliver those homes. So you’re going to see a little bit of that and are phasing on that, and I’ll talk a little bit more about that later in the presentation.

Single-family rentals. Again, we talk a lot about this segment. A little bit slower growth on bringing online some of these new units. And the reason for that has been that the — our local jurisdiction in Arapahoe County updated their building code regulations last summer, and it had a lot of new electrical standards that it took a bit longer to get through the permitting process. We’re seeing that necessarily on the build for rent on our builder partners that are building the units that we reserve for ourselves as well as some of our builders in general. So some of that phasing on Phase 2B on getting more of those lots into homes and more home sales on that are a function of kind of that delayed process. A process that typically takes 2 weeks has been taking up to 6 months.

I think the most of them are through that process now. The process that they do is they get their masters approved, which are — this is the type of home that we’re going to put out there without that home being identified on any specific lot. Once the masters are approved, then each individual building permit goes very smoothly. But — so we’ll see a lot more traction on our single-family rentals in first quarter next year and then continuing through 2026. But we’re still on pace for the same number of units that we’re looking for on our single-family unit to get up to about that 100 units after Phase 2. Take a little bit more. For those of you who are going to be a little bit newer, I’m going to elevate this up a little bit now that we’ve gone through kind of the quarter and then we’ll highlight some of the specifics about what we think about the market and things like that.

But we operate in 3 business segments. We have water, wastewater, where we own a valuable portfolio of water rights here in Colorado. Our portfolio can serve up to about 60,000 single-family equivalents. And as you’ll see in inventory levels, we’re really just getting started on some of that. We’re starting that through the development of Sky Ranch, but also some exciting things are happening in and around our service areas. So we have a lot of potential for providing services to the Lowry Ranch on the service area if and when that develops. We have a land development segment. That’s really where a lot of the activity is focused where we are cradle to grave, where we do the utilities on that, we go horizontal with all of the infrastructure, the roads, curbs and gutters.

And then in some cases, our third segment is the single-family rentals. We go vertical with those houses. And we maintain those houses in our portfolio to rent out for single-family homes. And really the changing dynamics, and this is really shifting between is it more favorable to buy a home? Or is it more favorable to rent a home? We really try to vertically integrate ourselves in both those segments so that we can really service both sides of that. Let me highlight a little bit more color on the water segment. Our water systems, we have about $65 million in total water assets and really, that’s split between the water rights portfolio. We continue to grow that portfolio by tuck-in acquisitions where appropriate. So we have about $32 million in the water rights portfolio.

$24 million in water and wastewater systems, those are brick-and-mortar, those are pumps wells, water treatment facilities, tanks, distribution facilities, that sort of stuff. And then that $9 million in wastewater, we have 2 wastewater systems that we really reused 100% of our water. So every drop of water that comes to our wastewater system, we are cleaning it up. We bring that back to a regulation quality where we can reuse that water supply. We have a dual distribution system throughout Sky Ranch, where we can deliver that highly treated effluent water to our parks and open spaces to irrigate our outdoor parks and open spaces. So we really capitalize on good stewardship of our water resources in a water-short area. This is a little bit about the water utility segment and kind of the capacities that we have, acre feet of production, we have about the ability to produce about 3,000 acre feet a year.

And depending on our largest customer being the industrial segment, this year, you see a little bit weaker deliveries of water just because of the known and forecasted gap in industrial water sales but we do have plenty of pedal that we can continue to provide industrial water for our oil and gas customers. And then taking a look again to highlight the amount of water that the company has the unallocated amount of water on that. We do get 2 revenue sources from that. So if you look at these 2 systems, the production capacity allows us to get that year-over-year revenue and then the portfolio of our water translates into how many units we can serve up that 60,000, and we get a strong connection fee for that. That connection fee continues to rise, really translating to the scarcity value of water and the cost of delivering that water to customers.

But that is about $40,000 per connection fee now and taking a look at how that translates into the full capacity of that, that’s about $2.3 billion, $2.4 billion were through connections. We add — we’ll have about $1 billion of investment as we build that system out, but we’re really using a very, very small capacity of that portfolio. So that kind of gives you a flavor for those of you that are new to the company of really where the outlook for the company is. Do want to highlight one new development. I know some of you have seen a number of these things, but if you take a look at the mapping to the right of this, that pink shaded area, we call it light red, but it looks more pink. That’s really our service area. That’s the Lowry Ranch. Above that in the blue is the Sky Ranch property, a dark line is I-70.

And about 4 miles north of that is the Denver International Airport. So it gives you kind of a proximity of where we’re at in the Denver metropolitan area. And we’ve shown a number of times, kind of this graphic where development has encroached this Lowry Range property. And there was that one outfall or an out parcel on the Lowry Range, down in that Southeast corner. It was a half section of ground that was privately owned. And that property is now under development. And so what you’re really seeing is just kind of a surrounding of our service area. And it just highlights the location that the company’s assets are in, in the Denver metropolitan area. As those of you who’ve been to Denver know, we effectively live on an ocean. We can only grow in one direction.

We can only grow to the east. We have a natural barrier of the Front Range, the mountains on our west side. And so we find ourselves in the right part of town, not only with the land interest that we own, but also our water assets and our service areas. So that’s been a new development for those of you that are joining us on our investor tour next week, you’ll get a chance to see some of this firsthand, but it’s an exciting development where we continue to see the Denver metropolitan area grow out and beyond our service areas. Taking a little bit about our land development segment. We do inventory land interest, and we’ll take land interest from raw land, add our water resources to it and then be able to get the zoning and go horizontal with that zoning so that we develop finished lots for our homebuilders.

And in that segment, the interesting thing is, and we’re becoming more of a unicorn in that segment because there are fewer and fewer developers that are actually doing the horizontal work. I mean, they’re doing the hard work of actually contracting for the grading, contracting for building the wet utilities, ultimately, street, curbs, gutters, all that to a finished lot. And really makes us not only an entity that does that, but also an entity that’s doing that in concert with how the public homebuilders are looking for that metric to be done. And so what we’re seeing is a very strong partnership and a strong relationship with our homebuilder partners in markets that tend to be cyclical. And so they’re appreciative of us handling that portion of this work element, us being able to deliver those lots on a — as a real-time basis as the market continues, the market demands that stuff.

And so what we see is we can dial up and dial down on those as the market continues to flex in that space. So that’s been very, I guess, satisfying to see how our business model really is capitalizing on that partnership and not really imposing hard decisions on builders where they may or may not be able to move forward given the level of sales or given the level of inventory that they might be running with. If you want to highlight Phase 2, so there’s a little bit of an update on that Phase 1, as we’ve talked about fully complete Phase 2. We’ve delivered all those lots, and we’ve got about 115 homes up and sold. Phase 3, Phase 2C there, about 228 lots and you can see most of the roads, curbs and gutters are finished. So we’re just punching out some of those items on Phase 2C for delivery by the end of the month.

And then Phase 2D, we’re making continued progress on that and we’re able to dial that up and dial that down, depending on how sales and inventory continue to go, but we have that product that’s available, and we don’t have a tremendous amount of infrastructure that is new to that side just because we’re continuing to expand. And so most of that major arterial roads and water and wastewater and stormwater systems are already developed. So we do have that ability to continue to add those. We’ve got new builders in Phase 2D that do want those lots as quickly as we can deliver them, and then we got returning builders in Phase 2D that would like to eat through a little bit of their inventory, and we have the ability to do both of those. So very, very real time in terms of our ability to deliver land development and finished lots.

Another exciting announcement for this is groundbreaking on our high school. As many of you know, one of the most important things when we started this project was to really have a full K-12 campus on site such that all the kids in the community have access to that. It’s centrally located, so families can walk to the school, and we’ve had our K-8 open. Partnership with National Heritage Academy out of Michigan, and they’ve been terrific partners. And so this was a groundbreaking on getting the high school under construction. So they will be going vertical on that over the next 12 months and looking for bringing those classrooms online for school year of ’26, ’27. But that’s very exciting. Getting — continuing with the development model and very exciting for our homebuilders.

This is a highly attractive model for new families that are coming out that the local schools are here. There’s a full K-12 campus for them. Taking a little bit on some of the things that we’ve been talking about for those. This is an illustration on how the one project that we have, our main development project, Sky Ranch builds out. And so when you take a look at the inventory for residential lots as well as commercial lots. And we do have quite a bit of commercial on this as well. We’ve got about 3,200 single-family equivalent zone for the property, but we also have about 2 million square feet of commercial. We do have an interchange that’s at the site. We’re in the final stages of finishing a permit for removing that interchange and making it larger.

And so we’ve got — and we have not started any of the commercial development yet. Some of that’s going to be predicated on having a little bit more of the residential development. Some of that’s going to be predicated on finishing the interchange. But taking a look at kind of the revenues on that when you take a look at what we’ve done to date on the residential, we’re about 22% done, so still plenty of pedal left on the residential side. Really nothing started on the commercial. And when you combine those 2 and how we try to illustrate the commercial is an equivalency to the single-family rental — or not single family, the single-family equivalents. So it’s about an 1,800. So we have about 5,000 overall lots that we have out at Sky Ranch.

And so we’re still very early on, on that. And when you take a look at kind of the sold in that category, that generates something close to about $620 million of income for the company. So still very early on and continuing to really put up some very good margins on that because of how we’re delivering that, that we really don’t have a large financing cost occurred with that. We have good relationship with our building partners to continue to develop that. So that gives you kind of the full scoping of kind of that whole project. Taking a look at the single-family rental market, why we like that segment, very high margin opportunity for us. We maintain the equity in both the water systems as well as the land development costs on that. So when we’ve got all those horizontal improvements, we’re really holding that value, which can be as much as $150,000 per lot.

And then we’re partnering with our homebuilder partners who are building their products on each individual phase and they’re building that product for us. And it’s a good partnership for them because they have already sold the home. They have those margins built in. And they also and sometimes can rent back that facility to use that home as a model home for folks. So it’s been a very good model for us and a good model for our homebuilder partners and so we’ll continue to add to that portfolio, taking a look at kind of how we want to build those numbers. We really have only 14 units started. We’ve got 5 under construction, with another 14 that are close to final permits on that in Phase 2B, and then we have probably 35, 38 more units coming on in 2C.

So you’re going to see a strong acceleration in that segment over the next 18 months. If you take a look at kind of how that growth is going to go. So from really a modest start on Phase 1 with 4 homes continuing to add those numbers in each of those phases, up to what we’re going to have is 98 homes from Phase 2D. So you’re going to see a lot more traction and a lot more velocity in that single-family rental portfolio over the next 18 months or so. Liquidity kind of continue. I want to highlight stewardship of the invested capital. So we have a terrific balance sheet, high degree of liquidity. Very important in volatile markets, right? So we have the ability not only to continue to invest in our own systems and make sure that we’ve got the proper inventory of finished lots for our homebuilders, but then also opportunities where you have weakening market segments present opportunities for growth where we take a look at how can we deploy that capital.

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

And so we were very, I guess, seeing some of the benefits of that cautious capital strategy to make sure that we’re able to execute our results of our business model, and that’s really the fundamental premise of what it is that we’re doing. We move over to outlook. So this is probably what the most interesting slide for all of you is to say, well, how is the housing market. The headwinds in the housing market are, I’d say the biggest one is just the consumer confidence. Is the home buyer confident enough to pull the trigger on that? When you take a look at consumer confidence, the companion opportunity for us in that area is a market segmentation where we are one of the few entry-level master plan communities available, not only an entry-level master plan community, but one where we’re actually the partner with our homebuilders where we’re doing the horizontal.

And that, again, I don’t know how other markets are positioning on this, but homebuilders, all the national homebuilders that we work with have said, how appreciative they are of us as our model because there are very few folks that are in a position to deliver both the horizontal infrastructure and that horizontal infrastructure to segment that entry-level buyer. Mortgage rates, I think mortgage rates are always of interest to the homebuyer, but I wouldn’t say that they have been as a bit of a headwind as it has been in the last couple of years. I think the transition from a low-interest rate market to a more normalized interest rate market has really occurred. And so that homebuyer isn’t trying to time the market on seeing if mortgage rates are going to move 0.5 or not 0.5. I think that, that’s — it does have an incentive for those that are on the sidelines that are trying to jump in, but it’s really less of a headwind than it has been historically.

Affordability is always a headwind. And it really doesn’t matter whether it’s Colorado or anywhere else. I mean just the affordability of homeownership these days. And really, again, that companion metric for us on an opportunity side is our market segmentation. And then we do have a bit more of a rising inventory, mostly just because of the slowing of the market. We have a low — market segmentation is good for us. We have a low inventory in the Denver area of entry-level almost anemic. We’re probably one of the only ones that have that. And then I will highlight our phase delivery so that neither us nor our homebuilders are being forced with high levels of inventory. How that translates, I put these metrics up in Phase 2, A, B, C and D. And then we do have another fifth phase, Phase 2E that will come online as well.

But when you take a look at this particular highlight, what we were seeing is really real-time delivery when we would deliver the lots within that year, nearly all of those loss would be vertical. If you take a look at that metric from 2A. And 2B, we’re seeing a little bit of a slowdown on that. So about half as many lots vertical and sold in 2B that we’ve seen. I think that’s 2 reasons. One, you have a weakening market. But then secondly, we had that new building permit process. So I think it was the homebuilders got caught off guard on that and it took a little bit longer for them to get their masters approved on Phase 2B. 2C, those delivery of lots are going to be at the end of this fiscal year, so August of this year. And then 2D, as we highlight here, we have some new builders in there that we’re going to be delivering some lots this year as well.

And then we can phase the balance of those deliveries and then again, phasing into 2E. And it really — it kind of depends. We’ve seen some of our homebuilders who got in early, and they had all their building permits. So they took their entire inventory and built that out on spec and they’re selling goes out. We’ve got some builders that because of their market segmentation and the price points, they sold their entire inventory even before they went vertical, which is almost unheard of. We had our paired product out there, the duplexes out there. Our homebuilder that has that product was able to sell all of their lots even before they broke ground on them. So that was a price sensitive. So we continue to see strength in those deliveries of that entry- level market.

And we’re also seeing, we have several segments in that entry level, where it’s a paired product or a townhome product and then smaller single-family homes that may be 1,800 square feet to larger single-family homes. So even in that entry sub-500 market, you still got some micro segmentations in there. And we’re seeing very attractive results, mostly just because there is no inventory of product at this price point. So the next few slides are kind of carryover slides from our year-end presentation. And really, what we were trying to do is give investors a look at how we look at the company and how we’re managing our capital structure, both for the current year, for the short- term outlook being the 3- to 5-year, where we’re really strong in investing in our inventory of lots and then the longer term, where how does Sky Ranch build out and how are we going to look at additional service areas, whether that’s going to be the Lowry Ranch service area or other acquisition opportunities.

And so just kind of highlights that in terms of those areas. On the water utility side, and then taking a look at the land development side, some of the key drivers in that, I won’t highlight those as I know we’ve highlighted that in our last 3 calls. And then also taking a look at it from single-family rentals, we look to get to that close to 100 homes over that period of time. And then translating that into really what we think that outlook does for the company. And so this showed a little bit of trending analysis of how we were building that from 2023 to 2024 results and then 2025 results and kind of shows how we’re positioning ourselves on that. We are looking to deliver pretty close, I’d say, within a short part of what that 2025 guidance was looking like, that will depend on kind of the homebuilders coming and particularly closing on the last balance of those lots on the end of August and then what it looks like in that kind of short-term area where we can continue to build out some of that residential.

We’re going to complete that interchange and then take a look at some of the entry of some of the commercial in there. So that kind of gives you a little bit of a projection of how that translates into the balance sheet in terms of revenues as well as earnings per share. And then how that drives shareholder value. So continuing to kind of highlight those in terms of the water revenue, this is the recurring revenue side of it and then the single-family rental revenues and then asset growth through that showing that build out of Sky Ranch. So one of the secrets to the company continues to be the hidden value, the stored value in these highly appreciated assets that the company has been able to acquire over the years, both in terms of the water assets as well as the land assets that we have.

And whether we’re serving land interest, where we’re the developer or whether we’re serving land interest where others are the developer or in our service area on the Lowry property. It continues to build value and really deliver results for housing in the Denver market. Reallocation of capital for — we continue to repurchase shares. We’re probably a little bit lighter in Q3, mostly just conserving that cash for making sure that we’re delivering that for our business model, but we continue to really be in the market to repurchase shares on a programmatic basis. So with that, what I’m going to do is remind everybody, if you’re registered, we have both a fiscal tour, where we’ll actually drive around and show you some of the phases that we’re doing, kind of where the market is at Colorado, some of the water assets that we have.

So there will be that. And then right around 12, I think we’ll have kind of a virtual Q&A, and I know a number of folks register for that. So that’s an opportunity just to have a more fireside chat with kind of how the company’s inventories are going and how the market looks. So that will be on July 16. If you haven’t registered for that, please do so that we can make sure that we have the proper links for everybody. But what I’ll do is I’ll open it up for some Q&A and see if we can provide a little additional color.

Marc Stephen Spezialy: [Operator Instructions] If there’s any questions, we’ll take them now.

Elliot Knight: Mark, I’ve got a couple of questions. Pure Cycle has a couple of reservoir sites. And is anything going on with them? Has any development started on them?

Mark W. Harding: No, not really. They certainly were a component of what we continue to do in our water utility. And so we had — we’ve acquired some water rights up in Weld County, that we’re looking to develop in concert with our surface reservoirs. There’s some regional opportunities with the surface reservoirs. I would say those are mostly confined to kind of partnership opportunities that we may or may not have with partners that we have with the South Metro Water Supply Authority. So as many of you who really drill down into the company’s assets, we have a water supply called the WISE water supply, and that’s in concert with about 13 different water providers in the South Metropolitan area. And there’s groups and subgroups of that look at kind of shared infrastructure, where we’re looking at shared infrastructure on delivering water rights that we’ve acquired over the last 5 to 7 years to bring that down into the reservoirs and perhaps make capacity available for other opportunities in that.

But those are going to be long-range assets. So I’d say those are going to be more build out assets that really will be consistent with developing up to that 60,000 residential unit capacity.

Elliot Knight: Okay. And then on Slide 20, where you said it was at least looking at the map as I saw it, the lower left-hand corner, and you said this is a new parcel that is now being developed. Where will the water be gotten obtained for that? Where is the owner going to paying water?

Mark W. Harding: Great question, and I failed to mention that. That particular property was annex to the city of Aurora as long as 20 years ago. So it’s been in that utility service area. So they’ll get their water from the city of Aurora. But as you can see, it really does surround the Lowry property. And that’s a beautiful people project that those are going to be — those are not entry-level homes, I guess, let me put it that way. But terrific [indiscernible] out there. They sit high. They’re going to look out over the Aurora Reservoir, which is owned by the city of Aurora as well as one of the reservoirs that we have that will ultimately build. So it’s a really exciting project to see get started, but it is in the city of Aurora.

Elliot Knight: All right. And actually, one other question. In the 10-K that was filed, I noticed the footnote that there’s something over 1,000 acre feet of water that I guess is you’re trying to have permitted, and it was turned down, but you’re negotiating with people. What’s there? How much water is involved? And when do you think that might be resolved?

Mark W. Harding: So that — we were applying for a new water right there. And so water, it just — it continues to get more and more challenging to develop water resources. We were doing a new water right that was allowing us to take some more water out of the Box Elder Creek, which flows through the Lowry Range and augment that farther up north with some of the supplies that we’ve acquired up in the Weld County area, and it was a very complicated exchange. And so we did not prevail on that. But we had other — we had 3 other claims that were in there. And so that was held in suspension, and we’ve been working with the groups that were opposing, what we were doing on Box Elder to try and find a resolution to that. I think there’s a path forward for both us and them so that they get some interesting things that are helpful for their systems. We get the things that we were looking for, but we’ll wait until see how that plays out.

Elliot Knight: Okay. It’s a work in progress?

Mark W. Harding: It is a work in progress.

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

Mark W. Harding: Well, must be an early morning presentation. Well, if we have no other folks that want to weigh in on any of the specific color. I do know we do have a number of folks that have registered for the Investor Day, and then we’ll have another opportunity as all of you digest our earnings call here in our presentation that, that may trigger some more questions next week. So we do have a number of opportunities to weigh in and don’t hesitate to give me a call directly. We want to make sure that everybody gets an opportunity to understand the company. We are well positioned for some significantly valuable assets and really investing to monetize those assets. And as I keep mentioning, I think our business model really shines.

It shines not only with how we are delivering what is a truly difficult product, right? You have to — we’re spending $80,000, $90,000 to deliver these lots and you want to make sure that, that cycle matches demand and how that works. And so when a lot of that infrastructure is in place, the water system, the wastewater system, making sure that we have the ability to dial that up, dial that down for customers like oil and gas customers that can be cyclical and there can be a lot of activity going on in 1 given year. There can be years where you have a little less activity. And so our ability to float with those big, big accounts like that is truly unique, and we’re well served and being able to add capacity. We don’t overextend ourselves on those areas and then we really look for opportunities to continue to deploy that capital to continue to grow the company.

So I think we’re — this is a terrific illustration of the flexibility of how we manage these highly valuable assets and long-term assets. So if anything comes up, don’t hesitate just to give me a holler or weigh in on our call — on our chat — fireside chat next week. But I’ll give you all the last call for ringing in on today’s call. Okay. Well, with that, I will bid you all continued healthy and prosperous summer. Get out and have some fun and look forward to seeing all of those of you that registered next week. So with that, take care, and we will be speaking soon.