- Earnings call transcript Q4 2022

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Operator

Good morning, ladies and gentlemen, and welcome to the Pure Cycle Corporation Year ended 2022 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Mark Harding. Sir, the floor is yours.

Mark Harding

Thank you. everyone. morning, Good welcome to our earnings year-end I'd you call. like to

at housekeeping Just log have website then a there'll items. that page, a tab that the few over in there'll to link deck our be you do and if allows We a you Investor join. be call, for to on a purecyclewater.com, page this to

there, slides have and will So I'll for be of on the join the to advance want you'll and button PDF then on then reference will through that be deck bit to as well presentation click reading only to the under a all me a website detail. the also and deck able that little With get both you on be take the presentation mode land weather, on Lashnits has Dirk into of little activities. today he's so a our been in development the it listen going more handles who Kevin a as is McNeill, who the

so a Dirk chance me, the that to you'll successes area other have as land in from some of well. on from hear than And and activities our hearing

with start presentation. the do not are statements. contained with thing reference this to like by And in statement, to that, our presentation is forward-looking we that the need safe about historical fact I'd first talk harbor So is just which or incorporated

question company. can harbor of the kind -- of overview think back detail. There's company. to a at so company with and go the certainly, I you're and about really portion a website. a some going going not, the if on be forward-looking more can And you safe I'm of this information bit of ton to the familiar our in take look with presentation little the through the are of of of statement familiar get you all Most lawyers room. are we overview statements brief the the out the you

the at level, a single-family into where complementary, asset enter appreciating portfolio give all that because in continue carry build market, have metropolitan utility to the So that the and I some land location And a to at of forward we're opportunity there an water have provides that they're But back on we segments, a water. to we able the planned in us in We website Wastewater water little resources We the we very and encourage spend we part country that that flow in and it what have segment. bit them do. can for hold specificity to cradle-to-grave of equity -- water value margins and develop the that for our on. customers master we foundational are lots company. Denver to a service we the resource where own an right we have homebuilder the we're from some and customers time take rental Water developing large those valuable operating you then ongoing an really have for X them of keep area land terrific along community that both cash you the to we a really, the develop and own to look on is the you water we more that's we homes

a of bit just briefly about the I'll little talk segments. So each

fees a to this. the fee. are supply. that distribute is diversions, fee, wastewater mentioned, I We our instruments water tap Colorado, We We tap $XX,XXX. connection the fee here As water, get X which our We water supply. the all that segment. to referred water the treat And customers. develop for the get around right wells, in We

$X,XXX. around right are fees tap sewer Our

and capacity the signed provide we And each up wastewater ongoing have to the then those water to have company, revenues and to get connections XX,XXX approximately as service wastewater water we connections. month. We

industrial they're have treatment connection we water collect generates So back. per supply customers. process water supplies, we're into per balance that a bringing on the supplies, that we year water our a And have very irrigation sales surface to usable or That system that water that our wastewater supply really, into We tight supplies, side. water, our water where them monthly water, service that. taking $X,XXX customer. We water about wastewater wastewater into outdoor whether system sending ground for

in recapturing have that have right into results a to irrigation, then of be in able bit that reuse some and use our to loss, outdoor system that of we going we also systems. a the then take terms And that's customers. of which reuse but do and We that for are mechanisms industrial water

system investing and are really a customers. So for company the for into water sustainable balance our

We asset continue our to grow base. infrastructure

water doubling and then So investments the we're supply. really so growth, growing facilities, customer we you of water with wastewater areas treatment treatment our investments the and of transmission base. years, storage, over facilities water our that Water distribution the board facilities that in a last claim see lines, infrastructure, all have wells, our the across existing where almost X we

users, south well Planned be whether area, Pointe Ranch then connections, and both bit Master is to that's Sky commercial area new those little Sky customers. that's going called have, One residential that of as Wild we to in the be the of service service industrial whether Ranch a Community as existing in Ranch, our of another Sky going area

today. to right So around continue connections the customers year-over-year. we to grow We're systems our X,XXX

customers. Another industrial important is our customer we that have

field. of where sits on gas very water our supplies So and be to right prolific we are. It on oil a top happen

water more developing that to generate selling are field so and of year and a water largely operators and the that's gas to well and regulatory operating the customers the sources that our comfortable and this area, customers, this of supply function them. distribute operators our that how as water volume water they're being really the year segment, price volume kind and gas record climate multiple with have in formations, reclaim Colorado of and regulatory We multiple oil, a in high the high raw climate water had we as for oil heightened settling in of offers oil to selling within down, Colorado

One things in of the is I'd are metropolitan geographically highlight Denver like where of we to area. kind

grow along growth any an in mountains, most As barrier are west, along we geologic you and our the really of well the we to Denver area. know, be have we might because and substantive prohibit foothill as the can't really ocean we a that there areas,

XXX-degree in activity area. And Denver the so growth really, semi-circle we're constrained to metropolitan a for really

Interstate-XX at right orange the difference corridor of there, look and the on map line you Denver this, the over green green the If in the metropolitan transportation belt there. and That's the side really East-West loop. then area have between that's it's we the

going XXX loop. Denver that top the be is to the belt Airport. see at International of Right can You the

then So is where a Range large our area, project is and that pink Sky kind has which that. X this of area, Ranch our the in miles for feel Lowry grown of you south development service look And directly which that new area the area, but only metropolitan opportunities also a service at in Lowry to area. and Planned development to Master service take Community, Denver Sky the is Ranch activities property, our Lowry able for being not gives

the in in a going have on activities we of bit exciting are segment Dirk. we He's over turn give on that update to the residential you a and an where give kind there, over. of you So perspective of land the and I'm development take area. to that's positioned want to to call going kind our it all Dirk of

Dirk Lashnits

morning, Good duration a old of for Ranch information it's development the everyone. Mark. Land Master Planned but stay the will the Sky Community. project. little the project, our Thanks, Right. is is This same probably hat,

the So come. for of that the years next we iteration several see the slide curve to

X So residential Sky up slide acres. Go square of XXX X,XXX All development. next is commercial about to accommodate can the million feet to here. right. We Ranch lots,

a again, project This phase. off had first in old XXXX. in kicked earnest So little of phase our the

for gives I sort of frame think of a basis. pretty overall project it good a and reference the

lots. XXX as wrapping is speak. This up phase this we So encompasses

last at you graphic right If now. the construction the can corner under you look of bit homes see the little top on the right-hand page, of

off. residents million. the respective to off, our been homes sold So have Last collected we've taps. the the the for all project our We've $XX That's are Based project moving our $XX.X few lot in. lot we're our infrastructure on all that's the this jurisdictions. We've tap. started. All finishing sales, all million over turned revenue for

That on this for on have -- accruing these in like XXXX. future. about something on phase then we bond that. $XX a these out here And costs some million, was reimbursable right. did All also We

in East. the are then is This phase graphic, move corner are on street the our right-hand school. current right-hand over to at What upper the to phase. So right corner then the you're and we lots down the the across most looking second the

So difference plan phase the our here. look going at out a land this new thing biggest we is really into on took

changes You X the our we versus introduced can some phase, types. plan we out. has look the went significantly. inherited at a really we to we phase see product X first kind the pretty our of next Phase product of In Phase the We layout new X lines, this in first the really X, how phase, project this -- took and phase, we with second wanted up at deliberate and basically

largely was Our motivation a density.

carry looking fall that we're whole -- would phase, our capacity houses us per at X the for of you through would X,XXX or first X,XXX the whole project, the and to lots. not get short up really if that acre, what Our whole project we about project

density that into helps our from up standpoint well. X bonding to So really forward, the usage a helps us per we got trying going houses And project acre. more incorporate on or us to water about and X as density standpoint that

have, added builder. this I product new neighborhood. like we said, We lines a in So fourth

we like yield phase pretty We So whether to number our the right builders, phase. that X to going builders so to our that of was. a in best X it with it we was whether the where either sweet good like in of first be felt balance was ended trying up felt spot. this analysis, X, or find going And

at So this segment, purple KV in in Lennar -- phase, blue one bit is in a a the challenger to homes. X lots product lots, the builders builders to the lots. mix. They important. little are got each this overlap And least and then have is those light unique time unique of get the it's there's one green. They

they're product competing one site. So on

same in future, this carry through our second phase. think I the at the least through we'll concept of build-out

stage So what the here quadrant X. on this is the X first you're of is first seeing of

-- future phases, our good concept have analyze then concept in more itself some are there adults. that's whether for some So we be other times forward in this in and the the repeats some the a first then segments and product and X we through, product phase. community. we'll And and opportunities second carry Those would attached like overall this go then active we as multifamily a possibly whether

So a here, of we've got in $XX million. lot revenue

from $XX here and our I XX% this up bond lot from up This the We think basis by then was XXX a our X. good XXXX was bond some And lots. on million we X. And phase that. through in that's Phase X going in to on saw on first from about that Phase Phase reimbursables phase. is appreciation that, again, another first in per did

center are next pie that's colors shows those so breakout building. the of quads our the the different of that mentioned, to So that segmentation. the if right, that I just we're next those pie types X a different represent builder over X different product -- look you The chart the there, slide at chart kind

parity the lots. craft good I there, good types of can and distribution numbers builder So of phase. product you a of got see think each distribution good we a And

we're previous was first that that So XA that I slide, represents on there. supply the building

will these roughly right that's out underway roll so year-over-year, now. nearing XA And so And actually, completion.

outstanding move next lot have we through school. then our few Mentioned less here phases We move items all that. received our and a we'll into revenue the as And little there.

looking So the a view is west. this towards

-- that couple that We for the object. center school of next side vertical layered in graphic -- of the the be the And model screen, little in X of are sort significantly the for stage hand has got for house you the XA. you to amount This screen, we a to weeks. the But So see there There's built of the few the in a more charter street -- in just foundation, that the there. academy, was going They construction Phase Sky construction. towards That's the of there. more right-hand on going That's a left school there's is go going started the of see screen, old. here on and the elementary gray the completion months of vertical that the on Ranch. challenger H-shaped they're there. house

subsequent So will that go very That as market about over we're pretty that's conditions here, structure years. school online the to pretty phase, quick and market. a fall seeing, Slide a KX is E-shaped years and open then add talk some start come will bumpy later, a that right which a right, All set high contracting so exciting. we we're is this now. little in a to next gray the they real year

called are experts recession. housing Some it a

quick some So indicators.

I Internet. out a the key here. couple metrics of pulled over all these see You

down are new Our XX% across year-over-year. home country the sales

are year-over-year. And -- for months XX build levels in sorry, -- a XX% confidence home our New mortgage our row. down are down applications I'm

So of basically had in We looking not talk about X%. abrupt watching not sentiments. historically, line. those we're out of crazy to from a It at rates We went uptake -- kind sort across rates. of interest And pretty X% those XXXX. interest

the decades, about back the since X.XX% interest had an go average If from XXXX. 'XXs, of rate through you we

point So mark -- for build we're X% XXs, our century that that something so and material in so. we last XX% that costs, seeing would probably the or and of we us into let see contracts our half labor remember, we That's anticipate. right typically, year-over-year. been couple -- they've a but the hit so then And around increase percentage in

labor year So that's over material just have last the been since costs up typical, XX% but year, our the start last up XX% the pretty and pandemic. of

up our is and house. of powers affecting of can are -- builder customers' buying sell are are and product that they costs our our our a partners kind down. the those how So And net

bad the on of side. kind that's So

in a as year good time run-up, little XXX,XXX. still comparison. houses hitting were XXXX X.X a -- last XXXX, side, units we about demand we period, year. were this We we seeing the just the And a were about for producing new peaked On are strong home sales million XXXX, new in only we per

see A be pretty good average appear there. market on other in market. like a So to indicators some a we days there the would on still capacity Typically, days XX/XX are the of the couple positive for market home.

So that's seasonal.

to is and on high-selling lot summer the the winter. in in we days are is So season, now note, which on into longer in then winter. downward XX a just And going days the trend that right the

cycle it is So the way sales winter, and back our down early spring. current ticking on starts then late up

but the So that's XX/XX currently like seeing we're on market. a typical, base

in going direction. positive that's So the

that, seeing but home was was, are think less it's of still appreciation, pretty seeing to inclined I positive a think what We it us were than that lot unsustainable. appreciation probably

other We're to for starting costs. the increased little a lending down compensate mortgage coming some the options. on creativity Short-term side that positive So to bit help pretty thing. see

So do these QX buydowns now.

seeing creative help low customer, in to here our out still unemployment, other Colorado. and So especially then the buying figuring ways

that not is be collapse. going we're necessary and correction a to it's takeaway -- our is So a hoping

that market builders. What fronts lots doing next on So is reevaluating the recalibrating our of all is to Sky correction and we're deliver looking Ranch. of of kind at timing out we that on set the for

take our to in from So need Phase the slowdown that they'll when their as and builders those a that sales see next phase, be on lots XB.

market little representations Next slide, some bit just of graphic a of more the stats.

point. those there recession, any housing seeing some lease at are foreclosures this then standards, and lending really significantly from XXXX like different ones lending hopefully the standards First supply, of not

a function of that is sign that. unemployment back set and So good

it and Mark. related turn I'll to think I a back over that's

Mark Harding

Thanks Great. Appreciate Dirk. that.

to segment, we've Planned our retaining So little Master talk a I lots want through last single-family really this rentals. business More recently, business about Community. added new our in

causing we opportunity it's ongoing Community, of do And what that well these great so we're creating And to us on a a single-family We the develop a the we provides cash company place appreciation Planned home and we're the do those. to actually seeing lots side, on the mostly as that value we in and Master development see to then for in for flow. nice for getting invest increase appreciation that. in significant want rentals into continue

our and So that we development like really complement water land to activities.

see we're more going to And to activity continue some so there.

Some of the this home trends consumer the specifics on preferences, versus are apartments. in the

entry-level Dirk to key got to We've delivering We space we've have consumer is this for Affordability a a paired as got townhomes, recalibration the an than the area. broader driver price flexible location. as going product so be And they're going for more class. of we've as point homes. significant -- We've more consumers at got concentrated seeking really that's well be on more all a rather renter. mentioned, in

number And comes with so an have we product. dent home a townhome X-bedroom single-family would so from somebody offerings different we level, to interest a a product on X-bedroom of maybe have a a home that when that large to with to type everything in home a rent be us,

flexible price points home really there all the of of be those rentals. for So a sorts customers continuing market will in strengthening and for

come trend some how statistics both for of like single-family on market. we rentals and our is that just the on the single-family to local So a This us. those national rental cash flows and

then expense, up dues you're high and thing. end cash very margins those adding to in be then taxes and flows, our back getting we bit are depreciation our And so $XX,XXX if income. is little going of average about operating which our take home, revenue we're generating it a an This look in annual costs, this when at cost, interest and you on a

us. carry land free provide water equity to So segment and of cash those the in rental we to the are the able value flows forward to

in continue invest really going We're we that. to like segment. this to So

have rentals X We actually, year. We added have week, We XX on construction. under and just last available. had up currently this we X and another

a XA. give is bit This the on into mix. this what So metrics for we're product on looking next Phase diversity of to forward of that you phase. Again, carrying the

getting purposes. of our So if our retaining terms those in our the we've you we're customers, some what also builder look what own at to for of we're on sold products

So we homes. have few flex

range less of XX-foot rents product had that anywhere $X,XXX have we small month phase. we month. more to from same And first going slightly in product have also our alley We a and then to load the a the than $X,XXX are

for on single-family I some drill market. to opportunities specific great rental the We've financial highlights. us the year. a So want on of down fantastic had

As from of releases, some execution, you Wastewater Water the press continued the segment. growth saw and our continued in

We continue to invest in that.

$XX a have Again, asset acquisitions little to that had this that million in around cost. in segment. we So capitalized area. We we continue water -- grow opportunistic

and purchased has all the on on more of was Colorado regionally I'm you, of little be water those we rights Most more Flat of the in a highly an that area supplies for water located River. the more Water water We've Colorado not water never River. we some sought-after investments They're opportunities. that one had have many but So sure, year, Western of supplies to in about that River. our press know high-value are I relevant. the the Water that those had. been a other on continues was relatively normal seen

revenue deliveries, in million XXX had that of deliveries, to for in we segment. generating us So deliveries, water we at water year then And record gallons look a over that. record continue water

So our land continuing development activities. with

come As than delivered the that, wee customers. our we're XA, homebuilder all also from as lot XX% Phase on sales. we And that Dirk continue delivered more and the reimbursables development generate to revenues a those as on both XXX% both we of to very improvements X, on we have maybe lots that. back X. about also terms to as really complete our And that we Phase sales but recover of carrying not Phase reimbursables that Phase another those then only well invest land those public to bond water in, of margins the look the those lot take to we've and the continue some forward X, of in had When bit highlighted, in us was nice on a of gross some you at of highlighting, some

very generated on some very liquidity and record low So side development has for exposure. had land opportunity high the outstanding We've us. that execution really

business real and this to infrastructure is in time. us able here Our deliver be to model allowing develop that

the neither to than is in So that. rentals, are forces nor we what market. And us again, on our demand the then them on the single-family growth customers continue exposed to anything homebuilder opportunity continued partner And other with for delivered. we've to market home rental really

some more So in we highlighting that area. like homes financial metrics. Again, Take some revenue. very much delivering

and see, Land as can recapturing recognition $XX means of big $X from $XX being about The net was or have recurring then We very Great kind accounting our improvement we million from that public primarily in as of XXXX modest in to came in in an and XXXX. of from million growth segment. be with highlight revenue, comfortable came our issue Development investments. you income, million able that Water those started this endeavor Wastewater of

continue and that then to revenues those margins those more And years real-time improve. recognize those our to accrue are as XXXX then previous in So area. of into some opposed recognized

more the segment, growth. as So land we both it and highlight execute the asset water more segment. to team Again, rental continuing development to we're to proud our of single-family utility, to becomes on ability forward very look continue and the to material

for in continue around then right cash equivalents water record million We that to rights invest showing $XX water, cash year-end. you of wastewater, ultimately assets, our and liquidity and

for us, outstanding we're timed an So is for really this how us. and out of kind proud year of

about we're look little a ESG the to on bit want our Do you being opportunistic some position side. good taking at investment very of as So initiatives. we're in a a talk

want that. continues ESG -- hired documentation lookout develop who an you to the initiative ESG be for So really our on specialist we we've for be activities. We to to want

up ESG to So that month. our post later we'll website. our report coming We'll this annual have first

of for as going from So some looking disclosure guidance want as to well forefront that. are SEC Exchange this be on We be the the and on standpoint NASDAQ be the look to for. this an documentation, on both what

those So specifically efficiency, you wastewater Things that. for water network tracking are management uses, usage, us. initiative collection recycling, look data, track things. and how sorts employee continue to highlighting assessing, of affordability significant track diversity, water a water all company diversity will It's sorts access, and to satisfaction energy issues really assess We the see and NASDAQ. those documentation and the we matrix -- can and perceives high for of staff board disclosing then are going as by required

see to bit position, continue debt that. the very you'll $XX at favorable sheet, in terrific highlights sheet, on on here. little So A position low rates. cash, low million more interest some some of debt balance Balance

So that at interest the X.X% we of a rate. financing lot locked in

$X.XX have a revenues, net if million at then $XX I talk a to income, And bit the in those on $XX diluted Total take So XXXX. share other basis. million for a worked income some you well look little also per us. tools. almost again, for want statement, about

and we adding hawkish the of our denominator our it, tool we Board nature many a are as So very you anti-dilutive on being -- share authorization And repurchase really a a to at through capital kind currency. very of are we're box for our new of know, looking this as program.

of to very be our on sale stock to option modest not we And do since our capital We want We owners XXXX. employees have the plans. company. of through Ranch acquired stock incentivize back we're raised the Sky in

But And so opportunistic an in this component ourselves. that. is to we're also invest important being of

Board look so disconnects at of And of our market authorization and look the maybe that is that value a our for this that may to take the the what market an took at liquidity is. some compared as valuations us and the intrinsic an to believe a opportunity perceive take we some

out bit through be that. have that you'll will So December meeting shareholder you'll next the annual take we that cards advantage proxy X. and as important A dates, in disclosure of on of proxy And quarters. January. upcoming several see of couple We'll mailed statements little an a see

at January meeting Take again, the leadership. look report later So a this our year's on then be be will will And initiatives ESG this of month. XX. kind

solid have leadership to the level very at continue both Board as well as We level. the staff

We intellectual of complemented we're Board by capital our highly just an within outstanding Directors. have

And so direction for on an us governance they provide great ongoing great and basis.

thrilled So in to I more couldn't have continued their leadership be scope.

Okay.

being lot able a some of bond overly how closing because when had my recap recapture able our finish -- how for year and real-time we business but bit me that in to through know markets that terrific nor invest We the And are to Before quality, shift through fashion, model see and we do paid a significant a working builders a really We liquidity that you us of reimbursed. like excellent remarks, our model to delivering let And Those only really budget. we also be liquidity were neither this, a were that here. do I business just then the generate CAB of is give schedule a with lots set we offering. dividends our direct really, of really, in credit how us, bonds. the development, was result opportunity you sale not develop, land on delivering a next these exposed. for

builders overall to recession of give Our to I'll the market and the market finished XXXX, this market. the one where entry-level the providing budgets XXXX, them providing prior Denver lots Prior be. starts prior kind in wants XXXX you -- home but here here, actually about of in dynamic the a home of XX% and -- have developers that and of we're starts for level their entry to represented everybody tightened to are few at

a had to really X%. first-time pursuing builders that concentration number you really that buyer closer has market. So And to and developers fallen of

really, primarily Denver of housing affordability that's we And The for reasons. in because number few market. that starter the So remains in Sky out strong. have a projects is Ranch Colorado, problem of homebuilders one an and that's demand in of for home there lots delivering

homebuilders our buyer. at So we're selling entry-level versus positioned trade-up We're homes, are new well buyers selling that homes a to market.

more be New Dirk buyers mortgage, mortgage. X% get really recalibrated X%, number, of to buyers what is are buyer. was we'll in buyers the highlighted, new not going existing really think the trade-up is a that have These traditional with And market. anomaly I as with The that right? on comfortable an to average not X%, a X% then that. isn't selling to They're this anomaly rig, we're

our the a in tool in in of balance make this both to box, invest company have land we We in liquidity can great lot and ourselves. acquisitions, terrific disciplined new now and and with optionality sheet, water

So the we'll at right we're company. look now, continue to that have have very delighted the continue to we liquidity grow opportunities to to and

So I it questions think some to can down and have I'll back you all that, and some see specifics. that over answer drill we Ali with turn if to

Operator

[Operator Instructions].

an first is Our coming Bill from is Miller, question who Investor.

Bill Miller

loan return on couple because to, you the I-XX is on rental going congratulate you have. about curious certainly home anywhere your just you a where year to a quarter, XXX alluded opportunity I or or that's are highest market along things. number is and of acquisitions else? beyond a land great investment that you One obviously a the for Are your you. secondly, I'm acquisitions and big further you any have home you And expand whatever

there? at you aggressively resources pursue to go reallocate you at you to do price? that? will that and going this Or So XXX,XXX? are going stop plan you finally, are beyond how And to

Mark Harding

Yes.

order the in if them that. can take me presented let remember I So

do as past, interest the that. the And degree we've of talked in So the a high I for have in well we certainly known on think segment. market very we're acquisitions, land

of interest most not which land, water. these the water, do have have We surrounding

at are seeing very we area, with. and active of value pursue of any of to broken intrinsic our while able being to does the in a in lot liquidity this to piece we high movement have a of to so that. free to add in We're value yet, continue land very pursue the degree have water that, pursuing And we're those a equation. not us that acquire interested it So we of

that optionality do able being much very like we and that. So to

say where going to are very the that continue I'd the what what be We'll is preference great land X, our the that a continuing add. to with very looking single-family may partners, We're some you we if builders that's back on and try tuck-in do available and opportunity us to for that near market, As taking But continue make in that's water try when be overweighted we of In concentrated continue do to well. that that of at see, be have segment, located Each would the side. those invest some And roll in is they've acquisitions really, Phase done market single-family right to themselves to and that did entry-level well somebody to we we're all in segment builder more forward. water also our be that. us at And us. our do an home. look in sense finds of to want to a lots for for at opportunity existing rental that take we're market. supplies to water. the

are doing of interested opportunities. that. Yes, those our but under one lots Currently, So this are all contract, is of we in

to see C a may Phase you more bit invest D. little in XB, area us continuing in So that and

opportunities are those for So us.

the elements in land company, that the was extent To to shares things and to it all see. number, that wait shares X is but to currency. buyback, that of it's continues Board make market own in we'll Can it want because XXX,XXX an is I disconnect water, and was As our sure cautious have to of a -- attest that the XXX,XXX the we the we anti-dilutive relates optionality there, of picked very share -- have investing

a you've time that the stewardship in where and seen, incrementally. we very governance are continue amount those to we been at are if see and tremendous of We disciplined. things Bill, with the a areas. have us and then As take look working working, We they're you've reinvest they these

to see any carefully our see buyback we invest our continue it's So through where successes. than do in own and of kind that. history currency you was more specifics other an so, past you well than we then our I performance things of to this and Other how we can't thought number thoughtfully, opportunity share very, continue a very give for quarters of and us so

our to going be we roll continue that are forward. those So to metrics

Bill Miller

company, your portion to of you business a how Mark, do rental big want be. to

Mark Harding

a question. It's good

lots good look portfolio. XX% there, would be of out a our to target market you X,XXX that in somewhere at single-family can the growth If be XX% a around take that

Bill Miller

That's going to be a big business for you.

Mark Harding

is to That point. continues those appreciate. good a is asset for to business I mean, that going be us. of much X And things your to where it

that on of provides the And flow is down cash that. to it also cost rentals us. mortgage customer then paying vertical the through Our

win-win it's going And it's is actually we reason of a to in. have be segment. to a -- So X those that one it be

land in highly good But be the If equity a us a we that to it's is the fact have tax-efficient business, would to look be water, a in in we and and forward being value in. the equity you lot able that carry we us going towards invest to are have I the in given say just business money a segment. take that to for value of the in the the at business that mechanism it's

So we're appreciating. it's and forward carrying that

time to so if a as us we acquisition there, few an opportunity And be grow hundred find at we've got for that punching back. spin out and above turns for that a it land be can continue are acquisition great then weight that that use that homes out monetizing another that off and a our to might the and that bit

segment. So there's for business flex us a on there that real

Operator

with Asset Our next Management. from Geoffrey Scott coming question is Scott

Geoffrey Scott

questions. Two

mention commercial of timing You much potential development didn't talk side. about that. you about the the Can and

Mark Harding

that side. we to say segment, out. -- have up continuing build bit on still The And I'd we're residential Great a question. commercial

vertical for the what -- do also a opportunistic bring like looking retail and that, looking the able density they're be big to on we're would some be in land We're commercials that putting really venture, the to doing utilities would But to we the to lot there want take for equity -- not that big bring about looking of think a do be not And really, have of a of most residential. for going neighboring out margins looking opportunities go high-volume able want rooftops for store. the I much as centers big that just want segment being high-value higher-value a that boxes. looking the provide to big able and some maybe look have rental the stuff. And there. developments for we're thing. like to carrying to X,XXX that. We're to at are value. forward in grocery where area. single-family of on this commercial and small the there to partner us we for we grocery up We we equation we're do are the be We're we do in about around on We the the store,

commercial So then really it. up think located trigger those lead and and end want it's kind Where positions to times interstate. as going of to because we're still our the get belt of location, off loop patient by some big small develop getting out some of a big usually right patients of right little opportunity to we they off, mostly lot sites pull we're next of rewarded here interstate, be We're the well a I right? a that redeveloped, and that retail our bit to people some big, a south that just preferred located not too that commercial in that the bringing on and like just is be in really located, that then and early, because does we're commercial,

airport, high-value does use and for pretend commercial. So -- that sorry, just it's large of out so the

that. continue but we're be pursuing very a on date we start I don't that. on active to that, we have on I So to being that, opportunities know I've and continue said for patient be market on patient

Geoffrey Scott

If So big kind in community built, right? box thousands. I understood people want of a a more be of the wouldn't lot houses correctly, they multiple

X we're talking now. development about kind years from and of X away So

Mark Harding

Yes, that's say but not X to me out. it a for X, years might out. say it's hard be that it's one -- out, couple a I'd of far years

Geoffrey Scott

Okay.

on it was question Next page, whatever XX.

that's correct, math X,XXX delivered. feet, You have the feet my gallons If and you said XXX.X is of you XX,XXX. X,XXX had kind -- million acre acre

selling, you're to currently have, the why water So X% what, of feet that X% additional acquisitions? acre you

Mark Harding

just really gone is can. city we by forever. purchased Once water a It's municipality, it's where the

with. expanding that at our is looking We're necessarily it's anywhere. not we're what to so acquisitions expanding where And just the invested next already portfolio areas we're

particular a in acquisition for of a long know do it's and we that -- We consider really strategic opportunity we're it's value area, it good portfolio. we'd us continue but able on to to Is function build with that those. to asset our it's be don't Are a builds to invested the look water. where other acquisition, And we're price. an bring it. water our infrastructure price? rights cost overly want value We so to of that And beyond we that to

Geoffrey Scott

hear a of defensive really you I to keep it correctly, control? If move it's governmental out

Mark Harding

-- the other I of control. provider, necessarily Not once very mean out governmental water so competitive. it's

opportunities who supplies. all So providers scouring were out for XX different water we have water

diminishing an are number you that opportunities those of looking opportunities. for acquisition and so increasing have And acquisition folks

side the we And that continue looking logical so we're business through to at grow making can of sure acquisitions. that

Geoffrey Scott

reservoir? on Okay. happening the then Anything

Mark Harding

with still studies, look have and that have whether the No. of interest with update assets take regional Wise look reservoir consultants we continue nothing with other partners We Metro to with on. to really on and exciting in those South that that's the all our our or at smart Group, that, you partner to a we but evaluations neighbors

Operator

is Greg with Malachowski question next Benchmark. coming Our from

Unidentified Analyst

with that how in evaluating Has approach know general kind financing mentioned mainly with company is guys been that the the high you couple business. Or the that? of rise change you were ones involves any Xs. Just rates, how I rates? the mortgage the -- in through approach all single-family mortgage in one and Xs low the Has to or funding question your future are anticipating a changed -- there at rental

Mark Harding

out keep and we and question. will a good $X attractive that, us, The continue million that we lock those some did maybe we to That's there. It opportunity very has. rates, in so like for at

financing mortgage that of maybe we strong bit have we at XX% finance instead equity because up may in rates look of drop such X% may have gone As down of that. that, to we of XX% and value that, a

that that's stay at for I'd awful to was will This be better at we say financing it's not it be be And X%. X%, going still is for to else. use -- not X%, It the it's to to where X%. millennials everybody mechanism. a significant So It And we're always type a to I at right? think it it's than is buying going indicative utility a are they house investment house. of at to other owning there's reasons be or the for decision that may the activity. an that a buy financing making that it's really other And And in be to house. going looking value

a taking line more so is more long-term traditional and in a X% projection of And with on mortgage that. house the

may We that, we're get because say, finance have X%, And but by I'd be those so an We for to continuing we either. grow that of some a to those getting going going the bottom to yes, like able X.X% do have better the opportunities extent on not to we return cash it in appetite line to flow when we're that overweighted continue segment. out those provide financing that. ourselves to to that's more to do to be

want the X% leverage of lending to as cost. to good Our said cost want still Board to us, this activities that. a We're rate money for carry that segment equity view because be value, vertical leverage that some there. mortgage cheaper going And of a some the type is we of us the is able very of for forward to the but we great has that but vertical to

XX% to of into XX%, us that So pursue going side. mortgage still see the you're

Unidentified Analyst

versus what up you the guys that see going you loosely do weakness maybe projecting of how picking And the at overall when strength and rental is home. associated right What underwrite with kind market now a looking Okay. would you're forward? or

Mark Harding

It's strengthening. a great is question, and it

that the and wanted why seeing you extent to compared be talk out would X%, say, of they buyers to like former X% have sense online that if would homebuilders really right? the of well, is it ability that lot a that really sense our for into of because we're online bringing maybe a excited the a about of locks those house component our That's There's And I school, they every it same who's the the qualify referrals from to think at puts education it -- for component them rental as the right? we're So coming you're are community, developer it. then of don't new units sense of community. place. a there them market, go new second community. what that That's some got really the getting That's initiative a to you is, being lose subdivision, to of that the

open what families, It We we're not may full KX. facility. strong be is. once, the capacity that's for because but grades this of that's up opening that all those driver a a KX new so at And all will particularly

builders of find we claw a our few to lots traffic kind cells. in on to business, rental of with be partner on why some good that our and the some of may we is putting flow so little back those wind single-family which a bit of And sale

Unidentified Analyst

robust. Okay. that's rental saying you're what Yes, market so favorable. is is because I The was the financing -- still

attractive. that something I guess if have something I I'm looks sure you float So of can guys that thought maybe really

point. it buy to land and costs guys it means you And is capital and I'm no at at land, -- really with is want takes of a at the are two, time, aware, capital best look You so by you've cheap all. two, our lot land of plate, capital kind of it is already land is talked a the lot use of on a land And requires obviously still with problem of about sure not allocation one, develop. as the what lot the this you

stay sign approaching for worth, this, been in continue have, ride. I in an you not you for best put own at over similar the the mentioned first you you're one is, look just currency, company but really, if that water the how for gives company the assets if the to to $XX print, rights you're and back sale are previous no a up it's but when market, along and think, the your of just use the caller, looking investing We've you're be credit in is capital that shareholders creating guys nice, you terms the and think share, You view thing, you value of public either. water immense say, a on the $X correct at way I the capitalizing that to might the

again, I then you of where that be commend great. basically these to And cost. buying get prices. $XXX,XXX back $XXX,XXX single-family it's So that you rental asset at the you're that's I doing which I stock able think or But and should fraction now, like aggressive guys create And your think at a business. into a

land, You keep tremendous that, own the the developer have then optionality with on margin. financing. of And top the you

you're let's these that momentum put $XXX,XXX, and bank of call only can you're value, most $XXX,XXX you it, for, also let's money, able not Sky if one up at create say, but to So the keeping moving. you finance with Ranch of things can

even in manner leading commercial keep I most think rooftops keeping the environment now important biggest is right an into things in the moving and coming. and one things efficient of the like an

selling the of many a some are slowdown So builders maybe or as is and homes there they're mentioned you've whatever. if not like --

break out down guys money. wouldn't that, out that that be would what much if actually then cost you the that back You could financing, cost even and homes, like and Wouldn't something guys take XXX you realistically you expensive?

be the and business, build that. water doing also coming, You you you'd the roofs money keep making

that curious type or I'm maybe a would now? just right like opportunity where had you of just for disagree because guys thoughts really opportunity I've an with where of kind or curious what as It said, that business any evaluate a you along that. that? I I about you So it's I this should said, think just was on rental heavily been win-win. is followed of And the if because looks you stepping thinking you up guys with no-brainer

Mark Harding

and lots. some that, back that Instead back pull pull having Maybe can have they a buyer. way house next we'll for deliver building it's would we section of those them then little we your working forward everything and what and at you on next Yes. look we're be, you be next to I we are ready pull agree longer said. on then to looking on No, than this we is a take us. to back, start, of I builders but of of you some we XX them do can long in be What those subsecond to develop at let's maybe back with or takedown. to can more our move on guys the say, pull to think have those never And this with bit each you'd we same of door okay, yourselves takedown, the want them been that the next not just find build have guaranteed and XX. relevant a

and Greg, look something take is a conversation will that that. there, So we at like

Unidentified Analyst

All that's That's for right. good. Yes, it me.

I Just it's think awesome.

a conservative capitalize now right is position responsible the in by these going line think being things. to a being with to been playing where you're on down having I company and capital, offense really win

XX guys you see start to good the it's that looking excellent. And was previous So way. months

think So given whole I'm at I think. think think, you guys lot what I you people excited matters can overall it new But about again, control, And less macro the situation. I than look might developments. a the

things as guys of kind that see to you well. happy at I'm looking So through lens

So to take it easy the forward and call. I next look

Mark Harding

Thanks. Great.

Operator

Instructions]. [Operator

investor. question is next an who Our is coming from Cunningham, Bill

Unidentified Analyst

you I a for very basic actually in a you. year. question fiscal just recent $X.XX have earned starters, for presentation the most share financial

that $X.XX numbers share. an per absolutely think final a it anywhere which actually $X.XX doesn't actual the first But The unless quarter, the quarter of means were quarters X something. specifically fantastic you appear I'm missing for share, out had you I fourth lay

Mark Harding

really the don't. particular right, for did helpful us fourth look a things we case, at quarter In apologize for And those next and quarter-over-quarter. -- of from boosted the that the You're this the it's delivery finished that because of for to all one liquidity the ability the to that always CAB, to I take that it was get was well, wise, us that offering lots. up bond ability

finished it so lot the weighted And category. into was

we'd a that pay always builder when a of where the principle. it look that agreements X/X, So X get a presentation. fourth builders quarter, always our Three be why they fourth this on agreements like a because we our that. that's finished agreements builder one will X/X, premium are take always at wait delivery. of pay look And always on us we'll It quarter, won't like delivery But is that, quarters. it look weight in for reason but the and delivery the lot that X/X will one quarterly They lot of huge the

Unidentified Analyst

soon, the Phase not Ranch situation Okay. X so I'm two? X I'm they're of that Co what's Or also which that shows selling and at D.R. those the it Horton updated looking are Sky your coming homes X actually website, wondering, builders yet? is that there with Lennar, in simply

Mark Harding

construction. under I'd single-family it, under probably got town they've has X, would detached X call X -- say say Lennar homes construction. got or And homes So XX I

a for sales sale. haven't opened not to They going -- a doing of -- the So as home. a they're yet out model selling be have just they they're trailers,

They I a little for their bit think start slow holidays. be really will their is their on to say, the -- getting D.R. they open before, approvals home through yet out have were there. county. model products Horton home the

the set think in most, X market. see They out cycle has get but a build they to X we'll their homes aggressive So within that. Horton on this next they're typically than more that what start more I there build weeks or to product. do spec

Unidentified Analyst

Okay.

-- So I mean, with in fees yet. fees you, I'm you obviously, tap how building but many haven't wondering homes, Lennar the about. X, actually sold they homes from sold tap And Phase purchase they've have

Mark Harding

you sold an building idea lots, in XXX Of of we've the about permits I XXX will That think are that. taps. the that give

Unidentified Analyst

ahead have -- then not kind a been of sounds to being and yet like you've Is for you're there likely ball of lull a fees the a be lot that sold. got homes of it -- already sold with with tap there

there bit assume be on tap the a a Is of in I might quarters. of that. next So couple fees low

Mark Harding

Yes.

with a at company at a that. market great a I that wouldn't a looking probably disagree ours the caution the harder, quarterly like as but you of and you're management well still as look year-over-year. year, If quarter-over-quarter, try I of is little we rest bit

Operator

who Lachlan Rosenberg, with Water. from coming is question next John is Our

John Rosenberg

year been strategy. have results Also, your questions congratulations my and covered. on and of your Most your

One to segment to about And talked and I I on of you ask flexibility congratulate your towards rental the last also wanted you first, just as questioned you. callers segment about -- and -- your demand. moving conditions market want talked Well, that in more

So drilling a bit little more.

you cap there you any do how much can on absolute in Is per that So that. flexibility period have doing or.

Mark Harding

we reason that advantaged it we No, so is to much we really the some have roll like don't. And that forward of an cost.

look a rental The the detached equity the a of right. that. of We're $XXX,XXX a And take we able a product tax-efficient we've that's might the like the market categories. be and so bit as second water the concentrating you here forward into do base, and got really that that value to home really X standard phase reason in different he's on got a more if different number product Greg was and And the mentioning, land at be classes. strategy we've home, to when we're is delivering carrying

and just -- the we new you town constrained a Right? family be to type an side. other can have be them and not comes where side look sides -- could be the say, home it, can would be for or got so taking It can duplexes renting in of a And parents out duplex. And with it bringing, that It be it great be we're customer. the a rental just and individual at is a things and same may shared both of on like opportunities together, one family that. spaces the

but this product we we're gives the offering the second a a us of us, customer marketplace. opportunity for So in is mix great for that's why diversity what like, optionality to a in it's phase our ton only that It's of homogeneous thing the not of not us.

John Rosenberg

of great. range And that was move terms thoughtful your a in Phase that's that. expanding in No, do appreciate yes, product I I think, very XA.

Additionally, just kind of of a little housekeeping. bit

presume the as over needed. from lumpy very time Your that's receivables CAB, I to be going

Mark Harding

these It's every start so It in you plus increase is. and kind premium years really of of X and It of call each what restrictions between so AV, as couple the bonds happens number you calls homes you and is. X-year the you X. on mills, your bonding of X-year a the these continue They're same is cycles X the as of AV, you have have do And capacity. each to value of that. grow, up build X-year them,

not will so model. our but complementary of from for and lot of business say So the were a they municipal in about they have not market at much that are our been in And a we invested bonds. capital market, it, took rate lumpy. terms outflows a interest more underwriters could where look I tough, tough

have that you And the oversold coming all on deals out market, our so have XXX% hit we offering. trying bond when to you and were money

with we we that how infrastructure of So lots the we're of it this of over the We're or in our a we in do, skis partners is our homebuilders. component maturing do the it, investing we're delivery not care have really on how infrastructure. great which any and validation

John Rosenberg

but I lastly, And again, eligible of I in recall types perhaps that housekeeping, seem incorrect conversation great. you'll more Or the commercial other to large That's a that? wrong, for a be when prior reimbursement and from am from bit ultimately I'm to state? do go perhaps you infrastructure

Mark Harding

sales a state. thing And we You are interesting that call Colorado the about incentive what tax correct. is is

weight we the And burden tax is the so we burden, commercial to do what the base.

I Xx. So by mean by lot. a

the residential $X the Xx same tax commercial. mill versus and get residential AV I $X take AV the at same the million So AV at rate, at on revenue that. million If commercial I of at

reimbursables. -- your forward able supercharges have And would We be fund we public would point -- some improvements. would ability even that longer to have would capacity your the fund where more so bond it get those yes, be of to we back reimbursables to no

John Rosenberg

is And somewhat hearing cadence if you accelerated commercial the where also I reimbursement correctly, development? actual take start once now, it that imply would me then, I'm to you be means that of do would it also that from

Mark Harding

Yes.

John Rosenberg

Great.

Okay. it. and Well, keep thanks Congratulations again. at

Operator

Zena, Greg is coming from question who a is next shareholder. Our

Unidentified Analyst

say, one of quick Is $XXX,XXX, when in does same is homes have the product -- look a single-family rental. you're let's the amenities have the an inside it product Does question building Just a the to it the home? home, about other area the the that same? home $XXX,XXX, identical are

Mark Harding

want They're owned other have with not it every their same Typically, to consistent were same be what composition. are. Yes. be we it particular home the do homebuilder exactly plan, the but the products because will

same going So you're you're basements, going on to grade we're space, if crawl to -- lab same in block. got the walkout X-story where an to see walkout not area if an X-story home going you're -- in we're find we've area of a find basement that on

the out overall be character of to won't community. it So the to and blocks

Unidentified Analyst

affordable have well, you developers any I , and live years to about housing where Five it's concern stigma an I neighborhood, was there were supposed in in the stigma from in the Do a put to let's came area going built when was valuation don't know, say, now, not therefore, the built -- builder resale retail is this in be going the not wasn't up the by market be this different. that -- the -- that and is something by to

Mark Harding

these And we're we is. product would measure, have some over then in reason control Yes. a properties. tend that also And class careful the the -- that's large to argue probably I maintaining with I we think what

homes. XXX, be out XXX, me And a took XX% might homes if look homes, If of called that's got of still we a what X,XXX after to this for in to position that Planned we're us. going Community, so And we've of think and area. Bill we pose foreshadow we're of Master the the number way maintain community on in even a out XXX the execute XX%, getting Miller

maintain so properties. staff those the have of And kind we'll have ability enough to to

keep resale We want pricing. And we will to rental purpose. want particular preferred that should choose have monetize so good that. do we asset. have We to that very that We'll for to

don't want that. this of community. very to this on continue conscious continue to returns we're that and in want the And be really asset. in to We area. now community. So invest generate slum the to We we like lord much We're vested

is stewardship So we're we're an investing. the in you DNA of good And company. of doing what it year-over-year asset this and how see

to would to years our I continue be invest assets. in in XX we're I is But going doing happen may is that at the the what not to I speak certainly, -- footprint of when so what's And can't to it helm.

Unidentified Analyst

friendly? Are Or friendly? they tenant in laws landlord the Colorado are

Mark Harding

question. Good

The I pretty process consistent. eviction think pretty they're is consistent.

We that. haven't seen

had I'm the I Tenant. it's it the not or Nightmare but landlord. would We But be that that that on Keaton is was, Michael movie thinking movie probably experience. blanking to neutral. tends the haven't what say Francisco the to other. It's I'd It product in one San back composition. say fair about

don't I we -- we think far, So that. have

Unidentified Analyst

-- early that in single-family themselves? people it's HOA area, maintain their there care takes Yes, Or of yards do the landscaping. the an is

Mark Harding

their own property. everybody No, maintains

separate be density on by basis. them Now are single-family common townhomes the But the does and structure maintained the duplexes maintained have do a the fee detach homeowners. a maintenance to higher some like that allow the of

Operator

from Advisors. is question Knight Our coming next Elliot Knight with

Elliot Knight

followed don't has I've I like closely that to as Q&A session question, everyone. I the heard. I'd you productive have been have for thank have this and XX just presentation I, years. a know, say And to but company this most

Mark Harding

the bell At I Well, personality. take lapse end don't on and those it the -- you the thank is really the need seen, test that about are think what reinvest of have right up is everybody say We kind to and here. don't I know management is that that day, what some Board you. modification. really The those nice in don't we the thing -- catching things on of working, of continuing the discipline you've things modify do kind market, our think you things,

interesting will have that maybe anything, don't this to we it thrilled much is than rate there is different the we -- And be are more indicators interest strength more ability market so of think an into have -- very this market. liquidity we're to recalibration anything it. we than into got else. what saw I in kind moving than that going have We've macroeconomic overall what XXXX. But

this going take And for so to we're of. us, presents opportunity you're If us an thrilled. see advantage

Elliot Knight

that take advantage the I in good seen just past. keep it Mark, work. every you have going have you're I up to the confidence, do of things and you

Mark Harding

the back on going. that That's keep like me

Operator

Thank you.

First, at be questions time, further queue. this there no appear to in

hand Mr. for may So Harding any I it will back have. comments closing you to

Mark Harding

don't hesitate all to tuned. extent support and an technical be for you thank happy give to on a in a again of to opportunity the you that to challenge, specifics didn't like I'd on drill continued stay bring Well, me get Terrific. to I'd your the down call. any please to continue

We exciting shareholders. have working to all look our executing forward of for and the and some things that value increasing we're we'll to those bringing on,

I'll So off, and thank sign you with that, all.

Operator

today's does This gentlemen. conference conclude and ladies call. you, Thank

you participation. a at We lines your have disconnect thank day. and wonderful for time, may your You this

Mark Harding

Ali. Thanks,

Pure Cycle (PCYO) 15 Nov 222022 Q4 Earnings call transcript