Capital Markets Day Transcript - PCYO 2026-07-15

Speaker 6

all right we're ready good afternoon um i'm mark guarding and and i'd like to welcome you all um you know what we try and do each year is give an opportunity uh for folks to come out and pick the tires and then you know it's it's getting harder and harder to to get out and and sort of visit companies and with technology, what it is today and our ability to kind of show visually it through earnings presentations and investor presentations and whatnot, you know, the actual company visit is sort of waning. But, you know, what I always like really is the opportunity to show it because, you know, when we describe it, when we report it on the balance sheet, you know, you get a picture of it. But when you actually come out and have an opportunity to see what's going on on the development side, what's going on on the water utility side, you know, a perspective of the growth of the Denver area and some of what we still continue to be, you know, the value, you know, our secret value, which is our service area at Lowry and those sorts of things, it does give you a different perspective. And as much as we try and describe that perspective, seeing it, driving it, you know, getting that actual imagery is truly valuable. And I know a lot of you, either on the call or who listen to us on the replay, have had that opportunity to see it. But one of the things that we did this year that we wanted to concentrate a little bit different on, just because there's a lot to see, is taking a look at our service area, taking a look at where our water originates, what's going on on the borders of the property, what's going on on the property. And, you know, what we were able to see today is a pretty sizable amount of oil and gas activity. You know, we saw a pad site that had 10 or so wells that had just finished fracking. We see them rigging up on another pad site because they're going to be fracking that probably starting next week. We see a pad site being developed, a pad site being graded out where they're going to bring a rig to. We saw a pad site where the rig was, so they're drilling that. And that one will start to frack probably, you know, these fracks last around two months. And so I think there'll be a little bit of overlap between, because there are two different operators. We've got one operator, SM, which is fracking the one starting next week. And then we've got GMT, which is drilling, and they're doing the other pad site. And so we've got really kind of two operators on Lowry. SM has the dominant position out there, so GMT is kind of backfilling in with their position. But it gives you a perspective of kind of the oil and gas industrial side of it, which is fairly robust. And it's been a while since I've talked about it being robust. And I always temper my remarks because as soon as I say that, then they end up saying, oh, yeah, we finished that bad site, but we're going to move on to another one before we do this one. And they're not always as predictable as both we would like and I'm sure you would like to give you guys some certainty as to how the cash flows are going to come in. And then, you know, take a look at some of the development that is pressuring this particular area. And you've heard me talk in the past how Denver kind of lives on a notion where we can't grow west and we just can't. And really the focus of the metropolitan area has been to grow east and even growing east. You know, one of the things that that shows as you drive it is, boy, there's a lot more barriers to where growth can occur than you might think. When you take a look at the south side of our service area, a lot of land, but it's all chunked up. Right. There's five-acre lots, and there's thousands of five-acre lots that make it absolutely impractical for any real substantive growth to occur on the south side of Lowry. When you take a look at the north side of Lowry and what's going on with some landfills and open space areas, there's a real gap there. And it really shows you kind of positioning of the metropolitan area and how much growth has occurred in the metropolitan area over the last 30 years. And then, you know, we're, you know, take that tour of Sky Ranch, show you the various phases of how they come online, how builders actually stage their production, you know, how they're going to take down lots, how they're going to build their inventory, how they sell their inventory, and how we phase that. and giving them various components of that inventory cycle so that they're building what they, you know, have for the next year. You know, we're building what they're going to want in the next year. We're planning what they're going to want in the third year. And so a lot of our activities aren't as much about what's going on today. You know, somebody often, you know, wants to know, well, how's business today? And I'm not the right guy to ask that. You know, my filter isn't how business is today. Mark's the right guy, our CFO Mark Beasley is the right person to ask on how business goes today. But 100% of my focus is how's business going to be in 18 months? How's business going to be in 36 months? And what do I need to be doing such that we are going from, you know, what our team is doing today, to what our customers are going to want in 18 months, to where I need to be preparing for the next phase in sort of that 36-month cycle. And it shows like that, right? I mean, when you go out and see it, you sort of say, oh, that makes sense now. You know, I wouldn't have otherwise appreciated that that is what you're working on, not for today. Those slots are going to be available summer next year and then you see oh i see that that's what you're going to look work to do for 2028 and then some of that other stuff and then also you know what are some of those what are some of those variables that we look to try and either do to to develop to acquire to partner with on other land opportunities and how do those position themselves in the metropolitan area and where is growth in those areas so that was what the tour was today. And I think we focused probably 60% on non-Sky Ranch stuff and maybe a little bit and whatever that little bit was, was pretty quick on what's actually occurring on Sky Ranch that gives us the world of how cash flows are going to be as we roll into year end, how cash flows are going to be in fiscal 2027. And so we saw a bunch of that. But we really don't have a strong agenda item here today um i'm i'm gonna put you know uh our two guests here who were able we had a couple of folks that that canceled on us on a last minute basis but um you know dan aronson out of minneapolis he's a long-term holder he's been on the tour several times jv um you know kind of new first time tour uh knows the story pretty well and and and you know maybe give them uh you know a couple sentences about what you saw, what you didn't like, what you liked.

Dan Aronson, Analyst — Investor

Thanks, Mark. A couple of comments. For those of you who have taken a tour in the past, I was originally out here when the first phase was being developed and you see a water treatment facility and there's a lot of open land around, but Sky Ranch over the years, it's really starting to develop and become a substantial community. The opening of the high school, seeing that what was open land a year or two ago with a full, not just the high school, but fields behind it and where you've got phase 2E and the grading work being done adjacent to that, you can see where the commercial takes place and how it's all filling in um and on the uh just the as as you mentioned you know be able to go out and see where um where development stops where the development is right on the edge of um of pure cycle service territory it's the natural extension and um uh and i'll just echo you i mean i've been out here before and you see okay well there's one rig here There's some pads that might be drilled. It's pretty extensive, the amount of industrial development and the oil and gas industry, and that's being phased in.

JV, Analyst — Investor

So, yeah, what stood out to me the most was certainly seeing how, as Denver expands outward, that you are the very next stop for further development over by Lowry. And, yeah, you know, previously I had sort of underwritten it as nice to have the upside optionality and, you know, we'll see if it ever happens, but certainly felt like a much more concrete opportunity. So that was that was most useful. And also the commercial area over at Sky Ranch, the compelling location of that. And, you know, both for the surrounding areas as well as how it fits so nicely for the broader community there was the second day.

Speaker 6

Let me let me ride on that a little bit, because I know, you know, there's always there's always I've always foreshadowed that commercial and, you know, upgrading that interchange is important for a lot of that big users that are going to look like that. and the interesting thing is we kind of have a lock on that for a while you know when we build that interchange there's not a lot of competing land that's been a benefit from that um that you know when you build something at the highway both north and south components benefit from that but in our particular case that's not going to be true because there's the railroad which you know In terms of entities that are challenging to deal with, I mean, it starts out as railroads, federal government, and then local government. I mean, and so somebody else has to build that infrastructure over that before those lands come into play. But the commercial off the interstate sort of stuff is going to be ours for a while. And so that does give us a nice value proposition. You know, the people that, you know, we get engaged, both a commercial and a retail broker, commercial industrial and retail brokers to really get out there and represent us in that that's not something that that's a different business. Right. It's not something that we can do in house. We that's not those folks just don't do with the land. don't. They deal with the institutional people and they look at it on a national scale. These guys are competing multi-state for particular projects. And we've got a lot of feedback from them in the few months that they've been engaged about the competitiveness of our particular property, the interchange access to it, the interstate frontage of it, and where there's just not a lot of competing opportunities for the same types of uses that we would have on our particular site. So, you know, just a quick update on some of that interchange type activity. You know, we continue to work on that permitting process. We're the applicant with CDOT, with the county, which is our jurisdiction. And so we should be in a position of getting that cdocs approval on all of those agreements by the end of the year that's our that's our pathway on that we go we go from a 30 design up to the full design which will take us you know maybe four or five months because it's not anything new other than you know the the the hard part is the first 30 now that the the 80 is the big docs as to you know what type of concrete you use and how much I think that that that's a fairly streamlined process so that we can get to a design where we can send that out to bid. We go bid with that same time. We're going to go look to the bond market and hope to be in a position of issuing those bonds for the construction of that sometime in the fall of next year. And then let that construction, you know, I always think it goes should go faster than it does. So I think it should take six months. they'll probably tell me it takes a year. But it's in that range. And the nice thing about that is then that really does open up a lot of those commercial users, because it's going to take them a little bit. They're going to want to plant the flag. They want to get the land. We have it zoned, but they need specific use, building permits, those sorts of things. And that might take them that six months, six to nine month time window. And everything should, in a perfect world everything should time itself out correctly by the time it's opened and you've got a bunch of people that are breaking ground on that commercial component the value for us in that is and i've described this as you know you'll see sky ranch continue to build out and we've got call it a thousand homes occupied we've probably got up to 1500 homes that are sold or under contract with home builders. And so those will continue to build out. And we continue to produce that out somewhere between 250 and 350 units a year. And maybe we dial it down to 200 in a slow year. We dial it up to 350 in a robust year to kind of work on being a just-in-time lock delivery customer for our home builders. And that'll generate that $20 to $30 million a year in revenue to the company. And then that'll continue to go for the next seven years. But the stack here is once that commercial comes online, that's going to be a similar absorption where we've got roughly 1,600, 1,800 lot tap equivalencies in the commercial component that will be added to it. So I'd love to say that this linearly would grow on that scale, but it likely is a step growth, right? We'll see a function where that commercial will be layering on top of the residential and it'll have its own little bell curve. We'll start out with a few transactions and then it'll grow up to a bunch of transactions, and then it'll tail off at maturity. So you'll see a lot of that type of activity on a stacking basis. And then, you know, whether it's that we provide water to another surrounding development, whether we have an acquisition on some of the surrounding vacant land out there, whether, you know, some of the stuff starts to break free on the state land board properties, all that becomes additive to then those two stacks. And so that's how this scales over time, is that you have those step function scales that don't weight it for us to tell everybody, oh, you know what, we're going to absorb the next 3,000 units in three years, not six years or not nine years. It's going to absorb, and we're going to go as fast as the market will take it. But what we do have is kind of a layering of monetization of the various components of what we have. So that kind of really is some of the interesting things that we would facilitate that. So what we can do is we'll unmute everybody at the same time. You know, if you've got something in background on yours, you can mute your own mics on that. But we'll just open it up and see if anybody, you know, this is kind of a fireside chat. If you have any questions, you know, just go ahead and holler out. If you had any follow-up from our earnings call last week, happy to color into some of that stuff as well.

Speaker 7

So just turn it over to the team here.

Dan Aronson, Analyst — Investor

We're waiting for somebody. Mark, can you comment on, for Sky Ranch specifically, on your customers, our customers, the home builders, the competitiveness of the product at Sky Ranch versus other developments that they're working on within the Denver metropolitan area. And I ask that in the sense that, you know, my impression is that the consumer, the home buyer, can buy a similar or the same product at Sky Ranch for less than they can at another development. I'm just sort of curious as to if you have a thought as to or observation as to how the developers, the builders look at Sky Ranch versus their other developments in the area.

Speaker 6

Good question. And I would say that that is true. I mean, you know, home builders, There's, they really, each builder will segment themselves into a particular phase of the market, and their product is almost the same across multiple price ranges, and the location might vary one way or another. Lot sizes might vary one way or another. And one of the big advantages that I think we have at Sky Ranch in the county that we really haven't talked about, that the builders love, is setback requirements, right? So, in a lot of jurisdictions, the setback requirements are 10 feet from property, such that you get a 20-foot setback between homes, which means you've got to have a bigger lot. In Arapahoe County, we have a 5-foot setback requirement. So, we have the ability to be closer to lot line to lot line development. And in Rockville County, what that means is it's a smaller lot, which means it's a smaller cost for the real estate for the home bill on that basis. And so, you know, it was a it used to be an impediment to be closer to your neighbors. And I think that's kind of blurred the way through the marketplace, because what they're looking for is to max out the square feet. and what they want is can I hit that same house on a smaller lot at a lower price because if they're four walls if they're if they get 2,800 square feet and they have 10 feet of yard versus five feet a yard they don't really look at the yard they're looking at the 2,800 square feet and that's what their that's what their buying mentality looks for and so that's one of the big advantages that we have being in the jurisdiction that we have so setback requirements are shorter and smaller and then even then we can get even variances beyond the five foot setback as long as we get fire rated walls you know it'd be like like you'd be a paired product that has a fire rated whatever the hour rated of the fire the building material is between that and so there's there's ways for us to be even closer on that where some of the home builders are looking at saying geez i'd really like to try this product and it's very innovative because what they're doing is they're getting an active side, which is going to be the open part. They might have a patio, front door, and a passive side, which would be nothing but wall. And the two passive sides are going to be closer together, but the two active sides, so you can imagine almost like a duplex that's got just a small area in between it, but they're detached houses. And again, it's price point stuff. It's affordability stuff. And it's our ability to work with them on that product innovation and we can deliver much more flexibility than any of the other jurisdictions or other jurisdictions primarily city of aurora and they just don't allow that and so it gives us a bit of perspective on bigger house same size house smaller lot much much cheaper and that's a big deal for that a good question i mean we never really get to talk about the innovation of the actual home product that we are able to do and and the home builders and this is a double-edged sword because when they start to hear it they're like oh my god I know we want to do this we want to do that and I'm like oh my god I can give you some of that but if you want all of that then it becomes your product specific and now I'm like okay I need you before I go out there and get all that I need you to be there you know making sure that they're there if we're getting that type of product yes it can be crossing over to other builders if we got that setback variance and we know we can do that but when we start to go at the at the design stage you know they get they get very interested and you know just like every pretty girl that tell you that they're gonna be there i want to go out to dinner anybody out the uh on the call we've got a good attendance here so you know

Vishal, Analyst — Bard Associates

so mark this is uh i don't know if you can hear me uh yes you can okay great thanks this is vishal from bard associates um if you look back like last 10 years um you know i'm sure a few things did not go per your expectations and few things sort of went ahead uh but if you can talk about that the highlights and the low lights and um you know um do you and also like do you think where the development and everything is where you thought you would be here or is it a bit slower because of the setbacks or it's faster because of the things which happen great you know so so i'm

Speaker 6

gonna good question you know what's the last since we started say we've been in sky range for six years and you say okay what went well what were what were the what were the tailwinds what were the headwinds you know the tailwinds were we were a breakout right we were the next part of the denver metro area and you don't know you don't know how that's gonna go right yeah and so when we when we first broke ground on this thing we had three national home builders we had richmond we had kb and we had taylor morrison and and we were starting out with 500 lots and they all said okay i just want i want 30 lots you know and you sort of say okay i'm breaking ground here and i've got a lot of off-site infrastructure and you all want to commit to 100 lots and i've got 500 lots here and I got to build the infrastructure for 500 lots. And so that took a little bit of, that took a, you know, you're pulling your pants on, on something like that, getting started on that. We do it, we get it going and they open up and they said, okay, not, not a hundred lots. I want all 500 lots and I want it tomorrow. And so that was a big surprise for us, right? And And that was entirely driven by the price segmentation, right? They drop in, they were able, they knew what the footprints were, they didn't know, they knew what they could price their models out in, but they didn't know if people were going to come to the next level of development, right? It was the next step out in the metropolitan area. And what they found was, holy crap, everybody wants price. And so that's how it started. And then all of a sudden, COVID. And nobody knew what to do for COVID. So we fortunately had their full commitments on that. And it was this giant hush that went through the marketplace on the sales side because nobody could get out of the house to buy a house. and then it sort of settled down after about three four months and it was just another gold rich everybody's like okay not only am i looking for price but i'm now getting out of college you know i don't want to be in an urbanized area and everybody that might have been in a higher density development now wanted i can't get on the elevator i'm never going to get on another elevator again and and so they were actually you had this flight to the suburban model. And because technology started to really ratchet into it, people didn't need to live downtown. They didn't need to live, you know, where they were going to commute every day to an office. And so that then you had an unusual cycle and then a little bit of an acceleration, right? There was a bunch of stuff that people were wanting to do. And I would say that took us from, say 2022 to 2024 as fast as you can build more more more and i was just like well i know i hear you but i'm willing to do that but here's the dollars and and here's the kind and they're like well no just more we'll get there and i'm like no we're going to get there before we do that and so you try and take it on a disciplined approach i could have delivered more if i speculated more in 23, right? And then 24 still looked great. So we dialed it up a little bit in 24. Everybody was there. They said, yes, yes, yes. We want more lots. We want more lots. And then 25 started to come in and then, you know, the new administration came in and things got a little wonky and they're like, well, you know, about that next phase, you know, I'm not so sure. And I'm like, well, we're already under contract well yeah but my inventory is not rolling as fast and what we were able to do on that side of it that again taking lemons and making lemonade out of it is when some people started to slow down you know we had some bridesmaids sitting on the sidelines saying hey if anybody isn't interested in moving forward your price point works that's what we want and so instead of having four builders and now we have seven builders and we're still not trying to deliver more than what they want in their annual inventories, right? Everybody, everybody would prefer to say, I'm going to buy the lot when I sell the house. And then you say, well, I'll let you do that if you can make me young, right? That's just a real hard timing. But what we're doing for our customers is as close to that as anyone can do, right? We don't chuck off more than they want to take down, and we're creating this rolling inventory on a master plan. And so what's happened over the last, say, five or six years are few headwinds, few unpredictables, but what we've really done is established the mark in it. And growth in the Denver area has gone to us. In some areas, it's gone past us. And so we're not what I would still call infill, but we're also not the breakout community and so we went by a couple breakout communities yeah on the tour and you sort of look at it and say okay you know they're grading a lot of lots you know hoping that the market's going to be there and i think i personally i think they're over their skis on what they've got but you know that's okay they'll have a little bit of inventory some builders will come in there and do that but what we try to do is not be over our skis and we We try and not trying to have to catch up on that demand. And so there's a delicate balance there. You know, what's it going to look like on the next three, four years? It's going to be, we're going to be disciplined enough to do it on the same scale as our builders. And now with all the infrastructure in, we've got all the backbone roads in and the major offsite infrastructure in such that if somebody comes in and says, okay, for those 2028 deliveries, I don't want. 30 lots I want 90 lots that's something we can dial up and dial down into now having the backbone infrastructure it was it was you know a little chunky on the front end you know when we wanted to do we had the backbone that would have supported it at 500 units and they only wanted 100 units and and it worked out well for us I'd say that's luck rather than skill but now it's going to be just be in that just-in-time basis. And if the demand picks up, maybe our pricing picks up in a way that helps support that, I think they'd be comfortable paying that price. The homebuilders themselves have tried to get as close as they can to not close on those lots. And to the extent that they are, they're closing with land banking it, which that's the creation of the affordability challenge because then you've got double-digit interest costs on a land bank, and they've got $2 billion on the balance sheet that they're earning 3.5% on. And so that's just a weird dynamic of the home building company, but that's kind of the preference on their IRR versus gross mortgage balance. But I don't know if Doug gave you enough color on that.

Vishal, Analyst — Bard Associates

Yeah, no, that's great.

Darren, Analyst — Clipbock

Thank you. um i'll jump i'll jump in this is this is darren with uh with clipbock um you mentioned you know volume output you expect to remain around 200 to 250 lots per year but also the number of builders have grown from three at the start to seven now and so that implies less lots per builder if you could kind of you know provide some color on that is that macro related denver specific sky ranch Pacific. Why do you expect less lots per builder moving forward?

Speaker 6

So, builders will be very predictable. They're going to want less lots when the market's slow and more lots when the market's hot. And they just only want to pay for the lots that are when the market's slow, but they want us to bill lots for when the market picks up and so that's where we kind of temper that out is to say okay fine you know we'll have we'll inventory maybe some of the grading costs on that and then before we move because we like to flow fund our land development deals where you know we we really get them a third a third a third where the first third they get the plat they get the physical title to the land and they think one third of the total lot cost uh in that payment and then i take that third and i use that to do off-site grading and wet utilities and then they pay me the next third so that i can use that money to do the paving roads and gutters and then i eat last and so you know when when things are good they're happy to pay that that second third in the first third just to make sure that that's there when things are bad they're like okay can you take that first third and then i'll pay you that second third after you got the lots graded and we don't want to get over extended on that so i i can dial that up from you know when when we started this they were at 30 lots per builder per year in 2023 2024 they were moving up to 60 70 lots per builder per year. And then they dial back down in 2025 to say I'd rather be at 30. And then if I'm still, you know, I still have that's that 250 lots. And if they all want 30, then that's seven as opposed to four. And so that's that flex in and out. But what happens is if I'm only developing 250 lots at a time, and they move back up from 30-40 to 70-80, then it's those that come in first get the lots that are going to be finished. And so it may be that you see it dialed back down to four builders if the market gets hot, and then we'll dial back up for the four builders, and then the seven builders will come in, and then the market will swing back down. And so it's in that if you see a cycle there, we want to you want to draw that linear line right through the middle of that cycle and have us have a little bit of inventory, have them have a little bit of inventory. So it's that right balance.

Speaker 7

Awesome. Thanks.

Dan Aronson, Analyst — Investor

Can I ask a follow up question on the actual composition of those? Because you guys got critical mass now in Sky Ranch. You've got a number of SFRs. SFRs, you're going to build up, you know, the next few months will be upwards to close to, what, 70? And I know you've commented on the previous calls, change regulations, be a little bit of a pause here and cut back from the initial about 100 that you were looking at doing. Aside from Sky Ranch, do we know those who are buying, what is the owner-occupied percentage within Sky Ranch versus those who rent out units? Obviously, the company rents, but are there private owners that are renting out units as well?

Speaker 6

Yeah, that's a great question. I'm going to punch that over to Deb. Does Deb say she runs the SFR segment for us?

Deb, Other

So, the last time we looked at that, it's about four weeks old, the data I'm spitting out at you. There were 62 rentals um in sky ranch that was as ours were being built so they were 30 above our numbers okay which went down there were 50 when we looked about a year ago was it a year ago the last board meeting annual board meeting yeah right yeah and so i mean and those are going to be mom and pop right a dentist buying you know a rental unit and and it's sort of ones and twos um or somebody that got relocated and they wanted, or they had a family change and needed a bigger house, smaller house,

Dan Aronson, Analyst — Investor

either way to keep the house, those types of But it's a minor it's a majority, almost everything that's being sold, it's owner-occupied Yeah, predominantly It helps with understanding a little bit of the characteristics, not being part of the community understanding part of the characteristics of the community Yeah, and Deb, you might comment I mean, I know a lot of the folks that are so we have a couple of value propositions on it.

Speaker 6

You know, when we were when we were first getting going on it. You know, you had you had somebody coming in that got relocated over to Buckley Air Force Base. Right. And Deb comes in and says, hey, I got this guy. And he's asking about a military discount. And I'm like, OK, sure. We'll give him a military discount. The guy must have put up a card and said, hey, anybody that wants it sky ranch is your place and so unbelievable amount of military relocates come and live in sky ranch i doubt it's because we gave them a military discount maybe you know and it was you know it's just thank you for your service discount but oh my gosh we're we're five minutes away 10 minutes away from buckley so we got a lot of folks uh and that's a transient you know high high caliber um renter and and you know they're they're always probably gonna rent as opposed to buy you know just because they're they're mobile and you know we get a lot of people that come here that are coming here for the school specifically you know either they either they were out of district commuting into it and and renting out of district and then you know parents are like oh my god why why am i renting this house you know 30 minutes from the school when i could rent a house and be two minutes from the school so we get a lot of that action is people are really the value of the school a value i can't tell you you know the the opportunity of having a k-12 you know campus right on you know walkable distance for all your all your kiddos is super valuable in the community.

Deb, Other

The school brings in grandparents as well, a large number on the for sale side, as well as just from being at the school. And the other big draw is DIA. So we have a lot of DIA staff members. Same thing kind of happened with an airline pilot, posted it on their like company chat and we get calls. Mark is right. The first military guy I actually stuck our information on a bulletin board. And then as it progressed, the wives got us on the Facebook page and, you know, all of that. So we do have a that's probably the largest population of tenants that we have.

Speaker 6

You know, and the SFR segment as a whole, we've had a lot of discussion, you know, at the board level and really looking to make sure that we we understand that. segment. We need to know what the rate of return is on that particular segment. We stood it up. I think we did a good job standing it up. We operate it in-house. Deb does a fabulous job of making sure they're leased. We're delivering units months ahead, and she's got them rented before. I mean, this is a weird dynamic and great for people that look ahead of that. But when I was renting a house, it was, okay, we need to move on the weekend, go find a place to live. And that's what, you know, it was just in time sort of deal. And that doesn't seem to be the case. We get these things least far ahead of them being completed and have, you know, just a solid occupancy record here. And the basis of it really is tax advantage because we're holding a lot of that equity between the lot, the tab, and what's going on in that, which doesn't show on the balance sheet. So when you start to look at the optics of it, is that a great segment or not? We think it is, but we also need to make sure it is. We need to report back to the shareholders to say, here's what we now know this segment to return, you know, and if it's not, then, you know, we'll take a look at, you know, okay, maybe that's not the right segment. So, you know, before we, there was a good reason to pause it, certainly because of the administration set, we were the problem on housing affordability, which we're not. But at the end of the day, we also want to be fiduciary with shareholder capital here and make sure that this works.

Vishal, Analyst — Bard Associates

What is the hurdle rate, Mark, with that rate of return discussion you said with the board? Is there like a cap rate hurdle or an IRR hurdle for single family rentals?

Speaker 6

You know, I think we got into it on a forecast basis to say we think it's going to be in that 10% return on investment. And we want to see if that's the case. I think, you know, when you take a look at our return on equity, you know, we're making much, much higher margins on sort of the land assets and the water assets. If I take a look at what we're doing, we might make 70 percent margin on the land assets. We might make 60 percent margin on the water assets, but we're only using 2 percent of that asset. So when you take a look at that on return on equity, the overall return on equity is around 9%. And so what we want to, our minimum would be we've got to do better than that return on equity. We'd like our return on investment to be in the mid to high teens if we're in the low teens, but we have a great tax advantage way of keeping that asset that might juice that up a little bit. That would be worth considering. So, those are going to be – I don't know that we've got a hard, fast threshold other than it's got to do better than our return on equity.

Vishal, Analyst — Bard Associates

Okay, thanks.

JV, Analyst — Investor

There's nothing else in the SFR. I was going to kick it back over to Lowry real quick, if that's all right. So, we spoke a moment ago about going out there, and you see how the residential development has now directly abuts that property. And so at least the layman's eye, it looks like the next logical step or progression is for development there. And yet the regulatory approval processes, the red tape that needs to be broken through in order to enable that to happen is different than the processes that enabled the residential development that goes all the way up to the border of that. yep um could you speak a bit about maybe even if in cliff notes bullet point format what is the process step by step that needs to occur for that to materialize how does that differ from the process that enable all the adjacent development and accordingly where do you maybe see some risks because there's some key uncertainties.

Speaker 6

Okay, so the regulatory process, that property is in unincorporated Arapahoe County. And so the neighboring jurisdiction, City of Aurora. So City of Aurora controlled everything that comes up to the property. Once you get onto that property, it's Arapahoe County. And I would say we know that process very well. You know, that's exactly the same process we deal with at SkyRange. And so that's our entitlement jurisdiction. We know what those zoning. And in fact, when I was talking about some of the setbacks and things like that, we think that Arapahoe County is actually more advantageous than the city of Aurora. Is Arapahoe County easier or harder to work with than the city of Aurora?

Darren, Analyst — Clipbock

Well, yeah.

Speaker 6

You know, Arabo County was by far considered the best jurisdiction to work with, you know, say, five, seven years ago. And then everybody at Arabo County retired. I mean, every department had retired at Arabo County. And so they're actually backfilling into that staffing issue. And what does that translate into? You know, it's a little bumpier than it was a few years ago, but, you know, our relationship with them and their experience with us doing exactly what we say we're going to do, exceeding expectations, solving problems. We didn't, you know, we solved the problem of schools. We brought our own schools. We solved the problem of the interchange. We didn't wait, you know, for somebody else, the county or anybody else to say, oh, somebody else built that. Well, you know, growth has to pay its own way. So we do that. They do that. So when you take a look at the actual zoning and entitlements, it's through Abdel County. The biggest complication or the big thing that's different on Lowry than it is in any other property is the own. It's owned by the state of Colorado. It's owned by the state land board. It's a trust for K-12 education beneficiaries. And so they have different metrics than anybody else. right? They're fiduciary for school funding in perpetuity. And they say this, but this is their single most valuable asset in their portfolio of three and a half million acres of land all over the state. And it's a very diverse piece of property, right? It has any number of opportunities for use and revenue. And so when the land board looks at that, they're looking at all uses. You know, what education uses do we have there? What mineral uses do we have there? You saw that they were very active about monetizing their minerals out there. So they've got the oil and gas leased out there and it's being drilling. You know, they're looking at it. Okay. You know, what are the setback requirements for oil and gas development and and urban development. And, you know, there's a setback where oil and gas encroaches to residential, which is very big. You know, that might be a 3,000-foot setback. But on a reverse setback, if the oil and gas facilities are there and residential encroaches to that, that might be 300 feet. You know, so there's an entirely different filter for them to analyze on which lands they want to look at for multi-uses and how they want to do those and the timing of those that all layer into that. And so sometimes, you know, when you have an infinite number of possibilities, it's hard to take that first step. You know, if you only have two possibilities, it's binary. If you have a hundred different opportunities, it's problematic. And so they've been looking at it pretty hard for a few years now. Do I know what they're looking at? You know, that's pretty close to the best on their side. We're their partner on the water. They generate a lot of money. We're likely to become their largest revenue lessee in the next five years on what they make from water utility alone. Because they, you know, a lot of our water, not all, a lot of our water originates on that property. They get a royalty on that. And so, you know, we we continue to, you know, be that steward of those systems and continue to invest on that. So, you know, I'd say we know the process a lot. Process can be political. We have a change. We have a change of leadership in the state of Colorado this year. You know, so we got a new governor coming, new sheriff coming into town. It'll be a Democrat, I assure you. But, you know, those are some of the interesting dynamics. you know the jurisdictional issues are in our favor the ownership complicated right thank you but you know having a single for 40 square miles is a lot different than having multiple land over so you know as that as that ball gets rolling you know you're likely to see it roll for a long time if if anything would impress you about the tour that's that's a 50-year inventory of land when you look at 40 square miles you know boy that's a lot you know they're not going to develop every square inch of it you know they're not going to conserve every square inch of it and so somewhere between those two poles is is unanswered and i think the next you know last five years you know growth was continuing to get out there but there was an inventory of life and i think that's that's whittled itself away you know it i don't think that changes their timeline because they're not you know that doesn't that's their motives are different than you know private ownership good question back to the uh back to the collars anybody else have the uh any color that they'd like uh an observation on mark in your annual

Vishal, Analyst — Bard Associates

letter uh you you have uh you know uh recurring revenue sort of kind of a step up uh from 26 to 28 and i assume that you make the assumption that the the i-70 interchange will be completed by then um and i say yeah i just want to make sure is that like has it delayed a little bit or you think still that's yeah you're right that that is exactly right you know when i when i think about writing that letter when it gets published and when you get to read it and then when we actually get to put you know that was a 2024 5 view and i thought

Speaker 6

we'll be done with that by 2028 you know given given given where we were with the actual design because we were we were up to our eyeballs on the design and c.review and oh the ramp's got to be this and it's got to do that. It's got to have this. And, you know, the deck has got to look like this. And so I'm looking at all of these decisions being made about the actual interchange thinking, OK, great, that'll allow me to get to this, to get to this, to get to this. And it's probably a year delayed. So when you take a look at all of what I thought was going to happen in 2028 i think that's probably a 2029 but what i think will happen and we were talking about this on the tour is um you know the every commercial retail resident you know all of those uh all of those businesses need a certain critical mass of density that are within x geography you know they They put a pin in and they draw a circle around it and they say, I've got to have this type of demographic around that circle. And that usually is around that 1,500 homes or more. And that will kind of, that'll coincide. So if it happened, you know, we might have been a year ahead of that curve with some of that density development. I think our commercial users are going to like for us to be that one more year mature before they put their flag down, but then they're going to be putting their flag down knowing that that's going to be the case in 28, 29, and it takes them that amount of time to get their approvals and through the process. And so I still think you're going to see a little bit of feathering between the residential aspects of what we're doing and then the commercial aspects layering on to that. Those bell curves, you know, what I'd like to do is have those bell curves, the meat part of those two bell curves lining up. But, you know, that's not always going to be the case.

Darren, Analyst — Clipbock

Yeah. Thanks. So just to clarify that, are you saying that you think you'll have the first cash inflows from commercial development by the beginning of 129?

Speaker 6

I'm going to be out there a little bit and qualify by this forward-looking statement. But I think we're going to have those in before that, before 2029, just because they're going to want to buy that. They're not going to go through all the entitlement work on the plot plan and the building code and all that other stuff on an option. And I loathe options, so I'm much more inclined to say either buy it or weigh it. And so I think we'll see some of those transactions. I wouldn't be shocked if we get some in late 2027. it once we once we green light yeah once i once i contract for somebody to put that interchange in it might take them i think it takes them six months it's going to tell they're going to tell me it's going to take them 12 months but once they see that award of contract they're going to be going hard i just that's that's my that's i'm not saying that my commercial guys are saying that too great but i like your 20 29 date and i'll i'll i'll i'll say that and give you a surprise on the upside.

Dan Aronson, Analyst — Investor

Can you share a little bit of thought or update on the board's thought on returning capital at some point to investors, priorities, you know, as investors, you know, at some point, we'd like to get paid, you know, to always have growth, growth, growth, growth, but you got a company, we have a company here that is profitable, that has a very solid balance sheet and is probably next year or two going to become very liquid, absent a significant investment in future growth. What does that look like?

Speaker 6

Yeah, that's a softball. Thanks. Yeah, no, great question. And trust me, there's nobody more frustrated about the share price than this side of the table and the board and the company. You know, so, you know, if we look at our capital stack, you know, what we've done is continue to invest into the assets, right? We invest into our water system because we make a pot full of money selling water to oil and gas. And I sell almost five times the amount physical wet water to oil and gas that I do to my domestic guys. And they pay a premium, right? They pay four times what my residential customers pay. So that's great money and it's great margin. And we want to continue to invest into that system. It does two things for us. It generates cash flows on that. And secondly, it allows us to flip that switch and our margins on our tap fees become very, very high because I don't need the facilities to do that on the water side. Oil and gas has already paid for that. And so you see, are we building shareholder capital? Yes, we are. We keep expanding that system. God damn it. It doesn't translate into share price. And that's frustrating. You know, our legacy basis in the assets are awesome, but they also don't translate well into an index or into somebody saying, oh, I get it. These assets just, you know, here's how many and here's how many you're going to do it over this period of time. Now, second stack is if we're, you know, water, and I'll put that first stack being both water and land, right? I want to put some land money out there, and this is a very capital-intensive business, right? Every phase that we do is around $20 million, and $20 million is a lot, and you like to flow fund that, but when your customer's out there saying, yes, I want to buy those lots, but you need to hold them until they're finished, And I'm like, but if you don't buy them, when I finish them, I'm sad. And so, you know, we try and work that relationship out. So we're not too far over our skis, but they want us to be over our skis. And it's trust me. And I'm like, well, yeah, but no. And so that's a bit of a feathering. And so you saw that this year, right? This year was a classic example where we actually got ahead. And that was weather related, but we got ahead of the flow funding. And you saw our liquidity go down to like $5 million when our liquidity is usually at $14, $15 million. And so having that flexibility produces tremendous dividends, but you've got to have that cushion in there. Could we use debt to do that? We probably could. So there's an opportunity for us to use a little bit more leverage and a little difference on your balance sheet. But I was also here when that wasn't the case. And sometimes the mule remembers the last down cycle more than it remembers the opportunistic side of it. But we're a bit conservative on that side, and I'll admit that. But now with a big assessed value, and you guys saw that today, but you see not 500 homes, but you see 1,100 homes, and you start to see a bunch of stuff going on. Well, that contributes to the value of the community, the tax base of that community. That tax base then allows us to be paid back that $60 million that the taxpayers owe us on that. And you're going to see that accelerate. And so that's an opportunity for us to do that. We think that's going to happen this year. We think that's going to happen next year specifically because we get these five-year increments. And I think we'll refinance a 2022 bond that we did in 2027, which will create a chunk of change. You know, I think there's 10, 15 million dollars worth of payback there and we'll still have a solid balance sheet. So you're going to start to see us be a lot more aggressive in the next 12 to 18 months on buybacks because that would be my next step. And then, you know, we're water utility. Water utilities, people that, you know, our peers, when we benchmark peers, somebody types us in, they say, oh, it's a water utility company. Why the hell don't they pay a dividend? Well, we are a water utility company, but we're not a regulated dividend cost of capital predictable side. And so I think I think dividends are part of the equation. I don't think it's this year, but I think it's, you know, soon that that becomes a component of the equation. I like buyback more than I like dividends as a consumer. You know, I'm a shareholder and I'd rather pay rather not double tax that income on it. But, you know, those are those are what I think the capital staff going to look like. And and I did I did talk a bit about that on our call last week is that I do think that we're going to be more aggressive. We're going to give you guys we don't want to compete with you guys because we think, you know, things are going to go fantastic over the next 18 months. And you're going to want to pick up some of that public float. And so but we're going to be we're going to be in there a little bit more. So good question. And thanks for putting me on the spot.

Darren, Analyst — Clipbock

Could you expand on that a touch in that you mentioned it at the start of the call and you've said it, I think, several times over the last year or so about potential acquisitions and kind of how land acquisitions for development maybe fits into that capital allocation decision?

Speaker 6

Yes. You know, so there's there's there's two schools of thought, asset light, asset heavy. I'd love to say that we have, you know, the ability to choose between that. But we're we're we're a halo company. We're a heavy asset company. And we're cognizant of that. So, you know, when we look at an acquisition, you know, the opportunity for us to buy an asset and wait 10 years for it to develop is less interesting. If if I can pay more for that and start developing it tomorrow, then I'd like that much better. And so somewhere between those two goals relates to our ability to buy or acquire property. Most of the types of acquisitions are the first part. You know, we buy it, we wait 10 years. And so I think our discipline is to say, I'd rather wait nine years before I buy that. The seller of that may not be as interested in that. And so, you know, where some of those opportunities have surfaced, we've passed because they're too far out. And we don't think that that prospect goes away. We certainly like venturing. We certainly like having somebody right next to us and they can inventory the land. We do the development and the water and bring up the value that way. That's probably not our sandbox. These guys, they're generational owners of this land, and they may have the same pickup truck they've had for 40 years, and they've rebuilt that engine three times. And you know what? They're going to die in that truck because it's just, if they don't have it, they don't want it. And it's all next-generation type stuff. And what happens typically on that is somebody needs to die. And then the next generation says, OK, I want to sell it. And that's happened a couple of times. And then there's still generational owners all around us. And they call me up and say, hey, what is this pipeline I see you building near my property? Not through my property, but near my property. You know, I'm, you know, I'm fortunate to know a number of really good, good individuals who are driven by just value propositions. And so those those those things, those will come up. But, you know, has anything broken free that has been the right time for them and us? No. Is it is it for lack of price? No, it's really not price. You know, if I offered them an absurd amount of money, they'd step aside. But then at the same token, I'd have a lot of our capital tied up and it wouldn't translate for too long. And I think you guys would beat me up for it. I know my board would beat me up for it. Mark would beat me up for it. So let's not, my wife would prefer that and not that.

JV, Analyst — Investor

So we've debated this a bit in our office, right? You see how the Sky Ranch has done great, right? On the other hand, there's almost a case that the tracker's a little bit thin because it's just been Sky Ranch. Perhaps some nuances to that property, very importantly, including the timing in which you bought it in a down market, may have contributed to the success of that, right? So then a risk that, all right, if we're going to try to repeat this going forward, how much confidence do we have in that? Right. And I know one of the narratives that I've heard is that, well, you pair the land development alongside the water assets that provides an advantage. On the other hand, I'm not sure how much money you're leaving on the table for the builders. of maybe you are whatever i i guess what i'm trying to say is if you go into that why do you think that is is in advance why are you uniquely positioned to successfully develop this land um especially at a time when there's probably going to be more competition for those parcels than there was uh at the outset of of the sky ranch um i think we we provide bad on that basis, but we don't have to be the developer, right?

Speaker 6

So in addition to us looking at acquisitions for land and bringing our water to that land, we also look at just utilities, right? I'm okay. Because I've got a system that's built. And if they come to me and say, hey, guess what? I want your water, but I want to develop the land. Hell yes. You know, I mean, there's great opportunities for that. If they say, I want your water and I'm going to bring my land to it and just give me your water so I can get my land zone and I'm going to sell it to a third party, yeah, maybe not. That's not what I want to do. But if they're ready to go and develop and they have the capability of developing it and they say, I say, okay, I'm going to give you my water and if you're going to develop in the next 18 months, two years, that's worth doing. If you say you're not going to develop for 10 years and I have to allocate my water to it, I'm going to to look for another another date who wants to go out and not just say when i have nothing else to do i'll go got it yep perfect exactly i was hoping to hear thank you but that's a feather right you know you kind of gotta because i get asked that why yeah give me a water service contract oh just that huh well you've got you've got all this water and i'm like yeah when are you going to develop oh well we just want to get zoning and i'm like and then what well we're gonna sell it i'm like oh i want to be you

Vishal, Analyst — Bard Associates

mark in the board and our room and yourself like which we have all these numbers floating around which metric is the best sort of number or maybe there are several to sort of track like you know the value created is it is it book value per share because i think yeah that's like you know six seven years it has doubled so that's kind of good um but i'm just thinking internally uh or you know which one is a good good way to measure the value value creation yeah i'd say book value is the worst because we've owned these assets forever and and look

Speaker 6

at sky ranch as an example right we we bought that for for our land basis in that is four or million as our land basis, we're going to make $500 million on that. So when you look at the book value of that, you know, in a highly appreciated asset side that we have, it's the worst indicator. And is that what the market's value in this as? I, you know, because there's not human beings, you're the only human beings left that look at companies, right? Now it's all, it's all you know quants and and computers and and and ai that that just looks at it from a book value transaction standpoint and they don't quite appreciate the fact that you know these assets have appreciated heavily our water assets you know we our total capital account the water assets 20 million dollars you know it's going to generate two and a half three billion dollars It's $20 million. I bought it 35 years ago. And so Enron saw that cost basis. And there's no way to really mark that to market on the appreciation of the asset. And so that's one of the challenges that we have is to how to communicate that to the marketplace. And when you show that you're making 70% margins on 2% of your asset, then it just leads to the question of when's 2% go to 5%? When does 5% go to 20%? You know, what's the scale and the timeline? Because there's a cost to that and making sure that that happens. You know, most of the way the company looks at it is the sum of the parts. And we take a look at, you know, what's Sky Ranch residential going to value to? What's Sky Ranch commercial going to value to? What's Sky Ranch water utility, the tapis and the usage revenue. Those are all very predictable to value, right? I've got 5,000 single family lots. And we break that up into say there's 3,400 residential lots, 1,600 commercial lots. And that's just to keep the math easy. I'm not exactly sure if it's going to go that way. We make $100,000 a lot on the residential side. We think we make one and a half, two times that on the commercial side you know if you just value 5 000 lots at a hundred thousand dollars a lot that's 500 million dollars on the land development side we get 40 000 a tap um we've got 5 000 taps so that's 200 million dollars we don't get and and jb asked a great question on that when you go through the numbers and you're asking and you're sort of saying okay you're making when i look at the number of taps you sell and the revenue you generate off the taps, you're not actually getting $40,000 a tap. And he's right, because we're not selling a full tap. So a lot of these smaller, like when you get a townhome, a townhome might get 0.4 tap. And what that does is it gets me that customer, and then I still have more water to sell another tap too um and so you look at you know some some of our some of our residential homes in there had to buy one and a half taps because the lot size was bigger so we we apportioned taps by the every individual lot and some of them are more some of them are less but on average you look at you know that being you know 5 000 tap connections and so that's you know that that's easy to value. We usually use a metric of about $1,500 per connection per year. That's probably closer to $1,700 per connection per year now. And you look at 5,000 connections on that, that's going to be about $8 million year over year revenue. Those are three segments of value in the company. Very predictable, all within our control, no blue sky. All that stuff is very predictable. And you can come up and say, okay, that's $800 million, present value of that over some sensitivity analysis. It sure has had a lot more than $250 million market cap. And so that's where it's frustrating from our perspective. It's so obvious on what's in our book that we're undervalued. And everybody's like, well, if you're that undervalued, buy your own shares. And we do. And we also look to try and make sure that that 800 million comes in. And we use that capital so that we're not going to use our denominator for any portion of that. And if you take any comfort from us, you know, last time I did shares was in 2010. You know, so we're not an issue.

Vishal, Analyst — Bard Associates

You know, we're grateful that you guys are there to take a look at what we're doing and agree with us we wish there were more right um yeah i mean just in the defense of book value it's like the past what has the cash earnings being added to the depressed book value that's kind of it's a it's a backward looking metric um but it and and it's it's a decent performance by the way so i i don't think uh uh even on that backward looking metric so um but i hear what what your thoughts are which is 800 versus 250 and you know that's that'll produce a huge IRR

Speaker 6

in any time frame so yeah yeah and and you're not wrong I mean everybody that sort of looks at what we're making per year and the times earnings we're trading where we should be trading right great thank you right you know the points I hate I hate that that's true it is but i also know what i just described to you is also true and so somewhere between those two you know when you start to see and to your point your question earlier what's the last five years and what's the next five years and and how do we look at those two differently you know the last five years got us to where we are organically slowly incrementally the next five years are going to be you know a higher degree of you know step functions because much more comes online in that period of time we're we're far we're not and to the point i'm not infield yet but i'm also not you know new growth yeah and that's what shows well and you see it i mean we we do the drones and you can kind of get a feel for it uh but you know there's nothing quite like pulling off to the side of the road and taking a perspective on it all.

Darren, Analyst — Clipbock

If I could follow up on the water rights a little more, you mentioned 60,000 taps at $40,000 of tapping, $2.4 billion opportunity, but there's obviously kind of an IRR play there. And so I'd be curious to hear kind of first how you guys think about comparable prices on acre feet of water today and then also just how how liquid are those assets right there's a lot of infrastructure it's going to take the right buyer for those and so what would the opportunity kind of be like there to actually unlock that value potentially um good question you know i mean when we when we first got into this and i'll apportion that to a couple of different areas you know 35 years ago, water rights were selling $5,000, $4,000, $5,000 an acre foot.

Speaker 6

Tap fees, which really try and portion the cost of developing that water utility, were $7,000, $8,000. And we show this in some of our slides. I can't remember if it's our earning slides. I have a couple of different decks out there. You know, when I talk to people who are not familiar with the story, I don't focus so much on, you know, the quarterly earnings. But there's a slide out there, I think, in maybe one of the investor things that starts to take a look at tap fees. And it compares our tap fees to tap fees elsewhere of surrounding water providers. And tap fees, you know, our tap these are at 40, but there are many providers that are north of $60,000 a tap. And where's that cycle going to go? It's going to go up, right? All the low-hanging fruit, which means all the close-in waters developed, and every incremental water project is a billion-dollar water project. And so, the tap fees, when you take a look at the time value of money and the discount back for all of those absorption of those tapis, I often make the argument, I'll make the argument again, that the increase in the value of the tapis will compensate the discount factor on it. Now, it doesn't always work that way because you've got to get a tangible value today. Is somebody willing to pay that for that today? When you take a look at our water assets. And to your point, can we bifurcate out and sell our water assets? That's a very hard thing to do. And really, it's because Colorado is very adverse to that, right? We have these very strict anti-speculation laws about private capital, Wall Street coming in and cornering the public water asset market. And I say, the road out of town is littered with billionaire carcasses trying to do that. It's very, very difficult for you to speculate in water. Yes, it's an asset class, and lots of people buy farms. But when you're buying and selling water on an open competitive market, it's very hard. And what we've built here is the franchise of a water utility. And so as much as we'd like to say, oh, let's just carve off and sell a bunch of acre feet, you know, the water that we're not going to sell for 30 years, let's monetize that and sell that today. It's very hard to do that because if you do that, then it really compromises who, how, and where you're going to be able to use that water. And the buyer of that won't have that certainty. And then when they dig into it, it's going to be very hard for them to do that. It's going to be very hard for them to replace us as the water utility. They're not going to be able to get a franchise water utility like we have. They won't have a service area. They won't be able to transfer it to another parcel of land because they won't have the service plans, the approved service areas to do that. So the stack on being able to do that value is in the actual utility itself. Is that to say I can't sell water? No, I can, but it's harder to do than to do the service model. And the value of what we offer is all of those together, not just the asset that underpins the value. And then, you know, I sort of described the fact that, you know, my most recent water acquisitions, because, you know, while I would say we're active in buying it, we are very, very picky and are buying it very selectively. my last acquisition, which has been a couple of years, but it was at, you know, right around that $20,000 an acre foot price. And if I think it's worth $20,000, a long ways from where we're at, you know, what's it worth for somebody with a franchise utility and a service area and customers? That's the chain that values this.

Speaker 7

I don't know if I answered your question. I went off on a different tangent.

Vishal, Analyst — Bard Associates

No, that's great. Thank you.

Speaker 6

Well, if there's no other questions, you know, maybe what I'll do is just kind of wrap it up. You know, we'll post it on our website. And certainly, if as you think about it and say, gosh, I wish I would have asked this, you know, don't hesitate. Give me a holler. You know, we will continue to do this. And, you know, if your plans so entail, you know, pop by. You know, it doesn't have to be on investor day. Pop by, kick the tires, take a look at it, look under the hood. I think you'll like what you see.

Speaker 7

Thank you all.

Speaker 6

Thank you.

Speaker 7

Yeah, thank you.