Earnings Call Transcript - PCYO Q4 2025

Operator, Operator

Okay. Good morning, everyone, and welcome to Pure Cycle's Year End Investor Presentation. Please mute your line while Mark Harding goes through the presentation. At the end, we will have a video and then open it up for questions and answers. With that, I will hand it off to Mark Harding.

Mark Harding, CEO

Thank you, Marc. Welcome, everyone. We're excited to present our fiscal 2025 earnings this morning. Joining me today are our CFO, Marc Spezialy, and our Controller, Cyrena Finnegan, who will assist with any challenging questions you may have. We're eager to share insights into our progress throughout the fiscal year, which has been dynamic in several areas. I want to start by acknowledging that this presentation contains forward-looking statements, and I'm sure you're all familiar with this disclaimer. With that in mind, let's highlight the key points. The most significant aspect is the privilege of working with an exceptional team of professionals. Marc, Cyrena, and our dedicated staff work diligently every day to ensure we meet our customers' needs across all three business segments. Our Board of Directors and advisory team are highly experienced, continually focusing on best-in-class performance for each business segment. This provides our shareholders with confidence in the continuity and caliber of the company’s management and directors. I want to outline some themes for this presentation, including our continued profitability marked by 25 consecutive quarters of profitability, with this past quarter and year following suit. We also see ongoing growth in our revenue segments, particularly in recurring revenues, which is crucial for us. This growth stems from both our water and wastewater operations, land development, and rental income from single-family homes. Our business model's resilience has been tested this year amid changing market dynamics. We plan to highlight the adaptability of our model, which allows us to adjust to meet our customers' demands effectively. Our strong capital position and commitment to managing shareholder resources prudently remain a focus, ensuring a solid foundation for ongoing results. Now, let’s delve into the Q4 results. As most of you know, our Q4 typically stands out as our strongest quarter, influenced by seasonal factors and our operations in Colorado, where timely concrete and asphalt paving ahead of winter is critical. Revenue for Q4 was our highest, though it experienced a slight dip mainly due to housing market challenges affecting revenue recognition, which has shifted some recognition into Q1 2026. Both revenue and gross profit increased, although slightly below what we observed in 2024. Regarding net income and earnings per share, our profit margins remain stable, partly thanks to the diverse revenue streams of the company. In Q4, we achieved solid net income and earnings performance. For the overall year, performance fell slightly short of expectations, largely due to housing-related headwinds. We operate on a percent completion basis for our land developments, which can sometimes result in revenues spilling over into the next fiscal year. Last summer, we aimed to ramp up deliveries and managed simultaneous phases of land development, which contributed to strong results despite slightly missing revenue and gross profit expectations. The key takeaway is our net income and earnings per share, which actually surpassed expectations, primarily due to better-than-anticipated oil and gas royalty income. This was driven by the commencement of six or seven wells in our royalty estate that started producing in 2025, significantly exceeding our forecasts. This highlights our revenue diversity, enabling us to generate earnings from various sources. Let me now provide an overview of the earnings bridge detailing the contributions from each revenue source. Our projected net income was around $12.5 million, with slightly lower revenues from the land development segment, not stemming from lost sales but due to delays pushing some revenue into 2026. We faced marginally higher costs of revenue from tariffs and inflation, but our efforts to manage general and administrative expenses provided some relief. Additionally, royalties from oil and gas contributed positively, allowing us to surpass our income forecasts and continue strengthening earnings for the company. I want to take a broader perspective and highlight each of our business segments so you can understand where our investments are allocated and how each segment is performing. In our Water Utility segment, the main revenue drivers come from the recurring side. We currently have over 1,600 commercial connection points out of a potential 60,000 within our water portfolio, indicating that we're just beginning this journey. Our revenue also includes industrial water sales and water sales to oil and gas customers, with connections significantly influenced by our land development business, which contributes to our tap fee revenue while delivering high margins. We continue to invest annually in our water system, utilizing capital from one-time oil and gas sales to maintain high margins and profitability from our tap fee connections. Regarding our water portfolio, as we've previously discussed, we believe we can accommodate 60,000 connections, potentially even exceeding that based on trends in water consumption per household. We continue to maintain our guidance at this target. As many of you know, we gain two types of fee income from this: a significant capital fee and tap fees, which currently combine to about $40,000. These fees continue to grow, driven by the increasing scarcity of water and the rising costs associated with delivering these supplies, which become more challenging to source. Our annual revenues remain steady, and we are slightly growing that figure to approximately $1,600 per connection each year. This translates to about $2.5 billion in top line revenue from the 60,000 connections, while it costs around $1 billion to develop the full system over time. Currently, we are utilizing only a small percentage of our total capacity, about 2.5%, depending on our capital deployment. We continue to invest in our system production, despite a lighter year due to predictable gaps in oil and gas deliveries. We anticipate an increase in water delivery as demand grows, especially looking toward 2026. Interestingly, our water side has a diverse mix of customers. This includes domestic customers, oil and gas deliveries, and tap fee contributions from our land development segment, demonstrating variability in our revenue mix year-over-year. This diversity allows us to expand our asset base continuously through both recurring income and opportunities in other segments, effectively utilizing idle capacity for oil and gas or development needs. Our customer growth remains healthy, showcasing a 22% compound annual growth rate, which reinforces our focus on building sustainable, recurring revenue. Regarding the oil and gas segment, we expect to see a predictable decline in deliveries in 2025 due to a significant push for permits on oil and gas wells at the Lowry Ranch within our service area. Currently, oil and gas operators have approximately 200 permits under development, and a drill rig is focused exclusively on drilling pad sites there. Consequently, we foresee a substantial increase in oil and gas deliveries in 2026. Let me discuss the Land Development segment. In Phase 2C, we successfully delivered the 228 lots we had projected for 2025. However, we had about $800,000 in deferred revenues that carried over into Q1, mainly due to challenges in the regulatory climate regarding permitting and the creation of lot templates for one of our builders, but that was resolved in Q1. Overall, Land Development sales fell short of our expectations, primarily due to headwinds in the housing market. We are focusing on providing quality customer service to our homebuilders while managing our inventories to avoid overinvestment in infrastructure, ensuring that we deliver finished lots at manageable levels. Looking ahead to 2026, we're working to complete Phase 2D, which is currently about 43% complete. Some revenue recognition from 2025 will flow into 2026, along with future phases like 2E. The breakdown of contributions to revenue streams shows that most deliveries in 2025 were from Phase 2C, with expected revenues somewhat reduced by housing challenges, impacting the early part of Phase 2D. This overview illustrates our total Land Development revenues and their trend over the last three fiscal years, highlighting the maturation of our developments. Additionally, we are still awaiting some tap fees from Phase 2B, expected to contribute in 2026, along with Phase 2C and 2D. Regarding single-family rentals, last year posed challenges for us due to regulatory changes in building codes that hampered homebuilder permit processing. Fortunately, most of our homebuilders have received Master approvals, allowing them to build various elevations of the same housing plan across different lots. This progress will likely lead to a significant increase in single-family rentals in 2026 and 2027, which I will elaborate on later. I wanted to explain how our percent completion system operates. Most of our builder contracts are structured in a Funding Agreement where payments occur in three phases. The first payment is made when we finalize the Plat, which serves as a recordable property interest for an individual lot. Although it's a paper lot, the buyer effectively owns that address. These funds are primarily used for land development. We work closely with our homebuilding partners to ensure timely delivery. The second payment, which comes after we complete the wet utilities, is made once the overlot grading and soil excavation are done. Finally, as we finish the roads, curbs, and gutters, we receive the payment for the completed lot. This illustrates the payment timing and the work associated with the percent completion framework. It's important to note that these projects often span multiple quarters or fiscal years, meaning the delivery of individual lots may not fit neatly into one fiscal year, but they do occur within a 12-month period. This flexibility allows us to respond to market conditions effectively. The next phase of our development will be located directly across from Phase 2E, offering around 150 lots near the high school. We are nearing completion of key infrastructure here. Roadways have already been finished in previous phases, making this a potentially high-margin area since the off-site and arterial work, as well as water and sewer system expansions, are already in place. A key milestone for 2025 is the groundbreaking for the high school, situated next to our primary school to create a full K-12 campus. We're excited to collaborate with National Heritage Academy as our charter partner, adding significant value by providing a walkable K-12 campus right within our development, enhancing the educational options at Sky Ranch. We're grateful for our charter and the collaboration with the Bennett School District to bring quality education to the area. Regarding our service area, the map indicates that Sky Ranch is located in the blue area along the I-70 corridor above. Denver's growth is limited to the Eastern Plains since it cannot expand west, which makes our assets and service area ideally positioned in a prime segment of the Denver metropolitan area. I also want to touch on our portfolio of single-family rentals. In Phase 2a, we have 14 units, with 4 in filing 1 and 10 in A. We anticipate that Phases B, C, D, and E will significantly add to our portfolio. Although there have been some delays due to building code updates, we currently have around 40 homes under contract with various builders, scheduled to deliver in increments of five units per month. We delivered five units in the first quarter of 2026, and out of those delivered in late October, three have already been leased, while two are actively on the market. We observe continued strength in the single-family rental market, which should provide a steady rental income stream. We favor an asset-light appreciation model, allowing us to manage costs effectively while maintaining a robust balance sheet. In 2026, we expect to maintain strong collaboration with our homebuilder partners and our land segment, alongside accelerated growth in the single-family rental segment. Year-over-year fiscal performance reflects a slight increase in rental growth, although our occupancy remains very high at 97% for the portfolio so far, alongside continued asset appreciation. This segment benefits from the equity of the lots and our water utility services, utilizing a high loan-to-value ratio, which supports asset appreciation in line with the market. We're seeing growth not only from housing expansion but also from ongoing community investments. The growth trajectory of each phase indicates that while we anticipated stronger growth in 2025, it has shifted into 2026, projecting an increase from 31 to around 40 homes in that area, with further growth expected from Phases 2b and C. Overall, we're aiming for 8% to 10% of total homes, with a target of 250 to 300 homes out of approximately 3,000 single-family equivalent units in our portfolio. Talk a little bit about stewardship of shareholder capital and our balance sheet. We continue to invest into these assets. So you'll see continued asset growth and strength to the company. Water segment is around $68 million, land development segment. That continues to mature. So as we're bringing assets into the portfolio, we're also taking them off our balance sheet because we're selling them. But we continue to make sure that we maintain liquidity. And as our capital stack goes, we want to make sure that we're investing into monetizing these legacy assets that we acquired over the years and really generate the high-margin incomes from each of the segments and then continuing to build into our single-family rental and continuing to maintain a strong liquidity portfolio, really balanced out between our cash, which is inclusive of restricted and unrestricted. And the restricted cash is really just letters of credit that we have for performance to the local municipality on the roads, curbs and gutters. It's how we warranty out those during our 1-year warranty period. And then the note receivable that we get as that comes in periodically in sort of increments as we build assessed value within the community, more homes, more assessed value, more tax revenue that's available for us to issue bonds through the local municipality and reimburse us for all of those receivables. And then a small amount of debt, our debt is really attributable to most of the single-family home rental side of the business. So continued strong balance sheet. Capital allocation, if you take a look at how that composite makes itself up, cash and investments and the note receivable and then just growth in the infrastructure, making sure that our water systems continue to grow so that we can continue to add those recurring customers. And then we continue to reinvest in ourselves, probably a little more conservative in 2025, mostly because of the housing headwinds and wanting to make sure that we're pacing. We had a lot of chips on the table last summer, really dialing up the absorption of our lots. And we wanted to make sure that we weren't pushing our homebuilder customers into a risk profile that really shifted most of that from our risk to their risk. So we wanted to balance that out. So we were a little bit more conservative than I think we would have otherwise been, but we continue to reinvest in the share repurchase program. Give you kind of a profile of how we were performing quarter-over-quarter in that. And then the diversity, I think one of the things that we want to continue to emphasize is the number of ways that we generate revenue from these assets, whether that's on the Utility segment, where we have a number of segments, subsegments in there, whether that's the domestic side of the business or the industrial side of the business, rental income revenue from our single-family homes, and you're going to see a strong acceleration of that, land development and the synergies that we get on doing just a fantastic job of the Master Planned Community and adding value to the community and really partnering with our homebuilder customers and then making sure that we are good stewards of your capital. Looking ahead, we are assessing our rollout plans not just for this year but also for the midyear and builder forecasts. We previously hinted at some of these developments last year. By 2026, we expect to see ongoing growth in recurring revenue, driven by both our water customers and our single-family rental business, which is set to become a more significant part of our revenue stream. We anticipate accelerating growth as we aim for up to 100 units in Phase 2 and potentially as many as 250 to 300 units during the build-out, contributing to our asset growth. This growth presents a substantial opportunity for the company, especially when considering the percentage of assets currently under development. We aim to match this development pace with appropriate inventory levels. We will also see continued positive trends in profitability across our business segments: Water, Land Development, and recurring revenues. While we project 2026 growth may be slightly lower than 2025 due to housing challenges, we have some optimism about oil and gas deliveries this year. We want to avoid being overly optimistic given the uncertainty in oil prices, but we are confident in the monetization and growth of this segment. Looking to 2028, we are progressing through the permit process for our interchange project, with plans to finalize permits soon and work on financing through the Metro District. We have set aside bonding capacity to fund this project in 2026, with construction expected to start in 2027. This will significantly increase our Land Development revenues, while also keeping pace with our residential developments and delivering a comparable number of commercial lots. We anticipate the valuation for these commercial lots to be approximately twice that of our residential lots, highlighting a strategic shift in our land development approach. This change is driven by two factors: the need for rooftops that attract commercial investments and ensuring robust access, especially given our location right by the Interstate with an interchange at our project site. This positioning provides us with leverage and scalability for both Land Development and Water Development. Valuation sensitivity indicates that in 2026, our gross revenue is projected to range from 26% to 30%. This will largely depend on factors such as lot deliveries and our industrial water sales activities. The range of earnings per share will reflect this. The potential for growth and the timing of acceleration will rely on how effectively we manage and maintain our inventory of lots, ensuring we do not incur capital costs for deliveries ahead of our homebuilder clients' needs. Initially, we began this project with three to four builders, and now our portfolio includes around seven builders. Each builder prefers to hold a year's worth of inventory, which will enable us to accelerate our Land Development efforts and offer a more diverse product mix. As the community develops, we are eager to continue supporting our entire portfolio of builders. In terms of our short-term outlook, I won't go into great detail since we've discussed a lot already. Our Water segment is expected to grow, aiming to reach about half of our total recurring water customers over the next three to five years. Sky Ranch will have approximately 5,000 total connections, and we anticipate that about 2,500 of those will be realized. On the Land Development side, we're around 18% complete, and we expect to get closer to 30%, effectively doubling that figure. Once we have the commercial aspect in place, we anticipate a faster acceleration in the longer term. The Sky Ranch build-out is projected to take between seven to ten years. In the short term, we're aiming for around 30%, with an increase in pace as we incorporate the commercial component. For single-family rentals, we expect to see about 100 units in this short-term outlook, which provides a glimpse of the overall build-out in the long run. When considering our build-out potential, we're looking at monetizing our net revenues from land development, which could approach $700 million. The recurring revenue is expected to be around $15 million to $16 million. This is reflective of our $250 million market cap and what we currently have in production. We have a strong asset, and we're committed to building it out and monetizing it quickly and profitably. We'll be providing a video tour to give you a better view. This will include an aerial representation, and I will highlight some key areas. Starting with the first phase, this part of the community is more developed and provides a profile relative to the metropolitan area and its growth. In the background, you can see the mountains, which we appreciate daily. Another important aspect is our wastewater treatment plant, which is difficult to illustrate but is located at the top of the development. This facility is significant because it allows us to treat and reuse 100% of the water from our community, ensuring no water is discharged into streams. We utilize this water for irrigating our open spaces, which are beautiful for our community, or we return it to our individual customers for their use. Continuing on, you'll see a panoramic view of our ongoing growth. We'll pause here to give you a perspective on the deliveries from the phases of our land development segment. On the left, where the cursor points, is Phase 2A, delivered in 2023. The next slide shows Phase 2B, and Phase 2C was delivered in 2026. You can see the finished roads and lots, along with some vertical homes beginning construction, which are likely Taylor Morrison lots. Phase 2D is currently under construction, with the wet utilities finishing up and work starting on roads, curbs, and gutters. As you continue, you'll observe the farmland that remains part of our portfolio, showcasing the ongoing growth of the project. This illustrates our build-out with plenty of residential land inventory. The main roadways have mostly been developed in the Boulevard area. The cursor now points to the oil and gas section, where we transport all treated water back to the reservoir at the top, which supports our irrigation system. You can see some of our oil and gas wells on site. Colorado has a strong history of integrating oil and gas with residential and commercial development. Next to Phase 2E, you can see the water tank; Phase 2E will sit between the water tank and the school, giving you a sense of the location of our primary school and the construction of the high school. We have most of the road network in place, with just a bit more extension needed up to the high school and the continuation of one of the Boulevards. This provides a good view of the campus positioned right in the center of Sky Ranch, making it easily accessible for students to walk there. This slide shows the commercial area, highlighting the 150 acres adjacent to the Interstate, emphasizing its strong transportation access and the value it brings. The airport is located just 4 miles directly south of us. The future Interchange will align with the Boulevard, maintaining the current Interchange while we build the new one before ultimately removing the existing one. This overview captures the essential physical features of the Sky Ranch development. I will now turn it over to see if there are any questions. You can unmute your mic to ask, or raise your hand and type in the comment section for details.

Operator, Operator

This concludes our slides, and we would like to give everyone the opportunity to ask questions. I see that you're on mute. Can you unmute yourself so we can ensure everything is working?

Mark Harding, CEO

Greg, can you unmute and check if your microphone is working?

Greg Vennett, Analyst

I'm testing this out. Does it work?

Mark Harding, CEO

There you go. Okay. At least I know we're working.

Greg Vennett, Analyst

Yeah, this is Greg Vennett. I'm a long-time shareholder. I wanted to check if anyone is experiencing issues with the technology. I joined the call late, so I will need to listen to the replay to follow up with questions. One quick question: has housing sales in your areas slowed down due to affordability? It seems like builders are still active. If you could clarify that, I would appreciate it.

Mark Harding, CEO

That's a good question because there are two main factors affecting the housing industry. Denver is likely among the more unaffordable markets. Although many consider Denver to be relatively high in affordability compared to other top housing markets, this has posed challenges for us. However, it also represents one of our strengths since we cater to the entry-level price point. In markets sensitive to interest rates, the incentives builders can offer are more impactful for entry-level homes than for move-up houses. Therefore, the resilience of our builders and projects is bolstered by our presence in the affordable market segment. While defining affordability as anything below $500,000 is still high for an entry-level home, we represent about 4% of homes delivered annually in that affordable price segment. This positioning likely enables us to perform slightly better than other master-planned communities. Despite the headwinds in housing, we have managed these challenges more effectively due to our ability to deliver lots incrementally.

Operator, Operator

I also want to point out sorry, Greg.

Greg Vennett, Analyst

No, sorry, go ahead and point it out.

Unknown Analyst, Analyst

On acquisitions and land acquisitions and where you are on those? And any progress throughout the quarter? I know it's hard to time when you're going to have the ability to acquire land and at what price you're willing to pay for it. And then additionally, on the commercial side, I know you have a big hockey stick in '28, but is there anything that's materialized with any commercial players throughout the last couple of quarters?

Mark Harding, CEO

Good questions. In terms of acquisitions, we are actively seeking opportunities and keeping some liquidity available for that purpose. While I wish I could share more details, our discussions regarding acquisitions in our targeted areas have been progressing positively. Our focus is on a very specific and limited scope, which we believe allows us to leverage our strengths effectively. We are prepared to invest more in land compared to other developers due to the added value we can provide through our water portfolio. However, we also want to ensure that our land acquisitions align with the right timing for development. I'm feeling more optimistic this year than last, though I tend to say that annually, and we hope to see progress in this area. Regarding commercial activities, we are active in the market and have listings that cover 70% to 80% of transactions in the Denver region. We’re particularly interested in engaging directly with end users, as intermediaries are less appealing to us. While our balance sheet remains robust, we want to maintain flexibility to engage in commercial opportunities, whether through selling land or partnering in horizontal improvements. We recognize that these transactions may have longer lead times, and some we are pursuing may not yield results until 2026 or 2027, which could then contribute to revenue growth by 2028. I would just add to that, though, the growth you're seeing that we're projecting in 2028 is mostly a factor of being able to open up Phase 3 with the interchange and less to do necessarily with some of the timing. So we still have a strong portfolio of commercial lots that aren't really showing up in the projections yet.

Unknown Analyst, Analyst

It's interesting because the near-term weakness that you're seeing from some of the homebuilders may be a long-term benefit for you guys in that the land may not be as expensive as it was when things were so hot.

Mark Harding, CEO

I believe that's correct. While I would like to emphasize our disciplined approach to what we pay, it also depends on the discussions we have with various individuals. They often point out that land will likely appreciate in value over time. Many of these individuals have experienced market cycles, which can be short or last several years. When they contemplate selling and recognize a cycle, they may feel psychologically compelled to act, regardless of the current price. This suggests to me that timing is more crucial than simply taking advantage of a weak market. I aim to be disciplined, but I also want to ensure that the transaction is mutually beneficial. Sometimes, it's more about the timing than the price itself.

Greg Vennett, Analyst

Mark, I have a question for you. This is Greg Vennett again. For land acquisitions, it's essentially just land. Are you considering acquisitions that lack access to water, where you would create value, or would you also consider purchasing land that already has water access?

Mark Harding, CEO

I think we would prefer to pursue acquisitions where we can add value through water. I am very optimistic about our land development segment and enhancing its value. For instance, if we were to acquire a property in an area where water and wastewater services are provided by another company, it would still be a successful venture. However, we would miss out on the benefits of vertical integration, which would help us accelerate that segment and generate returns on both land and water investments. While we would not entirely dismiss such opportunities, I believe there are many chances for us to be more proactive in acquisitions where we can incorporate water.

Greg Vennett, Analyst

So the person who owns that dirt now, are you the only logical provider of water or can they get water from somebody else? Is there competition? Are you the only provider? Is that your moat?

Mark Harding, CEO

I would say we're the best provider, but we're not the only one. They can go out and find water themselves and face the challenges of building a water utility. It's not an easy task, and as we've demonstrated over the past 30 years, constructing your own utility is a difficult and costly venture. However, we do face competition from the neighboring City of Aurora, which is probably our only competitor. If they don't value our water service, they might consider annexation, but that involves its own risks and costs, which impact land costs. We can provide lots much more affordably in unincorporated Arapahoe County than any developer can in the City of Aurora, thanks to our structure. This also highlights the home prices and their affordability. When others evaluate this, they need to consider the entire development cycle and ask themselves if they're competing to build $800,000 homes or $400,000 homes, which is our focus. This gives us a competitive edge, making us the best choice.

Greg Vennett, Analyst

So a new home in the Aurora area is $300,000 or $200,000 more than Sky Ranch. Is that the way?

Mark Harding, CEO

It will vary. Some of the newer projects that are starting in Aurora are launching at a significantly higher price point. Homes directly adjacent to us might only cost $60,000 or $70,000 more. So there's a wide range in that. However, we definitely have the better location, a better cost basis, and lower utility rates. Overall, the structure is much cheaper and more efficient in the unincorporated area compared to the incorporated area.

Greg Vennett, Analyst

The future for commercial development along I-70, where you're planning to build the interchange, raises the question of whether there will be other commercial developments in the future that could pose competition for you, or if you will be the primary focus in that area. Do you consider your commercial property to be the main target?

Mark Harding, CEO

Interchanges benefit all the land in the area, and we have a strong presence there. However, there are other nearby lands that we don't own that are planning to develop, and they will also need to contribute their fair share of the interchange cost. We may be covering that cost initially, but eventually, they will need to reimburse us once they start their projects. Our approach is to ensure that our timing is advantageous, while those entering later will have to factor in that cost. This will create an off-site investment, which will help accelerate our reimbursements as competition emerges. We aim to ensure that we’re not bearing their costs, but once they are operational, we believe we hold a competitive advantage.

Unknown Analyst, Analyst

Mark, can you hear me? It's Matt Reiner at Aranda. I have a question regarding Slide 34, which shows the profitability trend. When I look at 2026, it seems like every category has a slight increase in revenue, but the earnings forecast is slightly lower. I'm trying to understand if this is due to margin differences between the segments. It appears you're buying back some shares, so it doesn't seem to be an issue with share count. I'm just curious about what I might be missing here.

Mark Harding, CEO

You're correct. We're looking at the profitability in 2025, which was high due to oil and gas, achieving almost 100% margin. Even though we're seeing revenue growth in both land development and water, we don't expect the same increase in earnings per share as in 2025, mainly because of the high profitability from oil and gas royalties, which is a key factor. The comparison from 2024 to 2026 will likely be similar. In 2025, we were pleased to surpass our earnings per share forecast, as meeting forecasts is important. This success was driven by our diverse revenue streams. If there are no further questions, we'll share the presentation for those listening to the rebroadcast or who might have follow-up questions. Feel free to reach out to me to further discuss any inquiries. I want to highlight the value of our leadership and management teams, as well as all our employees, who consistently perform at a high level, helping us refine our operations. Our three business segments are capital-intensive, requiring investments in tangible and inflation-resistant assets. Occasionally, we have excess capacity in water or sewer systems, which we can monetize by supplying industrial customers. Our significant infrastructure investments, whether in boulevards, land developments, or interchanges, benefit us. We're cautious about financing these projects to ensure we can deliver lots as needed. While the development cycle can take a year from groundbreaking to obtaining a building permit, this timeframe is relatively quick in land development, and we're pleased to align our inventory delivery with our homebuilder customers' needs. The resilience and timing of our operations have been tested and proven effective, particularly in challenging market conditions. We are proud of our performance this year and look forward to advancing the monetization of each of our business segments. Wishing you all happy holidays as we wrap up the year.