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Pure Cycle (PCYO)

Participants
Mark Harding President and Chief Executive Officer
Bill Smith William Smith and Company
William Miller Hartwell
John Rosenberg Loughlin Water
Bill Cunningham Private Investor
Call transcript
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Operator

Good day ladies and gentlemen and thank you for joining us for this Pure Cycle Corporation's Fiscal Year-To-Date and Second Quarter Ended February 28, 2019 Earnings Call.

As a reminder, today's meeting is being recorded and all participants will remain in a listen-only mode until we are ready for your questions. [Operator Instructions] And now, to get it started with opening remarks and introductions, I'm pleased to turn the floor to president and CEO, Mr. Mark Harding. Mr. yours. is floor the Harding,

Mark Harding

Thank you all to you I'd much our second and to like quarter welcome very earnings call.

call XXXX. So ending earnings will our for this six-month February XX, be period

the deck of As you as to slide call year, have I'm this at at those one update delighted the to do one do end a then end, who followed you a and of year company. half-year presentation. two We company, for have to earnings status we the so able be

want if descriptive So, website on along part of to purecyclewater.com. you follow to with that, at log the you can our

utility be segments. water details, will our plans and concepts our facts is so be and details the Safe guidance extend be but both track statement which second will note of that over the out this slide the we click portions with audio get to within that out, allow intended will to try of some you see some this graphic welcome that as really and descriptive the and I'll kind or Tab will along, in of you historical the of our into the If that, the in information. is of the not There as well or the there, some descriptive can of Harbor you'll room the provide to of quarter our that be that the call. portion Investor you there for have that our pursuing, center transitions the most release and of company as I'll earnings first, lawyers presentation this. on part click through we move will development

we new detail kind seen we'll go What's incorporated kind really of the generate this an will addition additional development many of we have areas have, out part in to which that, so that land our not water. year's is segment So, for will it now come you utility some most have has that also with the as segment so that of Slide developments we'll and a revenue. we to company out we for reporting reporting, some large but exciting the pardon along, of in report to X, me, our really, the those number that, detail we portfolio water segment we've

to two through So, we XX,XXX have feet single-family provide associated service that. of fees and of about up about fees. usage to connections. to forms get That us of water We tap water connecting from then water. revenue generate acre water portfolio XX,XXX fees to enables water We system our with

multifamily, land We a land so have a and commercial for and segment, master and about developers about We'll developing and describe develop development lots. single-family lot community, that and lots to will development retail of side. users XXX-acre have that, plan we our on the for we're so talk

we to that's We generating gas in area. oil our around industrial oil small and gas and provide then portfolio royalties and have a water service and some

that. value water in our shareholder well rights. provides separate into and back water collect own as system water all assets. describe developed the retreat put sort water we surface an that supplies. briefly a in customers comes distribution system We'll that as We as wastewater, so utility. water domestic We we back them where system, those the a then of that that kind supplies. have supplies those irrigation wastewater our and we turns into treat a distribution put and we supplies of the our We in on are cradle-to-grave those into So that to where utilities system of both water our from water We're various terms groundwater

let that stay a – have on are little to it X move business. more bit and revenue new is This company. the detail If is what those we on generate Slide to you utility our for how the that me really from the we

XX,XXX have connections of that XX,XXX capacity. acre of service feet water water, We

a water our at tap If you fees, look tap take are fees current our XX,XXX.

tap X,XXX. sewer Our fees are

on you that's about at billion. that the a $X,XXX water connection side. math on generate of connection about per the If $X,XXX about year, We take side, top about over per look and revenue so per $XXX line connections, XX,XXX our $X.X connection sewer per

out acre a today. and So, serve modest XXX the that sewer about are XX,XXX that's We connections, $XX serving it of serve million about XXX once connections. amount system. into -- currently water builds feet We we our about

in and to X,XXX being location. concentrated Slide area in the our about about our is next development of It got in in corridor. master right a slide, the our Denver community planned is We've activities. acres Denver on investment the bit the the new property activity X, Moving I-XX of I-XX area. Metropolitan which here the little Most corridor is Metropolitan

to a commercial, and X,XXX add we to of whether of single-family in development you're water and that detached single-family X,XXX of crossover multifamily light have we top connections I of house, town, a some north, single-family most be the side that's the south, that retail, our for think geologic in highest on the up We our so the industrial, so to going grow the has left activity much west, schools, land going west of foreseeable to house a houses, and trying that and host segments line get on how concentrate statistics concentration equivalent. connections we barrier to single-family growing number up really bit little single total both can't any been future What attached to segments, here along is segment corridor, are of on works, a the be going development the so revenue the I-XX land going describe family that's going so utility is in some the have the connections really to be our about about that of whole of it's activity. made

you $XXX fee about $XXX and year. Ranch, million If million million that take or fee X,XXX water another tap get at tap $XX system Sky water our that and development so the for about a XX,XXX, in at back per operations revenue, we then per utility tap it's in take that's look fees over wastewater fees, revenues, connection $X,XXX

we've in about So, delivering X,XXX in that the XXX year. first development about will a segment, In with single-family our our associated finished selling houses. about acres equivalent retail, so about single-family recurrent revenue that land total $X.X million translates phase be that. into XXX We're we're connections In got lots. commercial, detached

those the lot, that of about foot. out priced at to are for per side generate right those about side up that the square $X look million $XX,XXX a taking on pad and so, right selling around that's on commercial us sites then a land could And $XXX $X,

about take at looking to a west so our the that a year-end the November was earnings look in of drainage graphics, component view couple we've of $XX were segment. adds another the a some look $XXX you commercial in we taking about the give where of million assets. property of at our last you of in tried This call towards kind the that, with year. at the if So, million, land development A

key can early the what's go connect so more on the you going entire be grading trail that of roadways make. that on property, we assets side see side into of drainage shape. is to can you of for channel can our are and space like left We've open now space, fairly things come you that that the corridor on which of the over, complete investments were parks some We've and because done that what but see those the drainage got where start assets and first all some of right overlap So that. to maturation are some the to open

about a Sky slide next the Ranch. talk to to Moving more little

a we've breaking year been for about year. We under began So March last now. about ground construction

have graphic we've facilities collection We've storm for grading and storm water a overlot completed This excavation We and entire is done of detention acres. the graded, centers. grading water entry roadway. XXX the sub

the And down infrastructure. infrastructures been working goes roadway on that Monahan into entry water key community, wholesale complete. our our our that of one we've the got offsite we've really that's that's so from So and is Road, interstate

more domestic next a I working little it's graphic to there. and enough property the little than got bit we've connections, the a a more thousand on and got which We've oversized little XXX service so water we're about bit sewer irrigation on connections. also water think is bit system capacity page. So then our to serve And our

be a the structure through, So sewer it capability. half overview of of reuse the sequential an should plant through if progress sewer all back about to sewer of go will X, back be so the This to take our kind lot plants water core got will a we've which really the it. plant of way on quality, after you state-of-the-art Slide way

them So into the Colorado in we're water contact, in us we and highly sewer to water the water really particularly has put can in supply so then they the that call treat their supply treated supply, a to is we safe an area they don’t limited west, the and our system regulations so back extent. and and fullest retreating water facilities and quality to re particular that that because reusable so plants it want this usable of that Metropolitan make reuse to water to anymore where reuse supply irrigation that be water very is we a use sure are we able Colorado human innovative are it resources like for water do our We quality given reclamation water a facility. and to to some allow back use availability

next $XX a property. development green into really progress through complete. invested date The we'll this is [ph], complete. asset utilities within is and We've mark occurring, education company you little have have so so opportunity on the facility for facility. the are will bit lots we'll I'm showcase itself. facility as report. roof a to vary you XXX So on very tours about to This of date to our progress it land wet how opportunities kind about a Grading a be gives we've The green graphic going to slide, more to got the it this a million and give

sewage with one those and lot agreements then builders progress two being milestones of with will at we've we got scale our which So of been we've some the and out complete will a flows development you growth that got delivery contract finished all all because just that on little system a some take got plants to XX% then will that XXX get entire and so and have of payments payments certain a full lot have the build who the site, as that we contracts wastewater economies to acres about sewer wastewater allows flows, deliver that deliver of how planned that master our our particular again us that We've of site. inventory our paid. forms builders, under excess bit is kind site and agreement progress from sewer particular

of that, some the numbers development of terms in. cash in are on flows Here numbers lot of some so our coming

So, so $X we to close to date we're million received a project project XX% under so the about year-to-date for $X.X agreements lot complete. percent for date revenue development total. complete, on for million We XXXX our recognized to about in $X.X million,

that complete taking that's some contract contracts in time. percent got we some that revenue we a these revenues point you're a when So in, we've the are lot the how recognized third that have, as delivery finished then under coming and a of of at two look

we that So well sold as we as goods as of the Cost lot, deliver of revenues deferred those recognize on that land revenue. finished development some side upfront.

of from the milestone So we the revenue complete. of is receiving some is on the the ahead of actual deferred our construction payments our money builders where percent timing of

why into revenue you there deferred deliver component a revenue deferred that lots, will have and those our in income. as that's So we grow finished

deliveries towards highlight as date. So we to of that phase. little bit gives yes, you I'll Ranch what Sky finishing a we've more the the out but first talked to financials, on end those progress expect when that's bit a into the lot get kind of is of a

we'll of in a be homes We'll the are between to development there we that amenities, the so on some of as could and have have three and mix commercial sites building, have may some that be So industrial, will working some In more right then our sort all retail, six phase local in our that, be this We'll so that substantial homes. some as second will be will some products. have single-family where don’t of second phase the XXX have other acres paired more additional our have development, of will there they'll that offering second in necessarily detached going school many will builders might in commercial product on and detached to lots. standard be existing system will various portfolio sorts we attached specialize deliver of phases will single-family we of in have that first another that in school dedicate different phase builders some some that phase phase. the have we're builders, classes our we first that are of but that have commercial,

open bit our and selling start online later activity this So you of we do be on then and fully time coming should summer see phase. that some first a that on we'll little to should

sort April at are of the getting end grand their of the months for opening to I towards are just looking think developed. the waiting some of model later homes where in the a electric builders they

by buyers going plan master We eight Sky and those have know done look websites. to number marketing we amenities a you coming they've on have have the website the there fully the the a is up Ranch that to end they're I of now, homes think so and and that local facility at, model their that some for educate of looking help they've onsite. month, traffic and developing so got some market can ready materials We'll like staged developed the we're of what of what

to that, on our we'll some with move other of activities. So

So of we to a and the gas number opportunity industry. a field. for We've this oil have large water do in got provide operators

you're of XXXX form. we number are and having And from of lot XXXX work have activity on lot type they where single that a that efficiencies of of to in with bit seen little where look move still kind drilling operators XXXX, some type in well, XXXX, multiple prepared activity of field the site So was a what well we XXXX a development you've we've a then so at pad that of the had historically and of a been a kind may taking more assessment and more to or assessment kind leases by looking holding field activity maybe think moving more that's sites development. seen that at expectation of so production field of

wells So depending different they'd per they of on have definitions the like how pad. many operator,

So Arapahoe a field It about XXX itself the County. is miles. square Adams and covers couple of in areas

water We provide have service well-positioned infrastructure are this to that field. to

we water You our storage assets. know, transfer can to

One of that add months the the system. things few that to we is did last over

we've working really some storage we serve but the added only meet So of not can field. barrels and the of operators million additional multiple that so peak in demands one an

it's develop So a been to to opportunity supplies. very us to good allow continue water our

to gets ultimately portfolio to needs. but to continue and have service today provide used water, capacity large able for excess be a oil has gas certainly that We domestic for

kind the Slide months. for six performance talk key at look XX. Take a little our let about indicators me So, bit of a

So little water, more six frac for water sales seasonal. our and compared revenue is bit to a our XXXX, our industrial months to-date drilling down

know, to a cold transfer over You winter this difficult it's the here very water winter. was and relatively

We of winter. think wells operators over I a operators. do the a lot and lot not amongst a was drilled the of fracking So of of bunch did it suited well number a

year. So and there's later to start an inventory rest the some of wells will that frac for probably this through carry that the of time month

more bit water you'll months. for frac deliveries see So six little in activity next the a the

be going ended. line months to are water side. up bit are those - up fairly municipal purchased Ranch. at water and our being a at Our the Sky to taps for deliveries services a tap six going to little significantly is look fee the in seasonal tap attributable be It Taking on wastewater revenues, are fees

years the well additional doing just So revenues what as a in Sky next of Wild you're over we're as Ranch have development the several occurring opportunity. terms at Pointe healthy see going activity in fee tap both because we to

as so out that in because see timeframe. XXXX on came so revenues, their you modest phase. pool more in Oil development of revenue terms that is activity wells think about, have some Wild revenues. of that Wild at the it and from So Pointe two we fee do those extended royalties we network Those at to some probably the down, the the system as coming and Pointe the should or have water line last in just interest royalty extending in They out spent in developer out the roads tap area, winter Ranch. XXXX, slightly into down are well really Sky that well there gas

it's still them over so looking still one to is the gas and still switched – driven So then jack but well, they're I [ph], show one for are of land in Well, gas continues all them are field the that they're But good pump development very to the operators think formation gas wells. a results of our driven pressure. under the segment. is

be of the tap segment keep you'll on number of We'll also of will new The then for lot takedowns lots. of reporting each of fees information number of a and a us, that. this those So so for lot number homes. the track get

on the percent I $X.X think So what model. recognized and we're complete the we've we've based rec X.X revenue the reporting of that revenue here in to-date revenue. revenues significantly about We've got more million on is sort got to-date recognized

sort to statement the So, income six balance ended. the next two slides months sheet going are for of the really be

let know, those. parse guys I'll through you You

going investments highlight invested of that's summarized a at we're category. particular the amount calling what as we've look opportunity at significant in One got and lots. of this be whole, this And take to the category going but inventory in this have into is to you're kind when is statement, on to the we'll in the things a is look that financials significant inventory that you

infrastructure to So close we've recognized, got that to that's yet sales. that put on it's into be yet hard lot a lot

XX might year, XXXX. Even they to million. of roll and a of delivery concrete delivery what the in builder kind us – into homes with to going over I'm is attributable delivering November/December of for not say over that some March. were homes are allow curb to odd of the allowed very another deliver bells part so of of those end for want We we've middle weather hoping when January be likely was know critical builders the those home another couldn't homes then this builders, build to thing down builders bad that finished our the see year-end, because and be April, going payment, the will of as Nature how so look builder we've And date To and lots that was that model particular builder of homes these model the as got of lots. agreements inventory for of to be to can you four a we so it going because we lots offerings. to should so that three they next but there each time deliveries their lots time look to we and from I lots revenue us product model those some at because to each have fiscal XX to those kind should going to each of homes be our take issues have their is of winter. the are rest two lots May. put takedown delivery lot maybe land So roads other what though payments up that two this to those year, we get for delivery to million we're earnings the home two of will of the another in and finished in got then those year all to in gutter phase builders close put a model XX was because some about the the for those We done rest what number built are be one should are in be from the finished reserving and hoping to will those our preferences model of which four that depending be customer build some know to Mother could that inventory models could we've they that those to another She then going and the June, we should us deliveries builders lots, other of so another bit XXX that the which and to and lots us on for few temperature that's another be, another that. got, through recognize so asphalt first to and of early to of is are $X have is each you guidance give But most you some generate next XXXX see so that's span just and I straddle for each model either $X.X QX the about builders, going months, September were so May think year XXX but into all for may will delivered of to X/XX, but maybe third

the sort by getting takedowns two early And in and close part of really delivered yet fall takedown lots to so, then the in our lots home XXX model another early timeframe. home and summer the to May some first then of with we're odd builders our another

receive to is lot correspondingly, can you be what seeing attributable tap fee We those. that's look deliveries. - XXXX to from homes. And So another in $XX forward going calendar of they're revenues see selling probably then million

get building attributable pool to those. tap fees we they as permits So

to type taken they're So homes is so the the taps delivered think lot sort than taps they XX by on we've to-date of more actually looking lot builders, are even doing inventory product they have fees they are we and I and be information send what determined they each on got that and calculate so can to of that over cap building those. attributable what the us they lot to and going to

So with questions has that, it I'm back period and think endings and the going over if a turn could for of I got to ring detailed to see add best I little bit you've any if six certainly moderator in our what of been color the months. one to

we're to look terms So segments. more well as our land the delivering be and very lot excited utility as a in development of

it to back So with turn I'll that, the moderator. over

Operator

Thank with and ahead is Smith Harding. Instructions] Company. Bill Smith take question [Operator William your first line you, will We our Go open. Mr. from sir,

Bill Smith

haven’t you. with and when Thank idea your builder yet, amount the payments do you be where be end, on the progress Question any progress. that congratulations Mark, any you Hi, get for might on that? at everything the might the received you what third have contract third and

Mark Harding

finished lots back-to-back another, or timeframe, one that deliveries. that's that’s May delivering that we’ll So, March be got two in and so the then XX

corresponding that to are have XX each lots those and lot about going another of attributable per so the be get June, we’ll we to those those. lots So, then XX XX,XXX numbers in

finished the So, three, deliveries those two, say lot lot to, million almost delivery. close $X.X on from two

Bill Smith

end builder, including that the payments – that progress at what one is all this calculation? the there's Okay, and don’t it’s get right, you’re you what you’re in where that but -

Mark Harding

They of so into preference mean, are particular separate finished for I you structure so paid lot they’ve delivery. got of substantial – from yes. - they’ve investments on in price into the have priced for we the a the all and were, Yes, it they a is each just we ex that know project, and over had apart us that getting. investments got substantial sales what lot, they

lots. So, maybe probably you XXX know, up to for got, each to say - lot per probably I’d close they’ve $XX,XXX

us. So, with where a finished project they’re just it’s lot held that is vested that so the all not inventory by of delivery

Bill Smith

And revenue are June and gave, numbers, all the in numbers were these like summer, progress-type you the deliveries late not those just just for May and and numbers? numbers progress, that those

Mark Harding

are, not not actually those do - received date. to -- numbers that’s so already it for those does account what No, we’ve

about of in So, looking you segment if in million what deliver in to that’s to what $XX we’re we’re doing. land total, closer the XXXX, look at

Bill Smith

that’s land that talking Okay, we’re about? and just the

Mark Harding

That’s just the that’s that's – we're what right, does the tap fees land, in that not doing not segment. that's utility and

Bill Smith

Alright, okay, thank you.

Mark Harding

Bill. you, Thank

Operator

take is open. we’ll ahead next go with line your Miller And question from Hartwell. William Please sir, our

William Miller

Hi, Mark, Will Miller.

Mark Harding

Hi Will.

William Miller

well? at you sales, next because flushed acquisitions afternoon and the in as is years, you about good us comment you morning and curious, for percentage the if I X whether the I of be And but lot on oil of earmarked that haven’t some to curious, then was use are morning, that or of for good just us would your talked gas, anyway you could utilities? give guess so to could looked going and at from years buyback good just all and I’m the you, water to that revenue the out cash, cash with you three X you have coming stock

Mark Harding

I love your optimism.

think reiterate So, because what point. we’re we’re really Slide doing, of at it is Sky X most price is, I doing will I and the crystal are the of builders on it’s what know what our Ranch, it about optimistic that presentation fairly you you of is ball which know, that

home. a property, is entry an pretty which flat lots pretty costs this level know, predictable, are delivering pretty of and up price allows reasonable development you - them tangible, piece have a to We developing so at so put we’re

- but of none the the in say in it $XXX,XXX, there's is level entry of an Now, the out homes that sentence, area stunning Denver in here and kind that’s can level same are here it’s you there. entry Colorado home where market

get we really times creeps can it the a time into XXXs, XXX,XXX. people of in one bought something advertise XXXs. by of somehow it get and are and you will that So, it for low done, there get mean, low the but few I up lot home projects deliver a the

terrific to month. where the what their keep be and that of -I take that can And I second to the XX their but this enough start quite they’re will to homes wanted early think they’re to call inventory I builders be season that’s not they into look a So, about volume, probably going - that, a we sales they as they aggressive put X really have think think to get at machines they opportunity months so at. and delivering as it together marketing a going wanted look and their

So, probably with $XX,XXX price, attributable revenue at and this phase sales the that that the next you period you volume XXX up that two-year lots that have put hope to you a the We to over in if the we’re if sort of first summer. of sale about second three year of first to a of number, gives pull kind matter and X.X million look inventory XXX. average that's phase $XX going builders take down into at look so in

do, so first that well the don’t the So, will breaking but sometime same that a on ground have quicker infrastructures, we’ll on-sites start think, little off-site this level than did. some bit have We that deliver we will quite of fall. one I

hope all know of the maybe builders, absorptions we of same three seven or just of So builders on have in total, have those. we have six level we and to instead you maybe

on So thing. phased going absorptions you’re see to this

look on how and wells I operators the for another that's going the pulling foreseeable a million going stable, have those, build somewhere on operations. in you some which year-over-year XX to depending fees to the in $XX we'll million tap And fairly at of million between revenue work other year, land $XX future field fee $X to probably higher XX gas, Oil and development down maybe as out, tap trailing higher. the quickly and get They’re $X up the attributable kind have to side. think be those million maybe revenues. so, of ramp then to So we're their

XXX to another first the So units add million. $X.X start

strengthen the historic assets of really and so accumulated company monetizing balance that to investing the So quality it’s and lot into, we’ve again, really going now built where high now the problem sheet. we’re is a

we’ve in what to that $XX of know, under maintaining You operate balance area. sort million is cash tried our

capacity very capacity Ranch, you not on been finished or So in be too that capacity. in lots, but economies focus investments. do and to sure lots water system scale the system we energies there we delivering those had those excess and sewer at have have and excess Sky system do sea reactive to to in and overspending utility our sewer have for delivery where wanted about to to We much logical getting capacity or not we have water it. be were our excess on studious our side system capacity We were with able make the land more catch able in into lots of we some have up

opportunities company. So can for then and company we our grow areas how at systems water the then can you systems for look are are acquisitions that constricted because start Certainly, pursuing are by what availability. expanding other to things systems that systems we’re at where the bring service we and water looking in wastewater to other exiting water and they are

that So, more we’ve invest that and that Sky efficiencies those just kind that and take ramp lot. like our XXXX new little our may to are where add leverage that of we those mature, to continue communities, some are can we can on, need just as the Ranch then on them water that’s, grow efficiencies we are that for we and to bring areas that operational like connections of for There of so to expertise that, really their that see some to operating bring a up. working in hopefully and of of see a can kind and some going a at we’re bit we’re look got, some

continued well oil gas water, to more to and up domestic our going and operational as capacities for - waste more ramp development. water industrial in our both of terms delivery We’re water more as deliver water,

more leverage exciting than the extent this all those having, we use sure we our very leverage comes to debt. not your any for to So in equity we're We to I certainly that our have think us cash we roll don't be, and and to are sheet want of cautious don't to balance we look and we'd position about would going using that avenues been have any something continue making along, capital. have

So we're on have kind not seen we're all an this I and thing you of as equity hawks think issuer.

bring I market capital think and extent invested we appreciate the of the into to those some the opportunities doesn't that our translates be shares and that that value that do to last at to company last us to that. dividends. then able issued we utility of continue over make share some also back sure some very for dividend look and we're a cannot time wants - take the the in was price, a a almost are potential. weigh ago And equity to of Everybody that stewardship on decade hold for

likely water our as they and on revenues and come grow start dividend from declarations operations to that. revenue so, to And to in on recurring you're continue sewer see some

our and So can that acquisition, our certainly think to how talked about, of an coverage get any meet a Board that not looks less bit at the and doesn't and we on an kind it going recurring take I've the market in market's gaining we're put the can't in with if priority they opportunities space cap. issuer, pursue a the cash get management of money from some we're something billion I where value people thresholds through it mean, you I there. gets We're to at the get order flows, the we're that can and lot odd with we're dividend that. you a market know think going little we to If some we of not use than into company, many any because love we'll a buyback industry we're from acquisition banks some small not coverage because into filter and understanding so look then programs that not of coverage.

get pedal I'm to that is cap. going do So what to as hard market to as I can

William Miller

thing do That's in the of That's State no development capacity you out thing But of with be? is estate would if waste given you and activities? why revenue your say Mark, other recurring second the years, of should general looked thinking you. real around, great phase for Denver the think three for second the and raising one thank prices what

Mark Harding

of are All latter those clearly opportunities. I'll first. do the

but in by what You as and to that absorptions opportunity we that builders to so builders same know, we continue want token, we upside participate to some the in find there's to to the want with as to property, the overburden it we they make this to don't high well. think in is this. continue sure from building that want participate We get value do our they're

at the So a favorable well in participations in participate a point and us house we might fixing more look to as above pricing then prices certain price a little take our equation. bit as lot a certain the sale for

the recurring within Sky of years the out. On will I three revenue, be days think built first Ranch

other water we'll from the will We'll be good fees that. online, sewer the growing. in so those annual million in from phases rapidly a have $X.X So revenue have coming coming

depending that number contributing $X operators attractive in still field. have in million to the are on be a I industrial frac sale that the that million think we $X of very will

years maybe million look a dollars had at recurring revenue. in us two you if know So ago, you we

us span not refer $X $XX from slide million back is my at to X. going from three now, look so unreasonable. within you years maybe If year But to a I five million

William Miller

very great much. thanks Well right job. All

Mark Harding

Thanks.

Operator

next John [Operator with Instructions] to Rosenberg Loughlin We'll Water. move

John Rosenberg

Yes, for my Good question. thanks morning and taking Mark. hi

Mark Harding

You bet.

John Rosenberg

Community a relationship have pertaining question couple to Board. of have well, your I – I with the CAB, Authority a

receivable Have in through - activities at for that performed a they point which reimburse later Pure entity read be, do will have will Cycle do have, now? note out the the you I Yes? they As you future? future, some will they in to them

Mark Harding

Yes.

So a little that for let describe bit. me

John Rosenberg

I you. Thank to Yes. have read.

Mark Harding

it mean Colorado the that job do can. own is we state. try a come And is, way well it so and as pays doesn't all that as its What growth we in across a disclosure. I - good

And structure own development to happens that for is have their tax so every what new has development.

comprehensive part city, their of set mill they that little to pay bigger or there a for we may are infrastructures their of for they lot otherwise, and need of a own those live to deliver that be deliver, are public going but county that So all to citizens cases going stuff public. cases those In roads, as development. levies They owned owned to in Authority assets. the of be They that Board. that rec improvements owned parks, gutter, public going they're by CAB, they'll open part will some deliver that We're drainage being the a all are by space, curbs, developer. Community ways, by some centers, county, be infrastructure

we're happens advancing what so, They is, those receive assets. And moneys. those

they will are they note We have levies tax so homes, what them. mill assessed capacity provide property value, from a And receivable advancement. it's get that when bonding an when advances, have that those and when have to repay call living they there, customers we

John Rosenberg

of a it This is Authority financing? in somewhat increment tax California, to analogous like issue Water I'm kind can that,

Mark Harding

Yes, that's right. exactly

John Rosenberg

then bonds against municipal issue once a to as able flowing entity? cash be will It that as it's established a

Mark Harding

That's right.

John Rosenberg

Okay.

Mark Harding

higher capacity. and it's rates can on interest more and rates and capitalized higher mature, that do it do you a interest bonding early get the more pay trigger have So you interest can when lower you or pulling and it

that chosen have that a bit bonding we have that that later a date levy so, of and at can And bonding to to to more mill community. taxable out capacity the of squeeze, we dollar capacity do little every

John Rosenberg

carried And see. under I on note right, All that's the sheet receivable? balance presently

Mark Harding

Well yes.

that CAB? and we'll some as a go there'll then owed numbers into total will and of note out what be from the So, delivery amounts the of describe receivable will P&L note the those still our inventory have is to roll then part and as they'll what the in footnote see are lots, of finish receivable we us that you'll

John Rosenberg

And very much. thank you to I SBXXX. And see. next question my pertains

Mark Harding

Yep.

John Rosenberg

- of oil believe your for ground development now? that you what that do northeast could on on I thoughts of could gas, the - and you you Do on right what

Mark Harding

northeast of Well, more on in them, I'm happens happens I'm in of interested at. we're what top interested where what

John Rosenberg

on geography, I I not Okay didn't so my see, my I'm up the apologies. know where Niobrara,

Mark Harding

the our that operators same overall field the exactly are portion, is okay. that's are same that developing. working area Niobrara The No, in

John Rosenberg

see. I

Mark Harding

wants have oil and Boulder. there's very really contingency development very we're doing so, and to keen limit what one and for strong a the Boulder couple of on it the the state not we of limit a gas want so vocal And okay thought to we doing that minority, And on a conservation of being, we want in and Boulder to of them rest well, wants the know we in doing limit out to so that. schools in of is say that state XXX, rest

have to development. Boulder of I transfer face which its gas oil more state on was should want of control XXX gas the rest more as development to jurisdictions the oil understood if Boulder to can and and to fine, development not doesn't most oil local it so, continue the and authority, And get gas do and

So local within reach. think that's that's probably I a that level control

and develop standards. One A is County develop unified We want under a It issue. have see B. happen we binary is didn't of to the things we that standard. want want didn't to Boulder a to different on want have didn't We Arapahoe standard have to standard

then are development you you you to that but be going is central agency don't if going and develop, develop have how that's to that. you know If regulating a don't a want

John Rosenberg

Makes sense.

Mark Harding

of local that that part want gas so and communities have things those definable it so, both oil to development, And make controls predictable to part of statewide was some strengthening and for continue control, it it encourage was of that happened. of

regulations I is or with the tenor the that the gas gas might and see that had allow with but what oil and wait active I statewide to think and those work industry the have oil think that to ways we'll is of continue then has, to either find address to claimant industry as work continue to development. do some public development maybe regulatory concerns jurisdictions to the which

tell what I the that know gas state. a oil oil have is crystal producer. state industry to don't whole. of I you as as I What what We're and can about to say, an an well the and going And gas a it. is good have ball that as kind is so, Colorado that's influence

the an and And so, producer, not continue an and Colorado oil may oil and it will producer. an gas envision being of would be not me to be gas State be oil think gas I Colorado to hard for but producer. Boulder

John Rosenberg

Thank you.

Mark Harding

That's give I you. - can

John Rosenberg

the clarification. for Thanks

Operator

next to Bill We'll [Operator Cunningham. go Instructions]

Bill Cunningham

how Mark, you? are Hi,

Mark Harding

How are Bill. great you? I'm

Bill Cunningham

at of was doing doing actually $XX the million paragraph the for on revenue another margin being so margins, discussion total would I'm $XX part is has ties phase lot then calculation I what the with a with the completed good. builder far, that but in. starters a of to looking here operating so car do there at expect have is so but a is the where, when into gross the that's fee million which you that is which cost finished where me this from lot coming actually $XX for is the I of saw kind surprised I million table in XX-Q question small first on the of same presume segment and kind the at be you're that I fee X%,

be first collecting to you're estimated So and that $XX million expense. going of the million from a $XX total segment

all done that I going XX% at and have you're in dust the when is correctly? with up settled that and come I has excess looking there. of So margin Am said to gross a

Mark Harding

are You

Bill Cunningham

Okay.

Mark Harding

this I have price capacity pursuant because at so to from defined – tax so a concept when we're and recall AV So the caveat now, standard residential you the we correct available incentive just gets I and mill and the and residential a set sales to sale caveat. a Those are that will and of remind that - state. the development that bonding levies the the mill with that levies one numbers house, will take of look

from the times residential revenue retail tax. the get amount so, our we And we sales of sales from bulk almost as four do tax commercial revenue of

wouldn't acres we'll reimbursable XXX over of our if revenues on that excess bonding it. get residential, our to because because we the But we half capacity back might have million project reimbursable. actually just have qualify we have the $XX that for were So limited of commercial,

XXX% our over right, get that of because may be So believe going may But it the be how we'll we're margin phases. get and development reimbursable It type back. that several in of phases, you're to we of are have. that's the those we reimbursable

Bill Cunningham

when happening? you you the when to be then your issuance expect said kind that's possible. moment of the be, to of you're until you're Okay. defer going bonds going thinking do And What's the last timeframe

Mark Harding

no. it's not from yield window back those think there's you might Cycle last rate I is, that. like of bonds, flat I'm a I but It's I'm going to said the certainly Yes, cheaper the to sure interest hold later the the that the - don't that so kind where I in a develop you certain curve.

doesn't as many matter have same So, going units, get certain more rate. interest on, a it of to the how you still just number units

the And to so, of of for that number level that will kind rate. bond between different and bonding would issuing the of and curve how interest fact at of process a as bond right maturity now be and the within firms working tradeoff the and of kind our we the yield gives work flat out start several a connections propose AV that we matter market have, comfort community after development enough of we're with that

infrastructure just to we can that out numbers got And want we that. throw we've know, so, there this. If finance you and all homes and no I'll at to illustrate you just do

maybe pay are interest market higher doing financing. that to your type Maybe is bond rates at interest the a percent. So accustomed of rate, X you

XX If you've and coming, your homes the then rate might interest there out are be XXX then X.X%. next got

and may If XXX financed, homes have you've you got to rate XXX interest X.X%. is homes out want your there be

that and may between you is some We And somewhere that what know that question on sweet spot But we're bonding that's homes, where XXX that choose be this to this to pull X% trigger may want may of a see homes So year. that getting is year. do XXX is it you that. you kind X% X.X% later answered. and later to

Bill Cunningham

for gross there's against My XXX,XXX the fees of see Okay, tap it. margin No when the was allocated the reported. quarter on operating segments revenue margins no I other one gross but there, question on cost very good. the

it gross So you're appears that. reporting margin on XXX% a

Mark Harding

No we into do that add it.

Bill. - bring it's I think point into might be might to at because footnotes overall a those lost the be does water describe more segment It bit there how us reporting, we and look costs to kind be going might the consolidated we the be of a in good able up you utility overall so water in that get taking little incumbent to a it on segment.

what And be so, that going they're of I XXX%, lost the sold as the table overall be online get hadn't segment. cost because thought but reported add to utility the taps to goods of that, does incremental those in each coming are but for for we might help that reader could another clarify of not are that it

Bill Cunningham

of what margin. at that in lot revenue the tap so small then I reasonable was the I because I the up different. should fees, thinking a great be totally to was fee footnote, would be when what the fee I looking of was then the when lot the something - fee that part with first that on saw lots that maybe the come But income margin Yes, first home to course adding saw tap saw and I

Mark Harding

we to right, know, that's do yes, I do. right. exactly We those, want segment

very point. good you. So, Thank

clarify the that will in filing. We next

Bill Cunningham

very Okay, very much. you good. Thank

Operator

Instructions] [Operator

Mark Harding

back just if give can I to hesitate technology wasn't and jump Don't all had a and get I'll some a in you me do me allowing that. what is, to question of let that in. call Well clarify you

and and again. call. day, this give your will end that get I hesitate if didn't and can of all in forward you a replay I assets that our of by thank listen time you kind With question don't it another spurs sign post that, will And We all you results to maybe up for again. the for to continued support it website us first our of thanks look out continued valuable to so

Operator

conclude Ladies your all and you teleconference thank we does today's for participation. and this gentlemen,

you that we the day. rest You disconnect enjoy your line of may now and hope your