Release Date: July 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Significant growth in overall revenues, up approximately 45% over the same period last year.
- Gross profit increased by over 60% from the same period last year.
- Net income and earnings per share are up over 30% from the same period last year.
- Strong liquidity with over $24 million in cash and $33.5 million in note receivable.
- Record year in water deliveries for oil and gas, demonstrating strong performance in the water segment.
Negative Points
- Frustration with the disconnect between the company's growth and its share price.
- Colorado's aggressive regulatory climate for oil and gas, requiring significant investment.
- Challenges in the Denver real estate market with affordability concerns and supply shortages.
- Potential delays in commercial development, with significant activity not expected until 2026.
- Continued need for significant investment in infrastructure and public improvements.
Q & A Highlights
Q: Could you go into more detail about the public improvement receivable and how it works?
A: When we build infrastructure owned by government entities, we get reimbursed. This involves a third-party engineering firm verifying the infrastructure qualifies for reimbursement, allowing us to book it as a note receivable. Payments are based on the assessed value of homes, which contribute to the tax base. As homes are built and their value assessed, we use the tax revenue to issue bonds, repaying the note receivable. This process typically has a two-year lag.
Q: What is the current enrollment of Sky Ranch Academy?
A: The enrollment is around 500 students. The school currently offers grades K-7 and will add one grade each year, reaching K-8 next year and eventually expanding to K-12.
Q: What will happen to the average price of your lot sales as you go through different phases?
A: We have built-in inflators for each phase to maintain margins while ensuring competitiveness. We aim to balance development margins, builder margins, and homebuyer affordability. Prices have been increasing, and we expect this trend to continue.
Q: Are you managing the single-family rentals in-house, and do you see this as another division of the company?
A: Yes, we manage both leasing and maintenance in-house. We have a separate website for leasing and have had high renewal rates. We aim to price rentals to ensure good returns while maintaining affordability for tenants.
Q: Are there plans for another K-9 school at Sky Ranch?
A: We have another site for a potential K-8 school. If the current school reaches capacity and there's demand, we may develop another school. This decision will be made in conjunction with our partner, National Heritage Academy.
Q: Is there new competition in the Denver market, and how does it affect Sky Ranch?
A: While new projects will come online, we have a competitive advantage due to our location, transportation access, and established community. The entitlement process for new projects is lengthy and costly, giving us an edge.
Q: What does the legislative support bullet point on the Metro Denver real estate shortage slide mean?
A: Colorado is pushing for higher density and affordability in housing. Legislative efforts are focused on limiting construction defect litigation and supporting higher occupancy and density to address affordability challenges.
Q: What are the plans for commercial development at Sky Ranch?
A: Significant commercial development is expected around 2026. We may see some small retail developments earlier, but major commercial projects will take more time.
Q: Have your tap fees increased in the last 12 months?
A: Yes, our tap fees have increased significantly. They started around $26,000 and are now closer to $38,000 for combined water and wastewater.
Q: What is the capacity of the current K-8 school at Sky Ranch?
A: The capacity is around 850 students. We expect to reach this capacity in the next two years, at which point we will transition to building the high school.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
