Pure Cycle Corporation (PCYO) Q2 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and welcome to the Pure Cycle Corporation’s Second Fiscal Quarter 2016 Financial Results Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mark Harding, President and CEO of Pure Cycle Corporation. You may begin.

Thanks, very much. I would like to welcome you all to our midyear earnings call. As with all our calls in the past and with this call, we do have a slide deck for this that is accessible through our website, if you go to purecyclewater.com. It will be on the homepage, where you can click on the slide deck there and then you can follow along with us on the presentation and I will note the transition of the slides as we move through the presentation. First, I would like to lead off with our Safe Harbor statement that says statements in this call are not historical facts that are contained and incorporated by reference are forward-looking statements. I think everybody is familiar with our Safe Harbor statement. So with that, I would like to get started. Really, I would like to summarize 2016 upfront and really note difference this year for 2016 and really emphasize the fact in the second quarter that we will see a discontinuance of our farm operations. We did sell our farm portfolio just at the end of last fiscal year. So moving into 2016, we worked out the remaining portion of the calendar year last year in 2015, because we were collecting the remaining rents from our year leases of the farms through 2015, which straddled our second quarter. We had our 11/30 first quarter close. So, a portion of the farm operations continued into the second quarter. And what you will see in the financial statement presentation is a little bit new because of the discontinuance of the farm operations, but – excuse me, that’s the biggest change to the company for 2016 together with the liquidity that came with that farm sale and some of the opportunities that liquidity present for the company that I think I am going to highlight in this call. Really, just a quick, I am going to be very quick about the overview of the company, because I am sure most of you are familiar with what it is that we do. We are an investor on a lot of utility company. We happen to own a large and valuable portfolio of water here in a water short state of Colorado, primarily in our Denver-based portfolio. We have about 25,000-acre feed of water that can serve about 60,000 connections in it. The connections really are unit of measure, that’s how we generate revenue from our water utility model and we generate that through a couple of fees that we will highlight. The first slide here, the Slide 3, really emphasizes kind of the primary areas of emphasis for the company. We own about 930 acres of property, which is ideally placed in the metropolitan area, along Interstate 70, just at the really edge of where the Denver metropolitan area is growing and there is a great deal of activity in the corridor and also what we are doing with that property more recently. We own a small amount of oil and gas mineral interest that we are generating some royalties from and have historically generated some revenue from selling water to the oil and gas industry. So collectively, that’s kind of the areas of emphasis for the company and how we manage some of our key assets. The next slide, Slide 4, really defines our cradle-to-grave approach to water, owning the water supply that defines the water rights, the 60,000 units of service capacity and then the types of infrastructure that we developed to deliver that service from the wells and divergent to treatment to distribution to collection and wastewater treatment on the back end of that. Next Slide 5, we get two fee instruments from this. We get a connection fee known as a tap fee. Our tap fees have remained consistent for the last couple of years. Water tap fees are around 24,600. Sewer tap fees are right around 5,000 on a rounding basis. We sort of look at that at about $30,000 number and then you get your water usage fees, where we generate about $1,500 combined water and wastewater fees per connection that we serve per year. Moving to the next slide, if I really drilled down on what that capacity looks like at build-out, that 60,000 connections really have a capital capacity of about $1.8 billion and about an annual capacity of $90 million a year at build-out. The next slide really shows how we are really early in that phase. We serve about 260 water connections and about 160 wastewater connections. Quarter-over-quarter revenues were very modest. It’s sort of in line. There is some seasonality differences there. It shows when you look at that difference in there, $12,000 make the big difference just because of the small number, but it’s really just a seasonal difference and how we are providing domestic water and wastewater service to our customers. Moving to the next slide, really talk a little bit about our master plan community. We have about a 930-acre parcel of property along the Interstate. It’s about 16 miles east of downtown Denver, located right along the Interstate, was about half a mile frontage along the Interstate. It’s zoned for 4,400 homes and about 1.3 million square feet of commercial retail property. That translates into about 5,000 single-family equivalent connections for us. And really if you look at just that model, that model represents a very good way to take a look at how the company generates revenue and what its income opportunities are. At a $30,000 connection, water sewerage tap fee generates about $120 million in top line revenue for us. On the waterside, $24 million, it’s about $145 million of tap fee revenues and then also $7.5 million year-over-year revenue. But I want to talk a little bit more about this call that I haven’t done in the past is really give you a little bit more insight as to what we are going to do with that property. We have met with a number of developers and a lot of developers, both national developers, very strong local developers here in the state and also some entrepreneurial type developers and have had a tough time getting our arms around a transaction with one of the developers. And best way to summarize that is probably because of the maturity of where we are in the development process with this particular project as it was described to me we are sort of in the red zone on this project, where we are very close to getting it all finalized and most of these people are accustomed to taking a project at its raw, during entitlement phase – prior to entitlements and getting all the entitlements and doing all the planning that this project has already had. And so our model has been out-of-the-box for them and we have had a real tough time putting a developer between us and the homebuilder and working up the economics of that. There hasn’t been anybody that we have talked to who hasn’t been interested in it is just tough to find how they participate in a project that this mature in its development process and they each sort of come back and say look you guys are already there, you know everything you need to know about this project, you have got to position properly, let’s – there was few other steps that we needed to do to get it really positioned for a rollout, but what they were looking for and what we could do and how we are looking to do with it, really we are kind of a disconnect on it. So, one of the things that we decided was that we would go ahead and bake out some of the risk or the final steps of doing that, put that ball really a little bit closer to the end zone on this thing and see if we then couldn’t find a relationship with the developer that might make a little bit more sense than what we were looking at. And so the company has initiated that process. It’s been something that we have been dancing around for the last 6 months or so, but have really taken more earnest approach to that in the last 90 days and really spent a little bit of time and energy with some consultants to be able to do that. And these series of slides really reflect that. What we are looking at doing is positioning one particular quarter section of this. So, 160 acres of this property looking at developing that as the first phase, of that’s about 155 acres, we have a small outparcel in this particular 160-acre assemblage there and taking a look at how we would configure and update this land plan from what it was originally. And so what we have done working with land planners and sort of market specialists to come up with the configuration on this thing is to really lay this thing out for about 500 lots, 500 units on that, take a look at some of the offsite infrastructure, how we would optimize that offsite infrastructure. We have been working with our entitlement agency, which is our Arapahoe County, who we know very well, because we have been a water provider for Arapahoe County for the last 12 years, and then also taking a look at how we face in the water and wastewater utility systems. So, taking a look at those three components of that and those have primarily been really the big upfront component costs for opening this community is getting that offsite infrastructure, which the sale of the farm portfolio allows us to have some flexibility to make some of those investments. We were very comfortable with making the investments on the utility side, both the water side as well as the wastewater side, but then that offsite infrastructure relative to some of the roadway improvements, which are what we define as reimbursables. Those are costs that come back to the person that funds that. In this case, this is likely to be Pure Cycle through reimbursables through bond proceeds and mill levies that could assess to once you have assess value, once you have homes on that property that are paying property taxes. So we have been taking a look at optimizing that structure and this slide really kind of highlights some of that cost elements of that. We are looking at three quarters of the three lane – three quarters of a mile of a three lane roadway to gain us access into this particular property. And that may design out to about $6 million. As many of you know and what we talked about sort of in our year end call last year we are moving forward, have got development approvals, we got our permitting for the transmission lines that will interconnect our supplies a little bit south of this, it’s about five miles south of this and interconnect our bulk of our portfolio to this particular project, which will give us build-out water that and that’s about $5 million investment. And then phasing of the wastewater system, the initial phase of the wastewater system is about $2 million. So collectively, we are looking at right around $12 million, $13 million investment to open up this particular project. The $6 million of the roadway will be the reimbursables. And then the other two components on water utility systems, we sort of understand and have that capacity to build into that for the utility model that we have. Drill down a little bit farther. Let me take it to the next slide, Slide 10 there and really show a little bit more about what this lot configuration looks like. Denver area is a very active real estate market. We are in the top 10 of the major metropolitan areas in the country for housing starts and housing appreciation. And one of the underserved markets here is really the entry level product. We have been tracking that statistic very closely over the last 5 years or 6 years and historically, the entry-level market and I will define entry-level market here in Colorado to be anything less than $300,000 home – finished home value. As represented about half of the market, maybe 45% of homes built were built in that entry-level market, but because of the demand out in the marketplace right now and additional costs and quite frankly the lack of inventory of finished lots, that number has retreated down to less than 7% of the overall market. So what we have is a high pent-up demand for entry-level lots and this particular project is ideally suited to serve that market. We got very attractive zoning to be able to allow us to do that. And this development plan really tries to capture that. So we have focused on lot sizing that builders are looking for in this entry-level product and getting some lot sizings in various configurations between 45-foot frontage, 50-foot frontage, 60-foot frontages and we have the flexibility to accordion those depending on the actual demand on any individual lots. Some of those lots may turn out to be a little bit larger, a little bit smaller, but it wouldn’t change in infrastructure requirements that we have in there that have come up with that 502 lots. And so when you break that down, we are emphasizing the higher percentage of those the smaller lot sizes to be able to capture that entry-level market. And then also showing some of the drainage way improvements, which was already done for the property. So we didn’t have to reinvent the wheel on that and a lot of the core infrastructure that was already done from the previous plan. So it was very efficient for us to be able to update this plan. It also allowed us the flexibility to make this true up with what the markets expectations are today. So we have got pretty strong assessment from the builder community of how this might look and then be able to be very specific about what these lot costs are going to look like. Next slide, we really talk a little bit more about even within this first phase, we have been able to segment this out and be in a position to have maybe five phases or six phases within the first phase, where a developer or a builder. One of those two can come in and say listen, I want to take a first phase of 60 of these 50-foot lots. And I will do the inside track improvement for those 50 lots and we can compartmentalize this, so that the improvements that they are looking to make directly relate to just the lots that they want to put under contract. And that allows them that flexibility to come in and do the physical improvements. That’s something that the company has resisted being in a position to be the developer of those individual platted lots, but what we want to know is exactly how those platted lots layout and be able to be intelligent with the builders out there and they are more and more of those builders now because of the market that are willing to come in and do those improvements themselves for lots that they as long as for lots that they can put under contract themselves. So this land plan that we have got now segregates this out and can partial that out, specifically to be able to do that, whether it’s a builder that does that or whether after we have got this all finalized and engineered, a developer now has very specific cost where they can come in and say, I will invest, I will take and buy from you a platted lot and then I will put that infrastructure in and be in the market for selling finished lots. And that’s a good role for them to be in rather than being in a position where they needed to take it to that platted lot and then that additional infrastructure competent to the finished lot. So it allows us to update all of the conversations that we have had with these developers to be able to get them more efficient about how they would come in on very specific units of this first phase and develop finished lots for inventory – for their own inventory and then they can sell those into the marketplace. And so whole land plan is what we have updated will be in a position of submitting this for approval probably by the end of next week actually. So we are very close to finalizing this. And then there will be probably 60-day process for review comments, modifications through the county. But we hope to be in a position sometime in the June, July timeframe for having platted lots available to market to builders. And then whether we market those to builders directly or whether they are other builders that’s say, listen I really rather have a finished lot rather than a platted lot. We have the ability to have a developer step in and take those platted lots and carry that through to the finished lot stage. So we are very excited. We believe we have had a terrific land plan here. We have got a good segmentation for it to be able to incrementally expand this. The company has the ability to do some of those offsite reimbursables with the liquidity we have and actually enhance the return on some of those proceeds, because we have those proceeds invested in very safe investments today. But this has the ability for us to take for example, that $6 million of roadway, not only where we get a return on this $6 million and get that reimburse to us, but it also opens up the opportunity for us to sell the real estate portion of this and also sell and start the development for our utility operations here at Sky Ranch as well. So very excited about that and look to be able to continue to give the market a little bit more definition up through the summer and be in the market to be able to generate some tap fee sales and some lot sales. Next slide, I will dive up a little bit and talk a little bit more. One of the key opportunities for the company this year is to grow the business and the opportunities for adding more connections to the company’s water systems. And there is two ways of doing that; organic growth, which is what I just talked about. We have the ability to control that now through developing Sky Ranch. And then there is also opportunities for acquisitions and what this will define is it gives us a couple of shadow looks on that. The pipeline that interconnects our Lowry Water’s assets up to Sky Ranch is that one that you see there, that’s one that we will be starting construction with this month and then have that finished probably by year end. But then also taking a look at a transmission line moving eastwards, picking up some existing water systems that are along that transmission line all the way out to an existing community out there, which we have been working with for a number of years, talking to for a number of years and those discussions are continuing to advance with the Town of Bennett and the opportunities to be a wholesale water provider to the Town of Bennett. And so we are excited about looking at investment opportunities with that transmission line as well being able to facilitate not only service to the corridor, but service to the corridor and some existing communities to have some acquisition type opportunities as a wholesale water system to serve existing connections as well as a diversified service area where they are also growing and adding new connections to their service area. While I am on the slide, I know a lot of folks are interested in and have continued to follow some of the other key assets the company has, most notably, some of our reservoir assets. We continue to have discussions with our neighboring city, City of Aurora, for that particular asset. The city has an interest to purchase it. We have an interest to sell it. It has taken a lot longer just because of the complexity of that. And I can’t really give you much guidance as to if we are any closer today that we were last year on that, I would say we probably are, but at the end of the day, there is still some hurdles that we need to overcome with the city and also with the state line board as our partner on that, but that’s still an opportunity that’s very active and something that the company is interested in pursuing if we can find the right opportunity on that. So, that really kind of shows the picture of what it is that some of the activities that we are looking at. We are also looking at some additional acquisition opportunities in the south side. If you take a look at our service area at the Lowry Range there, that Southern border there, there is some opportunities in Elbert County that we are pursuing, which are similar to the I-70 corridor, where we can extend systems and facilities down in that area to existing small districts or HOA systems down there and continue to roll up and acquire some good opportunities. So, what our opportunities are this year, I mean, we are actively developing the Sky Ranch project and those things that we control ourselves, but we are also – we have got our shopping hat on and we are looking for opportunities for acquisitions in this area where they make sense and where we can be synergistic and extending our infrastructure to those. Next slide really kind of just a continuation, give you an update on the WISE project. We are under construction on interconnecting our system to the WISE system. So, we will be the first one to be interconnected to that system. We should have that done probably by the end of May and looking at being able to both take water from the system, deliver water in and out of the system and be able to move water through that and that’s been a very good opportunity for the company and a very widely supported cooperative water development effort here in the state of Colorado. Let me move to the next slide, Slide 15. I will quickly go through what the opportunities are for us in developing oil and gas service – oil and gas services there. Lot of activity in this segment, back in 2013, 2014, not a lot of activity since probably Thanksgiving of 2014, where oil prices really did take a significant trend downward, but what this area is, is the Niobrara Shale activity area. We are in what we define as the Southern Wattenberg area. There is about a 200 square mile area, where we have major E&P companies that have leasehold interest in this area. If you take a look at how that goes, some of that infrastructure has been installed. So, there has been a significant investment in this particular field. We are putting our water facilities along the same corridor as some of those oil and gas facilities, which will enhance our ability to deliver water to existing pad sites to as many as I think 7 different pad sites that are existing that our pipeline will be right along and can easily deliver water to any efforts to any of those pad sites. Taking a look at the next slide, the reason this field is attractive is obviously it’s a stack play. It has as many as five productive formations. And so this is just some metrics on what that looks like for us. We were generating about $100,000 in revenue per well. These fracs were consuming about 8 million to 10 million gallons of water per well as they completed those systems. I did include a new slide that talked a little bit about, because I have gotten a lot of questions about what’s the oil and gas royalty interest look like and how is it compare itself to other Niobrara or other shale oil play? So, here is the metrics on that. We have three different products there. Approximately 70% of the product coming out of these wells is oil, but we have some dry gas and some wet gas coming out of them. And so this is what the decline curve looks like on those. And I think it’s fairly typical. We have not seen much falloff for the last 6 months. So, they have been fairly steady on their operations on this. And I know that they have been operating them with some design target pressure. The wells that we still have here, they have been in-service for more than a year. They are still gas-driven wells. They are still producing well. To-date, we have generated a little over $600,000 in royalty revenue from that. So, it’s a very good asset for us. We look forward to when the E&P companies want to increase our operations here and bring that both the rigs back for drilling the field and us selling water to them as well as additional wells on our property for our royalty interest. Moving on to the next slide, taking a look at our midyear revenue – this quarter revenue or midyear, it’s this quarter revenue, yes, sorry. I’ve got a little ahead of myself. Second quarter revenue right around $300,000, generating revenue in four different areas. One is going to be from royalty revenue from the oil and gas royalties, our domestic water utility revenues, some trailing off agricultural revenues and we saw some collectibles about $400,000 in collectibles for the remaining portion of our farm operations and some additional interest income revenues. So, we are still generating some continuing revenue associated with that farm income. Taking a look at the balance sheet, this is going to give you the metrics on both the balance sheet and the income statement, very strong cash position, which gives us the flexibility to do some of the things that we are looking at doing. We are very particular. We want to be cautious about the types of acquisitions that we do, but we do have our nets cashed out there and are finding a number of interesting opportunities, which we hope to be able to capitalize on. Our income statement and then I also included the income statement from discontinued operations as that is a bit confusing on the income statement right now just because we have moved those into the footnotes. So, this is kind of that footnote disclosure that shows what that agricultural segment is with the total receivables and cost attributable to that. So with that, that’s kind of an update to the quarter. Really, the key highlights this year – this quarter are kind of the moving forward with Sky Ranch, getting some platted lots in a position where we can actually be in the market, selling a platted lot either to a builder or to a developer, and either of those, we are sort of indifferent if there are some builders that would pay what a developer would like them to get on their money in the ground for finishing the lot. And there are some builders now that are coming back to the market because of the constrained capacity in there. And I think we are going to be very attractive at these entry level lots, where they are going to want to do some of that work themselves and be able to optimize the delivery of those lots based on how they are selling their homes. So, they can pace that and control those costs themselves. So, that’s the real segment there that I think is going to generate a lot of activity and a lot of interest for the company and then also developing the infrastructure will be under construction on the interconnecting pipeline and finishing up, completing the WISE interconnect later this spring, So with that, I would like to turn it over to some questions and see if you all want to drill down on any other specific color. So, I will hand it back to you, operator.

Thank you. [Operator Instructions] And our first question comes from Jeff Mann from MYDA Advisors. Your line is open.

Hey, Mark. How are you doing?

I am good, Jeff. How are you?

Good. I hopped on a little bit late, so I just wanted to be clear, I guess, from the slides that on the Sky Ranch, the estimates, the $6 million and the $5 million, is that money – is that just where you are estimating the development costs are going to be on the new plans you are filing or is that actually – you guys are actually going to paying up the money to do this?

That’s the infrastructure for opening the lot. So, the money that we are putting up to actually update the plan and get the engineering on that’s very modest, I mean, we are looking at maybe $300,000 to do that. And that was really where the disconnect was coming in. All the developers said, look, there is nothing left for us to do on this. You are already there. All I would do is update this plan and maybe change this layout a little bit. So, with that little investment, then we are able to really be in a position to sell platted lots and we will know specifically. Okay, we will be able to sell you a platted lot for this dollar for a platted lot and then have the number that says okay. And if you want to know what the cost is to finish that to grade that out and get to streets for this particular phase, we will have those costs as well. The $5 million of the pipeline, that’s cost that the company is going to incur to build that water pipeline, that’s our business model. The $2 million for the wastewater, that’s cost that we would – those are costs we were always comfortable with. The third cost, that $6 million for the roadway, we were only comfortable investing that because it was a reimbursable and that’s something that we can have our engineers – our contract engineers, engineer bid that out and we get that as a reimbursable. So those are the only costs that we are participating in the development of the project and that’s something that because of the sale of the farm assets that the company and the Board really did look to be able to be in a position to incentify that. And then we will get some pricing in our platted lots for being able to take that investment on.

I see okay, fine. So right, but those costs are not going to come unless you actually have someone who is prepared to build the houses?

Yes. We are not going to – right, well, let me pull that back. The $5 million line, we are going to do now, regardless of demand for lots, because we need to bring that line and interconnect the two supplies, so we are doing that now regardless. But the other $8 million, we will not invest that until we have sales of platted lots, you are right.

Okay, fine, so okay, great. And when you are talking – I kind of came in the part when you are talking about strategic acquisitions, I mean do you have any sort of budget mind as to what you are looking total to spend on each type of acquisition to spend, are you not really that far long to even is more of a general type of thought?

No, I mean I have very specific targets that we are looking at.

Okay.

Do I have a pool of money that we would be allocating to that, I look at that less than that. I mean, if we are able to get something that’s actively developing and they are adding new taps that’s worth more to us and we would put a little more of our capital and play something like that. If it’s more mature and more built-out and we are really just picking up the customer accounts, that were a little bit more conservative about how we value those sorts of things. But we will probably look at somewhere in the $8 million to $10 million range of acquisitions and see how those look to us as a mix of the existing customer accounts as well as how many new accounts that are going to develop pursuant to those types of acquisitions.

Okay, great, it sounds good. Thanks a lot Mark. I appreciate the time.

You bet.

Thank you. And our next question comes from Mason Matschke from Raymond James. Your line is open.

Hi Mark, how are you. Congratulations…

Good to hear from you.

I just wanted to hear a little bit more about the Lowry Range and to get any insight if there was any possibilities of development on that property also?

Great question. And I will tell you I have learned a lot in my discussions with some of the builders because they are seeing some of the same infrastructure. And when they look at this, they look at our opportunities as Sky Ranch being ideally positioned. But one of the things that they also were very interested in, was the sort of that Southwest corner of the Lowry Range. And most of the folks that we talk to, when they are looking at the three reservoirs there they are sort of looking at that as a very, very attractive piece of property. There is 3,000 acres or 4,000 acres down there that they look at and they are sang jeez, this is really attractive, can we buy that property, and I said, well, I don’t own that. The State of Colorado owns that. And I have given their contact information, but that’s certainly what developers have more recently told me as some of the most attractive ground – from a ground standpoint. Now that would not be entry-level housing, that’s something that they would look at building some higher priced housing down there. It has challenged access just because it’s pretty far away from any of the main transportation systems, but anywhere in Colorado where you look out over flat water storages is going to have very high premiums for view corridors. So I do know that, that has something that’s surfaced by the number of conversations that we have had. Where the states had in that whole process is really they have not foreshadowed anything to us or anybody else as to how they look at that property and the timeliness of development of that property. And I think it’s going to be a function of how many times people reach out to them with an interest in starting a project. They are pretty passive about how they look at their landholdings and really don’t through something on the market until somebody expresses an interest to it in the first place. And then they will coordinate after that. So that’s as best as I can give you is sort of what I have learned from the developers we have talked to about those two different types of market segments.

Alright. Thank you. That’s encouraging.

Yes. We thought so as well, but again that’s going to be a function of the state, its going to be a function of how that area has been very, very active all around the south side of the existing reservoir there for Aurora.

Okay. Thank you very much.

[Operator Instructions] And our next question comes from Bill Smith from William Smith & Company. Your line is open.

Hi. Thank you. Hi Mark.

Hi Bill.

Looking at this slide, you have got the fee and for the tap fee for $30,000, what about the lot itself, I mean I don’t think I see anything for the sale of the lot to the builder?

You are right, you don’t and I really did – I was hopeful that I might have a little bit more information from our engineering on that to be able to price into that yet, that’s what this process will tell me. And let me show you how it’s going to get there. Typically, you want to take a look at if I am targeting an entry-level house and let’s say, that entry-level house is somewhere between $300,000 and $325,000. And I know what the building cost is. I know what the square foot per cost – cost per square foot for that, how the vertical side of that house is going to look like. Then I am going to know what the engineered cost is for developing the horizontal frameworks, the individual lot cost, all of that engineering is what we are working on right now. And I am going to know what that cost is and that cost will back down into what is the right price per lot size, whether that’s a 45-foot lot, 50-foot lot, 60-foot lot, what that pricing should be per platted lot. And so I don’t have that number yet, but as soon as I do, that’s something that I think will be pretty vocal about because it’s going to be out there in the market.

Alright. I mean just from a historical standpoint, I mean does that comparable areas around Sky Ranch, is that around $20,000 a lot, is that...?

Yes. I am thinking it’s to be in the $12,000 to $15,000 a lot that we are going have to wait and see. We will probably be aggressive on the first few lots and then be a little more price competitive on the last few lots.

Okay. Thank you.

Now, that you forced me to put a number out there.

Okay. Thanks Mark.

Okay. And I am showing no further questions. I would now like to turn the call back to Mark Harding for any further remarks.

Okay, great. So let me close by saying we will have a replay of this on our website, so the replay code will be listed right there with it. To the extent that, you all didn’t have time to get in or had a technical difficulty asking your question, please don’t hesitate to give me a call to drill down any of the specifics that we did not cover today. Again, I want to thank our shareholders, our Board for the support and the efforts that we have undertook for the company. Management, our Board of Directors could not be more excited about where we are at today. As many of you know, saw from our last announcement, we did add a new Board member, who has brought a tremendous level of expertise in the development field here to give us a lot more confidence about what it is that we are doing here, how we need to structure these transactions, a lot of the interplay on making sure that we are asking the right questions and having our advisors and the consultants plan this thing out correctly and accordingly. So I think we have a little bit more comfort as to how it is that we are looking at doing this and really in a very good position. So we are very excited about what the next 12 months are going to like and what the next 3 years are going to look like. So with that, I will thank you all. I will conclude the call and look forward to speaking with you soon. Thanks.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.