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| 8-K - FORM 8-K FOR ANNUAL SHAREHOLDER MEETING PRESENTATION - VIDLER WATER RESOURCES, INC. | form8-kfor2017asmslidedeck.htm |
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PICO Holdings, Inc.
Annual Meeting of Shareholders
May 4, 2017
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SAFE HARBOR STATEMENT
This presentation contains forward-looking statements made pursuant to the “safe
harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements often address current expected future business and financial
performance, including the demand and pricing for PICO’s real estate and water assets,
the completion of proposed monetization transactions, the return of proceeds to
shareholders, and the reduction of costs, and may contain words such as “expects,”
“anticipates,” “intends,” “plans,“ “believes,” “seeks,” or “will”. All forward-looking
statements included in this presentation are based on information available to PICO as
of the date hereof, and PICO assumes no obligation to update any such forward-looking
statements. Actual results could differ materially from those described in the forward-
looking statements. Forward-looking statements involve risks and uncertainties,
including, but not limited to, economic, competitive and governmental factors outside of
our control, that may cause our business, industry, strategy or actual results to differ
materially from the forward-looking statements. Factors that could cause or contribute
to such differences include, but are not limited to those discussed in detail under the
heading “Risk Factors” in PICO’s periodic reports filed with the U.S. Securities and
Exchange Commission.
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OUR FOCUS
•Monetize assets
• Return proceeds to our shareholders
• Reduce costs
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NET ASSETS AT MARCH 31, 2017
Continuing operations:
Discontinued operations:
56.7% interest in UCP: $118 million (based on transaction value at date of
announcement of proposed merger with Century Communities, Inc.)
$171.9 million
$38.3 million
$1.3 million Vidler Real Estate and
Water Assets
Unrestricted Cash &
Equities less accrued
severance distributed
in April 2017
Other
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Sale of UCP, Inc. to Century Communities, Inc.
• Expected to close in third quarter 2017
• Cash of $5.32 per share of UCP owned
» We expect to receive approximately $55 million in cash at closing
• 0.2390 share of Century for each share of UCP owned
» We expect our ownership to be approximately 9% of the combined company
immediately following closing
• PICO Lock - Up Period
» No sale or transfer of Century stock received in merger within an initial lock –
up period of 60 days after closing
» May sell or transfer up to 5% of the then outstanding shares of the combined
company within any 50 day period post initial lock –up until 210th day post
closing; thereafter no lock - up restrictions
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Vidler’s Focus:
1) Fish Springs Ranch Water Credits
» Positive economic outlook in our markets.
– Building development approval process is still slow: leading to pent – up housing
demand.
» Expect contracts for initial take down of water to commence in late 2017 and in
2018.
Pursuing solar and grazing lease contracts and opportunities to generate on -
going cash flow from the ranch.
2) Carson Lyon Water Credits
» Also a positive economic outlook in this market.
– USA Parkway expected to be completed in late 2017: expected to stimulate
development demand.
3) Arizona Long - Term Storage Credits
» Very limited available supply of LTSCs.
» Pursuing additional sales with AZ state agencies and private entities.
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Vidler
Assets in
Northern
Nevada
VIDLER PARCELS
PENDING PROJECTS
FUTURE DEVELOPABLE PROPERTY
WASHOE
TURF FARM PROJECT
DODGE FLAT
RENO
SPARKS
FERNLEY
DAYTON
CARSON
950 RANCH
NORTH VALLEYS
STOREY
LYON
DOUGLAS
CARSON
SPANISH
SPRINGS
SUN
VALLEY
SILVER
SPRINGS
LEMMON
VALLEY
FSR PIPELINE
INTERTIE
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North Valleys: Developments
Development
1 – Stonegate
2 - Train Town
3 - White Lake Vistas
4 - Silver Hills
6 - Silver Star Ranch
7 - Evans Ranch
8 - Stead Airport
14 - Prado Ranch
15 - NVIG 4
16 - NVIG 6 & 7
17 - NVIG 8
18 - Arroyo Crossing
19 - Echeverria Peavine
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North Valleys Estimated Transaction Schedule
Area Development Area
Single Family
Units
Commercial /
Industrial Acres
Revised Date
Estimated for
Initial Contract
Estimated Water Usage
Total Project
(AF)
1
Stonegate (fka
Heinz Rch)
3,815 235 Dec 2018 2,026
2 Train Town 1,300 - Jan 2022 736
3 White Lake Vistas 324 342 Jan 2020 300
4 Silver Hills 1,600 - Jul 2018 640
6 Silver Star Ranch 1,600 - Dec 2018 449
7 Evans Ranch 5,679 62 Dec 2018 2,612
8 Stead Airport - 1,700
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Prado Ranch
(fka NVIG 2)
145
264 Multi-Family
5 Ac Commercial
May 2018 90
15 NVIG 4 -
264 Multi-Family
250 Ac Commercial
May 2018 300
16 NVIG 6 & 7 3,529 - Jan 2019 1,270
17 NVIG 8 238 - May 2020 86
18 Arroyo Crossing 236 - Oct 2017 94
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Echeverria
Peavine
1,380 80 Dec 2019 550
TOTAL 9,153
Based on most recent conversations with area developers
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Arizona Update
“Report: Colorado River in Peril.” The Wall Street Journal – April 12th 2017
“Drought and the growing population of the U.S. Southwest have
combined to make the lower part of the Colorado River the most
endangered river in America…”
“Horseshoe Bend” by Prayitno (https://www.flickr.com/photos/prayitnophotography) is licensed under CC BY 2.0 / Edited
from Original
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Colorado River: Lower Basin Structural Deficit
“Normal” Release
8.23 MAF
Ted Cooke,
CAP General Manager
“The bottom line: the net
annual loss to Lake Mead is
about 1.2 MAF.”
“The result is a ‘structural
deficit’ that causes Lake Mead’s
elevation to drop 12 feet every
year, drought or no drought”
Source: CAP BLOG – 12/2/2015
www.cap-az.com/public/blog
CA = 4.4 .
AZ = 1.8 .
NV = 0.3 .
Mexico = 1.5 .
Total = 9.0 MAF
Lake Mead
Evaporation Losses
0.6 MAF
(Half of Treaty Obligation)
There are tributary inflows and
system losses below Lake Mead
that also play into this accounting
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Vidler’s Major Assets : Summary
Arizona Long - Term Storage Credits
» Resource driven: Pent – up demand exists due to the Colorado River Lower
Basin structural deficit and the lack of other significant sources of available
LTSCs.
Northern Nevada assets (North Valleys, Reno and Dayton corridor areas)
» Market driven: Pent – up demand due to housing crunch and lack of available
water in the North Valleys and Dayton corridor: BUT actual monetization and
timing of sales is highly dependent on new residential demand occurring as part
of the “Reno Growth” story.
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Reducing Costs
We continue to reduce costs where feasible:
» We expect significant simplification of operations following the expected sale of
UCP.
» Considerable reductions in executive compensation and headcount since 2016.
» Ongoing consideration of certain benefit plans.
» Reduction in professional fees.
» Reduction in directors’ fees.
» Wind - down of oil and gas operations: reduced operating costs.
» Reduction of certain development costs at Vidler.
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Return of Monetization Proceeds to Shareholders
Considering multiple possible approaches each with benefits and
considerations:
» Purchases of our stock on the open market ($50 million Board
authorized program)
Repurchase programs currently in place
» Self - tender offer
» Special cash dividend
» Distribution of non – cash asset
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Q. & A.