Attached files
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| 8-K - FORM 8-K FOR 2018 ASM SLIDE DECK - VIDLER WATER RESOURCES, INC. | form8-kfor2018asmslidedeck.htm |
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PICO Holdings, Inc.
Annual Meeting of Shareholders
May 3, 2018
2 2
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,”
“estimates,” “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.
3 3
Business Plan
OUR BUSINESS PLAN IS UNCHANGED AFTER THE
TERMINATION OF THE STRATEGIC REVIEW PROCESS
• Creatively monetize existing assets at
maximum possible present value
• Return proceeds to our shareholders
• Reduce costs
4 4
Accomplishments in the past Eighteen Months
• Monetized our entire 57% stake in UCP, Inc. for $114.5 million
through the merger and subsequent disposal of our shares in
Century Communities, Inc.
• Monetized a portion of our Arizona Long Term Storage Credits
for $25.9 million in 2017
• Returned $115.9 million to shareholders through a tax-free
return of capital
• Repurchased 489,878 shares on the open market as of March
31, 2018
5 5
Accomplishments in the past Eighteen Months (cont’d)
• Reduced G&A and other costs in 2017 versus 2016 by
approximately $20.4 million (this comparison includes the $10.4
million severance cost to our former CEO in 2016)
• Put in place a Tax Benefits Preservation Plan for our federal
NOLs of approximately $185.5 million at December 31, 2017
• Improved our corporate governance (for example, all Board
members now have annual board terms)
6 6
Net Assets: March 31, 2018
22,709,599 shares outstanding at March 31, 2018.
$171.2 million
$27.6 million
$0.7 million
Vidler Real Estate and Water Assets
Unrestricted Cash
Other
Total: $199.5 million
7 7
EPIC Report Update: Northern Nevada Study Area
Note: Scenario B of the EPIC Forecast projects an increase of 42,400 new residents to the Study Area between December 2014
and December 2019, while Scenario B2 forecasts 64,700 new residents.
Jobs Dec-14 Feb-18 # Change % Change
EPIC (B) 596,637 620,699 24,063 4.0%
EPIC (B2) 596,637 633,738 37,101 6.2%
Actual 596,637 625,516 28,879 4.8%
8 8
Note: Scenario B of the EPIC Forecast projects an increase of 52,400 new jobs to the Study Area between December 2014 and
December 2019
EPIC Report Update: Northern Nevada Study Area
Jobs Dec-14 Feb-18 # Change % Change
EPIC (B) 353,404 388,148 34,744 9.8%
Actual 353,404 400,321 46,917 13.3%
9 9
EPIC Report Update: Northern Nevada Study Area
Note: Scenario B of the EPIC Forecast projects an increase of 16,800 new households to the Study Area between December
2014 and December 2019, while Scenario B2 forecasts 25,600 new households.
Jobs Dec-14 Feb-18 # Change % Change
EPIC (B) 235,825 245,775 9,950 4.2%
EPIC (B2) 235,825 250,937 15,113 6.4%
Actual 235,825 247,239 11,415 4.8%
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Sources: Washoe County Assessor and Department of Employment, Training, & Rehabilitation (CES data)
2005 = Peak of
New Units (6,004)
RENO-SPARKS REGIONAL ECONOMY – MARCH 2018
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Source: Washoe County Assessor
RENO-SPARKS REGIONAL ECONOMY – MARCH 2018
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Source: Northern Nevada Regional MLS
Jan-18 = $360,000 (19%↑)
Feb-18 = $370,000 (16%↑)
RENO-SPARKS REGIONAL ECONOMY – MARCH 2018
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Source: Johnson-Perkins-Griffin Apartment Survey
Estimated Income to Afford $1,180 = $48,364 (@ housing cost 33% of income)
Apartment Units Under Construction = 3,762
Apartment Units Approved = 8,329
RENO-SPARKS REGIONAL ECONOMY – MARCH 14, 2018
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Source: American Community Survey, US Census Bureau
RENO-SPARKS REGIONAL ECONOMY – MARCH 2018
15 15
VIDLER PARCELS
PENDING PROJECTS
FUTURE DEVELOPABLE PROPERTY
WASHOE
DESERT WELLS PRESERVE
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
Vidler Assets in
Northern Nevada
• Dodge Flat
» Land: 1,078 acres
» Water: 1,428 AF
• FSR
» Land: 7,076.11 acres
» Municipal Water: 7,983.95 AF + 5,000 AF
» Agricultural Water: 1,218.35 AF
– Ground Water & Surface Water
» Pipeline Capacity 22,000 AF
• Carson-Lyon
» Municipal Water: 1,779.53 AF
» Municipal Water Option: 895.53 AF
» Agricultural: 3,310 AF 1,778.85 AF (Mun)
» 950 Ranch: 949.58 acres
» Pipeline Capacity 5,000 AF
• Truckee Surface Water Rights
» 299.14 AF
16 16
North Valleys Estimated Total Water Usage from New Residential Projects
Development Area
(Prior Name)
Single Family Units
Commercial / Industrial
Acres
Estimated Water Usage
Total Project (AF)
Stonegate
(Heinz Ranch)
3,755
1,245 Multi-Family
51 Ac Commerc/Ind
2,023
Train Town 1,300 - 736
White Lake Vistas 324 - 240
Silver Hills 2,340 - 1,178
Silver Star Ranch 1,600 - 449
Evans Ranch 5,679 62 2,372
Stead Airport - 1,700 -
Prado Ranch
(NVIG 2)
162
254 Multi-Family
5 Ac Commercial
98
NVIG 4 -
254 Multi-Family
250 Ac Commercial
240
NVIG 6 & 7
including Prado North
3,012 - 1,320
NVIG 8 238 - 104
Arroyo Crossing 236 - 91
Echeverria
Peavine
1,900 - 750
North Valley Estates
Units 1- 3
252 - 73
Silver Dollar Estates 624 - 150
TOTAL 9,824
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Vidler Assets in Southern Nevada – Lincoln-Vidler Teaming Agreement
1. Garden Valley
2. Coal Valley
3. Pahroc Valley
4. Dry Lake Valley
5. Clover Valley
6. Tule Desert
7. Kane Springs Valley
1
2 3
4
5
6 7
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Tule Desert and Clover Valley – Lincoln-Vidler Teaming Agreement
• Tule Desert
» 2,900 AF permitted water rights
– Additional water may be
awarded after 8 years of
pumping, up to 4,340 AF
• Clover Valley
» Applications filed
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Kane Springs Valley – Lincoln-Vidler Teaming Agreement
• Kane Springs Valley
» 500 AF permitted water
rights, Vidler option with
Coyote Springs
» Additional application filed
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Dry Lake Valley – Lincoln-Vidler Teaming Agreement
• Dry Lake Valley
» 1,009 AF certificated
agricultural water rights
» 600 acre parcel located
within BLM-designated solar
energy development zone
21 21
Garden Valley, Coal Valley & Pahroc Valley – Lincoln-Vidler Teaming Agreement
• Garden Valley
» Applications filed
• Coal Valley
» Applications filed
• Pahroc Valley
» Applications filed
22 22
Phoenix AMA
Harquahala INA
Vidler Assets in Arizona, Long-Term Storage Credits Location LTSC (AF)
Harquahala INA 250,682.53
Current Phoenix AMA 53,816.69
AMA under Contract -13,650.00
Total Phoenix AMA 40,166.69
Grand Total 290,849.22
California
Nevada
Utah
New
Mexico
Colorado
23 23
Long-Term Storage Credits Under Contract in Arizona
PHOENIX ACTIVE MANANGEMENT AREA RECHARGE CREDITS
» 13,650 Long-Term Storage Credits under Contract
– Apache Sun Golf: 1,150 LTSC pricing $306.26 to $375.18 per
credit, contract terminates 9/30/21
– Roosevelt Water Conservation District: 12,500 LTSC pricing
$367.50 to $423.50 per credit, contract terminates 12/31/19
24 24
Colorado River Basin Water Supply Forecast:
(Source: April 10, 2018 US Bureau of Reclamation, data provided by NRCS, Snow Pack Conditions Map)
• Snowpack conditions throughout Upper Basin – Approximately half of the
upper Colorado River Basin watershed at less than 50% of the median snow
water equivalent (“SWE” or the amount of water contained within the snow
pack).
• Lower Colorado River Basin (AZ, southern parts of UT, & western NM). Data
also indicates most of the watershed at 50% of the median SWE, or less.
• Based on the March 2018 USBR 24 month study, releases from Lake Powell
are projected to include an April 2018 equalization release for a total of 9.0
MAF in water year 2018.
• Current runoff projection into Lake Powell are forecasted to be ~50% of
average, April through July.
25 25
Vidler Assets in
New Mexico
• Lower Rio Grande
»Agricultural Water: 1,214.78 AF
• Middle Rio Grand
»Municipal Water: 99.09 AF
•Campbell Ranch (Application)
»Municipal Water: 350 AF
Albuquerque
Santa Fe
Las Cruces
Campbell Ranch
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Summit County - Colorado
• Summit County Augmentation Plan
» 95.52 AF of water for sale
» 57.06 AF currently leased
Denver
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Vidler’s Major Assets: Summary
Arizona Long-Term Storage Credits
» Resource driven: Pent-up demand exists in AZ 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 shortages 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 and commercial demand
occurring as part of the “Reno/ Northern Nevada Growth” story.
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Return of Monetization Proceeds to Shareholders
2017
• Special Dividend (tax-free return of capital) of $5 per share
(approximately $115.9 million)
• 47,450 shares repurchased on the open market
2018
• Open market repurchases of stock: 442,428 shares repurchased in
Q1 2018 for total cost of $5 million (average cost $11.29 per share)
• Any significant additional monetization proceeds anticipated to be
returned to shareholders through tender offer, and/or open market
repurchases, and/or special dividends depending on facts and
circumstances existing at the time of monetization
29 29
Reducing Net Costs
• In first quarter 2018 we revised director compensation so that
from May 3, 2018, aggregate annual Board compensation will
now be $105,000 if taken in cash or $131,250 if taken in the
form of restricted stock units (vs. 2017 total $755,318)
• Anticipated reduction in New Mexico project costs in the future
• Ongoing review of cost base as assets are monetized
• Sourcing recurring lease revenue on non-core assets (for
example, Fish Springs Ranch solar lease and CO & NV water
rights leases)
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Reducing Net Costs (cont’d)
• Closing La Jolla, CA office: Transitioning and migrating all
functions (treasury, accounting, financial reporting, corporate
administration, IT & HR) to Vidler’s existing Carson City office
• Vidler’s existing Carson City office will become the new
headquarters of PICO Holdings, Inc.
• In process of reviewing overall group management function and
structure
31 31
Q. & A.