Financial Performance - Pure Cycle reported a net income of $13.1 million for the year ended August 31, 2025, representing a 13% increase from 2024[1]. - Earnings per fully diluted common share increased to $0.54, up 12.5% from $0.48 in 2024[1]. - Total revenue for the year was $26.1 million, a 9% decrease from $28.7 million in 2024, while pre-tax income rose 12% to $17.5 million[3]. - Net income increased to $13,110,000 for 2025, compared to $11,613,000 in 2024, representing a growth of 12.9%[19]. - Basic and diluted earnings per share rose to $0.54 in 2025, up from $0.48 in 2024, reflecting an increase of 12.5%[19]. - The company reported an increase in interest income to $3,272,000 in 2025, compared to $2,837,000 in 2024, marking a growth of 15.4%[19]. Revenue Sources - Oil and gas royalty income surged by 738% to $6.7 million, compared to $0.8 million in 2024[3]. - Water and wastewater tap sales increased to 182 taps sold for $7.3 million, up from 73 taps for $3.4 million in 2024[8]. - Lot sales revenue decreased to $13.7 million in 2025 from $16.0 million in 2024 due to delays in Phase 2D[15]. - The land development segment generated $15,257,000 in revenues for 2025, down 13.3% from $17,599,000 in 2024[19]. Assets and Liabilities - Total assets as of August 31, 2025, were $162,279,000, an increase of 10.1% from $147,354,000 in 2024[21]. - Cash and cash equivalents totaled $21.9 million as of August 31, 2025[3]. - Cash and cash equivalents decreased slightly to $21,931,000 in 2025 from $22,113,000 in 2024[21]. - Total liabilities increased to $19,541,000 in 2025 from $17,652,000 in 2024, an increase of 10.7%[21]. - Working capital was reported at $20 million as of August 31, 2025[13]. Future Plans and Growth - The company expects to complete Phase 2D by the end of fiscal 2026 and Phase 2E by the end of fiscal 2027[9]. - Pure Cycle plans to ramp up its single-family rental segment, with 40 additional homes under contract for delivery in fiscal 2026[12]. - Future growth is anticipated through the development of rental units and expansion of land development operations at Sky Ranch[25]. - The company continues to expand its operations in the water and wastewater service sector, which remains a core business segment[23].

Financial Data and Key Metrics Changes - The company reported 25 consecutive quarters of profitability, with Q4 being the strongest quarter despite slight revenue decline due to housing headwinds [4][6] - Year-end net income was slightly below expectations at approximately $12.5 million, primarily due to deferred revenue from land development [10][8] - Earnings per share exceeded forecasts, driven by stronger-than-expected oil and gas royalty income [8][9] Business Line Data and Key Metrics Changes - The water utility segment showed growth with over 1,600 commercial connection points, contributing to recurring revenue [11][12] - Land development faced challenges with sales being off expectations due to housing market headwinds, but phase 2C delivered as planned [18][19] - Single-family rental segment is expected to see substantial growth in 2026, with 40 homes under contract and a strong rental market [29][30] Market Data and Key Metrics Changes - The housing market in Denver is experiencing affordability challenges, impacting sales but the company remains resilient due to its focus on entry-level price points [54][55] - The company is positioned well in the market, with a competitive advantage in delivering affordable homes compared to other developers [65] Company Strategy and Development Direction - The company emphasizes flexibility in its business model to adapt to changing market dynamics, allowing for adjustments in delivery based on customer needs [5] - Future growth is anticipated from both the water utility and single-family rental segments, with plans to increase the number of rental units significantly [37][45] - The company is focused on land acquisitions that enhance its water portfolio, maintaining a strong balance sheet while exploring commercial opportunities [57][59] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in the housing market but expressed optimism about the company's ability to navigate these challenges due to its strategic positioning [54][55] - The outlook for 2026 includes expectations of continued growth in recurring revenue from both water customers and single-family rentals [37][38] - The company is preparing for significant land development revenue growth in 2028 with the completion of an interchange project [41][42] Other Important Information - The company maintains a strong liquidity position and continues to reinvest in its assets while being conservative in capital allocation due to market conditions [33][35] - The water utility segment is projected to grow significantly, with plans to serve up to 5,000 total connections in the long term [44] Q&A Session Summary Question: Has housing sales in your area slowed down due to affordability? - Management indicated that while Denver faces affordability challenges, the company benefits from focusing on entry-level price points, which helps maintain resilience in the market [54][55] Question: What is the status of land acquisitions and commercial developments? - Management confirmed ongoing discussions for land acquisitions and expressed optimism about potential commercial partnerships, emphasizing the importance of timing and value in these transactions [57][59]

, PURE CYCLE CORPORATION FISCAL YEAR 2025 EARNINGS PRESENTATION - - Presented By: MARK HAIRDING FORWARD LOOKING STATEMENT Statements that are not historical tacts contained or incorporated by reference in this presentation are "forward- looking statements" ("FLS"} within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21 C of the Securities Exchange Act of 1934 as amended. FLS involve risks and uncertainties that could cause actual r ...

Water Supply and Infrastructure - The company has developed 1,529 finished lots and constructed water and wastewater systems with capacity to serve approximately 2,500 residential equivalent units[20] - The company owns or controls water supply and infrastructure necessary for water withdrawal, treatment, storage, and delivery, as well as wastewater collection and treatment[21] - The company provides service to over 1,600 single-family equivalent (SFE) water connections and 1,153 SFE wastewater connections through the Rangeview District[23] - The company estimates it can serve approximately 60,000 SFEs with its water rights[23] - The Rangeview Water Supply consists of 30,602 acre-feet of water, including 25,354 acre-feet of groundwater and 4,578 acre-feet of surface water[36] - The company has exclusive rights to provide water and wastewater services to 24,000 acres of the Lowry Ranch, which consists of nearly 26,000 acres of primarily undeveloped land[48] - The company has the exclusive right to use and reuse 900 acre-feet of WISE water, approximately 9% of the total, for providing water services to the Rangeview District's customers[53] - The company is required to pre-pay an annual water royalty of approximately $46,000, credited against earned royalties each year[51] - The current WISE water rate is $6.55 per thousand gallons, increasing to $7.23 per thousand gallons effective January 1, 2025[54] - The Rangeview District's 2025 water tap fees are $34,200 per SFE, and wastewater tap fees are $8,240[64] Development and Construction - The Sky Ranch development is zoned for up to 3,200 single-family and multifamily homes, along with over two million square feet of retail, commercial, and light industrial space[15] - The company currently owns and rents 14 single-family homes, with plans to expand to more than 200 rental homes at Sky Ranch over the next several years[15] - As of August 31, 2025, the company has delivered 1,169 finished lots to homebuilders and retained 71 lots for its single-family rental segment[31] - The company is currently under construction on 204 lots (Phase 2D) scheduled for completion in fiscal 2026, with an additional 148 lots (Phase 2E) scheduled for completion in fiscal 2027[31] - Homebuilders have built and sold 837 homes at Sky Ranch, with approximately 64 additional homes under construction[31] - The company launched its single-family rental division, initially contracting for 14 single-family detached homes, with plans to add an additional 76 homes in Phase 2 and the potential for over 200 homes as Sky Ranch builds out[33] - The company has installed approximately 29 miles of water delivery and wastewater collection infrastructure at a cost of $10.5 million, which is reimbursable by the Sky Ranch CAB[81] - The company is required to construct all necessary wholesale water and wastewater improvements for the property as per service agreements[77] - Full development of the Sky Ranch Master Planned Community is expected to take another eight to ten years, depending on market conditions[80] Financial Performance and Investments - The company has invested $21.7 million and $18.8 million in Sky Ranch land for Phase 2 during the years ended August 31, 2025 and 2024, respectively, including $15 million and $13.1 million for public improvements expected to be reimbursed by the Sky Ranch CAB[100] - The company has advanced a total of $85.6 million to the Sky Ranch CAB for public improvements since 2017, with amounts owed bearing interest at a rate of 6% per annum[85] - The company sold 179 and 69 water and wastewater taps at Sky Ranch in fiscal years 2025 and 2024, generating $7.1 million and $2.6 million in tap fees, respectively[100] - The company has delivered 1,169 finished lots at Sky Ranch, retaining 71 lots for its single-family rental segment, with 204 lots under construction for fiscal 2026[74] - The company receives 98% of ongoing monthly water service revenue and 90% of ongoing monthly wastewater service revenue from Sky Ranch[75] - The company provided $1.6 million in funding to acquire exclusive rights to operate and maintain the water facilities at the Wild Pointe development[72] Market Trends and Demand - The company anticipates increased demand for water services due to population growth in the Denver metropolitan area[10] - Colorado's population grew by 14.8% from 2010 to 2021, reaching nearly 5.8 million, and is projected to exceed 8.7 million by 2050[103] - The South Platte River basin may require an additional 400,000 acre-feet of water by 2030 due to continued growth in the Denver area[103] - The single-family rental market has seen a 31% growth from 2007 to 2016, compared to 14% for multifamily rentals during the same period[106] - The single-family rental market is estimated at $3.4 trillion, with institutional investors holding less than 2% of this market[106] - The company is actively involved in the growing single-family rental market, capitalizing on the shift from renting out of necessity to renting by choice, which is expected to continue shaping the housing market[33] Environmental and Regulatory Aspects - The company is committed to environmentally responsible water management, utilizing dual-pipe systems for potable and reclaimed water[109] - The company is working with opposing parties to reach a settlement agreement regarding outstanding claims in the Water Court Application filed on December 31, 2020[43] - The company has filed a Water Court Application seeking to adjudicate 1,635 acre-feet of water from the Box Elder Creek Alluvial aquifer, which was denied on February 7, 2025, but did not impact existing water rights[43] - The wastewater reclamation facility, built at a cost of $10.2 million, has a designed capacity to serve over 2,000 single-family homes before requiring expansion[79] - The wastewater reclamation facility allows for processing wastewater for several development phases without immediate additional investment[79] Organizational Structure and Workforce - Approximately 41% of employees are in the water and wastewater segment, with a total of 44 full-time employees as of August 31, 2025[122] - The Sky Ranch Districts are quasi-municipal corporations formed to provide services to the Sky Ranch property, governed by an elected board of directors[83] - The company has significant in-house expertise in engineering, operations, and land development, allowing for a hands-on approach to its business segments[22] Oil and Gas Operations - The company is involved in providing raw water for industrial oil and gas operations, with sales fluctuating but offering high-margin revenue[24] - The company anticipates continuing to provide water for hydraulic fracturing operations, with each well utilizing between 10 and 20 million gallons of water[67] - The company has leased the oil and gas minerals underlying the property to a major independent exploration and production company[82]

Core Insights - Pure Cycle Corporation reported a net income of $13.1 million for the fiscal year ended August 31, 2025, representing a 13% increase from the previous year, marking the eighth consecutive year of positive net income [1][5] - Earnings per fully diluted common share increased to $0.54, up from $0.48 in 2024, reflecting a 12.5% growth [1][5] - The company experienced a 738% increase in oil and gas royalty income, totaling $6.7 million, due to the completion of six wells at Sky Ranch [1][5] Financial Performance - Total revenue for the year was $26.1 million, a 9% decrease from $28.7 million in 2024 [5][9] - EBITDA for the year was reported at $20.2 million, an 11% increase from $18.2 million in 2024 [5][4] - Cash and cash equivalents stood at $21.9 million as of August 31, 2025 [5][15] Land Development - The company continues to develop its Sky Ranch Master Planned Community, with ongoing phases including Phase 2D expected to be completed in fiscal 2026 and Phase 2E anticipated for fiscal 2027 [1][12] - Lot sales revenue decreased to $13.7 million in 2025 from $16.0 million in 2024, attributed to delays in closing Phase 2D [17] - The number of lots delivered decreased due to these delays, but the company expects to complete the delivery of all 180 lots in Phase 2D during fiscal 2026 [17] Water and Wastewater Operations - Water deliveries decreased to 639 acre-feet in 2025 from 1,818 acre-feet in 2024, primarily due to reduced demand from oil and gas customers [16] - Water and wastewater tap sales increased significantly, with 182 taps sold in 2025 compared to 73 in 2024, generating $7.3 million in revenue [10][16] - The average price of a water and wastewater tap rose to approximately $40,000 in 2025 from $38,000 in 2024 [16] Single-Family Rentals - The single-family rental segment reported rental income from 14 homes, with plans to add five rental townhomes and 40 single-family detached homes in fiscal 2026 [13][18] - The overwhelming demand for rental homes at Sky Ranch is expected to lead to a total of 100 homes in Phase 2, with potential for more than 200 homes as development continues [13][14] Capital Management - The company is focused on growth and shareholder returns, prioritizing investment in development projects while maintaining liquidity for share repurchase and strategic initiatives [2]

Group 1 - The Value Lab focuses on long-only value investment ideas, aiming for a portfolio yield of approximately 4% and has performed well over the last five years by engaging in international markets [1][2] - Pure Cycle Corporation (PCYO) holds water rights that are leased to developers and industrial operators, generating revenue from wholesale water sales to local authorities [2] Group 2 - The Valkyrie Trading Society consists of analysts who share high conviction investment ideas that are expected to yield non-correlated and outsized returns in the current economic environment [2]

Core Insights - Pure Cycle Corporation will release its financial results for the year ended August 31, 2025, on November 12, 2025, followed by an earnings presentation on November 13, 2025 [1][2] Company Overview - Pure Cycle operates as an innovative and vertically integrated wholesale water and wastewater service provider, with three distinct business segments that complement each other [3] - The company launched its land development segment in 2017, focusing on developing master-planned communities where it provides water and wastewater services [3] - In 2021, Pure Cycle introduced a rental business for single-family homes at Sky Ranch, which generates long-term recurring revenues and supports its land development operations [3]

Core Insights - Pure Cycle Corporation will participate in the ThinkEquity Conference on October 30, 2025, in New York City, with President and CEO Mark W. Harding presenting [1] - The company has experienced significant growth in its master planned community at Sky Ranch and its regional water system, which services both Sky Ranch and surrounding areas [2] Company Overview - Pure Cycle operates in three distinct business segments: wholesale water and wastewater services, land development for master planned communities, and rental of single-family homes at Sky Ranch, which generates recurring revenues [4] - The land development segment was launched in 2017, while the rental segment was introduced in 2021, enhancing the company's operations and customer base [4]

Summary of Pure Cycle Corporation Conference Call Company Overview - **Company Name**: Pure Cycle Corporation - **Ticker**: PCYO - **Industry**: Water and Wastewater Management, Land Development Key Points and Arguments 1. **Leadership Team**: The company boasts a strong leadership team with extensive experience in water management and land development, including a CFO with a background in audit and a VP of Engineering with over 40 years in the field [2][3][4] 2. **Business Segments**: Pure Cycle operates in three primary segments: water and wastewater services, land development, and single-family rentals [4][5] 3. **Water Rights Portfolio**: The company holds a valuable portfolio of water rights in Denver, Colorado, with a modest cost basis of $14.5 million, which has appreciated significantly over 35 years [5][9] 4. **Revenue Potential from Water Services**: The company can serve approximately 60,000 residential units with its water rights, generating potential top-line revenue of about $2.5 billion from connection fees, with a construction cost of around $1 billion [10][12] 5. **Land Development**: Pure Cycle is a master-planned community developer, delivering lots to national homebuilders and retaining some for its own rental portfolio. The company has delivered about 1,000 lots, generating approximately $80 million in sales [6][17] 6. **Single-Family Rentals**: The company is building single-family homes, with plans to maintain about 10% of the overall community in its portfolio, aiming for a total of 300 rental units [20][22] 7. **Financial Position**: Pure Cycle has a strong balance sheet with $60 million in liquidity and minimal debt of $7 million, primarily used for financing construction [7][8][22] 8. **Market Position**: The company focuses on entry-level homes, which are in high demand, and anticipates growth in customer accounts to 2,500-3,000 over the next three to five years [22][23] 9. **Growth Outlook**: The company plans to complete the Sky Ranch project, which includes 5,000 single-family units, within the next five years, while also increasing its rental portfolio [24][25] Additional Important Information - **Connection Fees**: The company charges approximately $42,000 per connection, which is expected to increase by about 3% annually [10][23] - **Water Supply Value**: Water supply can increase land value significantly, with water being nearly three times as valuable as land without it [14] - **Community Development**: The company is developing a charter school campus as part of its community development efforts, enhancing the attractiveness of its residential offerings [18] - **Shareholder Value**: Pure Cycle is actively engaged in share repurchases to address perceived undervaluation in the market [25][26]

Summary of the Conference Call Company and Industry - The conference call pertains to a land development company involved in residential and commercial real estate, specifically focusing on water rights and infrastructure development in the Denver area. Core Points and Arguments 1. **Current Development Status**: The company is actively developing multiple phases of residential lots, with phase two d being 40% complete and delivering 230 lots this month. The company is also engaged in utility work during winter months, which is temperature sensitive [5][6][7]. 2. **Sales Performance**: Approximately 80-90% of the homes built in phase two b have been sold, with some homes sold before construction began. The average selling rate is about 16 to 18 homes per month across four builders [7][34]. 3. **Market Dynamics**: The company is experiencing cyclical challenges in housing and land development, particularly due to updated county building regulations that delayed permit approvals. This has impacted the builders but has not significantly slowed down overall progress [15][16][19]. 4. **Revenue Recognition**: The company recognizes revenue as it builds infrastructure for its builders. In the current phase, there is a higher than usual number of lots under construction, leading to expectations of significant revenue catch-up in the fourth quarter [25][26][22]. 5. **Commercial Development Valuation**: The company has estimated the value of its commercial development at $423 million, based on a conservative metric of two to three and a half times the value of residential lots [37][39]. 6. **Water Rights and Revenue**: The company has a significant water rights portfolio, with a book value of $31.7 million. The estimated market value of these rights could be around $2.5 billion, considering the potential for 60,000 connections [47][50][91]. 7. **Share Buybacks and Market Perception**: There is a discussion regarding the company's share repurchase strategy, with some shareholders expressing concerns that it competes with their buying efforts. The management argues that share buybacks can enhance shareholder value by reducing the number of shares outstanding [55][61][82]. 8. **Future Growth Potential**: The company anticipates that as it continues to develop its land and water resources, it could significantly increase its capacity for future taps, potentially serving up to 120,000 connections [110][115]. Other Important but Overlooked Content 1. **Data Center Opportunities**: There is potential for developing data centers on the company's land, leveraging its water resources. However, the management acknowledges that this is not their primary focus and would require further exploration [117][129]. 2. **Market Dynamics and Indexing**: The company faces challenges in being indexed well, which affects its stock price relative to its intrinsic value. The management is aware of the need to attract institutional investors to bridge this gap [97][100][106]. 3. **Long-term Projections**: The management emphasizes the importance of demonstrating consistent growth and execution to build credibility with investors, which could lead to a more favorable market perception [103][104]. This summary encapsulates the key points discussed during the conference call, highlighting the company's current status, challenges, and future opportunities in the land development and water rights industry.