Housing Market and Development - The housing market stabilized in 2024, with the Federal Reserve shifting to a balanced approach, maintaining consistent interest rates through the first half of 2025 [99]. - Homebuilders' strategic use of interest rate buydowns has been crucial in driving sales despite higher mortgage interest rates and economic uncertainty [100]. - The Sky Ranch development is zoned for up to 3,200 single-family and multifamily homes, with plans for over two million square feet of retail, commercial, and light industrial space [102]. Sky Ranch Development Phases - The average lot price in Phase 2 of Sky Ranch increased by approximately 53%, from $75,000 to $115,000 for a 45-foot lot [110]. - As of November 30, 2025, Phase 2A of Sky Ranch is 100% complete, with $18.4 million received from the sale of 219 lots [111]. - Phase 2B of Sky Ranch is approximately 98% complete, with $17.3 million received from the sale of 211 lots [112]. - Phase 2C of Sky Ranch is approximately 89% complete, with $17.3 million received from the sale of 228 lots [113]. - Phase 2D of Sky Ranch is approximately 65% complete, with $4.5 million received and an expectation of $14.5 million in remaining payments [114]. - Construction activities for Phase 2E are expected to begin in fiscal 2026, with approximately 159 lots planned for completion in calendar 2026 [116]. Financial Performance - For the three months ended November 30, 2025, net income increased to $4.5 million from $3.9 million in 2024, primarily due to increased land development revenue [120]. - Total revenue for the same period rose by 59% to $9.1 million, driven by a 160% increase in lot sales revenue, which reached $6.0 million [122][130]. - Revenue recognized from lot sales in the three months ended November 30, 2025, was $6.0 million, compared to $2.3 million in the same period of 2024 [115]. - Operating income for the three months ended November 30, 2025, was $4.4 million, a 155% increase compared to the previous year [122]. Cash Flow and Investments - Cash used in operating activities for the three months ended November 30, 2025, was $1.0 million, primarily for construction activities at Sky Ranch and vendor payments [142]. - Cash used in investing activities was $4.7 million, mainly for the construction of single-family rentals and additional water and wastewater infrastructure [142]. - Financing activities provided $1.2 million in cash from financing single-family rentals, marking a significant increase of 1,165% compared to the previous year [140]. - The net change in cash for the three months ended November 30, 2025, was a decrease of $4.5 million, representing a 355% decline from the prior year [140]. - The company anticipates spending up to $10.8 million in the next 12 months for Phase 2 development and expects to receive approximately $17.5 million in milestone payments from builders [137]. - The company anticipates investing up to $2.0 million over the next 12 months to fund the Rangeview District's obligations related to water and infrastructure development [139]. Water and Infrastructure - Water and wastewater tap fees increased by 14% to $1.7 million, reflecting the timing of builders obtaining building permits [122][128]. - Water deliveries decreased by 51% to 147 acre-feet, primarily due to reduced sales to oil and gas operators [126][127]. - The current WISE subscription allows the company to access approximately 3.0 million gallons per day of transmission pipeline capacity and up to 900 acre-feet per year of water [139]. - The company expects to continue spending cash for construction activities at Sky Ranch for the foreseeable future [142]. General and Administrative Expenses - General and administrative expenses slightly increased due to inflation but were offset by a reversal of a legal expense of $0.5 million [125]. Accounting and Reporting - There have been no changes to the company's critical accounting policies during the three months ended November 30, 2025 [143]. - The company’s financial statements for the three months ended November 30, 2025, should be read in conjunction with the audited financial statements in the 2025 Annual Report [143].

Core Insights - Pure Cycle Corporation reported a net income of $4.5 million for the three months ended November 30, 2025, representing a 16% increase from the same period in 2024, marking the twenty-sixth consecutive fiscal quarter with positive net income [1] - The company achieved earnings of $0.19 per fully diluted common share, up from $0.16 in the same period in 2024, reflecting a 19% increase [1] - Revenue for the same period was $9.1 million, a 59% increase compared to $5.8 million in 2024, driven by strong demand for entry-level lots at the Sky Ranch Master Planned Community [6][8] Financial Performance - Net income for Q1 2026 was $4.6 million, up from $3.9 million in Q1 2025, a 16% increase [6] - EBITDA for the three months ended November 30, 2025, was $6.7 million, down 12% from $7.6 million in the same period in 2024 [6] - Cash and cash equivalents totaled $17.1 million as of November 30, 2025 [6][13] Land Development - The company completed the delivery of the remaining finished lots in Phase 2C and closed on the initial plat payment with a new homebuilder partner in Phase 2D [2] - Phase 2D is expected to be substantially complete by the end of fiscal 2026, with 218 lots currently under construction [12] - The company has started platting an additional 159 lots in Phase 2E, expected to be completed in fiscal 2027 [2] Water and Wastewater Segment - Water and wastewater revenue for the three months ended November 30, 2025, was $2.5 million, compared to $2.9 million in the same period in 2024 [8][20] - The company sold 51 water or wastewater taps for $1.7 million during the quarter, an increase from 38 taps sold for $1.5 million in the same period in 2024 [9][15] - The average price of a Sky Ranch water and wastewater tap held at approximately $42,000 per tap during fiscal 2026 [15] Single-Family Rentals - The single-family rental business had 19 homes built and rented or available for rent as of November 30, 2025 [11] - Five townhomes were brought online during the first quarter, and the company is under contract with several national home builders to construct an additional 40 single-family detached homes [11][17] Strategic Partnerships - Pure Cycle has diversified its land development segment by partnering with two new national homebuilders, bringing the total to seven national builders [2] - The company continues to collaborate with established builders like Pulte Group and Oakwood to produce entry-level homes in the Denver metropolitan area [7]

U.S. equities are navigating a mixed afternoon on Wednesday, December 31, 2025, as Wall Street closes out a tumultuous yet historically strong year. Despite a modest pullback in the final trading days, major indexes are poised to record significant annual gains, largely fueled by optimism surrounding artificial intelligence and a resilient U.S. economy. Trading volume remains lighter than usual as investors finalize positions ahead of the New Year's Day holiday.Current Market PerformanceAs afternoon trading ...

Core Insights - Pure Cycle Corporation will release its financial results for the three months ended November 30, 2025, on January 7, 2026, and will hold an earnings presentation on January 8, 2026 [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 on owned land while providing 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]

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]