Pure Cycle(US:PCYO)2025-11-12 21:01Water 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]