Pure Cycle Q1 Earnings Call Highlights

Core Insights - Pure Cycle reiterated its fiscal 2026 guidance range of $26 million to $30 million in revenue and $0.43 to $0.52 in earnings per share, with variability in industrial water sales to oil and gas operators being a significant factor [1][7] - The company reported a strong Q1, achieving approximately $9 million in revenue and about $6.2 million in gross profit, which is ahead of internal forecasts [3][4][7] Financial Performance - Pure Cycle achieved about a third of its fiscal-year revenue forecast and approximately 37% of its full-year guidance for net income and earnings per share through the first quarter [2][7] - The water utility business showed recurring growth with a 22% customer compound annual growth rate (CAGR), although industrial water revenue was softer this quarter due to timing issues related to oil and gas activity [5][11] Land Development Progress - The land development segment, particularly Phase 2D, is ahead of schedule, with roads approximately 80% complete, five to six months earlier than planned [6][8][9] - Phase 2E is planned to include about 159 lots, with grading expected to start in the spring [8][9] Water Utility Segment - The water utility segment includes recurring service revenues to residential customers and industrial water deliveries, primarily to oil and gas operators [11] - Despite a strong quarter, the water segment was described as "a little bit softer than normal" due to timing issues with building permits and oil and gas deliveries [12] Future Outlook - Management expects activity in the oil and gas sector to pick up later in the fiscal year, with wells drilled and completed expected to begin fracking soon [13] - The company anticipates that fiscal 2027 will not be a "breakout year," with more significant growth expected post-interchange development and commercial lot sales likely in 2028 and beyond [20] Strategic Initiatives - Pure Cycle is optimistic about strategic land acquisitions and is currently more aggressive in pursuing land than water acquisitions [21] - The company has engaged commercial and industrial brokers to explore potential commercial uses for Sky Ranch, leveraging its water assets and site readiness [19]