Pure Cycle(US:PCYO)2022-04-12 18:15Financial Data and Key Metrics Changes - The company reported a slight decline in revenue compared to the previous year, primarily due to the recognition of $1.5 million in project management revenues last year that were not expected to be collectible at that time [44][46] - Operating income remained consistent around $3 million, with net income showing slight growth when excluding last year's significant public improvement reimbursements [45][46] - Water and wastewater assets have seen a 65% increase in investment, with 137 million gallons delivered in the second quarter, largely for oil and gas operations [47][48] Business Line Data and Key Metrics Changes - The land development segment is progressing with the second phase, which includes 850 lots, and gross margins have remained consistent [49] - The single-family rental segment has three homes rented out, generating approximately $34,000 in annual revenue, with a fourth home under construction [50][38] Market Data and Key Metrics Changes - The company has approximately 970 customer connections, with growth expected to continue in both residential and industrial water usage [13] - The demand for water from oil and gas operators has reached record levels, benefiting from high oil prices [14] Company Strategy and Development Direction - The company is focused on executing its three business segments: land development, water and wastewater, and single-family rentals, aiming for cohesive growth across all areas [52] - There is an emphasis on seeking new land and water deals to enhance growth opportunities [53] - The company is also prioritizing shareholder returns through recurring revenue from single-family rentals and is enhancing its ESG reporting efforts [53] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of legacy assets in generating income and the company's strong position in inflationary times due to hard assets like land and water [61][62] - The company anticipates continued growth in revenue as it ramps up deliveries in the second phase of development [80] Other Important Information - The company has two significant reservoir assets that are being explored for regional water supply opportunities [75] - The company is positioned to increase tap fees by approximately 2.5% to keep pace with surrounding water providers [76] Q&A Session Summary Question: Discussion on inflation and tap fees - Management explained that tap fees are set based on agreements with the State of Colorado and are influenced by surrounding water providers, with a focus on remaining competitive [67][68] Question: Update on reservoir sites - Management provided an update on two reservoirs, emphasizing their value and ongoing exploration for development opportunities with regional partners [73][75] Question: Earnings and asset monetization - Management acknowledged the current phase as a trough but emphasized the potential for revenue growth as Phase 2 ramps up [78][80] Question: Status of models being built in Phase 2 - Management indicated that construction is progressing and that the company is on track to deliver all lots as planned [80][89]