Pure Cycle(US:PCYO)2025-09-30 19:47Summary 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]