Pure Cycle(US:PCYO)2026-01-08 14:32Financial Data and Key Metrics Changes - The company reported a record-setting first quarter with revenues exceeding $9 million and gross profits of approximately $6.2 million, achieving about a third of its fiscal year forecast [6][25]. - Net income and earnings per share saw significant increases, with year-to-date results ahead of guidance, achieving about 37% of the full-year guidance [6][25]. Business Segment Data and Key Metrics Changes - The land development segment showed strong performance, particularly with the completion of Phase 2C and ongoing work on Phase 2D, which is about 80% complete and ahead of schedule [5][14]. - The water utility segment experienced strong customer growth with a 22% compound annual growth rate (CAGR) in recurring revenue, although it was softer than normal due to timing issues with building permits and oil and gas deliveries [9][10]. - The single-family rental segment has 19 homes completed and rented, with another 40 units under contract, indicating a steady growth in recurring revenues [21][22]. Market Data and Key Metrics Changes - The company operates in a growing area of the Denver metropolitan region, with significant development occurring around the Lowry Ranch, which is expected to enhance the company's asset value [20][61]. - Home prices in the Sky Ranch area have appreciated by 30%-40% since the initial phases, indicating strong demand and market performance despite broader market challenges [42][43]. Company Strategy and Development Direction - The company aims to continue diversifying its activities across land development, water utilities, and single-family rentals, focusing on building a recurring revenue base and fortifying its balance sheet [4][24]. - Future growth is anticipated to come from the completion of the interchange project, which is expected to unlock additional commercial opportunities and enhance overall revenue streams [27][63]. Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing construction projects and the potential for increased oil and gas revenues as operators begin fracking later in the year [10][11]. - The company is cautious about water acquisitions, preferring strategic opportunities that complement its existing portfolio, while being more aggressive in land acquisitions [35][36]. Other Important Information - The company has a strong balance sheet and continues to invest in its business lines to create shareholder value [4][24]. - The company is exploring opportunities for data centers in the Sky Ranch area, leveraging its water availability to attract high water-use customers [40][41]. Q&A Session Summary Question: What should be the estimated earnings range for fiscal 2027? - Management indicated that fiscal 2027 will be influenced by Phase 2E and the interchange construction, suggesting it may not be a breakout year but will set the stage for future growth [31][32]. Question: What are the opportunities for water acquisition? - Management stated that while they have a strong water portfolio, any acquisitions would need to be strategic and adjacent to existing assets [35][36]. Question: What is the outlook for land acquisitions? - Management expressed optimism about land acquisition opportunities, noting more active conversations with landowners compared to previous years [37]. Question: What is the potential for data centers in the area? - Management highlighted the advantages of Sky Ranch for data centers due to water availability and proximity to infrastructure, indicating ongoing discussions with potential users [40][41]. Question: What is the current trend in home price appreciation in the Denver market? - Management reported strong appreciation in home values in Sky Ranch, with average increases of 30%-40% for earlier phases, driven by demand and community amenities [42][43].