Pure Cycle (PCYO) 2024 Southwest IDEAS Conference summary

Strategic positioning and business model

• Operates as a vertically integrated asset management company focused on water resources in a water-scarce region, leveraging early acquisition of water rights to drive value across multiple business segments.

• Holds approximately 30,000 acre-feet of water, enough to serve about 60,000 single-family connections, with ongoing conservation reducing per-connection usage.

• Monetizes water assets through capital tap fees and recurring utility payments, with water access significantly increasing land value and enabling land development.

• Expands into land development and single-family rentals, using water assets to enhance land value and generate high-margin opportunities.

• Maintains a highly skilled team and board with expertise in engineering, real estate, and finance.

Financial performance and growth

• Achieved record year-end results with over $28 million in revenue and 70% gross margins, driven by disciplined acquisitions and asset monetization.

• Land development segment boasts nearly 80% gross margins due to low land acquisition costs and strong demand for entry-level housing.

• Single-family rental segment is rapidly expanding, targeting growth from 14 to 100 units in 18 months, with each unit generating significant recurring revenue and equity value.

• Maintains a strong balance sheet with high liquidity, minimal debt, and periodic municipal reimbursements for infrastructure investments.

• Oil and gas water sales provide additional high-margin revenue, with record performance and favorable regulatory outlook.

Development pipeline and future outlook

• Sky Ranch master-planned community is about 15-20% built out, with 700 homes delivered and a target of 3,200 homes at full build-out.

• Commercial development on 150 acres is planned as residential build-out progresses, offering further high-margin opportunities.

• Short-term (three-year) outlook includes continued residential and commercial development, with single-family rentals expected to reach 100 units and potentially 300 at full build-out.

• Infrastructure investments are largely complete, reducing future capital intensity and increasing margins as new phases are developed.

• Guidance for fiscal 2025 anticipates continued strong results across all segments, with long-term asset value projected to exceed $700 million.