Pure Cycle (PCYO) Investor Day 2024 summary

Strategic growth and development plans

• Accelerated land development at Sky Ranch, with 700 homes built and another 700 lots to be delivered in the next 12 months, effectively doubling the current home count.

• Expansion of the single-family rental segment, targeting up to 90 units, with new phases (2B, 2C, 2D) adding 17, 40, and 26-28 units respectively.

• Diversification of builder partnerships, increasing from 3 to 6-7 builders to offer varied product categories and manage lot inventory efficiently.

• Commercial and retail development to follow residential growth, with a new I-70 interchange expected to accelerate commercial opportunities by 2026-2027.

• Infrastructure investments include a water treatment plant with capacity for 3,000 connections, expandable with minor CapEx, and a 35-acre site at Lowry for future large-scale utility needs.

Financial guidance and capital allocation

• Strong financial performance with high margins, supported by recurring revenue nearing the annual overhead; another phase of Sky Ranch is expected to push recurring revenue above budget.

• Ongoing share buybacks on a monthly basis, with flexibility to accelerate or decelerate based on market conditions.

• Dividend initiation is planned once recurring revenue consistently exceeds overhead, with a focus on sustainability and growth of the dividend over time.

• Significant investment ($50M-$60M) in water and wastewater infrastructure, positioning the company as a top non-oil and gas royalty earner for the State Land Board within 3-4 years.

Competitive positioning and future opportunities

• Competitive advantage in water delivery due to local water sources and oversized infrastructure, enabling lower tap fees compared to the City of Aurora, whose costs are rising due to distant water sourcing.

• Capacity for 60,000-70,000 taps, with 1,800 currently in place and 700 more expected in the next year; growth will occur in step functions as new projects layer in over the next five years.

• The Lowry Range, a 24,000-acre service area, offers long-term development potential, with the State of Colorado as a key partner and landowner.

• The company is actively seeking additional land acquisition and joint ventures, leveraging its integrated land and utility development expertise.

• Market demand remains strong, especially for entry-level housing, with supply still lagging demand in the region.