Pure Cycle (PCYO) Q1 2025 earnings summary

Executive summary

• Net income for the quarter ended November 30, 2024, was $3.94 million, up 91% year-over-year, with EPS of $0.16, driven by strong oil and gas royalty income, land development, and recurring rental revenues.

• Quarterly revenue reached $5.8 million, up 7% year-over-year, with gross profit of $3.67 million and a 64% gross margin.

• Sky Ranch development advanced with Phases 2A complete and active construction in Phases 2B, 2C, and 2D, and strong lot sales supporting results.

• Single-family rental business expanded to 14 homes rented, with plans to grow to 98–200 units over the next several years.

• Strategic investments in water assets, land, and rentals are driving both current earnings and long-term value creation.

Financial highlights

• Revenue for the quarter was $5.8 million (+7% YoY); net income was $3.94 million (+91% YoY); EPS was $0.16 (+78% YoY); gross margin was 64%.

• Oil and gas royalty income surged to $2.8 million, aided by six new wells at Sky Ranch.

• Land development revenue increased 29% to $2.6 million, with lot sales up 22%.

• Single-family rentals generated $0.1 million in revenue, with 14 homes rented and 64% gross margin.

• Total liquidity at quarter-end was $65.2 million, including $19.0 million in cash and $35.5 million receivable from CAB.

Outlook and guidance

• Management expects another record year in fiscal 2025, with guidance of $31 million in revenue and $0.52 EPS.

• Anticipates continued strong demand for entry-level and rental housing at Sky Ranch, with recurring revenue growth from water, rentals, and land.

• Plans to invest up to $26.5 million in Sky Ranch Phase 2 infrastructure and $6 million in new rental units in fiscal 2025.

• Expects to invest up to $6 million in the WISE water partnership through fiscal 2025.

• Forecasts $18 million in water and wastewater tap fee revenue from Phase 2 over the next three years.