Pure Cycle (PCYO) Q3 2024 earnings summary

Executive summary

• Achieved strong financial and operational results for Q3 and the nine months ended May 31, 2024, with revenue up 45% year-over-year and net income for the nine months rising 37% to $5.0 million, driven by water, land development, and single-family rental segments.

• Leadership team with decades of experience continues to execute on strategic growth initiatives and asset expansion, including the Sky Ranch Master Planned Community.

• Asset portfolio supports significant future growth, with water rights for up to 60,000 connections and a 930-acre master-planned community.

• Maintained twentieth consecutive fiscal quarter of positive net income, reflecting ongoing profitability.

• The company maintains excellent liquidity, with over $24 million in cash and $33.5 million in note receivables, supporting ongoing infrastructure and development.

Financial highlights

• Revenue reached $16.2 million for the nine months ended May 31, 2024, with Q3 revenue of $7.6 million and lot sales up 56% year-to-date.

• Gross profit for Q3-2024 was $9.99 million, with a gross margin of 62% for the period.

• Net income for Q3 2024 was $2.8 million, with EPS of $0.12 for Q3 and $0.21 for the nine months.

• Cash and cash equivalents at May 31, 2024, were $20.4 million, with total liquidity of $56.9 million and total debt of $6.9 million.

• Lot prices have risen from $75,000 in the first phase to about $120,000, and water tap fees now approach $38,000 combined.

Outlook and guidance

• Management expects to spend up to $19.6 million on Sky Ranch Phase 2 infrastructure in the next 12 months, with anticipated receipts of $26.3 million in milestone and lot payments.

• Plans to expand single-family rentals to 200 homes in Sky Ranch, targeting $6.7 million in annual rental revenue.

• Sky Ranch development expected to generate over $600 million in future revenue.

• The company is actively seeking additional land acquisition opportunities and remains disciplined in evaluating new projects.

• Commercial development is expected to ramp up in 2026, with some small retail activity possible earlier.