Pure Cycle (PCYO) Q3 2026 earnings summary

Executive summary

• Net income rose 31% for the quarter and 23% for the nine months ended May 31, 2026, marking 28 consecutive quarters of profitability, driven by increased water sales to oil and gas operators and higher land development revenue.

• Revenue increased 60% for the quarter to $8.2 million and 51% year-over-year to $22.5 million, reflecting strong performance in water, land development, and rental segments.

• Lot sales revenue grew 19% for the quarter and 78% year-to-date, while water and wastewater revenue surged 119% and 34%, respectively, due to higher oil and gas water demand.

• Accelerated land development at Sky Ranch, with Phase 2D 84% complete and Phase 2E construction underway, aided by a mild winter.

• Maintained diversified and recurring revenue streams from water utilities, land development, and single-family rentals, providing stability across market cycles.

Financial highlights

• Q3 2026 revenue reached $8.2M (up 60% YoY); nine-month revenue: $22.5M (up 51% YoY); Q3 net income: $2.9M (up 31% YoY); nine-month net income: $8.6M (up 23% YoY).

• Gross profit for Q3 2026 was $4.9M, with a gross margin of 52%; Q3 EBITDA: $4.7M (up 29% YoY); nine-month EBITDA: $13.6M (up 21% YoY).

• EPS for Q3: $0.12 (up from $0.09); nine months: $0.36 (up from $0.29); 71% of full-year net income and EPS guidance achieved by Q3 2026.

• As of Q3 2026, 77% of full-year revenue guidance and 69% of gross profit forecast achieved.

• Working capital at May 31, 2026, was $5.4M, including $8.4M in cash and equivalents; total assets at $176.0M.

Outlook and guidance

• FY26 gross revenue projected in the $28–32M range, with EPS sensitivity between $0.43–$0.52 depending on lot closings and rental lease-up timing.

• Expectation to complete Phase 2D by fiscal year-end and Phase 2E in fiscal 2027, with 159 lots planned.

• Management expects moderate demand for new homes through 2026 due to elevated energy prices, persistent inflation, and geopolitical uncertainty.

• Customer base expected to grow to 2,500 accounts in 3–5 years, with consistent tap sales and annual tap fee increases of ~3%.

• Ongoing investments in water/wastewater infrastructure and selective land acquisitions planned.