Pure Cycle (PCYO) Status Update summary

Strategic business model and growth outlook

• Focus on delivering finished lots to national home builders, leveraging low land basis and efficient infrastructure development to optimize capital use and monetize assets through sales and reimbursables.

• Single-family rental business is accelerating, with recurring revenue streams and significant equity value per home, aiming for a balanced approach between rentals and for-sale homes.

• Land inventory at Sky Ranch is expected to last five years, with ongoing commercial and joint venture opportunities and potential for additional acquisitions within liquidity capacity.

• Three main growth avenues: continued water portfolio development, more aggressive land acquisitions, and expansion of the rental portfolio, targeting up to 20,000 water customers and 2,000-3,000 rentals.

• Recurring revenue is projected to surpass overhead soon, enabling dividend initiation and potential increases, with share buybacks considered when liquidity is not deployed elsewhere.

Water recycling and resource management

• 100% of water entering wastewater plants is reused, with advanced treatment meeting strict regulatory standards and narrowing cost differentials versus discharge.

• Water use per home has dropped from 0.5 to 0.27 acre-feet, increasing the number of homes served per water right and enhancing portfolio value.

• Water can be resold up to five times through recycling, with synthetic turf further reducing outdoor irrigation needs.

• PFAS (forever chemicals) are managed with activated carbon treatment, a standard but ongoing challenge in water treatment.

Financial projections and capital allocation

• By 2032, expected to have $600 million in cash from Sky Ranch monetization, with recurring revenue of $15 million and 60% profit margins, while using only 20% of water rights.

• Water rights portfolio could serve 60,000 homes, with 50,000-55,000 connections remaining after Sky Ranch build-out, potentially valued at $2.5 billion in future tap fees.

• Tap fees have risen from $5,000 to $40,000 per home, with pricing set by comparison to regional providers and expected to continue increasing.

• Share buybacks are modest but may accelerate if liquidity is not used for land or water investments; dividend initiation is likely as recurring revenue exceeds overhead.