On July 10, 2024, Pure Cycle Corp (PCYO, Financial) released its 8-K filing announcing financial results for the three and nine months ended May 31, 2024. Pure Cycle Corp is a diversified land and water resource development company that designs, constructs, manages, operates, and maintains water and wastewater systems. The company operates in two business segments: Water and wastewater resource development and Land development, with the latter generating the maximum revenue.
Performance and Challenges
Pure Cycle Corp (PCYO, Financial) posted its twentieth consecutive fiscal quarter with positive net income, driven by the ongoing development of its Sky Ranch Master Planned Community. The company is actively working on Phases 2A, 2B, and 2C, with Phase 2B expected to be ready for builders soon. The company recognized a 52% increase in lot sales revenue for the three months ended May 31, 2024, and a 56% increase for the nine months ended compared to 2023. However, the company faces challenges such as the variability in water deliveries due to fluctuating oil and gas sales.
Financial Achievements
Pure Cycle Corp (PCYO, Financial) reported total revenues of $7.6 million for the three months ended May 31, 2024, compared to $6.9 million in the same period in 2023. For the nine months ended May 31, 2024, total revenues were $16.2 million, up from $11.2 million in 2023. The increase in revenue is primarily attributed to the land development segment, which generated $5.0 million and $8.3 million for the three and nine months ended May 31, 2024, respectively.
Income Statement Highlights
| Three Months Ended | May 31, 2024 | May 31, 2023 |
|---|---|---|
| Net Income | $2,825,000 | $3,295,000 |
| EBITDA | $4,522,000 | $4,989,000 |
| Basic EPS | $0.12 | $0.14 |
Balance Sheet and Cash Flow
As of May 31, 2024, Pure Cycle Corp (PCYO, Financial) reported working capital of $19.6 million, with $20.4 million in cash and cash equivalents. The company’s total assets stood at $140.4 million, up from $133.2 million as of August 31, 2023. The increase in assets is primarily due to investments in water and water systems and land under development.
Operational Summary
Water deliveries decreased for the three months ended May 31, 2024, to 394 acre-feet from 564 acre-feet in Q3 2023, primarily due to an unusually large volume of oil and gas water sales in Q3 2023. However, for the nine months ended May 31, 2024, water deliveries increased to a record 1,422 acre-feet compared to 806 acre-feet in the same period of 2023.
Commentary
“Due to the continued success of our Sky Ranch Master Planned community, we now have three phases of lot development under construction accelerating the timing of delivering our lots to home builder customers as well as lots for our single-family rental segment,” commented Mark Harding, CEO of Pure Cycle. “Also contributing were record 2024 YTD water sales to oil and gas customers with a continued strong outlook for the rest of 2024 and into 2025.”
Analysis
Pure Cycle Corp (PCYO, Financial) continues to show strong performance in its land development segment, which is crucial for its long-term growth. The increase in lot sales revenue and the ongoing development of the Sky Ranch community are positive indicators. However, the variability in water deliveries due to oil and gas sales remains a challenge. The company’s strong balance sheet and consistent net income provide a solid foundation for future growth.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Pure Cycle Corp for further details.
