Pure Cycle Announces Financial Results For the Three and Six Months Ended February 28, 2025

Rhea-AI Summary

Pure Cycle (NASDAQ:PCYO) reported its Q2 and YTD 2025 financial results, marking its twenty-third consecutive quarter with positive net income. The company posted Q2 revenues of $4.0 million and YTD revenues of $9.7 million, generating pre-tax income of $1.1 million and $6.3 million respectively.

Development continues at the Sky Ranch Master Planned Community, with Phase 2A completed and Phase 2B nearing completion with approximately 70 homes under construction. Phase 2C is actively developing with utility and road work underway, while Phase 2D's grading work is finished. The company has begun platting Phase 2E, expected to be ready by fiscal 2026.

Key financial highlights include royalty income of $1.9 million for Q2 and $4.7 million YTD, EBITDA of $1.8 million for Q2 and $7.6 million YTD, and cash & cash equivalents of $16.8 million as of February 28, 2025. The company maintains strong working capital of $19.8 million, positioning it well for growth and potential acquisitions.

Positive

• Twenty-third consecutive quarter with positive net income
• Strong royalty revenue growth with $1.9M in Q2 and $4.7M YTD
• Robust working capital position of $19.8M with $16.8M in cash
• Expected $20M+ in water and wastewater tap fee revenue over next three years
• Successful expansion of Sky Ranch development with multiple phases progressing

Negative

• Decreased water deliveries from 404 to 64 acre-feet in Q2 2025 vs Q2 2024
• Q2 lot sales revenue declined to $1.1M from $1.2M year-over-year
• Operating loss of $1.3M in Q2 2025 compared to loss of $0.4M in Q2 2024
• Increased general and administrative expenses to $2.7M from $2.0M in Q2

Insights

Financial Analyst

Pure Cycle's Q2 FY2025 results demonstrate strong year-over-year growth with quarterly net income increasing to $809,000 from $118,000 in the prior year period. The company achieved its 23rd consecutive profitable quarter, showing consistent execution of its business model.

Most impressive is the surge in oil and gas royalty income to $1.91 million for Q2 (vs. $53,000 prior year) and $4.72 million for H1 (vs. $87,000), driven by six additional wells that began producing this fiscal year. This revenue stream provides significant cash flow with minimal associated costs.

The company's multi-phase development approach at Sky Ranch is progressing well, with Phase 2A completed, Phase 2B at 95% completion, and Phases 2C, 2D, and 2E at various stages of development. This phased approach creates a steady pipeline of lot deliveries through fiscal 2026, generating predictable revenue.

Pure Cycle maintains a robust financial position with $16.8 million in cash and $19.8 million in working capital, providing flexibility for both continued development and opportunistic acquisitions. The water and wastewater tap fee revenue increased significantly to $2.1 million in Q2 from zero in the prior year period.

While overall water deliveries decreased year-over-year due to reduced oil and gas operations, this represents non-recurring revenue. More importantly, the company's core residential water service should continue growing as Sky Ranch develops further, creating a stable, recurring revenue base.

Real Estate Development Specialist

Pure Cycle's land development strategy shows sophisticated project management with five concurrent subphases in development. The company has wisely positioned itself in the entry-level housing market, which continues to see strong demand despite broader market uncertainties.

The development pipeline is methodically structured with Phase 2A complete, Phase 2B at 95% completion, Phase 2C at 48%, Phase 2D at 18%, and Phase 2E in planning. This staggered approach optimizes cash flow and resource allocation while creating a steady stream of lot deliveries extending through fiscal 2026.

Their value proposition to homebuilders is particularly compelling - by delivering finished lots in a market with land supply, Pure Cycle removes a significant risk element for builders. National homebuilders have already begun construction in Phase 2B with approximately 70 homes completed or under construction for the spring selling season.

The company's single-family rental business represents another shrewd diversification strategy. With 14 homes currently rented and 17 more planned for Phase 2B, Pure Cycle is creating an additional recurring revenue stream. Management notes the "overwhelming demand" for rental homes at Sky Ranch, indicating strong market fundamentals for this segment.

Pure Cycle's vertical integration across water infrastructure, land development, and now rental operations provides multiple revenue streams from the same land base. This model creates significant value from their landholdings while giving them greater control over the development timeline than traditional land developers who simply sell raw land to builders.

DENVER, CO / ACCESS Newswire / April 9, 2025 / Pure Cycle Corporation (NASDAQ:PCYO) announced its financial results for the three and six months ended February 28, 2025. Pure Cycle posted its twenty-third consecutive fiscal quarter with positive net income. Development at the Sky Ranch Master Planned Community continues to progress, as we complete our seasonally low winter quarter. We have completed development of Phase 2A, and we are finishing our landscaping and warranty work on Phase 2B as our national homebuilder partners have begun construction in Phase 2B with approximately 70 homes completed or under construction for the spring selling season. We are actively developing Phase 2C, with utility work and road work well underway, and we anticipate delivering finished lots with home construction expected to begin late summer of 2025. Additionally, we have finalized our grading work in Phase 2D and expect to complete these lots by the end of the calendar year 2025. Finally, we have started platting our next subphase, Phase 2E, for which we expect to have lots ready for our national homebuilder partners by the end of fiscal 2026. Pure Cycle continues to drive income from our resource rich asset base and in the three and six months ended February 28, 2025, we reported an increase in our royalty revenues from our oil and gas mineral interest at Sky Ranch, where an additional six wells were completed in 2024 that began producing during this fiscal year.

Our capital management and balance sheet strategy remains focused on growth and shareholder returns. We are prioritizing investment in our ongoing development projects while utilizing available liquidity to continue our share repurchase program and reserving sufficient capital for strategic development initiatives and land acquisitions.

Q2 and YTD 2025 Highlights

• Revenues for the three and six months ended February 28, 2025 of $4.0 million and $9.7 million, which drove pre-tax income of $1.1 million and $6.3 million;

• Net income for the three and six months ended February 28, 2025 of $0.8 million and $4.7 million;

• Royalty income for the three and six months ended February 28, 2025 of $1.9 million and $4.7 million;

• EBITDA for the three and six months ended February 28, 2025 of $1.8 million and $7.6 million (see table below for reconciliation of net income to EBITDA);

• Cash & cash equivalents totaled $16.8 million as of February 28, 2025;

• For the three and six months ended February 28, 2025, we delivered 64 and 367 acre-feet of water.

Net Income to EBITDA Reconciliation

We continue our profitability as shown in the table below:

		Three Months Ended								Six Months Ended
(In thousands)		February 28, 2025				February 29, 2024				February 28, 2025				February 29, 2024
Net Income		$	809			$	118			$	4,746			$	2,183
Add back:
Interest expense, net			109				111				218				219
Taxes			267				41				1,538				778
Depreciation / amortization			617				508				1,143				1,018
EBITDA		$	1,802			$	778			$	7,645			$	4,198
Earnings per common share - basic and diluted
Basic		$	0.03			$	-			$	0.20			$	0.09
Diluted		$	0.03			$	-			$	0.20			$	0.09
Weighted average common shares outstanding:
Basic			24,083,718				24,086,826				24,077,780				24,084,773
Diluted			24,196,178				24,149,195				24,177,677				24,149,524

"Second quarter is a seasonally slow quarter due to our Colorado winters making field construction challenging. That said we have a record number of lots under construction and have made substantial progress through the winter months towards delivering these lots," commented Mark Harding, CEO of Pure Cycle. "Our entry level market segmentation and our developing finished lots for our homebuilder customers continues to differentiate us in the market and bolster our value proposition to our homebuilder customers," continued Mr. Harding.

Q2 and YTD 2025 Financial Summary

Revenues

For the three months ended February 28, 2025 and February 29, 2024, we reported total revenue of $4.0 million and $3.2 million with $2.6 million and $1.8 million being generated in our water and wastewater resource development segment, $1.3 million and $1.3 million generated by our land development segment, and $0.1 million and $0.1 million reported in our single-family rental business.

For the six months ended February 28, 2025 and February 29, 2024, we reported total revenue of $9.7 million and $8.6 million with $5.7 million and $5.1 million being generated in our water and wastewater resource development segment, $3.8 million and $3.3 million generated by our land development segment, and $0.2 million and $0.2 million reported in our single-family rental business.

For the three months ended February 28, 2025 and February 29, 2024, we sold 52 and 0 water or water and wastewater taps for $2.1 million and $0. For the six months ended February 28, 2025 and February 29, 2024, we sold 90 and 15 water or water and wastewater taps for $3.6 million and $0.6 million. As of February 28, 2025, we have sold 895 water and wastewater taps at Sky Ranch in Phases 1, 2A, and 2B. Based on current prices and engineering estimates, we believe Phase 2 of Sky Ranch will exceed $20 million in water and wastewater tap fee revenue and cash over the next three years.

As of February 28, 2025, the first development phase (509 lots) is complete and the second development phase (1,032 lots) is being developed in five subphases, referred to as Phase 2A (229 lots), Phase 2B (211 lots), Phase 2C (228 lots), Phase 2D (218 lots) and Phase 2E (146 lots). As of February 28, 2025, Phase 2A is 100% complete, Phase 2B is approximately 95% complete, Phase 2C is approximately 48% complete, Phase 2D is approximately 18% complete and Phase 2E is expected to begin development work in fiscal 2025. Phase 2B is substantially completed with some landscaping and warranty items remaining. Phase 2C is expected to be completed by the end of Pure Cycle's fiscal 2025, Phase 2D is expected to be completed by the end of calendar 2025 and Phase 2E is expected to be completed by the end of Pure Cycle's fiscal 2026.

As of February 28, 2025, the single-family rental business had 14 homes built and rented in Sky Ranch and 17 additional homes under contract to build in Phase 2B starting in the spring of 2025. As noted in the prior quarters, due to the overwhelming demand for rental homes at Sky Ranch, we expect to have a total of 98 homes in Phases 1 and 2 with the ability to add more than 200 homes as Sky Ranch builds out.

"Despite typical winter slowdowns, Pure Cycle maintained positive net income in the quarter, leveraging its robust balance sheet and diversified asset portfolio. Our earnings showcased the strength of our oil and gas royalty portfolio through our royalty income and the strength of our water and wastewater infrastructure through our water and wastewater tap sales. We continue to see strong demand for our entry-level housing at Sky Ranch as we expand development across multiple subphases," stated Marc Spezialy, CFO of Pure Cycle. "Development activities are currently underway on 228 lots in Phase 2C, with finished lot deliveries scheduled for fiscal 2025. Additionally, we commenced development on an additional 218 lots in Phase 2D, with deliveries anticipated in fiscal 2026. We are also moving forward with a new subphase, Phase 2E, with an additional 146 lots we expect to deliver by the end of fiscal 2026," concluded Mr. Spezialy.

Working Capital

With the recent uncertainty in the capital markets our Company is well positioned with a strong balance sheet and terrific working capital (current assets less current liabilities) of $19.8 million as of February 28, 2025, with $16.8 million of cash and cash equivalents. This allows us to not only to execute delivering lots to our homebuilder customers but to capitalize on acquisition opportunities as they may become available.

Q2 and YTD 2025 Operational Summary

Water and Wastewater Resource Development

Water deliveries decreased for the three months ended February 28, 2025, to 64 acre-feet delivered as compared to 404 acre-feet delivered for 2024. Water deliveries decreased for the six months ended February 28, 2025, to 367 acre-feet delivered as compared to 1,028 acre-feet delivered for 2024.The decreases were due to a decrease in water sold to oil and gas operations, which is not part of our recurring water revenue to residential customers. Oil and gas operations are highly variable and dependent on oil prices, demand for gas, and the timing of development of other leases in our service areas. As Sky Ranch continues to develop, we anticipate continued growth in our residential water and wastewater service revenues. The water and wastewater tap sales increased in 2025 to $2.1 million compared to $0 in 2024 for the three months ended and increased in 2025 to $3.6 million compared to $0.6 million in 2024 for the six months ended, primarily due to the timing of development activities in Phase 2B.

Land Development

For the three months ended February 28, 2025, lot sales revenue decreased to $1.1 million as compared to $1.2 million in 2024 due to an increase in estimated cost to complete Phase 2B in 2025 and multiple phases under construction simultaneously. For the six months ended February 28, 2025, lot sales revenue increased to $3.5 million as compared to $3.1 million in 2024 due to having three phases under construction Phase 2B, 2C and 2D in 2025. Because lot sale revenue is recognized as construction progresses, revenue will fluctuate due to timing of construction activities.

Single Family Rentals

Rental income for the three and six months ended February 28, 2025 and February 29, 2024 was consistent at $0.1 million for the three months ended and $0.2 million for the six month ended as both periods represented the 14 completed homes in our portfolio. An additional 17 homes are under contract to be built in Phase 2B starting in the spring of 2025.

Earnings Presentation Information

Pure Cycle will host an earnings presentation on Thursday April 10, 2025, at 8:30AM Eastern (6:30AM Mountain) to discuss the financial results and answer questions. For an interactive experience, including the ability to ask questions and view the slide presentation, please register and join the event via the link below. Call in access will be in listen-only mode. See below for event details. Additionally, we will post a detailed slide presentation on our website, which will provide an overview of Pure Cycle and present summary financial results and can be accessed at www.purecyclewater.com.

When: Event link: Call in number: Replay:

8:30AM Eastern (6:30AM Mountain) on April 10, 2025 https://www.purecyclewater.com/Q22025 872-240-8702 (access code: 194540545#) https://www.purecyclewater.com/investors/news-events/ir-calendar

Other Important Information

The table below presents our consolidated results of operations for the three and six months ended February 28, 2025 and February 29, 2024 (unaudited):

		Three Months Ended								Six Months Ended
(In thousands, except share information)		February 28, 2025				February 29, 2024				February 28, 2025				February 29, 2024
Revenues:
Metered water usage from:
Municipal customers		$	129			$	111			$	359			$	313
Commercial customers			161				1,481				1,175				3,613
Wastewater treatment fees			93				87				182				173
Water and wastewater tap fees			2,126				-				3,592				581
Lot sales			1,136				1,215				3,455				3,111
Project management fees			116				41				369				141
Single-family rentals			118				125				242				234
Special facility projects and other			116				137				373				417
Total revenues			3,995				3,197				9,747				8,583
Cost of revenues:
Water service operations			402				511				885				1,064
Wastewater service operations			226				181				405				340
Land development construction costs			1,048				81				1,623				769
Project management costs			169				168				254				247
Single-family rental costs			25				33				93				90
Depletion and depreciation			468				360				839				722
Other			130				86				455				232
Total cost of revenues			2,468				1,420				4,554				3,464
General and administrative expenses			2,705				1,997				4,497				3,435
Depreciation			149				148				304				296
Operating income (loss)			(1,327	)			(368	)			392				1,388
Other income (expense):
Interest income - related party			322				215				806				939
Interest income - Investments			217				286				465				594
Oil and gas royalty income, net			1,910				53				4,717				87
Oil and gas lease income, net			-				20				-				38
Other, net			63				64				122				134
Interest expense, net			(109	)			(111	)			(218	)			(219	)
Income from operations before income taxes			1,076				159				6,284				2,961
Income tax expense			(267	)			(41	)			(1,538	)			(778	)
Net income		$	809			$	118			$	4,746			$	2,183
Earnings per common share - basic and diluted
Basic		$	0.03			$	-			$	0.20			$	0.09
Diluted		$	0.03			$	-			$	0.20			$	0.09
Weighted average common shares outstanding:
Basic			24,083,718				24,086,826				24,077,780				24,084,773
Diluted			24,196,178				24,149,195				24,177,677				24,149,524

The following table presents our consolidated financial position as of February 28, 2025 (unaudited) and August 31, 2024 (audited):

(In thousands, except shares)		February 28, 2025				August 31, 2024
ASSETS:		(unaudited)
Current assets:
Cash and cash equivalents		$	16,801			$	22,113
Trade accounts receivable, net			3,397				1,472
Income taxes receivable			1,370				-
Prepaid expenses and other assets			811				530
Land under development			4,612				3,647
Reimbursable public improvements and project management fees			-				10,100
Total current assets			26,991				37,862
Restricted cash			5,338				3,245
Investments in water and water systems, net			64,832				60,486
Construction in progress			1,876				3,161
Single-family rental units			4,947				5,059
Land and mineral rights:
Held for development			4,580				3,683
Held for investment purposes			-				451
Held for sale			451				-
Other assets			1,305				1,164
Notes receivable - related parties, including accrued interest
Reimbursable public improvements and project management fees			38,005				30,864
Other			1,197				1,221
Operating leases - right of use assets			134				158
Total assets		$	149,656			$	147,354
LIABILITIES:
Current liabilities:
Accounts payable		$	1,350			$	1,948
Accrued liabilities			2,423				1,514
Accrued liabilities - related parties			1,107				2,208
Income taxes payable			-				1,442
Deferred lot sales revenue			2,048				2,173
Debt, current portion			252				64
Total current liabilities			7,180				9,349
Debt, less current portion			6,616				6,821
Deferred tax liability, net			1,395				1,395
Lease obligations - operating leases, less current portion			53				87
Total liabilities			15,244				17,652
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Series B preferred shares: par value $0.001 per share, 25 million authorized; 432,513 issued and outstanding (liquidation preference of $432,513)			-				-
Common shares: par value 1/3 of $.01 per share, 40.0 million authorized; 24,076,305 and 24,063,894 outstanding, respectively			80				80
Additional paid-in capital			175,390				175,125
Accumulated deficit			(41,058	)			(45,503	)
Total shareholders' equity			134,412				129,702
Total liabilities and shareholders' equity		$	149,656			$	147,354

Company Information

Pure Cycle continues to grow and strengthen its operations, grow its balance sheet, and drive recurring revenues. We operate in three distinct business segments, each of which complements the other. At our core, we are an innovative and vertically integrated wholesale water and wastewater service provider. In 2017, we launched our land development segment which develops master planned communities on land we own and to which we provide water and wastewater services. In 2021, we launched our newest line of business, the rental of single-family homes located at Sky Ranch, which provides long-term recurring revenues, furthers our land development operations, and adds more customers to our water resource segment.

Additional information, including our recent press releases and SEC filings, is available at www.purecyclewater.com, or you may contact our President, Mark W. Harding, or our CFO, Marc Spezialy, at 303-292-3456 or info@purecyclewater.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are all statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, such as statements about the following: factors that differentiate us in the market; the completion, delivery and success of our rental units; timing of development at Sky Ranch, including timing of delivery of finished lots; future water and wastewater tap sales and revenues; timing of future home construction by our home builder customers; the strength of the Sky Ranch market, including the demand for entry-level and rental homes; and forecasts about our future sales of water to oil and gas operators, our sales of lots, and our expected financial results. The words "anticipate," "likely," "may," "should," "could," "will," "believe," "estimate," "expect," "plan," "intend," "potential" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ from projected results include, without limitation: home mortgage interest rates, inflation, trade policies, tariffs, and other factors impacting the housing market and home sales; the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2024; and those factors discussed from time to time in our press releases, public statement and documents filed or furnished with the U.S. Securities and Exchange Commission. Except as required by law, we disclaim any obligation to update publicly any forward-looking statements, whether because of new information, future events or otherwise.

SOURCE: Pure Cycle Corporation

View the original press release on ACCESS Newswire

FAQ

What are Pure Cycle's (PCYO) Q2 2025 revenue and net income figures?

Pure Cycle reported Q2 2025 revenue of $4.0 million and net income of $0.8 million.

How many phases are currently under development at PCYO's Sky Ranch community?

Sky Ranch is being developed in five subphases: Phase 2A (100% complete), 2B (95% complete), 2C (48% complete), 2D (18% complete), and 2E (development planned for fiscal 2025).

What is PCYO's current cash position as of February 2025?

Pure Cycle reported cash & cash equivalents of $16.8 million and working capital of $19.8 million as of February 28, 2025.

How many water and wastewater taps has PCYO sold at Sky Ranch?

As of February 28, 2025, Pure Cycle has sold 895 water and wastewater taps at Sky Ranch in Phases 1, 2A, and 2B.