Pure Cycle Corporation · NASDAQ:PCYO
Pure Cycle — Q3 2023 Earnings Presentation
30 slides from Pure Cycle's earnings presentation, July 2023
Slide 1: Pure Cycle Corporation Earnings Presentation
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW
Slide 2: Forward-looking statements
Statements that are not historical facts contained or incorporated by reference in this presentation are "forward-looking statements" ("FLS") within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and COMPANY Section 21 C of the Securiti
Slide 3: We Operate Multiple Complementary Segments
WE OPERATE MULTIPLE COMPLEMENTARY SEGMENTS ... ...driving value for stakeholders with water, land, and rentals • Own nearly 30K acre-feet of water rights (surface and ground water) • Sustainable water rights we estimate can serve up to 60,000 SFEs • Denver metro land development requires developers
Slide 4: Company Overview
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW
Slide 5: Well/Diversion Build Typical Usage
Well/Diversion Build Typical Usage • Vertically integrated, meaning we own, • Capacity to serve 60,000 taps • Base fee= $32.74 treat and sell water then collect, treat, • Capital Capacity= $2.3 billion • Consumption fee= Tiered and resuse wastewater • One-Time Connection Fees: 0- l Sk gal - $4.63 pe
Slide 6: Water System Balance
Water System Balance With Losses and Required Discharges Ground Water Supply Treatment £. £. Evaporation~ ~ Surface Water Outdoor Irrigation Supply Discharge to Stream pg6
Slide 7: Water Assets/Infrastructure Inventory
Water Assets/Infrastructure Inventory All major infrastructure is in service to support all of Phase 2 of the Sky Ranch development • 2 Wastewater reclamation facilities (one is a zero-discharge F Q3-2023 state of the art facility) • 20+ miles of transmission pipeline FY 2022 • 4 Alluvial wells FY 2
Slide 8: Customers - 1,326 System Capacity
Customers - 1,326 System Capacity Wild Pointe New Residential New Commercial 73 Residential 7 1 Commercial/ Irr. Residential water and wastewater customers added with • Future Sky Ranch commercial phases to include the Copa every new phase at Sky Ranch equivalent of 1,800 taps ~ 60 • Avg. residentia
Slide 9: Oil & Gas
OIL& GAS We provide raw water to oil and gas operators for drilling with 120 wells drilled to date Southern Wattenberg Niobrara • Q4 - ("t) N • Q3 0 N Mulitple Formations • Q2 > u. - • Q1 N N l 0 N l Pad Development: 40 Acre spacing > . u. - ..... I ~ N 16 wells/mile formation c:: Oil rig can drill
Slide 10: Development Encroachment to Lowry Range
DEVELOPMENT ENCROACHMENT TO LOWRY RANGE Sky Ranch
Slide 11: Land Development
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW
Slide 12: Development
DDEVELOPMENT • Developing the 930 acre Sky Ranch (Currently developing Phase 2A and Phase 28) • Can accommodate up to 3,200 residential lots • Can accommodate up to 2M sq. ft. of commercial development (1,800 SFE's) • 15 miles east of downtown Denver and 4 miles south of DIA pg 12
Slide 13: Land Development - Phase 1 & 2 - Total Lots 1,359
LAND DEVELOPMENT -PHASE 1&2 -Total Lots 1,359 Phase 1 - 509 lots 100% Complete - Completed 2022 K-7 opening in 8/2023 Phase 1 Rental lots - 4 lots High School opening in 2025 Phase 2 Phase 2A - 229 lots 90% complete - est. completion 2023 Phase 2B - 211 lots 21% complete - est. completion 2024 Phase
Slide 14: Sky Ranch Phase Financial and Quantitative Data
SKY RANCH PHASE 2 Financial and Quantitative Data TOTAL LOTS BY TYPE TOTAL LOTS BY BUILDER TOTAL LOT SALES BY BUILDER $26m $24.Sm $24m $22m $20m $18m $17.2m $ 10.7m • 45' LOTS • 45' LOTTS (ALLEY) • 50' LOTS • 35' LOTS • DUPLEXS pg 2 • CHALLENGER • LENNAR • DR HORTON • KB HOMES • PCYO SFR Phase 2A (2
Slide 15: Market Conditions
Market Conditions Continued demand for new home sales 2005/2006 - 1.4M 2021 /2022 - 600K Interest Rates Abrupt uptick in 2022 - 3% to 7% (70s - 9%, 80s - 13%, 90s -8%, 2000s - 6%, 201 Os - 4%) Mortgage rates stabalizing - Lot deliveries still trailing still at historical averages home starts All hom
Slide 16: Sky Ranch Academy
SKY RANCH ACADEMY DCNVU INrUINATIONAL AUIPORl Colorado Air and Space Port GRf.::NYtJlt~ • Watkins ' ® @ a en @ 396 Total Applicants Pure Cycle Corporation I Earnings 0 Presentation pg 16
Slide 17: Single Family Rentals
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW
Slide 18: Contracts to build single family homes for rentals
Pure Cycle contracts to build single family homes in it's Sky Ranch Master Planned Community to hold for rentals. • Retaining lots within the community it's building and adding value • Lot development costs fully recovered (horizontal costs and tap fees) • Contracting with experienced builder to del
Slide 19: Four units completed and rented in Phase 1
- ~ • ~9 Four units completed and rented in Phase l II Ii II . , \ .- l ~ •.-:,:r . Flexible debt usage up to 70% of appraised value '".;r"' . ,·· -~ ,-;::,-t~ f ..... " --- J I { ' •.• ~ - · _.. , · ·. : • fl • • IJ •• Low cost capital (First 3 units at 3.75 - 4.25%, working on next 11) ·...... -;~
Slide 20: Our Single Family Rentals - Operations and Cash Flows
Our Single Family Rentals -Operations and Cash Flows Actual Results 3 Projected to 14 Projected to 83 Projected to 200 Item Annualized Avg per home/yr units* homes/yr homes/yr homes/yr Rental Income $ 82 $ 98 $ 33 $ 459 $ 2,739 $ 6,560 Direct Operating Costs 30 36 72 768 996 2,400 Interest and depre
Slide 21: Financial Results
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW
Slide 22: Financial Results YTD Summary
Financial Results VTD 03 Summary WATER & WASTEWATER LAND DEVELOPMENT SINGLE FAMILY RENTALS • $68.0 m in water assets (cost) • Phase 2A - 90% complete • $1.5m in completed assets with an approximate market value >$2.0m • 1,326 total taps served • Phase 2B - 21 % complete, received 1st milestone payme
Slide 23: Financial Results - Revenue
Financial Results Fiscal VTD 03-2023 Revenue Segment Revenue $16M $16M $14M $14M $12M $12M I • ,,......_ $10M - l/) $10M Cl) -0 C ro ~ $8M "O C ro l/) ::i 0 $SM $4.9M I - 0 ..c ..c .µ $6M $6.2M $5.2M - C C c- $6M ·- $6.0M $11.SM $4M $4M $2M $2M 0 $4.9M $4.3M $7.4M $5.9M $5.9M 0 YTD 2019 YTD 2020 YTD
Slide 24: Financial Results - Net Income and Diluted EPS
Financial Results Fiscal VTD 03-2023 Net Income $20M Diluted EPS $0.8 $18M $0.7 $16M $0.6 $14M - ~ $12M C $0.5 ro ~ $10M 0 $0.4 .., ..c -~ $SM $0.3 $6M $0.2 $4M $0.1 $2M 0 0 pg24
Slide 25: Balance Sheet
(ln thousarrds, ,nr;ep,• :i>umrs) " "' 31, 2023 i\ UJ!IISt 31, 2022 ASSETS: (o.n:aadited) Current assets: Ca.sh and cm cqwvalcots s 26,000 s 34,894 Trade ;,ccounu rccci~ablc, n.-t 2,671 2,425 Land un<kr dC\ ~topmcol 721 l.ocome taXes rece,vable 190 Prepaid expense:, Md other useu 392 467 Toi.I] cum:
Slide 26: Income Statement
Th ree M outh~ Endl-d l"iiue M ou lbs Eodl-d (ln thousands, except shan iJiformarion) )la~· 31, 2023 )lay 31, 2022 May 31, 2023 )lay 31, 2022 RC\·emics: Mctcrcd water usage from: s s INCOME STATEMENT Municipal c11$tomcrs 145 $ 94 $ 3-19 274 Commercial Ctl$t0tucrs 2,145 549 2,596 2.686 Waste,.-a1cr t
Slide 27: Other Information / Upcoming Dates
OTHER INFORMATION / UPCOMING DATES I Stock Repurchase Program - as announced in the press release on November 14, 2022, our board approved an open-ended stock repurchase program which authorizes our CEO and CFO to repurchase up to 200,000 shares in the open market. No shares repurchased as of this d
Slide 28: Leadership and Board of Directors
LEADERSHIP AND BOARD OF DIRECTORS Mark W. Harding Kevin B. McNeill President and CEO Vice President and CFO Patrick J. Beirne Peter C. Howell Jeffrey G. Sheets Director and Chair of the Chair of the Board Director Audit Committee Wanda J. Abel Daniel R. Kozlowski Fredrick A. Fendel III. Director and
Slide 29: Questions?
CONTACT AND COMPANY INFORMATION CORPORATE HEADQUARTERS 34501 E. Quincy Ave, BLDG 65, Suite A, Watkins, CO 80137 CONTACT INFO info@pu recyclewater. com 303-292-3456 www. pu recyclewater. com Questions? Follow us on ... "JI Twitter: @PureCycleCorp ml Linkedln: https://www.linkedin.com/company/pure-cyc
Slide 30: Pure Cycle Corporation
PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS FINANCIAL RESULTS ENDED MAY 31, 2023 COMPANY OVERVIEW