Pure Cycle Corporation · NASDAQ:PCYO
Pure Cycle — Investor Presentation (December 2005)
30 slides from Pure Cycle's investor presentation, December 2005
Slide 1: A Water and Wastewater Management Company
A Water and Wastewater Management Company Mark W. Harding, President December 2005 1
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
“SAFE HARBOR” STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Statements that are not historical facts contained in this presentation are forward looking statements involving risk and uncertainties that could cause actual results to differ from projected results. F
Slide 3: Investor Owned Water Utilities: Asset Ownership
Investor Owned Water Utilities Asset Ownership z Ownership of Water Rights and the laws of ownership. z Ownership of water is administered at local (State) level. z Varying ownership interest depending on Region and State. z East of the Mississippi River ownership defined by Riparian Rights. z West
Slide 4: Asset Ownership: Riparian Rights
Investor Owned Water Utilities Asset Ownership Riparian Rights If you own a riparian parcel of land you own: w The upland. w The bottomland offshore from your lot. w The aquatic vegetation growing on your bottomland. w The right to fish, hunt, swim and boat on the entire lake surface in common with
Slide 5: Asset Ownership: Riparian Rights
Investor Owned Water Utilities Asset Ownership Riparian Rights z Use limited to property which abuts or is adjacent to a River z Cannot divert for use outside the drainage basin z Cannot transfer use to another parcel of land z Rights typically sold with the land December 2005 5
Slide 6: Asset Ownership: Appropriative Rights
Investor Owned Water Utilities Asset Ownership Appropriative Rights Í Junior water rights Í Average flow of stream Í 1863 “senior” water right Í 1852 “senior” water right z First in time, first in right December 2005 6
Slide 7: Asset Ownership: Groundwater Rights
Investor Owned Water Utilities Asset Ownership Groundwater Rights Ownership of groundwater tied to ownership of land and other “mineral” interests beneath the surface. Water and other mineral rights are separable from property. December 2005 7
Slide 8: Asset Ownership: Colorado Water
Investor Owned Water Utilities Asset Ownership Colorado Water z Water, in Colorado is a scarce commodity z Water laws are defined at the State level z Ownership of water is established as a real property right z Surface water – Doctrine of Prior Appropriations z Groundwater – Mineral Interest Decemb
Slide 9: Asset Ownership: Colorado Water
Investor Owned Water Utilities Asset Ownership Colorado Water z Colorado water is defined as a real property interest z The Colorado Public Utility Commission has intentionally not interfered with real property interests. The purchase and sale of water is not regulated by the Colorado PUC. z Water o
Slide 10: Colorado Surface Water
Pure Cycle Corporation Colorado Surface Water (Historic Average annual stream flows in acre feet) Most of the State’s water (80%) is located west of the continental divide in the Colorado River Basin, but the vast majority of its population (80%) is on the dryer, eastern side. December 2005 10
Slide 11: Our Business
Pure Cycle Corporation Our Business • Pure Cycle is a water and wastewater service provider. We are publicly held and our stock is traded on NASDAQ under the symbol “PCYO” • Pure Cycle’s business interests are in two primary segments: • Growth: Company sells taps, which grant property owners acces
Slide 12: Water Privatization Activities
PureCycle Corporation Water Privatization Activities • 1996 Water Privatization Agreement between the State of Colorado, Rangeview Metropolitan District, and PureCycle Corporation • 85-year contract which grants PureCycle the exclusive rights to provide water and wastewater service to the State Land
Slide 13: Water Privatization Agreement
PureCycle Corporation Water Privatization Agreement Partnership with Colorado State Land Board • Land Board owns approximately 3,000,000 acres of land • Partner with private sector to develop their assets • Principal beneficiary are the K-12 public education system Balance Water Revenue with Land De
Slide 14: Market Based Pricing
Pure Cycle Corporation Market Based Pricing Monthly Service Tap Fees Base Fee Charges Rate Base District $/SFE $/SFE $/1Kgal(1) East Cherry Creek $16,500 $27.00 $2.88 Parker Water & Sanitation 13,795 22.03 1.96 Town of Castle Rock 13,932 11.80 3.61 Averages (2) $14,740 $20.28 $2.82 1) Average $ per
Slide 15: Comparative Metro Area Water Tap Fees
Pure Cycle Corporation Comparative Metro Area Water Tap Fees • $ per single family equivalent. Broomfield Brighton Thornton $14,000 $19,385 $14,577 • CMWC = Consolidated Mutual Water Company which serves parts of Lakewood. Golden $12,641 Aurora* • Green boxes are the $17,456 RMD rate-based districts
Slide 16: Water Management Market Fee Instruments: Two Principal Revenue Streams
Pure Cycle Corporation Water Management Market Fee Instruments Two Principal Revenue Streams One-Time System Recurring Monthly Usage Development (Tap) Fees and Service Charges Water $14,740 per SFE Base = $20.28 per month $2.82 * per 1,000 gallons (about $592/year/SFE) Wastewater $4,883 per SFE Mont
Slide 17: Rangeview Water Assets
Pure Cycle Corporation Rangeview Water Assets Lowry Range Property Service Area Customers • 16,000 acre feet/year Groundwater • 1,650 acre feet/year Surface Water Capacity of 46,500 SFE Export Water Service Area Customers • 10,000 acre feet/year Groundwater • 1,650 acre feet/year Surface Water Capac
Slide 18: Projected Proceeds from Tap Sales
Pure Cycle Corporation Projected Proceeds from Tap Sales Lowry Service Area 46,550 Total connections serviceable Export Water 33,600 Total connections serviceable Combined Service Areas 80,150 Total connections serviceable (reduced by 4,850 for wastewater calculations) Total Gross Proceeds Estimated
Slide 19: Projected Annual Service Revenue
Pure Cycle Corporation Projected Annual Service Revenue Lowry Service Area 46,550 Total connections serviceable Export Water 33,600 Total connections serviceable Combined Service Areas 80,150 Total connections serviceable (reduced by 4,850 for wastewater calculations) Annual Gross Revenues Estimated
Slide 20: Development Responsibilities
PureCycle Corporation Development Responsibilities PureCycle Developer Wholesale Water System Retail Water System (wells, storage, treatment) (distribution lines, meters) Wholesale Wastewater System Retail Wastewater System (treatment plant, lift stations) (collection sewers) December 2005 20
Slide 21: Water Management / Water Reuse Technology
Pure Cycle Corporation Water Management / Water Reuse Technology Box Elder Wastewater Reclamation Facility Coal Creek Wastewater Reclamation Facility • Dual-pipe water distribution system (potable & nonpotable) • Two drainages to capture irrigation return flows December 2005 • Wastewater reclamation
Slide 22: Projected Margin Analysis
Pure Cycle Corporation Projected Margin Analysis CAPITAL REVENUE PROJECTIONS (as % of Tap Fees) Facilities Costs = 24% Royalties (through build out) = 22% Net Proceeds from tap fees = 54% OPERATING REVENUE PROJECTIONS (as % of service fees) System Operating Expenses = 39% Royalties (through build ou
Slide 23: Colorado Municipal Structures
Pure Cycle Corporation Colorado Municipal Structures z Colorado is a sales tax driven state z Modest property tax z Modest income tax z 70% of municipal revenues are derived from sales taxes z Inefficient government: Denver metropolitan area has over 55 separate municipal governing bodies, most with
Slide 24: Business Drivers
Pure Cycle Corporation Business Drivers • More properties looking for water than is available to serve properties. • Denver area - one of the nations most rapidly growing metro areas: • Current population of 2.5 million people in the Denver area* • Projected 2030 population of 3.8 million people res
Slide 25: Our Service Area
Pure Cycle Corporation Our Service Area Denver z Lowry Range Property is 12 I-76 Int’l miles south of DIA. Airport Interstate 70 z 70% of new development Sky occurs south of I-70 and 70% E-470 occurs east of I-25* Ranch I-70 z Accordingly, 50% of new development occurs in Downtown I-70 southeast sub
Slide 26: Metro Area Housing Market
Pure Cycle Corporation Metro Area Housing Market z Housing starts in the Denver Metro Area: z 16,000 – YTD 9/30/05 z Projected at 20,000 by 12/31/05. z New Home Inventory Metro Area (at 9/30/05): z Finished inventory totaled 3,500 units – a 2.3 month supply. z Homes under construction totaled 10,800
Slide 27: Lowry Range Property: Sky Ranch
Pure Cycle Corporation Sky Ranch Sky Ranch North 1 Mile At Buildout Sky Ranch and the Hills at Sky Ranch will generate: Initial Export Water Unincorporated Water Tap Proceeds: Pipeline Arapahoe County 4,850 Water Taps $ 14,740 / SFE $71,500,000 Lowry Range Annual Usage Fees: 4,850 Connections Proper
Slide 28: Lowry Range Property: Land Purchases
Pure Cycle Corporation Land Purchases Sky Ranch Highlighted sections Initial Export Water Pipeline represent recent ownership changes in our Target Service Area. Lowry Range Property Arapahoe County. Box Elder Douglas County. Elbert County. Creek December 2005 28 Coal Creek
Slide 29: Lowry Range Property: State Land Board RFP
Pure Cycle Corporation State Land Board RFP Sky Ranch State Land Board issued Development Development RFP due Export Water Pipeline RFP April 2006. Arapahoe County Fairgrounds, Competition dates July 2006. Lowry Range Property Arapahoe County. Douglas County. Elbert County. December 2005 29
Slide 30: General Information
Pure Cycle Corporation General Information • Ticker symbol: • PCYO – traded on the NASDAQ SmallCap market • Website: • www.purecyclewater.com • Phone number: • 303-292-3456 • Address • 8451 Delaware Street, Thornton, CO 80260 • For more information email us at: • info@purecyclewater.com December 200