Pure Cycle Corporation · NASDAQ:PCYO
Pure Cycle — Q1 2023 Earnings Presentation
31 slides from Pure Cycle's earnings presentation, 2023
Slide 1: Earnings Presentation for the Quarter Ended November 30, 2022
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 Section 21C of
Slide 3: We Operate Multiple Complementary Segments
WE OPERATE MULTIPLE COMPLEMENTARY SEGMENTS... ... driving value for stakeholders with land and water investments il “ Water and Wastewater Resource Development Segment + Own 29,900+ acre-feet of water rights + Sustainable ground and surface water rights we estimate can serve up to 60,000 SFEs _—_ -
Slide 4: Pure Cycle Corporation
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash
Slide 5: Wholesale Water & Wastewater
Wholesale Water & Wastewater Well/Diversion Collection 5 ure Well/Diversion Build Usage + Vertically integrated in that we own, treat + Capacity to serve 60,000 taps + Base fee = $32.74 and sell water then collect, treat, and + Capital Capacity = $2.0 billion + Consumption fee = Tiered resuse wastew
Slide 6: Water System
Water System Balance With Losses and Required Discharges ))) fater System Eva poratid) Ground Water Supply _),, Evaporation oo Surface Water Outdoor Irrigation Supply Discharge to Stream :
Slide 7: Water Infrastructure
WATER INFRASTRUCTURE All major infrastructure is in service to support phase 2 of the Sky Ranch development Water Assets/Infrastructure Inventory + 2 Wastewater reclamation facilities F Q1-2023 + 20 miles of transmission pipeline FY 2021 + 4 Alluvial wells Water Assets — pv2020 + 150 Acre-feet surfa
Slide 8: Water and Wastewater
WATER AND WASTEWATER Customers -1,248 System Capacity Wild Pointe . . . 17) Residential New Residential New Commercial Ja Commercial @ 171 Resident Residential water and wastewater customers added with + Future Sky Ranch commercial phases to include the Capacity, every new phase at Sky Ranch equival
Slide 9: Oil & Gas
OIL & GAS Southern Wattenberg Niobrara CI Mulitple Formations | | Pad Development: 40 Acre spacing || 16 wells/mile formation | Oil rig can drill 20 wells per year . Average $250,000 of water sales per well More than 200 square miles in Adams & Arapahoe Counties We provide raw water to oil and gas o
Slide 10: Development Encroachment to Lowry Range
DEVELOPMENT ENCROACHMENT TO LOWRY RANGE os 10.
Slide 11: Pure Cycle Corporation
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash
Slide 12: Land Development
LAND DEVELOPMENT » Developing the 930 acre Sky Ranch + 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 12.
Slide 13: Land Development
LAND DEVELOPMENT PHASE 1 & 2 Phase 1 - 509 lots Phase 2A - 229 lots 78% complete - est. completion 2024 SCHOOL'SITE. 1 mplete - Compl 2022 00% Complete - Completed 20: Phase 2B - 211 lots RoMiensecess 15 % complete - est. completion 2025 Phase 2C - 204 lots Sky Ranch Academy 0% complete - est. compl
Slide 14: Sky Ranch Phase 2 Financial and Quantitative Data
SKY RANCH PHASE 2 Financial and Quantitative Data Phase 2A (229 L0TS) | [Phase 2B (211 LOTS) | Phase 2C (204 LOTS) | {Phase 2D (206 LOTS) Phase 2 (850 LOTS) LotRevenue** $ 184m LotRevenue** $ — 17.0m LotRevenue** $ 16.Jm LotRevenue** $ 179m Lot Revenue ** $ 70.0m Tap Revenue 5.6m Tap Revenue 5.2m Ta
Slide 15: Market Conditions
Market Conditions Pent-up demand for new home sales 2005/2006 - 1.4M Interest Rates 2021/2022 - 600K Abrupt uptick in 2022 - 3% to 7% (70s - 9%, 80s - 13%, 90s -8%, 2000s - 6%, 2010s - 4%) Mortgage rates stabalizing - Lot deliveries still trailing still at historical averages home starts Builder con
Slide 16: Zonda Denver Housing Market
% Zonda. Denver Metro (incl Boulder) Ann Job Growth +63,300 YOY for 3.7% Ann Growth Rate Land Development Denver Housing Market eo ar2 Ann te: enti + Job growth has slowed but remains strong, resulting in need o “ for housing as people move into the state for work = + Although rising - rates are not
Slide 17: Pure Cycle Corporation
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash
Slide 18: Single-Family Rentals
Single-Family Rentals We have contracted for the construction of single family homes with the intent to retain them for long-term rental purposes within our Sky Ranch development. Pure Cycle is working with an experienced home builder to construct these houses, which Pure Cycle will own and maintain
Slide 19: Single Family Rentals
Single Family Rentals Phase 1&2 Initial Three Homes Financed with our Bank Flexible debt usage up to 70% of appraised value Low cost capital (3.75 - 4.25%) House appraisal value estimated at $547,000 based on homes sold in Sky Ranch per NMLS Annual appreciation estimated at 4% per year Price ranges
Slide 20: Closed Listings by Price Range
OSED LISTINGS BY PRICE RANGE 284 Market Watch = 7o1 474 454 395 Steady increase in lease price while other rental 53s. ee || me 167 Ey 89 e ‘4 Pp —— = types fell @ Detached and Townhomes are more affordable per square foot and per bedroom fmm Multi-Family/Condo/lownhome ggg Single-Family Kesidence N
Slide 21: Our Single Family Rentals - Operations and Cash Flows
Our Single Family Rentals - Operations and Cash Flows Annualized Rental Income, $ 82 $ 38 $ 33 $ 459 $ 1,640 Operating Costs 30 36 12 168 600 see a 2 "2 vm oa Net operatingincome $ 21 $ 25 $ 8 $ 18 $ 420 Add back non-cash items 23 28 9 129 460 Cash flows from operations $ 4400 $s 53 $ we 246 $ 880 “
Slide 22: Pure Cycle Corporation
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash
Slide 23: Financial Results: Quarter 1 Summary
9 WATER & WASTEWATER + $67.4 m in water assets (cost) + 1,248 total taps served + 67.5M gallons delivered in Q1 2023 Financial Results Quarter 1 Summary 9 LAND DEVELOPMENT + Phase 2A 78% complete + Phase 2B 15% complete - but delayed until spring 2023, no payments from builders yet + $17.2M in reimb
Slide 24: Financial Results: Segment Revenue
(in thousands) Qi 2019 Revenue $10.46M Qi 2021 Qi 2022 Financial Results Fiscal 01-2023 Segment Revenue $10M $9M $8M $7M Som $5M ve $3M $2.36M $2M $1.38M $8.54M SIM 0 $1.69M $1.92M $2.51M (in thousands) $3.19M $1.07M Q1-2019 Q1-2020 Q1-2021 Q1-2022 Q1-2023 Qi 2023 @ Ww @ Land Development (|) Single
Slide 25: Financial Results: Net Income and Diluted EPS
(in thousands) $6.0M $5.5M $5.0M $4.5M $4.0M $3.5M $3.0M $2.5M $2.0M $1.5M $1.0M $0.5M 0 Financial Results Fiscal Q1-2023 Net Income $0.63M $5.77M $0.85M $1.51M $0.20M ] ar2019 ] ar2020 | ai2021 | ai2022 | Q1 2023 $0.24 $0.22 $0.20 $0.18 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 0 Diluted EPS
Slide 26: Share Repurchase Authorization / Upcoming Dates
Q SHARE REPURCHASE AUTHORIZATION / UPCOMING DATES | 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. | Important Upcomin
Slide 27: Assets and Liabilities
(n thousands, except shares) November 30, 2022 August 31, 2022 ASSETS: Current asses: ‘Cash and eash equivalents s 16843 § 34,894 Investments 15,000 = ‘Trade accounts receivable, net 1.240 2,425 Prepaid expenses and other assets 67 Total current assets 33,510 37,786 Restrieted cash 2,328 2,328 Inves
Slide 28: Statements of Operations: Three Months Ended
ae ‘Three Months Ended (in: thousands, except share information) November 30, 2022 ‘November 30, 2021 Revenues: Metered water usage from: ‘Municipal customers s m $ ‘Commercial customers 392 Wastewater treatment fees 6 Water and wastewater tap fees 150 Lot sales 513 Project management fees 8 Single-
Slide 29: Leadership and Board of Directors
Q 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 Audit Committee Director Wanda J. Abel Daniel R. Kozlowski Fredrick A. Fendel III. Director
Slide 30: Contact and Company Information
CONTACT AND COMPANY INFORMATION CORPORATE HEADQUARTERS 34501 E. Quincy Ave, BLDG 65, Suite A, Watkins, CO 80137 CONTACT INFO info@purecyclewater.com 303-292-3456 t 1 oO) www.purecyclewater.com U es | O a S . Follow us on... W Twitter: @PureCycleCorp (BB Linkedin: https:/www.linkedin.com/company/pure
Slide 31: Pure Cycle Corporation
NASDAQ: PCYO www.purecyclewater.com @PureCycleCorp EARNINGS PRESENTATION FOR THE QUARTER ENDED NOVEMBER 30, 2022 PURECYCLE «¢ CORPORATION "a COMPANY WATER & LAND SINGLE FAMILY. » FINANCIAL OVERVIEW WASTEWATER DEVELOPMENT RENTALS RESULTS Presented by Mark Harding, CEO | Kevin McNeill, CFO | Dirk Lash