Pure Cycle Corporation · NASDAQ:PCYO
Pure Cycle — Wall Street Analyst Forum (March 2006)
27 slides from Pure Cycle's conference presentation, Mar 1, 2006
Slide 1: A Water and Wastewater Management Company
A Water and Wastewater Management Company Mark W. Harding, President March 1, 2006 1
Slide 2: Safe Harbor Statement
Pure Cycle Corporation “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 fr
Slide 3: Water Facts
Pure Cycle Corporation Water Facts The amount of water on Earth is constant and recycled throughout time; It is actually possible to drink water that was part of the dinosaur era. Ninety-seven percent of the earth's water is saltwater in the oceans and seas. Of the 3% percent that is freshwa
Slide 4: Water Ownership
Pure Cycle Corporation Water Ownership How is water ownership defined throughout the U.S.? Varies depending on the region and state, in general: East of the Mississippi River, water ownership is defined by “Riparian Rights” West of the Mississippi River, water ownership is defined predominately
Slide 5: Water Ownership - Riparian Rights
Pure Cycle Corporation Water Ownership - Riparian Rights - What are Riparian Rights? Use is limited to property which abuts or is adjacent to a River Cannot divert for use outside the drainage basin Cannot transfer use to another parcel of land Rights typically sold with the land If you own
Slide 6: Water Ownership - Appropriative Rights
Pure Cycle Corporation Water Ownership - Appropriative Rights - What are Appropriative Rights? Water can be used for a beneficial use, outside of its drainage basin Water can be transferred between land parcels and can be sold separate from the land. Water rights are defined as “first in time,
Slide 7: Appropriative Groundwater Rights
Pure Cycle Corporation Water Ownership Appropriative 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. March 1, 2006 7
Slide 8: Ownership of Colorado Water
Pure Cycle Corporation Ownership of Colorado Water How is water ownership defined in Colorado? Colorado water laws are defined at the State level Colorado water is defined as a real property interest based on: Surface water – Doctrine of Prior Appropriations Groundwater – Mineral Interest
Slide 9: Colorado Water Facts
Pure Cycle Corporation Colorado Water Facts How much water does Colorado have? Average yearly precipitation in Colorado is 17 inches. In contrast, the San Luis Valley and parts of south central Colorado receive an average of less than 12 inches of precipitation each year, but Many mountainous re
Slide 10: Our Business
Pure Cycle Corporation Our Business What does this have to do with Pure Cycle? Pure Cycle is an Investor Owned Water Utility in the State of Colorado that provides water and wastewater services. We hold the largest unallocated portfolio of water in the Denver area (referred to as our “Rangeview
Slide 11: Our Business (continued)
Pure Cycle Corporation Our Business (continued) What services does Pure Cycle offer and how does it generate funds? Our business consists of two segments Construction segment – the design and construction of our water and wastewater systems. Funding for this segment is derived mainly through tap
Slide 12: Water Ownership: How Pure Cycle Acquired Its Water Assets
Pure Cycle Corporation Water Ownership How did Pure Cycle acquire its valuable water assets? The 1996 Water Privatization Agreements between the State of Colorado, Rangeview Metropolitan District, and Pure Cycle. 85-year contract which grants Pure Cycle the exclusive rights to provide water and
Slide 13: Market Based Pricing
Pure Cycle Corporation Market Based Pricing How does Pure cycle establish its rates and charges? Our rates and charges for water services are derived by the average of three surrounding communities, called our “Rate-Based Districts”. The averages for our Rate-Based Districts as of January 1, 2006 ar
Slide 14: Comparative Metro Area Water Tap Fees
Pure Cycle Corporation Comparative Metro Area Water Tap Fees How do Pure Cycle’s tap fees compare to the rest of the Denver Metro area? Broomfield Brighton Thornton $14,000 $20,354 $14,577 $ per single family equivalent. As of January 1, 2006 (Rangeview tap fee is effective July Golden 1, 2006) $17,
Slide 15: Rangeview Water Assets
Pure Cycle Corporation Rangeview Water Assets How many taps (or single family equivalents (SFEs)) can Pure Cycle service with its Rangeview Water Assets? Based on independent engineering estimates, our Rangeview Water Assets can supply water to the following: Lowry Range Property Service Area Custom
Slide 16: Projected Proceeds
Pure Cycle Corporation Projected Proceeds If Pure Cycle can supply services to 80,150 SFEs at build-out, what does this equate to in tap fees and annual operating fees? Total Tap Fees “current Service Tap Fees dollars” (millions) Water $16,840/SFE $1,350 Wastewater $4,883/SFE $ 368 Totals $1,718 Est
Slide 17: Water Recycling Model
Pure Cycle Corporation Water Recycling Model With the philosophy that water is a scarce and often misused natural resource, we designed our systems to reuse as much of our valuable water assets as possible. Including the use of: Dual pipe distribution system (potable and non-potable water) Two d
Slide 18: Projected Margin Analysis
Pure Cycle Corporation Projected Margin Analysis How will the tap fees and usage/service charges be utilized? We estimate our expenditures to be as follows (based on development/financial model through 2029): CAPITAL REVENUE PROJECTIONS (as % of Tap Fees) Facilities Costs = 24% Royalties (through bu
Slide 19: Colorado Municipal Structures
Pure Cycle Corporation Colorado Municipal Structures What drives/controls Colorado’s growth? Colorado is a sales tax driven state Modest property tax Modest income tax 70% of municipal revenues are derived from sales taxes Inefficient government: Denver metropolitan area has over 55 separa
Slide 20: Business Drivers
Pure Cycle Corporation Business Drivers How does Pure Cycle’s business model work in the Denver area? There are currently 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 millio
Slide 21: Metro Area Housing Market
Pure Cycle Corporation Metro Area Housing Market How did the Denver new home market perform in 2005? The Denver market continued to grow at a sustainable rate. According to Metrostudy, the new home market achieved the following in 2005: New home starts for the year = 20,448 A 9% increase over 20
Slide 22: Our Service Area
Pure Cycle Corporation Our Service Area Where is Pure Cycle’s Service Area? Denver I-76 Lowry Range Property is 12 miles Int’l Airport south of DIA. Interstate 70 Sky 70% of new development occurs E-470 south of I-70 and 70% occurs east Ranch of I-25* I-70 Downtown I-70 Accordingly, 50% of new
Slide 23: Lowry Range Property
Who are Pure Cycle’s Sky Ranch customers? Lowry Range Property – currently service over 200 taps. Development Export Water Pipeline RFP State Land Board issued 2 RFPs in October 2005 which are due in April 2006. Water service agreement with Sky Ranch Lowry Range Property Water service agreement with
Slide 24: Construction
Pure Cycle Corporation Construction How is the construction of the Fairgrounds water system progressing? The 500,000-gallon 175 foot tower Elbert TheCounty. well being drilled March 1, 2006 24
Slide 25: Lowry Range Property: Sky Ranch
Pure Cycle Corporation Sky Ranch Sky Ranch North 1 Mile What fees could Sky Ranch generate based on today’s rates? Initial Export Water At Buildout Sky Ranch and the Unincorporated Pipeline Hills at Sky Ranch will generate: Arapahoe County Water Tap Proceeds: 4,850 Water Taps $14,740 /SFE $71,500,00
Slide 26: Land Purchases
Pure Cycle Corporation Land Purchases Sky Ranch What land transactions have occurred in the Pure Cycle Service Area? Initial Export Water Pipeline Highlighted sections represent recent ownership changes in our Target Service Area. Lowry Range Property Arapahoe County. Box Elder Douglas County. Elber
Slide 27: 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 March 1, 200