Pure Cycle Announces Financial Results For the Three and Six Months Ended February 29, 2024

About this update from Pure Cycle Corporation

DENVER, CO / ACCESSWIRE / April 10, 2024 / Pure Cycle Corporation (NASDAQ Capital Market:PCYO) announced its financial results for the three and six months ended February 29, 2024 . Pure Cycle posted its nineteenth consecutive fiscal quarter with positive net income. Pure Cycle continues to develop its Sky Ranch Master Planned Community , and as of February 29, 2024 , we are actively working on Phase 2A, 2B and 2C. Phase 2B will be ready for builders to start construction in fiscal Q3 2024 and continue into Phase 2C once Phase 2B is built out. We also recognized a 25% increase in water and wastewater revenue for the three months ended February 29, 2024 , and a 127% increase in water and wastewater revenue for the six months ended compared to 2023, due to an increase in water sales to oil and gas customers. Q2 and YTD 2024 Highlights Revenues for the three and six months ended February 29, 2024 of $3.2 million and $8.6 million , which drove pre-tax income of $0.2 million and $3.0 million ; Net income for the three and six months ended February 29, 2024 of $0.1 million and $2.2 million ; EBITDA for the three and six months ended February 29, 2024 of $0.8 million and $4.2 million (see table below for reconciliation of net income to EBITDA); Cash totaled $20.4 million at February 29, 2024 ; For the three and six months ended February 29, 2024 , we delivered 404 and 1,028 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 29 , 2024 February 28 , 2023 February 29 , 2024 February 28 , 2023 Net Income $ 118 $ 189 $ 2,183 $ 348 Add back: Interest expense, net 111 47 219 97 Taxes 41 90 778 220 Depreciation / amortization 508 583 1,018 1,076 EBITDA $ 778 $ 909 $ 4,198 $ 1,741 Fully diluted earnings per share $ - $ 0.01 $ 0.09 $ 0.01 "Due to the continued success of our Sky Ranch Master Planned community, we have three phases of lot development now under construction accelerating the timing of delivering our lots to our home builder customers as well as lots for our single-family rental segment. As we complete final landscaping in Phase 2A, lot production through our seasonally slow winter months will see accelerated deliveries in the remaining half of our fiscal year with completion of approximately 211 lots in Phase 2B and substantial progress on our overlapping production of 228 lots in Phase 2C" commented Mark Harding , CEO of Pure Cycle . "Also contributing was a record 2024 YTD water sales to oil and gas customers with a continued strong outlook for the second half of 2024," continued Mr. Harding . Q2 and YTD 2024 Financial Summary RevenueFor the three months ended February 29, 2024 , and February 28, 2023 , we reported total revenues of $3.2 million and $3.0 million with $1.8 million and $1.5 million being generated in our water and wastewater resource development segment, $1.3 million and $1.5 million generated by our land development segment, and $0.1 million and less than $0.1 million reported in our single-family rental business. For the six months ended February 29, 2024 , and February 28, 2023 , we reported total revenues of $8.6 million and $4.3 million with $5.1 million and $2.2 million being generated in our water and wastewater resource development segment, $3.3 million and $2.0 million generated by our land development segment, and $0.2 million and less than $0.1 million reported in our single-family rental business. For the three months ended February 29, 2024 , and February 28, 2023 , we sold 0 and 35 water or water and wastewater taps for $0 and $1.0 million . For the six months ended February 29, 2024 , and February 28, 2023 , we sold 15 and 39 water or water and wastewater taps for $0.6 million and $1.1 million . We have sold 723 water and wastewater taps at Sky Ranch in Phases 1 and 2A. Based on current prices and engineering estimates, we believe Phase 2 of Sky Ranch will exceed $20.0 million in additional water and wastewater tap fee revenue and cash over the next 3-5 years. As of February 29, 2024 , the first development phase (509 lots) is complete and the second development phase (874 lots) is being developed in four subphases, referred to as Phase 2A (229 lots), Phase 2B (211 lots), Phase 2C (228 lots) and Phase 2D (206 lots). As of February 29, 2024 , Phase 2A is approximately 96% complete and Phase 2B is approximately 52% complete. Phase 2A is substantially completed with some landscaping items remaining, and Phase 2B is expected to be complete by the end of Pure Cycle's fiscal 2024. Phase 2C construction has begun but has not met revenue recognition criteria as of February 29, 2024 . As of February 29, 2024 , the single-family rental business had 14 homes built and rented in Sky Ranch and 17 additional homes forecasted for construction in Phase 2B. As noted in the prior quarters, due to the overwhelming demand for rental homes at Sky Ranch, we expect to have a total of 93 homes in Phase 2 with the ability to add more than 200 homes as Sky Ranch builds out. "Our land development schedule is lining up to allow for continuous lot deliveries in the second half of 2024 and into fiscal 2025," commented Marc Spezialy , CFO of Pure Cycle . "We are currently developing on three Phases within our Sky Ranch Master Planned Community , due to continued strong demand. We are also excited to begin construction on our next phase of single-family rentals which will more than double the number of units we have to rent once Phase 2B is completed," concluded Mr. Spezialy . Working CapitalWe reported working capital (current assets less current liabilities) of $19.9 million as of February 29, 2024 , with $20.4 million of cash and cash equivalents. Q2 and YTD 2024 Operational Summary Water and Wastewater Resource Development Water deliveries increased for the three months ended February 29, 2024 , to 404 acre-feet delivered as compared to 33 acre-feet delivered in Q2 2023, primarily due to increased sales to oil and gas operators and new Sky Ranch customers. Water deliveries increased for the six months ended February 29, 2024 , to a record 1,028 acre-feet delivered as compared to 242 acre-feet delivered in same period of 2023. Oil and gas operations are highly variable and dependent on oil prices, demand for gas, and timing of development of other leases in our service areas; however, our current expectation is for continued strong demand for oil and gas water sales through 2024. As Sky Ranch continues to develop, we anticipate continued growth in our residential water and wastewater service revenues. Water and wastewater tap sales decreased in Q2 2024 and YTD 2024 compared to the same period in 2023 due to the timing of closings at Sky Ranch. Tap sales are driven by building permit applications and are not contractually established with the builders. Land Development Lot sales revenue decreased slightly in Q2 2024 compared to Q2 2023 due to timing of construction in Sky Ranch for Phase 2B and not reaching a certain milestone in the development of Phase 2C to begin revenue recognition. Because lot sale revenue is recognized as construction progresses, revenue will fluctuate due to timing of construction activities. Single Family RentalsQ1 2024 represented our first quarter of rental income for our 14 completed homes. An additional 17 homes are forecasted for construction in Phase 2B in calendar 2024. Earnings Call Information Pure Cycle will host a conference call on Thursday April 11, 2024 , at 8:30AM Eastern ( 6:30AM Mountain) to discuss the financial results and answer questions. Call details are presented below. 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: 8:30AM Eastern ( 6:30AM Mountain) on Thursday April 11, 2024 Call in number: 888-506-0062 (access code: 516964)International call-in number: 973-528-0011 (access code: 516964)Replay numbers: 877-481-4010 | 919-882-2331 (passcode: 50292)Replay available until: April 25, 2024 at 8:30AM ET Event link: https://www.webcaster4.com/Webcast/Page/2247/50292 Other Important Information The table below presents our consolidated results of operations for the three and six months ended February 29, 2024 and February 28, 2023 (unaudited): Three Months Ended Six Months Ended (In thousands, except share information) February 29 , 2024 February 28 , 2023 February 29 , 2024 February 28 , 2023 Revenues: Metered water usage from: Municipal customers $ 111 $ 83 $ 313 $ 204 Commercial customers 1,481 59 3,613 451 Wastewater treatment fees 87 78 173 141 Water and wastewater tap fees - 994 581 1,144 Lot sales 1,215 1,391 3,111 1,904 Project management fees 41 123 141 131 Single-family rentals 125 31 234 56 Special facility projects and other 137 240 417 308 Total revenues 3,197 2,999 8,583 4,339 Expenses: Water service operations 511 402 1,064 881 Wastewater service operations 181 116 340 254 Land development construction costs 81 197 769 340 Project management costs 168 74 247 146 Single-family rental costs 33 19 90 29 Depletion and depreciation 360 461 722 839 Other 86 141 232 247 Total cost of revenues 1,420 1,410 3,464 2,736 General and administrative expenses 1,997 1,707 3,435 3,095 Depreciation 148 122 296 237 Operating (loss) income (368 ) (240 ) 1,388 (1,729 ) Other income (expense): Interest income - related party 215 263 939 510 Interest income - Investments 286 218 594 446 Oil and gas royalty income, net 53 67 87 183 Oil and gas lease income, net 20 19 38 38 Other, net 64 (1 ) 134 1,217 Interest expense, net (111 ) (47 ) (219 ) (97 ) Income from operations before income taxes 159 279 2,961 568 Income tax expense 41 90 778 220 Net income $ 118 $ 189 $ 2,183 $ 348 Earnings per common share - basic and diluted Basic $ - $ 0.01 $ 0.09 $ 0.01 Diluted $ - $ 0.01 $ 0.09 $ 0.01 Weighted average common shares outstanding: Basic 24,086,826 24,023,775 24,084,773 24,004,677 Diluted 24,149,195 24,142,300 24,149,524 24,114,089 The following table presents our consolidated financial position as of February 29, 2024 (unaudited) and August 31, 2023 (audited): (In thousands, except shares) February 29 , 2024 August 31 , 2023 ASSETS: (unaudited) Current assets: Cash and cash equivalents $ 20,417 $ 26,012 Short term investments 169 - Trade accounts receivable, net 1,712 1,092 Land under development 3,441 1,726 Income taxes receivable - 551 Prepaid expenses and other assets 637 346 Total current assets 26,376 29,727 Restricted cash 2,880 2,475 Investments in water and water systems, net 57,417 57,798 Construction in progress 6,227 5,457 Single-family rental units 5,171 4,490 Land and mineral rights: Held for development 5,150 4,652 Held for investment purposes 451 451 Other assets 1,036 1,359 Notes receivable - related parties, including accrued interest Reimbursable public improvements and project management fees 28,915 24,999 Other 1,410 1,451 Operating leases - right of use assets 193 357 Total assets $ 135,226 $ 133,216 LIABILITIES: Current liabilities: Accounts payable $ 1,169 $ 1,960 Accrued liabilities 1,338 1,761 Accrued liabilities - related parties 1,086 1,021 Income taxes payable 176 - Deferred lot sale revenues 2,605 1,661 Deferred water sales revenues 31 69 Debt, current portion 33 31 Total current liabilities 6,438 6,503 Debt, less current portion 6,868 6,885 Deferred tax liability, net 1,352 1,352 Lease obligations - operating leases, less current portion 124 242 Total liabilities 14,782 14,982 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; 24,088,734 and 24,078,720 outstanding, respectively 80 80 Additional paid-in capital 175,014 174,689 Accumulated deficit (54,650 ) (56,535 ) Total shareholders' equity 120,444 118,234 Total liabilities and shareholders' equity $ 135,226 $ 133,216 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 [email protected] . 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: our positioning to continue to grow through this market cycle; the completion and delivery of our rental units; timing of development at Sky Ranch; future tap sales and revenues; future home sales by our home builder customers; the affordability of our products; the strength of the Sky Ranch market; forecasts about our fiscal 2024 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" 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, 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, 2023 ; 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 accesswire.com

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