Pure Cycle Corp (PCYO, Financial) released its 8-K filing on November 14, 2024, announcing impressive financial results for the fiscal year ended August 31, 2024. The company, a diversified land and water resource development firm, reported a net income of $11.6 million, marking a 147% increase from the previous year. This achievement represents the seventh consecutive year and twenty-first consecutive fiscal quarter of positive net income.
Company Overview
Pure Cycle Corp operates in two primary segments: Water and wastewater resource development and Land development. The company is involved in designing, constructing, managing, operating, and maintaining water and wastewater systems. It generates the majority of its revenue from the Land development segment, which includes activities necessary to develop and sell finished lots.
Financial Achievements and Challenges
The company's earnings per fully diluted common share rose to $0.48, a 153% increase from $0.19 in 2023. This growth was largely driven by a 135% increase in lot sales revenue, attributed to heightened development activity at the Sky Ranch Master Planned Community. Phases 2A and 2B of this development are substantially completed, with Phase 2C expected to commence construction in fiscal 2025.
“Due to the continued success of our Sky Ranch Master Planned community, we now have three phases of lot development under construction accelerating the timing of delivering our lots to home builder customers as well as lots for our single-family rental segment,” commented Mark Harding, CEO of Pure Cycle.
Key Financial Metrics
For the fiscal year 2024, Pure Cycle reported total revenues of $28.7 million, a significant increase from $14.6 million in 2023. The Water and wastewater resource development segment contributed $11.6 million, while the Land development segment generated $16.7 million. The company also reported a record delivery of 1,818 acre-feet of water, with 77% sold to oil and gas operations.
| Year Ended | August 31, 2024 | August 31, 2023 |
|---|---|---|
| Net Income | $11,613 | $4,699 |
| EBITDA | $18,171 | $8,582 |
| Total Revenues | $28,747 | $14,586 |
Operational Highlights
Pure Cycle's operational strategy focuses on expanding its Sky Ranch development, with significant progress in lot deliveries and water sales. The company has delivered 949 finished lots to home builders and is actively developing additional lots in Phase 2C and Phase 2D. The single-family rental business also saw its first year of rental income, with plans to expand further.
“Our land development segment continued to ramp up in fiscal 2024, and we expect this trend to continue into the next fiscal year with various phases concurrently under development,” stated Marc Spezialy, CFO of Pure Cycle.
Analysis and Outlook
Pure Cycle's robust financial performance underscores its strategic focus on land development and water resource management. The company's ability to deliver consistent growth in net income and revenue highlights its strong operational execution and market demand for its services. However, challenges such as dependency on oil and gas operations and the cyclical nature of real estate development may pose risks. Nonetheless, Pure Cycle's continued expansion in the Sky Ranch community and its diversified revenue streams position it well for future growth.
Explore the complete 8-K earnings release (here) from Pure Cycle Corp for further details.
