Pure Cycle Announces Financial Results For the Year Ended August 31, 2023
Pure Cycle Corporation (NASDAQ:PCYO) reported a net income of $4.7 million for the fiscal year ended August 31, 2023, marking its sixth consecutive year and seventeenth consecutive fiscal quarter with positive net income. The company continues to develop its Sky Ranch Master Planned Community, delivering 738 finished lots to homebuilders and retaining 14 lots for its single-family rental segment. With nearly 600 new homes built and sold and 90 homes under construction, Pure Cycle also completed and leased 11 additional single-family homes during Fiscal Year 2023. The company's EBITDA for the year was $8.6 million, and it reported cash totaling $26.0 million. Despite the pressure of interest rates on the housing market, Pure Cycle's Sky Ranch community demonstrated solid growth with entry-level homes and affordable products, contributing to strong shareholder returns.
Positive
Sixth consecutive year and seventeenth consecutive fiscal quarter with positive net income
Delivery of 738 finished lots to homebuilders and retention of 14 lots for single-family rental segment
Nearly 600 new homes built and sold, with 90 homes under construction
Completion and leasing of 11 additional single-family homes during Fiscal Year 2023
EBITDA of $8.6 million and cash totaling $26.0 million
Solid growth of Sky Ranch community despite pressure of interest rates on the housing market
11/15/2023 - 04:26 PM
DENVER, CO / ACCESSWIRE / November 15, 2023 / Pure Cycle Corporation (NASDAQ:PCYO) announced its financial results for the year ended August 31, 2023. Pure Cycle posted $4.7 million of net income for the year ended August 31, 2023, which marks our sixth consecutive year and seventeenth consecutive fiscal quarter with positive net income. Pure Cycle continues to develop its Sky Ranch Master Planned Community and as of August 31, 2023, we have delivered to homebuilders 738 finished lots, retaining 14 lots for our single-family rental segment. The Community has nearly 600 new homes built and sold and 90 homes under construction. In addition to our lots for sale, we continue to build homes for our own portfolio of single-family rentals. During Fiscal Year 2023 we completed and leased 11 additional single-family homes bringing our total to 14 homes.
Full Year 2023 Highlights
Revenues of $14.6 million , which drove pre-tax income of $6.2 million ; Net income of $4.7 million ; EBITDA of $8.6 million (see table below for reconciliation of net income to EBITDA); Cash totaled $26.0 million ; For the year ended August 31, 2023, we delivered 313.8 million gallons of water. Net Income to EBITDA Reconciliation We continue our profitability as shown in the table below:
Year Ended (In thousands)
August 31, 2023 August 31, 2022 Net Income
$ 4,699 $ 9,619 Add back:
Interest expense
206 90 Taxes
1,521 3,086 Depreciation / amortization
2,156 2,125 EBITDA
$ 8,582 $ 14,920
Fully diluted earnings per share
$ 0.19 $ 0.40
"Despite interest rates pressuring the housing market, our Sky Ranch community continues to demonstrate solid growth with entry level homes and our great location directly off Interstate 70," commented Mr. Harding, CEO of Pure Cycle. "While interest rates have risen significantly over the past year, rates are closer to historic averages and we are seeing housing prices stabilize, as our homebuilding partners at Sky Ranch continue to offer affordable products, thanks in large part to our affordable lots. As we continue to enhance the community with the opening of the Sky Ranch Academy School, coupled with our ability to deliver affordable rental units that we have been able to rent quickly, and Sky Ranch continues to deliver strong shareholder returns," concluded Mr. Harding.
Fourth Quarter 2023 Highlights
Revenues of $3.4 million , which drove pre-tax income of $1.2 million ; Net income of $1.1 million ; EBITDA of $1.9 million and fully diluted earnings per share of $0.05 For the fourth quarter, we delivered 51.2 million gallons of water. Full Year 2023 Financial Summary
Revenue
For the years ended August 31, 2023, and 2022, we reported total revenues of $14.6 million and $23.0 million with $7.3 million and $10.1 million being generated in our water and wastewater resource development segment, $6.8 million and $12.9 million generated by our land development segment, and less than $0.2 million and $0.1 reported in our single-family rental business.
For the years ended August 31, 2023, and 2022, we sold 90 and 154 water and wastewater taps for $2.7 million and $4.9 million . We have sold 703 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 produce $20.6 million in additional water and wastewater tap fee revenue and cash over the next 3-5 years.
The number of lots delivered (which refers to when title passed on a lot to the homebuilder) decreased in 2023 compared to 2022 due to all lots in Phase 2A being delivered to builders by the end of fiscal 2022. No finished lots were delivered to homebuilders during fiscal 2023; however, we did receive certain milestone payments from our Lot Delivery Agreement from home builders in 2023, which accounted for $3.8 million in lot sales revenue for Phase 2B and $3.0 million in lot sales revenue for Phase 2A. We expect to be substantially complete with the delivery of all 211 Phase 2B lots during fiscal 2024. Despite lots being transferred to the homebuilders, we still have various construction activities to complete Phase 2A and to turn over the completed infrastructure to the applicable governmental agency for maintenance.
As of August 31, 2023, the single-family rental business has 11 homes built and rented in Sky Ranch and 18 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 add 65 homes in Phase 2 with the ability to add more than 200 homes as Sky Ranch builds out.
"With our strong balance sheet, we are well positioned to mobilize our assets for continued growth," commented Marc Spezialy, CFO of Pure Cycle. "Despite the housing market headwinds which delayed some of our construction activities and timing of our lot deliveries, we continue to see strong demand at Sky Ranch. The primary drivers fueling our growth include our well-priced lots and water availability for development in the Denver metropolitan region," concluded Mr. Spezialy.
Working Capital
We reported working capital (current assets less current liabilities) of $23.2 million as of August 31, 2023, with $26.0 million of cash.
Full Year 2023 Operational Summary
Water and Wastewater Resource Development
Water deliveries decreased in 2023 to 313.8 million gallons delivered as compared to 404.9 million gallons delivered in 2022, primarily due to decreased sales to oil and gas operators, offset by new Sky Ranch customers. Oil and gas operations are highly variable and dependent on oil prices, demand for gas, and timing of other leases in our service areas; therefore, we cannot provide any assurances that we will realize this level of sales to oil and gas customers in the future. As Sky Ranch continues to develop, we anticipate continued growth in our residential water and wastewater service revenues. Water and wastewater tap sales declined in fiscal 2023 compared to fiscal 2022 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 for fiscal 2023 compared to fiscal 2022 due to timing of construction in Phase 2B at Sky Ranch. Because lot sale revenue is recognized as construction progresses, revenue will fluctuate due to timing of construction activities.
Single Family Rentals
In fiscal 2023, we had three completed homes that were rented for the full year. Our remaining 11 homes were added at various times throughout fiscal 2023 with the majority being in the last quarter. Fiscal 2024 will represent our first year of rental income for our 14 completed homes. An additional 18 homes are forecasted for construction in Phase 2B in fiscal 2024.
Earnings Call Information
Pure Cycle will host a conference call on Thursday November 16, 2023, 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, which provides an overview of Pure Cycle and presents summary financial results on our website which can be accessed at www.purecyclewater.com .
When: 8:30AM Eastern (6:30AM Mountain) on Thursday November 16, 2023
Call in number: 888-506-0062 (access code: 615127)
International call-in number: 973-528-0011 (access code: 615127)
Replay numbers: 877-481-4010 | 919-882-2331 (passcode: 49465)
Replay available until: November 30, 2023 at 8:30AM ET
Event link: https://www.webcaster4.com/Webcast/Page/2247/49465
Other Important Information
The table below presents our results of operations for the years ended August 31, 2023 and 2022:
Year Ended (In thousands, except share information)
August 31, 2023 August 31, 2022 Revenues:
Metered water usage from:
Municipal customers
$ 504 $ 440 Commercial customers
3,059 4,107 Wastewater treatment fees
302 248 Water and wastewater tap fees
2,991 4,922 Lot sales
6,815 12,187 Project management fees
283 683 Single-family rentals
165 82 Special facility projects and other
467 334 Total revenues
14,586 23,003
Expenses:
Water service operations
1,757 1,910 Wastewater service operations
675 501 Land development construction costs
1,606 1,990 Project management costs
286 176 Single-family rental costs
73 23 Depletion and depreciation
1,658 1,740 Other
491 289 Total cost of revenues
6,546 6,629
General and administrative expenses
5,470 5,893 Depreciation
498 385 Operating (loss) income
2,072 10,096
Other income (expense):
Interest income - related party
1,481 1,937 Interest income - Investments
1,023 32 Oil and gas royalty income, net
267 498 Oil and gas lease income, net
75 171 Other, net
1,508 61 Interest expense, net
(206 ) (90 ) Income from operations before income taxes
6,220 12,705 Income tax expense
1,521 3,086 Net income
$ 4,699 $ 9,619
Earnings per common share - basic and diluted
Basic
$ 0.20 $ 0.40 Diluted
$ 0.19 $ 0.40 Weighted average common shares outstanding:
Basic
24,031,068 23,953,740 Diluted
24,106,067 24,155,990
The following table presents our consolidated financial position as of August 31, 2023 and 2022:
(In thousands, except shares)
August 31, 2023 August 31, 2022 ASSETS:
Current assets:
Cash and cash equivalents
$ 26,012 $ 34,894 Trade accounts receivable, net
1,092 2,425 Land under development
1,726 - Income taxes receivable
551 - Prepaid expenses and other assets
346 467 Total current assets
29,727 37,786 Restricted cash
2,475 2,328 Investments in water and water systems, net
57,798 58,763 Construction in progress
5,457 1,224 Single-family rental units
4,490 975 Land and mineral rights:
Held for development
4,652 6,773 Held for investment purposes
451 451 Other assets
1,359 2,463 Notes receivable - related parties, including accrued interest
Reimbursable public improvements and project management fees
24,999 17,208 Other
1,451 1,120 Operating leases - right of use assets
357 138 Total assets
$ 133,216 $ 129,229
LIABILITIES:
Current liabilities:
Accounts payable
$ 1,960 $ 849 Accrued liabilities
1,761 2,029 Accrued liabilities - related parties
1,021 560 Income taxes payable
- 2,530 Deferred lot sale revenues
1,661 4,275 Deferred water sales revenues
69 570 Debt, current portion
31 10 Total current liabilities
6,503 10,823 Participating interests in export water supply
- 323 Debt, less current portion
6,885 3,950 Deferred tax liability, net
1,352 1,075 Lease obligations - operating leases, less current portion
242 62 Total liabilities
14,982 16,233 Commitments and contingencies
SHAREHOLDERS' EQUITY:
Series B preferred shares: par value $0.00 1 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; 24,054,843 and 23,980,645 outstanding, respectively
80 80 Additional paid-in capital
174,689 174,150 Accumulated deficit
(56,535 ) (61,234 ) Total shareholders' equity
118,234 112,996 Total liabilities and shareholders' equity
$ 133,216 $ 129,229
Company Information
Pure Cycle continues to diversify 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 info@purecyclewater.com .
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; higher interest rates and stabilizing home prices; 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 and low-cost of our products; the strength of the Sky Ranch market; forecasts about our fiscal 2023 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
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What is Pure Cycle Corporation's ticker symbol?
Pure Cycle Corporation's ticker symbol is NASDAQ:PCYO.
What was Pure Cycle Corporation's net income for the fiscal year ended August 31, 2023?
Pure Cycle Corporation reported a net income of $4.7 million for the fiscal year ended August 31, 2023.
How many finished lots did Pure Cycle deliver to homebuilders?
Pure Cycle delivered 738 finished lots to homebuilders and retained 14 lots for its single-family rental segment.
What was Pure Cycle's EBITDA for the year?
Pure Cycle's EBITDA for the year was $8.6 million.
What is the company's cash total as of August 31, 2023?
As of August 31, 2023, Pure Cycle reported cash totaling $26.0 million.