Pure Cycle Corporation Reports Q3 Financial Results with Decreased Net Income and Revenue Decline

Pure Cycle Corporation reported its financial results for the third quarter and nine months ended May 31, 2025, revealing a net income of $2.3 million for the quarter, down from $2.8 million in the same period last year. For the nine-month period, net income increased to $7.0 million from $5.0 million year-over-year. Total revenues for the quarter were $5.1 million, a decrease of 32% compared to $7.6 million in the prior year, while revenues for the nine months fell to $14.9 million from $16.2 million. The decline in revenue was primarily attributed to reduced land development activity, particularly in lot sales, which dropped significantly due to the timing of finished lot deliveries.

The company experienced a notable shift in its revenue streams, with water and wastewater tap fees increasing significantly. For the three months ended May 31, 2025, tap fee revenues reached $1.7 million, compared to $0.6 million in the same quarter of 2024. This increase was driven by a rise in the number of water taps sold, which doubled to 40 from 20 year-over-year. However, lot sales revenue decreased to $2.5 million from $4.8 million, reflecting a 47% decline as the company continues to navigate the challenges of the housing market.

Operationally, Pure Cycle has made strides in its Sky Ranch development, with the completion of Phase 2A and significant progress in Phases 2B and 2C. As of May 31, 2025, the company had 14 single-family rental homes rented and is in the process of constructing an additional 17 rental units, with plans to expand this segment further. The company has reserved 84 lots in upcoming phases for future rental units, indicating a strategic focus on growing its rental business.

The company’s total assets increased to $151.7 million as of May 31, 2025, up from $147.4 million at the end of the previous fiscal year. This growth was supported by investments in water and water systems, which rose to $65.0 million. The company’s cash and cash equivalents stood at $14.4 million, down from $21.9 million, reflecting ongoing investments in development and infrastructure. Pure Cycle's working capital was reported at $18.1 million, indicating sufficient liquidity to support its operations and development plans over the next year.

Looking ahead, Pure Cycle remains optimistic about its long-term growth prospects despite current market challenges. The company plans to align its construction activities with market demand and is closely monitoring economic conditions that could impact the housing market. The ongoing development of the Sky Ranch community, along with the anticipated increase in water and wastewater services, positions Pure Cycle to capitalize on future opportunities in the Denver metropolitan area.