Pure Cycle Corporation Reports $3.9 Million Net Income, Driven by Oil and Gas Royalty Income

Pure Cycle Corporation reported a net income of $3.9 million for the three months ended November 30, 2024, a significant increase from $2.1 million in the same period last year. This growth was primarily driven by a rise in oil and gas royalty income, which contributed to an overall revenue increase to $5.8 million, up from $5.4 million in the prior year. The company’s earnings per share also improved, reaching $0.16 compared to $0.09 in the previous year. The increase in total revenue was attributed to ongoing development activities at the Sky Ranch Master Planned Community, particularly in phases 2A, 2B, and 2C.

In terms of operational performance, Pure Cycle experienced a notable increase in lot sales revenue, which rose by 22% to $2.3 million, reflecting the progress in construction activities. The company sold 38 water taps and 35 wastewater taps during the quarter, marking a 153% and 133% increase, respectively, compared to the previous year. However, water and wastewater resource revenue decreased by 7% to $3.1 million, primarily due to reduced commercial water sales to oil and gas operators. The total cost of revenue increased slightly to $2.1 million, in line with the revenue growth.

Strategically, Pure Cycle continues to expand its single-family rental business, with 14 homes currently rented and plans to construct an additional 17 rental units in Phase 2B of Sky Ranch. The company has reserved 84 lots across various phases for future rental units, projecting a total of 98 rental homes once fully developed. This expansion aligns with the company’s strategy to leverage its land development capabilities while addressing the growing demand for rental properties in the Denver area.

The company’s balance sheet reflects a total asset value of $149.7 million, up from $147.4 million at the end of the previous fiscal year. Cash and cash equivalents decreased to $19.0 million, while restricted cash increased to $5.3 million. The company’s working capital stood at $20.3 million, indicating sufficient liquidity to support ongoing operations and development projects. Looking ahead, Pure Cycle anticipates continued investment in the Sky Ranch development, with estimated costs to complete the infrastructure for Phase 2 totaling approximately $80.9 million, of which $26.5 million is expected to be spent in the next 12 months. The company remains optimistic about its growth prospects, despite potential challenges in the housing market due to macroeconomic factors.