Reported Late Wednesday April 12, Pure Cycle Announces Financial Results For The Six Months Ended February 28, 2023; Revenue For 3-Months $3M, 6-Months 4.3M; EPS For 3-Months $0.01 Vs $0.07 YoY, 6-Months $0.01 Vs $0.13 YoY

Author: Happy Mohamed | April 13, 2023 01:14am

Pure Cycle Corporation (NASDAQ:PCYO) announced it produced its sixteenth consecutive fiscal quarter with positive net income. Pure Cycle continues to see positive results from its Sky Ranch Master Planned Community with over 100 new home starts in Phase 2A and the initiation of construction in our next 211 lots in Phase 2B with all four of our homebuilder partners excited to continue building homes at Sky Ranch. While the national and local housing markets are experiencing some headwinds, our Sky Ranch community continues to see robust new home starts due to its much-needed entry level priced homes in the most active front range market. In addition to our lots for sale, we continue to build homes for our own portfolio of single-family rentals, with 10 homes under construction and nearing completion. In addition, industrial water sales to oil and gas operations, although slow throughout the winter months, continued to generate positive results for that line of business and are forecasted to produce record water deliveries and oil and gas operations water sale revenues through the remainder of our fiscal year. Highlights for the first half of fiscal 2023 are presented below.

Highlights

• Revenues for the three and six months ended February 29, 2023, were $3.0 million and $4.3 million which drove pre-tax income of $0.3 million and $0.6 million
• EBITDA for the three and six months ended February 28, 2023 of $0.9 million and $1.7 million (EBITDA defined below)
• Cash and investments totaled $22.5 million as of February 28, 2023

"Rising interest rates have generated headwinds in the housing markets with many buyers deferring the purchase of a new home. Even with the broader market headwinds, our real-time delivery of lots to our homebuilder customers and our just in time payment for lot deliveries optimizing cash flows for both Pure Cycle and our homebuilder partners has demonstrated their value with all our homebuilders aggressively building new homes in Phase 2A and purchasing lots in our next Phase 2B. While the timing of lot deliveries has varied from the previous year due to market pressures, Sky Ranch continues to be among the Denver metropolitan area's most affordable and successful Master Planned Communities" commented Mr. Harding, CEO of Pure Cycle. "The winter months are always a seasonally slow time for home sales and construction, yet despite this, our homebuilding partners continue to construct homes at Sky Ranch and our Phase 2A is nearly 90% complete, with 156 of the 219 taps being sold and our homebuilder partners all wanted to make sure they have additional lots for continued building in Phase 2B. In addition to robust demand for our "For Sale" homes at Sky Ranch, working with our homebuilder partners we nearly doubled our Single-Family Rental lots in Phase 2B moving from 10 units to17 units. We continue to see strong demand for rental units at Sky Ranch with multiple highly qualified applicants for each unit we bring online. Our entry level priced homes for sale and for rent will remain attractive in this market and we believe the future growth at Sky Ranch will remain strong," concluded Mr. Harding.

Financial Summary

Revenue

For the three months ended February 28, 2023 and 2022, we reported total revenues of $3.0 million and $4.7 million. This was generated by our water and wastewater resource development segment ($1.5 million and $2.8 million), our land development segment ($1.5 million and $1.8 million), and our single-family rental business (less than $0.1 million in both periods). For the six months ended February 28, 2023 and 2022, we reported total revenues of $4.3 million and $8.9 million. This was generated by our water and wastewater resource development segment ($2.2 million and $3.9 million), our land development segment ($2.0 million and $5.0 million), and our single-family rental business (less than $0.1 million in both periods). The decline in revenue for both periods presented was predominately due to a reduction in commercial water sales to oil and gas operators, and the slowing of the housing industry, which resulted in our construction activities being slowed over the winter to align the timing of our lot deliveries with the projected home absorptions from our homebuilding partners.

For the three months ended February 28, 2023 and 2022, we sold 35 and 27 taps for $1.0 million and $0.9 million. For the six months ended February 28, 2023 and 2022, we sold 39 and 36 taps for $1.1 million and $1.1 million. These taps were sold predominately at our Sky Ranch community where we have sold a total of 798 water and wastewater taps since we began developing Sky Ranch in 2017.

As of February 28, 2023, the single-family rental business has four homes built and rented with ten additional units under construction with expected delivery dates beginning in May 2023. Additionally, after February 28, we amended two builder contracts for Phases 2B-D to change lot prices and retain an additional 19 lots which we will use in our rental division.

Profitability

We continue to be profitable with net income, positive earnings per share, and positive EBITDA as detailed in the table below:

	Three Months Ended						Six Months Ended
(In thousands, except share information)	February 28, 2023		February 28, 2022		February 28, 2023		February 28, 2022
Net income	$	189	$	1,693	$	348	$	3,207
Add back:
Interest expense	47	13	97	21
Taxes	90	501	220	978
Deprecation / depletion / amortization	583	449	1,076	888
EBITDA	$	909	$	2,656	$	1,741	$	5,094
Fully diluted earnings per share	$	0.01	$	0.07	$	0.01	$	0.13

Posted In: PCYO