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May 31, 2022
Pure Cycle Q3 2022 Earnings Report
Pure Cycle reported positive net income and revenue growth, driven by Sky Ranch development and water resource segment expansion.
Key Takeaways
Pure Cycle reported a net income of $0.8 million on revenues of $3.2 million for the three months ended May 31, 2022. The company's Sky Ranch development continues to progress, with Phase 2A nearing completion and strong demand for affordably priced homes. The water resource development segment also continues to expand its customer reach.
Revenues reached $3.2 million for the quarter.
Net income was $0.8 million for the quarter, marking the thirteenth consecutive quarter with positive net income.
Phase 2A of Sky Ranch development is nearly 67% complete, with homebuilders beginning construction on model homes.
40 water taps were sold in Phase 2A during the quarter, contributing to total tap fees of $16.4 million to date at Sky Ranch.
Pure Cycle
Pure Cycle
Forward Guidance
Pure Cycle anticipates continuing to grow through the remainder of fiscal year 2022, focusing on delivering finished lots on time and on budget. The company believes its land, water, and rental housing assets will continue to grow, adding substantial shareholder value.
Positive Outlook
- Demand for affordably priced Sky Ranch homes holds steady.
- First 229 lots in Phase 2A have been delivered as projected.
- Builders have invested in over-lot grading for the next 211 lots in Phase 2B.
- Wet utilities set to begin construction this fall for lot deliveries early next summer.
- Sale of the school site completed during fiscal Q2-2022.
Challenges Ahead
- Economy continues to adjust to inflationary pressures.
- Markets are slowing.
- Interest rates are rising.
- Water and wastewater tap sales declined compared to Q3-2021 due to the timing of closings at Sky Ranch.
- Revenue for three of the four builder contracts in the second development phase are recognized over time with progress measured under the percent of completion method; therefore, revenue will fluctuate due to timing of construction activities throughout the second phase.