The following is a summary of the Pure Cycle Corporation (PCYO) Q4 2024 Earnings Call Transcript:
Financial Performance:
Pure Cycle reported strong Q4 results with revenue at $12.5 million for the quarter mainly due to the delivery of Phase 2D lots totaling 197 lots.
Annual revenue reached a new high of $28.7 million, reflecting robust growth and efficient execution in land and water utility sectors.
Gross profit for the year stood approximately at $20 million, with a gross margin close to 70%, underpinned by historical land and water rights acquisitions.Net income significantly improved to $11.6 million, translating to earnings per share of approximately $0.48.
Business Progress:
Pure Cycle saw record performance in its water utility segment, particularly driven by oil and gas operations, with continued customer growth.
Development in Sky Ranch is ongoing, with approximately 700 lots under production and a focus on expanding the single-family rental segment from 14 units to around 200 units.
Strategic land acquisitions adjacent to existing assets enhance future growth prospects, particularly highlighted by the recent purchase of 400 acres which align with Pure Cycle's pipeline infrastructure and include valuable water rights and mineral interests.
Opportunities:
The company is leveraging significant opportunities in its oil and gas operations with oil and gas being strong in the fourth quarter, hinting at sustained demand and excess capacity utilization.
With only 2% of their extensive tap capacity currently utilized and significant water assets at hand, there is a substantial opportunity for future growth as Sky Ranch and other developments progress.
Expansion in the single-family rental sector is viewed as a promising venture.
Risks:
The significant upswing in interest rates over recent periods has posed financial management challenges, potentially impacting the cost of carrying land and other capital-intensive activities.
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