PURE CYCLE CORP

PURE CYCLE CORP Annual Review – Plain Talk for Investors
Let’s break down their year like we’re chatting over coffee…

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1. What They Do

Pure Cycle owns water rights and develops land in Colorado and the western U.S. Think of them as a hybrid: part water utility, part land developer. This year, they finished Phase 1 of their Sky Ranch project (a neighborhood with rental homes and infrastructure). Their core business? Selling water to growing communities and prepping land for new housing.

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2. Financial Performance

• Revenue: $12.5 million (up 25% from last year’s $10 million).
• Profit: $2.1 million (up from $1.8 million).
• Growth Drivers: Sold more water rights, leased land to farmers, and added oil/gas companies as new customers. Big projects like Sky Ranch are still in early stages—costs are rising, but payoffs could come later.

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3. Wins & Challenges

• Wins:
  • Signed water deals for a 5,000-home community.
  • Reduced debt by 15% through smarter loan terms.
  • Locked in leadership with equity incentives (fewer board shakeups).
• Challenges: Permitting delays slowed projects, and droughts worried farm customers.

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4. Financial Health

• Cash: $8 million (up from $5 million).
• Debt: $20 million (down from $24 million).
• Key Strength: Their water rights are valued for future potential, not just today’s prices—a rare advantage.
• Verdict: Stable. They’re earning more than they spend, and debt is manageable.

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5. Risks to Consider

• Regulatory changes: Water laws could limit their biggest asset.
• Energy sector volatility: Oil/gas partnerships add growth but come with instability.
• Droughts: Could hurt farm leases and water demand.

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6. Competitive Edge

• Owns 53,000 acres in high-growth Colorado areas.
• Mixes water sales and land development—unlike most competitors.
• New oil/gas deals give them an advantage over smaller rivals.

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7. Leadership & Strategy Shifts

• Hired a CFO with real estate expertise to focus on housing projects.
• New priority: Building housing (like Sky Ranch) over farm leases.

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8. What’s Next?

• 2024-2025: Building Sky Ranch infrastructure (costs up now, profits later).
• Expanding water sales to energy companies—a potential cash cow.

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9. Market Trends

• Droughts: Make their water rights more valuable.
• Colorado’s population growth: Up 1.5% this year—great for housing demand.
• Permitting reforms: Potential for faster project approvals (they’re lobbying hard!).

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The Bottom Line for Investors

👍 Good for: Patient investors (3-5+ year horizon) who believe in Colorado’s growth.
🚫 Not for: Quick-profit seekers or those wary of regulatory/weather risks.

Why consider Pure Cycle?

• Unique water/land combo with long-term potential.
• Steady revenue growth and improving debt situation.
• Positioned to benefit from housing demand and water scarcity.

Watch out for:

• Permitting delays and drought impacts.
• Energy sector volatility affecting new partnerships.

Final thought: If you’re comfortable with some risk and like infrastructure plays, Pure Cycle could be a solid addition to a diversified portfolio. Want to dive deeper? Their full report has more numbers—I’ll grab us another coffee while you skim it. ☕