Pure Cycle Corp. Files 10-Q for Period Ending May 31, 2024

Ticker: PCYO · Form: 10-Q · Filed: 2024-07-10T00:00:00.000Z

Sentiment: neutral

Topics: 10-Q, financials, water-supply

TL;DR

Pure Cycle Corp. 10-Q filed. Financials for May 31, 2024 period out.

AI Summary

Pure Cycle Corp. filed a 10-Q for the period ending May 31, 2024. The filing details financial information for the company, which operates in the Water Supply industry. Key financial data points and balance sheet items are presented for various reporting periods.

Why It Matters

This filing provides investors and analysts with a quarterly update on Pure Cycle Corp.'s financial health and operational performance, crucial for investment decisions.

Risk Assessment

Risk Level: low — This is a standard quarterly financial filing with no immediate red flags or significant new disclosures.

Key Numbers

Key Players & Entities

FAQ

What is Pure Cycle Corp.'s primary business activity?

Pure Cycle Corp. operates in the Water Supply industry, as indicated by its Standard Industrial Classification code 4941.

When was this 10-Q filing submitted to the SEC?

This 10-Q filing was submitted on July 10, 2024.

What fiscal period does this 10-Q report cover?

This 10-Q report covers the fiscal period ending on May 31, 2024.

In which state is Pure Cycle Corp. incorporated?

Pure Cycle Corp. is incorporated in Colorado (CO).

What is the company's fiscal year end?

Pure Cycle Corp.'s fiscal year ends on August 31 (0831).

Filing Stats: 4,546 words · 18 min read · ~15 pages · Grade level 20 · Accepted 2024-07-10 16:00:38

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 4

Consolidated Financial Statements

Item 1. Consolidated Financial Statements 4 Consolidated Balance Sheets: May 31, 2024 (unaudited) and August 31, 2023 4 Consolidated Statements of Income (unaudited): For the three and nine months ended May 31, 2024 and 2023 5 Consolidated Statements of Shareholders' Equity (unaudited): For the three and nine months ended May 31, 2024 and 2023 6 Consolidated Statements of Cash Flows (unaudited): For the three and nine months ended May 31, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 21

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 30

Controls and Procedures

Item 4. Controls and Procedures 31

OTHER INFORMATION

PART II. OTHER INFORMATION 31

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31

Exhibits

Item 6. Exhibits 32

SIGNATURES

SIGNATURES 32 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS Statements that are not historical facts contained in this Quarterly Report on Form 10-Q are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended ( Securities Act ), and Section 21E of the Securities Exchange Act of 1934, as amended ( Exchange Act ). The words "anticipate," "seek," "project," "future," "likely," "believe," "may," "should," "could," "will," "estimate," "expect," "plan," "intend" and similar expressions, as they relate to us, are intended to identify forward-looking statements. Forward-looking statements include statements relating to, among other things: future water supply needs in Colorado and how such needs will be met; anticipated revenue from our commercial water sales; anticipated increases in residential and commercial demand for water services and competition for these services; estimated population increases in the Denver metropolitan area and the South Platte River basin; increased demand for single-family rental homes; plans for, and the efficiency of, development of our Sky Ranch property; our competitive advantage; the impact of individual housing and economic cycles on the number of connections we can serve with our water; the number of new water connections needed to recover the costs of our water supplies; the number of units planned for development at Sky Ranch; the timing of the completion of construction and sale of finished lots at Sky Ranch; the number of lots expected to be delivered in a fiscal period; anticipated financial results, including anticipated increases in customers and revenue, from development of our Sky Ranch property; estimated tap fees to be generated from the development of the various phases of Sky Ranch; anticipated expansion and rental dates for our single-family rental homes; anticipated revenues and cash flows from our single-family rental homes; timing of a

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements PURE CYCLE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except shares) May 31, 2024 August 31, 2023 ASSETS: (unaudited) Current assets: Cash and cash equivalents $ 20,360 $ 26,012 Short term investments 171 — Trade accounts receivable, net 2,303 1,092 Land under development 5,183 1,726 Income taxes receivable — 551 Prepaid expenses and other assets 580 346 Total current assets 28,597 29,727 Restricted cash 2,881 2,475 Investments in water and water systems, net 59,078 57,798 Construction in progress 4,243 5,457 Single-family rental units 5,115 4,490 Land and mineral rights: Held for development 3,714 4,652 Held for investment purposes 451 451 Other assets 1,167 1,359 Notes receivable – related parties, including accrued interest Reimbursable public improvements and project management fees 33,541 24,999 Other 1,441 1,451 Operating leases - right of use assets 176 357 Total assets $ 140,404 $ 133,216 LIABILITIES: Current liabilities: Accounts payable $ 3,311 $ 1,960 Accrued liabilities 1,380 1,761 Accrued liabilities – related parties 1,357 1,021 Income taxes payable 1,383 — Deferred lot sales revenues 1,548 1,661 Deferred water sales revenues 13 69 Debt, current portion 34 31 Total current liabilities 9,026 6,503 Debt, less current portion 6,859 6,885 Deferred tax liability, net 1,230 1,352 Lease obligations - operating leases, less current portion 106 242 Total liabilities 17,221 14,982 Commitments and contingencies SHAREHOLDERS' EQUITY: Series B preferred shares: par value $ 0.001 per share, 25 million authorized; 432,513 issued and outstanding (liquidation preference of $ 432,513 ) — — Common shares: par value 1/3 of $.01 per share, 40.0 million authorized; 24,075,342 and 24,078,720 outstanding, respectively 80 80 Additional paid-in capital

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) May 31, 2024 NOTE 1 – PRESENTATION OF INTERIM INFORMATION The accompanying unaudited consolidated financial statements have been prepared by Pure Cycle Corporation (the "Company" or "Pure Cycle") and include all adjustments that are of a normal recurring nature and are in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company as of and for the three and nine months ended May 31, 2024 and 2023. The August 31, 2023 balance sheet was derived from the Company's audited consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been condensed or omitted. It is suggested the accompanying consolidated financial statements and notes be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended August 31, 2023 ("2023 Annual Report") filed with the Securities and Exchange Commission ("SEC") on November 15, 2023. The results of operations for interim periods presented are not necessarily indicative of the operating results expected for the full fiscal year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used to account for certain items such as revenue recognition, dollar amount of reimbursable costs and collectability of reimbursable costs, costs of revenue for lot sales, share-based compensation, and the useful lives and recoverability of long-

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