Pure Cycle Corporation Q2 FY2026 earnings call

CEO Mark Harding introduced the team, including CFO and Controller. Emphasized 27th continuous profitable quarter, growing revenues across segments. Discussed water utilities with domestic, industrial, and connection fees segments; land development phases and product diversity; single-family rental realignment to measure returns. Highlighted school construction progress at Sky Ranch, service area growth, and future opportunities like interchange construction.

Water utilities: Year-to-date revenues include customer growth from connection fees, oil and gas revenues up due to increased drilling, monthly water/wastewater sales growing. Land development: Q2 revenues strong due to mild winter allowing lot completion, Phase II about 95% complete, Phase IId ~80% complete, density increased. Single-family rental: Growth slowed, scaled back to ~60 units, 19 homes completed and rented, revenues up 20% period-over-period.

Halfway through 2026, at 50% of full-year guidance. Full-year 2026 total revenue ~$14.3M vs ~$30M forecast, profit ~$9M vs ~$19M guidance. 2027 guidance on interchange and refinancing, total gross revenue expected $26M-$30M, EPS $0.43-$0.52, with upside from lot deliveries and oil and gas.

Cyclical nature of housing market, variability in oil and gas demand affecting industrial water sales, regulatory concerns on single-family rental corporate ownership, potential air pocket in land development phases if builders' appetite for lots wanes.

Q: Update on new interchange completion?

A: Interchange at 30% design, submitting 1601 permit end of year, start construction 2027, complete 2028.

Q: Data center opportunities?

A: Colorado less attractive for hyperscale due to tax policy and power challenges, but still pitching water/bottling, distribution centers.

Q: Builders' appetite for lots?

A: Consumer confidence key, new homebuilders added, diversity of products helps, yearly deliveries align with builders' inventory needs.

Q: Rental program economics?

A: Unlevered return 8%-10%, fixed rate credit facility, rentals ~$3k, homes appraise ~$530k vs build cost ~$350k.

Q: Oil and gas contract terms?

A: Variable demand, premium for flexibility, confident in 2026-2027, beyond depends on oil/gas commodity index.

Q: Water supply obligations?

A: Can draw from WISE program, trade water with other participants, opportunities to expand partnerships for storage