Pure Cycle Corporation

Q3 revenue was $8.2 million and gross profit was $4.3 million, for about a 52% gross margin. Management said net income and EPS were strong, though no specific EPS figure for the quarter was stated on the call. On a full-year basis, management reiterated gross revenues of $20 million-$32 million and EPS around $0.50, and said the company is a little ahead of schedule and expects a strong year-end finish. They also said tap fees should remain strong through this fiscal year and next, and that 2027 could see a step-up in tap-fee pricing of about 2.5%-3%.

Mark Harding struck an upbeat but value-focused tone, emphasizing that the company is monetizing highly appreciated water and land assets with low balance-sheet basis and strong long-term earning power. He repeatedly framed Sky Ranch, Lowry, and the planned interchange as optionality that could expand revenues materially over time, especially if commercial development follows residential buildout. He also said the stock appears mispriced relative to the asset value and that management will keep reinvesting and, as liquidity builds, become more aggressive with buybacks.

Marc Spezialy mainly facilitated the call and Q&A logistics, with the financial detail coming from Mark Harding rather than a traditional CFO script. In the questions, management said the interchange is expected to cost about $40 million and should be reimbursable through bonding capacity tied to mill levies and impact fees. They also said the receivable balance is about $59 million, that $8 million-$10 million could come back in 2027 from refinancing, and that another $25 million-$28 million could be repaid when Phase 3 bonds are issued around 2027-2028. Liquidity was said to have dipped in Q2 because of accelerated development, but is now strengthening again and may support more share repurchases.

An analyst asked whether the prior $675 million full-buildout asset estimate was still reasonable, and management walked through the math behind it, saying the value comes from 5,000 Sky Ranch connections, tap fees, and about $100,000 per lot economics. The analyst also asked about undeveloped water reserves, and management said roughly 30,000 AF remains, supported by additional farm acquisitions and a finalized water court decree. Another question focused on interchange reimbursement and the $59 million receivable balance; management said the project should be reimbursable, and that bond refinancing should bring cash back in chunks over the next three years. On tap and wastewater fees, management said recurring monthly fees rise modestly each year, while tap fees increase in steps and may see another increase in 2027.