Form 8-K - Current report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 12, 2023

PURE CYCLE CORPORATION

(Exact name of registrant as specified in its charter)

Colorado

(State or other jurisdiction of incorporation)


0-8814		84-0705083
(Commission File Number)		(IRS Employer Identification No.)

34501 East Quincy Avenue, Building 65, Suite A, Watkins, CO 80137

(Address of principal executive offices) (Zip Code)


Registrant’s telephone, including area code	(303) 292-3456

N/A

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:


Common Stock 1/3 of $.01 par value	PCYO	The NASDAQ Stock Market
(Title of each class)	(Trading Symbol(s))	(Name of each exchange on which registered)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth Registrant as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth Registrant ☐

If an emerging growth Registrant, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

This current report on Form 8-K is filed by Pure Cycle Corporation (Registrant), a Colorado corporation, in connection with the matters described herein

Item 2.02 Results of Operations and Financial Condition.

On July 12, 2023, the Registrant issued a press release announcing its financial results for the three and nine months May 31, 2023. A copy of the press release is furnished as Exhibit 99.1 hereto, and in incorporated herein by reference.

In accordance with General Instruction B.2 of Form 8-K, the press release furnished as Exhibit 99.1 to this current report on Form 8-K shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information or exhibit be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in any such filing.

Item 7.01Regulation FD Disclosure

On July 13, 2023, the Registrant presented and posted on its website a presentation summarizing Pure Cycle’s operations and financial results (Earnings Presentation). The Earnings Presentation is furnished as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference.

The information contained in the Earnings Presentation is summary information and should be read in conjunction with Pure Cycle’s filings with the Securities and Exchange Commission and other public announcements that Pure Cycle may make by press release or otherwise from time to time. The Earnings Presentation will be posted in the Investor Relations section of Pure Cycle’s website, www.purecyclewater.com.

The information contained in this Item 7.01 of Form 8-K, including the accompanying Exhibit 99.2 is being furnished, and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liabilities of that section. The information contained in the presentation shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01Financial Statements and Exhibits.

(d)Exhibits


Exhibit No.		Description
99.1		Press Release dated July 12, 2023, announcing earnings for the three and nine months ended May 31, 2023
99.2		Three and nine months ended May 31, 2023 earnings presentation
104		Cover Page Interactive Data File (the cover page XBRL tags are embedded in the inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 14, 2023

Vice
	PURE CYCLE CORPORATION


	By:	/s/ Kevin B. McNeill
		Kevin B. McNeill
		Vice President and Chief Financial Officer

Exhibit 99.1

Pure Cycle Announces Financial Results

For Three and Nine Months Ended May 31, 2023

DENVER, CO / ACCESSWIRE / July 12, 2023 – Pure Cycle Corporation (NASDAQ Capital Market: PCYO) announced its financial results for the three and nine months ended May 31, 2023. Pure Cycle posted its seventeenth consecutive fiscal quarter with positive net income. Pure Cycle continues to develop its Sky Ranch Master Planned Community with nearly 200 new homes started in Phase 2A and the start of construction of the next 211 lots in Phase 2B. In addition to our lots for sale, we continue to build homes for our own portfolio of single-family rentals, with four homes built and rented in Phase 1, and 10 homes under construction in Phase 2A (six of these homes were finished and rented after May 31, 2023). In addition, industrial water sales to oil and gas operations saw tremendous growth which generated the highest revenues we have posted for that customer base. Highlights for the three and nine months ended May 31, 2023, are presented below.

Highlights

Revenues for the three and nine months ended May 31, 2023 of $6.9 million and $11.2 million, which drove pre-tax income of $4.4 million and $5.0 million;

Net income for the three and nine months ended May 31, 2023 of $3.3 million and $3.6 million;

EBITDA for the three and nine months ended May 31, 2023 of $5.0 million and $6.7 million (see table below for reconciliation of net income to EBITDA);

Cash totaled $26.0 million at May 31, 2023;

During the three and nine months ended May 31, 2023, we delivered 183.6 million gallons and 262.6 million gallons of water.

“Despite interest rates pressuring the housing market, our Sky Ranch community continues to grow and attract residents with its affordable prices and great location directly off Interstate 70,” commented Mr. Harding, CEO of Pure Cycle. “As interest rates continue to rise and housing prices stabilize, our homebuilding partners at Sky Ranch continue to offer affordable products, thanks in large part to our affordable lots. Couple that with our ability to build low-cost rental units that we have been able to rent quickly at good rates, and Sky Ranch once again leads our growth expectations,” concluded Mr. Harding.

Financial Summary

Revenue

For the three months ended May 31, 2023, we posted $6.9 million of revenue compared to $3.2 million for the same period in 2022. The increase was due to a record level of water sales to oil and gas operators and the start of the Phase 2B construction at Sky Ranch (Phase 2A is nearly 90% complete as of May 31, 2023 while Phase 2B is about 21% complete). For the nine months ended May 31, 2023, we posted revenues of $11.2 million compared to $12.1 million for the comparable period in 2022. This slight decline was mainly due to lot sales being higher in 2022, which is due to timing of construction activities. The nine months ended May 31, 2023, was impacted by a very high precipitation year and the housing market headwinds which delayed some of our construction activity. We anticipate the summer months generating increased lot sale revenue due to seasonal construction activity.

For the three months ended May 31, 2023 and 2022, we generated $1.3 million and $1.3 million in tap fees. For the nine months ended May 31, 2023 and 2022, we generated $2.4 million and $2.4 million in tap fees. These taps were sold predominately at our Sky Ranch community where we have sold a total of 840 water and wastewater taps since we began developing Sky Ranch in 2017 (14 of these taps were for our single-family rental business). Posting a consistent level of tap sales despite the headwinds in the housing market is indicative of the level of interest in home sales at Sky Ranch.

As of May 31, 2023, the single-family rental business has four homes built and rented in Phase 1 of Sky Ranch and 10 homes under construction in Phase 2A. After May 31, 2023, we completed and rented six of the units in Phase 2A with the remaining four expected to be completed around the end of August 2023. As noted in the prior quarter, due to the overwhelming demand for rental units at Sky Ranch, we increased the number of lots to be used in our single-family rental business from 55 to 69 in Phase 1 and Phase 2 of Sky Ranch.

Profitability

We continue our profitability as shown in the table below:


	Three Months Ended				Nine Months Ended
(In thousands)	May 31, 2023		May 31, 2022		May 31, 2023		May 31, 2022
Net Income	$	3,295	$	837	$	3,643	$	4,044
Add back:
Interest expense		52		31		149		52
Taxes		1,124		246		1,344		1,224
Depreciation / amortization		518		444		1,594		1,332
EBITDA	$	4,989	$	1,558	$	6,730	$	6,652

Fully diluted earnings per share	$	0.14	$	0.03	$	0.15	$	0.17

“The resurgence of oil and gas operations in our service area added a tremendous boost to our income for the periods presented,” commented Kevin McNeill, CFO of Pure Cycle. “Despite the rainiest spring on record, which impacts our construction activities and timing of our lot deliveries, with oil and gas water sales, strong demand at Sky Ranch due to well-priced lots, and continued interest in our rental business, we believe we are going to finish the fiscal year strong,” concluded Mr. McNeill.

Working Capital

We reported working capital (current assets less current liabilities) of $23.8 million as of May 31, 2023, with $26.0 million of cash.

Operational Summary

Water and Wastewater Resource Development

For the three and nine months ended May 31, 2023, residential water usage revenue increased over 2022 mainly due to new home sales in Sky Ranch which adds customers to our water and wastewater operations. For the three months ended May 31, 2023 compared to 2022, commercial water usage revenue increased due to increased water sales to oil and gas operators for use in drilling operations, which we believe will continue at a high level through the remainder of our fiscal 2023. For the nine months ended May 31, 2023, commercial water sales were consistent with 2022.

For the three and nine months ended May 31, 2023, water and wastewater tap sales remained relatively consistent with 2022 due to timing of closings at Sky Ranch. Tap sales are driven by builders obtaining building permits in anticipation of home construction. We believe this is a good indicator of the continued steady sales and interest in Sky Ranch.

Early in fiscal 2023, we continued our acquisition of water rights with the acquisition of three deep water wells in the Lost Creek Basin for $0.3 million, which will be added to our other Lost Creek Water and eventually transferred to the Denver market for use in our Denver service area.

Land Development

Despite the challenges with the weather and housing market, for the three months ended May 31, 2023, lot sales revenue increased as compared to 2022. This was mainly due to 2023 having two phases under construction (Phase 2A and Phase 2B). Revenue for lot sales is recognized over time with progress measured using the percent of completion method.

For the nine months ended May 31, 2023, lot sales revenue decreased as compared to 2022. This was mainly due to the timing of development activities at Sky Ranch which was impacted by the weather and pressures on the overall housing market. The price per lot for delivered lots in Phase 2 increased an average of 40% over Phase 1. Revenue for lot sales is recognized over time with progress measured under the percent of completion method; therefore, revenue will fluctuate due to the timing of construction activities. Additionally, lot sale revenue declined as we delayed the start of Phase 2B by a few months due to the increased pressures on the housing market in late 2022. We believe lot sale revenues will pick up pace throughout the remainder of our fiscal 2023 as we are in the summer months, which are the best months for construction activities.

Single Family Rentals

In 2021, we built three homes that were rented to separate families effective November 1, 2021. In the first quarter of fiscal 2022, we contracted for the construction of a fourth rental home, which was completed and rented in December 2022. In the third quarter of fiscal 2022, we contracted for the construction of 10 rental units in Phase 2A, six of which were completed and rented after May 31, 2023, and the remaining four we believe will be ready for rental around the end of our fiscal 2023. Additionally, we broke ground on Phase 2B this quarter, which has 211 lots in total, of which we retained 17 for use in our single-family rental business.

Earnings Call Information

Pure Cycle will host a conference call on Thursday July 13, 2023, at 8:30AM Eastern (6:30AM Mountain) to discuss the financial results and answer questions. Call details are presented below. We will post a detailed slide presentation, which provides an overview of Pure Cycle and presents summary financial results on our website which can be accessed at www.purecyclewater.com.

When: 8:30AM Eastern (6:30AM Mountain) on July 13, 2023

Call in number: 888-506-0062 (access code: 943198)

International call-in number: 973-528-0011 (access code: 943198)

Replay numbers: 877-481-4010 | 919-882-2331 (passcode: 48662)

Replay available until: July 23, 2023 at 8:30AM ET

Event link:https://www.webcaster4.com/Webcast/Page/2247/48662

Other Important Information

Pure Cycle will be hosting its annual investor day on July 19, 2023. Please see the Investor section of our website for more information and how to RSVP for the tour and/or the Q&A session via Teams.

Our CEO Mark Harding will be presenting at the IDEAS conference on August 24, 2023, so stay tuned for additional information on that conference.

The table below presents our unaudited results of operations for the periods noted:


	Three Months Ended				Nine Months Ended
(In thousands, except share information)	May 31, 2023		May 31, 2022		May 31, 2023		May 31, 2022
Revenues:
Metered water usage from:
Municipal customers	$	145	$	94	$	349	$	274
Commercial customers		2,145		549		2,596		2,686
Wastewater treatment fees		75		66		216		185
Water and wastewater tap fees		1,256		1,273		2,400		2,447
Lot sales		3,160		1,070		5,064		5,644
Project management fees		42		81		173		529
Single-family rentals		34		25		90		59
Special facility projects and other		22		29		321		299
Total revenues		6,879		3,187		11,209		12,123

Expenses:
Water service operations		576		560		1,457		1,419
Wastewater service operations		96		109		350		337
Land development construction costs		951		222		1,282		1,048
Project management costs		81		66		227		112
Single-family rental costs		24		9		53		16
Depletion and depreciation		407		349		1,246		1,055
Other		71		79		318		298
Total cost of revenues		2,206		1,394		4,933		4,285

General and administrative expenses		805		1,074		3,900		3,950
Depreciation		111		95		348		277
Operating (loss) income		3,757		624		2,028		3,611

Other income (expense):
Interest income - related party		331		305		841		1,196
Interest income - Investments		281		5		727		8
Oil and gas royalty income, net		44		123		227		330
Oil and gas lease income, net		18		47		56		143
Other, net		40		10		1,257		32
Interest expense, net		(52)		(31)		(149)		(52)
Income from operations before income taxes		4,419		1,083		4,987		5,268
Income tax expense		1,124		246		1,344		1,224
Net income	$	3,295	$	837	$	3,643	$	4,044

Earnings per common share - basic and diluted
Basic	$	0.14	$	0.03	$	0.15	$	0.17
Diluted	$	0.14	$	0.03	$	0.15	$	0.17
Weighted average common shares outstanding:
Basic		24,054,843		23,970,290		24,021,582		23,944,394
Diluted		24,166,344		24,124,586		24,131,621		24,183,500

The following table presents our consolidated financial position as of the dates shown:


(In thousands, except shares)	May 31, 2023		August 31, 2022
ASSETS:		(unaudited)
Current assets:
Cash and cash equivalents	$	26,000	$	34,894
Trade accounts receivable, net		2,671		2,425
Land under development		721		—
Income taxes receivable		190		—
Prepaid expenses and other assets		392		467
Total current assets		29,974		37,786
Restricted cash		2,332		2,328
Investments in water and water systems, net		58,146		58,763
Construction in progress		4,929		1,224
Single-family rental units		1,395		975
Land and mineral rights:
Held for development		4,996		6,773
Held for investment purposes		451		451
Other assets		1,343		2,463
Notes receivable – related parties, including accrued interest
Reimbursable public improvements and project management fees		23,118		17,208
Other		1,397		1,120
Operating leases - right of use assets		84		138
Total assets	$	128,165	$	129,229

LIABILITIES:
Current liabilities:
Accounts payable	$	905	$	849
Accrued liabilities		1,174		2,029
Accrued liabilities – related parties		569		560
Income taxes payable		—		2,530
Deferred lot sale revenues		3,475		4,275
Deferred water sales revenues		13		570
Debt, current portion		10		10
Total current liabilities		6,146		10,823
Participating interests in export water supply		—		323
Debt, less current portion		3,942		3,950
Deferred tax liability, net		873		1,075
Lease obligations - operating leases, less current portion		6		62
Total liabilities		10,967		16,233
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; 24,054,843 and 23,980,645 outstanding, respectively		80		80
Additional paid-in capital		174,709		174,150
Accumulated deficit		(57,591)		(61,234)
Total shareholders’ equity		117,198		112,996
Total liabilities and shareholders’ equity	$	128,165	$	129,229

Company Information

Pure Cycle continues to diversify its operations, grow its balance sheet, and drive recurring revenues. We operate in three distinct business segments, each of which complements the other. At our core, we are an innovative and vertically integrated wholesale water and wastewater service provider. In 2017, we launched our land development segment which develops master planned communities on land we own and to which we provide water and wastewater services. In 2021, we launched our newest line of business, the rental of single-family homes located at Sky Ranch, which provides long-term recurring revenues, furthers our land development operations, and adds more customers to our water resource segment.

Additional information, including our recent press releases and SEC filings, is available at www.purecyclewater.com, or you may contact our President, Mark W. Harding, or our CFO, Kevin B. McNeill, at 303-292-3456 or info@purecyclewater.com. Be sure to follow Pure Cycle on Twitter @purecyclecorp.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are all statements, other than statements of historical facts, included in this press release that address activities, events or developments that we expect or anticipate will or may occur in the future, such as statements about the following: our positioning to continue to grow through this market cycle; higher interest rates and stabilizing home prices; the completion and delivery of our rental units; timing of development at Sky Ranch; future tap sales; future home sales by our home builder customers; the affordability and low-cost of our products; the strength of the Sky Ranch market; forecasts about our fiscal 2023 sales of water to oil and gas operators; our sales of lots; and our expected financial results. The words "anticipate," "likely," "may," "should," "could," "will," "believe," "estimate," "expect," "plan," "intend" and similar expressions are intended to identify forward-looking statements. Investors are cautioned that forward-looking statements are inherently uncertain and involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause actual results to differ from projected results include, without limitation: home mortgage interest rates, inflation, and other factors impacting the housing market and home sales; the risk factors discussed in Part I, Item 1A of our most recent Annual Report on Form 10-K for the fiscal year ended August 31, 2022; and those factors discussed from time to time in our press releases, public statement and documents filed or furnished with the U.S. Securities and Exchange Commission. Except as required by law, we disclaim any obligation to update publicly any forward-looking statements, whether because of new information, future events or otherwise.

SOURCE: Pure Cycle Corporation

Exhibit 99.2

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

COMPANY OVERVIEW Statements that are not historical facts contained or incorporated by reference in this presentation are "forward-looking statements" ( "FLS") within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27 A of the Securities Act of 1933 and Section 21 C of the Securities Exchange Act of 1934 as amended. FLS involve risks and uncertainties that could cause actual results to differ from projected results. The words "anticipate," "believe," "estimate," "expect," "plan," "intend" and similar expressions, as they relate to us, are intended to identify FLS. Such statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. We are not able to predict all factors that may affect future results. We cannot assure you that any of our expectations will be realized. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such FLS include, w ithout limitation: the risk factors discussed in our most recent Annual Report on Form 10 -K; the timing of new home construction and other development in the areas where we may sell our water, which in turn may be impacted by credit availability; population growth; employment rates; general econom ic conditions; the market price of water; changes in customer consumption patterns; changes in applicable statutory and regu latory requirements; changes in governmental policies and procedures; uncertainties in the estimation of water avai lable under decrees; uncertainties in the est imation of costs of delivery of water and treatment of wastewater; uncertaint ies in the estimation of the service life of our systems; uncertainties in the estimation of costs of construction projects; uncertainties in the amount and timing of reimbursable public improvement payments: uncertainty in the single family home rental market and our ability to rent homes in a time ly manner or at the amount we project; the strength and financial resources of our competitors; our ability to find and retain skilled personnel; climatic and weather conditions, including flood, droughts and freezing conditions; labor relations; availability and cost of labor, mater ial and equipment; de lays in anticipated permit and construction dates; environmental risks and regulations; our ability to raise capita l; our ability to negotiate contracts with new customers; and uncertainties in water court rulings; and other factors discussed from time to time in our press releases, public statements and documents filed or furnished with the SEC. pg 2

WE OPERATE MULTIPLE COMPLEMENTARY SEGMENTS ... . . . driving value for stakeholders with water, land, and rentals • Own nearly 30K acre-feet of water rights (surface and ground water) • Sustainable water rights we estimate can serve up to 60,000 SFEs • Denver metro land development requires developers to have water service as a condition of zoning, offering us a competitive edge • Provide industrial and oil and gas customers with water - - ~'3'o.U--~"""'-...=.J. • Own and reuse our reclaimed water • Own highly-appreciated property in attractive and easily accessible I-70 Corridor of Denver, Colorado • Developing nearly 930 acres of a full Master Planned community known as Sky Ranch • Sky Ranch can have around 3,200 residential units and over 2 million square feet of retail, commercial and industrial uses (Equivalent of 1,800 residential units) • Developing residential and commercial land for which we are the sole water and wastewater service provider • Build single family homes in the Denver metro area in neighborhoods we are developing • Receive rental income in growing housing market • Benefit from immediate asset appreciation and positive cash flows • Provide water and wastewater service to rental properties pg 3

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

Well/Diversion • Vertically integrated, meaning we own, treat and sell water then collect, treat, and resuse wastewater • Own and control near ly 30K acre feet of water • Own rights to surface reservo ir storage assets Build • Capacity to serve 60,000 taps • Capital Capacity= $2.3 billion • One -Time Connect ion Fees: • Water tap = $30,977 • Sewer tap = $7,250 Typical Usage • Base fee= $32.74 • Consumption fee= T iered 0-l Sk gal - $4.63 per 1,000 gal l 5k-30k gal - $8. l O per 1,000 gal >30k gal - $9.95 per 1,000 gal (Approx $1,500/yr/unit) pg 5

Water System Balance With Losses and Required Discharges Outdoor Irrigation Discharge to Stream Ground Water Supply Treatment £. £. Evaporation~ ~ Surface Water Supply pg6

All major infrastructure is in service to support all of Phase 2 of the Sky Ranch development F Q3-2023 FY 2022 FY 2021 Water Assets FY 2020 (at cost) FY 2019 FY 2018 FY 2017 $59.2M $46.2M ...c +- s 0 lo... CD ~ CX) CX) Water Assets/Infrastructure Inventory • 2 Wastewater reclamation facilities (one is a zero-discharge state of the art facility) • 20+ miles of transmission pipeline • 4 Alluvial wells • 150 Acre-feet surface storage • 2 million gallons of water storage • 29,900+ Acre-feet of water rights • 11 Groundwater wells • 30+ miles of distribution pipeline pg7

Customers - 1,326 New Residential Residential water and wastewater customers added with every new phase at Sky Ranch • Avg. residential customer generates $1,500 per year in revenue Existing Residential • Sky Ranch Phase 1 • all taps sold for 509 homes (4 are our SFRs) • Sky Ranch Phase 2A • 192 taps sold as of QTR End (10 are our SFRs) • Elbert and Hwy 86 • more than 200 residents New Commercial • Future Sky Ranch commercial phases to include the equivalent of 1,800 taps • More parks, irrigated space, and amenities will be added to the Sky Ranch Community Existing Commercial • Elbert and Hwy 86 commercial customers include a Walmart, carwash, and fitness center • 3 parks and additional irrigated space for Sky Ranch, paid by the Sky Ranch CAB • more irrigated space to come in Phase 2A in 2023 • Largest commercial customers are oil and gas operators - record sales to these customers in 2022; Strong demand for FY '23. System Capacity Wild Pointe Copa ~ 60 Sky Ranch 73 Residential 71 Commercial/Irr. ~ ...... ~ 705 Residential 135 Commercial/Irr. Lowry ~ Capacity ~ 5,000 Capacity ~50,000 0 Residential 242 Commercial/Irr. pg8

OIL& GAS We provide raw water to oil and gas operators for drilling with 120 wells drilled to date Southern Wattenberg Niobrara • Q4 - ("t) N • Q3 0 Mulitple Formations N > u. • Q2 - • Q1 N N l 0 Pad Development: 40 Acre spacing N l > u. - ...... 16 wells/mile formation ~ . I N c:: - 0 Oil rig can drill 20 wells per year N ~ . IJ c:: • - O'I ...... 0 Average $250,000 of water sales per well N I____J > u. - 0 400 800 1,200 1,600 2,000 More than 200 square miles in Adams & Arapahoe Counties Revenue in thousands pg 9

DEVELOPMENT ENCROACHMENT TO LOWRY RANGE Sky Ranch

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

D DEVELOPMENT • Developing the 930 acre Sky Ranch (Currently developing Phase 2A and Phase 28) • Can accommodate up to 3,200 residential lots • Can accommodate up to 2M sq. ft. of commercial development (1,800 SFE's) • 15 miles east of downtown Denver and 4 miles south of DIA pg 12

LAND DEVELOPMENT -PHASE 1 & 2 -Total Lots 1,359 Phase 1 Phase 1 - 509 lots 100% Complete - Completed 2022 Rental lots - 4 lots PARTNERING HOMEBUILDERS LENNAR. taylor . mornson .•.. Homes Inspired by You W# f:il I j CHALLENGER ~ HO MES D·R·HORION. ~Kd~ ~ ~~ RICI-MON) ~~AMERICAN HOME ; kb HOME K-7 opening in 8/2023 High School opening in 2025 Phase 2 Phase 2A - 229 lots 90% complete - est. completion 2023 Phase 2B - 211 lots 21% complete - est. completion 2024 Phase 2C - 204 lots 0% complete - est. completion 2025 Phase 2D - 206 lots 0% complete - est. completion 2026 Rental lots - 65 lots pg 13

TOTAL LOT SALES BY BUILDER $26m $24m $22m $20m $18m $17.2m $ 10.7m Phase 2A (229 LOTS) Lot Revenue** $ 18.4m Tap Fees 5.6m Total Lot Costs (21.0m) Reimbursable* 18.4m $ 21.4m $24.Sm SKY RANCH PHASE 2 Financial and Quantitative Data TOTAL LOTS BY TYPE • 45' LOTS • 45' LOTTS (ALLEY) • 50' LOTS • 35' LOTS • DUPLEXS Phase 28 (211 LOTS) Phase 2C (204 LOTS) Lot Revenue** $ 17.2m Lot Revenue** $ Tap Fees 5.2m Tap Fees Total Lot Costs (18.8m) Total Lot Costs Reimbursable* 14.lm Reimbursable* NET PROCEEDS $ 17.6m NET PROCEEDS $ TOTAL LOTS BY BUILDER pg 2 • CHALLENGER • LENNAR • DR HORTON • KB HOMES • PCYO SFR Phase 20 (206 LOTS) 15.5m Lot Revenue** $ 15.5m 5.0m Tap Fees 5.lm (17.lm) Total Lot Costs (17.3m) 12.8m Reimbursable* 16.2m NET PROCEEDS $ 16.3m 4

Market Conditions Continued demand for new home sales 2005/2006 - 1 .4M 2021 /2022 - 600K Mortgage rates stabalizing - still at historical averages Lot deliveries still trailing home starts All homebuilders in Sky Ranch are top 15 nationally Low unemployment House price appreciation Lower average days on market (June/Jan.) Typical - 60/90 Current - 30/60 + The GOOD Existing home sales declining (mortgage locked) Interest Rates Abrupt uptick in 2022 - 3% to 7% (70s - 9%, 80s - 13%, 90s -8%, 2000s - 6%, 201 Os - 4%) Mortgage applications down Cancellations up Traffic down The BAD Home sales down • Entry level price segmentation • Diverse product offerings (Low to mid 400's) • Available homes to buy - spec home construction • New school opening August 2023 pg 15

SKY RANCH ACADEMY GRf.::NYtJlt~ • DCNVU INrUINATIONAL AUIPORl Watkins 396 Colorado Air and Space Port ' Total Applicants 0 Pure Cycle Corporation I Earnings Presentation ® @ a en @ pg 16

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

Pure Cycle contracts to build single family homes in it's Sky Ranch Master Planned Community to hold for rentals. • Retaining lots within the community it's building and adding value • Lot development costs fully recovered (horizontal costs and tap fees) • Contracting with experienced builder to deliver homes cost efficiently • Financing home costs with mortgage based cost of capital • Finished home valuations average $200,000 in appraised equity • Assets appreciating 4% per year • Each unit covers financing costs and provides positive cash flows Segment provides excellent asset appreciation positive cash flows. pg 18

Four units completed and rented in Phase l Flexible debt usage up to 70% of appraised value Low cost capital (First 3 units at 3.75 - 4.25%, working on next 11) House appraisal value estimated at $547,000 based on homes sold in Sky Ranch per NMLS Annual appreciation estimated at 4% per year Price ranges in rental units from $2,800 - $3,000/month Expanding our product mix to include: • Front load detached homes • Paired homes • Alley load homes Watch our website for additional information ~~~~ ~~~~~~~ 69 Homes in Phase 1 & 2 [ l O Under Construction itiu,:ii~tlnted (6 more rented after 5/31/2023 but before this presentation) - ~ • ~9 II Ii II . , .- l ~ • r I { ' .-:,: . ,·· -~ " --- '".;r"'. ..... ,-;::,-t~ f J •.• ~ - · _ .. , ··.: • fl • • IJ •• ·...... -;~ .. : . ·.:. . - ... " .., ... ... .. . pg 19

Item Rental Income Direct Operating Costs Interest and depreciation expense Net Add back non-cash items Cash flows before G&A & tax Our Single Family Rentals -Operations and Cash Flows $ $ $ Actual Results 3 units* 82 30 37 27 23 44 •ten months ended 8/3 l /2022 Annualized $ $ $ Avg per home/yr 98 $ 33 36 72 37 72 25 $ 8 28 9 53 $ 18 $ $ $ Projected to 14 homes/yr 459 768 174 778 129 246 $ Projected to 83 homes/yr 2,739 996 996 $ 664 747 7,494 Projected to 200 homes/yr $ 6,560 2,400 2,480 7,680 7,840 $ 3,520 pg 20

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

WATER & WASTEWATER • $68.0 m in water assets (cost) • 1,326 total taps served • 262.6M gallons delivered nine months ended 5/31/2023 • Continued acquistions to ensure sustainability Financial Results VTD 03 Summary LAND DEVELOPMENT • Phase 2A - 90% complete • Phase 2B - 21 % complete, received 1st milestone payment from 3 builders in March/ April 2023 • $23. lM recorded reimbursable public improvement receivables • 80%+ gross margin for Phase 2 SINGLE FAMILY RENTALS • $1.5m in completed assets with an approximate market value >$2.0m • 10 homes under construction at 5/31/2023 with deliveries in FY 2023 • Average monthly rental rates in excess of $2,800 per unit • Amended Future Phase 2 filings with builders to add 19 additional rentals

$16M $14M $12M ,,......_ $10M Cl) -0 C ro ~ $8M 0 ...c - C c- $6M $4M $2M 0 Revenue Financial Results Fiscal VTD 03-2023 Segment Revenue $16M $14M $12M I • - $10M l/) "O C ro l/) $SM ::i 0 $4.9M I ...c ..µ $6M C $6.2M $5.2M ·-- $4M $6.0M $11.SM $2M 0 $4.9M $4.3M $7.4M $5.9M $5.9M YTD 2019 YTD 2020 YTD 2021 YTD 2022 YTD 2023 • W-WW • Land Development Single Family Rentals pg23

- $20M $18M $16M $14M ~ $12M C ro ~ $10M 0 ...c ..., -~ $SM $6M $4M $2M 0 Net Income Financial Results Fiscal VTD 03-2023 Diluted EPS $0 ..8 $0 ..7 $0.6 $0.5 $0.4 $0.3 $0.2 $0.1 0 pg24

(ln thousarrds, ,nr;ep,• :i>umrs) " "' 31, 2023 iUJ!IISt 31, 2022 ASSETS: (o.n:aadited) Current assets: Ca.sh and cm cqwvalcots s 26,000 s 34,894 Trade ;,ccounu rccci~ablc, n.-t 2,671 2,425 Land un<kr dC ~topmcol 721 l.ocome taXes rece,vable 190 Prepaid expense:, Md other useu 392 467 Toi.I] cum:nt a&Sets 29.974 37.786 Rmrictcd cash 2.332 2.328 lll.''esunentt w ~ater alld water systems net 58146 58,763 Co,utruChOd 1fi PfO!!feU 4 .929 121.J Si.oglc-fam1ly rental unm 1.395 975 Land ud IIWlcnl nghn: Held for dC,:lopment 4.996 6.773 Hdd for investment pwposcs 451 451 Othi!! aue13 I 343 2463 NoteJ recen able - , elated pame,, including accrued tnteie:.t R.cunbunable public UDl)'OYcments and proJect manaf!emcot fee, '.!3.1 IS 17.208 Other 1.397 1.110 Operating lcasa - right of U5C ,met, 84 138 To1ala,~1, s 128,165 s 129.229 LLU1Llfl.£S: Co,rent l1ab1.h11e,: Accounts payable s 905 s S49 Accrued liabilities 1,174 2.029 Accr~d fo,bilities- 1d11tl"d pami~ 569 560 Income i.,,cs P<'!Yllblc 2.530 Deferred lot tale rev~ues 3,475 4.27S Deferred wal!:r sales ren?nue, 13 :570 Debt. coacru ponion 10 10 Total cum:nt liabilities 6.146 10.S23 PartJCJpahd! Ullet'CSIJ 1fi export WBl!:r supply 323 DebL less current portion 3.942 3.950 Dcfcned tL't habtlny. n~ 873 1.075 Leese ob!Jgattons - Opcrall.rlg ka1cs. less current poruon 6 62 Total bab1h11es 10,967 16,233 Com.mJaucou and conungcnc1es SHAREBOLDERS' EQUin': Scnes B preferred shares: par vatuc S0.001 per share. 25 msllioo authonzcd: 132,5 13 ,~sued and outitandine (hqu,datiot1 p,efetiet!Ce of S-i32,5 I 3) Common shares par value 1/3 of SO l per share. 40 0 million authorized; 2-i.0:,4.843 and 23.980.645 oumanding. re:spcrnvcly 80 80 Additional paid-in capital 174,709 174.150 Accumulated deficit (57.591) (61.234) Iota! shareholders' equity 117.198 112.996 pg 25 Total lia.bilitics and diarcholdcn • equity s 128.165 s 129.229

Three M outh~ Endl-d l"iiue Mou lbs Eodl-d (ln thousands, except shan iJiformarion) )la~· 31, 2023 )lay 31, 2022 May 31, 2023 )lay 31, 2022 RC·emics: INCOME STATEMENT Mctcrcd water usage from: Municipal c11$tomcrs s 145 $ 94 $ 3-19 s 274 Commercial Ctl$t0tucrs 2,145 549 2,596 2.686 Waste,.-a1cr treatment fees 75 66 216 185 Water and wastewater tap fees 1.256 1.273 2.400 2.447 Loi ,ales 3.160 1.070 5.064 5.644 Project management fees 42 81 173 529 Single-family rentals 34 25 90 59 Special facility projects and other ll 29 3.21 299 Total l'C'·cnucs 6,879 3, 187 11,209 12.123 Expenses: Vatcr ~cn·icc operations 576 560 1.457 1,419 Vaslewatcr scn;ce opcratioM 96 109 350 337 LRnd dC·clopmenl construction costs 95 1 222 1.282 1,048 Project management costs 81 66 227 112 Sin~lc:-family rental costs 24 9 53 16 Dc-plction and dc-prcc:iatiou 407 349 1.246 1.055 Other 71 79 318 298 Total cost of rcvenucs 2,206 1,394 4,933 4.285 Ocncml and :ulmini<rtrntfrc expenses 805 1,0 74 3,900 3,950 Depreciation 111 95 348 277 OpC'Tating (Jou) iucome 3,157 624 2.028 3.6 11 Other income (apcm.c): Interest income • related party 331 305 84 1 1.196 Interest income: • Jnva;Cmenti 281 5 727 8 Oil and gas royalty income. net 44 123 227 330 Oil and gas lease income, net 18 47 56 143 Other, net 40 10 1,257 40 Interest expense, net (52) {3 1) {149) (52) Income from opcrntioM before income ta.,cs 4.419 1.083 4.987 S.216 Income true expen~e 1,124 246 1.344 1.224 Net income s 3.295 $ 837 $ 3.643 5 4.051 Enm.ings per common share - basic and diluted Basic s 0.14 $ O.o3 $ 0 .15 5 0. 17 Diluted s 0. 14 $ 0 .03 s 0.IS 5 0. 17 ''eight~ an:rn!!e common 1h.~rcr, ou:tstnnding: Da~ic 24,054,843 23.970,290 24.021,582 23.914,394 Diluted 24, 166,344 24.124,586 24.131 ,621 24,183.500 pg 26

OTHER INFORMATION / UPCOMING DATES I Stock Repurchase Program - as announced in the press release on November 14, 2022, our board approved an open-ended stock repurchase program which authorizes our CEO and CFO to repurchase up to 200,000 shares in the open market. No shares repurchased as of this date. I Important Upcoming Dates • 10-Q Filing: July 14, 2023 • Investor day: July 19, 2023 • IDEAS Conference in Chicago: August 24, 2023 pg 27

Mark W. Harding President and CEO Patrick J. Beirne Chair of the Board Wanda J. Abel Director and Chair of the Nominating and Governance Committee LEADERSHIP AND BOARD OF DIRECTORS Kevin B. McNeill Vice President and CFO Peter C. Howell Director and Chair of the Audit Committee Daniel R. Kozlowski Director and Chair of the Compensation Committee Jeffrey G. Sheets Director Fredrick A. Fendel III. Director pg 28

CONTACT AND COMPANY INFORMATION CORPORATE HEADQUARTERS 34501 E. Quincy Ave, BLDG 65, Suite A, Watkins, CO 80137 CONTACT INFO info@pu recyclewater. com 303-292-3456 www. pu recyclewater. com Follow us on ... "JI Twitter: @PureCycleCorp ml Linkedln: https://www.linkedin.com/company/pure-cycle-corporation STOCK INFO Ticker symbol (NASDAQ Capital Market): PCYO Shares outstanding: 24.1 million Questions? pg 29

PURE CYCLE CORPORATION EARNINGS PRESENTATION FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 COMPANY OVERVIEW FINANCIAL RESULTS

Document and Entity Information	Jul. 12, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Jul. 12, 2023
Securities Act File Number	0-8814
Entity Registrant Name	PURE CYCLE CORPORATION
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-0705083
Entity Address, State or Province	CO
Entity Address, Address Line One	34501 East Quincy Avenue, Building 65, Suite A
Entity Address, City or Town	Watkins
Entity Address, Postal Zip Code	80137
City Area Code	303
Local Phone Number	292-3456
Title of 12(b) Security	Common Stock 1/3 of $.01 par value
Trading Symbol	PCYO
Security Exchange Name	NASDAQ
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000276720
Amendment Flag	false

N-2	Jul. 12, 2023
Cover [Abstract]
Entity Central Index Key	0000276720
Amendment Flag	false
Securities Act File Number	0-8814
Document Type	8-K
Entity Registrant Name	PURE CYCLE CORPORATION
Entity Address, Address Line One	34501 East Quincy Avenue, Building 65, Suite A
Entity Address, City or Town	Watkins
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80137
City Area Code	303
Local Phone Number	292-3456
Entity Emerging Growth Company	false