Pure Cycle 2025 Q3 Earnings Misses Targets as Net Income Falls 20.1%

Pure Cycle (PCYO) reported its fiscal 2025 Q3 earnings on Jul 09th, 2025. Pure Cycle's results for the third quarter of 2025 did not meet expectations, with both revenue and earnings showing declines compared to the previous year. The company has maintained its guidance for total revenue and net income for the fiscal year ending August 31, 2025. However, the anticipated earnings per share remain in line with previous estimates. Management remains focused on strategic investments to drive future growth.

Revenue
The total revenue for Pure Cycle fell by 32.4% to $5.14 million in Q3 2025, down from $7.60 million in Q3 2024. Metered water usage contributed $297,000, municipal customers generated $148,000, and commercial customers added $149,000. Wastewater treatment fees amounted to $102,000, while water and wastewater tap fees brought in $1.70 million. There were no land development construction costs, but lot sales accounted for $2.53 million. Project management fees contributed $138,000, single-family rentals added $131,000, and special facility projects and other sources generated $246,000.

Earnings/Net Income
Pure Cycle's EPS decreased by 25.0% to $0.09 in Q3 2025, compared to $0.12 in Q3 2024. The company's net income also declined to $2.26 million, a 20.1% drop from $2.83 million in the previous year. This decline reflects a challenging environment for the company.

Price Action
The stock price of Pure Cycle has edged down 2.92% during the latest trading day, has dropped 3.54% during the most recent full trading week, and has climbed 3.91% month-to-date.

Post-Earnings Price Action Review
Following Pure Cycle's earnings release, the historical strategy of purchasing shares 30 days post-announcement, given a quarter-over-quarter revenue increase, has historically yielded strong returns. Over the past three years, this approach has achieved an impressive 92.97% return, outperforming the benchmark by 24.63%. The strategy's Sharpe ratio stood at 1.19, indicative of favorable risk-adjusted returns. Moreover, the maximum drawdown was -7.83%, showcasing the strategy's resilience against market volatility. This performance underscores the strategy's effectiveness in capitalizing on post-earnings momentum, despite the current revenue downturn.

CEO Commentary
Mark W. Harding, CEO of Pure Cycle Corporation, highlighted that "despite a challenging housing market, we continue to see growth in our core segments." He emphasized that the company's diversified business model, including water and wastewater services and land development, remains resilient. Harding noted the strategic focus on completing phases at Sky Ranch, which is crucial for revenue generation. He expressed cautious optimism regarding future performance, stating, "We believe our entry-level pricing and limited inventory position us well amidst ongoing market fluctuations."

Guidance
Pure Cycle Corporation anticipates total revenue of approximately $31 million and net income of around $9 million for the fiscal year ending August 31, 2025. The company expects to maintain earnings per share (EPS) at $0.29, driven by continued demand for water and wastewater services and successful execution of land development projects. Management remains committed to strategic investments in infrastructure to support ongoing growth.

Additional News
In recent news, Pure Cycle Corporation announced its upcoming Q3 2025 earnings call, scheduled for July 10, 2025. The company will discuss its financial results for the three and nine months ended May 31, 2025, providing an opportunity for investors and analysts to engage with management and gain insights into future prospects. Additionally, Pure Cycle has scheduled its annual Investor Day for July 16, 2025. This event will include a virtual Q&A session, allowing stakeholders to interact directly with the company's leadership. Pure Cycle remains committed to transparency and open communication with its investors.