Pure Cycle Corp (NASDAQ:PCYO) Q3 2020 Earnings Conference Call - Final Transcript

Jul 07, 2020 • 04:00 pm ET

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Pure Cycle Corp (NASDAQ:PCYO) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Mark Harding

where we're headed with the investment that we've got on the balance sheet, you're going to see probably another $14 million come in attributable to that. So some very healthy revenue is still yet to come to balance out the $35 million investment that we've got into the Phase One infrastructure.

Industrial water sales have been the hardest hit from the virus related impacts and that's basically because of demand for travel and oil and gas in general. So we've had no real fracs or water sales attributable to that. Some small deliveries relative to pad construction and maintenance issues and things like that, but we'll continue to monitor that, that's a variable delivery for us. So fortunately for us, we have a fixed investment into our infrastructure and then we can dial-up or dial down that system as appropriate. We don't have a lot of -- a lot of inventory that goes away. I mean our water supplies will continue to be available for those users.

And then lastly, our oil and gas royalties. Those are a little bit stronger this year and that's mostly because we've had new wells that were developed in our mineral interest, these wells are actually developed in our one-eighth pooling interest as opposed to -- we have really one square mile where we have one-eighth of two square mile pooling and then three-eight in another pooling. This actually -- these wells are actually in the smaller mineral segment of that. So those have been healthy for us this year. We enjoy that.

Slide 14 and 15, really start to get into what's in the Q itself. You got the balance sheet, good liquidity, no liability. I'm very proud of kind of our stewardship of investor capital where we've been able to accumulate these assets. We are very hawkish on our denominator for shares outstanding. The company has not issued shares since 2010 and we're very still -- we take very serious our fiduciary role for your capital and make sure that we're putting those assets to use and we don't leverage this up. We do have leverageability within the balance sheet and if there is an opportunity that would call for something like that, an acquisition or something like that that may interest us, we have the ability to do that, but if anything this the virus issues and the downturn in an economy like this our strong healthy balance sheet, certainly has proven a very strong stewardship for this company and our assets. So we're very pleased to be able to present a very clean balance sheet. And then also a very profitable income statement, if you take a look at that. For those who keep track of how our assets are performing without the accounting principles and our favorite government taxes, we do show that non-GAAP EBITDA measure, and you take a look at -- if we're at $9.5 million on $15 million of revenues that's tremendous asset potential, tremendous earning