PCYOMEDIUM SIGNALOPERATIONAL10-K

PCYO expanded its development pipeline meaningfully while experiencing operational headwinds that compressed margins despite asset growth.

The company has grown its finished lot count from 1,395 to 1,529 units and shifted to contracting with national homebuilders for rental properties rather than building directly, suggesting a more capital-efficient expansion strategy. However, the decline in operating income alongside reduced gross margins indicates potential execution challenges or market pressures in their core water/wastewater and land development operations that investors should monitor closely.

Comparing 2025-11-12 vs 2024-11-13View on EDGAR →
FINANCIAL ANALYSIS

PCYO's financial profile shows mixed signals with total assets growing 10.1% to $162.3M while operating performance weakened, as operating income declined meaningfully to $7.7M and gross profit fell 18.9% to $16.0M. Interest expense increased substantially to $391K, reflecting higher financing costs, though net income still managed to grow 12.9% to $13.1M. The company's liquidity position shifted unfavorably with current assets declining 16.4% while current liabilities rose 24.3%, suggesting tighter working capital management will be required going forward.

FINANCIAL STATEMENT CHANGES
Net Interest Income
P&L
-71.4%
$19K→$6K

Net interest income declined 71.4% — margin compression from rate changes or funding cost increases.

Interest Expense
P&L
+63.3%
$239K→$391K

Interest expense surged 63.3% — significant debt increase or rising rates materially impacting earnings.

Operating Income
P&L
-37.3%
$12.2M→$7.7M

Operating income deteriorated sharply — investigate whether driven by one-time charges or structural cost issues.

Share Buybacks
Cash Flow
-31.7%
$581K→$397K

Buyback activity reduced 31.7% — capital being redeployed elsewhere or cash conservation underway.

Current Liabilities
Balance Sheet
+24.3%
$9.3M→$11.6M

Current liabilities rose 24.3% — increased short-term obligations, watch current ratio.

Gross Profit
P&L
-18.9%
$19.8M→$16.0M

Gross margin compression — rising input costs, pricing pressure, or unfavorable product mix shift.

Current Assets
Balance Sheet
-16.4%
$37.9M→$31.7M

Current assets declined 16.4% — monitor working capital adequacy and short-term liquidity.

Net Income
P&L
+12.9%
$11.6M→$13.1M

Net income grew 12.9% — bottom-line growth signals improving overall business health.

Total Liabilities
Balance Sheet
+10.7%
$17.7M→$19.5M

Liabilities increased 10.7% — monitor debt-to-equity ratio and interest coverage.

Total Assets
Balance Sheet
+10.1%
$147.4M→$162.3M

Asset base grew 10.1% — expansion through organic growth, acquisitions, or capital deployment.

LANGUAGE CHANGES
NEW — 2025-11-12
PRIOR — 2024-11-13
ADDED
Each of our businesses providing water and wastewater services, land development and single-family home rentals generates attractive recurring monthly income.
For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights, land interests and single-family rental homes along the Front Range of Colorado.
We have added an extensive network of wholesale water production, storage, treatment and distribution systems, and wastewater collection and treatment systems that we operate and maintain to serve domestic, commercial, and industrial customers in the eastern Denver metropolitan region.
Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we contract with national homebuilders to build us single-family homes for rent, typically under annual lease agreements.
One of the most significant components of any master planned community in Colorado is its ability to bring high quality domestic water, irrigation water, and wastewater services to the community.
To date, within our three business segments, we have sold or are in the process of developing 1,529 finished lots, we have constructed and operated and maintain water and wastewater systems with capacity to serve approximately 2,500 residential equivalent units, and we have constructed and are renting 14 homes.
As of August 31, 2025, through the Rangeview District, we provide service to more than 1,600 single-family equivalent (SFE) water connections and 1,153 SFE wastewater connections.
Sky Ranch is being developed in phases over several years, which began in June 2017, when we entered into agreements with three national home builders to sell the initial residential lots at Sky Ranch (referred to as Phase 1) and has continued to expand as we sell lots, including to additional national homebuilders, in Phase 2.
As of August 31, 2025, homebuilders have built and sold 837 homes at Sky Ranch, with approximately 64 additional homes under construction.
Sky Ranch Academy has partnered with National Heritage Academy (NHA) to build and operate the charter, NHA brings more than 25 years of experience providing educational services at more than 100 schools in nine states, educating more than 60,000 students including five other schools in Colorado.
REMOVED
Each of our businesses, providing water and wastewater services, land development and single-family home rentals generate attractive recurring monthly income.
For more than 30 years, we have accumulated and continue to accumulate a portfolio of valuable water rights and land interests along the Front Range of Colorado.
We have added an extensive network of wholesale water production, storage, treatment and distribution systems, and wastewater collection and treatment systems that we operate and maintain to serve domestic, commercial, and industrial customers in the eastern Denver metropolitan region (the illustration below notes the general area of our land and water assets).
Additionally, we have retained lots in our Sky Ranch development for our single-family rental business where we build single-family homes for rent under annual lease agreements.
We refer to these segments as our water and wastewater resource development segment, our land development segment, and our single-family rental segment, all of which are described in greater detail below.
To date, within our three business segments, we have sold or are actively developing 1,395 finished lots, we have constructed and operated and maintain water and wastewater systems with capacity to serve approximately 2,500 residential equivalent units, and we have constructed and are renting 14 homes.
As of August 31, 2024, through the Rangeview District, we provide service to more than 1,400 single-family equivalent (SFE) water connections and more than 952 SFE wastewater connections.
Beginning in late 2021 and continuing through 2024, we saw a significant recovery in the oil and gas markets, and this resulted in additional water sales to oil and gas clients in our fiscal 2024 and 2023.
Land Development Segment In 2010 we purchased approximately 930 acres of land along the I-70 corridor known as Sky Ranch.
Sky Ranch is being developed in phases over several years, which began in June 2017, when we entered into agreements with three national home builders to sell the initial residential lots at Sky Ranch (referred to as Phase 1) and has continued to expand as we sell lots to national homebuilders now up to 1,395 residential lots.
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