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Aris Water Solutions, Inc. Reports Second Quarter 2024 Results, Increases Full Year Adjusted EBITDA Guidance

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Aris Water Solutions (NYSE: ARIS) reported strong Q2 2024 results, with net income increasing 26% to $13.1 million and Adjusted EBITDA rising 17% to $50.0 million compared to Q2 2023. The company saw a 5% increase in produced water volumes and a 6% rise in recycled water volumes. Aris achieved a Gross Margin per barrel of $0.31 and an Adjusted Operating Margin per barrel of $0.46, a 21% increase year-over-year. The company maintained a strong balance sheet with a leverage ratio of 2.2x and $299 million in available liquidity. Based on strong performance, Aris increased its 2024 Adjusted EBITDA guidance to $195-$205 million. The company also announced plans for an iodine extraction facility in the Permian Basin, expected to be operational by year-end 2025.

Aris Water Solutions (NYSE: ARIS) ha riportato risultati positivi per il Q2 2024, con un aumento del 26% dell'utile netto a 13,1 milioni di dollari e un aumento del 17% dell'EBITDA rettificato a 50,0 milioni di dollari rispetto al Q2 2023. L'azienda ha registrato un incremento del 5% nei volumi di acqua prodotta e un aumento del 6% nei volumi di acqua riciclata. Aris ha raggiunto un Margine lordo per barile di 0,31 dollari e un Margine operativo rettificato per barile di 0,46 dollari, con un aumento del 21% rispetto all'anno precedente. L'azienda ha mantenuto un bilancio solido con un rapporto di indebitamento di 2,2x e 299 milioni di dollari in liquidità disponibile. Grazie a performance solide, Aris ha aumentato la sua guideline per l'EBITDA rettificato 2024 a 195-205 milioni di dollari. La società ha anche annunciato piani per un impianto di estrazione di iodio nel Permian Basin, previsto per essere operativo entro la fine del 2025.

Aris Water Solutions (NYSE: ARIS) reportó resultados sólidos para el Q2 2024, con un aumento del 26% en los ingresos netos a 13.1 millones de dólares y un incremento del 17% en el EBITDA ajustado a 50.0 millones de dólares en comparación con el Q2 2023. La compañía vio un aumento del 5% en los volúmenes de agua producida y un incremento del 6% en los volúmenes de agua reciclada. Aris logró un Margen bruto por barril de 0.31 dólares y un Margen operativo ajustado por barril de 0.46 dólares, un aumento del 21% interanual. La empresa mantuvo un balance sólido con una relación de apalancamiento de 2.2x y 299 millones de dólares en liquidez disponible. Basándose en un desempeño sólido, Aris aumentó su guía de EBITDA ajustado 2024 a 195-205 millones de dólares. La compañía también anunció planes para una instalación de extracción de yodo en la Cuenca Permian, que se espera que esté operativa para finales de 2025.

Aris Water Solutions (NYSE: ARIS)는 2024년 2분기에 강력한 실적을 보고했으며, 순이익이 26% 증가하여 1310만 달러에 이르고, 조정 EBITDA가 17% 상승하여 5000만 달러에 도달했습니다. 이 회사는 생산된 물의 양이 5% 증가하고 재활용된 물의 양이 6% 증가했습니다. Aris는 배럴당 0.31달러의 총 마진배럴당 0.46달러의 조정 운영 마진을 달성했으며, 이는 전년 대비 21% 증가한 수치입니다. 이 회사는 2.2배의 부채 비율과 2억 9900만 달러의 가용 유동성을 유지하며 강력한 재무 구조를 유지하고 있습니다. 강력한 실적을 바탕으로 Aris는 2024년 조정 EBITDA 가이던스를 1억 9500만~2억 500만 달러로 상향 조정했습니다. 회사는 또한 2025년 말까지 가동될 예정인 Permian Basin의 요오드 추출 시설 계획을 발표했습니다.

Aris Water Solutions (NYSE: ARIS) a déclaré de solides résultats pour le 2ème trimestre 2024, avec un revenu net en augmentation de 26% à 13,1 millions de dollars et un EBITDA ajusté en hausse de 17% à 50,0 millions de dollars par rapport au 2ème trimestre 2023. L'entreprise a connu une augmentation de 5% des volumes d'eau produite et une hausse de 6% des volumes d'eau recyclée. Aris a atteint un marge brute par baril de 0,31 dollar et un marge opérationnelle ajustée par baril de 0,46 dollar, ce qui correspond à une augmentation de 21% par rapport à l'année précédente. L'entreprise a maintenu un bilan solide avec un ratio d'endettement de 2,2x et 299 millions de dollars de liquidités disponibles. Sur la base de cette performance solide, Aris a relevé sa prévision d'EBITDA ajusté pour 2024 entre 195 et 205 millions de dollars. La société a également annoncé des projets pour une installation d'extraction d'iode dans le bassin Permien, qui devrait être opérationnelle d'ici la fin de 2025.

Aris Water Solutions (NYSE: ARIS) hat starke Q2 2024 Ergebnisse berichtet, mit einem Anstieg des Nettogewinns um 26% auf 13,1 Millionen Dollar und einem Anstieg des bereinigten EBITDA um 17% auf 50,0 Millionen Dollar im Vergleich zu Q2 2023. Das Unternehmen verzeichnete einen Anstieg der produzierten Wassermengen um 5% und einen Anstieg der recycelten Wassermengen um 6%. Aris erreichte einen Bruttomargen pro Barrel von 0,31 Dollar und eine bereinigte operative Marge pro Barrel von 0,46 Dollar, was einem Anstieg von 21% im Jahresvergleich entspricht. Das Unternehmen wies eine starke Bilanz mit einem Verschuldungsgrad von 2,2x und 299 Millionen Dollar an verfügbaren liquiden Mitteln auf. Basierend auf einer starken Leistung erhöhte Aris die 2024er-Earnings Before Interest, Taxes, Depreciation, and Amortization-Prognose auf 195 bis 205 Millionen Dollar. Das Unternehmen kündigte auch Pläne für eine Jod-Extraktionsanlage im Permian Basin an, die bis Ende 2025 in Betrieb genommen werden soll.

Positive
  • Net income increased 26% to $13.1 million in Q2 2024 compared to Q2 2023
  • Adjusted EBITDA rose 17% to $50.0 million in Q2 2024 versus Q2 2023
  • Produced water volumes increased 5% and recycled water volumes rose 6% year-over-year
  • Adjusted Operating Margin per barrel improved 21% to $0.46 compared to Q2 2023
  • 2024 Adjusted EBITDA guidance increased to $195-$205 million
  • Plans announced for an iodine extraction facility, expanding revenue streams
Negative
  • Produced water handling volumes decreased 6% compared to Q1 2024
  • Groundwater volumes sold decreased 69% compared to Q2 2023
  • Skim oil recoveries decreased 14% compared to Q1 2024

Insights

Aris Water Solutions' Q2 2024 results demonstrate solid financial performance and operational growth. The company reported a $13.1 million net income, up 26% year-over-year and generated $50.0 million in Adjusted EBITDA, a 17% increase. The improved Adjusted Operating Margin of $0.46 per barrel, up 21% YoY, indicates enhanced operational efficiency.

The company's strong balance sheet with a 2.2x leverage ratio and $299 million available liquidity provides financial flexibility. The increased 2024 Adjusted EBITDA guidance to $195-$205 million reflects management's confidence in future performance. However, investors should note the slight sequential decline in volumes and Adjusted EBITDA from Q1 2024.

Aris's Q2 results highlight its strong position in the Permian Basin water management market. The 5% increase in produced water volumes and 6% growth in recycled water volumes year-over-year demonstrate the company's ability to capitalize on increasing production in its dedicated acreage. The focus on operating and capital efficiencies is important for maintaining competitive advantage in this sector.

The company's expansion into mineral extraction, particularly the planned iodine extraction facility, represents a promising diversification strategy. Additionally, the ongoing Joint Industry Project for water treatment and reuse showcases Aris's commitment to sustainable water management solutions. These initiatives could potentially open new revenue streams and strengthen Aris's market position in the long term.

Aris Water Solutions is making significant strides in sustainable water management within the oil and gas industry. The company's focus on recycling produced water and exploring beneficial reuse options aligns with growing environmental concerns and regulatory pressures. The Joint Industry Project with major oil companies to develop cost-effective water treatment for multiple uses is particularly noteworthy.

The planned iodine extraction facility represents an innovative approach to resource recovery from produced water, potentially reducing waste and creating additional value. However, investors should monitor regulatory developments closely, as the approval process for applications outside oil and gas could impact the timeline and scope of these initiatives. Overall, Aris's efforts in sustainability could enhance its long-term competitive position and appeal to ESG-focused investors.

HOUSTON--(BUSINESS WIRE)-- Aris Water Solutions, Inc. (NYSE: ARIS) (“Aris,” “Aris Water” or the “Company”) today announced financial and operating results for the second quarter ended June 30, 2024.

SECOND QUARTER 2024 HIGHLIGHTS

  • Increased produced water volumes 5% and recycled water volumes 6% versus the second quarter of 2023
  • Achieved net income of $13.1 million, a 26% increase versus the second quarter of 2023
  • Generated Adjusted EBITDA1 of $50.0 million, up 17% versus the second quarter of 2023
  • Achieved Gross Margin per barrel of $0.31 and Adjusted Operating Margin2 per barrel of $0.46, a 21% increase in Adjusted Operating Margin per barrel2 versus the second quarter of 2023
  • Maintained a strong balance sheet with quarter-end leverage of 2.2x3 and $299 million of available liquidity under our revolving credit facility
  • Increasing 2024 Adjusted EBITDA guidance to $195 to $205 million, reflecting strong first half performance and further confidence in the outlook for the second half of the year

“Aris had a strong second quarter as resilient produced water volumes and operating margins combined to deliver outstanding results. Our customers are steadily growing their production and associated water volumes in our dedicated acreage, and we are pleased with how well Aris has performed to date this year. In the second half of the year, we will remain focused on operating and capital efficiencies, driving free cash flow and working with new and existing customers as we evaluate opportunities for further growth,” said Amanda Brock, President and CEO of Aris.

“While we remain focused on our core business, we continue to gauge how we can create additional value from our produced water stream and are increasingly optimistic regarding mineral extraction. In the second quarter, Aris signed a letter of intent with an established iodine production and marketing company to construct an iodine extraction facility at one of Aris’s Permian Basin produced water management facilities. Aris anticipates that this first iodine extraction facility in the Permian Basin will be operational by year-end 2025.

As it relates to our beneficial reuse efforts, we continue to work with regulators to accelerate the approval process for applications outside of oil and gas. The Aris-led Joint Industry Project (“JIP”) with ConocoPhilllips, Chevron, and ExxonMobil has successfully completed its second of three desalination pilots and is scheduled to complete Phase 1 testing by year-end to confirm that produced water can be cost effectively and safely treated for multiple uses.

Overall, we remain committed to continuous improvement in our operations, increasing automation and reducing costs while maintaining system safety and integrity. Margins are at record levels, capital expenditures are in line with expectations, and, when combined with our consistent, contracted produced water revenue stream, we have reached free cash flow generation that supports additional shareholder returns. We remain optimistic about our future opportunities as a leader in delivering sustainable comprehensive water management and infrastructure solutions to the industry.”

OPERATIONS UPDATE

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

Three Months Ended

 

 

 

 

June 30,

 

March 31,

 

% Change

June 30,

 

% Change

 

 

2024

 

2024

 

 

2023

 

 

(thousands of barrels of water per day)

 

 

 

 

 

 

 

 

 

Total Volumes

 

1,455

 

 

1,523

 

 

(4

)%

1,497

 

 

(3

)%

Produced Water Handling Volumes

 

1,093

 

 

1,159

 

 

(6

)%

1,045

 

 

5

%

Water Solutions Volumes

 

 

 

 

 

 

 

 

 

Recycled Produced Water Volumes Sold

 

314

 

 

337

 

 

(7

)%

296

 

 

6

%

Groundwater Volumes Sold

 

48

 

 

27

 

 

78

%

156

 

 

(69

)%

Total Water Solutions Volumes

 

362

 

 

364

 

 

(1

)%

452

 

 

(20

)%

 

 

 

 

 

 

 

 

 

 

Skim oil recoveries (barrels of oil per day)

 

1,490

 

 

1,729

 

 

(14

)%

1,042

 

 

43

%

Skim oil recoveries (as a % of produced water volumes)

 

0.14

%

 

0.15

%

 

(7

)%

0.10

%

 

40

%

 

FINANCIAL UPDATE

Net income was $13.1 million for the second quarter of 2024 versus net income of $10.4 million in the second quarter of 2023 and net income of $16.8 million in the first quarter of 2024. Adjusted Net Income1 was $17.3 million for the second quarter of 2024 versus $13.2 million for the second quarter of 2023 and $20.1 million in the first quarter of 2024.

Adjusted EBITDA1 was $50.0 million for the second quarter of 2024, up approximately 17% from $42.6 million in the second quarter of 2023, and down approximately 6% from $53.1 million in the first quarter of 2024.

Gross Margin per Barrel for the second quarter of 2024 was $0.31 per barrel versus $0.24 per barrel in the second quarter of 2023.

Adjusted Operating Margin per Barrel2 for the second quarter of 2024 was $0.46 per barrel versus $0.38 per barrel in the second quarter of 2023.

Second quarter 2024 Capital Expenditures4 totaled approximately $37 million versus $49 million in the second quarter of 2023.

STRONG BALANCE SHEET AND LIQUIDITY

As of June 30, 2024, the Company had net debt of approximately $438 million with $12 million in cash and $299 million available under its revolving credit facility. The Company’s leverage ratio at the end of the second quarter of 2024 was 2.2X3, below the Company’s target leverage of 2.5X – 3.5X.

THIRD QUARTER 2024 DIVIDEND

Aris’s Board of Directors declared a dividend on its Class A common stock for the third quarter of 2024 of $0.105 per share. In conjunction with the dividend payment, a distribution of $0.105 per unit will be paid to unit holders of Solaris Midstream Holdings, LLC. The dividend will be paid on September 19, 2024, to holders of record of the Company’s Class A common stock as of the close of business on September 5, 2024. The distribution to unit holders of Solaris Midstream Holdings, LLC will be subject to the same payment and record dates.

UPDATED 2024 FINANCIAL OUTLOOK

“Given our strong first half of 2024 and increased confidence in the outlook for the second half of the year, we are increasing our full year 2024 Adjusted EBITDA guidance, establishing a new range between $195 and $205 million,” said Amanda Brock. “I’m extremely grateful to our team for their hard work and successful execution so far this year and look forward to continuing our positive momentum throughout the rest of 2024 and beyond.”

For the third quarter of 2024, the Company expects:

  • Produced Water Handling volumes between 1,060 and 1,090 thousand barrels of water per day
  • Water Solutions volumes between 410 and 440 thousand barrels of water per day
  • Adjusted Operating Margin per Barrel2 between $0.43 and $0.45
  • Skim oil recoveries of approximately 1,300 barrels per day
  • Adjusted EBITDA1 between $48 and $52 million
  • No change to Aris’s full year Capital Expenditure4 outlook of $85 to $105 million

CONFERENCE CALL

Aris will host a conference call to discuss its second quarter 2024 results on Wednesday, August 7, 2024, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time).

Participants should call (877) 407-5792 and refer to Aris Water Solutions, Inc. when dialing in. Participants are encouraged to log in to the webcast or dial in to the conference call approximately ten minutes prior to the start time. To listen via live webcast, please visit the Investor Relations section of the Company’s website, www.ariswater.com.

An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately fourteen days. It can be accessed by dialing (877) 660-6853 within the United States or (201) 612-7415 outside of the United States. The conference call replay access code is 13747323.

About Aris Water Solutions, Inc.

Aris Water Solutions, Inc. is a leading, growth-oriented environmental infrastructure and solutions company that directly helps its customers reduce their water and carbon footprints. Aris Water delivers full-cycle water handling and recycling solutions that increase the sustainability of energy company operations. Its integrated pipelines and related infrastructure create long-term value by delivering high-capacity, comprehensive produced water management, recycling and supply solutions to operators in the core areas of the Permian Basin.

 

1 Adjusted Net Income, Adjusted EBITDA, and Diluted Adjusted Net Income per Share are non-GAAP financial measures. See the supplementary schedules in this press release for a discussion of how we define and calculate Adjusted Net Income, Adjusted EBITDA, and Diluted Adjusted Net Income per Share and a reconciliation thereof to net income, the most directly comparable GAAP measure.

 

2 Adjusted Operating Margin per Barrel is a non-GAAP financial measure. See the supplementary schedules in this press release for a discussion of how we define and calculate Adjusted Operating Margin per Barrel and a reconciliation thereof to gross margin, the most directly comparable GAAP measure.

 

3 Represents a non-GAAP financial measure. Defined as net debt as of June 30, 2024, divided by trailing twelve months Adjusted EBITDA. Net debt is calculated as total debt less cash and cash equivalents. See the supplementary schedules in this press release for a reconciliation to the most directly comparable GAAP measure.

 

4 Capital Expenditures is a non-GAAP financial measure. See the supplementary schedules in this press release for a discussion of how we define and calculate Capital Expenditures and a reconciliation thereof to cash paid for property, plant, and equipment, the most directly comparable GAAP measure.

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. Examples of forward-looking statements include, but are not limited to, statements, information, opinions or beliefs regarding our business strategy, our industry, our future profitability, business and financial performance, including our guidance for 2024, current and potential future long-term contracts, legal and regulatory developments, our ability to identify strategic acquisitions and realize expected benefits therefrom, the development of technologies for the beneficial reuse of produced water and related strategies, plans, objectives and strategic pursuits and other statements that are not historical facts. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “guidance,” “preliminary,” “project,” “estimate,” “expect,” “anticipate,” “continue,” “sustain,” “will,” “intend,” “strive,” “plan,” “goal,” “target,” “believe,” “forecast,” “outlook,” “future,” “potential,” “opportunity,” “predict,” “may,” “visibility,” “possible,” “should,” “could” and variations of such words or similar expressions. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated or implied by the forward-looking statements including our guidance for 2024. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to, energy prices, the Russia-Ukraine and Middle Eastern conflicts, macroeconomic conditions (such as inflation) and market uncertainty related thereto, legislative and regulatory developments, customer plans and preferences, adverse results from litigation and the use of financial resources for litigation defense, technological innovations and developments, and other events discussed or referenced in our filings made from time to time with the Securities and Exchange Commission (“SEC”), including such factors discussed under “Risk Factors” in our most recent Annual Report on Form 10-K, and if applicable, our subsequent SEC filings, which are available on our Investor Relations website at https://ir.ariswater.com/sec-filings or on the SEC’s website at www.sec.gov/edgar. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. All forward-looking statements, expressed or implied, included in this presentation and any oral statements made in connection with this presentation are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Table 1

Aris Water Solutions, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

(in thousands, except for share and

 

Three Months Ended

 

Six Months Ended

per share amounts)

 

June 30,

 

June 30,

 

 

2024

 

2023

 

 

2024

 

2023

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling

 

$

54,815

 

$

49,716

 

 

$

113,921

 

$

95,816

Produced Water Handling — Affiliate

 

 

28,614

 

 

23,181

 

 

 

55,441

 

 

46,321

Water Solutions

 

 

13,795

 

 

14,928

 

 

 

25,497

 

 

28,810

Water Solutions — Affiliate

 

 

3,453

 

 

8,163

 

 

 

8,695

 

 

16,147

Other Revenue

 

 

440

 

 

645

 

 

 

969

 

 

1,110

Total Revenue

 

 

101,117

 

 

96,633

 

 

 

204,523

 

 

188,204

Cost of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Direct Operating Costs

 

 

40,194

 

 

44,446

 

 

 

79,840

 

 

88,291

Depreciation, Amortization and Accretion

 

 

19,707

 

 

19,086

 

 

 

39,128

 

 

37,692

Total Cost of Revenue

 

 

59,901

 

 

63,532

 

 

 

118,968

 

 

125,983

Operating Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

General and Administrative

 

 

16,037

 

 

12,682

 

 

 

30,538

 

 

24,481

Research and Development Expense

 

 

1,128

 

 

650

 

 

 

2,193

 

 

1,058

Other Operating Expense (Income), Net

 

 

132

 

 

(192

)

 

 

1,047

 

 

25

Total Operating Expenses

 

 

17,297

 

 

13,140

 

 

 

33,778

 

 

25,564

Operating Income

 

 

23,919

 

 

19,961

 

 

 

51,777

 

 

36,657

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, Net

 

 

8,813

 

 

7,971

 

 

 

17,251

 

 

15,632

Other

 

 

 

 

 

 

 

1

 

 

Total Other Expense

 

 

8,813

 

 

7,971

 

 

 

17,252

 

 

15,632

Income Before Income Taxes

 

 

15,106

 

 

11,990

 

 

 

34,525

 

 

21,025

Income Tax Expense

 

 

1,994

 

 

1,559

 

 

 

4,583

 

 

2,886

Net Income

 

 

13,112

 

 

10,431

 

 

 

29,942

 

 

18,139

Net Income Attributable to Noncontrolling Interest

 

 

7,147

 

 

5,733

 

 

 

16,354

 

 

10,063

Net Income Attributable to Aris Water Solutions, Inc.

 

$

5,965

 

$

4,698

 

 

$

13,588

 

$

8,076

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.18

 

$

0.15

 

 

$

0.41

 

$

0.25

Diluted

 

$

0.18

 

$

0.15

 

 

$

0.41

 

$

0.25

Weighted Average Shares of Class A Common Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,549,092

 

 

30,036,593

 

 

 

30,451,553

 

 

29,985,869

Diluted

 

 

30,589,997

 

 

30,036,593

 

 

 

30,472,005

 

 

29,985,869

Table 2

Aris Water Solutions, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except for share and per share amounts)

 

June 30,

 

December 31,

 

 

2024

 

2023

Assets

 

 

 

 

 

 

Cash

 

$

11,526

 

 

$

5,063

 

Accounts Receivable, Net

 

 

64,309

 

 

 

59,393

 

Accounts Receivable from Affiliate

 

 

29,132

 

 

 

22,963

 

Other Receivables

 

 

13,432

 

 

 

12,767

 

Prepaids and Deposits

 

 

5,389

 

 

 

8,364

 

Total Current Assets

 

 

123,788

 

 

 

108,550

 

Fixed Assets

 

 

 

 

 

 

Property, Plant and Equipment

 

 

1,116,165

 

 

 

1,041,703

 

Accumulated Depreciation

 

 

(141,019

)

 

 

(121,989

)

Total Property, Plant and Equipment, Net

 

 

975,146

 

 

 

919,714

 

Intangible Assets, Net

 

 

213,750

 

 

 

232,277

 

Goodwill

 

 

34,585

 

 

 

34,585

 

Deferred Income Tax Assets, Net

 

 

18,510

 

 

 

22,634

 

Right-of-Use Assets

 

 

15,839

 

 

 

16,726

 

Other Assets

 

 

5,445

 

 

 

5,995

 

Total Assets

 

$

1,387,063

 

 

$

1,340,481

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Accounts Payable

 

$

42,112

 

 

$

25,925

 

Payables to Affiliate

 

 

679

 

 

 

894

 

Insurance Premium Financing Liability

 

 

1,855

 

 

 

5,463

 

Accrued and Other Current Liabilities

 

 

50,261

 

 

 

64,416

 

Total Current Liabilities

 

 

94,907

 

 

 

96,698

 

Long-Term Debt, Net of Debt Issuance Costs

 

 

444,727

 

 

 

421,792

 

Asset Retirement Obligations

 

 

20,904

 

 

 

19,030

 

Tax Receivable Agreement Liability

 

 

98,274

 

 

 

98,274

 

Other Long-Term Liabilities

 

 

16,071

 

 

 

16,794

 

Total Liabilities

 

 

674,883

 

 

 

652,588

 

Stockholders' Equity

 

 

 

 

 

 

Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of June 30, 2024 and December 31, 2023

 

 

 

 

 

 

Class A Common Stock $0.01 par value, 600,000,000 authorized, 31,104,226 issued and 30,552,938 outstanding as of June 30, 2024; 30,669,932 issued and 30,251,613 outstanding as of December 31, 2023

 

 

310

 

 

 

306

 

Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,543,565 issued and outstanding as of June 30, 2024 and December 31, 2023

 

 

275

 

 

 

275

 

Treasury Stock (at Cost), 551,288 shares as of June 30, 2024; 418,319 shares as of December 31, 2023

 

 

(6,730

)

 

 

(5,133

)

Additional Paid-in-Capital

 

 

335,183

 

 

 

328,543

 

Retained Earnings (Accumulated Deficit)

 

 

7,235

 

 

 

(87

)

Total Stockholders' Equity Attributable to Aris Water Solutions, Inc.

 

 

336,273

 

 

 

323,904

 

Noncontrolling Interest

 

 

375,907

 

 

 

363,989

 

Total Stockholders' Equity

 

 

712,180

 

 

 

687,893

 

Total Liabilities and Stockholders' Equity

 

$

1,387,063

 

 

$

1,340,481

 

Table 3

Aris Water Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended

(in thousands)

 

June 30,

 

 

2024

 

 

2023

 

Cash Flow from Operating Activities

 

 

 

 

 

 

Net Income

 

$

29,942

 

 

$

18,139

 

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities

 

 

 

 

 

 

Deferred Income Tax Expense

 

 

3,770

 

 

 

2,837

 

Depreciation, Amortization and Accretion

 

 

39,128

 

 

 

37,692

 

Stock-Based Compensation

 

 

8,214

 

 

 

5,585

 

Abandoned Well Costs

 

 

310

 

 

 

 

Loss on Disposal of Assets, Net

 

 

114

 

 

 

57

 

Abandoned Projects

 

 

745

 

 

 

128

 

Amortization of Debt Issuance Costs, Net

 

 

1,436

 

 

 

1,041

 

Other

 

 

735

 

 

 

376

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

Accounts Receivable

 

 

(5,524

)

 

 

15,097

 

Accounts Receivable from Affiliate

 

 

(6,169

)

 

 

18,308

 

Other Receivables

 

 

(665

)

 

 

(4,005

)

Prepaids and Deposits

 

 

2,975

 

 

 

1,583

 

Accounts Payable

 

 

1,818

 

 

 

(1,001

)

Payables to Affiliate

 

 

(215

)

 

 

(578

)

Accrued Liabilities and Other

 

 

(18,467

)

 

 

1,208

 

Net Cash Provided by Operating Activities

 

 

58,147

 

 

 

96,467

 

 

 

 

 

 

 

 

Cash Flow from Investing Activities

 

 

 

 

 

 

Property, Plant and Equipment Expenditures

 

 

(56,879

)

 

 

(77,981

)

Deposit on Assets Held for Sale

 

 

 

 

 

1,750

 

Proceeds from the Sale of Property, Plant and Equipment

 

 

94

 

 

 

 

Net Cash Used in Investing Activities

 

 

(56,785

)

 

 

(76,231

)

 

 

 

 

 

 

 

Cash Flow from Financing Activities

 

 

 

 

 

 

Dividends and Distributions Paid

 

 

(11,817

)

 

 

(10,743

)

Repurchase of Shares

 

 

(1,326

)

 

 

(599

)

Repayment of Credit Facility

 

 

(15,000

)

 

 

(36,000

)

Proceeds from Credit Facility

 

 

37,000

 

 

 

30,000

 

Payment of Insurance Premium Financing

 

 

(3,756

)

 

 

 

Net Cash Provided by (Used in) Financing Activities

 

 

5,101

 

 

 

(17,342

)

 

 

 

 

 

 

 

Net Increase in Cash

 

 

6,463

 

 

 

2,894

 

Cash, Beginning of Period

 

 

5,063

 

 

 

1,122

 

Cash, End of Period

 

$

11,526

 

 

$

4,016

 

Use of Non-GAAP Financial Information

The Company uses financial measures that are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA, Adjusted Operating Margin, Adjusted Operating Margin per Barrel, Adjusted Net Income, net debt and leverage ratio, and Capital Expenditures. Although these Non-GAAP financial measures are important factors in assessing the Company’s operating results and cash flows, they should not be considered in isolation or as a substitute for net income or gross margin or any other measures prepared under GAAP.

The Company calculates Adjusted EBITDA as net income (loss) plus: interest expense; income taxes; depreciation, amortization and accretion expense; abandoned well costs, asset impairment and abandoned project charges; losses on the sale of assets; transaction costs; research and development expense; change in payables related to the Tax Receivable Agreement liability as a result of state tax rate changes; loss on debt modification; stock-based compensation expense; and other non-recurring or unusual expenses or charges (such as litigation expenses and severance costs), less any gains on the sale of assets.

The Company calculates Adjusted Operating Margin as Gross Margin plus depreciation, amortization and accretion. The Company defines Adjusted Operating Margin per Barrel as Adjusted Operating Margin divided by total volumes handled, sold or transferred.

The Company calculates Adjusted Net Income as Net Income (Loss) plus the after-tax impacts of stock-based compensation and plus or minus the after-tax impacts of certain items affecting comparability, which are typically noncash and/or nonrecurring items. The Company calculated Diluted Adjusted Net Income Per Share as (i) Net Income (Loss) plus the after-tax impacts of stock-based compensation and plus or minus the after-tax impacts of certain items affecting comparability, which are typically noncash and/or nonrecurring items, divided by (ii) the diluted weighted-average shares of Class A common stock outstanding, assuming the full exchange of all outstanding LLC interests, adjusted for the dilutive effect of outstanding equity-based awards.

For the quarter ended June 30, 2024, the Company calculates its leverage ratio as net debt as of June 30, 2024, divided by Adjusted EBITDA for the trailing twelve months. Net debt is calculated as the principal amount of total debt outstanding as of June 30, 2024, less cash and cash equivalents as of June 30, 2024.

The Company calculates Capital Expenditures as cash capital expenditures for property, plant, and equipment additions less changes in accrued capital costs.

The Company believes these presentations are used by investors and professional research analysts for the valuation, comparison, rating, and investment recommendations of companies within its industry. Similarly, the Company’s management uses this information for comparative purposes as well. Adjusted EBITDA, Adjusted Operating Margin, Adjusted Operating Margin per Barrel, Adjusted Net Income, and Capital Expenditures are not measures of financial performance under GAAP and should not be considered as measures of liquidity or as alternatives to net income (loss), gross margin, or cash paid for property, plant and equipment. Additionally, these presentations as defined by the Company may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) and other measures prepared in accordance with GAAP, such as gross margin, operating income, net income, cash paid for property, plant, and equipment or cash flows from operating activities.

Although we provide forecasts for the non-GAAP measures Adjusted EBITDA, Adjusted Operating Margin per Barrel, and Capital Expenditures, we are not able to forecast their most directly comparable measures (net income, gross margin, and cash paid for property, plant, and equipment) calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of forward-looking GAAP metrics are not predictable, making it impractical for us to forecast. Such elements include but are not limited to non-recurring gains or losses, unusual or non-recurring items, income tax benefit or expense, or one-time transaction costs and cost of revenue, which could have a significant impact on the GAAP measures. The variability of the excluded items may have a significant, and potentially unpredictable, impact on our future GAAP results. As a result, no reconciliation of forecasted non-GAAP measures is provided.

Table 4

Aris Water Solutions, Inc.

Operating Metrics

(Unaudited)

 

 

 

Three Months Ended

Six Months Ended

 

 

June 30,

March 31,

 

June 30,

 

 

2024

 

2023

2024

 

2024

 

2023

(thousands of barrels of water per day)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Volumes

 

 

1,093

 

 

1,045

 

 

1,159

 

 

1,126

 

 

1,008

Water Solutions Volumes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recycled Produced Water Volumes Sold

 

 

314

 

 

296

 

 

337

 

 

325

 

 

277

Groundwater Volumes Sold

 

 

48

 

 

156

 

 

27

 

 

38

 

 

151

Total Water Solutions Volumes

 

 

362

 

 

452

 

 

364

 

 

363

 

 

428

Total Volumes

 

 

1,455

 

 

1,497

 

 

1,523

 

 

1,489

 

 

1,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Barrel Operating Metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Revenue/Barrel

 

$

0.84

 

$

0.77

 

$

0.81

 

$

0.83

 

$

0.78

Water Solutions Revenue/Barrel

 

$

0.52

 

$

0.56

 

$

0.51

 

$

0.52

 

$

0.58

Revenue/Barrel of Total Volumes (2)

 

$

0.76

 

$

0.70

 

$

0.74

 

$

0.75

 

$

0.72

Direct Operating Costs/Barrel

 

$

0.30

 

$

0.33

 

$

0.29

 

$

0.29

 

$

0.34

Gross Margin/Barrel

 

$

0.31

 

$

0.24

 

$

0.32

 

$

0.32

 

$

0.24

Adjusted Operating Margin/Barrel

 

$

0.46

 

$

0.38

 

$

0.46

 

$

0.46

 

$

0.38

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Per Barrel operating metrics are calculated independently. Therefore, the sum of individual amounts may not equal the total presented.

(2) Does not include Other Revenue.

Table 5

Aris Water Solutions, Inc.

Reconciliation of Net Income to Non-GAAP Adjusted EBITDA

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

2024

 

2023

 

Net Income

 

$

13,112

 

 

$

10,431

 

 

$

29,942

 

$

18,139

 

Interest Expense, Net

 

 

8,813

 

 

 

7,971

 

 

 

17,251

 

 

15,632

 

Income Tax Expense

 

 

1,994

 

 

 

1,559

 

 

 

4,583

 

 

2,886

 

Depreciation, Amortization and Accretion

 

 

19,707

 

 

 

19,086

 

 

 

39,128

 

 

37,692

 

Abandoned Well Costs

 

 

(25

)

 

 

 

 

 

310

 

 

 

Stock-Based Compensation

 

 

4,693

 

 

 

3,117

 

 

 

8,214

 

 

5,585

 

Abandoned Projects

 

 

16

 

 

 

128

 

 

 

745

 

 

128

 

Loss on Disposal of Assets, Net

 

 

168

 

 

 

70

 

 

 

114

 

 

57

 

Transaction Costs

 

 

89

 

 

 

100

 

 

 

96

 

 

145

 

Research and Development Expense

 

 

1,128

 

 

 

650

 

 

 

2,193

 

 

1,058

 

Other

 

 

300

 

 

 

(490

)

 

 

527

 

 

(594

)

Adjusted EBITDA

 

$

49,995

 

 

$

42,622

 

 

$

103,103

 

$

80,728

 

Table 6

Aris Water Solutions, Inc.

Reconciliation of Gross Margin to Adjusted Operating Margin and

Adjusted Operating Margin per Barrel

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Total Revenue

 

$

101,117

 

 

$

96,633

 

 

$

204,523

 

 

$

188,204

 

Cost of Revenue

 

 

(59,901

)

 

 

(63,532

)

 

 

(118,968

)

 

 

(125,983

)

Gross Margin

 

 

41,216

 

 

 

33,101

 

 

 

85,555

 

 

 

62,221

 

Depreciation, Amortization and Accretion

 

 

19,707

 

 

 

19,086

 

 

 

39,128

 

 

 

37,692

 

Adjusted Operating Margin

 

$

60,923

 

 

$

52,187

 

 

$

124,683

 

 

$

99,913

 

Total Volumes (thousands of barrels)

 

 

132,372

 

 

 

136,282

 

 

 

270,974

 

 

 

260,097

 

Adjusted Operating Margin/BBL

 

$

0.46

 

 

$

0.38

 

 

$

0.46

 

 

$

0.38

 

Table 7

Aris Water Solutions, Inc.

Reconciliation of Net Income to Non-GAAP Adjusted Net Income

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net Income

 

$

13,112

 

 

$

10,431

 

 

$

29,942

 

 

$

18,139

 

Adjusted items:

 

 

 

 

 

 

 

 

 

 

 

 

Abandoned Well Costs

 

 

(25

)

 

 

 

 

 

310

 

 

 

 

Loss on Disposal of Assets, Net

 

 

168

 

 

 

70

 

 

 

114

 

 

 

57

 

Stock-Based Compensation

 

 

4,693

 

 

 

3,117

 

 

 

8,214

 

 

 

5,585

 

Tax Effect of Adjusting Items (1)

 

 

(638

)

 

 

(419

)

 

 

(1,147

)

 

 

(741

)

Adjusted Net Income

 

$

17,310

 

 

$

13,199

 

 

$

37,433

 

 

$

23,040

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Estimated tax effect of adjusted items allocated to Aris based on statutory rates.

Table 8

Aris Water Solutions, Inc.

Reconciliation of Diluted Net Income Per Share to Non-GAAP Diluted Adjusted Net Income Per Share

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Diluted Net Income Per Share of Class A Common Stock

 

$

0.18

 

 

$

0.15

 

 

$

0.41

 

 

$

0.25

 

Adjusted items:

 

 

 

 

 

 

 

 

 

 

 

 

Reallocation of Net Income Attributable to Noncontrolling Interests From the Assumed Exchange of LLC Interests

 

 

0.04

 

 

 

0.03

 

 

 

0.08

 

 

 

0.05

 

Abandoned Well Costs

 

 

 

 

 

 

 

 

0.01

 

 

 

 

Stock-Based Compensation

 

 

0.08

 

 

 

0.05

 

 

 

0.14

 

 

 

0.10

 

Tax Effect of Adjusting Items (1)

 

 

(0.01

)

 

 

(0.01

)

 

 

(0.02

)

 

 

(0.01

)

Diluted Adjusted Net Income Per Share

 

$

0.29

 

 

$

0.22

 

 

$

0.62

 

 

$

0.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Estimated tax effect of adjusted items allocated to Aris based on statutory rates.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Shares of Class A Common Stock Outstanding

 

 

30,549,092

 

 

 

30,036,593

 

 

 

30,451,553

 

 

 

29,985,869

 

Adjusted Items:

 

 

 

 

 

 

 

 

 

 

 

 

Assumed Redemption of LLC Interests

 

 

27,543,565

 

 

 

27,554,393

 

 

 

27,543,565

 

 

 

27,561,348

 

Dilutive Performance-Based Stock Units (2)

 

 

40,905

 

 

 

 

 

 

20,452

 

 

 

 

Diluted Adjusted Fully Weighted Average Shares of Class A Common Stock Outstanding

 

 

58,133,562

 

 

 

57,590,986

 

 

 

58,015,570

 

 

 

57,547,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Dilutive impact of Performance-Based Stock Units already included for the three and six months ended June 30, 2024 and 2023.

Table 9

Aris Water Solutions, Inc.

Computation of Leverage Ratio

(Unaudited)

 

 

 

 

 

As of

(in thousands)

 

June 30, 2024

Principal Amount of Debt at June 30, 2024

 

$

449,855

 

Less: Cash at June 30, 2024

 

 

(11,526

)

Net Debt

 

$

438,329

 

 

 

 

 

Net Debt

 

$

438,329

 

÷ Trailing Twelve Months Adjusted EBITDA

 

 

197,347

 

Leverage Ratio

 

 

2.22

 

Table 10

Aris Water Solutions, Inc.

Reconciliation of Capital Expenditures

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

(in thousands)

 

2024

 

2023

 

2024

 

2023

Cash Paid for Property, Plant and Equipment

 

$

37,297

 

$

42,666

 

$

56,879

 

$

77,981

Change in Capital Related Accruals

 

 

49

 

 

6,422

 

 

18,183

 

 

19,081

Capital Expenditures

 

$

37,346

 

$

49,088

 

$

75,062

 

$

97,062

 

David Tuerff

Senior Vice President, Finance and Investor Relations

(281) 501-3070

IR@ariswater.com

Source: Aris Water Solutions, Inc.

FAQ

What were Aris Water Solutions' (ARIS) key financial results for Q2 2024?

Aris Water Solutions reported net income of $13.1 million, a 26% increase from Q2 2023, and Adjusted EBITDA of $50.0 million, up 17% year-over-year. The company achieved a Gross Margin per barrel of $0.31 and an Adjusted Operating Margin per barrel of $0.46.

How did Aris Water Solutions' (ARIS) water volumes perform in Q2 2024?

Aris Water Solutions saw a 5% increase in produced water volumes and a 6% rise in recycled water volumes compared to Q2 2023. However, produced water handling volumes decreased 6% compared to Q1 2024.

What is Aris Water Solutions' (ARIS) updated 2024 Adjusted EBITDA guidance?

Based on strong first-half performance and increased confidence in the second half outlook, Aris Water Solutions increased its 2024 Adjusted EBITDA guidance to a range of $195 to $205 million.

What new project did Aris Water Solutions (ARIS) announce for diversifying revenue?

Aris Water Solutions announced plans to construct an iodine extraction facility at one of its Permian Basin produced water management facilities. The facility is expected to be operational by year-end 2025, marking the first such facility in the Permian Basin.

Aris Water Solutions, Inc.

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Utilities - Regulated Water
Oil & Gas Field Services, Nec
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