Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Aris Water Solutions, Inc. Reports Second Quarter 2024 Results, Increases Full Year Adjusted EBITDA Guidance By: Aris Water Solutions, Inc. via Business Wire August 06, 2024 at 16:10 PM EDT 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240806050836/en/Contacts David Tuerff Senior Vice President, Finance and Investor Relations (281) 501-3070 IR@ariswater.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Aris Water Solutions, Inc. Reports Second Quarter 2024 Results, Increases Full Year Adjusted EBITDA Guidance By: Aris Water Solutions, Inc. via Business Wire August 06, 2024 at 16:10 PM EDT 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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240806050836/en/Contacts David Tuerff Senior Vice President, Finance and Investor Relations (281) 501-3070 IR@ariswater.com
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 View source version on businesswire.com: https://www.businesswire.com/news/home/20240806050836/en/
