Le Lézard
Classified in: Business
Subjects: EARNINGS, Dividend, Conference Call, Webcast

Aris Water Solutions, Inc. Reports Third Quarter 2023 Results


Aris Water Solutions, Inc. (NYSE: ARIS) ("Aris," "Aris Water" or the "Company") today announced financial and operating results for the third quarter ended September 30, 2023.

"We had an excellent third quarter as we continued to execute on our operating plan, expanded the reach of our infrastructure, and improved profitability. We achieved year-over-year and sequential volume growth while increasing margins as we recognized the benefits of our operating cost reduction efforts. We expect the positive momentum to continue in the fourth quarter and 2024, as we continue to drive a culture of excellence across the organization," said Amanda Brock, Chief Executive Officer of Aris.

"Water handling is critical to the success of our customers' long-term production growth plans in the Permian Basin. We remain focused on delivering comprehensive water management solutions to our customers while simultaneously advancing technologies for the beneficial reuse of water outside of the oil and gas industry, which holds the promise of further improving the sustainability of our customers' operations. Our produced water treatment pilot project with ConocoPhillips, Chevron, and ExxonMobil is now fully underway and testing several exciting technologies.

We are also engaging in preliminary conversations with several third parties to explore commercialization of the minerals found in our produced water. While we are still in the early stages, we are encouraged by the data we have seen so far."

OPERATIONS UPDATE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months
Ended

 

Three Months
Ended

 

 

 

Three Months
Ended

 

 

 

 

 

September 30,

 

June 30,

 

% Change

September 30,

 

% Change

 

 

2023

 

2023

 

 

 

2022

 

 

 

(thousands of barrels of water per day)

 

 

 

 

 

 

 

 

 

 

 

Total Volumes

 

1,516

 

1,497

 

1

 

%

1,416

 

7

 

%

Produced Water Handling Volumes

 

1,056

 

1,045

 

1

 

%

905

 

17

 

%

Water Solutions Volumes

 

 

 

 

 

 

 

 

 

 

 

Recycled Produced Water Volumes Sold

 

339

 

296

 

15

 

%

345

 

(2

)

%

Groundwater Volumes Sold

 

121

 

156

 

(22

)

%

166

 

(27

)

%

Total Water Solutions Volumes

 

460

 

452

 

2

 

%

511

 

(10

)

%

 

 

 

 

 

 

 

 

 

 

 

 

Skim oil recoveries (bbls/d)

 

1,125

 

1,042

 

8

 

%

889

 

27

 

%

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

 

0.11%

 

0.10%

 

10

 

%

0.10%

 

10

 

%

FINANCIAL UPDATE

Net income was $12.2 million for the third quarter of 2023 versus net income of $2.0 million in the third quarter of 2022 and net income of $10.4 million in the second quarter of 2023. Adjusted Net Income1 was $13.9 million for the third quarter of 2023 versus $13.2 million for the third quarter of 2022 and $13.2 million in the second quarter of 2023.

Adjusted EBITDA1 was $44.9 million for the third quarter of 2023, up approximately 14% from $39.3 million in the third quarter of 2022, and up approximately 5% from $42.6 million in the second quarter of 2023.

The Company had gross margin per barrel of $0.26 for the third quarter of 2023 versus $0.23 in the third quarter of 2022 and $0.24 for the second quarter of 2023. The Company had Adjusted Operating Margin per Barrel2 of $0.40 for the third quarter of 2023, versus $0.36 in the third quarter of 2022 and $0.38 for the second quarter of 2023.

Third quarter 2023 capital expenditures3 totaled approximately $40 million versus $70 million in the third quarter of 2022, in line with full year 2023 capital expenditure expectations of $160 to $170 million.

STRONG BALANCE SHEET AND LIQUIDITY

As of September 30, 2023, the Company had approximately $24 million in cash and approximately $166 million available under its revolving credit facility for total available liquidity of approximately $190 million. As of September 30, 2023, the Company's leverage ratio was 2.53X, at the low end of its target leverage range of 2.50X-3.50X4. Accounts Receivable balance of approximately $81 million was down approximately 14% from the second quarter while revenue grew 3% quarter-over-quarter, reflecting continued improvements in working capital management.

On October 12, 2023, the Company entered into an amended and restated credit agreement which provides for a $350 million senior secured revolving credit facility with maturity extended through October 2027. The facility, which was sized proportionate to the Company's growth since the prior facility was put in place, has covenants and interest rates consistent with the prior credit agreement.

FOURTH QUARTER 2023 DIVIDEND

On October 31, 2023, Aris's Board of Directors declared a dividend on its Class A common stock for the fourth quarter of 2023 of $0.09 per share. In conjunction with the dividend payment, a distribution of $0.09 per unit will be paid to unit holders of Solaris Midstream Holdings, LLC. The dividend will be paid on December 21, 2023, to holders of record of the Company's Class A common stock as of the close of business on December 7, 2023. The distribution to unit holders of Solaris Midstream Holdings, LLC will be subject to the same payment and record dates.

FOURTH QUARTER 2023 FINANCIAL OUTLOOK

"We are very pleased with the progress the team has made year-to-date and we are on track to achieve the high-end of the Adjusted EBITDA guidance we provided at the beginning of the year and affirmed last quarter," said Amanda Brock.

"As we look to the fourth quarter, we anticipate produced water volumes to be up approximately 2?3%, adjusting for the impact of the Martin County asset sale, and water solutions volumes to be down moderately sequentially versus the third quarter due to the pull-forward of activity we saw in the third quarter as well as potential seasonal year-end slowdowns.

In terms of profitability, while we are pleased with the progress we've made through the third quarter of this year, we will continue to pursue additional cost-savings opportunities that can further enhance margins."

___________________________________

1

Adjusted EBITDA and Adjusted Net Income are non-GAAP financial measures. See the supplementary schedules in this press release for a discussion of how we define and calculate Adjusted EBITDA and Adjusted Net Income 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

Calculated on capital costs incurred during the period, excluding the impact of working capital.

4

Represents a non-GAAP financial measure. Defined as net debt as of September 30, 2023, 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.

CONFERENCE CALL

Aris will host a conference call to discuss its third quarter 2023 results on Thursday, November 2, 2023, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time).

Participants should call (888) 428-7458 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. The replay can be accessed by dialing (877) 660-6853 within the United States or (201) 612-7415 outside of the United States. The access code is 13741339.

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.

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 2023, 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 2023. 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 Israel-Hamas conflicts, macroeconomic conditions (such as inflation) and market uncertainty related thereto, legislative and regulatory developments, customer plans and preferences, 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

 

Nine Months Ended

per share amounts)

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling

 

$

47,574

 

 

$

39,674

 

$

143,390

 

 

$

110,299

 

Produced Water Handling?Affiliate

 

 

28,036

 

 

 

24,796

 

 

74,357

 

 

 

69,084

 

Water Solutions

 

 

20,370

 

 

 

20,392

 

 

49,180

 

 

 

46,744

 

Water Solutions?Affiliate

 

 

3,048

 

 

 

5,668

 

 

19,195

 

 

 

11,640

 

Other Revenue

 

 

761

 

 

 

246

 

 

1,871

 

 

 

364

 

Total Revenue

 

 

99,789

 

 

 

90,776

 

 

287,993

 

 

 

238,131

 

Cost of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Direct Operating Costs

 

 

44,687

 

 

 

43,885

 

 

132,978

 

 

 

101,337

 

Depreciation, Amortization and Accretion

 

 

19,445

 

 

 

16,942

 

 

57,137

 

 

 

49,724

 

Total Cost of Revenue

 

 

64,132

 

 

 

60,827

 

 

190,115

 

 

 

151,061

 

Operating Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Abandoned Well Costs

 

 

1,214

 

 

 

9,222

 

 

1,214

 

 

 

14,637

 

General and Administrative

 

 

13,526

 

 

 

11,052

 

 

38,007

 

 

 

33,330

 

Impairment of Long-Lived Assets

 

 

?

 

 

 

?

 

 

?

 

 

 

15,597

 

Research and Development Expense

 

 

809

 

 

 

430

 

 

1,867

 

 

 

530

 

Other Operating (Income) Expense

 

 

(2,121

)

 

 

239

 

 

(2,096

)

 

 

1,816

 

Total Operating Expenses

 

 

13,428

 

 

 

20,943

 

 

38,992

 

 

 

65,910

 

Operating Income

 

 

22,229

 

 

 

9,006

 

 

58,886

 

 

 

21,160

 

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, Net

 

 

7,955

 

 

 

6,763

 

 

23,587

 

 

 

21,863

 

Income (Loss) Before Income Taxes

 

 

14,274

 

 

 

2,243

 

 

35,299

 

 

 

(703

)

Income Tax Expense (Benefit)

 

 

2,032

 

 

 

287

 

 

4,918

 

 

 

(81

)

Net Income (Loss)

 

 

12,242

 

 

 

1,956

 

 

30,381

 

 

 

(622

)

Net Income (Loss) Attributable to Noncontrolling Interest

 

 

6,829

 

 

 

1,257

 

 

16,892

 

 

 

(493

)

Net Income (Loss) Attributable to Aris Water Solutions, Inc.

 

$

5,413

 

 

$

699

 

$

13,489

 

 

$

(129

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Per Share of Class A Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

 

$

0.02

 

$

0.42

 

 

$

(0.03

)

Diluted

 

$

0.17

 

 

$

0.02

 

$

0.42

 

 

$

(0.03

)

Weighted Average Shares of Class A Common Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

30,050,560

 

 

 

24,499,953

 

 

30,007,433

 

 

 

22,779,077

 

Diluted

 

 

30,050,560

 

 

 

24,546,632

 

 

30,007,433

 

 

 

22,779,077

 

Table 2

Aris Water Solutions, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

 

 

 

 

 

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

 

September 30,

 

December 31,

 

 

2023

 

2022

Assets

 

 

 

 

 

 

Cash

 

$

24,184

 

 

$

1,122

 

Accounts Receivable, Net

 

 

57,820

 

 

 

81,683

 

Accounts Receivable from Affiliate

 

 

23,296

 

 

 

46,029

 

Other Receivables

 

 

18,077

 

 

 

4,354

 

Prepaids and Deposits

 

 

2,241

 

 

 

5,805

 

Total Current Assets

 

 

125,618

 

 

 

138,993

 

Fixed Assets

 

 

 

 

 

 

Property, Plant and Equipment

 

 

1,021,516

 

 

 

907,784

 

Accumulated Depreciation

 

 

(112,151

)

 

 

(88,681

)

Total Property, Plant and Equipment, Net

 

 

909,365

 

 

 

819,103

 

Intangible Assets, Net

 

 

241,550

 

 

 

269,845

 

Goodwill

 

 

34,585

 

 

 

34,585

 

Deferred Income Tax Assets, Net

 

 

25,783

 

 

 

30,424

 

Right-of-Use Assets

 

 

16,760

 

 

 

9,135

 

Other Assets

 

 

853

 

 

 

1,281

 

Total Assets

 

$

1,354,514

 

 

$

1,303,366

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Accounts Payable

 

$

30,974

 

 

$

22,982

 

Payables to Affiliate

 

 

1,177

 

 

 

3,021

 

Accrued and Other Current Liabilities

 

 

81,189

 

 

 

65,411

 

Total Current Liabilities

 

 

113,340

 

 

 

91,414

 

Long-Term Debt, Net of Debt Issuance Costs

 

 

429,324

 

 

 

428,921

 

Asset Retirement Obligation

 

 

18,136

 

 

 

17,543

 

Tax Receivable Agreement Liability

 

 

98,164

 

 

 

97,980

 

Other Long-Term Liabilities

 

 

16,756

 

 

 

10,421

 

Total Liabilities

 

 

675,720

 

 

 

646,279

 

Stockholders' Equity

 

 

 

 

 

 

Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of September 30, 2023 and December 31, 2022

 

 

?

 

 

 

?

 

Class A Common Stock $0.01 par value, 600,000,000 authorized, 30,334,399 issued and 30,023,826 outstanding as of September 30, 2023; 30,115,979 issued and 29,919,217 outstanding as of December 31, 2022

 

 

303

 

 

 

300

 

Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,543,565 issued and outstanding as of September 30, 2023; 27,575,519 issued and outstanding as of December 31, 2022

 

 

275

 

 

 

276

 

Treasury Stock (at Cost), 310,573 shares as of September 30, 2023; 196,762 shares as of December 31, 2022

 

 

(4,259

)

 

 

(2,891

)

Additional Paid-in-Capital

 

 

325,655

 

 

 

319,545

 

Accumulated Deficit

 

 

(2,683

)

 

 

(7,722

)

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

 

 

319,291

 

 

 

309,508

 

Noncontrolling Interest

 

 

359,503

 

 

 

347,579

 

Total Stockholders' Equity

 

 

678,794

 

 

 

657,087

 

Total Liabilities and Stockholders' Equity

 

$

1,354,514

 

 

$

1,303,366

 

Table 3

Aris Water Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

 

 

Nine Months Ended

(in thousands)

 

September 30,

 

 

2023

 

2022

Cash Flow from Operating Activities

 

 

 

 

 

 

Net Income (Loss)

 

$

30,381

 

 

$

(622

)

Adjustments to reconcile Net Income (Loss) to Net Cash provided by Operating Activities:

 

 

 

 

 

 

Deferred Income Tax Expense (Benefit)

 

 

4,773

 

 

 

(96

)

Depreciation, Amortization and Accretion

 

 

57,137

 

 

 

49,724

 

Stock-Based Compensation

 

 

8,945

 

 

 

9,134

 

Impairment of Long-Lived Assets

 

 

?

 

 

 

15,597

 

Abandoned Well Costs

 

 

1,214

 

 

 

14,637

 

(Gain) Loss on Disposal of Assets, Net

 

 

(2,574

)

 

 

481

 

Amortization of Debt Issuance Costs, Net

 

 

1,580

 

 

 

1,563

 

Other

 

 

(345

)

 

 

377

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

Accounts Receivable

 

 

22,594

 

 

 

(33,683

)

Accounts Receivable from Affiliate

 

 

22,771

 

 

 

(5,581

)

Other Receivables

 

 

(13,359

)

 

 

(2,139

)

Prepaids and Deposits

 

 

3,564

 

 

 

4,215

 

Accounts Payable

 

 

(155

)

 

 

3,233

 

Payables to Affiliate

 

 

(1,844

)

 

 

913

 

Accrued Liabilities and Other

 

 

17,843

 

 

 

19,432

 

Net Cash Provided by Operating Activities

 

 

152,525

 

 

 

77,185

 

 

 

 

 

 

 

 

Cash Flow from Investing Activities

 

 

 

 

 

 

Property, Plant and Equipment Expenditures

 

 

(131,874

)

 

 

(96,991

)

Cash Paid for Asset Acquisitions

 

 

-

 

 

 

(3,353

)

Proceeds from the Sale of Property, Plant and Equipment

 

 

20,119

 

 

 

7,441

 

Net Cash Used in Investing Activities

 

 

(111,755

)

 

 

(92,903

)

 

 

 

 

 

 

 

Cash Flow from Financing Activities

 

 

 

 

 

 

Dividends and Distributions Paid

 

 

(16,083

)

 

 

(19,157

)

Repurchase of Shares

 

 

(625

)

 

 

?

 

Repayment of Credit Facility

 

 

(51,000

)

 

 

?

 

Proceeds from Credit Facility

 

 

50,000

 

 

 

?

 

Net Cash Used in Financing Activities

 

 

(17,708

)

 

 

(19,157

)

 

 

 

 

 

 

 

Net Increase (Decrease) in Cash

 

 

23,062

 

 

 

(34,875

)

Cash, Beginning of Period

 

 

1,122

 

 

 

60,055

 

Cash, End of Period

 

$

24,184

 

 

$

25,180

 

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 and net debt and leverage ratio. 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; loss on debt modification; stock-based compensation expense; and other non-recurring or unusual expenses or charges (such as temporary power costs, litigation expenses and severance costs), less any gains on sale of assets. For the fourth quarter of 2022, we began including research and development expense in our calculation of Adjusted EBITDA due to our new beneficial reuse pilot projects, which are discreet, non-revenue initiatives.

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.

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 September 30, 2023, the Company calculates its leverage ratio as net debt as of September 30, 2023, divided by Adjusted EBITDA for the trailing twelve months. Net debt is calculated as the principal amount of total debt outstanding as of September 30, 2023, less cash and cash equivalents as of September 30, 2023.

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, and Adjusted Net Income are not measures of financial performance under GAAP and should not be considered as measures of liquidity or as alternatives to net income (loss) or gross margin. 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 or cash flows from operating activities.

Although we provide forecasts for the non-GAAP measures Adjusted EBITDA and Adjusted Operating Margin per Barrel, we are not able to forecast their most directly comparable measures (net income and gross margin) calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of forward-looking non-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

 

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2023

 

2022

 

 

2023

 

2022

(thousands of barrels of water per day)

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Volumes

 

 

1,056

 

 

905

 

 

 

1,024

 

 

850

Water Solutions Volumes

 

 

 

 

 

 

 

 

 

 

 

 

 

Recycled Produced Water Volumes Sold

 

 

339

 

 

345

 

 

 

298

 

 

306

Groundwater Volumes Sold

 

 

121

 

 

166

 

 

 

141

 

 

112

Groundwater Volumes Transferred (1)

 

 

?

 

 

?

 

 

 

?

 

 

8

Total Water Solutions Volumes

 

 

460

 

 

511

 

 

 

439

 

 

426

Total Volumes

 

 

1,516

 

 

1,416

 

 

 

1,463

 

 

1,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Barrel Operating Metrics (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Revenue/Barrel

 

$

0.78

 

$

0.77

 

 

$

0.78

 

$

0.77

Water Solutions Revenue/Barrel

 

$

0.55

 

$

0.55

 

 

$

0.57

 

$

0.50

Revenue/Barrel of Total Volumes

 

$

0.71

 

$

0.69

 

 

$

0.72

 

$

0.68

Direct Operating Costs/Barrel

 

$

0.32

 

$

0.34

 

 

$

0.33

 

$

0.29

Gross Margin/Barrel

 

$

0.26

 

$

0.23

 

 

$

0.24

 

$

0.25

Adjusted Operating Margin/Barrel

 

$

0.40

 

$

0.36

 

 

$

0.39

 

$

0.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The groundwater transfer assets were sold in Q1 2022.

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

Table 5

Aris Water Solutions, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted EBITDA

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(in thousands)

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Net Income (Loss)

 

$

12,242

 

 

$

1,956

 

 

$

30,381

 

 

$

(622

)

Interest Expense, Net

 

 

7,955

 

 

 

6,763

 

 

 

23,587

 

 

 

21,863

 

Income Tax Expense (Benefit)

 

 

2,032

 

 

 

287

 

 

 

4,918

 

 

 

(81

)

Depreciation, Amortization and Accretion

 

 

19,445

 

 

 

16,942

 

 

 

57,137

 

 

 

49,724

 

Abandoned Well Costs

 

 

1,214

 

 

 

9,222

 

 

 

1,214

 

 

 

14,637

 

Impairment of Long-Lived Assets

 

 

?

 

 

 

?

 

 

 

?

 

 

 

15,597

 

Stock-Based Compensation

 

 

3,360

 

 

 

3,595

 

 

 

8,945

 

 

 

9,134

 

(Gain) Loss on Disposal of Assets, Net

 

 

(2,631

)

 

 

(97

)

 

 

(2,574

)

 

 

481

 

Transaction Costs

 

 

528

 

 

 

336

 

 

 

673

 

 

 

1,269

 

Research and Development Expense

 

 

809

 

 

 

430

 

 

 

1,867

 

 

 

530

 

Other

 

 

(18

)

 

 

(105

)

 

 

(484

)

 

 

(139

)

Adjusted EBITDA

 

$

44,936

 

 

$

39,329

 

 

$

125,664

 

 

$

112,393

 

Table 6

Aris Water Solutions, Inc.

Reconciliation of Gross Margin to Adjusted Operating Margin and

Adjusted Operating Margin per Barrel

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(in thousands)

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Total Revenue

 

$

99,789

 

 

$

90,776

 

 

$

287,993

 

 

$

238,131

 

Cost of Revenue

 

 

(64,132

)

 

 

(60,827

)

 

 

(190,115

)

 

 

(151,061

)

Gross Margin

 

 

35,657

 

 

 

29,949

 

 

 

97,878

 

 

 

87,070

 

Depreciation, Amortization and Accretion

 

 

19,445

 

 

 

16,942

 

 

 

57,137

 

 

 

49,724

 

Adjusted Operating Margin

 

$

55,102

 

 

$

46,891

 

 

$

155,015

 

 

$

136,794

 

Total Volumes (Thousands of BBLs)

 

 

139,429

 

 

 

130,267

 

 

 

399,525

 

 

 

348,315

 

Adjusted Operating Margin/BBL

 

$

0.40

 

 

$

0.36

 

 

$

0.39

 

 

$

0.39

 

Table 7

Aris Water Solutions, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Adjusted Net Income

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

(in thousands)

 

September 30,

 

September 30,

 

 

2023

 

2022

 

2023

 

2022

Net Income (Loss)

 

$

12,242

 

 

$

1,956

 

 

$

30,381

 

 

$

(622

)

Adjusted items:

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of Long-Lived Assets

 

 

?

 

 

 

?

 

 

 

?

 

 

 

15,597

 

Abandoned Well Costs

 

 

1,214

 

 

 

9,222

 

 

 

1,214

 

 

 

14,637

 

(Gain) Loss on Disposal of Assets, Net

 

 

(2,631

)

 

 

(97

)

 

 

(2,574

)

 

 

481

 

Stock-Based Compensation

 

 

3,360

 

 

 

3,595

 

 

 

8,945

 

 

 

9,134

 

Tax Effect of Adjusting Items (1)

 

 

(257

)

 

 

(1,460

)

 

 

(1,003

)

 

 

(4,575

)

Adjusted Net Income

 

$

13,928

 

 

$

13,216

 

 

$

36,963

 

 

$

34,652

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

Nine Months
Ended

 

 

September 30,

 

September 30,

 

 

2023

 

2023

Diluted Net Income Per Share of Class A Common Stock

 

$

0.17

 

 

$

0.42

 

Adjusted items:

 

 

 

 

 

 

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

 

 

0.03

 

 

 

0.08

 

Abandoned Well Costs

 

 

0.02

 

 

 

0.02

 

(Gain) Loss on Disposal of Assets, Net

 

 

(0.05

)

 

 

(0.04

)

Stock-Based Compensation

 

 

0.06

 

 

 

0.16

 

Tax Effect of Adjusting Items (1)

 

 

-

 

 

 

(0.02

)

Diluted Adjusted Net Income Per Share

 

$

0.23

 

 

$

0.62

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Weighted Average Shares of Class A Common Stock Outstanding

 

 

30,050,560

 

 

 

30,007,433

 

Adjusted Items:

 

 

 

 

 

 

Assumed Redemption of LLC Interests

 

 

27,550,626

 

 

 

27,557,774

 

Dilutive Performance-Based Stock Units (2)

 

 

?

 

 

 

?

 

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

 

 

57,601,186

 

 

 

57,565,207

 

 

 

 

 

 

 

 

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

Table 9

Aris Water Solutions, Inc.

Computation of Leverage Ratio

(Unaudited)

 

 

 

 

 

 

As of

 

 

September 30,

(in thousands)

 

2023

 

 

 

 

Principal Amount of Debt at September 30, 2023

 

$

434,000

 

Less: Cash at September 30, 2023

 

 

(24,184

)

Net Debt

 

$

409,816

 

 

 

 

 

Net Debt

 

$

409,816

 

÷ TTM Adjusted EBITDA

 

$

161,742

 

Leverage Ratio

 

 

2.53

 

 


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