Aris Water Solutions, Inc. Reports Fourth Quarter and Full Year 2023 Results and Provides 2024 Outlook
Aris Water Solutions, Inc. (ARIS) reported strong financial and operating results for Q4 and full year 2023. They saw a 4% increase in total water volumes quarter-over-quarter and a 16% increase annually. The company achieved net income of $43.4 million for the full year, with Diluted Net Income per Share of $0.59. Adjusted EBITDA was $175.0 million for the year, up 17% from 2022. They also improved Adjusted Operating Margin per Barrel by 11% compared to Q4 2022. Aris maintained a strong balance sheet with leverage of 2.4x and $329.0 million of available liquidity. Looking ahead to 2024, they expect positive free cash flow, with produced water volumes forecasted to grow 2-5% and water solutions volumes between 430 to 470 thousand barrels per day. Adjusted EBITDA for 2024 is projected to be between $180 - $200 million.
Positive
Strong financial and operating results for Aris Water Solutions, Inc. for Q4 and full year 2023.
4% increase in total water volumes quarter-over-quarter and 16% annually.
Net income of $43.4 million for the full year with Diluted Net Income per Share of $0.59.
Adjusted EBITDA of $175.0 million for the year, up 17% from 2022.
Improved Adjusted Operating Margin per Barrel by 11% compared to Q4 2022.
Maintained a strong balance sheet with leverage of 2.4x and $329.0 million of available liquidity.
Positive free cash flow expected for 2024.
Produced water volumes forecasted to grow 2-5% in 2024.
Water solutions volumes expected to be between 430 to 470 thousand barrels per day in 2024.
Adjusted EBITDA for 2024 projected to be between $180 - $200 million.
The financial results of Aris Water Solutions, Inc. indicate a positive trajectory with a 4% quarter-over-quarter and 16% annual increase in total water volumes. This growth, coupled with an 8% annual increase in recycled produced water volumes, demonstrates the company's expanding operational scale. The reported net income of $13.0 million for the fourth quarter and $43.4 million for the full year, alongside a 17% increase in Adjusted EBITDA to $175.0 million, reflects a robust financial performance. The improvement in the Adjusted Operating Margin per Barrel by 11% suggests effective cost-saving initiatives are in place. With a year-over-year increase in Cash Provided by Operating Activities of $114 million, the company's cash flow position appears strong.
Looking ahead, the company forecasts significant positive free cash flow and anticipates Adjusted EBITDA to rise by approximately 9% at the midpoint versus 2023. The projected decrease in Capital Expenditures by about 40% could enhance profitability and shareholder value. However, the forecasted 2-5% growth in produced water volumes, excluding the impact of a 2023 asset divestiture, may signal a conservative growth estimate, potentially reflecting market conditions or strategic focus on efficiency over expansion.
Aris Water Solutions' focus on recycling and sustainability is timely, given the increasing global emphasis on environmental responsibility. The significant reduction in groundwater withdrawals by more than 270 million barrels over three years aligns with broader industry trends towards sustainable practices. This strategic positioning not only enhances the company's reputation but also meets the growing demand for environmentally conscious operations, potentially opening up new market opportunities and partnerships.
The company's ability to recycle over 550,000 barrels of produced water in a single day marks a significant operational milestone that underscores its technical capabilities and could serve as a competitive advantage. As industries and investors alike prioritize sustainability, Aris Water's commitment to enhancing water sustainability could attract ESG-focused investors and potentially lead to premium pricing on its services.
The reported leverage of 2.4x reflects a manageable debt level relative to earnings, which is a positive sign for the company's financial health and its ability to invest in future growth. The $329.0 million of available liquidity provides Aris Water with a cushion to navigate economic uncertainties or to seize growth opportunities as they arise. The company's strategic focus on cash generation and improved cost structure is prudent in the context of a potentially tightening economic environment, where operational efficiency and financial flexibility are key to maintaining competitiveness and capitalizing on market dynamics.
It's important to note that the water management industry is closely tied to the health of the broader energy sector, particularly oil and gas. As such, Aris Water's financial performance may be sensitive to fluctuations in commodity prices and regulatory changes. Investors should consider these external factors when assessing the company's outlook and performance.
02/28/2024 - 04:02 PM
HOUSTON --(BUSINESS WIRE)--
Aris Water Solutions, Inc. (NYSE: ARIS) (“Aris,” “Aris Water” or the “Company”) today announced financial and operating results for the fourth quarter and year ended December 31, 2023.
FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS
Increased total water volumes 4% quarter-over-quarter and 16% annually
Grew recycled produced water volumes 8% for the year of 2023, including record volumes in the fourth quarter
Achieved fourth quarter and full year 2023 net income of $13.0 million and $43.4 million , respectively
Diluted Net Income per Share of $0.59 for the full year of 2023; Diluted Adjusted Net Income per Share1 of $0.88 for the year, up 14% versus 2022
Generated Adjusted EBITDA1 of $49.3 million for the fourth quarter and $175.0 million for the full year, up 17% from 2022
Improved Adjusted Operating Margin per Barrel2 by 11% versus the fourth quarter of 2022, reflecting the successful impact of cost saving initiatives
$114 million year-over-year increase in Cash Provided by Operating Activities driven by volume growth, operational efficiencies and significant improvements in working capital
Full year Capital Expenditures3 of $156.4 million
Maintained a strong balance sheet with 2023 year-end leverage of 2.4x4 and $329.0 million of available liquidity
2024 OUTLOOK: FOCUSED ON CASH GENERATION
Significant positive free cash flow expected due to greater asset efficiency, improved cost structure and lower capital reinvestment
Full year produced water volumes are forecasted to grow approximately 2 - 5% , excluding the impact of a 2023 asset divestiture
Full year water solutions volumes are expected to be between 430 to 470 thousand barrels per day, approximately flat with 2023
Full-year Adjusted EBITDA1 forecasted between $180 - $200 million , up approximately 9% at the midpoint versus 2023
Adjusted Operating Margin per Barrel2 is anticipated to increase 8% - 13% year-over-year to $0.42 - $0.44 /bbl
We project Capital Expenditures3 of $85 - $105 million , down approximately 40% versus 2023, a range which reflects $12 - $16 million of capital investment needed to maintain our system and potential capital for new business development
“2023 was an exceptional year for Aris. Our team delivered significantly increased profitability, with strong momentum carrying us into 2024. A year ago, we stated that our primary objectives for 2023 were to improve asset efficiency, address our cost structure, and improve margins. Our electrification and other cost reduction efforts allowed us to recognize over $7.5 million in sustainable, annualized savings while volumes also increased throughout the year. We structurally reduced our operating costs while growing substantially, supporting our long-term contracted customers. I am very pleased with our results and the efforts of the Aris team,” said Amanda Brock, Chief Executive Officer of Aris.
“In addition, Aris’s water recycling infrastructure facilitated over 118 million barrels of recycled produced water in 2023, growing 8% year over year. In December, we achieved a major milestone by recycling over 550,000 barrels in a single day. We take pride in having helped our customers dramatically reduce their groundwater withdrawals by more than 270 million barrels in the past 3 years. We have significantly enhanced water sustainability in the areas in which we operate and are delivering long term benefits to all our stakeholders.
"We remain committed to continuous improvement, optimizing our existing assets, and increasing our rates of return on invested capital and are extremely optimistic about what we can achieve in 2024 and beyond.”
OPERATIONS UPDATE
Three Months Ended
Three Months Ended
December 31,
September 30,
% Change
December 31,
% Change
2023
2023
2022
(thousands of barrels of water per day)
Total Volumes
1,577
1,516
4
%
1,305
21
%
Produced Water Handling Volumes
1,095
1,056
4
%
940
16
%
Water Solutions Volumes
Recycled Produced Water Volumes Sold
401
339
18
%
283
42
%
Groundwater Volumes Sold
81
121
(33)
%
82
(1)
%
Total Water Solutions Volumes
482
460
5
%
365
32
%
Skim oil recoveries (barrels of water per day)
1,362
1,125
21
%
775
76
%
Skim oil recoveries (as a % of produced water volumes)
0.12%
0.11%
9
%
0.08%
50
%
Year Ended December 31,
% Change
2023
2022
(thousands of barrels of water per day)
Total Volumes
1,492
1,284
16
%
Produced Water Handling Volumes
1,042
873
19
%
Water Solutions Volumes
Recycled Produced Water Volumes Sold
324
300
8
%
Groundwater Volumes Sold
126
105
20
%
Groundwater Volumes Transferred
—
6
N/M
%
Total Water Solutions Volumes
450
411
9
%
Skim oil recoveries (barrels of water per day)
1,219
792
54
%
Skim oil recoveries (as a % of produced water volumes)
0.12%
0.09%
33
%
N/M Not Meaningful
FINANCIAL UPDATE
Full year Cash Flow from Operating Activities increased approximately 162% to $183.9 million as compared to 2022 and was positively impacted by a $43.8 million improvement in Accounts Receivable and Accounts Receivable from Affiliate balances.
Net income was $13.0 million for the fourth quarter of 2023 versus net income of $5.4 million in the fourth quarter of 2022 and net income of $12.2 million in the third quarter of 2023. Adjusted Net Income1 was $15.4 million for the fourth quarter of 2023 versus $9.0 million for the fourth quarter of 2022 and $13.9 million in the third quarter of 2023.
Net income was $43.4 million for the full year of 2023, versus net income of $4.8 million for the full year of 2022. Adjusted Net Income1 was $52.4 million for the full year of 2023 versus $44.1 million for the full year of 2022.
Adjusted EBITDA1 was $49.3 million for the fourth quarter of 2023, up approximately 37% from $36.1 million in the fourth quarter of 2022, and up approximately 10% from $44.9 million in the third quarter of 2023. Adjusted EBITDA1 was $175.0 million for the full year of 2023 versus $149.0 million for the full year of 2022, an increase of approximately 17% .
Adjusted Operating Margin per Barrel2 for the fourth quarter of 2023 was $0.41 per barrel versus $0.37 per barrel in the fourth quarter of 2022. Adjusted Operating Margin per Barrel2 for the full year of 2023 was $0.39 per barrel, flat versus the full year of 2022.
Fourth quarter 2023 Capital Expenditures3 totaled approximately $20 million versus $20 million in the fourth quarter of 2022. Full year 2023 Capital Expenditures3 totaled approximately $156 million versus approximately $167 million for the full year of 2022.
STRONG BALANCE SHEET AND LIQUIDITY
As of December 31, 2023, the Company had approximately $5 million in cash and $324 million available under its revolving credit facility for total available liquidity of $329 million . The Company’s leverage ratio at year-end 2023 was 2.4X4 , below the low end of its target leverage range of 2.5X-3.5X.
FIRST QUARTER 2024 DIVIDEND
On February 23, 2024, Aris’s Board of Directors declared a dividend on its Class A common stock for the first quarter of 2024 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 March 21, 2024, to holders of record of the Company’s Class A common stock as of the close of business on March 7, 2024. The distribution to unit holders of Solaris Midstream Holdings, LLC will be subject to the same payment and record dates.
FIRST QUARTER AND FULL YEAR 2024 FINANCIAL OUTLOOK
“Building on our success in 2023, our focus in 2024 is unlocking additional value from our infrastructure by driving increased returns from our existing assets, demonstrating sustainable cash generation capability, and identifying opportunities to leverage our expertise in the treatment of high-volume, complex water streams. We will prioritize safety, operational excellence, cost efficiency, and innovation,” said Amanda Brock.
“We will continue to grow alongside new and existing customers in the Northern Delaware Basin with potential upside in our shorter cycle Water Solutions business. We expect the positive momentum in our operating margins to continue as we benefit from the impact of contractual inflation clauses and additional efficiency initiatives in the field.
"2024 is an inflection year for Aris. The capital investment needed to support our infrastructure is substantially lower this year as the basin matures and operators temper their pace of development. With the Aris system more fully built out, we can better utilize its reach and capabilities, which in turn should increase free cash generation. With moderating volume growth, continued improvements in operating margins, and significantly reduced capital spending, we anticipate 2024 will deliver sustainable free cash flow. Aris is exceptionally well positioned for 2024 following our demonstrated operating improvements in 2023. As the year progresses, we expect cash generation to accelerate which will drive additional returns of capital to our shareholders.”
For the full year of 2024, the Company expects:
Produced Water Handling volumes between 1,020 and 1,070 thousand barrels of water per day, up approximately 2 – 5% versus 2023 when adjusted for the approximately 35 thousand barrels per day impact of asset divestitures completed in the third quarter of 2023
Water Solutions volumes between 430 and 470 thousand barrels of water per day, approximately flat versus 2023
Adjusted Operating Margin per Barrel2 between $0.42 and $0.44
Skim oil recoveries of approximately 1,300 barrels per day at an average WTI price of $76 per barrel
Adjusted EBITDA1 between $180 and $200 million
Capital Expenditures3 between $85 and $105 million
For the first quarter of 2024, the Company expects:
Produced Water Handling volumes between 1,075 and 1,105 thousand barrels of water per day
Water Solutions volumes between 325 and 345 thousand barrels of water per day
Adjusted Operating Margin per Barrel2 between $0.42 and $0.44
Skim oil recoveries of approximately 1,600 barrels per day at an average WTI price of $76 per barrel
Adjusted EBITDA1 between $43 and $47 million
Capital Expenditures3 between $30 and $35 million
CONFERENCE CALL
Aris will host a conference call to discuss its fourth quarter and full year 2023 results on Thursday, February 29, 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. 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 13743897.
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 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.
4 Represents a non-GAAP financial measure. Defined as net debt as of December 31, 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.
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 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
Year Ended
per share amounts)
December 31,
December 31,
2023
2022
2023
2022
Revenue
Produced Water Handling
$
51,817
$
41,061
$
195,207
$
151,360
Produced Water Handling—Affiliate
27,965
24,023
102,322
93,107
Water Solutions
17,445
13,928
66,625
60,672
Water Solutions—Affiliate
6,416
3,516
25,611
15,156
Other Revenue
482
342
2,353
706
Total Revenue
104,125
82,870
392,118
321,001
Cost of Revenue
Direct Operating Costs
44,995
38,143
177,973
139,480
Depreciation, Amortization and Accretion
19,495
17,800
76,632
67,524
Total Cost of Revenue
64,490
55,943
254,605
207,004
Operating Costs and Expenses
Abandoned Well Costs
89
1,134
1,303
15,771
General and Administrative
12,447
11,890
50,454
45,220
Impairment of Long-Lived Assets
—
—
—
15,597
Research and Development Expense
1,253
161
3,120
691
Other Operating (Income) Expense, Net
866
396
(1,230)
2,212
Total Operating Expenses
14,655
13,581
53,647
79,491
Operating Income
24,980
13,346
83,866
34,506
Other Expense
Interest Expense, Net
9,266
7,322
32,853
29,185
Other
107
—
107
—
Total Other Expense
9,373
7,322
32,960
29,185
Income Before Income Taxes
15,607
6,024
50,906
5,321
Income Tax Expense
2,576
605
7,494
524
Net Income
13,031
5,419
43,412
4,797
Net Income Attributable to Noncontrolling Interest
7,632
3,590
24,524
3,097
Net Income Attributable to Aris Water Solutions, Inc.
$
5,399
$
1,829
$
18,888
$
1,700
Net Income Per Share of Class A Common Stock
Basic
$
0.17
$
0.06
$
0.59
$
0.04
Diluted
$
0.17
$
0.06
$
0.59
$
0.04
Weighted Average Shares of Class A Common Stock Outstanding
Basic
30,128,424
27,946,505
30,037,681
24,070,934
Diluted
30,128,424
28,051,871
30,037,681
24,146,215
Table 2
Aris Water Solutions, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except for share and per share amounts)
December 31,
December 31,
2023
2022
Assets
Cash
$
5,063
$
1,122
Accounts Receivable, Net
59,393
81,683
Accounts Receivable from Affiliate
22,963
46,029
Other Receivables
12,767
4,354
Prepaids and Deposits
8,364
5,805
Total Current Assets
108,550
138,993
Fixed Assets
Property, Plant and Equipment
1,041,703
907,784
Accumulated Depreciation
(121,989
)
(88,681
)
Total Property, Plant and Equipment, Net
919,714
819,103
Intangible Assets, Net
232,277
269,845
Goodwill
34,585
34,585
Deferred Income Tax Assets, Net
22,634
30,424
Right-of-Use Assets
16,726
9,135
Other Assets
5,995
1,281
Total Assets
$
1,340,481
$
1,303,366
Liabilities and Stockholders' Equity
Accounts Payable
$
25,925
$
22,982
Payables to Affiliate
894
3,021
Insurance Premium Financing Liability
5,463
—
Accrued and Other Current Liabilities
64,416
65,411
Total Current Liabilities
96,698
91,414
Long-Term Debt, Net of Debt Issuance Costs
421,792
428,921
Asset Retirement Obligations
19,030
17,543
Tax Receivable Agreement Liability
98,274
97,980
Other Long-Term Liabilities
16,794
10,421
Total Liabilities
652,588
646,279
Stockholders' Equity
Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of December 31, 2023 and December 31, 2022
—
—
Class A Common Stock $0.01 par value, 600,000,000 authorized, 30,669,932 issued and 30,251,613 outstanding as of December 31, 2023; 30,115,979 issued and 29,919,217 outstanding as of December 31, 2022
306
300
Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,543,565 issued and outstanding as of December 31, 2023; 27,575,519 issued and outstanding as of December 31, 2022
275
276
Treasury Stock (at Cost), 418,319 shares as of December 31, 2023; 196,762 shares as of December 31, 2022
(5,133
)
(2,891
)
Additional Paid-in-Capital
328,543
319,545
Accumulated Deficit
(87
)
(7,722
)
Total Stockholders' Equity Attributable to Aris Water Solutions, Inc.
323,904
309,508
Noncontrolling Interest
363,989
347,579
Total Stockholders' Equity
687,893
657,087
Total Liabilities and Stockholders' Equity
$
1,340,481
$
1,303,366
Table 3
Aris Water Solutions, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
Year Ended
(in thousands)
December 31,
December 31,
2023
2022
2023
2022
Cash Flow from Operating Activities
Net Income
$
13,031
$
5,419
$
43,412
$
4,797
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Deferred Income Tax Expense
2,526
562
7,299
466
Depreciation, Amortization and Accretion
19,495
17,800
76,632
67,524
Stock-Based Compensation
2,624
2,900
11,569
12,034
Impairment of Long-Lived Assets
—
—
—
15,597
Abandoned Well Costs
89
1,134
1,303
15,771
(Gain) Loss on Disposal of Assets, Net
(32
)
(3
)
(2,606
)
478
Abandoned Projects
88
6
216
72
Amortization of Debt Issuance Costs, Net
700
580
2,280
2,143
Change in Payables Related to Tax Receivable Agreement Liability
413
—
413
—
Other
566
312
93
623
Changes in Operating Assets and Liabilities:
Accounts Receivable
(1,878
)
(5,128
)
20,716
(38,811
)
Accounts Receivable from Affiliate
333
(20,257
)
23,104
(25,838
)
Other Receivables
3,711
1,301
(9,648
)
(838
)
Prepaids and Deposits
(6,123
)
(3,977
)
(2,559
)
238
Accounts Payable
4,092
(1,330
)
3,937
1,903
Payables to Affiliate
(283
)
609
(2,127
)
1,522
Accrued Liabilities and Other
(8,004
)
(6,900
)
9,839
12,532
Net Cash Provided by Operating Activities
31,348
(6,972
)
183,873
70,213
Cash Flow from Investing Activities
Property, Plant and Equipment Expenditures
(37,862
)
(49,534
)
(169,736
)
(146,525
)
Cash Paid for Asset Acquisitions
—
(1,747
)
—
(5,100
)
Proceeds from the Sale of Property, Plant and Equipment
35
7,259
20,154
14,700
Net Cash Used in Investing Activities
(37,827
)
(44,022
)
(149,582
)
(136,925
)
Cash Flow from Financing Activities
Dividends and Distributions Paid
(5,346
)
(5,308
)
(21,429
)
(24,465
)
Repurchase of Shares
(738
)
(2,756
)
(1,363
)
(2,756
)
Repayment of Credit Facility
(67,000
)
—
(118,000
)
—
Proceeds from Credit Facility
59,000
35,000
109,000
35,000
Payment of Debt Issuance Costs Related to Credit Facility
(3,942
)
—
(3,942
)
—
Proceeds from Insurance Premium Financing
6,636
—
6,636
—
Payment of Insurance Premium Financing
(1,252
)
—
(1,252
)
—
Net Cash (Used in) Provided by Financing Activities
(12,642
)
26,936
(30,350
)
7,779
Net (Decrease) Increase in Cash
(19,121
)
(24,058
)
3,941
(58,933
)
Cash, Beginning of Period
24,184
25,180
1,122
60,055
Cash, End of Period
$
5,063
$
1,122
$
5,063
$
1,122
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 temporary power costs, litigation expenses and severance costs), less any gains on the 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 and temporary power costs. 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 December 31, 2023, the Company calculates its leverage ratio as net debt as of December 31, 2023, divided by Adjusted EBITDA for the trailing twelve months. Net debt is calculated as the principal amount of total debt outstanding as of December 31, 2023, less cash and cash equivalents as of December 31, 2023.
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 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
Year Ended
December 31,
September 30,
December 31,
2023
2022
2023
2023
2022
(thousands of barrels of water per day)
Produced Water Handling Volumes
1,095
940
1,056
1,042
873
Water Solutions Volumes
Recycled Produced Water Volumes Sold
401
283
339
324
300
Groundwater Volumes Sold
81
82
121
126
105
Groundwater Volumes Transferred (1)
—
—
—
—
6
Total Water Solutions Volumes
482
365
460
450
411
Total Volumes
1,577
1,305
1,516
1,492
1,284
Per Barrel Operating Metrics (2)
Produced Water Handling Revenue/Barrel
$
0.79
$
0.75
$
0.78
$
0.78
$
0.77
Water Solutions Revenue/Barrel
$
0.54
$
0.52
$
0.55
$
0.56
$
0.51
Revenue/Barrel of Total Volumes
$
0.71
$
0.69
$
0.71
$
0.72
$
0.68
Direct Operating Costs/Barrel
$
0.31
$
0.32
$
0.32
$
0.33
$
0.30
Gross Margin/Barrel
$
0.27
$
0.22
$
0.26
$
0.25
$
0.24
Adjusted Operating Margin/Barrel
$
0.41
$
0.37
$
0.40
$
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
Year Ended
(in thousands)
December 31,
December 31,
2023
2022
2023
2022
Net Income
$
13,031
$
5,419
$
43,412
$
4,797
Interest Expense, Net
9,266
7,322
32,853
29,185
Income Tax Expense
2,576
605
7,494
524
Depreciation, Amortization and Accretion
19,495
17,800
76,632
67,524
Abandoned Well Costs
89
1,134
1,303
15,771
Impairment of Long-Lived Assets
—
—
—
15,597
Stock-Based Compensation
2,624
2,900
11,569
12,034
(Gain) Loss on Disposal of Assets, Net
(32
)
(3
)
(2,606
)
478
Transaction Costs
129
251
802
1,520
Research and Development Expense
1,253
161
3,120
691
Change in Payables Related to Tax Receivable Agreement Liability
413
—
413
—
Other
464
489
(20
)
880
Adjusted EBITDA
$
49,308
$
36,078
$
174,972
$
149,001
Table 6
Aris Water Solutions, Inc.
Reconciliation of Gross Margin to Adjusted Operating Margin and
Adjusted Operating Margin per Barrel
(Unaudited)
Three Months Ended
Year Ended
(in thousands)
December 31,
December 31,
2023
2022
2023
2022
Total Revenue
$
104,125
$
82,870
$
392,118
$
321,001
Cost of Revenue
(64,490
)
(55,943
)
(254,605
)
(207,004
)
Gross Margin
39,635
26,927
137,513
113,997
Depreciation, Amortization and Accretion
19,495
17,800
76,632
67,524
Adjusted Operating Margin
$
59,130
$
44,727
$
214,145
$
181,521
Total Volumes (thousands of barrels)
145,122
120,086
544,647
468,401
Adjusted Operating Margin/BBL
$
0.41
$
0.37
$
0.39
$
0.39
Table 7
Aris Water Solutions, Inc.
Reconciliation of Net Income to Non-GAAP Adjusted Net Income
(Unaudited)
Three Months Ended
Year Ended
(in thousands)
December 31,
December 31,
2023
2022
2023
2022
Net Income
$
13,031
$
5,419
$
43,412
$
4,797
Adjusted items:
Impairment of Long-Lived Assets
—
—
—
15,597
Abandoned Well Costs
89
1,134
1,303
15,771
(Gain) Loss on Disposal of Assets, Net
(32
)
(3
)
(2,606
)
478
Stock-Based Compensation
2,624
2,900
11,569
12,034
Tax Effect of Adjusting Items (1)
(335
)
(420
)
(1,282
)
(4,577
)
Adjusted Net Income
$
15,377
$
9,030
$
52,396
$
44,100
(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
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Diluted Net Income Per Share of Class A Common Stock
$
0.17
$
0.06
$
0.59
$
0.04
Adjusted items:
Reallocation of Net Income Attributable to Noncontrolling Interests From the Assumed Exchange of LLC Interests
0.05
0.03
0.14
0.01
Impairment of Long-Lived Assets
—
—
—
0.28
Abandoned Well Costs
—
0.02
0.02
0.29
(Gain) Loss on Disposal of Assets, Net
—
—
(0.05
)
0.01
Stock-Based Compensation
0.05
0.05
0.20
0.22
Tax Effect of Adjusting Items (1)
(0.01
)
(0.01
)
(0.02
)
(0.08
)
Diluted Adjusted Net Income Per Share
$
0.26
$
0.15
$
0.88
$
0.77
(1) Estimated tax effect of adjusted items allocated to Aris based on statutory rates.
Diluted Weighted Average Shares of Class A Common Stock Outstanding
30,128,424
28,051,871
30,037,681
24,146,215
Adjusted Items:
Assumed Redemption of LLC Interests
27,543,565
29,271,745
27,554,221
30,929,045
Dilutive Performance-Based Stock Units (2)
—
—
—
—
Diluted Adjusted Fully Weighted Average Shares of Class A Common Stock Outstanding
57,671,989
57,323,616
57,591,902
55,075,260
(2) Dilutive impact of Performance-Based Stock Units already included for the three and twelve months ended December 31, 2023 and 2022.
Table 9
Aris Water Solutions, Inc.
Computation of Leverage Ratio
(Unaudited)
As of
(in thousands)
December 31, 2023
Principal Amount of Debt at December 31, 2023
$
431,463
Less: Cash at December 31, 2023
(5,063
)
Net Debt
$
426,400
Net Debt
$
426,400
÷ Trailing Twelve Months Adjusted EBITDA
174,972
Leverage Ratio
2.4
Table 10
Aris Water Solutions, Inc.
Reconciliation of Capital Expenditures
(Unaudited)
Three Months Ended
Year Ended
December 31,
December 31,
(in thousands)
2023
2022
2023
2022
Cash Paid for Property, Plant and Equipment
$
37,862
$
49,534
$
169,736
$
146,525
Change in Capital Related Accruals
(18,095
)
(29,876
)
(13,342
)
20,876
Capital Expenditures
$
19,767
$
19,658
$
156,394
$
167,401
View source version on businesswire.com: https://www.businesswire.com/news/home/20240228061104/en/
David Tuerff
Senior Vice President, Finance and Investor Relations
(281) 501-3070
IR@ariswater.com
Source: Aris Water Solutions, Inc.
What were Aris Water Solutions' (ARIS) net income figures for the full year 2023?
Aris Water Solutions reported a net income of $43.4 million for the full year 2023.
What was the Diluted Net Income per Share for Aris Water Solutions (ARIS) in 2023?
The Diluted Net Income per Share for Aris Water Solutions in 2023 was $0.59.
What was the Adjusted EBITDA reported by Aris Water Solutions (ARIS) for the full year 2023?
Aris Water Solutions reported an Adjusted EBITDA of $175.0 million for the full year 2023.
How much did Aris Water Solutions' (ARIS) Adjusted EBITDA increase by in 2023 compared to 2022?
Aris Water Solutions' Adjusted EBITDA increased by 17% in 2023 compared to 2022.
What was the leverage ratio for Aris Water Solutions (ARIS) at the end of 2023?
Aris Water Solutions had a leverage ratio of 2.4x at the end of 2023.