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Aris Water Solutions, Inc. Reports Third Quarter 2022 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, 2022.

THIRD QUARTER 2022 HIGHLIGHTS

  • Total water volumes of more than 1.4 million barrels per day for the third quarter of 2022, up 47% versus the third quarter of 2021 and up 14% sequentially from the second quarter of 2022.
  • Recycled produced water volumes of approximately 345 thousand barrels per day for the third quarter of 2022, up 165% versus the third quarter of 2021 and up 16% sequentially from the second quarter of 2022.
  • Net income of $2.0 million for the third quarter of 2022. Adjusted Net Income 1 of $13.2 million for the third quarter of 2022, up 98% versus the third quarter of 2021. Adjusted EBITDA 1 of $39.3 million for the third quarter of 2022, up 28% versus the third quarter of 2021.

RECENT EVENTS

  • Announced strategic agreement with Chevron U.S.A Inc. (“Chevron”) and ConocoPhillips Corporation (“ConocoPhillips”) to develop and pilot technologies and processes to treat produced water for potential beneficial reuse opportunities.
  • Completed acquisition of intellectual property rights, treatment technologies and assets from Water Standard Management (US), Inc. (“Water Standard”) which are expected to support and advance the Company’s efforts related to the beneficial reuse of produced water.

“In the third quarter, we continued to perform, growing our volumes and providing reliable, sustainable water solutions for our customers,” stated Amanda Brock, Chief Executive Officer of Aris. “We continue to benefit from our long-term contracts with leading operators who are committed to the Permian Basin. Our significant existing infrastructure overlays some of the lowest breakeven rock in the Permian Basin supporting our customers as they prioritize investments in our contracted acreage. Alongside our growth, we are focused on optimizing our operations while identifying additional efficiencies to improve our operating margins and offset the impact of recent extraordinary inflationary pressures. We are also very encouraged by our recent strategic agreement with ConocoPhillips and Chevron as well as the acquisition of technology and assets from Water Standard. These key transactions further demonstrate our leadership and commitment to beneficial reuse.”

OPERATIONS UPDATE

For the third quarter of 2022, the Company averaged approximately 1.4 million barrels of water per day of total volumes handled, up approximately 47% from 961 thousand barrels of water per day for the third quarter of 2021. The Company’s volume growth was primarily driven by increased activity levels from our long-term contracted customers and continued adoption of our recycled produced water solutions.

FINANCIAL UPDATE

Net income of $2.0 million for the third quarter of 2022, up from a net loss of $20.7 million in the third quarter of 2021. Adjusted Net Income 1 of $13.2 million for the third quarter of 2022, up 98% versus the third quarter of 2021.

The Company had Adjusted EBITDA 1 of $39.3 million for the third quarter of 2022 compared to $30.8 million in the third quarter of 2021, an increase of 28%. Aris continues to grow its Adjusted EBITDA alongside its long-term contracted customers and increased demand for its sustainable water recycling solutions.

The Company had gross margin per barrel of $0.23 per barrel for the third quarter of 2022 compared to $0.23 per barrel in the third quarter of 2021. The Company had Adjusted Operating Margin per barrel 2 of $0.36 per barrel for the third quarter of 2022, compared to $0.41 per barrel in the third quarter of 2021. Operating margins for the quarter were negatively impacted by ongoing inflationary pressure and non-recurring startup costs at new reuse facilities.

Third quarter 2022 property, plant, and equipment expenditures totaled $48.7 million compared to $20.4 million in the third quarter of 2021. Aris continues to invest in high-return capital projects that support its long-term contracted customers and leverage its existing infrastructure.

STRONG BALANCE SHEET AND LIQUIDITY

As of September 30, 2022, the Company had approximately $25.2 million in cash and an available revolving credit facility of approximately $199.9 million for a total available liquidity of approximately $225.1 million.

FOURTH QUARTER 2022 DIVIDEND

On November 4, 2022, Aris’s Board of Directors declared a dividend on its Class A common stock for the fourth quarter of 2022 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 November 30, 2022, to holders of record of the Company’s Class A common stock as of the close of business on November 17, 2022. The distribution to unit holders of Solaris Midstream Holdings, LLC will be subject to the same payment and record dates.

FINANCIAL OUTLOOK

For the fourth quarter of 2022, Aris projects Adjusted EBITDA1 between $39.0 and $41.0 million, consistent with the lower end of our previously provided guidance of $150.0-$160.0 million for the full year of 2022. We expect our capital expenditures for the full year of 2022 to be between $140.0 and $150.0 million, consistent with previously provided guidance.

CONFERENCE CALL

Aris will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2022 on Thursday, November 10, 2022, at 8:00 a.m. Central Time (9:00 a.m. Eastern Time). Participants should call (877) 407-5792 and should refer to Aris Water Solutions, Inc. when dialing in. An audio replay of the conference call will be available shortly after the conclusion of the call and will remain available for approximately 14 days. To access the replay, call (877) 660-6853 (United States/Canada) or (201) 612-7415 (International) and enter access code 13732938. A live broadcast of the earnings conference call and the related earnings presentation will also be available via the internet at www.ariswater.com under the “Investors” section of the website. A replay will also be available on the website following the call.

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, those regarding the Company’s business strategy, its industry, its future profitability, the various risks and uncertainties associated with the extraordinary inflationary environment and impacts resulting from the volatility in global oil markets, expected capital expenditures and the impact of such expenditures on performance, management changes, current and potential future long-term contracts and the Company’s future business and financial performance and our ability to identify strategic acquisitions and realize benefits therefrom, such as the intellectual property recently acquired from Water Standard. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “guidance,” “preliminary,” “project,” “estimate,” “outlook,” “expect,” “continue,” “will,” “intend,” “plan,” “targets,” “believe,” “forecast,” “future,” “potential,” “may,” “possible,” “should,” “could” and variations of such words or similar expressions. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its 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, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Factors that could cause the Company’s actual results to differ materially from the results contemplated by such forward-looking statements include, but are not limited to the risk factors discussed or referenced in its filings made from time to time with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. Factors or events that could cause the Company’s actual results to differ may emerge from time to time, and it is not possible for the Company to predict all of them. The Company undertakes 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.

________________________

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.

Table 1

Aris Water Solutions, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling

 

$

39,674

 

$

24,639

 

 

$

110,299

 

 

$

71,368

 

Produced Water Handling—Affiliates

 

 

24,796

 

 

23,135

 

 

 

69,084

 

 

 

62,216

 

Water Solutions

 

 

20,392

 

 

7,666

 

 

 

46,744

 

 

 

11,824

 

Water Solutions—Affiliates

 

 

5,668

 

 

4,059

 

 

 

11,640

 

 

 

16,864

 

Other Revenue

 

 

246

 

 

 

 

 

364

 

 

 

 

Total Revenue

 

 

90,776

 

 

59,499

 

 

 

238,131

 

 

 

162,272

 

Cost of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Direct Operating Costs

 

 

43,885

 

 

23,497

 

 

 

101,337

 

 

 

66,703

 

Depreciation, Amortization and Accretion

 

 

16,942

 

 

15,378

 

 

 

49,724

 

 

 

45,550

 

Total Cost of Revenue

 

 

60,827

 

 

38,875

 

 

 

151,061

 

 

 

112,253

 

Operating Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Abandoned Well Costs

 

 

9,222

 

 

27,402

 

 

 

14,637

 

 

 

27,402

 

General and Administrative

 

 

11,482

 

 

5,228

 

 

 

33,860

 

 

 

15,240

 

Impairment of Long-Lived Assets

 

 

 

 

 

 

 

15,597

 

 

 

 

Loss on Asset Disposal and Other

 

 

239

 

 

940

 

 

 

1,816

 

 

 

2,590

 

Total Operating Expenses

 

 

20,943

 

 

33,570

 

 

 

65,910

 

 

 

45,232

 

Operating Income (Loss)

 

 

9,006

 

 

(12,946

)

 

 

21,160

 

 

 

4,787

 

Other Expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense, Net

 

 

6,763

 

 

7,880

 

 

 

21,863

 

 

 

17,855

 

Other

 

 

 

 

 

 

 

 

 

 

380

 

Total Other Expense

 

 

6,763

 

 

7,880

 

 

 

21,863

 

 

 

18,235

 

Income (Loss) Before Income Taxes

 

 

2,243

 

 

(20,826

)

 

 

(703

)

 

 

(13,448

)

Income Tax Expense (Benefit)

 

 

287

 

 

(83

)

 

 

(81

)

 

 

(81

)

Net Income (Loss)

 

 

1,956

 

 

(20,743

)

 

 

(622

)

 

 

(13,367

)

Equity Accretion and Dividend—Redeemable Preferred Units

 

 

 

 

 

 

 

 

 

 

21

 

Net Income (Loss) Attributable to Stockholders'/Members' Equity

 

 

1,956

 

$

(20,743

)

 

 

(622

)

 

$

(13,346

)

Net Income (Loss) Attributable to Noncontrolling Interest

 

 

1,257

 

 

 

 

 

(493

)

 

 

 

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

 

$

699

 

 

 

 

$

(129

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

 

 

 

$

(0.03

)

 

 

 

Diluted

 

$

0.02

 

 

 

 

$

(0.03

)

 

 

 

Weighted Average Shares of Class A Common Stock Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,499,953

 

 

 

 

 

22,779,077

 

 

 

 

Diluted

 

 

24,546,632

 

 

 

 

 

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,

 

 

2022

 

2021

Assets

 

 

 

 

 

 

Cash

 

$

25,180

 

 

$

60,055

 

Accounts Receivable, Net

 

 

76,273

 

 

 

41,973

 

Accounts Receivable from Affiliate

 

 

25,772

 

 

 

20,191

 

Other Receivables

 

 

6,287

 

 

 

4,126

 

Prepaids and Deposits

 

 

1,828

 

 

 

6,043

 

Total Current Assets

 

 

135,340

 

 

 

132,388

 

Fixed Assets

 

 

 

 

 

 

Property, Plant and Equipment

 

 

881,003

 

 

 

700,756

 

Accumulated Depreciation

 

 

(81,019

)

 

 

(67,749

)

Total Property, Plant and Equipment, Net

 

 

799,984

 

 

 

633,007

 

Intangible Assets, Net

 

 

277,379

 

 

 

304,930

 

Goodwill

 

 

34,585

 

 

 

34,585

 

Deferred Income Tax Assets, Net

 

 

24,377

 

 

 

19,933

 

Right-of-Use Assets

 

 

7,635

 

 

 

 

Other Assets

 

 

1,422

 

 

 

1,850

 

Total Assets

 

$

1,280,722

 

 

$

1,126,693

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Accounts Payable

 

$

35,823

 

 

$

7,082

 

Payables to Affiliate

 

 

2,412

 

 

 

1,499

 

Accrued and Other Current Liabilities

 

 

85,089

 

 

 

40,464

 

Total Current Liabilities

 

 

123,324

 

 

 

49,045

 

Long-Term Debt, Net of Debt Issuance Costs

 

 

393,453

 

 

 

392,051

 

Asset Retirement Obligation

 

 

8,148

 

 

 

6,158

 

Tax Receivable Agreement Liability

 

 

80,009

 

 

 

75,564

 

Other Long-Term Liabilities

 

 

8,966

 

 

 

1,336

 

Total Liabilities

 

 

613,900

 

 

 

524,154

 

Commitments and Contingencies

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Class A Common Stock $0.01 par value, 600,000,000 authorized, 26,166,400 issued and 26,156,209 outstanding as of September 30, 2022; 21,858,022 issued and 21,847,831 outstanding as of December 31, 2021

 

 

261

 

 

 

218

 

Class B Common Stock $0.01 par value, 180,000,000 authorized, 30,811,322 issued and outstanding as of September 30, 2022; 31,716,104 issued and outstanding as of December 31, 2021

 

 

308

 

 

 

317

 

Treasury Stock (at Cost), 10,191 shares as of September 30, 2022 and December 31, 2021

 

 

(135

)

 

 

(135

)

Additional Paid-in-Capital

 

 

282,917

 

 

 

212,926

 

Accumulated Deficit

 

 

(7,094

)

 

 

(457

)

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

 

 

276,257

 

 

 

212,869

 

Noncontrolling Interests

 

 

390,565

 

 

 

389,670

 

Total Stockholders' Equity

 

 

666,822

 

 

 

602,539

 

Total Liabilities and Stockholders' Equity

 

$

1,280,722

 

 

$

1,126,693

 

Table 3

Aris Water Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

 

 

 

 

(in thousands)

 

Nine Months Ended September 30,

 

 

2022

 

2021

Cash Flow from Operating Activities

 

 

 

 

 

 

Net Loss

 

$

(622

)

 

$

(13,367

)

Adjustments to reconcile Net Loss to Net Cash provided by Operating Activities:

 

 

 

 

 

 

Deferred Income Tax Benefit

 

 

(96

)

 

 

 

Depreciation, Amortization and Accretion

 

 

49,724

 

 

 

45,550

 

Stock-Based Compensation

 

 

9,134

 

 

 

 

Impairment of Long-Lived Assets

 

 

15,597

 

 

 

 

Abandoned Well Costs

 

 

14,637

 

 

 

27,402

 

Loss on Disposal of Asset, Net

 

 

481

 

 

 

225

 

Abandoned Projects

 

 

66

 

 

 

2,035

 

Amortization of Debt Issuance Costs

 

 

1,563

 

 

 

1,320

 

Loss on Debt Modification

 

 

 

 

 

380

 

Other

 

 

311

 

 

 

216

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

Accounts Receivable

 

 

(33,683

)

 

 

(11,231

)

Accounts Receivable from Affiliate

 

 

(5,581

)

 

 

(10,046

)

Other Receivables

 

 

(2,139

)

 

 

231

 

Prepaids, Deposits and Other Current Assets

 

 

4,215

 

 

 

2,516

 

Accounts Payable

 

 

3,233

 

 

 

(3,284

)

Payables to Affiliate

 

 

913

 

 

 

(715

)

Adjustment in Deferred Revenue

 

 

14

 

 

 

(46

)

Accrued Liabilities and Other

 

 

19,418

 

 

 

16,000

 

Net Cash Provided by Operating Activities

 

 

77,185

 

 

 

57,186

 

 

 

 

 

 

 

 

Cash Flow from Investing Activities

 

 

 

 

 

 

Property, Plant and Equipment Expenditures

 

 

(96,991

)

 

 

(62,728

)

Cash Paid for Acquisitions

 

 

(3,353

)

 

 

 

Proceeds from the Sale of Property, Plant and Equipment

 

 

7,441

 

 

 

 

Net Cash Used in Investing Activities

 

 

(92,903

)

 

 

(62,728

)

 

 

 

 

 

 

 

Cash Flow from Financing Activities

 

 

 

 

 

 

Dividends and Distributions Paid

 

 

(19,157

)

 

 

 

Proceeds from Senior-Sustainability Linked Notes

 

 

 

 

 

400,000

 

Payments for Initial Public Offering Costs

 

 

 

 

 

(855

)

Payments of Debt Issuance Costs Related to Issuance of Senior- Sustainability Linked Notes

 

 

 

 

 

(9,352

)

Repayment of Credit Facility

 

 

 

 

 

(297,000

)

Redemption of Redeemable Preferred Units

 

 

 

 

 

(74,357

)

Payments of Debt Issuance Costs related to Credit Facility

 

 

 

 

 

(1,442

)

Members' Contributions

 

 

 

 

 

5

 

Net Cash (Used In) Provided by Financing Activities

 

 

(19,157

)

 

 

16,999

 

 

 

 

 

 

 

 

Net (Decrease) Increase in Cash

 

 

(34,875

)

 

 

11,457

 

Cash, Beginning of Period

 

 

60,055

 

 

 

24,932

 

Cash, End of Period

 

$

25,180

 

 

$

36,389

 

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, and Adjusted Net Income. 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 impairments and abandoned project charges; losses on the sale and/or exchange of assets; loss on debt modification; and non-recurring or unusual expenses or charges (including temporary power costs), less any gains on sale and/or exchange of assets.

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.

The Company calculates Adjusted Net Income as Net Income (Loss) Attributable to Stockholders’/Members’ Equity 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) Adjusted Net Income (Loss) Attributable to Stockholder’s Equity 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, 2022, the Company calculates its leverage ratio as net debt as of September 30, 2022, divided by annualized 3Q 2022 Adjusted EBITDA. Net debt is calculated as the principal amount of total debt outstanding as of September 30, 2022, less cash and cash equivalents as of September 30, 2022.

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 measure Adjusted EBITDA, we are not able to forecast the most directly comparable measure net income calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP net income 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, which could have a significant impact on the GAAP measure. As a result, no reconciliation of forecasted Adjusted EBITDA to forecasted GAAP net income is provided.

Table 4

Aris Water Solutions, Inc.

Operating Metrics

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2021

 

2022

 

2021

Thousand barrels water per day

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Volumes

 

 

905

 

 

708

 

 

850

 

 

692

Water Solutions Volumes:

 

 

 

 

 

 

 

 

 

 

 

 

Recycled Produced Water Volumes Sold

 

 

345

 

 

130

 

 

306

 

 

102

Groundwater Volumes Sold

 

 

166

 

 

82

 

 

112

 

 

61

Groundwater Volumes Transferred

 

 

 

 

41

 

 

8

 

 

42

Total Water Solutions Volumes

 

 

511

 

 

253

 

 

426

 

 

205

Total Volumes

 

 

1,416

 

 

961

 

 

1,276

 

 

897

 

 

 

 

 

 

 

 

 

 

 

 

 

Per Barrel Operating Metrics (1)

 

 

 

 

 

 

 

 

 

 

 

 

Produced Water Handling Revenue/Barrel

 

$

0.77

 

$

0.73

 

$

0.77

 

$

0.71

Water Solutions Revenue/Barrel

 

$

0.55

 

$

0.50

 

$

0.50

 

$

0.51

Revenue/Barrel of Total Volumes

 

$

0.69

 

$

0.67

 

$

0.68

 

$

0.66

Direct Operating Costs/Barrel

 

$

0.34

 

$

0.27

 

$

0.29

 

$

0.27

Adjusted Operating Margin/Barrel

 

$

0.36

 

$

0.41

 

$

0.39

 

$

0.41

(1) 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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Income (Loss)

 

$

1,956

 

 

$

(20,743

)

 

$

(622

)

 

$

(13,367

)

Interest Expense, Net

 

 

6,763

 

 

 

7,880

 

 

 

21,863

 

 

 

17,855

 

Income Tax Expense (Benefit)

 

 

287

 

 

 

(83

)

 

 

(81

)

 

 

(81

)

Depreciation, Amortization and Accretion

 

 

16,942

 

 

 

15,378

 

 

 

49,724

 

 

 

45,550

 

Abandoned Well Costs

 

 

9,222

 

 

 

27,402

 

 

 

14,637

 

 

 

27,402

 

Impairment of Long-Lived Assets

 

 

 

 

 

 

 

 

15,597

 

 

 

 

Stock-Based Compensation

 

 

3,595

 

 

 

 

 

 

9,134

 

 

 

 

Abandoned Projects

 

 

 

 

 

679

 

 

 

66

 

 

 

2,035

 

Temporary Power Costs

 

 

 

 

 

 

 

 

 

 

 

4,253

 

(Gain) Loss on Disposal of Asset, Net

 

 

(97

)

 

 

8

 

 

 

481

 

 

 

225

 

Loss on Debt Modification

 

 

 

 

 

 

 

 

 

 

 

380

 

Transaction Costs

 

 

336

 

 

 

253

 

 

 

1,269

 

 

 

330

 

Other

 

 

325

 

 

 

 

 

 

325

 

 

 

221

 

Adjusted EBITDA

 

$

39,329

 

 

$

30,774

 

 

$

112,393

 

 

$

84,803

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Total Revenue

 

$

90,776

 

 

$

59,499

 

 

$

238,131

 

 

$

162,272

 

Cost of Revenue

 

 

(60,827

)

 

 

(38,875

)

 

 

(151,061

)

 

 

(112,253

)

Gross Margin

 

 

29,949

 

 

 

20,624

 

 

 

87,070

 

 

 

50,019

 

Depreciation, Amortization and Accretion

 

 

16,942

 

 

 

15,378

 

 

 

49,724

 

 

 

45,550

 

Temporary Power Costs

 

 

 

 

 

 

 

 

 

 

 

4,253

 

Adjusted Operating Margin

 

$

46,891

 

 

$

36,002

 

 

$

136,794

 

 

$

99,822

 

Total Volumes (Thousands of BBLs)

 

 

130,267

 

 

 

88,357

 

 

 

348,315

 

 

 

245,048

 

Adjusted Operating Margin/BBL

 

$

0.36

 

 

$

0.41

 

 

$

0.39

 

 

$

0.41

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net Income (Loss)

 

$

1,956

 

 

$

(20,743

)

 

$

(622

)

 

$

(13,367

)

Adjusted items:

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of Long-Lived Assets

 

 

 

 

 

 

 

 

15,597

 

 

 

 

Abandoned Well Costs

 

 

9,222

 

 

 

27,402

 

 

 

14,637

 

 

 

27,402

 

(Gain) Loss on Disposal of Asset, Net

 

 

(97

)

 

 

8

 

 

 

481

 

 

 

225

 

Stock-Based Compensation

 

 

3,595

 

 

 

 

 

 

9,134

 

 

 

 

Tax Effect of Adjusting Items (1)

 

 

(1,460

)

 

 

 

 

 

(4,575

)

 

 

 

Adjusted Net Income

 

$

13,216

 

 

$

6,667

 

 

$

34,652

 

 

$

14,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 (Loss) Per Share to Non-GAAP Diluted Adjusted Net Income Per Share

(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2022

 

2022

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

 

$

0.02

 

 

$

(0.03

)

Adjusted items:

 

 

 

 

 

 

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

 

 

0.01

 

 

 

(0.01

)

Impairment of Long-Lived Assets

 

 

-

 

 

 

0.29

 

Abandoned Well Costs

 

 

0.17

 

 

 

0.27

 

(Gain) Loss on Disposal of Asset, Net

 

 

-

 

 

 

0.01

 

Stock-Based Compensation

 

 

0.06

 

 

 

0.17

 

Tax Effect of Adjusting Items (1)

 

 

(0.03

)

 

 

(0.08

)

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

 

 

24,546,632

 

 

 

22,779,077

 

Adjusted Items:

 

 

 

 

 

 

Assumed Redemption of LLC Interests

 

 

31,248,544

 

 

 

31,481,479

 

Dilutive Performance-Based Stock Units (2)

 

 

-

 

 

 

65,253

 

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

 

 

55,795,176

 

 

 

54,325,809

 

 

 

 

 

 

 

 

(2) Dilutive impact of Performance-Based Stock Units already included for the three-months ended September 30, 2022

Table 9

Aris Water Solutions, Inc.

Computation of Leverage Ratio

(Unaudited)

 

 

 

 

 

 

As of

 

 

September 30,

(in thousands)

 

2022

 

 

 

 

Principal Amount of Debt at September 30, 2022

 

$

400,000

 

Less: Cash at September 30, 2022

 

 

(25,180

)

Net Debt

 

$

374,820

 

 

 

 

 

Adjusted EBITDA for the Three Months Ended September 30, 2022

 

$

39,329

 

x 4 Quarters

 

 

x 4

 

Annualized Adjusted EBITDA

 

$

157,316

 

 

 

 

 

Net Debt

 

$

374,820

 

÷ Annualized Adjusted EBITDA

 

$

157,316

 

Leverage Ratio

 

 

2.38

 

 

Contacts

David Tuerff

Senior Vice President, Finance, and Investor Relations

(281) 501-3070

IR@ariswater.com

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