ARIS - Earnings call transcript Q4 2024 | Aris Water Solutions, Inc.

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Operator

Greetings, and welcome to Aris Water Solutions Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this call is being recorded. It is now my pleasure to introduce David Tuerff. Thank you, David.

begin. may You

David Tuerff

Executive welcome XXXX and by Aris Solutions Founder Water President CFO, and Good Tompsett. Stephan Conference to Call. Quarter and our Brock; Earnings CEO, today Bill I Fourth Zartler; and our morning, Amanda the Chairman, am our joined

number differ we of and like which current contemplated our you a future beliefs, and and expectations, to results Before and unknown could not that uncertainties to performance and forward-looking guarantees are events and call regarding known other this begin, forward-looking presentation, cause related risks statements I'd are subject statements. of the we remind in will make and such by actual materially that factors results to from plans

over undue of to our substitute out Please place in Exchange accompanying cautionary accordance which financial GAAP useful performance. Zartler. Securities measures a call supplemental not our measures, measures will today's turn considered forward-looking You Commission. I from included in contain and most to are call and our filings measures other Founder and in the also not reliance Reconciliations the as appendix or point and presentation. I'll prepared release These be in to GAAP. the we included factors to with like isolation are comparable Executive U.S. should of refer Chairman, the evaluating for directly the earnings are Bill that financial our in our today's now non-GAAP time and believe discussion conference investor would statements presentation made to statements. risk with on time cautioned to

William Zartler

XXXX for increased strong for in shareholder we well the the quarter, which Water a We efficiency, us Solutions Margins fourth while paired tremendous increase inflection Thank beyond point produced continued in strong activity leading record flow the cash quarter. and cash remained business. in you, fourth reinvest quarter, generation, as significant generating during year. water to quarter returns represented quarter capital the a robust XXXX saw a volumes continued and allows free to David. significantly XXXX in continuing business. with and the earnings our meaningful to with steady finished a as completion Aris

of We proud assess day. the our recognize every single on a and or of accomplishment metrics, our of be recordable have no and those what they like diligence our without team much was every year, proud XXXX of was contractor to immensely greater hour but team operations the sites, we most we're We the I'd than entire as congratulate safety our There's during our demonstrate and ended all safety that to priority incident. XXXX. safety. important accomplished employee of

contracted from long-term As production we completion we customers. activity and see look growth steady our XXXX, to

and and to I'll We look our capital that, and we are few to XXXX of will Ranch more solid Gaines Lea on maintain to forward a margins and excited reuse County, and and our details. outlook customers business, our With and pursue purchase investment, returns continue in as water turn as Amanda to for into Texas. we'll thanks expansion the continue strategic a efficiencies into Alongside well beyond. we mineral a beyond our Mexico treatment achieved as express progress expand and our the the activities on our for to it oil to cash disciplined Counties, continued operating and XXXX, industry. We over extraction beneficial industrial initiatives, want increasing we our team, McNeill generation focusing closed shareholders. suppliers XXXX New gas phenomenal the current in Andrew including and for

Amanda Brock

team. remarkable Bill. entire proud of a was our year, I'm Thank extremely XXXX and you,

to volumes our cash alongside We free time announce this asset to footprint cash this Solutions pleased at and we dedicated increase capital we existing efficiency business, grow flow. consistent grew expanded And our to their our Water our by as quarterly finish with as to acreage, leverage Supported customers returns, improve exceeded We're say to operate were we safely, our significant our record operational result, volumes margins generated strong to on shareholder increasing and had Water a share. We per goals dividend and our XX% the those objectives. Our $X.XX sequentially. commitment XX% our and a in Solutions we're to year. they last a optimize production achieved our year spending. to proud

of on multiple We achieving significant improved X% see Basin decades and in volumes adjusted dedicated our acreage, year-over-year remaining in our fourth long our from quarter, dedicated an providing our and the Permian visibility customers. $XX.X margin still large XXXX, maintained long-term the million. EBITDA our inventory acreage our core of grew us in dedicated margins water in produced of barrel activity $X.XX customers consistent continue term. We have adjusted to a operating of the We

the detail For flow. financial of million our CapEx Steve year, on cash $XX and million generated strong will performance. $XXX invested we go in free approximately into more

becomes Water produced water are have and together to long-term with Water supply in contract New acres one that Solutions extended produced dedicates largest contracts faster water. tenor recycled As dedicated on visibility Solutions into of the lengths larger lateral efficient more water business our handling and This a to we that our dedication We years. pad large-scale industry contracted customers our and Aris, under approximately X future volumes. an an with completions, volumes which, long-term ensure forecasted operators longer XX% now access recently infrastructure of contracts, of need substantial gives us XXX,XXX their Mexico to average with over to means of long-term now designs, acreage over our XXXX reliable sourcing

activity XXXX alongside customers increase customers Permian an them. growth flow. cash forward We grow areas. XXXX in Water we in completion produced our Steve in production additional will increase we margin as Looking will our anticipate the the believe certain forecasting We provide improvements volumes are free our our achieved to maintain we in XXXX, in guidance. and can dedicated in details anticipate mid-single-digit growth activity around Solutions XXXX, and Basin their water further

We will accelerate will allow growth us well pursue that initiatives to strategic into to continue also future. our the

of Bill advantages. believe for long-term which support As water operational comprised XX,XXX infrastructure significant acquired purchased ranch ranch subsurface fourth optionality the believe acres, Ranch royalties the mentioned, several Aris in and and industry's on The geology the quarter, volumes for the reduce it compelling after growing with we our in surface with by can injection. ranch downhole of landowner long-term for to McNeill the porosity of ranch. promising long-term the collaboration approximately largest water customers detailed operating features eliminating We location need provides the development. We our expense disposed a analysis also largest and provides opportunity

In the utilization addition, to industrial for the flexibility and power we and income renewable have applications. surface reuse value significant rights beneficial ranch of development, the of way, maximize surface by of through generating other

commercialize current to use We the and are in recent an we discussions valuation of at which with adjacent transactions Ranch, relative potential the acreage. new customers on attractive purchased both to

assets, permit Commission outside our added on Coterra. a treatment for has extensive us Chevron, progress have quarter the well to and industrial make for Environmental that, companies on ConocoPhillips numerous reuse development discharge up of industry. and have outlook After details partners, large testing projects property on experienced financial with the turn further of beneficial and providing we an Quality to positions We're to applied This continue team to alongside grows. And for technologies, into XXXX. and industrial oil to pleased Texas We strategically. recently per We water team have our users gas us as ExxonMobil, to in hope the to expansion day. treatment permit the of industrial business the reclaimed discharge water to applying ability this intellectual Steve of We results for broader barrels XXX,XXX to to the expertise and our in our updates water XXXX. Aris is a developed over XXXX forward end and extremely complex also I'll help for it by with hand to look market. with discuss in its

Stephan Tompsett

for million adjusted barrel. margin We fourth and operating of per recorded Amanda. EBITDA $XX.X the you, Thank quarter of $X.XX adjusted

million, up XX% barrel, year, For EBITDA from recorded full we per margins the year. adjusted $XXX.X XX% XXXX up prior and of the from $X.XX adjusted of operating

earnings to performance, in spent XX% generated We the $XX fourth strong for million and were paired year. Turning Expenditures million $XXX CapEx. million quarter $XX year. the flow in our with which during cash free year-over-year, the down full

X,XXX to as barrels up estimated price expect approximately day between which the the forecasting X% is XXXX, for Looking oil water between million XX% year volumes to day barrel, per compared versus We're business, per we barrels the average be produced impact. In customer XXX,XXX $XX annual XXXX an million at X% XXXX $X for year, versus completion X.XX barrel average ahead down for of barrels due X.XX an expect to and increased skim of $X per Water per we Solutions recoveries the approximately to year the at midpoint. million volumes XXX,XXX per or up day, and XXXX for activity. of to

activity and $XXX produced with volume are depending performance operating oil water customer of for to EBITDA This sustained mix. margin $X.XX recoveries, completion to on growth, continued margin deliver per million and between be skim $X.XX expected and continued are barrel adjusted pricing We million margin oil adjusted $XXX strong to XXXX. strong forecasting anticipated skim strength volume

consistent generation our and the between expenditures are up XX% cash Finally, $XX free million, between levels, $XX and XXXX be to at anticipated XXXX over to $XXX leading million, million midpoint. flow million $XX capital with

customers, February. barrels water January between Water and first production shut and Water customer per reflects and quarter, day. also which weather, cold and completion we be produced XXX,XXX from which in XXX,XXX some well downtime February. of the X.XXX barrels one reflects largest For million between in impact forecast out expect to certain X.XXX of per be This to million day volumes Solutions unexpected January This and volumes Solutions outlook our the volumes pushed in

resume have the could we activity will some volume been delayed Despite is expected be in to While year. $X.XX for the these potential be per margins our unaffected March, impacts, quarter. in there $X.XX believe issues until between activity that largely and resolved these is barrel and later

levels, amount, impact to returned we weather-related EBITDA quarter, the $XX EBITDA for $X.X now million. Aris' to between Net onetime of normal the has and be While to adjusted approximately we anticipate first million adjusted production quarter first $XX anticipate million. this

to balance of net to million with We sheet. adjusted X.Xx debt of quarter million ratio with EBITDA debt and $XXX liquidity. our $XXX ended the Turning a

current financing, go scheduled begun April, of our refinancing and our to $XXX in options. we terms In notes have million are senior assessing

March and paid contracted a be our first record flows, over to reflection of declared This XX of $X.XX is we per to the dividend I'll Finally, XXXX dividend and turn confidence cash XX% XX. low of stable to quarter leverage our represents March XXXX shareholders quarter beyond. With in and that, back Amanda. increase of share a on it fourth

Amanda Brock

customers In for closing, would to and like our their we of in work execution sincere appreciation offer to hard Thanks, XXXX. our all also Steve. team loyal consistent and

cash across us and metrics: was adjacent in on disciplined a that, excess beyond core can up on progress. remain exceptional water areas, investments our We new you to industries. produced Alongside returning our look built strategic updating both and XXXX efficiency questions. prudently and we we initiatives growth infrastructure platform performance on to in We've happy take which Our providing growth business, and shareholders. with our exceptional focus the additional commercial our And capital customers, set service to forward cost focused make to and sustainable new safety, in are continuous growth, all investment. XXXX in contracting, for volumetric we reinvesting from throughout business

Operator

Goldman And [Operator Sachs. John question from our first comes with Mackay Instructions]

John Mackay

ranch acquisition. acre much I other It's per lower some seen. the screening want deals to definitely start than on we've

for maybe you you're to curious could just up what the the and about are how the that Just steps on return? thinking frame acquisition if us realizing profile return

Amanda Brock

Certainly.

characteristics being subsurface customers last looking began and looking adjacent is bought optionality. suitable customers, areas future and barrels granted It's some at lines. got great X and our power, are of believe very XXX,XXX permits straddles We our the ranch of That So for forward. frame. price. ranch in the 'XX, at Delaware. It been on rail, largest over capacity. great said, has secure early barrels us attractive a us disposal ourselves accessing located capacity, locations disposal future the in and fastest-growing about and New of disposal Mexico It associated for Northern believe future gives porosity 'XX growth subsurface this evaluated And our to for with gas we customers think We there already locations McNeill XXX,XXX for great Ranch with Texas. available year, that of we the We're with transmission of volumes this we've of to there It great X is we discussions ranch. the time injectivity. we with

be which we rates, underwrite at infrastructure that the and is attractive with we our to and any ranch with contracts expect will this long-term have expect underwritten contracts ranch So MVCs enter our into CapEx developed development associated to and way in the then same of the existing network, expansion as by develop the we customers needed.

days. early as look it So forward, we is

customers. discussions We our with are in

for subsurface. We've got wind, ranch solar, inbounds We of right are by for inbounds battery. We've substations. solar, encouraged the have way that for to also unrelated for leasing had on in very come

has great great and acquisition, a optionality us in giving operational So this all advantages. all, been

as this look going you long-term just We look want and very Steve, we're forward and we continue focused same develop to to go to add we So it. in financial at returns at a a on updating perspective, generation, growth the for as flow cash time, we're of we us to to we're balancing shareholders very free terms great remaining opportunity you from encouraged. if it And forward. view be growth. to how

Stephan Tompsett

X growth XX just years. Yes. ability what the porous next this said, is future of for some about secure to really the to for strategic And space echo to Amanda

project. of So a going we with to buy. porous the we land, having on optionality really retain development at basis down versus to of the to look John, return lease And come can strategic other as comes this long it, when ownership compete as down to any the space it's for and

Amanda Brock

we is addressing this we dispose this Sorry, John, be related on did it the for mention as of last to that And ranch, some thing we will foreshadow not royalties. paying that royalties. to barrels obviously

John Mackay

Maybe Absolutely. clear. That's just quick follow-up. a

the of about the would You M&A. Maybe for for of touched go-forward this stay more active now? to more You've water frame surface but talked kind briefly, this acquisition kind traditional Is of of kind us. on you expect acquisition side? it strategy just up kind on broadly

Amanda Brock

companies But for supported. as contracts, for got there we strategic have that to to to we they good continue growth, opportunities for consistently We look assets, come inorganic to market. to and they've great great can continue we buy and imperatives be as be evaluate them said, price inventory have to at a believe

So future. we continue have companies, ensure to that we we will to a look and robust at in continue pathway will to opportunities other growth the got look to at

William Zartler

the really to think, move and lot of of business years. with the going And which John, but probably of options at kind not that I the strategic and really business a the continue protect don't part core land this a next to we we're we pace the it. to over strategy, added grow believe That's have

Operator

Dounis from next with question And Citi. comes Spiro our

Charles Douglas Bryant

on Chad is Spiro. This for

just it more you starting off growth years. you've very have on or over I the about X Can dividend, forward? you specific past in like grown going looks think yield mind target rapidly what normalized if and talk a the

William Zartler

could one increase deliver have shareholder we growing a that goals, stated and we with sustainable returns manner really we're pleased shareholders. that key to our is of our Yes, in this

underscore management's business. relatively time to meant from to growing confidence And our well as midstream outlook up have those really this for had strong performance returns We increase that long-term over relative was with as been reflecting the names. the in XX% commitment XXXX, a in starting low we payout to

number we at we consistent forward, a payouts, most don't but XX%, at growth target will have to don't to be going basis. an at lower specific though time. likely on have look likely an explicit to rate more annual dividends increases we future around I evaluate range expect So level, a the but a relative this or would

Charles Douglas Bryant

just benefits on in see and to to And up we asset about talk then up when McNeill expect show develop Can Understood. following sort of EBITDA? acquisition. this can Okay. timing you

Amanda Brock

Certainly, I in developing we 'XX, are think of time 'XX at this sort the ranch frame. looking

at years with revenue meaningful looking associated in surface sort right the off of 'XX revenue really at activities looking some So those than and that of frame. other we're now, the impact the ranch later time

Operator

And from our comes next question Jeremy with Tonet JPMorgan.

Noah Katz

Katz is Noah on This for Jeremy.

can do your Can the back from to operations? integrate expect Going to any Ranch ranch acquisition, receive you McNeill spoke future costs? to plan the optimization cut acquisition? bit, but what it how into you that the efforts do synergies a guys existing be And speak to you to to accomplished you

Amanda Brock

the are OpEx pay ranch, we made to items. mean, disposing I our of largest And don't on royalties. that we I comment one if John's So question, is the

that to So the The benefit in one ranch position. as Northern look the an is is a optimization, Delaware. immediately areas is we grow of our adjacent fastest-growing the location to of

where signing investing So associated that contracts and with infrastructure it have in been we in is area.

customers synergistic. as of operational So giving characteristics giving see us with advantages associated we great very some it attractive. that us subsurface and see got the has these optionality found ranch largest great it have the very our the fact We as that

an us positions well we and opportunities to customers. with think our growth So future for advantage have OpEx

Noah Katz

projects relating follow-up. further like see mineral for Can And you revenue then potential you these? coming expect in the streams in do up And pipeline switching gears we the a can projects? XXXX? provide Should bit other any these update and provide updates you desalination to on extraction the as a an you any have

Amanda Brock

'XX. be unlikely pretty we've been in No, specific there's that to revenue

'XX. towards more looking are We

locations. on citing iodine work projects those the to continue We in

those structure a stream be and of any the to required construction where projects contribute expect looking be not under royalty we We the type end be will on to year towards CapEx. at

working magnesium. are We on

We has in to most filed barrels which very progress are for have a And TCEQ a for in been see constructive permit of our the we the continuing pilot. XXX,XXX discharge importantly, Texas, day. with surface

We to and who water want access expect permits work in and to to this disposal customers year-end able facilities by hand safely. discharge capacity have 'XX be with our to operate in develop that draft to

Operator

with from next comes Wells Satish And our Praneeth question Fargo.

Praneeth Satish

new you you how plan of your ballpark a to of like it involved disposal that you it? it guess building be potentially ranch. be hundreds of seems us would with a Can of peers large wells alluded to one I or comparable this volumes type of that much the your developing kind is a CapEx pipeline it bring this, water the for ranch and in to potentially the but give So project build in at the range that? pipeline of be less night. of than kind scale millions Would in last announced Would to water customers' dollars

Amanda Brock

a Yes, like of we timing we question release get given expected would that. that that

we So answer that the expect is in do at looking range. no, to CapEx be not

of One do we the where advantages ranch have is of this the to phases. of ability this that development the location in and is,

will these as development, I And customers new moved said. be as volumes to It's our to need to so work going all we phased with closely very ranch. be the

[ So we a in do how that number to like CapEx underwriting headline this? was to release you do number talk about want we from have significant the not expect ]. look at Steve, WES the

Stephan Tompsett

Yes.

growth to is potential company. at be as Praneeth, going free cash it by long-term of contracts opportunities look support commercial here, think, the flow we growth, that underwritten I

it's to support to with consistent going a sheet balance and company's outlook structure health. long-term that's be So going the

Praneeth Satish

beneficial then turning Got maybe to it. And reuse.

XXX,XXX barrels Texas permit the of is with the So significant. quite pretty Commission

already you that? on what this How for do then need is decision Bluff Red I And in would you the committed any capital to guess And facility. FID you large would customers or called required to kind make have it's this bring of Would treatment project? partners? question, interest? when volume First be that? expressing an

Amanda Brock

we those detailed say, the from yes, and this Great We all where as very sort project. be you Conoco consortium and whom Chevron, will And very accessing and with are standpoint, are ultimately a we Praneeth. with will of proposing it. there with work volumes. I operate are closely, do what discussions, Coterra, to competitive interest in questions, project know, will just it anticipate in is of in considerable We Exxon combined familiar a we

at see we regulatory looking end be to year as FEED the going go are the We process. toward of project through

for So this more update we but with something partners, our will we operation role on be as that and you absolutely go, consortium. to a it be we is will expect technology, design,

Operator

with next our comes Partners. Campbell Research question Jeffrey And from Seaport

Jeffrey Campbell

Congratulations you strong questions alluded quarter. that X to to recycling wanted of I water couple on industrial the a the about on of Slide ask presentation. the

like somebody you to The I intrinsically sounds If going your kind else's of first an this wondered question is, involve what might early us so, working Is versus this different value deriving that of water if from give just this that is with could like an own. business. correct? And like. seems snapshot look

Amanda Brock

we Sure, industrial on been water. we the water with we rapidly, expertise and proprietary consistent produced how We've have industry. for know water Jeffrey. is deal that treatment been developed complex the doing pretty Yes, growing saying to have sector in and that

look the forward, we a is opportunity treatment to we believe to wastewater. take real industrial our As of expertise there

where beneficial industrial minimizing we part, brought reuse. solutions expertise on are they've waste And some successfully for got large is is, we reverse recovery using using streams. which osmosis in completed projects in why they're They've high in industrial in-house. customers. wastewater team It so where focus deep is projects that systems, this treatment Their

and platform continue very is own to our in position us outside in expertise only well verticals. efforts, So delivering gas beneficial this and a us bringing to reuse in using of and also not but people, oil adjacent help their great them of backlog assets projects in to

very we water think industrial in we what sector. can by We the do are encouraged

Jeffrey Campbell

could this your multistate Texas depending evolves, Great. that, And New primarily just limited would on be to Mexico operations? near become as Or projects this gas a these follow-up to endeavor? oil and current a how and

Amanda Brock

And in This team and the of obviously, already rollout. has backlog this related would It see references endeavor. but in a multistate see Jeffrey, we multistate as multiple just really projects large very Permian, has as not not a this with the we industrials. Texas great a states. way is to

Operator

And our question with Capital. from next Whitfield Texas comes Derrick

Derrick Whitfield

on thinking activity, direct you teams commercial and Congrats power Starting updates. you're speak use development, and how operations, attract other beyond to would your industrial close Ranch surface which drive additional on your other could income year-end your to applications? McNeill and organizing through beneficial

Amanda Brock

And closed looking of the exactly have the year. for gone And ranch honestly, we on end at last not opportunities. out we

a encouraged these is, We transmission have know where associated advantages are ranch a got around the very it. because been across got built next inbounds line. Hobbs, a door plant Mexico. are from built There being people It's what are in the the town power It's line, understand substations with railway street. the ranch. New is to power which who gas fastest-growing who a line. being located the It's There's

focus time So to and us core however, these and our these to go are operations, continue customers inbounds is working disposal responding with have reuse. to without At permitting, come inbounds allocating point, beneficial for with opportunities long-term people we associated as to this to out. on having us we which

Derrick Whitfield

leaning And Slide bit. in Terrific. XX then maybe on a

You're reuse this with cases providing update. fulsome beneficial on more update a

we barrels? the how up of ramp should Regarding XXX,XXX think about potential desalination reservoir to cost the replenishment, discharge and to

Amanda Brock

desalination cost And cost on to effective. tremendous pilot the robust the with becomes enough have lot deal pace made not we only partners but a of to of are in getting it with on are that that an technologies to on be with have competitive. our this complex a focusing time operational down perspective We progress water, spent

said with which your is will desalination we we this, evaluating, look at be one, what we are phase earlier not partners. do about, start we with an with as answer, whether from think or XXX,XXX. to As we associated design a I is CapEx modular. going how perspective are this, in And is question I the this, into how

easy it grow. is trains add to as So you desalination

the So we to with on more sort giving as get of we further look data process. this you permit forward

Operator

from Don question next Johnson Rice. Crist comes our And with

Donald Crist

touch and to their one your most larger come all. very and but the some your around levels. customers impacted wanted It feels world know I on layoffs you activity like all customers didn't in of with has stable are operations, at out of if that stuff

is clarify wanted is it would larger one we Just of the forward moving that as that past to in customers still doing in dedicated activity your the acreage your years. thought

Amanda Brock

go, Don. all is systems It

think Chevron announced other of the announced has down But are will initiatives and they you some production that I to parts impact layoffs, saying have they world. what So if in drill the million barrels Permian what and X They the specific about been they've of their are up. about they're this milestone about operations over day. saying in ramping very hitting Delaware, a still

completions, And are acreage more is a we It slight disposal. we if go. we're anything, know our all activity uptick in not get to activity water providing that is impacting that definitely if seeing anything for going on that their about water right our systems on is So we're property the completion great and dedications. now, side. are seeing And we what's for

Donald Crist

pay came good that down debt industry M&A in wheelhouse particularly the all did is That's of to to they some your is question, necessarily And over to recently. in they a or out you of Diamondback you acquisitions broader player the sell would major industry going water if years? a But not. that question, kind could possibly know that kind that? of don't like hear. just couple next continue broader the feel to consolidate the do And one from on of systems and M&A. their said I be

William Zartler

that's think I Don, right.

directly And of need you to is we're of for really Conoco several ago. quality operator an operator operated Concho if make position. contract the an quality economics assets, make that did that commercialize that really you really assets, you of we fits you're we we're and at out work. with can then the to that other ensure water with that make folks' some years business what a said, and for asset really contract. we in sure from to the As perspective negotiating owned have And their sure terms looking of the And obviously, looking criteria that spinning

So operator-owned Brock among like midstream of well still to water find time. the comments. call that and operator. to looks systems Amanda peers home as a back water for exists, both are there's I It for closing a would model consolidation sets, that with more as like might there turn opportunity this at still questions further better no

Amanda Brock

Thanks.

you a our as look forward the customers. year And the outlook. We we strategic to thank thank we initiatives develops. on we've XXXX. updating the very as about team, So want expressed, we're our great and want encouraged We to to had our XXXX and progress

So earnings. in. we the don't before, And thank you great you a Have at for will talk if you day. talk to calling quarter next to we

Operator

Thank We participation. today's thank your This for conclude does you. you teleconference.

time. You may disconnect your lines at this

Aris Water Solutions (ARIS) 27 Feb 252024 Q4 Earnings call transcript