Aris Water Solutions (ARIS) Q2 2024 earnings summary

Executive summary

• Produced water volumes grew 5% year-over-year, with Q2 2024 Adjusted EBITDA up 17% to $50 million and net income rising 26% to $13.1 million.

• Adjusted operating margin per barrel reached a record $0.46, supported by electrification, automation, and higher skim oil recoveries.

• Strategic initiatives advanced in water recycling, mineral extraction, and beneficial reuse, including a DOE research grant and new iodine extraction agreement.

• Dividend per share increased 17% to $0.105, with consistent capital allocation toward organic growth, M&A, and shareholder returns.

• Capital expenditures for Q2 2024 were $37 million, supporting operational efficiency and growth.

Financial highlights

• Q2 2024 revenue was $101.1 million, up 5% year-over-year, with operating income of $23.9 million and adjusted net income of $17.3 million.

• Produced water handling revenue rose 10% to $54.8 million; water solutions revenue declined 8% to $13.8 million.

• Adjusted operating margin per barrel was $0.46, up 21% year-over-year; gross margin per barrel improved 29% to $0.31.

• Capital expenditures for Q2 2024 were $37 million, with first half 2024 CapEx at $75 million, in line with full-year guidance of $85–$105 million.

• Leverage ratio at quarter-end was 2.2x, net debt $438 million, and available liquidity $299 million.

Outlook and guidance

• Full-year 2024 Adjusted EBITDA guidance raised to $195–$205 million, with Q3 2024 expected at $48–$52 million.

• Produced water handling volumes for Q3 2024 projected at 1,060–1,090 thousand barrels/day; water solutions volumes expected to rise in H2 2024.

• Full-year capital expenditure guidance unchanged at $85–$105 million.

• Long-term margin improvements expected to be sustainable, with $0.43 per barrel as a baseline.

• Inflation and cost pressures are partially offset by CPI-based contract adjustments, though some caps may limit margin expansion.