Aris water solutions, inc. reports third quarter 2021 financial and operating results
Houston--(business wire)--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, 2021. third quarter 2021 highlights record total water volumes and recycled water volumes of 961,000 barrels of water per day and 130,000 barrels of water per day respectively executed four new acreage dedications, increasing dedicated acres by 20,000 acres with a weighted-average contract length of ten years exceeded aris’s 2022 sustainability performance target consolidated revenue of $59.5 million net loss of $20.7 million which includes a non-cash charge of $27.4 million associated with the abandonment of an asset consolidated adjusted ebitda1 of $30.8 million cash flow from operating activities of $26.5 million free cash flow of $6.1 million2 “the third quarter of 2021 featured continued strong performance for aris water as we set records in total volumes handled and produced water volumes recycled. we improved our percentage of sourced water recycled to 61%, exceeding our 2022 sustainability performance target and demonstrating our commitment to water stewardship by reducing groundwater extraction. our strong, long-term partnerships with our blue-chip customers provide both stability and significant upside as activity levels continue to improve,” stated amanda brock, chief executive officer of aris water. “this is an exciting time for the company and our industry. we are seeing steady growth from our customers across both the delaware and midland basins, supporting a positive outlook moving forward. we have a unique offering that provides our customers with a proven, reliable water infrastructure partner and helps them reduce the use of groundwater,” stated bill zartler, founder and executive chairman of aris water. 1 adjusted ebitda is a non-gaap financial measure. see the supplementary schedules in this press release for a discussion of how we define and calculate adjusted ebitda and a reconciliation thereof to net income, the most closely comparable gaap measure. 2 free cash flow is a is a non-gaap financial measure. see the supplementary schedules in this press release for a discussion of how we define and calculate free cash flow and a reconciliation thereof to net cash from operating activities, the most closely comparable gaap measure. operations and financial update during the third quarter of 2021, the company recorded a consolidated net loss of $20.7 million. the consolidated net loss includes a non-cash charge of $27.4 million associated with the abandonment of an asset. excluding the non-cash charge, consolidated net income was $6.7 million in the third quarter of 2021 compared to consolidated net income of $1.1 million for the third quarter of 2020. during the third quarter of 2021, the company averaged 961,000 barrels of water per day of total volumes handled, sold and transferred, an increase of 42% compared to the third quarter of 2020. our volume growth was driven by the increased activity levels of our long-term contracted customers. the company had adjusted ebitda1 of $30.8 million for the third quarter of 2021 compared to $19.7 million in the third quarter of 2020, an increase of 56%. during the third quarter of 2021, the company executed four new long-term acreage dedications covering approximately 20,000 dedicated acres, with a weighted average life of approximately 10 years. two of these contracts include long term full-cycle handling and recycling solutions. third quarter 2021 cash capital expenditures totaled $20.4 million compared to $29.3 million in the third quarter of 2020, a decrease of 30%. we continue to invest in high-return capital projects that support our long-term contracted customers and leverage our existing infrastructure. free cash flow was $6.1 million for the third quarter of 2021. as of september 30, 2021, the company had approximately $36.4 million in cash and an undrawn and available $200.0 million revolving credit facility. additionally, the company received net proceeds of approximately $32.8 million in october from its recent initial public offering. the following table summarizes the company’s volumes on its operated assets: three months ended september 30, nine months ended september 30, 2021 2020 2021 2020 produced water handling volumes (mbbl/d) 708 574 692 566 total water solutions volumes (mbbl/d) 253 101 205 103 total volumes (mbbl/d) 961 675 897 669 conference call aris will host a conference call and webcast for investors and analysts to discuss its results for the third quarter of 2021 on wednesday, november 10, 2021 at 8:00 a.m. central time (9:00 a.m. eastern time). participants should call (888) 437-3179 (united states/canada) or (862) 298-0702 (international) and should refer to aris water solutions, inc. when dialing in. a telephonic replay will be available from 11/10/2021 to 11/24/2021. to access the replay, call (877) 660-6853 (united states/canada) or (201) 612-7415 (international) and enter confirmation code 13724848. a live broadcast of the earnings conference call will also be available via the internet at www.ariswater.com under the “investors” section of the site. 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 our business strategy, our industry, our future profitability, the various risks and uncertainties associated with the extraordinary market environment and impacts resulting from the volatility in global oil markets and the covid-19 pandemic, expected capital expenditures and the impact of such expenditures on performance, management changes, current and potential future long-term contracts and our future business and financial performance. in some cases, you can identify forward-looking statements by terminology such as “anticipate,” “guidance,” “preliminary,” “project,” “estimate,” “expect,” “continue,” “intend,” “plan,” “believe,” “forecast,” “future,” “potential,” “may,” “possible,” “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 by the forward-looking statements. 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 the risk factors discussed or referenced in our filings made from time to time with the sec. 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 our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. 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. solaris midstream holdings, llc and subsidiaries condensed consolidated statements of operations (unaudited) three months ended nine months ended september 30, september 30, 2021 2020 2021 2020 24,639 23,323 71,368 70,382 23,135 13,312 62,216 35,284 7,666 1,149 11,824 10,410 4,059 4,672 16,864 10,472 59,499 42,456 162,272 126,548 23,497 22,207 66,703 71,640 15,378 11,751 45,550 31,529 38,875 33,958 112,253 103,169 27,402 — 27,402 — 5,228 4,773 15,240 13,421 940 555 2,590 4,854 33,570 5,328 45,232 18,275 (12,946 ) 3,170 4,787 5,104 7,880 2,099 17,855 5,364 — — 380 — 7,880 2,099 18,235 5,364 (20,826 ) 1,071 (13,448 ) (260 ) (83 ) 9 (81 ) 15 (20,743 ) 1,062 (13,367 ) (275 ) — (1,511 ) 21 (1,928 ) (20,743 ) (449 ) (13,346 ) (2,203 ) solaris midstream holdings, llc and subsidiaries condensed consolidated balance sheets (unaudited) 2021 2020 36,389 24,932 32,576 21,561 21,584 11,538 3,649 3,722 1,349 4,315 95,547 66,068 692,231 661,446 (60,757 ) (43,258 ) 631,474 618,188 313,081 337,535 34,585 34,585 2,848 1,429 1,077,535 1,057,805 10,067 16,067 1,169 1,884 46,774 27,838 58,010 45,789 1,336 1,432 391,583 297,000 6,032 5,291 456,961 349,512 — 74,378 308,638 318,394 35,773 37,023 — — 276,163 278,498 620,574 633,915 1,077,535 1,057,805 solaris midstream holdings, llc and subsidiaries condensed consolidated statements of cash flows (unaudited) 2021 2020 (13,367 ) (275 ) 45,550 31,529 27,402 — 225 82 2,035 1,501 1,320 570 380 — 216 83 (11,231 ) 9,387 (10,046 ) 2,475 231 56 2,516 1,522 (3,284 ) 1,793 (715 ) 390 (46 ) 975 16,000 462 57,186 50,550 (62,728 ) (121,835 ) (62,728 ) (121,835 ) 400,000 — (855 ) — (9,352 ) — (297,000 ) — — 73,000 (74,357 ) — (1,442 ) (491 ) 5 — 16,999 72,509 11,457 1,224 24,932 7,083 36,389 8,307 use of non-gaap financial information we use financial measures that are not calculated in accordance with u.s. generally accepted accounting principles (“gaap”), including adjusted ebitda, free cash flow, adjusted operating margin and adjusted operating margin per barrel. although these non-gaap financial measures are important factors in assessing our 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. reconciliation of gaap “net income” to non-gaap “adjusted ebitda” – we calculate adjusted ebitda as net income (loss) plus: interest expense; income taxes; depreciation, amortization and accretion expense; asset impairment and abandoned project charges; losses on the sale of assets; loss on debt modification; and non-recurring or unusual expenses or charges (including temporary power costs), less any gains on sale of assets. reconciliation of gaap “cash flow from operating activities” to non-gaap “free cash flow” – we calculate free cash flow as cash flow from operating activities adjusted to exclude cash spent on property, plant and equipment. reconciliation of gaap “gross margin” to non-gaap “adjusted operating margin” and “adjusted operating margin per barrel” – we calculate adjusted operating margin as gross margin plus depreciation, amortization and accretion and temporary power costs. we define adjusted operating margin per barrel as adjusted operating margin divided by total volumes. we believe this presentation is used by investors and professional research analysts for the valuation, comparison, rating, and investment recommendations of companies within our industry. additionally, we use this information for comparative purposes within our industry. adjusted ebitda, adjusted operating margin and adjusted operating margin per barrel 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. adjusted ebitda, free cash flow, adjusted operating margin and adjusted operating margin per barrel as defined by us 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 or cash flows from operating activities. solaris midstream holdings, llc and subsidiaries operating metrics and non-gaap reconciliation (unaudited) three months ended nine months ended september 30, september 30, 2021 2020 2021 2020 708 574 692 566 130 44 102 34 82 45 61 58 41 12 42 11 253 101 205 103 961 675 897 669 0.73 0.69 0.71 0.68 0.50 0.63 0.51 0.74 0.67 0.68 0.66 0.69 0.27 0.36 0.27 0.39 0.41 0.38 0.41 0.37 26,496 9,639 57,186 50,550 (20,375 ) (29,254 ) (62,728 ) (121,835 ) 6,121 (19,615 ) (5,542 ) (71,285 ) (20,743 ) 1,062 (13,367 ) (275 ) 7,880 2,099 17,855 5,364 (83 ) 9 (81 ) 15 15,378 11,751 45,550 31,529 27,402 — 27,402 — 679 368 2,035 1,501 — 3,548 4,253 12,669 8 15 225 82 — — 380 — — 714 — 1,311 253 172 330 3,271 — — 221 190 30,774 19,738 84,803 55,657 59,499 42,456 162,272 126,548 (38,875 ) (33,958 ) (112,253 ) (103,169 ) 20,624 8,498 50,019 23,379 15,378 11,751 45,550 31,529 — 3,548 4,253 12,669 36,002 23,797 99,822 67,577 88,357 62,103 245,048 183,438 0.41 0.38 0.41 0.37
