UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number: 001-40955

Aris Water Solutions, Inc.

(Exact name of registrant as specified in its charter)


Delaware	87-1022110
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

9651 Katy Freeway, Suite 400

Houston, Texas

77024

(Address of principal executive offices)

(Zip Code)

(832) 304-7003

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	ARIS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 1, 2024, the registrant had 30,682,834 shares of Class A common stock, $0.01 par value per share, and 27,543,565 shares of Class B common stock, $0.01 par value per share, outstanding.

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10‑Q (this “Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report, including, without limitation, statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. 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,” “should,” “may,” “possible,” “could” and variations of such words or similar expressions.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 (our “2023 Annual Report”) and found elsewhere in this Quarterly Report, including, but not limited to, the following:

●

the impact of the ongoing Russia-Ukraine and Middle Eastern conflicts on the global economy, including the impact on financial markets and the energy industry;

●

the level of capital spending and development by oil and gas companies, including potential reductions in capital expenditures by oil and gas producers in response to commodity price volatility and/or reduced demand;

●

our reliance on a limited number of customers and a particular region for substantially all of our revenues;

●

the impact of competition on our operations, including our ability to renew or replace expiring contracts on acceptable terms;

●

the degree to which our exploration and production customers may elect to operate their water-management services in-house rather than outsource these services to companies like us;

●

our customers’ ability to complete and produce new wells;

●

risks related to acquisitions and organic growth projects, including our ability to realize their expected benefits;

●

capacity constraints on regional oil, natural gas and water gathering, processing and pipeline systems that result in a slowdown or delay in drilling and completion activity, and thus a slowdown or delay in the demand for our services;

●

our ability to retain key management and employees and to hire and retain skilled labor;

●

our health, safety and environmental performance;

●

the impact of current and future laws, rulings and federal and state governmental regulations, including those related to hydraulic fracturing, accessing water, handling of produced water, carbon

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pricing, taxation of emissions, seismic activity, drilling and right-of-way access on governmental lands and various other matters;

●

delays or restrictions in obtaining, utilizing or maintaining permits and/or rights-of-way by us or our customers;

●

advances in technologies or practices that reduce the amount of water used or produced in the oil and gas production process, thereby reducing demand for our services;

●

changes in global political or economic conditions, both generally, and in the specific markets we serve, such as economic slowdown or recession, or uncertainty regarding the timing, pace and extent of an economic recovery;

●

adverse results from litigation and the use of financial resources to defend ourselves;

●

physical, electronic and cybersecurity breaches; and

●

the other risks described in our 2023 Annual Report filed with the United States Securities and Exchange Commission (“SEC”).

Many of the factors that will determine our future results are beyond the ability of management to control or predict. Should one or more of the risks or uncertainties described in this Quarterly Report or in our 2023 Annual Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, are expressly qualified in their entirety by this cautionary statement. We do not undertake to update any forward-looking statement that we may make from time to time except as required by applicable law.

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PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

Aris Water Solutions, Inc.

Condensed Consolidated Balance Sheets

(unaudited)


(in thousands, except for share and per share amounts)	September 30,		December 31,
	2024		2023
Assets
Cash	$	32,760	$	5,063
Accounts Receivable, Net		69,854		59,393
Accounts Receivable from Affiliate		31,192		22,963
Other Receivables		15,292		12,767
Prepaids and Deposits		4,459		8,364
Total Current Assets		153,557		108,550
Fixed Assets
Property, Plant and Equipment		1,125,295		1,041,703
Accumulated Depreciation		(150,867)		(121,989)
Total Property, Plant and Equipment, Net		974,428		919,714
Intangible Assets, Net		204,487		232,277
Goodwill		34,585		34,585
Deferred Income Tax Assets, Net		15,966		22,634
Operating Lease Right-of-Use Assets, Net		15,650		16,726
Other Assets		5,986		5,995
Total Assets	$	1,404,659	$	1,340,481
Liabilities and Stockholders' Equity
Accounts Payable	$	13,510	$	25,925
Payables to Affiliate		938		894
Insurance Premium Financing Liability		—		5,463
Accrued and Other Current Liabilities		74,830		64,416
Total Current Liabilities		89,278		96,698
Long-Term Debt, Net of Debt Issuance Costs		452,194		421,792
Asset Retirement Obligations		21,499		19,030
Tax Receivable Agreement Liability		98,274		98,274
Other Long-Term Liabilities		16,650		16,794
Total Liabilities		677,895		652,588
Commitments and Contingencies (see Note 10)
Stockholders' Equity
Preferred Stock $0.01 par value, 50,000,000 authorized. None issued or outstanding as of September 30, 2024 and December 31, 2023		—		—
Class A Common Stock $0.01 par value, 600,000,000 authorized, 31,139,032 issued and 30,582,305 outstanding as of September 30, 2024; 30,669,932 issued and 30,251,613 outstanding as of December 31, 2023		311		306
Class B Common Stock $0.01 par value, 180,000,000 authorized, 27,543,565 issued and outstanding as of September 30, 2024 and December 31, 2023		275		275
Treasury Stock (at Cost), 556,727 shares as of September 30, 2024; 418,319 shares as of December 31, 2023		(6,822)		(5,133)
Additional Paid-in-Capital		337,609		328,543
Retained Earnings (Accumulated Deficit)		11,332		(87)
Total Stockholders' Equity Attributable to Aris Water Solutions, Inc.		342,705		323,904
Noncontrolling Interest		384,059		363,989
Total Stockholders' Equity		726,764		687,893
Total Liabilities and Stockholders' Equity	$	1,404,659	$	1,340,481

The accompanying notes are an integral part of these condensed consolidated financial statements

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended				Nine Months Ended
(in thousands, except for share and per share amounts)	September 30,				September 30,
	2024		2023		2024		2023
Revenue
Produced Water Handling	$	59,006	$	47,574	$	172,927	$	143,390
Produced Water Handling — Affiliate		29,418		28,036		84,859		74,357
Water Solutions		16,600		20,370		42,097		49,180
Water Solutions — Affiliate		4,225		3,048		12,920		19,195
Other Revenue		3,063		761		4,032		1,871
Total Revenue		112,312		99,789		316,835		287,993
Cost of Revenue
Direct Operating Costs		46,553		44,687		126,393		132,978
Depreciation, Amortization and Accretion		19,974		19,445		59,102		57,137
Total Cost of Revenue		66,527		64,132		185,495		190,115
Operating Costs and Expenses
Abandoned Well Costs		8		1,214		318		1,214
General and Administrative		17,415		13,526		47,953		38,007
Research and Development Expense		408		809		2,601		1,867
Other Operating (Income) Expense, Net		(358)		(2,121)		379		(2,096)
Total Operating Expenses		17,473		13,428		51,251		38,992
Operating Income		28,312		22,229		80,089		58,886
Other Expense
Interest Expense, Net		9,382		7,955		26,633		23,587
Other		—		—		1		—
Total Other Expense		9,382		7,955		26,634		23,587
Income Before Income Taxes		18,930		14,274		53,455		35,299
Income Tax Expense		2,499		2,032		7,082		4,918
Net Income		16,431		12,242		46,373		30,381
Net Income Attributable to Noncontrolling Interest		8,943		6,829		25,297		16,892
Net Income Attributable to Aris Water Solutions, Inc.	$	7,488	$	5,413	$	21,076	$	13,489

Net Income Per Share of Class A Common Stock
Basic	$	0.23	$	0.17	$	0.64	$	0.42
Diluted	$	0.22	$	0.17	$	0.64	$	0.42
Weighted Average Shares of Class A Common Stock Outstanding
Basic		30,631,995		30,050,560		30,511,701		30,007,433
Diluted		30,919,575		30,050,560		30,621,195		30,007,433

The accompanying notes are an integral part of these condensed consolidated financial statements

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)


(in thousands)	Nine Months Ended September 30,
	2024		2023
Cash Flow from Operating Activities
Net Income	$	46,373	$	30,381
Adjustments to reconcile Net Income to Net Cash provided by Operating Activities:
Deferred Income Tax Expense		5,730		4,773
Depreciation, Amortization and Accretion		59,102		57,137
Stock-Based Compensation		13,489		8,945
Abandoned Well Costs		318		1,214
Loss (Gain) on Disposal of Assets, Net		84		(2,574)
Abandoned Projects		823		128
Amortization of Debt Issuance Costs, Net		2,193		1,580
Other		422		(473)
Changes in Operating Assets and Liabilities:
Accounts Receivable		(11,039)		22,594
Accounts Receivable from Affiliate		(8,229)		22,771
Other Receivables		(3,168)		(13,359)
Prepaids and Deposits		4,056		3,564
Accounts Payable		(8,418)		(155)
Payables to Affiliate		44		(1,844)
Accrued Liabilities and Other		9,445		17,843
Net Cash Provided by Operating Activities		111,225		152,525

Cash Flow from Investing Activities
Property, Plant and Equipment Expenditures		(87,201)		(131,874)
Proceeds from the Sale of Property, Plant and Equipment		160		20,119
Net Cash Used in Investing Activities		(87,041)		(111,755)

Cash Flow from Financing Activities
Dividends and Distributions Paid		(18,192)		(16,083)
Repurchase of Shares		(1,418)		(625)
Repayment of Credit Facility		(40,000)		(51,000)
Proceeds from Credit Facility		69,000		50,000
Payment of Insurance Premium Financing		(5,634)		—
Payment of Finance Leases		(243)		—
Net Cash Provided by (Used in) Financing Activities		3,513		(17,708)

Net Increase in Cash		27,697		23,062
Cash, Beginning of Period		5,063		1,122
Cash, End of Period	$	32,760	$	24,184

Supplementary Cash Flow Data
Cash Paid for Interest	$	17,561	$	18,230
Cash Paid for Income Taxes	$	618	$	80

The accompanying notes are an integral part of these condensed consolidated financial statements

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Aris Water Solutions, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)


		Three and Nine Months Ended September 30, 2024
(in thousands, except for share and per share amounts)		Class A			Class B			Additional					Retained Earnings				Non-			Total
		Common Stock			Common Stock			Paid-in		Treasury Stock			(Accumulated			controlling			Stockholders'
	Amount			Shares	Amount		Shares	Capital		Amount		Shares		Deficit)			Interest			Equity
Balance at January 1, 2024		$	306	30,669,932	$	275	27,543,565	$	328,543	$	(5,133)	418,319		$	(87)		$	363,989		$	687,893
Stock-Based Compensation Expense			4	428,044		-	-		4,503		-	-			-			(986)			3,521
Deferred Tax Assets Acquired			-	-		-	-		224		-	-			-			-			224
Dividends and Distributions ($0.09 per share or unit)			-	-		-	-		-		-	-			(2,884)			(2,601)			(5,485)
Purchase of Treasury Stock			-	-		-	-		(18)		(1,581)	131,921			-			18			(1,581)
Net Income			-	-		-	-		-		-	-			7,623			9,207			16,830
Balance at March 31, 2024		$	310	31,097,976	$	275	27,543,565	$	333,252	$	(6,714)	550,240		$	4,652		$	369,627		$	701,402
Stock-based Compensation Expense			-	6,250		-	-		2,509		-	-			-			2,184			4,693
Deferred Tax Liabilities Acquired			-	-		-	-		(578)		-	-			-			-			(578)
Dividends and Distributions ($0.105 per share or unit)			-	-		-	-		-		-	-			(3,382)			(3,051)			(6,433)
Purchase of Treasury Stock			-	-		-	-		-		(16)	1,048			-			-			(16)
Net Income			-	-		-	-		-		-	-			5,965			7,147			13,112
Balance at June 30, 2024		$	310	31,104,226	$	275	27,543,565	$	335,183	$	(6,730)	551,288		$	7,235		$	375,907		$	712,180
Stock-based Compensation Expense			1	34,806		-	-		3,010		-	-			-			2,264			5,275
Deferred Tax Liabilities Acquired			-	-		-	-		(584)		-	-			-			-			(584)
Dividends and Distributions ($0.105 per share or unit)			-	-		-	-		-		-	-			(3,391)			(3,055)			(6,446)
Purchase of Treasury Stock			-	-		-	-		-		(92)	5,439			-			-			(92)
Net Income			-	-		-	-		-		-	-			7,488			8,943			16,431
Balance at September 30, 2024		$	311	31,139,032	$	275	27,543,565	$	337,609	$	(6,822)	556,727		$	11,332		$	384,059		$	726,764


		Three and Nine Months Ended September 30, 2023
(in thousands, except for share and per share amounts)		Class A			Class B			Additional									Non-			Total
		Common Stock			Common Stock			Paid-in		Treasury Stock			Accumulated			controlling			Stockholders'
	Amount			Shares	Amount		Shares	Capital		Amount		Shares		Deficit			Interest			Equity
Balance at January 1, 2023		$	300	30,115,979	$	276	27,575,519	$	319,545	$	(2,891)	196,762		$	(7,722)		$	347,579		$	657,087
Redemption of Class B Shares for Class A Shares			-	20,953		-	(20,953)		267		-	-			-			(267)			-
Stock-Based Compensation Expense			2	175,717		-	-		2,383		-	-			-			83			2,468
Increase in TRA Liability Related to Share Redemption			-	-		-	-		(110)		-	-			-			-			(110)
Deferred Tax Assets Acquired			-	-		-	-		82		-	-			-			-			82
Dividends and Distributions ($0.09 per share or unit)			-	-		-	-		-		-	-			(2,826)			(2,588)			(5,414)
Purchase of Treasury Stock			-	-		-	-		-		(599)	42,293			-			-			(599)
Net Income			-	-		-	-		-		-	-			3,378			4,330			7,708
Balance at March 31, 2023		$	302	30,312,649	$	276	27,554,566	$	322,167	$	(3,490)	239,055		$	(7,170)		$	349,137		$	661,222
Redemption of Class B Shares for Class A Shares			-	524		-	(524)		7		-	-			-			(7)			-
Stock-based Compensation Expense			-	-		-	-		1,626		-	-			-			1,491			3,117
Increase in TRA Liability Related to Share Redemption			-	-		-	-		(3)		-	-			-			-			(3)
Deferred Tax Assets Acquired			-	-		-	-		2		-	-			-			-			2
Dividends and Distributions ($0.09 per share or unit)			-	-		-	-		-		-	-			(2,819)			(2,584)			(5,403)
Net Income			-	-		-	-		-		-	-			4,698			5,733			10,431
Balance at June 30, 2023		$	302	30,313,173	$	276	27,554,042	$	323,799	$	(3,490)	239,055		$	(5,291)		$	353,770		$	669,366
Redemption of Class B Shares for Class A Shares			1	10,477		(1)	(10,477)		136		-	-			-			(136)			-
Stock-based Compensation Expense			-	10,749		-	-		1,816		-	-			-			1,544			3,360
Increase in TRA Liability Related to Share Redemption			-	-		-	-		(71)		-	-			-			-			(71)
Deferred Tax Assets Acquired			-	-		-	-		48		-	-			-			-			48
Dividends and Distributions ($0.09 per share or unit)			-	-		-	-		-		-	-			(2,805)			(2,577)			(5,382)
Purchase of Treasury Stock			-	-		-	-		(73)		(769)	71,518			-			73			(769)
Net Income			-	-		-	-		-		-	-			5,413			6,829			12,242
Balance at September 30, 2023		$	303	30,334,399	$	275	27,543,565	$	325,655	$	(4,259)	310,573		$	(2,683)		$	359,503		$	678,794

The accompanying notes are an integral part of these condensed consolidated financial statements

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Aris Water Solutions, Inc.


PART I. FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements		3
Item 1.	Financial Statements (unaudited)	5
Condensed Consolidated Balance Sheets		5
Condensed Consolidated Statements of Operations		6
Condensed Consolidated Statements of Cash Flows		7
Condensed Consolidated Statements of Stockholders’ Equity		8
Notes to Unaudited Condensed Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	39
Item 4.	Controls and Procedures	40
PART II. OTHER INFORMATION		40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	41
Signatures		43