| Segment Information |
14. Segment Information
Operating segments are identified as components of an enterprise about which separate, discrete financial information is available for evaluation by the chief operating decision maker (“CODM”) or decision-making group, in making decisions on how to allocate resources and assess performance. Our CODM is the Chief Executive Officer.
Prior to the completion of the Crosstek Acquisition in February 2025, as discussed in Note 5. Acquisitions, we operated as a single reportable segment, which reflected how our business was managed and the nature of our services. Following the Crosstek Acquisition, we re-evaluated our reportable segments and determined that we operate under two reportable segments as discussed below. Prior period information has been adjusted to reflect the new segment structure.
Our reportable segments include:
|
● |
Water Gathering and Processing – The Water Gathering and Processing segment is comprised of two primary revenue streams, Produced Water Handling and Water Solutions. Our Produced Water Handling revenue is driven by the volumes of produced water we gather from our customers, and our Water Solutions revenue is driven by the quantities of recycled produced water and groundwater delivered to our customers to support their well completion activities in the Permian Basin.
|
|
● |
Corporate and Other – The Corporate and Other segment is comprised of our Beneficial Reuse operations, Industrial Water operations (including the Crosstek Acquisition) and other business operations that are not material to be presented separately. Our corporate operations are also included in this reportable segment. |
Our CODM assesses the performance of our business and decides how to allocate resources based on segment net income. The CODM also uses results based on segment net income to evaluate income generated from segment assets in deciding how to allocate resources. Results based on segment net income are used to monitor budget versus actual results. We do not have intra-entity sales or transfers.
All of our assets reside in the United States. Assets are reviewed by the CODM at a consolidated level, using total consolidated assets on the balance sheet, and no measure of segment assets is provided to the CODM. Significant expenses provided to and reviewed by the CODM primarily include “Direct Operating Costs” and “General and Administrative” expenses, which are included in the condensed consolidated statements of operations.
Summarized financial information by business segment were as follows for the three-month periods ended June 30, 2025 and 2024:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended June 30, 2025 |
|
|
Water Gathering and Processing |
|
Corporate and Other |
|
Consolidated |
Revenue |
|
$ |
123,748 |
|
$ |
344 |
|
$ |
124,092 |
Cost of Revenue |
|
|
|
|
|
|
|
|
|
Direct Operating Costs |
|
|
58,224 |
|
|
3 |
|
|
58,227 |
Cost of Goods Sold |
|
|
— |
|
|
127 |
|
|
127 |
Depreciation, Amortization and Accretion |
|
|
19,410 |
|
|
562 |
|
|
19,972 |
Total Cost of Revenue |
|
|
77,634 |
|
|
692 |
|
|
78,326 |
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
Abandoned Well Costs |
|
|
998 |
|
|
— |
|
|
998 |
General and Administrative |
|
|
— |
|
|
17,699 |
|
|
17,699 |
Research and Development Expense |
|
|
— |
|
|
946 |
|
|
946 |
Other Operating Income, Net |
|
|
— |
|
|
(208) |
|
|
(208) |
Total Operating Expenses |
|
|
998 |
|
|
18,437 |
|
|
19,435 |
Operating Income (Expense) |
|
|
45,116 |
|
|
(18,785) |
|
|
26,331 |
Other Expense |
|
|
|
|
|
|
|
|
|
Interest Expense, Net |
|
|
— |
|
|
9,567 |
|
|
9,567 |
Income (Loss) Before Income Taxes |
|
|
45,116 |
|
|
(28,352) |
|
|
16,764 |
Income Tax Expense |
|
|
— |
|
|
2,680 |
|
|
2,680 |
Net Income (Loss) |
|
|
45,116 |
|
|
(31,032) |
|
|
14,084 |
Net Income Attributable to Noncontrolling Interest |
|
|
— |
|
|
7,433 |
|
|
7,433 |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. |
|
$ |
45,116 |
|
$ |
(38,465) |
|
$ |
6,651 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Three Months Ended June 30, 2024 |
|
|
Water Gathering and Processing |
|
Corporate and Other |
|
Consolidated |
Revenue |
|
$ |
101,117 |
|
$ |
— |
|
$ |
101,117 |
Cost of Revenue |
|
|
|
|
|
|
|
|
|
Direct Operating Costs |
|
|
40,194 |
|
|
— |
|
|
40,194 |
Depreciation, Amortization and Accretion |
|
|
19,091 |
|
|
616 |
|
|
19,707 |
Total Cost of Revenue |
|
|
59,285 |
|
|
616 |
|
|
59,901 |
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
Abandoned Well Costs |
|
|
(25) |
|
|
— |
|
|
(25) |
General and Administrative |
|
|
— |
|
|
16,037 |
|
|
16,037 |
Research and Development Expense |
|
|
— |
|
|
1,128 |
|
|
1,128 |
Other Operating Expense, Net |
|
|
16 |
|
|
141 |
|
|
157 |
Total Operating (Income) Expenses |
|
|
(9) |
|
|
17,306 |
|
|
17,297 |
Operating Income (Expense) |
|
|
41,841 |
|
|
(17,922) |
|
|
23,919 |
Other Expense |
|
|
|
|
|
|
|
|
|
Interest Expense, Net |
|
|
— |
|
|
8,813 |
|
|
8,813 |
Income (Loss) Before Income Taxes |
|
|
41,841 |
|
|
(26,735) |
|
|
15,106 |
Income Tax Expense |
|
|
— |
|
|
1,994 |
|
|
1,994 |
Net Income (Loss) |
|
|
41,841 |
|
|
(28,729) |
|
|
13,112 |
Net Income Attributable to Noncontrolling Interest |
|
|
— |
|
|
7,147 |
|
|
7,147 |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. |
|
$ |
41,841 |
|
$ |
(35,876) |
|
$ |
5,965 |
Summarized financial information by business segment were as follows for the six-month periods ended June 30, 2025 and 2024:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Six Months Ended June 30, 2025 |
|
|
Water Gathering and Processing |
|
Corporate and Other |
|
Total |
Revenue |
|
$ |
243,999 |
|
$ |
584 |
|
$ |
244,583 |
Cost of Revenue |
|
|
|
|
|
|
|
|
|
Direct Operating Costs |
|
|
108,409 |
|
|
6 |
|
|
108,415 |
Cost of Goods Sold |
|
|
— |
|
|
127 |
|
|
127 |
Depreciation, Amortization and Accretion |
|
|
38,538 |
|
|
1,190 |
|
|
39,728 |
Total Cost of Revenue |
|
|
146,947 |
|
|
1,323 |
|
|
148,270 |
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
Abandoned Well Costs |
|
|
1,460 |
|
|
— |
|
|
1,460 |
General and Administrative |
|
|
— |
|
|
37,709 |
|
|
37,709 |
Research and Development Expense |
|
|
— |
|
|
2,074 |
|
|
2,074 |
Other Operating Expense, Net |
|
|
237 |
|
|
667 |
|
|
904 |
Total Operating Expenses |
|
|
1,697 |
|
|
40,450 |
|
|
42,147 |
Operating Income (Expense) |
|
|
95,355 |
|
|
(41,189) |
|
|
54,166 |
Other Expense |
|
|
|
|
|
|
|
|
|
Interest Expense, Net |
|
|
— |
|
|
18,797 |
|
|
18,797 |
Other |
|
|
— |
|
|
2,535 |
|
|
2,535 |
Total Other Expense |
|
|
— |
|
|
21,332 |
|
|
21,332 |
Income (Loss) Before Income Taxes |
|
|
95,355 |
|
|
(62,521) |
|
|
32,834 |
Income Tax Expense |
|
|
— |
|
|
2,750 |
|
|
2,750 |
Net Income (Loss) |
|
|
95,355 |
|
|
(65,271) |
|
|
30,084 |
Net Income Attributable to Noncontrolling Interest |
|
|
— |
|
|
14,822 |
|
|
14,822 |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. |
|
$ |
95,355 |
|
$ |
(80,093) |
|
$ |
15,262 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Six Months Ended June 30, 2024 |
|
|
Water Gathering and Processing |
|
Corporate and Other |
|
Total |
Revenue |
|
$ |
204,523 |
|
$ |
— |
|
$ |
204,523 |
Cost of Revenue |
|
|
|
|
|
|
|
|
|
Direct Operating Costs |
|
|
79,840 |
|
|
— |
|
|
79,840 |
Depreciation, Amortization and Accretion |
|
|
37,889 |
|
|
1,239 |
|
|
39,128 |
Total Cost of Revenue |
|
|
117,729 |
|
|
1,239 |
|
|
118,968 |
Operating Costs and Expenses |
|
|
|
|
|
|
|
|
|
Abandoned Well Costs |
|
|
310 |
|
|
— |
|
|
310 |
General and Administrative |
|
|
— |
|
|
30,538 |
|
|
30,538 |
Research and Development Expense |
|
|
— |
|
|
2,193 |
|
|
2,193 |
Other Operating Expense (Income), Net |
|
|
745 |
|
|
(8) |
|
|
737 |
Total Operating Expenses |
|
|
1,055 |
|
|
32,723 |
|
|
33,778 |
Operating Income (Expense) |
|
|
85,739 |
|
|
(33,962) |
|
|
51,777 |
Other Expense |
|
|
|
|
|
|
|
|
|
Interest Expense, Net |
|
|
— |
|
|
17,251 |
|
|
17,251 |
Other |
|
|
— |
|
|
1 |
|
|
1 |
Total Other Expense |
|
|
— |
|
|
17,252 |
|
|
17,252 |
Income (Loss) Before Income Taxes |
|
|
85,739 |
|
|
(51,214) |
|
|
34,525 |
Income Tax Expense |
|
|
— |
|
|
4,583 |
|
|
4,583 |
Net Income (Loss) |
|
|
85,739 |
|
|
(55,797) |
|
|
29,942 |
Net Income Attributable to Noncontrolling Interest |
|
|
— |
|
|
16,354 |
|
|
16,354 |
Net Income (Loss) Attributable to Aris Water Solutions, Inc. |
|
$ |
85,739 |
|
$ |
(72,151) |
|
$ |
13,588 |
|