Group 1 - The stock of Aris Water Solutions (ARIS) has increased by 86% since July 2024, surpassing the initial price target set in the first analysis [1] - The focus is on small to mid-cap companies with disruptive technology, emphasizing competitive analysis and the founders' backgrounds [2] - The investment strategy involves a two-year time frame, with a tendency to hold investments for longer periods [2] Group 2 - The analyst has a beneficial long position in ARIS shares through various means [3] - The article reflects the analyst's personal opinions and is not influenced by compensation from any company mentioned [3] - There is no business relationship with any company whose stock is discussed in the article [3]

Core Insights - Aris Mining Corporation reported strong financial and operational results for Q4 2024, achieving its highest gold production of the year at 57,364 ounces and a significant increase in adjusted EBITDA to $55.6 million, reflecting operational efficiency and cost control measures [3][4][8]. Financial Performance - Q4 2024 gold production reached 57,364 ounces, up from 53,608 ounces in Q3 2024, contributing to a total of 210,955 ounces for the year [3][4]. - Adjusted EBITDA for Q4 2024 was $55.6 million, compared to $43.0 million in Q3 2024, while full-year adjusted EBITDA totaled $163.1 million [3][4][8]. - The company reported net earnings of $24.6 million or $0.16 per share for the full year, with adjusted earnings of $55.9 million or $0.35 per share [3][4][8]. Cost Metrics - The All-in Sustaining Cost (AISC) per ounce sold decreased to $1,485 in Q4 2024 from $1,540 in Q3 2024, resulting in an AISC margin of $58.3 million, a 32% increase from the previous quarter [3][4][9]. - The average realized gold price increased by 8% to $2,642 per ounce sold in Q4 2024 compared to Q3 2024 [7][9]. Operational Highlights - Segovia's processing facility expansion is on track for commissioning in Q2 2025, with an expected ramp-up to 3,000 tonnes per day (tpd) capacity by the end of 2025 [4][13]. - The Marmato Lower Mine expansion is being upgraded to a 5,000 tpd capacity, with construction costs estimated at $290 million, and production ramp-up expected to start in H2 2026 [5][12][13]. Production Guidance - For 2025, Aris Mining anticipates consolidated gold production between 230,000 and 275,000 ounces, with Segovia expected to produce between 210,000 and 250,000 ounces [14][19]. - The company aims for an annual production rate exceeding 500,000 ounces of gold following the ramp-up of Segovia and Marmato expansions [23][24]. Strategic Initiatives - Aris Mining is exploring partnerships with Colombia's small-scale mining sector to enhance production and operational efficiency [24]. - The company is also focused on diversifying its asset portfolio, including the Soto Norte joint venture and the Toroparu gold/copper project in Guyana [23][24].

Core Viewpoint - Aris Mining Corporation is advancing its Soto Norte Project in Colombia while navigating new environmental regulations, focusing on sustainable practices and community engagement [1][2]. Group 1: Regulatory Developments - The Colombian Ministry of Environment has completed a public consultation process regarding a Temporary Reserve Area (TRA) in the Santurbán region, affecting the Soto Norte Project [1]. - The TRA resolution allows for a two-year suspension of environmental license issuance while evaluating water resources in the area [1]. Group 2: Project Updates - Aris Mining is working on a smaller-scale version of the Soto Norte Project, with completion of environmental and technical studies expected by mid-2025 [2]. - The redesigned project aims to align with environmental protection goals and has received significant local support [2]. Group 3: Production and Operations - In 2024, Aris Mining produced 210,955 ounces of gold from its Segovia Operations and Marmato Upper Mine, with plans to increase annual production to over 450,000 ounces by ramping up operations in 2025 and 2026 [4]. - The company operates a 51% owned joint venture at Soto Norte, with studies for a new development plan underway [4]. Group 4: Strategic Vision - Founded in September 2022, Aris Mining aims to become a leading gold mining company in Latin America, focusing on production, cash flow generation, and transformational growth through asset expansions and acquisitions [3][5]. - The company is actively pursuing partnerships with small-scale miners in Colombia to promote safe and environmentally responsible mining practices [5].

Operations and Capacity - As of December 31, 2024, the company has approximately 377,000, 324,000, and 300,000 barrels per day of recycled volumes sold for the years ended December 31, 2024, 2023, and 2022, respectively[13]. - The company operates 68 produced water handling facilities with a total capacity of approximately 1.9 million barrels per day as of December 31, 2024[62]. - The company has secured permits for an additional 195 miles of pipeline and 23 produced water handling facilities, providing a permitted handling capacity of approximately 0.7 million barrels per day[63]. - The company has 20 operational recycling facilities in the Delaware Basin with a treatment capacity of approximately 1.5 million barrels per day and access to 16.4 million barrels of storage capacity[65]. - As of December 31, 2024, the company has approximately 100 contracts with 37 different customers, covering approximately 625,000 dedicated acres[68]. - The company's largest customers, ConocoPhillips and Chevron U.S.A. Inc., represented approximately 53% of total revenue for the year ended December 31, 2024[69]. - The weighted average remaining life of the company's produced water handling acreage dedication contracts is approximately 6.8 years[69]. - The company has a total of approximately 100,000 barrels per day of minimum volume commitments (MVCs) with a weighted average remaining life of 2.1 years[72]. Financial Performance - Total revenue for the year ended December 31, 2024, was $435,444,000, representing an 11% increase from $392,118,000 in 2023[333]. - Produced Water Handling revenue increased by 16% to $345,352,000 in 2024, up from $297,529,000 in 2023, driven by a 78 kbwpd volume increase and higher prices[336]. - Adjusted Operating Margin per Barrel improved by 15% to $0.45 in 2024, compared to $0.39 in 2023, reflecting increased efficiency in operations[335]. - Produced Water Handling Volumes rose to 1,120,000 barrels per day in 2024, a 7% increase from 1,042,000 barrels per day in 2023[335]. - Net income for 2024 was $60,178,000, a 39% increase from $43,412,000 in 2023[333]. - General and Administrative expenses increased by 29% to $65,315,000 in 2024, up from $50,454,000 in 2023, indicating higher overhead costs[333]. - Skim Oil Volumes recovered increased by 38% to 1,688 barrels per day in 2024, compared to 1,219 barrels per day in 2023[335]. - Water Solutions revenue decreased by 6% to $62,942,000 in 2024, down from $66,625,000 in 2023, primarily due to a decrease in groundwater volumes sold[333]. - Other Revenue surged by 286% to $9,093,000 in 2024, up from $2,353,000 in 2023, driven by new agreements and capital recovery charges[333]. - Adjusted EBITDA for the year ended December 31, 2024, was $211.9 million, compared to $175.0 million in 2023, reflecting a significant increase in operational performance[355]. Regulatory Environment - The trend in U.S. environmental regulation is increasingly placing more restrictions on activities affecting the environment, which could materially impact the company's financial position[101]. - The company is subject to the Clean Water Act, which imposes strict controls on pollutant discharges into U.S. waters, requiring permits for compliance[106]. - Recent regulatory changes may broaden the scope of the Clean Water Act's jurisdiction, potentially increasing costs and permitting challenges for the company[109]. - The company operates in New Mexico and Texas, where state regulations require seismic activity assessments for new disposal wells to address concerns about induced seismicity[112]. - The company has faced regulatory scrutiny regarding underground injection wells, which may affect its ability to dispose of produced water and other substances[110]. - The company is required to submit daily injection and pressure volumes on a weekly basis due to regulatory requirements[114]. - The company faces potential operational impacts from new federal, state, or local restrictions on hydraulic fracturing, which could increase costs and affect service demand[121]. - The New Mexico Ozone Precursor Rule requires operators to reduce natural gas waste and achieve a reduction in ozone precursor pollutants of approximately 260 million pounds annually[127]. - The company entered into a Candidate Conservation Agreement in January 2023 to gain flexibility in project development in the lesser-prairie chicken range[131]. - The company may incur significant costs due to compliance with chemical safety regulations, including the Lautenberg Act, which requires safety reviews for all chemicals in commerce[132]. - The company is subject to various occupational safety and health regulations to protect worker health and safety, which may require compliance monitoring and disclosure[134]. Capital and Investments - The average outstanding debt balance was $442.5 million in 2024, with a slight decrease in the average interest rate to 7.655%[345]. - The company declared a total of $24.9 million in dividends for 2024, with a quarterly dividend of $0.09 per share for Q1 and $0.105 for the subsequent quarters[365]. - As of December 31, 2024, the company had a cash balance of $28.7 million and working capital of $22.8 million, indicating a stable liquidity position[362]. - The company plans to pursue strategic acquisitions to create synergies and enhance customer relationships while maintaining financial flexibility[358]. - Net cash used in investing activities was $145.6 million for the year ended December 31, 2024, compared to $149.6 million in 2023, with property, plant, and equipment expenditures decreasing from $169.7 million to $100.0 million[368]. - Capital expenditures for 2025 are expected to be between $85.0 million and $105.0 million, based on contracted customers' outlooks[373]. - The company has a Credit Facility with commitments of $350.0 million, maturing on October 12, 2027, and a leverage ratio covenant currently set at 4.50 to 1.00[374]. Asset Management and Valuation - The company recognized that fair value calculations for long-lived assets and intangible assets contain uncertainties due to the need for significant estimates and assumptions[399]. - The company evaluates the carrying value of long-lived assets for potential impairment when warranted by events and circumstances[399]. - The assumptions made in performing asset valuations require significant judgment, including discount rates and future revenue projections[398]. - Goodwill impairment assessment concluded no new impairment triggering events as of December 31, 2024[402]. - The fair value of reporting units is determined using a combination of income and market approaches, requiring significant estimates and assumptions[403][404]. - The company did not record any unrecognized tax benefits for the years ended December 31, 2024 and 2023[410]. - The estimated Tax Receivable Agreement liability was $98.9 million, up from $98.3 million in 2023[385]. - The company entered into a short-term insurance premium financing agreement for $8.8 million in Q4 2024, with a remaining balance of $6.7 million as of December 31, 2024[382]. Insurance and Risk Management - The company maintains various insurance policies, including general liability and pollution liability, to mitigate risks associated with physical damage and operational interruptions[98]. - The company is committed to evaluating its insurance policy limits as it continues to grow, ensuring adequate coverage for its operations and assets[98]. - The company temporarily curtailed one well in September 2023 due to a seismic event but returned it to pre-curtailment levels on November 1, 2023[114]. - The company operates four wells within the Hat Mesa Seismic Response Area (SRA) and has partially curtailed injection in one well by approximately 5 kbwpd as of December 31, 2024[114]. - The Stanton SRA was established in 2022, but the company no longer operates any wells within this area following the sale of its assets in Martin County in 2023[115]. - The Northern Culberson-Reeves SRA has not materially impacted the company's operations to date[116].

Financial Data and Key Metrics Changes - Aris Water Solutions reported adjusted EBITDA of $54.5 million for Q4 2024 and $211.9 million for the full year, representing a 21% increase from 2023 [24][14] - The adjusted operating margin for Q4 was $0.44 per barrel, while the full year margin was $0.45 per barrel, up 15% from the prior year [24][14] - Free cash flow for the year was $73 million, with capital expenditures of approximately $101 million [24][14] Business Line Data and Key Metrics Changes - Water solutions volumes grew 14% sequentially in Q4 2024 and 7% year-over-year for the full year [13][14] - The company expects water solutions volumes to average between 460,000 and 520,000 barrels per day in 2025, a 15% increase compared to 2024 [26] - Adjusted operating margins for the water solutions business are anticipated to be between $0.43 and $0.45 per barrel in 2025 [26] Market Data and Key Metrics Changes - The company has over 450,000 acres dedicated to its water solutions business, with 80% of forecasted 2025 volumes under long-term contracts [15][16] - Customers are forecasting mid-single-digit production growth in the Permian Basin, which will drive produced water volume growth [16] Company Strategy and Development Direction - The company aims to maintain and expand margins achieved in 2024 while pursuing operating efficiencies and disciplined capital investment [9][10] - Strategic initiatives include the acquisition of the McNeil Ranch, which is expected to support long-term water injection needs and reduce operating expenses [18][20] - Expansion into industrial water treatment beyond the oil and gas industry is a key focus, leveraging expertise in complex water treatment [22][86] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate significant free cash flow and increase shareholder returns in 2025 [7][9] - The company ended 2024 without any safety incidents, highlighting a strong commitment to safety as a priority [8] - Management anticipates continued strong completion activity and production growth from long-term contracted customers [9][16] Other Important Information - A 33% increase in the dividend to $0.14 per share was announced, reflecting confidence in the long-term outlook [13][29] - The company is pursuing beneficial reuse activities and has applied for a discharge permit for up to 475,000 barrels of reclaimed water per day [21][66] Q&A Session Summary Question: Thoughts on the Ranch acquisition and return profile - Management highlighted the attractive price of the McNeil Ranch and its potential for future growth, emphasizing the strategic optionality it provides [35][36] Question: Future acquisition strategy - The company continues to evaluate opportunities for inorganic growth, focusing on quality contracts and assets [44][45] Question: Dividend growth expectations - Management indicated that future dividend increases would likely be at a more consistent level, reflecting a sustainable growth approach [52] Question: Timing for McNeil Ranch development - Development of the ranch is expected to occur around 2026-2027, with initial surface revenue anticipated sooner [55] Question: Integration of the Ranch into existing operations - The ranch is expected to provide operational advantages, including reduced operating expenses due to eliminated landowner royalties [61][62] Question: Industrial water recycling projects - The company is expanding into industrial water treatment, leveraging expertise in proprietary treatment technologies [86][89] Question: Activity levels and customer stability - Management confirmed that operations with major customers remain stable, with an uptick in completion activity noted [102]

Aris Water Solutions, Inc. – Earnings Presentation Fourth Quarter and Full Year 2024 Cautionary Statements Forward-Looking Statements This presentation and the oral statements made in connection with this presentation contain "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, statements, information, opinions or bel ...

Group 1 - Aris Water Solutions, Inc. reported $118.61 million in revenue for the quarter ended December 2024, reflecting a year-over-year increase of 13.9% [1] - The reported revenue exceeded the Zacks Consensus Estimate of $110.88 million by 6.97%, while the EPS of $0.17 matched the previous year's EPS, but fell short of the consensus estimate of $0.27 by 37.04% [1] - The stock has returned -4.4% over the past month, underperforming the Zacks S&P 500 composite's -2.3% change, and currently holds a Zacks Rank 3 (Hold) [3] Group 2 - Revenue per barrel of total volumes was $0.75, matching the average estimate, while direct operating costs per barrel were $0.35, slightly above the average estimate of $0.32 [4] - Total volumes reached 1,636 thousand barrels of water per day, surpassing the average estimate of 1,576.12 thousand barrels per day [4] - Revenue from Total Water Solutions including Affiliates was $25.98 million, exceeding the estimated $23.07 million and representing an 8.9% increase year-over-year [4] - Revenue from Total Produced Water Handling including Affiliates was $87.57 million, above the estimated $85.89 million, marking a 9.8% increase year-over-year [4]

Core Viewpoint - Aris Water Solutions, Inc. reported quarterly earnings of $0.17 per share, missing the Zacks Consensus Estimate of $0.27 per share, representing an earnings surprise of -37.04% [1] Financial Performance - The company posted revenues of $118.61 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 6.97% and showing an increase from year-ago revenues of $104.13 million [2] - Over the last four quarters, Aris Water Solutions has surpassed consensus revenue estimates four times, but has only exceeded EPS estimates once [2] Stock Performance - Aris Water Solutions shares have increased approximately 7.8% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.27 for the coming quarter and $1.25 for the current fiscal year, with revenues expected to be $110.82 million and $463.97 million respectively [7] - The estimate revisions trend for Aris Water Solutions is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Waste Removal Services industry, to which Aris Water Solutions belongs, is currently ranked in the bottom 38% of over 250 Zacks industries, suggesting that the industry's outlook can significantly impact stock performance [8]

Financial Performance - Aris Water Solutions achieved a net income of $13.8 million for Q4 2024 and $60.2 million for the full year, representing a 39% increase year-over-year[11]. - Adjusted EBITDA for Q4 2024 was $54.5 million, up 10% year-over-year, and $211.9 million for the full year, up 21% from 2023[5]. - Total revenue for Q4 2024 reached $118.6 million, a 14% increase from $104.1 million in Q4 2023[30]. - Net income attributable to Aris Water Solutions, Inc. was $5.8 million in Q4 2024, compared to $5.4 million in Q4 2023, reflecting a 7% increase[30]. - Operating income for the year ended December 31, 2024, was $106.8 million, up from $83.9 million in 2023, representing a 27% increase[30]. - Net income for the year ended December 31, 2024, was $60.2 million, compared to $43.4 million in 2023, representing a 38.5% increase[49]. - Adjusted net income for Q4 2024 was $18.1 million, a 17.5% increase from $15.4 million in Q4 2023[49]. - Diluted adjusted net income per share for the year ended December 31, 2024, was $1.26, compared to $0.88 in 2023, marking a 43.2% increase[50]. Cash Flow and Dividends - Free cash flow for the year ended December 31, 2024, was $72.6 million, a significant recovery from a negative $29.1 million in 2023[57]. - Cash flow from operating activities for the year was $178,876,000, slightly down from $183,873,000 in 2023, reflecting a decrease of 2.2%[34]. - The company paid dividends totaling $24,559,000 for the year, compared to $21,429,000 in 2023, representing an increase of 10.0%[34]. - Aris announced a 33% increase in its quarterly dividend to $0.14 per share for Q1 2025[13]. Growth and Projections - Produced water volumes grew by 7% year-over-year, with a total of 1,548 thousand barrels per day for the full year 2024[5]. - The company set a new quarterly record for recycled water volumes, growing 16% for the year and 18% sequentially in Q4 2024[5]. - For 2025, Aris expects Adjusted EBITDA between $215 million and $235 million, with capital expenditures between $85 million and $105 million[16]. - Free cash flow is projected to be between $75 million and $95 million, an increase of approximately 17% over 2024[16]. - The company anticipates produced water handling volumes to be between 1,150 and 1,210 thousand barrels per day in 2025[21]. - The company anticipates continued growth in revenue and profitability, with guidance for 2025 reflecting positive market conditions[28]. Capital Expenditures and Assets - Capital expenditures for the full year 2024 were $101 million, down 35% from 2023[5]. - Capital expenditures for the year totaled $99,985,000, down from $169,736,000 in 2023, showing a reduction of 41.0%[34]. - Total assets grew to $1.42 billion in 2024, compared to $1.34 billion in 2023, indicating a 6% increase[32]. - Total liabilities increased to $684.8 million in 2024, compared to $652.6 million in 2023, a rise of 5%[32]. - Total stockholders' equity attributable to Aris Water Solutions, Inc. increased to $348.6 million in 2024, up from $323.9 million in 2023, a growth of 8%[32]. Operational Metrics - Produced water handling volumes for the quarter were 1,112,000 barrels per day, slightly up from 1,095,000 barrels per day in Q4 2023[46]. - Total water solutions volumes sold reached 524,000 barrels per day, an increase from 482,000 barrels per day in the same quarter last year, marking an 8.7% growth[46]. - The company reported a gross margin per barrel of $0.31 for Q4 2024, compared to $0.27 in Q4 2023, indicating a year-over-year improvement of 14.8%[46]. - The company reported a gross margin of $46.5 million for Q4 2024, up from $39.6 million in Q4 2023, indicating a 17.5% increase[48]. - Adjusted operating margin for Q4 2024 was $66.6 million, up from $59.1 million in Q4 2023, reflecting a 12.5% growth[48]. Research and Development - Research and development expenses decreased to $3.0 million for the year ended December 31, 2024, from $3.1 million in 2023[30]. Debt Management - The leverage ratio as of December 31, 2024, was calculated based on net debt divided by Adjusted EBITDA for the trailing twelve months, indicating a focus on managing debt levels[40]. - The leverage ratio as of December 31, 2024, was 1.99, calculated using net debt of $422.1 million and trailing twelve months adjusted EBITDA of $211.9 million[53].

Core Insights - Analysts project Aris Water Solutions, Inc. (ARIS) will report quarterly earnings of $0.27 per share, reflecting a year-over-year increase of 58.8% [1] - Revenue is expected to reach $110.88 million, marking a 6.5% increase from the same quarter last year [1] - The consensus EPS estimate has been revised upward by 3.1% over the past 30 days, indicating a collective reassessment by analysts [2] Revenue Estimates - Revenue from Total Water Solutions including Affiliates is estimated at $23.07 million, a decrease of 3.3% from the prior-year quarter [5] - Revenue from Total Produced Water Handling including Affiliates is projected at $85.89 million, an increase of 7.7% from the year-ago quarter [5] Volume Estimates - Total Volumes are expected to be 1,576.12 thousand barrels of water per day, slightly down from 1,577 thousand barrels per day reported in the same quarter last year [6] - Total Water Solutions Volumes are estimated at 478.13 thousand barrels per day, compared to 482 thousand barrels per day in the previous year [6] - Produced Water Handling Volumes are projected to reach 1,097.99 thousand barrels per day, slightly up from 1,095 thousand barrels per day reported in the same quarter last year [7] Market Performance - Aris Water Solutions shares have experienced a decline of 1.9% over the past month, compared to a 1.8% decline in the Zacks S&P 500 composite [8] - The company holds a Zacks Rank 3 (Hold), indicating it is expected to closely follow overall market performance in the near term [8]