Aris Water Solutions(ARIS) - 2025 Q2 - Quarterly Report

Part I. Financial Information Cautionary Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements based on current expectations and projections, subject to various risks and uncertainties, advising against reliance on them as future predictions - Forward-looking statements are identified by terms like 'anticipate,' 'guidance,' 'expect,' 'will,' 'plan,' 'believe,' and 'future,' and are based on current expectations and projections[4] - Key risks include impacts of geopolitical conflicts (Russia-Ukraine, Middle East), commodity price volatility, reliance on limited customers/regions, uncertainties surrounding the planned merger with WES (completion, benefits, disruptions, litigation), access to capital, competition, changes in economic conditions, regulatory changes, and technological advancements[5][6][9] Item 1. Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and stockholders' equity, with detailed notes on organization, accounting policies, and specific financial line items Condensed Consolidated Balance Sheets The balance sheet indicates increased total assets, driven by higher cash and accounts receivable, alongside a rise in long-term debt and total liabilities, with a modest increase in stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Cash | $57,359 | $28,673 | $28,686 | 100.0% | | Accounts Receivable, Net | $66,878 | $63,016 | $3,862 | 6.1% | | Accounts Receivable from Affiliate | $24,418 | $12,016 | $12,402 | 103.2% | | Total Current Assets | $170,605 | $127,952 | $42,653 | 33.3% | | Total Property, Plant and Equipment, Net | $1,064,578 | $1,028,605 | $35,973 | 3.5% | | Total Assets | $1,476,875 | $1,408,400 | $68,475 | 4.9% | | Total Current Liabilities | $98,861 | $105,187 | $(6,326) | (6.0%) | | Long-Term Debt, Net | $490,522 | $441,662 | $48,860 | 11.1% | | Total Liabilities | $689,213 | $635,893 | $53,320 | 8.4% | | Total Stockholders' Equity | $787,662 | $772,507 | $15,155 | 2.0% | Condensed Consolidated Statements of Operations The company reported increased total revenue for both the three and six months ended June 30, 2025, driven by growth in produced water handling and water solutions, leading to higher net income and EPS Condensed Consolidated Statements of Operations (Three Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------- | | Total Revenue | $124,092 | $101,117 | 22.7% | | Total Cost of Revenue | $78,326 | $59,901 | 30.8% | | Operating Income | $26,331 | $23,919 | 10.1% | | Net Income | $14,084 | $13,112 | 7.4% | | Net Income Attributable to Aris Water Solutions, Inc. | $6,651 | $5,965 | 11.5% | | Basic Net Income Per Share | $0.19 | $0.18 | 5.6% | | Diluted Net Income Per Share | $0.19 | $0.18 | 5.6% | Condensed Consolidated Statements of Operations (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------- | | Total Revenue | $244,583 | $204,523 | 19.6% | | Total Cost of Revenue | $148,270 | $118,968 | 24.6% | | Operating Income | $54,166 | $51,777 | 4.6% | | Net Income | $30,084 | $29,942 | 0.5% | | Net Income Attributable to Aris Water Solutions, Inc. | $15,262 | $13,588 | 12.3% | | Basic Net Income Per Share | $0.45 | $0.41 | 9.8% | | Diluted Net Income Per Share | $0.44 | $0.41 | 7.3% | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased, investing activities decreased due to lower PP&E expenditures despite acquisitions, and financing activities significantly rose from new senior notes issuance and debt repayment Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net Cash Provided by Operating Activities | $66,157 | $58,147 | $8,010 | 13.8% | | Net Cash Used in Investing Activities | $(51,416) | $(56,785) | $5,369 | (9.5%) | | Net Cash Provided by Financing Activities | $13,945 | $5,101 | $8,844 | 173.4% | | Net Increase in Cash | $28,686 | $6,463 | $22,223 | 343.9% | | Cash, End of Period | $57,359 | $11,526 | $45,833 | 397.6% | - Financing activities in 2025 included the issuance of $500 million in 2030 Notes, satisfaction and discharge of $400 million in 2026 Notes, and net Credit Facility repayments of $44 million[15] Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased, primarily from net income and additional paid-in capital, partially offset by treasury stock repurchases for tax withholding and dividends/distributions Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Class A Common Stock (Amount) | $335 | $314 | $21 | 6.7% | | Class B Common Stock (Amount) | $264 | $274 | $(10) | (3.6%) | | Additional Paid-in-Capital | $411,779 | $380,565 | $31,214 | 8.2% | | Retained Earnings | $19,522 | $13,676 | $5,846 | 42.7% | | Total Stockholders' Equity Attributable to Aris Water Solutions, Inc. | $412,863 | $385,841 | $27,022 | 7.0% | | Noncontrolling Interest | $374,799 | $386,666 | $(11,867) | (3.1%) | | Total Stockholders' Equity | $787,662 | $772,507 | $15,155 | 2.0% | - During the six months ended June 30, 2025, 1,000,000 Class B shares were redeemed for Class A shares. The company repurchased 327,164 Class A shares for tax withholding purposes[92][96] Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed explanations of the company's business, accounting policies, financial line items, acquisitions, debt, leases, income taxes, equity, commitments, and segment information, offering crucial context to the condensed financial statements Note 1. Organization and Background of Business Aris Water Solutions, Inc. provides sustainability-enhancing services in the Permian Basin and announced a planned merger with WES, where Aris Inc. and Aris LLC will become wholly-owned subsidiaries of WES, with consideration including WES Common Units and/or cash - Aris Water Solutions, Inc. is an independent, environmentally-focused company providing integrated produced water handling, recycling, and supply solutions in the Permian Basin[18] - On August 6, 2025, Aris Inc. and Aris LLC entered into a Merger Agreement with WES, under which Aris will be acquired and continue as wholly-owned subsidiaries of WES[21] - Merger consideration options include a combination of 0.450 WES Common Units and $7.00 cash, $25.00 cash (subject to $415 million proration), or 0.625 WES Common Units[21] - The Merger Agreement includes a termination fee of $57 million payable by Aris to WES under certain conditions, such as a change of recommendation by the Company board or termination to enter a superior offer[23] - A Tax Receivable Agreement (TRA) amendment was executed, terminating the TRA upon merger closing with an aggregate cash payment of $80 million to TRA Holders, down from an estimated $183.4 million early termination payment[24] Note 2. Basis of Presentation and Significant Accounting Policies This note outlines the basis of financial statement presentation, including Aris LLC consolidation and significant accounting policies, addressing a revision of previously issued financial statements related to TRA liability, fair value measurements, and related party transactions - Previously issued financial statements for June 30, 2024, were revised to correct immaterial misstatements in Tax Receivable Agreement liability, Deferred Income Tax Assets, Net, and Additional Paid-in-Capital, with no impact on net income or cash flows[27] Revision of Previously Reported Financial Statements (in thousands) | (in thousands) | As Previously Reported | Revision | As Revised | | :--------------------------------------- | :--------------------- | :------- | :--------- | | Additional Paid-in-Capital | $335,183 | $37,223 | $372,406 | | Total Stockholders' Equity | $712,180 | $37,223 | $749,403 | - The company consolidates Aris LLC, where it holds a controlling interest (approximately 55% as of June 30, 2025) and is considered the primary beneficiary[19][31][32] - Fair value of 2030 Notes ($500 million) and 2026 Notes ($400 million at Dec 31, 2024) is estimated based on market prices (Level 2), while the Credit Facility's fair value approximates carrying value due to variable interest rates (Level 3)[39] - ConocoPhillips is a significant stockholder and related party, with whom the company has long-term water gathering, handling, and supply agreements. Receivables from ConocoPhillips increased from $12.0 million (Dec 31, 2024) to $24.4 million (June 30, 2025), and revenues from ConocoPhillips increased by 26% for Q2 2025 and 30% for YTD June 30, 2025[42][44] Revenues from ConocoPhillips (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Revenues from ConocoPhillips | $41,700 | $32,000 | $83,400 | $64,100 | - The company is assessing the impact of new FASB ASUs 2024-03 and 2023-09, related to expense disaggregation and income tax disclosures, respectively, with no material impact expected from ASU 2023-09[49][50] Note 3. Additional Financial Statement Information This note details various balance sheet and statement of operations items, including other receivables, current assets, accrued liabilities, long-term liabilities, and components of depreciation, amortization, accretion, and interest expense Balance Sheet Details (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | Other Receivables | | | | Insurance and Third-Party Receivables for Remediation Expenses | $6,812 | $5,149 | | Reimbursable Research and Development Receivable | $705 | $207 | | Financing Receivable | $1,668 | $3,242 | | Total Other Receivables | $13,222 | $13,829 | | Other Current Assets | | | | Prepaid Insurance | $2,707 | $7,257 | | Income Tax Receivable | $2,340 | — | | Total Other Current Assets | $8,728 | $10,418 | | Accrued and Other Current Liabilities | | | | Accrued Operating Expense | $30,749 | $28,897 | | Accrued Capital Costs | $8,225 | $4,023 | | Accrued Interest | $9,688 | $8,067 | | Accrued Compensation | $5,811 | $12,651 | | Sales Tax Payable | $1,887 | $12,721 | | Total Accrued and Other Current Liabilities | $70,386 | $77,339 | | Other Long-Term Liabilities | | | | Noncurrent Operating Lease Liabilities | $15,065 | $14,040 | | Noncurrent Finance Lease Liabilities | $2,012 | $1,747 | | Total Other Long-Term Liabilities | $18,200 | $17,335 | Depreciation, Amortization, Accretion, and Interest Expense (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Depreciation, Amortization and Accretion | | | | | | Depreciation of Property, Plant and Equipment | $10,474 | $10,105 | $20,844 | $19,944 | | Amortization of Intangible Assets | $8,880 | $9,264 | $17,684 | $18,527 | | Total Depreciation, Amortization and Accretion | $19,972 | $19,707 | $39,728 | $39,128 | | Interest Expense, Net | | | | | | Interest on Debt Instruments | $9,076 | $8,596 | $17,863 | $16,897 | | Amortization of Debt Issuance Costs | $705 | $763 | $1,340 | $1,529 | | Total Interest Expense, Net | $9,567 | $8,813 | $18,797 | $17,251 | Note 4. Property, Plant and Equipment This note details the composition of PP&E, which increased from December 31, 2024, to June 30, 2025, and outlines expenses related to abandoned wells and projects Property, Plant and Equipment (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Wells, Facilities, Water Ponds and Related Equipment | $651,213 | $626,182 | | Pipelines | $478,223 | $460,455 | | Projects and Construction in Progress | $41,615 | $28,151 | | Total Property, Plant and Equipment | $1,245,013 | $1,188,781 | | Total Property, Plant and Equipment, Net | $1,064,578 | $1,028,605 | - The company recognized $1.0 million and $1.5 million in plugging and abandonment expense for the three and six months ended June 30, 2025, respectively, related to uneconomical produced water handling facilities and a disused pipeline[54] - Abandoned project expense was $0.2 million and $0.7 million for the six months ended June 30, 2025 and 2024, respectively, due to the write-off of expired or unused permits and easements[56] Note 5. Acquisitions This note details two 2025 acquisitions: the Reeves County Asset Acquisition of water handling facilities and land, and the Crosstek Business Acquisition of intellectual property and workforce for industrial water treatment - In Q2 2025, the company acquired five produced water handling facilities and 787 acres in Reeves County, Texas, for $13.2 million cash, including transaction costs, and a $1.5 million indemnity holdback liability[57] - Concurrent with the Reeves County acquisition, the acquired land was sold to a third party for $4.5 million, resulting in a $0.1 million loss[58] - In February 2025, the Crosstek Business Acquisition was completed for $2.9 million, including $2.0 million cash and up to $1.0 million in sales-based contingent consideration, to accelerate entry into broader industrial water markets[59] - The Crosstek acquisition purchase price was primarily allocated to intangible assets ($2.8 million), including patents, processes, technologies, customer relationships, and trademarks[60] Note 6. Tax Receivable Agreement Liability This note explains the TRA with Aris LLC legacy owners, detailing payments based on tax savings, the increased estimated TRA liability, and an amendment made with the WES merger to reduce the early termination payment - The TRA provides for payments to TRA Holders of 85% of net cash savings in U.S. federal, state, and local income/franchise tax resulting from tax basis increases[60] - The estimated TRA liability increased from $49.9 million at December 31, 2024, to $58.9 million at June 30, 2025[61] - A change of control (such as the WES merger) or early termination would trigger an early termination payment, estimated at $183.4 million prior to amendment. The TRA Amendment, concurrent with the Merger Agreement, will terminate the TRA upon closing, with an aggregate payment of $80 million in cash to TRA Holders[24][61] Note 7. Debt This note details the company's debt structure, including the issuance of new 2030 Senior Notes, the satisfaction and discharge of 2026 Senior Sustainability-Linked Notes, the Credit Facility status, and insurance premium financing Debt (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | 7.250% Senior Notes due 2030 | $500,000 | — | | 7.625% Senior Sustainability-Linked Notes due 2026 | — | $400,000 | | Credit Facility | — | $44,000 | | Total Long-Term Debt, Net of Debt Issuance Costs | $490,522 | $441,662 | | Total Debt | $492,803 | $448,387 | - On March 25, 2025, the company issued $500.0 million in 7.250% Senior Notes due 2030. Proceeds were used to satisfy and discharge the 2026 Notes and fully repay Credit Facility borrowings[64] - The 2026 Notes ($400.0 million principal) were satisfied and discharged in March 2025, resulting in a $2.5 million loss on debt extinguishment[67][68] - As of June 30, 2025, there were no outstanding borrowings under the Credit Facility, with $346.7 million in revolving commitments available and the company in compliance with all covenants[71][72] Note 8. Leases This note details the company's operating and finance leases, including balance sheet classification, associated costs in statements of operations, cash flow impacts, and maturity schedules Lease Information (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :---------------- | | Operating Lease Right-of-Use Assets, Net | $15,714 | $15,016 | | Noncurrent Operating Lease Liabilities | $15,065 | $14,040 | | Finance Lease Property, Plant and Equipment, Net | $3,257 | $2,731 | | Noncurrent Finance Lease Liabilities | $2,012 | $1,747 | Lease Costs (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Lease Cost | $1,189 | $857 | $2,320 | $1,710 | | Short-term Lease Costs | $3,600 | $3,700 | $6,300 | $6,800 | - Weighted average remaining lease terms are 6.4 years for operating leases and 3.3 years for finance leases as of June 30, 2025[80] Note 9. Income Taxes This note details the company's income tax expense, effective tax rate, and changes in deferred tax assets, also mentioning the ongoing evaluation of new tax legislation (OBBB) and the status of tax examinations Income Tax Expense (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income Tax Expense | $2,680 | $1,994 | $2,750 | $4,583 | | Current Expense (Benefit) | $500 | $300 | $(1,600) | $800 | | Deferred Expense | $2,200 | $1,700 | $4,400 | $3,800 | - The effective tax rate (ETR) for the six months ended June 30, 2025, was 8.4%, down from 13.3% in the prior year, primarily due to the impact of noncontrolling interest and windfall tax benefits from stock-based compensation vesting[86] - Deferred Income Tax Assets, Net, increased by $5.5 million during the six months ended June 30, 2025, due to deferred tax benefits from Class B share redemptions and stock-based compensation vesting[87] - The company is evaluating the financial impact of the recently enacted H.R. 1 (One Big Beautiful Bill), which includes changes to corporate taxation such as immediate expensing of R&D and extended bonus depreciation[89][91] Note 10. Stockholders' Equity This note outlines changes in stockholders' equity, including Class B share redemptions for Class A shares, dividend declarations, and treasury stock transactions related to tax withholding - During the six months ended June 30, 2025, 1,000,000 Aris LLC units and corresponding Class B common stock shares were redeemed for Class A common stock on a one-for-one basis[92] - The Board declared a dividend of $0.14 per share for the first, second, and third quarters of 2025 on Class A common stock, with corresponding distributions to Aris LLC unit holders[93][94] - The Merger Agreement restricts future dividends and distributions, capping them at $0.14 per share quarterly[95] - The company withheld 327,164 Class A common shares in the first six months of 2025 for payment of taxes on employee stock awards, compared to 109,862 shares in the same period of 2024[96] Note 11. Commitments and Contingencies This note details the company's commitments and contingencies, including a minimum volume delivery commitment, short-term purchase obligations, environmental expenses, and accrued insurance proceeds - As of June 30, 2025, the company has a minimum volume commitment of $17.8 million (undiscounted) with an unaffiliated water disposal company through June 2030[102] - Short-term purchase obligations for products and services, primarily pipe, pumps, and other components, totaled approximately $13.1 million due in the next twelve months as of June 30, 2025[103] - Environmental expenses were $1.1 million for the six months ended June 30, 2025, compared to $0.7 million in the prior year. Accrued insurance proceeds and third-party receivables for remediation expenses were $6.8 million as of June 30, 2025[104][105] Note 12. Earnings Per Share This note provides the computation of basic and diluted net income per share attributable to Class A common stock, detailing weighted average shares outstanding and the treatment of dilutive securities Earnings Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic Net Income Per Share | $0.19 | $0.18 | $0.45 | $0.41 | | Diluted Net Income Per Share | $0.19 | $0.18 | $0.44 | $0.41 | | Basic Weighted Average Shares Outstanding | 32,702,834 | 30,549,092 | 32,048,183 | 30,451,553 | | Diluted Weighted Average Shares Outstanding | 33,494,725 | 30,589,997 | 32,880,189 | 30,472,005 | - Class B common stock shares (26,493,565 for Q2 2025 and 27,543,565 for Q2 2024) were considered antidilutive and excluded from diluted EPS computation[108][109] Note 13. Stock-Based Compensation This note details the activity and compensation costs associated with RSUs and PSUs granted under the 2021 Equity Incentive Plan RSU Activity | RSU Activity | Outstanding at Dec 31, 2024 | Granted | Forfeited | Vested | Outstanding at June 30, 2025 | | :-------------------------- | :-------------------------- | :------ | :-------- | :------- | :--------------------------- | | RSUs | 2,175,931 | 713,731 | (65,365) | (945,699) | 1,878,598 | | Weighted-Average Grant Date Fair Value | $11.94 | $28.84 | $13.90 | $12.82 | $18.34 | - Approximately $28.2 million of compensation cost for unvested RSUs remains to be recognized over a weighted-average period of 1.2 years[112] PSU Activity | PSU Activity | Outstanding at Dec 31, 2024 | Granted | Vested | Outstanding at June 30, 2025 | | :-------------------------- | :-------------------------- | :------ | :------- | :--------------------------- | | PSUs | 569,338 | 220,076 | (5,807) | 783,607 | | Weighted-Average Grant Date Fair Value | $18.79 | $39.27 | $26.73 | $24.62 | - PSUs granted in 2025 are based on 50% relative total shareholder return and 50% absolute total shareholder return, with vesting and payout occurring approximately three years after the first performance period[114][116] - Approximately $12.8 million of compensation cost for unvested PSUs remains to be recognized over a weighted-average period of 1.4 years[114] Note 14. Segment Information This note describes the company's two reportable segments, Water Gathering and Processing, and Corporate and Other, following the Crosstek Acquisition, providing summarized financial information including revenue, cost of revenue, and operating income - Following the Crosstek Acquisition in February 2025, the company re-evaluated its reportable segments into: Water Gathering and Processing (produced water handling, water solutions) and Corporate and Other (beneficial reuse, industrial water, corporate operations)[119][122] Segment Information (Q2 2025, in thousands) | (in thousands) | Water Gathering and Processing (Q2 2025) | Corporate and Other (Q2 2025) | Consolidated (Q2 2025) | | :------------------------------------ | :--------------------------------------- | :---------------------------- | :--------------------- | | Revenue | $123,748 | $344 | $124,092 | | Total Cost of Revenue | $77,634 | $692 | $78,326 | | Operating Income (Expense) | $45,116 | $(18,785) | $26,331 | | Net Income (Loss) Attributable to Aris Water Solutions, Inc. | $45,116 | $(38,465) | $6,651 | Segment Information (YTD Q2 2025, in thousands) | (in thousands) | Water Gathering and Processing (YTD Q2 2025) | Corporate and Other (YTD Q2 2025) | Total (YTD Q2 2025) | | :------------------------------------ | :--------------------------------------- | :---------------------------- | :------------------ | | Revenue | $243,999 | $584 | $244,583 | | Total Cost of Revenue | $146,947 | $1,323 | $148,270 | | Operating Income (Expense) | $95,355 | $(41,189) | $54,166 | | Net Income (Loss) Attributable to Aris Water Solutions, Inc. | $95,355 | $(80,093) | $15,262 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive analysis of the company's financial performance, condition, and future outlook, including a business overview, Q2 2025 results, market trends, segment performance, non-GAAP measures, and liquidity and capital resources Business Overview Aris Water Solutions, Inc. is an environmental infrastructure and solutions company focused on full-cycle water handling and recycling in the Permian Basin, with a planned merger with WES and re-evaluated reportable segments following the Crosstek Acquisition - Aris is a leading environmental infrastructure and solutions company providing full-cycle water handling and recycling solutions to energy companies in the Permian Basin[128] - The company announced a planned merger with WES, where Aris will be acquired and continue as wholly-owned subsidiaries of WES, with the merger expected to close in Q4 2025, subject to shareholder and regulatory approvals[126] - Following the Crosstek Acquisition in February 2025, the company now reports two distinct business segments: Water Gathering and Processing, and Corporate and Other[129] Second Quarter 2025 Results The company achieved significant financial and operational growth in Q2 2025, with total revenue increasing by 23% and net income by 7% year-over-year, driven by higher produced water handling and water solutions volumes, and new facility acquisitions Second Quarter 2025 Results | Metric | Q2 2025 | Q2 2024 | % Change | | :------------------------------------ | :------ | :------ | :------- | | Total Revenue | $124.1 million | $101.1 million | 23% | | Net Income | $14.1 million | $13.1 million | 7% | | Adjusted EBITDA (non-GAAP) | $54.6 million | $50.0 million | 9% | | Dividend Paid (Class A Common Stock) | $0.14/share | $0.105/share | 33% | | Produced Water Handling Volumes | 1,234 kbwpd | 1,093 kbwpd | 13% | | Total Water Solutions Volumes | 523 kbwpd | 362 kbwpd | 44% | | Direct Operating Costs per Barrel | $0.36 | $0.30 | 20% | | Gross Margin per Barrel | $0.29 | $0.32 | (9%) | | Adjusted Operating Margin per Barrel (non-GAAP) | $0.41 | $0.46 | (11%) | - The company completed the acquisition of five produced water handling facilities and approximately 787 acres of land in Reeves County, Texas, for $13.2 million cash[130] General Trends and Outlook This section discusses market dynamics, including geopolitical conflicts and commodity price volatility impacts on the energy industry, cost inflation, and the company's response to seismicity in its operating areas - Ongoing Russia-Ukraine and Middle Eastern conflicts continue to impact the global economy, financial markets, and the energy industry[132] - WTI crude oil spot prices averaged $64.57 in Q2 2025, down from $81.81 in Q2 2024, impacting a portion of revenue directly exposed to crude oil price fluctuations[133] - Permian Basin oil and associated water production growth continues to provide meaningful support for future growth, especially with key customers' consistent capital allocation[134] - Cost inflation, particularly elevated core inflation, may negatively impact operating margins as contractual CPI-based adjustments are often capped, leading to costs increasing faster than fees[136][137] - The company has adapted to regulatory responses to seismic activity in New Mexico and Texas, maintaining service without material disruption due to its integrated pipeline network and system-wide redundancy[138] Results of Operations Consolidated results show a significant increase in total revenue for both the three and six months ended June 30, 2025, driven by growth across all revenue streams, with operating costs and expenses also rising, leading to modest increases in operating income and net income Results of Operations (Three Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Total Revenue | $124,092 | $101,117 | $22,975 | 23% | | Total Cost of Revenue | $78,326 | $59,901 | $18,425 | 31% | | Total Operating Expenses | $19,435 | $17,297 | $2,138 | 12% | | Operating Income | $26,331 | $23,919 | $2,412 | 10% | | Income Before Income Taxes | $16,764 | $15,106 | $1,658 | 11% | | Net Income | $14,084 | $13,112 | $972 | 7% | Results of Operations (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Total Revenue | $244,583 | $204,523 | $40,060 | 20% | | Total Cost of Revenue | $148,270 | $118,968 | $29,302 | 25% | | Total Operating Expenses | $42,147 | $33,778 | $8,369 | 25% | | Operating Income | $54,166 | $51,777 | $2,389 | 5% | | Income Before Income Taxes | $32,834 | $34,525 | $(1,691) | (5%) | | Net Income | $30,084 | $29,942 | $142 | 0% | Water Gathering and Processing Segment This segment experienced significant growth in produced water handling and water solutions volumes, driving increased revenues, but direct operating costs per barrel also rose due to higher expenses and maintenance timing, impacting gross and adjusted operating margins per barrel Recent Developments Recent developments include the acquisition of five produced water handling facilities and land in Reeves County, Texas, and progress on a mineral extraction agreement to construct an iodine extraction facility - In Q2 2025, the company acquired five produced water handling facilities and 787 acres of land in Reeves County, Texas, for $13.2 million, selling the land concurrently for $4.5 million[141] - The company finalized site selection for an iodine extraction facility at one of its Permian Basin produced water handling facilities, aiming for operational status in H1 2026, as part of a mineral extraction agreement[142] Operating Metrics Operating metrics show substantial increases in produced water handling and water solutions volumes for both the three and six months ended June 30, 2025, but direct operating costs per barrel increased, and gross and adjusted operating margins per barrel decreased, partly due to maintenance timing and lower skim oil prices Operating Metrics (Q2, thousands of barrels of water per day) | (thousands of barrels of water per day) | Q2 2025 | Q2 2024 | Change | % Change | | :-------------------------------------- | :------ | :------ | :----- | :------- | | Produced Water Handling Volumes | 1,234 | 1,093 | 141 | 13% | | Recycled Produced Water Volumes Sold | 425 | 314 | 111 | 35% | | Groundwater Volumes Sold | 98 | 48 | 50 | 104% | | Total Water Solutions Volumes | 523 | 362 | 161 | 44% | | Total Volumes | 1,757 | 1,455 | 302 | 21% | | Produced Water Handling Revenue/Barrel | $0.87 | $0.84 | $0.03 | 4% | | Water Solutions Revenue/Barrel | $0.53 | $0.52 | $0.01 | 2% | | Direct Operating Costs/Barrel | $0.36 | $0.30 | $0.06 | 20% | | Gross Margin/Barrel | $0.29 | $0.32 | $(0.03) | (9%) | | Adjusted Operating Margin/Barrel | $0.41 | $0.46 | $(0.05) | (11%) | Operating Metrics (YTD Q2, thousands of barrels of water per day) | (thousands of barrels of water per day) | YTD Q2 2025 | YTD Q2 2024 | Change | % Change | | :-------------------------------------- | :---------- | :---------- | :----- | :------- | | Produced Water Handling Volumes | 1,213 | 1,126 | 87 | 8% | | Recycled Produced Water Volumes Sold | 450 | 325 | 125 | 38% | | Groundwater Volumes Sold | 91 | 38 | 53 | 139% | | Total Water Solutions Volumes | 541 | 363 | 178 | 49% | | Total Volumes | 1,754 | 1,489 | 265 | 18% | | Produced Water Handling Revenue/Barrel | $0.87 | $0.83 | $0.04 | 5% | | Water Solutions Revenue/Barrel | $0.54 | $0.52 | $0.02 | 4% | | Direct Operating Costs/Barrel | $0.34 | $0.29 | $0.05 | 17% | | Gross Margin/Barrel | $0.31 | $0.32 | $(0.01) | (3%) | | Adjusted Operating Margin/Barrel | $0.43 | $0.46 | $(0.03) | (7%) | Skim Oil Volumes | Skim Oil Volumes | Q2 2025 | Q2 2024 | Change | % Change | | :------------------------------------ | :------ | :------ | :----- | :------- | | Skim Oil Volumes (bpd) | 2,845 | 1,490 | 1,355 | 91% | | Skim Oil Sales Revenue/Barrel of Skim Oil | $56.90 | $72.58 | $(15.68) | (22%) | Revenues Produced water handling revenues increased due to higher volumes and skim oil sales despite lower skim oil prices, water solutions revenues grew significantly from increased recycled and groundwater volumes, and other revenues rose from a new water separation facility Revenues (in thousands) | (in thousands) | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Produced Water Handling Fees | $83,475 | $73,586 | $164,711 | $148,709 | | Skim Oil Sales Revenue | $14,732 | $9,843 | $25,674 | $20,653 | | Total Produced Water Handling Revenue | $98,207 | $83,429 | $190,385 | $169,362 | | Water Solutions Revenue | $25,159 | $17,248 | $52,574 | $34,192 | | Other Revenue | $726 | $440 | $1,624 | $969 | - Produced water handling revenues increased by $14.8 million (Q2 2025 vs. Q2 2024) due to a 141 kbwpd volume increase and a $4.9 million increase in skim oil sales revenue (higher volumes/recoveries, offset by lower prices)[151] - Water solutions revenues increased by $8.4 million (Q2 2025 vs. Q2 2024) due to a 111 kbwpd increase in recycled produced water volumes and a 50 kbwpd groundwater volume increase, partially offset by lower prices[152] - Other Revenue increased due to $0.3 million (Q2 2025) and $1.0 million (YTD Q2 2025) from services performed to operate a new water separation facility[153] Expenses Direct operating costs increased significantly due to higher volumes and maintenance expenses, depreciation, amortization, and accretion expenses slightly rose from new and acquired assets, and abandoned well and project expenses were recognized - Direct operating costs increased by $18.0 million (Q2 2025 vs. Q2 2024) and $28.6 million (YTD Q2 2025 vs. YTD Q2 2024), driven by higher produced water handling and water solutions volumes, and timing of maintenance expenses[154][155] - Key drivers for increased direct operating costs included higher water transfer costs, groundwater expense, electricity and fuel expense, landowner royalties, and workover costs[154][155] - Depreciation, amortization, and accretion expense slightly increased due to new and acquired assets placed in service[156] - Abandoned well costs were $1.0 million (Q2 2025) and $1.5 million (YTD Q2 2025) for uneconomical facilities and disused pipelines[54][158] Corporate and Other Segment This segment's recent developments include collaborations with NAWI and UCLA for produced water treatment and mineral extraction, and progress on the Beneficial Reuse JIP, with expenses influenced by the Crosstek Acquisition, stock-based compensation, and JIP activities Recent Developments The company is actively engaged in R&D through agreements with NAWI and UCLA to explore produced water treatment and mineral extraction, while the Beneficial Reuse JIP completed Phase 1 testing and is launching Phase 2 to scale treatment technologies - The company signed an agreement with NAWI to investigate produced water treatment technologies, with operational data collected in November 2024[160] - An agreement with UCLA focuses on extracting magnesium and other valuable metals/minerals from produced water, with bench testing on synthetic and actual brines in progress[161] - The Beneficial Reuse Joint Industry Project (JIP) with Chevron, ConocoPhillips, Exxon Mobil, and Coterra Energy completed Phase 1 testing of pilot technologies in Q2 2025 and is launching Phase 2 to scale these technologies for industrial, commercial, and non-consumptive agricultural purposes[162] Expenses Costs of goods sold emerged from industrial water operations due to the Crosstek Acquisition, G&A expenses increased primarily from higher stock-based compensation, and R&D expenses decreased due to the winding down of JIP Phase 1 - Costs of goods sold for Q2 and YTD 2025 relate to operating expenses from industrial water operations, specifically the Crosstek Acquisition[163] - General and administrative (G&A) expenses increased by $1.7 million (Q2 2025 vs. Q2 2024) and $7.2 million (YTD Q2 2025 vs. YTD Q2 2024), primarily due to increases in stock-based compensation ($1.2 million in Q2, $3.5 million YTD) and other compensation and benefits[165][166] - Research and development expense decreased due to lower JIP expenses as Phase 1 of the project wound down. Total JIP R&D expense was $1.0 million (Q2 2025) vs. $2.6 million (Q2 2024) and $3.2 million (YTD Q2 2025) vs. $5.2 million (YTD Q2 2024)[167] Interest Expense, Net Net interest expense increased for both the three and six months ended June 30, 2025, primarily due to higher average outstanding debt balances from the new 2030 Notes, partially offset by lower average credit facility borrowings and decreased capitalized interest Interest Expense, Net (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest on Debt Instruments | $9,076 | $8,596 | $17,863 | $16,897 | | Amortization of Debt Issuance Costs | $705 | $763 | $1,340 | $1,529 | | Interest on Finance Lease Obligations | $52 | — | $100 | — | | Total Interest Expense | $9,833 | $9,359 | $19,303 | $18,426 | | Less: Amounts Capitalized | $(266) | $(546) | $(506) | $(1,175) | | Interest Expense, Net | $9,567 | $8,813 | $18,797 | $17,251 | - The average outstanding debt balance increased to $500 million for Q2 2025 (from $438 million in Q2 2024) and $481 million for YTD Q2 2025 (from $432 million in YTD Q2 2024), driven by the new 2030 Notes[169] Other Other expense for the six months ended June 30, 2025, primarily relates to the loss incurred from the extinguishment of the 2026 Notes - Other expense of $2.535 million for the six months ended June 30, 2025, is attributed to the loss on debt extinguishment for the satisfaction and discharge of the 2026 Notes[170] Non-GAAP Financial Measures This section defines and reconciles non-GAAP financial measures, including Adjusted EBITDA, Adjusted Operating Margin, and Adjusted Operating Margin per Barrel, used to evaluate performance and liquidity as supplemental metrics - Adjusted EBITDA is defined as net income (loss) plus interest expense, income taxes, depreciation, amortization and accretion, abandoned well costs, asset impairment, abandoned project charges, losses on asset sales, transaction costs, R&D expense, TRA liability changes, loss on debt extinguishment, stock-based compensation, and other non-recurring items, less gains on asset sales[174] Adjusted EBITDA Reconciliation (in thousands) | (in thousands) | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Net Income | $14,084 | $13,112 | $30,084 | $29,942 | | Interest Expense, Net | $9,567 | $8,813 | $18,797 | $17,251 | | Income Tax Expense | $2,680 | $1,994 | $2,750 | $4,583 | | Depreciation, Amortization and Accretion | $19,972 | $19,707 | $39,728 | $39,128 | | Stock-Based Compensation | $6,247 | $4,693 | $11,937 | $8,214 | | Loss on Debt Extinguishment | — | — | $2,535 | — | | Adjusted EBITDA | $54,564 | $49,995 | $111,103 | $103,103 | - Adjusted Operating Margin is defined as Gross Margin plus Depreciation, Amortization and Accretion, and Adjusted Operating Margin per Barrel is this margin divided by total volumes handled or sold[175] Adjusted Operating Margin Reconciliation (in thousands) | (in thousands) | Q2 2025 | Q2 2024 | YTD Q2 2025 | YTD Q2 2024 | | :------------------------------------ | :------ | :------ | :---------- | :---------- | | Gross Margin | $46,114 | $41,832 | $97,052 | $86,794 | | Depreciation, Amortization and Accretion | $19,410 | $19,091 | $38,538 | $37,889 | | Adjusted Operating Margin | $65,524 | $60,923 | $135,590 | $124,683 | | Total Volumes (thousands of barrels) | 159,890 | 132,372 | 317,382 | 270,974 | | Gross Margin/Barrel | $0.29 | $0.32 | $0.31 | $0.32 | | Adjusted Operating Margin/Barrel | $0.41 | $0.46 | $0.43 | $0.46 | Liquidity and Capital Resources This section discusses the company's cash needs, funding sources, and cash flow activities, highlighting its strong liquidity, the WES merger's impact on financial flexibility, and 2025 capital expenditure plans Overview The company's cash needs for asset development, construction, and contractual obligations are funded by internal cash flow, credit facility, or capital markets, with a strong cash balance and working capital as of June 30, 2025, though the WES merger introduces future financial restrictions - As of June 30, 2025, the company had a cash balance of $57.4 million and working capital of $71.7 million[182] - The company had $500.0 million of 2030 Notes outstanding and $346.7 million of availability under its Credit Facility as of June 30, 2025, with no outstanding borrowings[184] - The Merger Agreement imposes restrictions on future indebtedness, equity issuance, asset sales, and share repurchases[187] - The company is evaluating the financial impact of the recently enacted One Big Beautiful Bill (OBBB) tax legislation[186] Dividends and Distributions The Board declared a consistent quarterly dividend of $0.14 per share for Class A common stock and corresponding distributions to Aris LLC unit holders for Q1, Q2, and Q3 2025, with the Merger Agreement imposing a cap on future quarterly dividends and distributions - The Board declared a dividend of $0.14 per share for Class A common stock for Q1, Q2, and Q3 2025, with equivalent distributions to Aris LLC unit holders[188][189] - The Merger Agreement restricts future quarterly dividends and distributions to a maximum of $0.14 per share[190] Cash Flows from Operating Activities Net cash provided by operating activities increased for the six months ended June 30, 2025, primarily due to higher total revenues, partially offset by increased direct operating and general and administrative expenses Net Cash Provided by Operating Activities (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net Cash Provided by Operating Activities | $66,157 | $58,147 | $8,010 | 13.8% | - The increase in operating cash flow was primarily driven by a $40.1 million increase in total revenues, partially offset by higher direct operating costs and general and administrative expenses[191][192] Cash Flows from Investing Activities Net cash used in investing activities decreased for the six months ended June 30, 2025, despite cash paid for the Crosstek and Reeves County acquisitions, due to lower overall property, plant, and equipment expenditures Net Cash Used in Investing Activities (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net Cash Used in Investing Activities | $(51,416) | $(56,785) | $5,369 | (9.5%) | - The decrease in cash used was primarily related to lower property, plant, and equipment expenditures, despite $15.2 million cash paid for the Crosstek and Reeves County acquisitions[193] Cash Flows from Financing Activities Net cash provided by financing activities significantly increased, driven by the issuance of new 2030 Notes and the satisfaction and discharge of 2026 Notes, alongside Credit Facility repayments, dividends, and treasury stock repurchases Net Cash Provided by Financing Activities (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :-------------------- | :------- | | Net Cash Provided by Financing Activities | $13,945 | $5,101 | $8,844 | 173.4% | - Key activities included the issuance of $500.0 million in 2030 Notes, satisfaction and discharge of $400.0 million in 2026 Notes, net Credit Facility repayments of $44.0 million, $17.1 million in dividends, and $10.0 million in treasury stock repurchases[194] Capital Requirements The company expects 2025 capital expenditures to range from $85.0 million to $105.0 million, funded primarily by cash on hand, cash flows from operations, and its Credit Facility, excluding any merger impacts - Expected capital expenditures for 2025 are between $85.0 million and $105.0 million, based on current customer outlooks and excluding merger impacts[195] - Capital requirements are intended to be funded through cash on hand, cash flows from operations, and borrowing capacity under the Credit Facility[195] Emerging Growth Company Status The company maintains its 'emerging growth company' status, allowing exemptions from reporting and an extended transition period for new accounting standards, but this status is expected to cease by December 31, 2025, if the merger has not closed, requiring an independent auditor's attestation report on internal controls - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised accounting standards[196] - The company will cease to be an emerging growth company by December 31, 2025 (if the merger has not closed), requiring an independent auditor's attestation report on the effectiveness of its internal control over financial reporting[197] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section discusses the company's exposure to market risks, primarily commodity price and interest rate risk, noting no material changes since the previous annual report, and confirms no use of derivative instruments for trading purposes - The company's market risks primarily relate to potential changes in the fair value of long-term debt due to interest rate fluctuations[198] - Commodity price risk exists due to indirect exposure to crude oil and natural gas price fluctuations impacting customer activity, and direct exposure from customer contracts with WTI-linked rates and skim oil sales[199][200] - Interest rate risk applies to the Credit Facility, which bears variable interest rates (SOFR-linked), though there were no outstanding borrowings as of June 30, 2025[202] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective, with no material changes in internal control over financial reporting identified during the quarter - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[203][204] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended June 30, 2025[205] Part II. Other Information Item 1. Legal Proceedings The company is subject to routine litigation and disputes, with no material changes to previously disclosed legal proceedings, and management believes no outstanding matters would materially adversely affect financial condition or results of operations - No material changes to legal proceedings previously disclosed in the 2024 Annual Report[206] - Management believes there are no pending litigation, disputes, or claims that would have a material adverse effect on the company's financial condition, cash flows, or results of operations[206] Item 1A. Risk Factors This section outlines specific risks related to the proposed merger with WES, including consideration value uncertainty, completion conditions, business disruption, limitations on alternative transactions, and negative impacts of a failed merger - The value of WES Common Units, which form part of the merger consideration, has fluctuated and will continue to fluctuate, creating uncertainty for stockholders[208][209] - Completion of the merger is subject to customary closing conditions, including stockholder and regulatory approvals, and there is no assurance these conditions will be satisfied[210][211] - The merger may disrupt existing business relationships, potentially leading to adverse effects on the combined business[212] - The Merger Agreement limits the company's ability to pursue alternative acquisitions and includes a $57.0 million termination fee payable to WES under certain circumstances, which could discourage other bidders[213][215][216] - Failure to complete the merger could negatively impact the company's stock price, customer/employee relations, incur significant costs, and divert management's attention, potentially leading to litigation[217][219][220][222] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section summarizes the repurchases of the company's Class A common stock during Q2 2025, primarily for the payment of withholding taxes on employee stock awards Class A Common Stock Repurchases | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------- | :----------------------------- | :--------------------------- | | 4/1/2025 - 4/30/2025 | 285 | $24.62 | | 5/1/2025 - 5/31/2025 | - | - | | 6/1/2025 - 6/30/2025 | 854 | $22.04 | | Total | 1,139 | $22.69 | - These repurchases represent shares of Class A common stock received from employees for the payment of withholding taxes due on shares issued under the 2021 Equity Incentive Plan[223] Item 3. Defaults upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[224] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable to the registrant[225] Item 5. Other Information This section reports that no directors or Section 16 officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025[226] Item 6. Exhibits This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including key agreements related to the merger and certifications - Key exhibits include the Agreement and Plan of Merger (Exhibit 2.1), Amendment No. 2 to Amended and Restated Water Gathering and Disposal Agreement (Exhibit 10.1), Tax Receivable Agreement Amendment (Exhibit 10.3), and certifications by the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[228][229][231] Signatures This section contains the signatures of the authorized officers, certifying the filing of the report on behalf of Aris Water Solutions, Inc - The report is signed by Amanda M. Brock (President and Chief Executive Officer), Stephan E. Tompsett (Chief Financial Officer), and Jeffrey K. Hunt (Chief Accounting Officer) on August 11, 2025[233]