Aris Water Solutions, Inc. ((ARIS)) has held its Q1 earnings call. Read on for the main highlights of the call.
Aris Water Solutions, Inc. showcased a robust performance in its first-quarter earnings call for 2025, highlighting record volumes and solid financial metrics. The company expressed confidence in its strategic positioning, supported by long-term contracts and a strong customer base. However, there were concerns regarding potential impacts from commodity price volatility and tariff uncertainties, which the company is prepared to address by moderating capital investments if necessary.
Record Volumes and Strong Performance
Aris Water Solutions reported record volumes in both Produced Water Handling and Water Supply, driven by higher-than-anticipated completion activity and sustained demand. The company saw a 7% sequential growth in both Produced Water volumes and Water Solution volumes from the previous quarter, underscoring its operational strength.
Adjusted EBITDA and Operating Margin
The company achieved a record adjusted EBITDA of $56.5 million, marking a 4% sequential increase and a 6% year-over-year growth, with an adjusted operating margin of $0.44 per barrel. This financial success highlights Aris Water Solutions’ effective cost management and operational efficiency.
Successful Integration of McNeill Ranch
The first quarter marked the successful integration of McNeill Ranch into Aris Water Solutions’ operations. The company is exploring additional revenue streams, including solar and surface royalty development, to further enhance its business model.
Balance Sheet Improvements
Aris Water Solutions made significant improvements to its balance sheet by refinancing its senior notes and upsizing the offering to $500 million. This move was complemented by a credit rating upgrade from Moody’s, reflecting the company’s strengthened financial position.
Commodity Price and Tariff Uncertainty
The company is closely monitoring potential impacts from commodity price fluctuations and tariff uncertainties, which currently pose a $6 million to $8 million headwind from the WTI price strip. Aris Water Solutions is prepared to adjust its strategies to mitigate these risks.
Deferred Maintenance Costs
Approximately $2 million of planned well maintenance costs were deferred to the second quarter, which benefited margins by $0.01 per barrel in Q1. This strategic deferral reflects the company’s proactive approach to managing operational expenses.
Potential CapEx Cuts Due to Market Volatility
In response to potential reductions in customer activity, Aris Water Solutions indicated that it could reduce capital expenditures by 25% to 30% if necessary. This flexibility demonstrates the company’s readiness to adapt to changing market conditions.
Forward-Looking Guidance
Looking ahead, Aris Water Solutions expects Produced Water volumes to range between 1.2 million and 1.25 million barrels per day and Water Solutions volumes to be between 475,000 and 525,000 barrels per day in the second quarter. Despite potential headwinds from commodity price fluctuations and tariff uncertainties, the company remains confident in its ability to adapt its capital investments and maintain strong financial health, supported by a low debt-to-adjusted EBITDA ratio of 2.2 times and $372 million in liquidity.
In summary, Aris Water Solutions, Inc. delivered a strong first-quarter performance, marked by record volumes and financial achievements. While the company faces potential challenges from market volatility and tariff uncertainties, it remains well-prepared to navigate these issues with strategic flexibility and a robust financial foundation.