Aris Water 2025 Q1 Earnings Mixed Results as Net Income Declines 5%
Daily EarningsThursday, May 8, 2025 8:14 am ET
40min readAris Water Solutions, Inc. (NYSE: ARIS) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Aris Water Solutions achieved record-breaking operational volumes and improved financial outcomes, with a net income of $16.0 million and Adjusted EBITDA reaching $56.5 million, marking a 4% sequential increase and a 6% rise compared to the same period last year. Despite these achievements, the company missed expectations with a net income decline of 5% from the previous year. Aris maintained a strong Adjusted Operating Margin of $0.44 per barrel due to efficiency improvements and deferred maintenance activities. For the upcoming quarter, Aris anticipates consistent activity, expecting Adjusted EBITDA between $50 million and $55 million. The company will continue to monitor customer development plans and adapt its capital expenditure strategies based on market conditions.
Revenue
Aris Water Solutions reported a total revenue increase of 16.2% for 2025 Q1, amounting to $119.59 million, compared to $102.88 million in the previous year’s first quarter. In the Produced Water Handling segment, revenue reached $57.31 million, while Produced Water Handling with Affiliates contributed $34.87 million. The Water Solutions segment recorded $20.66 million and its affiliate operations added $6.76 million. Other Revenue amounted to $898,000, bringing the total revenue to $120.49 million.
Earnings/Net Income
Aris Water's EPS increased by 13.0% to $0.26 in 2025 Q1, up from $0.23 in 2024 Q1, demonstrating continued earnings growth. However, the company's net income declined to $16 million, down 4.9% from $16.83 million reported in 2024 Q1. The EPS growth indicates positive performance despite the drop in net income.
Post-Earnings Price Action Review
The strategy of purchasing Aris Water shares following a quarter-over-quarter revenue drop and holding them for 30 days yielded an 8.14% return over the past five years. The strategy's compound annual growth rate (CAGR) was 2.25%, although it experienced a maximum drawdown of -6.88%. The Sharpe ratio stood at 0.20, indicating a challenging risk-return profile when compared to the benchmark's 18.29% return. Despite the revenue drop, the strategy has delivered modest returns, although with higher risk factors. Investors should consider the market volatility and potential disruptions that could impact future performance. This strategy highlights the importance of understanding market conditions and aligning investment decisions accordingly, especially given the unpredictable nature of financial markets.
CEO Commentary
Amanda Brock, Chief Executive Officer, highlighted that Aris Water Solutions had an exceptional first quarter with record volumes driven by increased customer activity and sustained Produced Water volumes, resulting in an adjusted EBITDA of $56.5 million. She noted, "We are off to a strong start this year and are seeing that strength continue into the second quarter." The CEO emphasized the integration of McNeill Ranch and its potential for additional revenue streams, including solar development, while maintaining focus on beneficial reuse efforts and reducing desalination costs. Amanda expressed confidence in the company's ability to navigate market uncertainties, stating, "We believe we are well-positioned to weather potential disruptions."
Guidance
For the second quarter, Aris Water expects Produced Water volumes to range between 1.2 million and 1.25 million barrels per day, while Water Solutions volumes are anticipated to be between 475,000 and 525,000 barrels per day. The company guides for an adjusted operating margin between $0.41 and $0.43 per barrel, reflecting slight declines due to maintenance expenses. Additionally, the current WTI price strip represents a $6 million to $8 million headwind, but offsetting factors include strong first-half volumes and CPI-linked revenue escalations.
Additional News
Recently, Aris Water Solutions completed the acquisition of the McNeill Ranch, a 45,000-acre property located in Texas and New Mexico, for $45 million. This strategic purchase provides significant disposal capacity to support future growth in the Northern Delaware Basin's fastest-growing production areas. The company plans to utilize the ranch's advantageous location for additional surface income through rights-of-way, power and renewable development, beneficial reuse, and other industrial applications. In addition, Aris Water announced a dividend of $0.14 per share for the second quarter of 2025, marking a continuation of its commitment to shareholder returns. The dividend will be paid on June 18, 2025, to holders of record as of June 5, 2025. The distribution to unit holders of Aris Water Holdings, LLC will adhere to the same payment and record dates.
Revenue
Aris Water Solutions reported a total revenue increase of 16.2% for 2025 Q1, amounting to $119.59 million, compared to $102.88 million in the previous year’s first quarter. In the Produced Water Handling segment, revenue reached $57.31 million, while Produced Water Handling with Affiliates contributed $34.87 million. The Water Solutions segment recorded $20.66 million and its affiliate operations added $6.76 million. Other Revenue amounted to $898,000, bringing the total revenue to $120.49 million.
Earnings/Net Income
Aris Water's EPS increased by 13.0% to $0.26 in 2025 Q1, up from $0.23 in 2024 Q1, demonstrating continued earnings growth. However, the company's net income declined to $16 million, down 4.9% from $16.83 million reported in 2024 Q1. The EPS growth indicates positive performance despite the drop in net income.
Post-Earnings Price Action Review
The strategy of purchasing Aris Water shares following a quarter-over-quarter revenue drop and holding them for 30 days yielded an 8.14% return over the past five years. The strategy's compound annual growth rate (CAGR) was 2.25%, although it experienced a maximum drawdown of -6.88%. The Sharpe ratio stood at 0.20, indicating a challenging risk-return profile when compared to the benchmark's 18.29% return. Despite the revenue drop, the strategy has delivered modest returns, although with higher risk factors. Investors should consider the market volatility and potential disruptions that could impact future performance. This strategy highlights the importance of understanding market conditions and aligning investment decisions accordingly, especially given the unpredictable nature of financial markets.
CEO Commentary
Amanda Brock, Chief Executive Officer, highlighted that Aris Water Solutions had an exceptional first quarter with record volumes driven by increased customer activity and sustained Produced Water volumes, resulting in an adjusted EBITDA of $56.5 million. She noted, "We are off to a strong start this year and are seeing that strength continue into the second quarter." The CEO emphasized the integration of McNeill Ranch and its potential for additional revenue streams, including solar development, while maintaining focus on beneficial reuse efforts and reducing desalination costs. Amanda expressed confidence in the company's ability to navigate market uncertainties, stating, "We believe we are well-positioned to weather potential disruptions."
Guidance
For the second quarter, Aris Water expects Produced Water volumes to range between 1.2 million and 1.25 million barrels per day, while Water Solutions volumes are anticipated to be between 475,000 and 525,000 barrels per day. The company guides for an adjusted operating margin between $0.41 and $0.43 per barrel, reflecting slight declines due to maintenance expenses. Additionally, the current WTI price strip represents a $6 million to $8 million headwind, but offsetting factors include strong first-half volumes and CPI-linked revenue escalations.
Additional News
Recently, Aris Water Solutions completed the acquisition of the McNeill Ranch, a 45,000-acre property located in Texas and New Mexico, for $45 million. This strategic purchase provides significant disposal capacity to support future growth in the Northern Delaware Basin's fastest-growing production areas. The company plans to utilize the ranch's advantageous location for additional surface income through rights-of-way, power and renewable development, beneficial reuse, and other industrial applications. In addition, Aris Water announced a dividend of $0.14 per share for the second quarter of 2025, marking a continuation of its commitment to shareholder returns. The dividend will be paid on June 18, 2025, to holders of record as of June 5, 2025. The distribution to unit holders of Aris Water Holdings, LLC will adhere to the same payment and record dates.
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