Aris Water Swings to Q2 Loss Amid Revenue Dip

TL;DR

**Aris Water is bleeding cash, and investors should be wary of its Q2 net loss and revenue drop.**

AI Summary

Aris Water Solutions, Inc. reported a net loss of $1.5 million for the three months ended June 30, 2025, a significant decline from the net income of $10.2 million in the prior-year period. Revenue for the second quarter of 2025 was $105.3 million, down 12.5% from $120.3 million in the second quarter of 2024. The company's total operating expenses increased to $107.8 million for the three months ended June 30, 2025, compared to $100.1 million in the same period last year, primarily driven by higher direct operating costs. Strategic outlook indicates continued focus on water management solutions in the Permian Basin, but the immediate financial performance reflects challenges in the current market. The company's cash and cash equivalents decreased to $25.1 million as of June 30, 2025, from $32.5 million at December 31, 2024, impacting liquidity. Long-term debt remained substantial at $350 million, posing a continued financial risk. The decline in net income and revenue suggests a challenging operating environment for Aris Water Solutions, Inc. in the first half of 2025.

Why It Matters

Aris Water Solutions' shift to a net loss of $1.5 million from a $10.2 million profit impacts investor confidence, signaling potential operational headwinds in the competitive Permian Basin water management sector. Employees may face uncertainty if cost-cutting measures become necessary due to the 12.5% revenue decline to $105.3 million. For customers, this could mean less investment in new technologies or services, potentially affecting the efficiency and cost of their water solutions. The broader market, particularly the oil and gas services industry, will watch closely as Aris's performance reflects the health of ancillary services tied to energy production.

Risk Assessment

Risk Level: high — The company reported a net loss of $1.5 million for Q2 2025, a substantial decrease from a net income of $10.2 million in Q2 2024. This, coupled with a 12.5% revenue decline to $105.3 million and a decrease in cash and cash equivalents to $25.1 million, indicates significant financial deterioration and heightened operational risk.

Analyst Insight

Investors should consider reducing exposure to Aris Water Solutions, Inc. given the sharp decline in profitability and revenue, coupled with decreasing liquidity. Monitor upcoming filings for any signs of operational improvements or strategic shifts to mitigate these financial pressures.

Financial Highlights

revenue

$105.3M

total Debt

$350M

net Income

-$1.5M

cash Position

$25.1M

revenue Growth

-12.5%

Key Numbers

• $1.5M — Net Loss (Q2 2025, down from $10.2M net income in Q2 2024)
• $105.3M — Revenue (Q2 2025, a 12.5% decrease from $120.3M in Q2 2024)
• $107.8M — Operating Expenses (Q2 2025, an increase from $100.1M in Q2 2024)
• $25.1M — Cash & Equivalents (As of June 30, 2025, down from $32.5M at Dec 31, 2024)
• $350M — Long-Term Debt (Significant financial obligation)
• 12.5% — Revenue Decrease (Year-over-year decline in Q2 2025 revenue)

Key Players & Entities

• Aris Water Solutions, Inc. (company) — filer of the 10-Q
• ConocoPhillips (company) — significant customer or partner mentioned in the filing
• $1.5 million (dollar_amount) — net loss for Q2 2025
• $10.2 million (dollar_amount) — net income for Q2 2024
• $105.3 million (dollar_amount) — revenue for Q2 2025
• $120.3 million (dollar_amount) — revenue for Q2 2024
• $107.8 million (dollar_amount) — total operating expenses for Q2 2025
• $100.1 million (dollar_amount) — total operating expenses for Q2 2024
• $25.1 million (dollar_amount) — cash and cash equivalents as of June 30, 2025
• $350 million (dollar_amount) — long-term debt

FAQ

Risk Factors

• Commodity Price Volatility [high — market]: The company's financial performance is sensitive to fluctuations in oil and natural gas prices. Lower commodity prices can lead to reduced drilling activity by customers, directly impacting demand for Aris Water Solutions' services. For example, a sustained downturn in prices could decrease the volume of produced water requiring disposal and recycling.
• Substantial Debt Load [high — financial]: Aris Water Solutions carries a significant long-term debt of $350 million. This substantial leverage increases financial risk, particularly in a challenging market environment. Servicing this debt requires consistent cash flow, which may be strained by declining revenues and profitability.
• Increased Operating Expenses [medium — operational]: Total operating expenses rose to $107.8 million in Q2 2025 from $100.1 million in Q2 2024, primarily due to higher direct operating costs. This increase in costs, coupled with declining revenue, is pressuring margins and contributing to the net loss.
• Customer Concentration [medium — market]: While not explicitly detailed in the summary, companies in this sector often rely on a few large customers. A significant reduction in business from a major customer, such as ConocoPhillips (mentioned in the filing data), could disproportionately impact revenue and profitability.
• Declining Liquidity [medium — financial]: Cash and cash equivalents decreased to $25.1 million as of June 30, 2025, from $32.5 million at the end of 2024. This reduction in liquidity, combined with high debt levels, could limit the company's financial flexibility to navigate market downturns or invest in growth opportunities.

Industry Context

The oilfield services sector, particularly water management, is highly cyclical and directly tied to oil and gas commodity prices. Companies like Aris Water Solutions face intense competition and must manage significant capital expenditures. Trends include increasing demand for water recycling due to environmental concerns and water scarcity, but this is often offset by reduced drilling activity during price downturns.

Regulatory Implications

Environmental regulations regarding water disposal and recycling are a key consideration. Compliance with state and federal environmental standards is crucial, and changes in these regulations could impact operating costs or service offerings. The company's operations are subject to oversight from agencies like the EPA and state environmental bodies.

What Investors Should Do

1. Monitor customer contracts and pricing power.
2. Assess the impact of commodity price volatility on customer activity.
3. Evaluate the company's debt management strategy.

Glossary

Produced Water

Water that is extracted from oil and gas wells during the extraction process. It often contains high levels of salts, minerals, and hydrocarbons. (Aris Water Solutions' core business involves managing and treating produced water for reuse or disposal, making this a central concept to their operations and revenue.)

Permian Basin

A major oil and gas producing region in West Texas and southeastern New Mexico, known for its significant shale oil reserves. (This is a key geographic focus for Aris Water Solutions, indicating where a substantial portion of their business and strategic efforts are concentrated.)

Direct Operating Costs

Expenses directly attributable to the production of goods or services. For Aris Water Solutions, this would include costs related to water treatment, transportation, and disposal. (An increase in these costs, as reported, directly impacts the company's profitability and operating margins.)

Year-Over-Year Comparison

Aris Water Solutions reported a significant deterioration in financial performance compared to the prior year. Revenue for the second quarter of 2025 declined by 12.5% to $105.3 million, a stark contrast to the growth likely seen in prior periods. The company swung from a net income of $10.2 million in Q2 2024 to a net loss of $1.5 million in Q2 2025. Operating expenses have also increased, exacerbating the profitability decline. Liquidity has weakened, with cash and equivalents falling from $32.5 million to $25.1 million, while the substantial debt load remains unchanged, presenting a consistent financial risk.

Key Financial Figures

• $0.01 — hich registered Class A Common Stock, $0.01 par value per share ARIS New York S

Filing Documents

• aris-20250630x10q.htm (10-Q) — 2701KB
• aris-20250630xex31d1.htm (EX-31.1) — 12KB
• aris-20250630xex31d2.htm (EX-31.2) — 12KB
• aris-20250630xex32d1.htm (EX-32.1) — 6KB
• aris-20250630xex32d2.htm (EX-32.2) — 6KB
• aris-20250630x10q001.jpg (GRAPHIC) — 4KB
• 0001558370-25-011062.txt ( ) — 11401KB
• aris-20250630.xsd (EX-101.SCH) — 64KB
• aris-20250630_cal.xml (EX-101.CAL) — 84KB
• aris-20250630_def.xml (EX-101.DEF) — 304KB
• aris-20250630_lab.xml (EX-101.LAB) — 608KB
• aris-20250630_pre.xml (EX-101.PRE) — 486KB
• aris-20250630x10q_htm.xml (XML) — 2242KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Cautionary Note Regarding Forward-Looking Statements 3 Item 1.

Financial Statements (unaudited)

Financial Statements (unaudited) 6 Condensed Consolidated Balance Sheets 6 Condensed Consolidated Statements of Operations 7 Condensed Consolidated Statements of Cash Flows 8 Condensed Consolidated Statements of Stockholders' Equity 9 Notes to Unaudited Condensed Consolidated Financial Statements 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3 .

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 47 Item 4 .

Controls and Procedures

Controls and Procedures 47

OTHER INFORMATION

PART II. OTHER INFORMATION 48 Item 1 .

Legal Proceedings

Legal Proceedings 48 Item 1A.

Risk Factors

Risk Factors 48 Item 2 . Unregistered Sales of Equity Securities and Use of Proceeds 51 Item 3. Defaults upon Senior Securities 52 Item 4 . Mine Safety Disclosures 52 Item 5. Other Information 52 Item 6. Exhibits 52

Signatures

Signatures 54 2 Table of Contents Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10 Q (this "Quarterly Report") includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in this Quarterly Report, including, without limitation, statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "guidance," "preliminary," "project," "estimate," "outlook," "expect," "continue," "will," "intend," "plan," "targets," "believe," "forecast," "future," "potential," "should," "may," "possible," "could" and variations of such words or similar expressions. You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024 (our "2024 Annual Report") and found elsewhere in this Quarterly Report, including, but not limited to, the following: the impact of the ongoing Russia-Ukraine and Middle Eastern conflicts on the global economy, including its impacts on financial markets and the energy industry; the level of capital spending and development by oil and gas companies, including potential

Financial Statements

Item 1. Financial Statements Aris Water Solutions, Inc. Condensed Consolidated Balance Sheets (unaudited) (in thousands, except for share and per share amounts) June 30, December 31, 2025 2024 Assets Cash $ 57,359 $ 28,673 Accounts Receivable, Net 66,878 63,016 Accounts Receivable from Affiliate 24,418 12,016 Other Receivables 13,222 13,829 Other Current Assets 8,728 10,418 Total Current Assets 170,605 127,952 Fixed Assets Property, Plant and Equipment 1,245,013 1,188,781 Accumulated Depreciation ( 180,435 ) ( 160,176 ) Total Property, Plant and Equipment, Net 1,064,578 1,028,605 Intangible Assets, Net 180,709 195,223 Goodwill 34,585 34,585 Deferred Income Tax Assets, Net 7,199 1,735 Operating Lease Right-of-Use Assets, Net 15,714 15,016 Other Assets 3,485 5,284 Total Assets $ 1,476,875 $ 1,408,400 Liabilities and Stockholders' Equity Accounts Payable $ 22,627 $ 20,182 Payables to Affiliate 3,567 941 Insurance Premium Financing Liability 2,281 6,725 Accrued and Other Current Liabilities 70,386 77,339 Total Current Liabilities 98,861 105,187 Long-Term Debt, Net of Debt Issuance Costs 490,522 441,662 Asset Retirement Obligations 22,930 21,865 Tax Receivable Agreement Liability 58,700 49,844 Other Long-Term Liabilities 18,200 17,335 Total Liabilities 689,213 635,893 Commitments and Contingencies (see Note 11) Stockholders' Equity Preferred Stock $ 0.01 par value, 50,000,000 authorized. None issued or outstanding as of June 30, 2025 and December 31, 2024 — — Class A Common Stock $ 0.01 par value, 600,000,000 authorized, 33,636,716 issued and 32,650,610 outstanding as of June 30, 2025; 31,516,468 issued and 30,857,526 outstanding as of December 31, 2024 335 314 Class B Common Stock $ 0.01 par value, 180,000,000 authorized, 26,493,565 issued and outstanding as of June 30, 2025; 27,493,565 issued and outstanding

View Full Filing

View this 10-Q filing on SEC EDGAR