05. Aris Water Solutions, Inc. (NYSE:ARIS)
Number of Hedge Fund Holders: 21
Aris Water Solutions, Inc. (NYSE:ARIS) is a significant player in the water management sector, providing innovative solutions for produced water from oil and gas operations. This focus on water sustainability positions the company as a vital resource in an industry increasingly dependent on efficient water management strategies. As of Q2 2024, Aris Water Solutions, Inc. (NYSE:ARIS) has gained traction among investors, with 21 hedge fund holders compared to 17 in the previous quarter, reflecting a growing confidence in its fundamentals.
In the second quarter of 2024, Aris Water Solutions, Inc. (NYSE:ARIS) reported impressive financial metrics, including an adjusted EBITDA of $50 million, marking a 17% year-over-year increase. This consistent growth in produced water volumes, which rose by 5% year-over-year, showcases the company’s resilience and effective operational execution. Despite a sequential decline due to natural volume flowbacks, Aris Water Solutions, Inc. (NYSE:ARIS) anticipates an increase in Water Solutions volumes as the year progresses. The company’s adjusted operating margins have stabilized at $0.46 per barrel, driven by cost reductions through electrification, automation, and improved waste handling processes.
The company’s strategic investments are underscored by its recent letter of intent to construct an iodine extraction facility, which aims to capitalize on the produced water waste stream. This initiative, along with the ongoing desalination pilots in collaboration with major industry players, highlights Aris Water Solutions, Inc. (NYSE:ARIS) commitment to sustainability and innovation. Moreover, the company maintains a robust balance sheet with a net debt of $438 million and a healthy debt-to-adjusted-EBITDA ratio of 2.2 times, well within its target range.
Looking forward, Aris Water Solutions, Inc. (NYSE:ARIS) is poised for continued success with its revised adjusted EBITDA guidance of $195 million to $205 million for the year. With a strong operational foundation, strategic initiatives, and increasing market recognition, Aris presents a compelling investment opportunity within the water stock sector.
Wasatch Micro Cap Value Strategy stated the following regarding Aris Water Solutions, Inc. (NYSE:ARIS) in its first quarter 2024 investor letter:
“Another significant contributor was Aris Water Solutions, Inc. (NYSE:ARIS), an oilfield-services company that manages the water supplies used in energy exploration and production (E&P). The company’s recent pipeline investments allow E&P businesses to increase the amount of water that can be recycled, which significantly lowers costs for Aris’s customers. In Texas, for example, water use is one of the greatest expenses incurred for drilling activities. The stock was down in the fourth quarter of 2023 due to poor operating results stemming from bad weather that prevented crews from making expected pipeline connections. At the time, we were undeterred because we didn’t think those short-term challenges would materially impact Aris’s long-term results. In the first quarter of this year, we were rewarded for our patience as the stock climbed to a 52-week high on the back of excellent earnings, lower capital expenditures and projections for increased cash flows.”
