Aris Mining Corporation Q4 FY2024 earnings call

Key Points

• Bill Zartler highlighted 2024 was a strong year with record water solutions volumes, strong margins, significant free cash flow, and no safety incidents. Strategic initiatives included acquiring the McNeil Ranch, progress on beneficial reuse and mineral extraction, and expansion into industrial water treatment.
• Amanda Brock mentioned exceeding 2024 goals, generating significant free cash flow, a 33% dividend increase, record quarterly water solutions volumes, long-term visibility from dedicated acreage, and strategic initiatives like the McNeil Ranch acquisition, progress on beneficial reuse permit, and expansion into industrial water treatment.
• Stephan Tompsett discussed adjusted EBITDA, CapEx, free cash flow, 2025 guidance on volumes, margins, EBITDA, CapEx, free cash flow, and first quarter outlook with weather and completion impacts.

In 2024, Aris Water Solutions had a strong performance. The water solutions business achieved record quarterly volumes in the fourth quarter, with water solution volumes growing 14% sequentially. For the full year 2024, adjusted EBITDA was $211.9 million, up 21% from 2023, and adjusted operating margins were $0.45 per barrel, up 15% from the prior year. Produced water volume grew 7% year over year in 2024. For 2025, produced water volumes are expected to be between 1.15 and 1.21 million barrels per day, up 5% at the midpoint. Water solutions volumes are forecasted to average between 460,000 and 520,000 barrels per day, up 15% versus 2024. Adjusted operating margin is anticipated to be between $0.43 and $0.45 per barrel, and adjusted EBITDA is expected to be $215 million to $235 million.

2025 Guidance

• Produced water volumes for 2025 are expected to be between 1.15 and 1.21 million barrels per day, up 5% at the midpoint.
• Water solutions volumes are forecasted to average between 460,000 and 520,000 barrels per day, up 15% versus 2024.
• Adjusted operating margin is anticipated to be between $0.43 and $0.45 per barrel.
• Adjusted EBITDA for 2025 is expected to be $215 million to $235 million.
• Capital expenditures are anticipated to be between $85 million and $105 million, leading to free cash flow generation between $75 million and $95 million, up 17% over 2024 at the midpoint.

First Quarter Outlook

• Produced water volumes expected between 1.085 and 1.125 million barrels per day.
• Water solutions volumes expected between 510,000 and 550,000 barrels per day.
• Adjusted EBITDA anticipated between $50 million and $54 million net of one-time weather-related impact.

Q: John Mackay inquired about the return profile on the Ranch acquisition and steps to realize return.

A: Amanda Brock and Stephan Tompsett discussed the strategic optionality, subsurface characteristics, royalty benefits, and financial perspective of the acquisition.

Q: Spiro Dounis asked about the timing to develop the McNeil Ranch and when benefits would show up in EBITDA.

A: Amanda Brock stated the ranch is expected to be developed in the 2026-2027 time frame with meaningful impact in later years.

Q: Noah Katz wanted to know about integrating the Ranch into existing operations and synergies.

A: Amanda Brock mentioned OPEX advantages like no royalties and synergy with fast-growing areas.

Q: Praneeth Satish asked about CapEx for Ranch project and beneficial reuse.

A: Amanda Brock and Stephan Tompsett responded that CapEx for the Ranch project is not in the hundreds of millions, and beneficial reuse has customer interest and will be a combined project with partners.

Q: Jeffrey Campbell inquired about industrial water recycling.

A: Amanda Brock discussed the expertise in industrial wastewater treatment and multistate potential.

Q: Derek Whitfield asked about commercial teams for Ranch and beneficial reuse cost.

A: Amanda Brock talked about inbounds and cost-effective technologies for beneficial reuse.

Q: Don Crist asked about customer activity and industry M&A.

A: Amanda Brock and Bill Zartler mentioned stable customer activity and continued look for inorganic growth opportunities