Company: WBI
Filing Date: 2025-08-04
Form Type: DRS/A
Source: 0000950123-25-006924
Chunk: 135

Company: WaterBridge Infrastructure LLC
Filing Date: 2025-08-04
Form: DRS/A
Chunk 135
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 our industry depending upon accounting methods, book values of assets, capital structures and the method by which the assets were acquired.

Free Cash Flow

Free Cash Flow is used by our management and by external users of our financial statements, such as investors, research analysts and others, to assess and evaluate our financial performance and the ability of our operations, after taking into account capital expenditures, to generate cash flow to fund our capital allocation priorities. We define Free Cash Flow as operating cash flows less capital expenditures.

Net Debt

Net Debt is an important component in the calculation of the Ratio of Net Debt to Annualized Adjusted EBITDA. We believe that Net Debt is a meaningful non-GAAP financial measure useful to investors because we review Net Debt to assess our overall financial flexibility, capital structure and leverage. Further, we believe that the Ratio of Net Debt to Annualized Adjusted EBITDA is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against Annualized Adjusted EBITDA, which is used as an operating performance measure. We define Net Debt as total debt less available cash.

Adjusted Operating Margin and Adjusted Operating Margin per Barrel

Adjusted Operating Margin and Adjusted Operating Margin per Barrel are dependent upon the volume of produced water we gather and handle, the volume of recycled water and brackish water we sell and transfer, the fees we charge for such services and the recurring operating expenses we incur to perform such services. We define Adjusted Operating Margin as gross margin plus depreciation, amortization and accretion. We define Adjusted Operating Margin per Barrel as Adjusted Operating Margin divided by total volumes handled, sold or transferred.

We seek to enhance our Adjusted Operating Margin in part by reducing, to the extent appropriate, expenses directly tied to operating our assets. Landowner royalties, power expenses for handling and treatment facilities, direct labor costs, chemical costs, workover expenses and repair and maintenance costs comprise the most significant portion of our expenses. Our operating expenses are largely variable and as such, generally fluctuate in correlation with throughput volumes.

Our Adjusted Operating Margin incrementally benefits from increased Water Solutions recycled water sales. When produced water is recycled, we recognize cost savings from reduced landowner royalties, reduced pumping costs, lower chemical treatment and filtration costs and reduced power consumption.

Management believes Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Operating Margin and Adjusted Operating Margin per Barrel are useful because they allow us to more effectively evaluate our operating performance and compare the