Select Water Solutions (WTTR) FY Conference June 11, 2025 10:00 AM ET Speaker0 Morning everybody, my name is Earl Gergen, I'm here with Three Part Advisors, thank you all for coming to the conference. Up next we have Select Water Solutions traded on the NYSE under WTTR. On behalf of the company we have John Schmitz, Chairman and CEO. John? Speaker1 Yeah. Thank you very much for having us, and thanks for the interest today. As I said, I'm the Chairman and CEO. I founded the company in July. We took the compa ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to ________________ Commission File Number 001-38066 SELECT WATER SOLUTIONS, INC. (Exact name of registrant as specified in its charter ...

Financial Data and Key Metrics Changes - In Q1 2025, the company increased revenue by 7%, adjusted EBITDA by 14%, and improved consolidated gross margins by one percentage point [7][19] - Net income grew by $12 million, while consolidated SG&A expenses decreased by 6% [7][19] - The company achieved strong revenue growth of 21% in Chemical Technologies and 8% in Water Services [7] Business Line Data and Key Metrics Changes - Water Infrastructure maintained a strong gross margin of 54%, despite a sequential revenue decline driven by reduced revenues from legacy freshwater pipeline assets [7][16] - Water Services saw an 8% sequential revenue increase, primarily due to improved activity levels [17] - Chemical Technology experienced a strong sequential revenue growth of 21%, exceeding expectations [18] Market Data and Key Metrics Changes - The Northern Delaware Basin now represents 54% of the company's total fixed recycling capacity, reflecting significant growth in contracted acreage [11] - The company has developed a leading water infrastructure network in the Northern Delaware Basin, with over 1 million acres under dedication or right of first refusal agreements [8][11] Company Strategy and Development Direction - The company is focused on expanding its water infrastructure and has secured several large contracts that enhance its long-term revenue potential [8][10] - The strategic location of new projects and partnerships with industry-leading E&P partners are expected to contribute significantly to future earnings [8][10] - The company is also pursuing growth opportunities in agricultural, industrial, and municipal water sectors [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience despite macroeconomic pressures and potential activity dislocations due to tariffs and trade uncertainties [9][14] - The company anticipates continued growth in consolidated adjusted EBITDA of 6% to 12% during Q2 2025, despite potential declines in activity levels later in the year [13][19] - Management highlighted the importance of maintaining a disciplined approach to leverage and capital allocation to support growth initiatives [15][21] Other Important Information - The company successfully implemented a new ERP system across all operations, which is expected to yield efficiencies over time [23] - The company has adjusted its free cash flow expectations for the year to a conversion rate of 5% to 15% relative to adjusted EBITDA [21] Q&A Session Summary Question: Activity pullback in growth areas - Management confirmed that there has not been a pullback in activity in the Permian Basin, indicating confidence in their asset positioning [26][27] Question: Upcoming catalysts for AV Farms project - Management is engaging stakeholders and has letters of intent with potential customers, indicating strong demand and optimism for future revenue generation [28][30] Question: Role of CNA companies in AB Farms project - Management stated that Select will eventually take over operational roles while collaborating with CNA for commercialization [39][41] Question: Impact of tariffs on water infrastructure contracts - Management indicated that tariffs are not expected to materially impact water infrastructure projects due to domestic supply chains [43] Question: Supply chain resilience in Chemical Technologies - Management highlighted efforts to localize the supply chain, reducing reliance on international sourcing, particularly from China [44][45] Question: Future growth in water infrastructure - Management expects to maintain a growth trajectory of around 15% into 2026, supported by new projects and existing contracts [52][53] Question: M&A opportunities in the current environment - Management noted that the current environment presents opportunities for strategic asset purchases, particularly in a down cycle [75][78]

Select Water Solutions (WTTR) Q1 2025 Earnings Call May 07, 2025 11:00 AM ET Speaker0 Greetings, and welcome to the Select Water Solutions twenty twenty five First Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Williams, Vice President of Corporate Finance and Investor Relations. Thank you, sir. ...

Select Water Solutions, Inc. (WTTR) reported $374.38 million in revenue for the quarter ended March 2025, representing a year-over-year increase of 2.1%. EPS of $0.08 for the same period compares to $0.04 a year ago.The reported revenue represents a surprise of +3.67% over the Zacks Consensus Estimate of $361.15 million. With the consensus EPS estimate being $0.07, the EPS surprise was +14.29%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they co ...

Select Water Solutions, Inc. (WTTR) came out with quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of $0.07 per share. This compares to earnings of $0.04 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 14.29%. A quarter ago, it was expected that this company would post earnings of $0.08 per share when it actually produced a loss of $0.01, delivering a surprise of -112.50%.Over the last four quarters, ...

Financial Performance - First quarter 2025 consolidated revenue was $374.4 million, a sequential increase of $25 million or 7% compared to Q4 2024[1] - Net income for Q1 2025 increased by $11.7 million, with adjusted EBITDA rising 14% sequentially compared to Q4 2024[3] - Total revenue for the first quarter of 2025 was $374.4 million, up from $366.5 million in the same period of 2024, representing a year-over-year increase of 2.3%[37] - Net income attributable to Select Water Solutions, Inc. for the first quarter of 2025 was $8.2 million, compared to a net loss of $1.6 million in the previous quarter[37] - Net income for the three months ended March 31, 2025, was $9,560 thousand, a significant recovery from a net loss of $2,134 thousand in the previous quarter[41] - Adjusted EBITDA increased to $64,031 thousand for the three months ended March 31, 2025, up from $56,240 thousand in the previous quarter and $59,758 thousand a year ago[46] - Gross profit before depreciation and amortization (D&A) was $94,445 thousand for the three months ended March 31, 2025, compared to $84,484 thousand for December 31, 2024, and $89,569 thousand for March 31, 2024[46] - The total gross margin before D&A for the three months ended March 31, 2025, was 25.2%, compared to 24.2% for December 31, 2024, and 24.4% for March 31, 2024[47] Segment Performance - Water Infrastructure segment revenues were $72.4 million, a decrease of 5.8% sequentially, while gross margin before D&A remained strong at 53.7%[16] - Water Services segment revenues increased by 7.8% sequentially to $225.6 million, with gross margin before D&A at 19.5%[17] - Chemical Technologies segment revenues were $76.3 million, up from $62.9 million in Q4 2024, with gross margin before D&A at 15.2%[18] - Water Infrastructure segment gross profit was $19,101 thousand for the three months ended March 31, 2025, down from $23,009 thousand in the previous quarter but up from $15,915 thousand a year ago[46] - The Water Services segment reported gross profit of $26,765 thousand for the three months ended March 31, 2025, compared to $14,831 thousand for December 31, 2024, and $25,661 thousand for March 31, 2024[46] - The Chemical Technologies segment gross profit increased to $9,904 thousand for the three months ended March 31, 2025, from $6,344 thousand in the previous quarter but decreased from $11,101 thousand a year ago[46] Cash Flow and Capital Expenditures - Cash flow used in operations for Q1 2025 was $5.1 million, impacted by a $61.8 million increase in net working capital[19] - Net capital expenditures for Q1 2025 were $46.5 million, with $48.4 million in capital expenditures partially offset by $1.9 million from asset sales[20] - The company reported a net cash used in operating activities of $(5,061) thousand for the three months ended March 31, 2025, compared to $67,767 thousand provided in the previous quarter[41] - Cash flows from investing activities totaled $(132,522) thousand, significantly higher than $(54,380) thousand in the previous quarter, indicating increased investment activity[41] - Free cash flow for the same period was $(51,544) thousand, a significant decrease from $16,228 thousand in the previous quarter and $3,532 thousand a year ago[46] Liquidity and Debt - Total cash and cash equivalents were $27.9 million as of March 31, 2025, compared to $12.8 million as of March 31, 2024[24] - Total liquidity increased to $260.2 million as of March 31, 2025, compared to $168.6 million as of March 31, 2024, reflecting a growth of approximately 54.3%[26] - Long-term debt increased to $245,888 thousand, up from $85,000 thousand at December 31, 2024, indicating a substantial rise in financing[39] Acquisitions and Investments - The company executed multiple long-term contracts and acquisitions in the Permian Basin, with expected capital expenditures of $100 million to $125 million for new projects and acquisitions[27] - Select signed an 11-year agreement to expand recycling and pipeline infrastructure in the Northern Delaware Basin, adding up to 240,000 barrels per day of throughput capacity[28] - The company acquired two active disposal wells in the Midland Basin, adding 35,000 barrels per day of disposal capacity to support infrastructure development[30] - Select entered into a partnership for water rights investment in Colorado, with an initial investment of $62 million and an additional $10 million to enhance the water rights portfolio[32] - The company plans to construct 14 miles of large-diameter pipelines as part of two new 11-year contracts in the Northern Delaware Basin, expected to be operational by Q4 2025[29] - The Central Basin Platform recycling facility includes 120,000 barrels per day of recycling capacity and is expected to be operational by the end of Q3 2025[31] Assets and Liabilities - Total assets increased to $1,545,211 thousand as of March 31, 2025, up from $1,366,282 thousand at December 31, 2024, representing a growth of 13.1%[39] - Total liabilities increased to $628,262 thousand, up from $450,748 thousand at December 31, 2024, reflecting a rise of 39.4%[39] - The company’s total stockholders' equity remained relatively stable at $793,078 thousand as of March 31, 2025, compared to $793,520 thousand at the end of the previous quarter[39] - The company’s accumulated deficit decreased to $(197,908) thousand from $(206,147) thousand, reflecting improved profitability[39]

Core Viewpoint - Select Water Solutions, Inc. reported strong financial performance in the first quarter of 2025, with significant increases in revenue, net income, and adjusted EBITDA compared to the previous quarter, alongside new long-term contracts in the Water Infrastructure segment that are expected to drive future growth [1][2][11]. Financial Performance - Consolidated revenue for Q1 2025 was $374.4 million, up $25 million or 7% sequentially from Q4 2024 [1][11]. - Net income increased by $11.7 million to $9.6 million compared to a net loss of $2.1 million in Q4 2024 [1][11]. - Adjusted EBITDA rose 14% sequentially to $64.0 million from $56.2 million in Q4 2024 [1][14]. Business Segments - **Water Infrastructure Segment**: Generated revenues of $72.4 million, down 5.8% sequentially, with gross margin before D&A at 53.7% [15]. The segment anticipates low double-digit revenue growth in Q2 2025 [15]. - **Water Services Segment**: Revenues increased to $225.6 million, up 7.8% sequentially, with gross margin before D&A at 19.5% [16]. A decrease of 5-10% in revenues is expected in Q2 2025 due to operational consolidations [16]. - **Chemical Technologies Segment**: Revenues rose to $76.3 million, up 21.3% sequentially, with gross margin before D&A at 15.2% [17]. A mid single-digit percentage decrease in revenue is anticipated for Q2 2025 [17]. Capital Expenditures and Investments - The company plans to increase net capital expenditures for 2025 to $225 million to $250 million, driven by new infrastructure projects [9]. - Cash flow used in operations for Q1 2025 was $5.1 million, impacted by a $61.8 million increase in net working capital [18][19]. - Significant investments include $72.1 million related to a partnership in Colorado and $14.0 million for asset acquisitions to support ongoing Water Infrastructure projects [20][32]. Strategic Developments - Multiple new long-term contracts were executed in the Permian Basin, with anticipated capital deployment of $100 million to $125 million [1][26]. - An 11-year contract was signed for a major water recycling project in the Northern Delaware Basin, expected to enhance the company's infrastructure and revenue potential [6][27]. - The company has developed a leading water infrastructure network in the Northern Delaware Basin, with over 1 million acres under dedication or right-of-first-refusal [5][27]. Balance Sheet and Liquidity - Total cash and cash equivalents were $27.9 million as of March 31, 2025, compared to $12.8 million a year earlier [23]. - The company entered a new sustainability-linked credit facility with $250 million in term loan commitments, enhancing its liquidity position [22][24].

Group 1 - Select Water Solutions, Inc. will release its 2025 first quarter financial results on May 6, 2025, after market close [1] - A conference call to discuss the financial results is scheduled for May 7, 2025, at 11:00 a.m. Eastern Time [1] - The conference call will be accessible via phone or live over the Internet, with a replay available until May 21, 2025 [1] Group 2 - Select Water Solutions is a leading provider of sustainable water and chemical solutions to the energy industry [2] - The company emphasizes safe and environmentally responsible management of water throughout the lifecycle of a well [2] - Select Water Solutions aims to conserve and protect the environment through responsible management of water resources [2]

Financial Data and Key Metrics Changes - In 2024, Select Energy Services, Inc. achieved record consolidated revenue of $1.5 billion, with a gross margin of 53% in the water infrastructure segment, $258 million in adjusted EBITDA, $235 million in cash flow from operating activities, and $78 million in free cash flow [35][36][44] - The company reported a 26% annual revenue growth and a 62% increase in annual gross profit from the water infrastructure segment [11][12] Business Line Data and Key Metrics Changes - The water infrastructure segment saw significant growth, with a gross profit increase of 62% and a revenue growth expectation of 15% to 25% for 2025 [21][44] - The water services segment experienced a revenue decline of about 10% in Q4, but is expected to recover with low to mid-single-digit percentage revenue increases in Q1 2025 [48][49] - The chemical technologies segment reported a 14% sequential revenue growth in Q4, driven by new product development and market share gains [50] Market Data and Key Metrics Changes - The company has over 2.5 million acres under long-term area dedication, with a significant backlog of future well inventory and produced water volumes [15][42] - Demand for water recycling is increasing, with the company setting a new five-year target to recycle over 400 million barrels of produced water annually by 2029 [39] Company Strategy and Development Direction - The company is focusing on expanding its water infrastructure platform into the municipal, industrial, and agricultural water markets, with a $62 million investment in Colorado [27][30] - Select aims to enhance its capital structure to support significant growth opportunities while maintaining a conservative balance sheet [38][56] Management's Comments on Operating Environment and Future Outlook - Management expects a steady commodity price environment for oil and natural gas in 2025, with a modest reduction in US lower 48 activity levels compared to 2024 [22] - The company anticipates stronger year-over-year adjusted EBITDA growth in 2025, driven primarily by the water infrastructure segment [25][56] Other Important Information - The company has executed nearly a dozen small bolt-on infrastructure acquisitions and increased its base dividend by 17% during the year [12][36] - Select has a disciplined approach to leverage, maintaining a net debt to EBITDA leverage ratio substantially below one times [38] Q&A Session Summary Question: Can you discuss the new venture in Colorado and its return profile? - Management highlighted that the Colorado venture offers high gross margin-related revenue with contracts that could last up to 50 years, providing predictable and repeatable income [70][72] Question: How does the Colorado opportunity compare to traditional recycling projects? - The Colorado opportunity is seen as a resource development opportunity with higher margins than traditional water projects, although it requires a larger upfront investment [73][74] Question: What is the expected revenue growth trajectory for the water infrastructure segment? - Management indicated that the water infrastructure segment is expected to see a strong second half of 2025, with double-digit percentage growth anticipated in Q2 and Q3 [47][81] Question: Will the company maintain its gross margin levels in the upcoming quarters? - Management expressed confidence in maintaining gross margins in the 50% to 60% range, despite some initial operational efficiency challenges with new assets [84][86]