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 June 30, 2023 or SELECT WATER SOLUTIONS, INC. (Exact name of registrant as specified in its charter) (State of incorporation) (IRS Employer Delaware 81-4561945 Identification Number) ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transitio ...

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, 2023 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 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 ENERGY SERVICES, INC. (Exact name of registrant as specified in its charter ...

Select Energy Services, Inc. (NYSE:WTTR) Q1 2023 Earnings Conference Call May 3, 2023 11:00 AM ET Company Participants Chris George - Senior Vice President, Corporate John Schmitz - Founder, Chairman, President and CEO Nick Swyka - SVP and CFO Michael Skarke - EVP and COO Conference Call Participants Jim Rollyson - Raymond James Don Crist - Johnson Rice Luke Lemoine - Piper Sandler Tom Curran - Seaport Research Partners Operator Greetings, and welcome to the Select Energy Services First Quarter Earnings Con ...

Part I [Item 1. Business](index=11&type=section&id=Item%201.%20Business) Select Energy Services is a leading U.S. provider of water-management and chemical solutions for the oil and gas industry, operating through Water Services, Water Infrastructure, and Oilfield Chemicals segments - Select Energy Services is a leading provider of water-management and chemical solutions to the U.S. oil and gas industry, operating across all major unconventional basins[36](index=36&type=chunk)[38](index=38&type=chunk) Revenue Contribution by Segment (2022 vs. 2021) | Segment | 2022 Revenue Contribution (%) | 2021 Revenue Contribution (%) | | :--- | :--- | :--- | | Water Services | 58% | 52% | | Water Infrastructure | 19% | 19% | | Oilfield Chemicals | 23% | 28% | - The company has a strong position in the Permian Basin, which accounted for approximately **47% of its revenue in 2022**[68](index=68&type=chunk) - Recent growth has been supported by seven business combinations, an asset acquisition, and a joint venture buyout, enhancing the company's market position and recycling solutions[53](index=53&type=chunk) [Description of Business Segments](index=29&type=section&id=Description%20of%20Business%20Segments) This section details the core operations and technological focus of the Water Services, Water Infrastructure, and Oilfield Chemicals segments - **Water Services:** Provides services for new well completions and ongoing production, including water transfer, flowback and well testing, fluids hauling, water containment, and accommodations. This segment utilizes proprietary technology like WaterONE™ and AquaView® for automation and monitoring[88](index=88&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - **Water Infrastructure:** Develops and operates semi-permanent and permanent infrastructure for water sourcing, recycling, and disposal. This includes pipelines, recycling facilities, and saltwater disposal wells (SWDs) with a focus on reducing truck hauling and increasing water reuse[102](index=102&type=chunk)[104](index=104&type=chunk)[113](index=113&type=chunk) - **Oilfield Chemicals:** Develops, manufactures, and provides a full suite of chemicals for hydraulic fracturing and well completions. The segment offers customized solutions through its FluidMatch™ service and operates in-basin manufacturing facilities to reduce transportation costs[117](index=117&type=chunk)[118](index=118&type=chunk) [Human Capital](index=19&type=section&id=Human%20Capital) The company emphasizes employee safety, diversity, and had over 4,000 employees as of December 31, 2022 - As of December 31, 2022, the company had more than **4,000 employees**[62](index=62&type=chunk) - The company focuses on employee safety through comprehensive training, safety programs, and empowering personnel with stop-work authority (SWA)[63](index=63&type=chunk) - Diversity initiatives are a focus, with over **45% of the workforce comprised of ethnic minorities** and **12% being female**[63](index=63&type=chunk) [Environmental and Occupational Safety and Health Matters](index=45&type=section&id=Environmental%20and%20Occupational%20Safety%20and%20Health%20Matters) Operations are subject to stringent environmental and safety regulations, including those for water disposal and climate change, posing compliance and cost risks - The company's operations are subject to stringent federal, state, and local environmental laws (e.g., RCRA, CWA, SDWA, CAA) and occupational safety regulations (OSHA), which can impose substantial liabilities and compliance costs[130](index=130&type=chunk)[131](index=131&type=chunk) - Regulations concerning saltwater disposal wells and induced seismicity, particularly in Texas and Oklahoma, could lead to restrictions or shutdowns of disposal wells, impacting operations[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Climate change regulations and initiatives, including the Inflation Reduction Act of 2022 (IRA 2022), pose risks by potentially increasing customer costs (e.g., methane fees) and accelerating the transition away from fossil fuels, which could reduce demand for the company's services[160](index=160&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk) [Item 1A. Risk Factors](index=65&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from volatile oil and gas markets, operational challenges from acquisitions, stringent environmental regulations, and complex capital structure obligations - **Business & Market Risks:** Demand is directly tied to oil and gas capital spending, which is volatile. Inflation, rising interest rates, and potential recessions could increase costs and reduce customer spending. The company's concentration in the Permian Basin (**47% of 2022 revenue**) makes it vulnerable to regional issues[195](index=195&type=chunk)[206](index=206&type=chunk)[216](index=216&type=chunk) - **Regulatory & Compliance Risks:** Laws related to hydraulic fracturing, water sourcing, and disposal-induced seismicity could increase costs and restrict customer operations. Climate change initiatives, like the IRA 2022, may impose new costs (e.g., methane fees) and accelerate the transition to renewable energy, reducing long-term demand[270](index=270&type=chunk)[274](index=274&type=chunk)[214](index=214&type=chunk) - **Acquisition & Integration Risks:** Failure to successfully integrate recently acquired businesses, such as Breakwater, could prevent the realization of anticipated benefits and lead to unforeseen expenses and operational disruptions[208](index=208&type=chunk)[209](index=209&type=chunk) - **Capital Structure & Organizational Risks:** The company is a holding company dependent on distributions from its subsidiary (SES Holdings) to pay taxes, dividends, and cover expenses. It is required to make potentially significant payments under Tax Receivable Agreements for certain tax benefits, which could be accelerated in a change of control[319](index=319&type=chunk)[320](index=320&type=chunk)[323](index=323&type=chunk) [Item 1B. Unresolved Staff Comments](index=117&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[348](index=348&type=chunk) [Item 2. Properties](index=117&type=section&id=Item%202.%20Properties) The company operates 154 properties, including leased offices and owned/leased facilities across its operating regions, as of December 31, 2022 Leased and Owned Properties by Segment (as of Dec 31, 2022) | Region | Water Services | Water Infrastructure | Oilfield Chemicals | Corporate & Other | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Leased | 58 | 20 | 3 | 4 | 85 | | Owned | 41 | 22 | 6 | — | 69 | | **Total** | **99** | **42** | **9** | **4** | **154** | [Item 3. Legal Proceedings](index=119&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to materially adversely affect its financial position - The company states that no current legal proceedings are expected to have a material adverse effect on its financial position, results of operations, or cash flows[352](index=352&type=chunk) [Item 4. Mine Safety Disclosures](index=119&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[353](index=353&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=119&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under 'WTTR', initiated a quarterly dividend in 2022, and has an active share repurchase program - The company's Class A common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol **"WTTR"**[355](index=355&type=chunk) - On September 7, 2022, the company initiated a quarterly dividend program, declaring a cash dividend of **$0.05 per share** of Class A common stock[356](index=356&type=chunk) - The company has a share repurchase program of up to **$25.0 million**, with approximately **$8.6 million remaining available** for purchase as of December 31, 2022[366](index=366&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=125&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased 81.5% to $1.4 billion in 2022, shifting from a net loss to a net income of $54.9 million, driven by demand, pricing, and acquisitions Key Financial Results (2022 vs. 2021) | Metric | 2022 | 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $1,387.4 M | $764.6 M | +81.5% | | Gross Profit | $160.8 M | $20.9 M | +670.6% | | Net Income (Loss) | $54.9 M | $(50.1) M | +209.5% | | Adjusted EBITDA | $194.8 M | $50.0 M | +289.8% | - The significant increase in revenue and profitability was primarily driven by higher demand for services, improved pricing, and incremental revenue from multiple acquisitions completed between July 2021 and December 2022[411](index=411&type=chunk)[373](index=373&type=chunk) - Net cash provided by operating activities was **$33.2 million** in 2022, a **$49.5 million improvement** from the **$16.2 million used in 2021**, primarily due to higher net income, partially offset by increased working capital needs[443](index=443&type=chunk) - As of December 31, 2022, the company had **$7.3 million in cash** and **$206.1 million of available borrowing capacity** under its Sustainability-Linked Credit Facility[439](index=439&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=151&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk is primarily tied to volatile oil and gas commodity prices impacting customer spending, and interest rate risk on its variable-rate credit facility - The main market risk is the dependency on capital spending by oil and gas companies, which is influenced by volatile oil and gas prices[464](index=464&type=chunk) - The company has interest rate risk associated with its Sustainability-Linked Credit Facility, as borrowings are based on variable index rates plus an applicable margin[465](index=465&type=chunk)[467](index=467&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=153&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2022, 2021, and 2020, along with the independent auditor's report - This section includes the consolidated financial statements and supplementary data, which begin on page F-1 of the report[468](index=468&type=chunk) [Notes to Consolidated Financial Statements](index=178&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Key notes detail significant acquisitions, revenue disaggregation by region, debt obligations, and income tax information including NOL carryforwards - **Acquisitions (Note 3):** The company completed several major acquisitions in 2022, including Breakwater (**$105.3 million** consideration), Cypress (**$9.2 million**), and Nuverra (**$35.9 million**), significantly expanding its water logistics, infrastructure, and disposal assets[594](index=594&type=chunk)[602](index=602&type=chunk)[605](index=605&type=chunk) - **Revenue (Note 5):** Revenue is disaggregated by geographic region, with the Permian Basin being the largest, contributing **$646.2 million (47%)** of total revenue in 2022[637](index=637&type=chunk) - **Debt (Note 10):** The company entered into a **$270.0 million** Sustainability-Linked Credit Facility in March 2022. As of Dec 31, 2022, **$16.0 million was outstanding** with an interest rate of **8.25%**[665](index=665&type=chunk)[678](index=678&type=chunk) - **Income Taxes (Note 15):** As of Dec 31, 2022, the company had approximately **$886.3 million of U.S. federal net operating loss (NOL) carryforwards**, though a significant portion (**$410.4 million**) is expected to expire unused due to Section 382 limitations[740](index=740&type=chunk) [Item 9A. Controls and Procedures](index=153&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, excluding a recent acquisition - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[471](index=471&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2022. The independent auditor, Grant Thornton LLP, also issued an unqualified opinion on the effectiveness of internal control[475](index=475&type=chunk)[481](index=481&type=chunk) - The evaluation of internal controls excluded the business of Breakwater Energy Services, LLC, acquired on November 1, 2022, as permitted by the SEC[474](index=474&type=chunk) Part III [Items 10-14](index=160&type=section&id=Items%2010-14) Information for Items 10 through 14 is incorporated by reference from the company's definitive proxy statement for the 2023 annual meeting of stockholders - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the registrant's definitive proxy statement for the 2023 annual meeting of stockholders[493](index=493&type=chunk)[494](index=494&type=chunk)[495](index=495&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=160&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K, including various agreements and certifications - This section provides a list of all financial statements and exhibits filed with the Form 10-K, including credit agreements, equity incentive plans, and various certifications[499](index=499&type=chunk)[500](index=500&type=chunk)[503](index=503&type=chunk)

Financial Data and Key Metrics Changes - In 2022, the company achieved revenue growth of 81%, reaching approximately $1.4 billion, and adjusted EBITDA growth of 290%, totaling $195 million [6][7] - The fourth quarter revenue was $382 million, a sequential increase of 2% or $6.6 million, impacted by winter weather and certain non-ordinary expenses [26][27] - Net income for the fourth quarter decreased to $7.6 million from $24.7 million, while adjusted EBITDA fell to $52.2 million from $62.8 million [26] Business Line Data and Key Metrics Changes - Record revenues were achieved in both Water Infrastructure and Chemicals segments, with Water Services benefiting from consolidation and technology initiatives [6][7] - The Water Infrastructure segment is expected to see significant revenue growth of 20% to 25% in Q1, driven by recent acquisitions and investments [28] - The Chemicals segment continues to experience strong organic revenue expansion, maintaining near record-high revenue levels [29] Market Data and Key Metrics Changes - The company operates primarily in the Permian Basin, with a breakdown of approximately 80% oil-directed and 20% natural gas-oriented activity [51] - The company has seen increased conversations around pipeline solutions and recycling due to lower natural gas prices, indicating a shift towards more efficient operations [54] Company Strategy and Development Direction - The company is focused on building and bolstering its core water and chemicals business, advancing technology, and executing strategic M&A [9][12] - A corporate rebranding initiative is planned to change the name to Select Water Solutions, Inc., aligning with the company's vision as a water-first company [13][15] - The company aims to enhance operational efficiency and increase free cash flow through the integration of various systems and streamlining operations [24][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about meaningful revenue, EBITDA, and net income growth in 2023, supported by recent acquisitions and infrastructure investments [16][24] - The company anticipates a significant uplift in free cash flow, projecting it to be roughly two-thirds of adjusted EBITDA for 2023 [24][30] - Management highlighted the importance of responsible energy production and sustainable solutions as part of the energy transition [11][12] Other Important Information - The company initiated its first-ever quarterly dividend in Q4 2022 and aims to build a solid track record of returning capital to shareholders [8] - The company completed numerous strategic acquisitions and divested non-core assets to focus on its vision [12][17] Q&A Session Summary Question: Revenue and profitability potential post-integration of acquisitions - Management indicated that the Water Infrastructure Group will see significant growth due to capital expenditures focused on infrastructure and recycling projects [34][35] Question: Integration of collection processing systems and Microsoft 365 migration - The target for completing the migration remains the same, with expectations for benefits to materialize over time [44][45] Question: Expected gross margin for Water Services - Management confirmed expectations for Water Services to achieve gross margins in the low 20s for Q2 through Q4 [49] Question: Split between oil-directed and natural gas-oriented activity - The company reported a 50% focus on the Permian Basin, with an overall breakdown of 80% oil to 20% gas [51] Question: Diversification opportunities from rebranding - Management discussed leveraging existing technology and chemistry capabilities to expand into other industries beyond oil and gas [60][62]

Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $375 million, representing a 12% increase quarter-over-quarter, with 59% of this revenue increase contributing to higher gross profits [24][8] - Net income increased by 70% to $24.7 million, and adjusted EBITDA grew by 32% to $62.8 million, marking the highest quarterly net income and adjusted EBITDA since Q3 2018 [25][24] - Gross margins across all segments improved, with the Water Services segment achieving gross margins of 22.8% and the Chemicals segment increasing gross margin from 14.6% to 18.8% [31][35] Business Line Data and Key Metrics Changes - The Water Services segment saw a sequential revenue growth of 13% to $221 million, with gross margins increasing over 3 percentage points [31] - The Infrastructure segment experienced significant revenue gains, growing by 23% sequentially to $74 million, with gross margins before depreciation and amortization increasing to 27.2% [34] - The Chemicals segment maintained strong revenue growth, with expectations of mid-single-digit revenue growth in Q4 while maintaining margins around Q3 levels [35] Market Data and Key Metrics Changes - The U.S. onshore rig count increased by about 7%, although completions activity lagged with low-single-digit percent growth [19] - Despite the disparity in rig count and completions, the company saw strong demand for integrated water and chemistry solutions, indicating a solid commodity price environment [19] Company Strategy and Development Direction - The company is focused on improving its core business, advancing technology, sustainability, and diversification efforts, along with executing strategic mergers and acquisitions (M&A) [8] - Recent acquisitions of Breakwater Energy Partners and Cypress Environmental Services are expected to drive efficiencies and create value, with a focus on expanding water recycling capabilities [10][14] - The company initiated a regular quarterly dividend program, reflecting confidence in its operating performance and commitment to shareholder returns [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for continued operational efficiency gains and growth opportunities from recent acquisitions, anticipating a strong year in 2023 [21][20] - The company highlighted the importance of integrating new acquisitions and maintaining a disciplined capital structure to support growth [18][38] - Management noted that while working capital needs increased in Q3, they expect to reverse this trend in Q4 and generate substantial positive free cash flow in 2023 [60][61] Other Important Information - The company finished Q3 with a net cash position of $13.2 million and no bank debt, indicating strong liquidity [40] - The Breakwater acquisition is expected to generate approximately $110 million to $115 million in revenue and over $30 million in adjusted EBITDA on a full-year basis [15] Q&A Session Summary Question: Can you walk me through the process to develop Breakwater's capacity? - The permitting process can take as little as three to four months, but initially, it may take six months or more. Construction timelines vary based on size and treatment type, ranging from four to nine months [45][46] Question: Are there other M&A opportunities in different basins? - The company remains active in the market and believes there are more opportunities across the U.S. for water and chemical solutions [49][50] Question: How do you expect to reverse working capital flow in Q4? - The company plans to integrate recent acquisitions and upgrade ERP systems to streamline operations, aiming for substantial positive free cash flow in 2023 [60][61] Question: What is the current utilization rate of existing recycling facilities? - Utilization rates improved in Q3, with all facilities contributing for a full quarter, but half are still underutilized [63] Question: Did you negotiate with Cypress creditors during their restructuring? - Conversations occurred prior to the transaction, and the acquisition was made from a party involved in restructuring [65]

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 September 30, 2022 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 ENERGY SERVICES, INC. (Exact name of registrant as specified in its cha ...

Financial Data and Key Metrics Changes - Revenue increased by 14% quarter-over-quarter, rising from $295 million to $336 million, primarily driven by pricing and activity improvements [17][19] - Adjusted EBITDA grew by 48%, from $32.2 million to $47.7 million, while net income surged by 83%, from $8 million to $14.6 million [19] - Gross margin improved from 8.4% to 10.6% in the second quarter [19] Business Segment Data and Key Metrics Changes - Water Services segment revenues grew by 20% to $196 million, with gross margins increasing over 3 percentage points to 19% [23] - Water Infrastructure revenue increased by 3% to just over $60 million, with margins rising to 25.5% [24] - Chemicals segment revenue expanded by 10% to nearly $80 million, with margins growing slightly to 14.6% [25] Market Data and Key Metrics Changes - The second quarter saw a meaningful double-digit percentage increase in drilling activity, while completion activity lagged with single-digit percentage growth [14] - The company expects mid to high single-digit revenue growth in the Water Services segment for the third quarter, supported by activity growth and pricing gains [23] Company Strategy and Development Direction - The company is focused on improving its base business, advancing technology, sustainability, and executing strategic M&A [7] - The asset-light business model is designed to generate substantial free cash flow through the cycle, without requiring large amounts of reactivation or maintenance CapEx [10] - The company aims to capitalize on market leadership in sustainable water and chemical solutions, with ambitious targets for water stewardship [12] Management's Comments on Operating Environment and Future Outlook - Management believes that US unconventional resources will be the primary growth driver for global energy needs in the coming years [10] - The company is confident in generating meaningful free cash flow during the second half of 2022, supported by strong financial conditions [15] - Management noted that the integration of recent acquisitions is progressing well, with expectations for continued efficiencies and synergies [11] Other Important Information - The company issued its inaugural sustainability report during the second quarter, highlighting its commitment to water stewardship [12] - The company has commenced operations at two new contracted fixed recycling facilities, increasing recycling capacity to over 600,000 barrels per day [13] Q&A Session Summary Question: Pricing outlook for the second half of 2022 and 2023 - Management indicated that pricing has largely been to cover costs, with expectations for continued price increases in Q3 due to inflationary pressures and supply-demand imbalances [30][32] Question: Freshwater sourcing displacement by recycling efforts - The company is moving about 35 million to 40 million barrels of produced water that would directly replace fresh water [34] Question: Demand in other areas outside the Permian Basin - Management noted increased demand for services across their footprint, including new recycling projects in Colorado [37] Question: Update on synergy realization and cost savings from acquisitions - Management provided an update on the progress of synergy realization, indicating that back office rationalization is nearing completion, while operational efficiencies and revenue synergies are still being pursued [42][45] Question: Utilization levels of water services assets - Management stated that labor has been a constraint, but equipment is starting to become a limiting factor due to a lack of investment since 2018 [46][48] Question: Challenges in the chemical supply chain and inflationary pressures - Management acknowledged challenges in the chemical raw material supply chain, but noted that they have been able to navigate these issues effectively [64][66]

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 June 30, 2022 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 ENERGY SERVICES, INC. (Exact name of registrant as specified in its charter) ...

Financial Data and Key Metrics Changes - The company reported a sequential revenue growth of 16% in Q1 2022, reaching $295 million, which is an increase of $40 million from Q4 2021 and $90 million from Q3 2021 [8][16] - Adjusted EBITDA increased by 22% sequentially to $32.2 million, while net income was $8 million, slightly down from $11.2 million in the previous quarter [8][17] - Gross margin improved from 7% to 8.4% [17] - Free cash flow was negative at $20.5 million due to a working capital build of $44.9 million [17] Business Line Data and Key Metrics Changes - Water Services segment revenue grew by 16% to $164 million, with gross margins advancing to over 16% [22] - Water Infrastructure revenue increased by 25% to $59 million, although gross margin slipped slightly to 24% due to integration efforts and maintenance upgrades [22] - Oilfield Chemicals segment revenue rose by 7.5%, with gross margins increasing nearly 200 basis points to 14.4% [23] Market Data and Key Metrics Changes - The company noted a meaningful double-digit percentage increase in drilling activity, although completion activity lagged [14] - The company expects continued growth in activity supported by strong commodity prices [14] Company Strategy and Development Direction - The company is focused on improving its base business, advancing technologies, and executing strategic M&A [8] - The integration of Nuverra is ongoing, with expectations of improved profitability as operational efficiencies are realized [21] - The company aims to double its recycled water volumes over the next five years, with current estimates indicating that about 15% of handled water volumes are recycled [28] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in generating positive free cash flow throughout 2022 despite challenges from working capital and integration costs [9][18] - The company anticipates substantial positive free cash flow as integration costs diminish and working capital normalizes [18] - Management highlighted the importance of sustainability initiatives and the commitment to water stewardship [10][19] Other Important Information - The company executed a $16 million open-market share buyback during the first quarter [9] - A $270 million sustainability-linked asset-backed lending facility was closed, extending the term by five years [19] Q&A Session Summary Question: What is the current mix of recycled water and the industry's recycling percentage? - The company estimates that about 15% of its handled water volumes are recycled, with a target to exceed 50 million barrels of recycled water over the next five years [28] Question: What are the main inflationary pressures and supply chain challenges for Water Services? - Fuel prices were a significant inflationary challenge, and the long-term target for gross margins is expected to be in the mid-to-high 20s [34] Question: How is working capital expected to progress throughout 2022? - Positive free cash flow is anticipated, with net working capital as a percentage of revenue expected to decrease [36] Question: What further opportunities exist for operational improvements? - The company has a backlog of projects and is focused on integrating and investing in underutilized assets [39] Question: Is there urgency among E&Ps to partner for water needs? - There is increased interest from E&Ps for water sourcing and disposal solutions, particularly in the Permian [41] Question: What is the status of share repurchase authorization? - As of March 31, the company had authorization for $25 million in share repurchases, with some room left in that authorization [42]