Select Water Solutions (NYSE: WTTR) FY Conference Summary Company Overview - **Company**: Select Water Solutions - **Ticker**: WTTR - **Industry**: Water solutions for oil and gas, primarily focused on the Permian Basin - **Founded**: 2007 - **Segments**: - Water Infrastructure (largest segment) - Water Services (temporary solutions) - Chemical Technologies (smallest segment) Core Points and Arguments - **Water's Importance**: Water management in oil and gas is critical, especially in the Permian Basin, which is a growing concern for the industry [2][4] - **Business Transition**: The company has shifted from a service-based model (80% income from water services in 2018) to a focus on water infrastructure, aiming for 60% of income from infrastructure in the future [4][5] - **Growth Rates**: Water recycling and produced water disposal have seen compound annual growth rates of 75-80% since 2020 [5] - **Recycling Focus**: Select Water Solutions is the leading recycling provider in New Mexico, currently recycling about 50% of completion water, with a goal to increase this to 85-90% [9][11] - **Economic Advantage of Recycling**: Recycling costs approximately $0.50 per barrel compared to $1 for local disposal and $1.25 for distant disposal, making it the most cost-effective solution [11][12] - **Long-term Contracts**: The company has secured nearly 1 million acres of dedicated and right of first refusal acres in New Mexico, with an average contract duration of 11 years, providing stability and cash flow [15][16] Industry Dynamics - **Regulatory Challenges**: New Mexico is not permitting significant disposal capacity, necessitating new solutions for distant disposal [9][10] - **Competitors**: Major competitors include WaterBridge, WBI, and Aeris, which are primarily disposal-focused, while Select Water Solutions emphasizes recycling [34][35] - **Future Opportunities**: The company is exploring municipal, agricultural, and industrial markets, with plans to secure long-term contracts for water rights [25][40] Financial Insights - **CapEx Expectations**: Expected net CapEx for the current year is $250 million-$275 million, with a decrease anticipated next year [37] - **Debt Management**: The company maintains a conservative debt-to-EBITDA ratio of around 1 to 1.25 times, funding infrastructure build-out primarily through free cash flow [29][30] - **Shareholder Returns**: The company has instituted a dividend and has increased it twice since 2022, indicating a commitment to shareholder returns as infrastructure spending stabilizes [30][31] Additional Considerations - **Infrastructure Build-out**: The company is focused on building a robust pipeline network in Lea County, New Mexico, to enhance water management efficiency [18][19] - **Beneficial Reuse Initiatives**: Select Water Solutions is conducting trials for using distilled produced water for crop irrigation, aiming to educate regulators on beneficial reuse [14][39] - **Market Positioning**: The company positions itself as a leader in water solutions, with a strong emphasis on recycling and long-term contracts to mitigate cyclicality in the oil and gas sector [24][28] This summary encapsulates the key points discussed during the conference, highlighting the company's strategic focus, market dynamics, and financial outlook.

Core Insights - Consolidated Water Co. Ltd. has secured an $11.7 million contract to construct a wastewater recycling plant in the San Francisco Bay Area, which will have a capacity of 200,000 gallons per day and 600,000 gallons of treated water storage [1][2] Company Overview - Consolidated Water Co. Ltd. specializes in developing and operating advanced water supply and treatment plants, including seawater desalination facilities in various regions [6][7] - The company is currently engaged in a $204 million design-build-operate project for a seawater desalination plant in Hawaii [6] Project Details - The contract was awarded to PERC Water Corporation, a subsidiary of Consolidated Water, which focuses on water infrastructure in the Southwestern U.S. [2] - The plant will utilize membrane bioreactor technology to treat untreated wastewater, producing high-quality recycled water suitable for irrigation [2][3] - Key design features include the use of precast concrete basins and prefabricated equipment, which are expected to lower construction costs and expedite the project timeline [2] Environmental Impact - The wastewater recycling plant is projected to save 36 to 38 million gallons of potable water annually, thereby reducing dependence on local freshwater resources [3] Management Commentary - The CEO of Consolidated Water, Rick McTaggart, noted that this contract is part of a larger strategy, with three design and/or build projects totaling over $20 million expected in 2025 [4] - The company attributes its success in securing the contract to competitive pricing, extensive permitting experience, and a fast-tracked construction schedule [4]