Financial Data and Key Metrics Changes - Consolidated Adjusted EBITDA from continuing operations increased to $167.3 million in Q2 2026, up from $149.4 million in Q2 2025, representing a 12% increase [2][3] - Full-year Adjusted EBITDA guidance was raised from $615-$625 million to $650-$660 million [3] - Operating cash flow projections indicate a zero ABL balance at the end of the fiscal year with approximately four times leverage [3] Business Line Data and Key Metrics Changes - Water Solutions Adjusted EBITDA rose to $151.9 million in Q2 2026, compared to $128.9 million in Q2 2025, an 18% increase [5] - Physical water disposal volumes averaged 2.8 million barrels per day in Q2 2026, up from 2.68 million barrels per day in Q2 2025, a 4% increase [5] - Total volumes paid for disposal increased to 3.15 million barrels per day in Q2 2026 from 2.77 million barrels per day in Q2 2025, a 14% increase [5] Market Data and Key Metrics Changes - Grand Mesa pipeline volumes averaged approximately 72,000 barrels per day in Q2 2026, compared to 63,000 barrels per day in the previous quarter [7] - October volumes for the fiscal third quarter exceeded 80,000 barrels per day [8] Company Strategy and Development Direction - The company is focusing on capital structure optimization and has repurchased approximately 6.8 million units under its unit repurchase plan, equating to about 5% of outstanding units [4] - NGL aims to become a pure play water company, with significant growth expected from water operations [16][17] - The company has secured new growth capital projects for approximately 750,000 barrels per day of newly contracted volume commitments, scheduled for service by the end of the calendar year [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth of the water solutions segment, citing strong performance and increased customer commitments [12][13] - The company anticipates adjusted EBITDA for fiscal 2027 to be at least $700 million, driven by new projects [13] - Management highlighted the importance of maintaining a strong balance sheet and reducing leverage to less than four times [17] Other Important Information - The company has achieved annual interest savings of $15 million on its term loan B due to repricing and Fed rate cuts [4] - NGL has the largest capacity pipeline system in the Delaware Basin, with over 800 miles of pipeline [10] Q&A Session Summary Question: Can you provide insights on the macro and micro events leading to increased customer acquisition? - Management noted that growth is driven by larger producers' commitment to infrastructure improvements and economic efficiencies [21][23] Question: What is the capital required to access the pore space in Andrews County? - Management indicated that projects to access pore space would range from $50 million to $150 million, paced over several years [24] Question: Is the increase in growth capital primarily for drilling SWD wells? - Management confirmed that the additional capital is related to growth in the water side of the business [25] Question: How many new SWD wells are planned? - Management stated they have 35 to 45 legacy permits and are in the process of drilling 15 to 20 new wells this fiscal year [26]

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]