Financial Data and Key Metrics Changes - In Q2 2025, the company increased net income by 22% and adjusted EBITDA by 13% [7][17] - Consolidated gross margins improved by nearly two percentage points, reaching 55% in the Water Infrastructure segment [7][17] - SG&A expenses increased to $39 million, representing just under 11% of revenue [22] Business Line Data and Key Metrics Changes - Water Infrastructure segment revenues increased by 12% with gross profit before D&A growing by 15%, achieving a gross margin of 55% [17][19] - Water Services segment revenues decreased by approximately 4% sequentially, with gross margins holding relatively flat at around 20% [19][20] - Chemical Technologies segment saw a sequential revenue decline of approximately 11%, but gross margins before D&A exceeded expectations at 17.5% [22] Market Data and Key Metrics Changes - The company added approximately 60,000 acres of leasehold dedication and 385,000 acres under right of first refusal agreements in the Northern Delaware Basin [13][15] - New Mexico's contribution to total fixed recycling capacity increased from zero to over 60% in about two years [15] Company Strategy and Development Direction - The company is focused on growing its water infrastructure, scale, and margin, with a strategic emphasis on long-term contracts and rationalizing its water services segment [6][8] - The acquisition of assets from Omni Environmental Solutions aims to enhance the infrastructure business while monetizing non-core parts of the water service segment [9][10] - The company is exploring financing options for Peak Rentals to unlock value while maintaining strategic alignment with its core water infrastructure growth strategy [10][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong 20% year-over-year growth in the Water Infrastructure segment for 2026, building on double-digit growth expected in 2025 [16][18] - Despite anticipated challenges in the second half of 2025 for the completions-oriented parts of the business, management expects continued strong free cash flow generation [18][23] Other Important Information - The company generated over $10 million of free cash flow during Q2 2025, despite significant capital expenditures [24][25] - The company expects net CapEx in 2025 to be between $225 million and $250 million, with a focus on growth capital [25][26] Q&A Session Summary Question: What inning is the company in regarding market opportunities? - Management indicated that they are far along in the build-out phase, with major contracts in place and starting to receive calls for additional acreage [28][30] Question: What is the market opportunity for Peak Rentals? - Management highlighted Peak's unique position in the market, particularly in power generation, and the potential for economic value through battery technology integration [38][41] Question: What is the expected CapEx budget for 2026 to support growth? - Management stated that the 20% growth projection for 2026 is based on current contracts, with an expected capital deployment of approximately $225 million in 2025 [52][53] Question: Are there other assets being considered for divestiture? - Management confirmed that while they have rationalized trucking operations, they are focused on maintaining strategic relationships with remaining assets that support infrastructure [75][79] Question: What is the status of operations in Colorado? - Management reported ongoing progress in Colorado, with a focus on developing a reliable water network and engaging with local stakeholders [82][85]

Group 1 - Select Water Solutions, Inc. reported revenue of $364.22 million for the quarter ended June 2025, reflecting a year-over-year decline of 0.3% and an EPS of $0.10 compared to $0.13 a year ago [1] - The reported revenue was a surprise of -0.28% against the Zacks Consensus Estimate of $365.22 million, with an EPS surprise of -23.08% compared to the consensus estimate of $0.13 [1] - The stock has returned -0.6% over the past month, underperforming the Zacks S&P 500 composite's +1% change, and currently holds a Zacks Rank 4 (Sell) [3] Group 2 - Revenue from Chemical Technologies was $67.7 million, below the four-analyst average estimate of $73.97 million, representing a year-over-year change of +1.7% [4] - Revenue from Water Services was $215.66 million, exceeding the average estimate of $207.72 million, but showing a -6.2% change compared to the year-ago quarter [4] - Revenue from Water Infrastructure was $80.86 million, slightly below the average estimate of $81.22 million, with a year-over-year change of +17.9% [4] - Gross Profit before D&A for Water Services was $42.35 million, below the average estimate of $44.87 million [4] - Gross Profit before D&A for Chemical Technologies was $11.82 million, slightly above the average estimate of $11.58 million [4] - Gross Profit before D&A for Water Infrastructure was $44.64 million, exceeding the average estimate of $42.69 million [4]

Financial Data and Key Metrics Changes - Revenue increased by 7% in Q1 2025, with adjusted EBITDA rising by 14% and consolidated gross margins improving by one percentage point [7][15] - Net income grew by $12 million, while consolidated SG&A expenses decreased by 6% [7][19] - The company expects consolidated adjusted EBITDA to rise to between $68 million and $72 million in Q2 2025 [19] Business Line Data and Key Metrics Changes - Chemical Technologies saw a strong revenue growth of 21%, while Water Services experienced an 8% increase [7][18] - Water Infrastructure maintained a robust gross margin of 54%, despite a sequential revenue decline driven by legacy freshwater pipeline assets [7][16] - The Water Services segment's gross margins improved to 19.45% in Q1 2025, up from 16.4% in the previous quarter [18] Market Data and Key Metrics Changes - The Northern Delaware Basin now has over 1,000,000 acres under dedication or right of first refusal agreements, indicating a strong market position [9] - New Mexico represents 54% of the company's total fixed recycling capacity, showcasing significant growth in this area [12] - The company anticipates continued growth in the Permian Basin and other natural gas basins, despite potential macroeconomic pressures [10][66] Company Strategy and Development Direction - The company is focused on expanding its water infrastructure and enhancing its recycling capabilities, with several large contracts recently secured [8][25] - A strategic partnership for ultra-long-term municipal, industrial, and agricultural water supply in Colorado has been initiated [15] - The company aims to maintain a disciplined approach to leverage while funding capital projects and enhancing liquidity [15][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business despite macroeconomic pressures and potential activity dislocations [10][14] - The company expects continued growth in consolidated adjusted EBITDA of 6% to 12% during Q2 2025, with a focus on water infrastructure [13][19] - Management highlighted the importance of long-term contracts and full life cycle revenues for stability and growth [25] Other Important Information - The company implemented a new ERP system across all operations, which is expected to yield efficiencies over time [24] - Capital expenditures for 2025 are now expected to be between $225 million and $250 million, up from previous estimates [22] - The company is actively pursuing acquisition opportunities to enhance its asset base and operational capabilities [67] Q&A Session Summary Question: Activity levels in the Permian Basin - Management confirmed no pullback in activity levels in the Permian Basin to date, indicating confidence in their asset positioning [28][29] 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 [30][32] 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 [45] Question: Supply chain resilience in Chemical Technologies - Management highlighted efforts to localize the supply chain, reducing reliance on international sourcing, particularly from China [46] Question: Future growth in water infrastructure - Management expects to maintain a double-digit growth trajectory in water infrastructure, supported by ongoing projects and contracts [52][56]

Core Insights - Select Water Solutions, Inc. reported revenue of $374.38 million for Q1 2025, marking a year-over-year increase of 2.1% and exceeding the Zacks Consensus Estimate by 3.67% [1] - The company achieved an EPS of $0.08, up from $0.04 a year ago, representing a surprise of 14.29% over the consensus estimate of $0.07 [1] Revenue Breakdown - Chemical Technologies revenue was $76.35 million, surpassing the average estimate of $71.09 million, reflecting a year-over-year increase of 2.2% [4] - Water Services revenue reached $225.65 million, slightly below the average estimate of $215.31 million, with a year-over-year decrease of 1.2% [4] - Water Infrastructure revenue was $72.39 million, underperforming the estimated $75.09 million, but showing a significant year-over-year increase of 14% [4] Profitability Metrics - Gross Profit before D&A for Water Services was $43.93 million, below the average estimate of $46.32 million [4] - Gross Profit before D&A for Chemical Technologies was $11.62 million, exceeding the estimated $10.34 million [4] - Gross Profit before D&A for Water Infrastructure was $38.90 million, slightly below the average estimate of $39.25 million [4] Stock Performance - Over the past month, Select Water Solutions, Inc. shares returned -0.2%, contrasting with the Zacks S&P 500 composite's increase of 11.5% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]