Select Water Solutions (WTTR) FY Conference Transcript

Summary of Select Water Solutions (WTTR) FY Conference Call Company Overview - Company Name: Select Water Solutions - Ticker Symbol: WTTR - Industry: Water Infrastructure, Oil and Gas - Founded: July 2017, went public in 2017 [1][2] Core Business and Market Position - Business Model: Primarily a water infrastructure company focused on the oil and gas sector, with expansion into municipal water services [2][6] - Market Leadership: Leader in water recycling applications, particularly in the Permian Basin, with a significant market share [3][8] - Revenue Growth: Transitioned from an oil field service business to a water infrastructure business, with a focus on high free cash flow conversion and low capital expenditures (CapEx) [4][16] Financial Performance - Cash Flow Conversion: Capable of converting 70% to 80% of earnings to cash, indicating strong financial health [4][17] - Debt Management: Maintains a conservative debt level, with debt less than one year of EBITDA [5][34] - Stock Buybacks: Approximately $200 million worth of stock repurchased during the growth phase [6][37] - Dividend Policy: Increased dividend by 17% last year, indicating commitment to returning value to shareholders [35][36] Infrastructure and Services - Water Recycling: Focus on recycling produced water for fracking, reducing the need for fresh water [7][23] - Municipal Expansion: Recently entered the municipal water space with a significant investment in Colorado, acquiring 16,600 acre-feet of water rights [30][31] - Long-term Contracts: Contracts with municipalities can last 30 to 50 years, providing stable revenue streams [32][33] Strategic Initiatives - Mergers and Acquisitions: Actively pursuing M&A to build out water management networks, enhancing service offerings [5][28] - Chemical Technologies: In-house chemical manufacturing to treat water for fracking, differentiating the company from competitors [11][48] - Environmental Focus: Initiatives to reclaim waste water for agricultural use, promoting sustainability [7][30] Market Dynamics and Challenges - Cyclical Nature: Business is cyclical, heavily influenced by oil and gas completion activities [17][19] - Regulatory Environment: Facing increasing regulations regarding water use in oil and gas, particularly in regions with limited water resources [49][52] - Competitive Landscape: Limited competition in fixed recycling facilities, positioning Select Water Solutions uniquely in the market [47] Future Outlook - Growth Opportunities: Anticipates significant growth in the municipal and industrial water sectors, with plans to secure long-term contracts [36][45] - Investment in Infrastructure: Committed to building out infrastructure to support water management needs across various basins in the U.S. [13][19] - Focus on Recycling: Emphasizes recycling as the most economically viable solution for water management in the oil and gas industry [55] This summary encapsulates the key points discussed during the Select Water Solutions FY Conference Call, highlighting the company's strategic direction, financial health, and market positioning within the water infrastructure and oil and gas sectors.