Select Water Solutions (WTTR) FY Conference Transcript

Summary of Select Water Solutions (WTTR) FY Conference Call Company Overview - Select Water Solutions is a publicly traded company on the New York Stock Exchange, founded in 2007 and went public in April 2017 [1] - The company operates in the oil and gas water space, focusing on infrastructure for water recycling and disposal [2] Industry and Market Position - The company claims to be the fastest-growing infrastructure platform in the oil and gas water sector [2] - It has established long-term contracts that provide economic value through full life cycle water management [3] - The company has a low capital maintenance business model, with a focus on free cash flow conversion [4] Financial Performance - The company has a conservative balance sheet with debt less than one year of EBITDA [7] - It has a regular dividend and has engaged in share buybacks over the past five years [7] - The gross margin for the infrastructure segment was reported at 55.6% in the last quarter [26] Business Segments - The company operates in three segments: water infrastructure, water services, and chemical technology [9] - The water infrastructure segment is less cyclical and has high gross margins, while the water services segment has lower margins (22%-25%) [10] - The chemical technology segment has the lowest margins, primarily serving upstream oil and gas companies [10][41] Growth and Expansion - The company has expanded its recycling capacity to 3 million barrels per day and has over 100 disposal wells [14] - It has dedicated acreage of over 2.5 million acres, with a right of first refusal (ROFR) on additional acreage [16] - The company is transitioning into municipal and industrial markets, focusing on long-term water leasing agreements [6][31] Strategic Initiatives - The company is investing in beneficial reuse of water, treating it to an environmentally acceptable quality for agricultural use [33] - It is also exploring opportunities in direct air carbon capture and other industrial applications [32] - The company has a significant backlog of contracts and is focused on converting conversations into contracts before investing capital [28] Risks and Considerations - The company acknowledges potential impacts from a slowdown in completion activity, which could affect water volumes needed for fracking [40] - Regulatory changes and seismic activity in the Permian Basin could also impact operations [43][44] Conclusion - Select Water Solutions is positioned as a leader in the oilfield water infrastructure sector, with a strong focus on growth, shareholder returns, and sustainable practices [35] - The company believes its infrastructure model will provide better free cash flow compared to previous service models, with significant opportunities in both the oil and gas sector and municipal markets [36][37]