Select Water Solutions, Inc. Q4 FY2025 earnings call

John Schmitz highlighted 2025 was record-setting, with Water Infrastructure growth strategy working. Chemical Technologies adapted and grew market share. Water Services streamlined. Strategic conveyances of facilities in New Mexico. Partnerships for produced water lithium extraction. Chris George discussed financial results, Q4 adjusted EBITDA $64.2M above guidance, Water Infrastructure expected 20% - 25% growth in 2026, Chemical Technologies expected steady revenue and margins, SG&A target reduction. Michael Skarke talked about Northern Delaware system opportunities, smaller accretive opportunities and potential larger projects, and beneficial reuse pilots.

Water Infrastructure: In 2025, water infrastructure grew recycled produced water volumes by 18% to over 330 million barrels, achieved 1 billion barrels recycled since 2021, with revenue growth over 800% in 5 years. Fourth quarter gross profit before D&A increased 5% to 54%. Expected 20% - 25% growth in 2026. Chemical Technologies: 2025 revenue growth 19%, gross profit before D&A growth 45%, fourth quarter revenue $87 million, 14% sequential increase, gross margin before D&A 20%. Water Services: Streamlined, performed well in 2025, 7% revenue growth in fourth quarter due to water transfer revenues offsetting seasonal impacts, gross margin before D&A improved by ~2 percentage points to 20% in fourth quarter.

2026 Water Infrastructure expected 20% - 25% year-over-year growth. First quarter Water Infrastructure revenue and gross profit before D&A expected 7% - 10% growth vs Q4 '25. Chemical Technologies expected similar revenue to prior year with upside, margins 19% - 20%. Q1 2026 consolidated adjusted EBITDA expected $65M - $68M. 2026 net CapEx $175M - $225M after asset sales.

Industry faces evolving produced water challenges, especially in Northern Delaware Basin with decreasing disposal availability and increasing regulation. Macro environment uncertainties affecting business operations and growth. Commodity price fluctuations impacting margins.

Q: Scott Gruber asks about additional opportunities in Northern Delaware, whether smaller bolt-ons or larger trunkline expansion.

A: Michael Skarke says more smaller accretive opportunities leveraging the system, some chunkier projects still pursued.

Q: Robert Brooks asks about other opportunities like lithium extraction.

A: Michael Skarke says more lithium deals to come, including iodine and others, leveraging Water Infrastructure's position.

Q: Derrick Whitfield asks about macro and municipal growth.

A: Chris George says back half '26 and '27 maturation phase, municipal project in Colorado to see large investment in 2027.

Q: Derek Podhaizer asks about chemicals segment demand.

A: Executive says seeing demand, investing in technical team, well positioned for surfactant expansion.

Q: Jeff Robertson asks about utilization impact on margins.

A: Chris George says incremental barrels accretive, Michael Skarke says evaluating expansions outside Permian.

Q: Sean Mitchell asks about simul-frac.

A: John Schmitz says intensity increasing but can't give percentage.