WTTR - Earnings call transcript Q4 2020 | Select Energy Services, Inc.

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Operator

Greetings, and welcome to Select Energy Services 2020 Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Chris George, VP, Investor Relations and Treasurer.

Chris George

good and operator, you, morning, everyone. Thank you conference call appreciate operational for of joining our us Services Energy results XXXX. quarter fourth Select the the and and for financial We webcast review to Schmitz, John Swyka, Nick President are today Vice me our and Officer; Senior Officer. Chief Financial Chief Chairman and and Executive With

for may at this replay also over, on Please this and will call be included a by webcast longer Before call of a as replay March no and housekeeping today, of today's yesterday's I I reported note only speaks available turn earnings will XXXX, as of be items replay access XX, of reading. few from accurate replay selectenergy.com. release. transcript was our recorded telephonic XXXX. website accessible time have be information listening also or call February the to the information There cover. information that the time-sensitive A until the available XX, in therefore, The

In statements within by addition, Select's forward-looking federal of views United the statements the may meaning securities current management conference States call reflect the of during These the contain forward-looking the management. comments laws. made

to With expect yesterday to December John I'd over Also, to Schmitz. like Founder, quarterly uncertainties turn as cause our Form expressed management. However, ended XX-K call to XXXX, our the our understand and refer measures. our quarter we current the contingencies released risks, contingencies. to and Form that, and annual non-GAAP for on on or on file which from earnings our fourth is those XX, report Chairman encouraged our actual reports Form listener on to annual of financial report year CEO, for X-K XXXX, as December subsequent in Form The for materially could XX-Q risks, year uncertainties performance results, achievements the the reconciliations XX-K well various this statements please by ended differ those our reports announcement week made and to read XX,

John Schmitz

morning, and you I Chris. as to today. Thanks, everybody, with the Select be CEO. thanks, joining again for pleased Good am discussing

person, many founded soon. I full had very into a I'm Since in the made of things customers very of ongoing employees, meetings years back I have to me. few These meet and lot on and meetings XX time. role, will and ago, I excited our discussing As job a the them I the of be stepping all are and you company with company the business. to visited CEO of clear have aware, nearly regions back many

solutions leading on First, position through we and are customers. things improving around value-add chemical our focused water have a and strong growing and all for in this position solutions very

and near-term These strengthen the on recovery this cross-selling position continue chemical water drive and we team, growth execution a our integrated most to share, our Select and and To solutions, development to solutions and existing in our water customers. provide Second, and life oil active technology focused and our have our what capture business importantly, deep efforts are research towards operational to drive reorganized market. solutions position across of execute integrated integrated advance real gas in we relationships advance a changing space. the operational This our puts and all and and market basins. our footprint And marketing sustainable have in value our customer covering third, reuse an chemical expand and to sales water excellent our the cycle.

in into the how we new we our outside knowledge gas. solutions expand transition long-term water can the the position, the and know-how on believe are to capture focused also energy chemical future oil We industries what leading this With of for and areas possibilities and of holds.

As economy with all water in. our we and and health, communities to conserve to Select well-being live of know, a we commitment reuse. the that sustainable vital on work solutions developing social and all is is water focused directly

alike. a every that day, best We the get this inside team into is that developing we value-add solutions that results is Select turn water and in quality where is. for and to couple right water an treatment to that a works our unusable innovative usable make have the logistically chemistry the We place source the at that source, which right then customers water known communities can

barrels year. have billion you If to customers of a step it, our around water at manage back XX produced look and

local the We In are and outcomes. goals role short, important volume cost, bring the shareholders communities. an chemical water play Select and to are employees, and sustainability repurpose the building of reduce solutions all on effective in that reuse that designed to environmental-positive solutions will customers, bring and focused our stakeholders, to cost operations including of meet to our

to to around questions, over you through some for opportunity us and Nick? financials time Nick go strategy dollars and on our Now spend some before then longer-term I'll some floor grow Select's take profitability. walk the we of I'm discussing your turn to And provide to the going thoughts capture and some forward. thoughts

Nick Swyka

EBITDA or the provided million around to net on while in and fourth $XX revenues QX dated the margins Thank quarter $XXX segment. across morning, positive million release and of return basis more, territory. you, since the a of press and and each million finished $X February to million our seen both June provided. of range X, Adjusted John, $XX.X within previously ranges forecast finished consolidated loss were to XX% million $XX.X incremental adjusted improvements solidly we've above of continued of good EBITDA monthly marked The just everyone. progression our

driver gross services While the for with of since activity, XXX% above the saw getting market water back with along and revenue XX% the revenue chemicals first infrastructure quarter water growing segment and grow margins the was third time XXXX. biggest

in Tier in core acreage saw the X pipelines both volume the serving large throughput. and Delaware key our returned, activity Northern As recoveries Bakken

leverage at margins. significant have which margins, quarter's operating related to impacted pipelines and while good strong results, us the allowing very positively logistics fixed pull-through other Our work

cash flow. free at Looking

led to XX% after revenue exceeding QX, some call $XXX cash year, million year, the difficulties original on the a year. even generated increase of While last headwinds free XXXX capital impacted this we in our target flow working for all quarter-on-quarter stated that the

front our time more big analysts I'd and Q&A in to significant liquidity, our vision free the a three different For I sheet into the more number very while about, I segment will Usually, step time $XXX approach drivers hear and we've research in of of for around environments, that talk about through the last balance, the quarter cash, us. $XXX individual to debt spend to a years, million us us the was million business, strong million that investors to from flow, return drastically shareholders with no served maintain assets impacted make forward pay revolver of our certainly opportunities our generated fourth our company covering the approximately see using more think of be while allowing a $XXX providing the still nearly investments with cash quarter. vision. building and balance capital this sizable we to John be And better finished We happy of getting cash that year balance. the a and off

insurance on deeper best and Given year this would safely, like follow-up with be would or dive and and We're company $X some who'd the a as of savings we safety such call here to the year-end challenging will focus and of resulted ever quarter of with everyone our the comp metrics more happy to our workers' employees' relentless a into at through to mention accruals. if year. roughly of e-mail safety to us. in call I ever especially relative that that, proud one I Chris operating you'll like our our significant on programs finished million

and Now in some we see forward-looking I'll of cover guidance the businesses. our trends

We may have to our perspective, deal while the and number. incrementals. across In couple QX below we a are increased QX from QX there adjusted the EBITDA through that limit momentum overall of continues attractive of a revenue of over margins pulling And factors modestly advance QX, segments, operational QX coming purely year. rest a to and into the good QX, XX%

severe we operate, areas communities, on so Texas, had many has and Louisiana, in polar the vortex Oklahoma, impact of of especially our recent Dakota employees other a many including the and tremendous but Mexico. First, North also in New

This around fuel. a supply primarily diversified a infrastructure role maintaining will base need particular, some weather ensuring Our event week well integrity. demonstrated the priorities our around their as families in legacy safety importance gas as and has transition and challenges of last the our well chain, customers' country's employees essential the of were our to of play as the natural and energy

activities to Looking severe ongoing weather immediate around limited wellsite. impact, the our the significantly the commercial

temporary early recent activity of bit like in. operate many the of impact on Generally, structure event, saw project in impact a to basis, a doesn't have cost affected across the the a challenges but but this, quarter's While results. shutdown will face change full event for the on an meaningful our our given a financial the on much weekly we and a areas the in employees skips location and the many temporary effectively of revenue organization, areas week, this we

water a the QX XX%, we up the still In revenues to with along Looking X% the Currently, quarter services factors. nonrecurrence of likely some will primarily impacts, and to compression. will the to infrastructure, of this modest due recent is see be water believe between now. first somewhere margins so weather positive

Chemicals, will rapid the in raw in adjustments pricing before oil-linked near-term While QX. a costs recent materials impact lagging increases Oilfield are in pass-through have realized

quarter, Through cost and down by of to year-on-year revenue impact executive aim relative the below to as XXXX a in rate Looking XXXX SG&A the one-off first to a of unlikely QX percentage XXXX. XX% SG&A XX% after in we're the and the Even SG&A that the get digits XXXX, is end single at year-on-year run hitting to of severance grow our back on basis XXXX efforts, SG&A. XXXX. still of were levels QX from XXXX we cutting rapid

of at projects opportunities already to $XX growth key million for recycling million As to the we look forecast $XX we to potential the over entirety for projects similar CapEx $XX some we targeted recently. the out announced million and million year, $XX announced of another the maintenance metrics with

Though a the we time, cash if continue of first free to build faster a particularly headwind market working half We positive XXXX. in than of expect anticipate, in generate the be and flow the could capital year. recovers period will to for

delever future economics February. activity Speaking drilling as in expectations, to customers recovery, such that attractive near of and a flow price prices, a of we to $XX weather we provides outside add to sheets year, an completions we oil factors our setting many free investors, their control and barrel for of There are deliver over disciplined sit overall the cash positive course continue believe balance our the and but operational market economic WTI recent a progression, to positive issues worldwide the impacting see our continued as aside today, containment the COVID-XX monthly here way.

see number our significant but initiatives. of will existing and expect advance economic XXXX and present from XXX With not crew recovery, range a the XXX earnings curve of the QX will these the of anticipate year assumed adjusted current the remainder we levels. to half QX crews new only toward back frac from believe EBITDA progression to our come exciting We in forward active the and a count businesses,

talk vision. to For back John and those, strategy to our turn more on about I'll John? it over

John Schmitz

Nick. Thanks,

but with Before we Select for we all capture but solutions what jobs, Select oilfield, value-add and are bring gas about was in understand take rightsized continue focused space. rates is customer sure today capture business. cost or will and our these doing always base in and We we to free and know synergies company, we are talk our dollar XXXX oil market, our make that where Select that in chemical that have and a with water year built it a going operational of performed capital-, base will with more we it. profitability the more job. solutions both allow and and But leverage. get This focus and way, where the per let's the is We're generate share, business. It a sustainable to to flow. back about fully in number well said, chemical it We we focus has market has also smaller thinking positions had that. past. on tough to finding to cash Select out on might of be is to water less. leader asset-light run between we're for can to

customers go is. We of largely will asset energy developing skills balance current there and have our can activity out customers Also flexible and mobile care if unlike where oil that no will major new deferral do so base many skills This our the and not maintenance gas. strongly are and challenged to service others it's on wheels, assets meaning issues the sheets. we We be these or transitions and with feel part customers alike. for are

Looking sustainable as and company on a our forward, advancing strategy solutions our growth path primary focused chemical through is three ways. water

that First, we is customers for through revenue on positive continue technology outcomes value services, to are and create for ESG advancing growing already will our base to our integrated our and energy that in improving and focus place for and strategies. to profitable business experience transition us

chain to industrial our and value expertise chemical and through water energy extensive our use will the expand into footprint applications. we Second,

accretive Third, prudent strategic we and in way. and pursue disciplined a M&A will

As and private large for a companies. market leader, independents majors, Select works

few on are fully customers and a chemical for for integrated growing consumption is an congestions. the positions, traffic of solutions of that we cost Select's effect in that was ESG. industry we the we where that solutions. Select time this their this can to customers help our as and of to site. address spill companies our just believe our and their through and to and do. If operations, recently is methane priority position who analytics to execute data of Permian improvements reduction forest And impact specialized and what are industry's has automation well or point, would also increasing that on we we reducing brought can the capitalize fixed reduce solutions reduce the look projects environmental in solution, have and believe Select are, flowback last way and with technology, for less customers targets with the to around the the in real-time decreasing ESG The temporary innovative over trucking those fuel one on reduced annually is monitoring, to ESG XXX,XXX on allows and internally, will capturing today, needed looking allows deliver from meeting industry the checks with water which where them over emissions more capture we recycling diesel more water To safety, and today. deliver capture automation, critical two cost has and logistics, gasoline come on to provide announced one demand more acres core, decade, our reduction carbon Select have are and for back investors pipeline ESG effect need by companies amount the achieve blue-chip core industry reducing number performed partnerships water is can COX looking boxes. sustainability than and Just the provided deliver Select equal and is same targets. reducing which sustainable reduced through the we in partners Select improves sustainable safety less. facilities streamlined chemical and controls, and impact. continue operators period. and and This the we environmental This on leading exhaust our Select's

for water optimize customers and planning our match best water, produces control helping chemistry reduce risk, are better and to that We results. allowing quality that

solutions power to look focused and replace market already natural continue diesel take their ESG can profitable to automation on deploy vendors customers build solar-powered for solution. our efforts, share. gas, of Select ways with electric and the to that our transition we or solutions energy we As solar fleet, on deliver majority to will

team uses on is focusing Our of solutions. water and materials chemicals chemistry, reuse renewable developing raw biodegradable while always

and the be chemical sustainable industrial related for on So To in have good industries. fully but group formed in is we There oilfield chemistry, what and this Industrial believe the learned a needed fits space we XXXX. and knowledge, our things opportunity, we industries. assets a and water other lot that technology more today, developed focus gas Solutions market are it and can large in the people, where is we've into I in solutions. of I for believe addressable taken to oil

contract won with last solutions ultimately of water XX example, sustainable to For revenue an provide year, paper we range a generator company XXXX. that a for top a industrial became

is Given chemical fluid development record. to logistics, this knowledge research track leads large M&A, piece, automation, and success, Select to M&A. and across continue final and market. me M&A water on we have a use in strategic our management strong and we to new advance a industrial opportunity very This opportunities our expertise will focused manufacturing,

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solutions. technology; doing centered protected focus less; and with energy streams; cost and predictable more M&A and contracted, synergies; revenue revenue ESG on: advanced our So transition is and

we always shareholder value. with it change effort business; drive to our grow that, what is on to accreted our to execute two, drive so in we new strategic, value, in my have we With primary base expanding changing, to use and To more The create got value-add return with and one, Select and lead in should where M&A. create number opportunity; then chemicals three, areas. is profile. expertise value, protected and number number first, got smart into to it and the create this simplify: our new of focus market All water stability

you leave this. with I'll So

we potential am platform real or have company I the to share. today the but it primary As our shareholders we and and in X that, It's for to million people. importantly, business the of We own shareholders, what of drive so and can let's or this open Operator? shareholders, questions. times never and focus got just customers right we a need with other this Exciting base sold partner, believe employees. areas And shares value right opportunity. with lie ahead. your is footprint, my very I into take

Operator

[Operator Meakim with question Our Please ahead. go from comes Sean Instructions] JPMorgan. first

Sean Meakim

really So about how I in quarter fourth with helps a the want to bit it context and going infrastructure little forward. us of business start the think

the it's external bit a that. a obviously bit a a volumes the difficult factors So little I that there's been years see to been there. in was to lot I little the but of model, couple surprised magnitude found business influenced improvement of of have last

maybe of is just it about the business the 'XX what should that what and looked can how delta existing distinguish between beyond today what think like expectations the like, versus the looked terms and the relative to influence doing? course that what versus quarter? the our in infrastructure, what we Delaware, Bakken today we utilization business over that So for for fourth could should do the How capacity

Nick Swyka

Sean. Sure,

completions low third know, had second So frac very the for crews. and as very and you demand few quarter

an saw that quarter acreage. to really core you real of our but the in our X upturn level, in due it the outsized pipeline the Tier locations fourth in So represented business activity

related services We so there. of the macro and that to major pipelines do And the a our expect continues that of were performance especially pipelines logistics to in driver those environment improve. gain the continue,

in the a Bakken. typically quarter Second is weaker little

typically, a down the slow breakup there season and operators see little You bit.

weather less second strong, to and the you'll But past absent adjacent the issues of week. the system. on Bakken So volumes Permian see our probably quarter go pipeline months, continues

customer volumes. increasing are their anchor there other and have We both big customers the that

And so to that forward results going should drive here. continue

Sean Meakim

a revenue for here. revenue in then mentioned but an XX And start of what contributor opportunities that questions last understand a terms just industrial look new dialogue customer I'll these us here pursuing, you're lot and of there's like, year. those to to Clearly, top becoming opportunities you

upstream just So of as these opportunities about about catch, customer and transpired engagement transpired, words, chemicals that how didn't to In can does If that how more I'd bit a understand providing part less that that shape like you're talk business? services? specific an better that us compared how sourcing, pursuing. your I you other that how to traditional can traditional you're specific help quite example? that water was little understand the example

John Schmitz

bring one. Sure, participated it a an industrial and Sean. was application. managed their the water in No, chemical forum. that I'll water to plant we a It in take synergy, we value to manner that mill wasn't the ability paper

of and So oilfield, that it's that able do equipment, water, to them. the All water. situation things various in the and oil we day we meaningful for know-how movement be set, way to performed got step value of the had in is to did a ability because day, whether we every we an we it into the bring we every outside that various with industry for how containment things do that skill And it. actually the that gas

how we if will. that's So landed the customer, you

Sean Meakim

to just so clarify. And

hose customer. just of existing a it to different where flat business, looks I delivering like lay we're your type mean, of and using operations a So traditional you're your lot lot a but

John Schmitz

oil lay the devices. all, was it solution is the a first gas flat, We, we But devices, brought and of correct. manner storage, centrificals, every that equipment various of that movement monitoring day the to brought use in skill and customer. industry the That sets in pieces yes,

Nick Swyka

throughout Really, it's applicable a logistics industries. and the piece, number treatment of

more and there are forward of here. sets And can so paper certainly but others, is develop skill -- have these we and one to use those that of going and

Sean Meakim

geographic -- of somewhere piece me. of it oil are is operations gas in -- region and upstream -- most clarification of for geographically the customer was your Was outside? the your where last And or

John Schmitz

area That well oil gas there as oil active It our sense and in space. of we're in activity, footprint there, a we one an do gas and the in fit ability is as the have side the do established water, treat that how how move various that an yes, you was all things had in But of contain how you treatment in it, water, we every day. was we and logistics already operations. and you it the area

Operator

Our Curran next from ahead. question Riley. Instructions] Please [Operator comes Tom with go B.

Tom Curran

John, what integration? your ideal comes optimized for conceptually solutions value what specific of entail? synergies between chemicals stage should version next And to creation water be better when phase next the associated that with the like, it of and integration vision or looks the should what

John Schmitz

a thanks between to in we question. and The the that. has applied reality very for that's that joining base business chemistry a Tom, have water So the today is, large relationship quality

the drill out Then the logically completion water. frac downhole the phase job adding that applied with. of itself job, today, or pit We where right frac think the about is it. if will in of a make back get frac actual water frac and you into there. to it's participate Then the after this the water you to of to cycle and you're potentially water a think of water, on it chemicals you to that side for get have ready chemicals piece frac be it's move that to if into for So type used going you a it job going the certain

And is participate able in is produced So for and the source effectively used water the used water the out chemistry the for fluids space. that's or well. that a important to in Tom, we and a value-add efficiently reuse. the treatment is complete last during piece piece to the very water drill the that be We that That's where get. that a potentially we because in participate, us phase

So is I. our business base the biggest Phase thing

water we really to That's frac we complete. make the we every it effects in water with of the we the chemicals what in it a do be didn't first either this produced we but world the So can to ready the how chemicals up the the together repurpose the to used can have of step, to in water bring again synergy, used in how for linked them can side able frac, where getting then of frac, on And water Tom. the day, together, pretreatment it.

Tom Curran

to returning realizing original behind acquisition. fully the Energy the strategic So more and Rockwater rationale Solutions

John Schmitz

That that it, important and looks and water that actually is really consistent. think them. really correct is type And it it together what couple what like, bring and it's to if the Tom, about you stays

the water You don't the both chemistry the the be quality job enough want that not applying too its job, because the then much stable, to in results as job job. affect cost of as of that could either well is that cost the effectiveness water the changing. chemical or water to stabilized not if And chemical, matching and can you drive you the of both to

together we Tom. So is base sure can value piece make it really bringing first of business, big of the bring to that together that and our couple step a

Tom Curran

turning question. then and group Industrial And the opportunities set Great. Solutions there. Two-part the to

the evaluating then second using you first First, expand is up of turning effort. the currently that prospects would going it in Haynesville? whether industrial a more reactivation of have this part the is in And did did be Would this just the John, specific lead to to or industrial that the the idle or Industrial it question? you could SCOOP/STACK, of it and the or project, could that pipeline group? paper pipeline forward, a set end reactivation M&A one the Haynesville project are And opportunity Solutions that the to either mill it's lead open to idle you broadly

John Schmitz

Yes.

to your the all, of idle is to We fairly of skill and oil do about we're mill business solution that sets, that whether we fit or knowledge they're believe it we outside of value-add idle believe part paper of active, what and the of pipeline water pipeline be We our that that. would they same could people, reality believe could any our match whether I and pipelines solution our question brought fully dynamics idle space to or knowledge oil skill gas gas that, industrial believe not it's got base the company, We absolutely gas, space First or the in ability really too, our believe, base of but we in that sources customer synergy of do. Tom. and be the all But say facilities, the a that oil hired the the our We there. industrial was Along pipeline part sets and and and that part because early. assets or will outside the do Tom. there. our sources of whether with into exists chemistry, to our

Operator

would final for [Operator Instructions] like turn floor to comments. I management Thank you. to the over

John Schmitz

Sure.

we're assets being Just thank to our for oil well. joining we're well company, industry able use And the of the people call. forward do everybody base what looking to skills to as other again, as business to outside gas with enter the as this able with places both and

So all. thank you

Operator

Thank you. today's teleconference. concludes This

time, this at lines your for participation. and your disconnect may thank You you

Select Energy Services (WTTR) 24 Feb 212020 Q4 Earnings call transcript