WTTR - Earnings call transcript Q4 2021 | Select Energy Services, Inc.

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Operator

Greetings, and welcome to the Select Energy Services Fourth Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. pleasure your my Mr. now is to host introduce It and of Chris President Relations Treasurer. George, Vice Investor Thank you, Mr. Chris George.

begin. may You

Chris George

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

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

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

I'd announcement please our XX-Q uncertainties like those Founder, Form to risks, call reconciliations to now and the XX-K, financial achievements and performance encouraged our our understand statements Form John various Form Chairman, earnings contingencies. for refer differ Also, over could CEO, made However, results, is Annual The our from or as our yesterday management. as listener well on non-GAAP And President our reports Schmitz. to of Report to contingencies those risks, uncertainties quarterly turn X-K, in by and measures. materially reports current on actual to read expressed released on to the cause

John Schmitz

Select Thanks, I'm with the us. you our while base today. for progress a business, XXXX and and like with and efforts, discussing I'd Overall, $XXX a CEO highlighting adjusted for again EBITDA pleased Energy quarter our M&A. to made in with margins some Chris. EBITDA revenues executing be been we've of our exciting for advancing year. diversification on adjusted to of now, of start strategy year seat morning our you over joining little back seeing by executing revenue, Having achievements. XXXX the technology, very and and million year Good ESG the thank Select. bolstering our I'm improving excited finished and $XX grow million, strategic every the total of We on throughout was

We've water efforts. invested a technology growth advance we six and long-term backed continue during sets in to front, the our volumes recycling recycled XXXX On in XXXX. stage by significant for for our This facilities contracts. sustainability the

XXXX. in We recent opportunities continue are customers I more on with every our will And conversations believe we with long-term contract our having to day. success also constructive build development

We active very are M&A XXXX. the also on during front

is on closed times, Libre consideration stock Energy HB Services, the I've XXXX. acquisitions consolidation cash Complete of I Agua many stated and very combination and this Rentals As a for Through we during UltRecovery believe of industry. important Midstream,

doing distribution gathering business disposal In infrastructure rate base growing the and to an of $XXX on assets, close to set revenues are acquisition acquired so, strategic million Nuverra nearly we've and we run landfill operations. pipelines, added facilities, including of portfolio Additionally, Environmental and Solutions. of already

in Select tight operation our savings, critical XXXX. breadth. profile we expanded and drive synergies, improving increased In I economic while will a also continued cost family. through opportunities, these revenue opportunity we environment our improved our capabilities meaningfully business. be and employees and have Importantly, more to efficiency to capture have new believe X,XXX a challenging have and create the and gains across margin consolidation tremendous geographic members new than skilled also market, success the labor welcome team Through a these to we pricing

During XXXX, of energy unique also and we number Technologies, platforms, and have ICE strategic executed Harvesting, transition investments and Emissions technologies Deep Rx. Imaging emerging a with partnerships including Solutions, Thermal ESG

for will continue our diversification look sustainability we As and technology, in opportunities to forward, and we unique to advance look initiatives. invest

growth industry activity While fourth exceeded stable relatively activity was the revenue well industry the standpoint, quarter an from our growth.

to reliability, I of of $XX prices and strong a XXXX our than price sustainability, acquisitions, around the and our onshore budgets well-positioned Select's by XX% than E&P Select XXXX. with technology our platform prices be solutions year-over-year. on see focus strong succeed in water technology, more continued and employee skilled expected X,XXX leadership benefits year chemical to recent continue the grow in and America will and to balance industry, be that's We by for operation $X. investment strong. and our Supported believe strong more base oil our gas with natural up is driven sheet safety our committed is to and commodity XX% now highly backdrop leading a our in overall North dedicated

operational for rely continue solutions truly Our provides water with platform come to excellence unique look to provide I forward they integrated on to the customers, them and Select. differentiated proposition of have our a chemical from and value

wrapped XX% revenues growing Speaking the directly and to year EBITDA quarter-over-quarter another the adjusted fourth $XX increasing million. than strong with more XX% with quarter, by to showing, up we've

acquisitions. from In growth we've our seen strong the business, base addition to in we've the already recent seen contributions

for improvement business, energies, still speak I XXXX market meaningfully more but to share, we to the room Nick cost outlook and in financial good in flow let grow ability our very pricing, have detail, I'll during our as about free first improve coming the advances strategy quarters. integration capture and quarter achieve feel generate continued However, our our operation, XXXX. much cash

develop outlook we and including and performance, solutions, solutions. setting Ultimately, differentiate financial prices and and we're We match its fluid gathering with capabilities, recently the very less improved integrated acquired, and assets around more generation assets well-positioned recycling detail. to Nick With to other Select be flow of our unique strong Select. to hand over remain contracted from on and sustainable investments. this and build year our industrial-related capital through enhance financial discuss infrastructure and pipelines, it for cash competitors very stabilize infrastructure. recent recycling adding XXXX to our portfolio and revenues, technology revenues growing production our our further sizeable the continue up our With will further pipeline water pleased very focused is our and these incremental I'll exciting our strategy, With and and to Again, opportunities. activity, that, strategic I'm growing commodity a operations provide acquisitions, in recycling projects, allocation performance cyclical

Nick Swyka

everyone. John, and morning, you, good Thank

gain revenue strong XX% reporting adding quarterly financial income. while net continue positive on to our margins recovery, expanding We growth, and steam

third $XX second. Our $XXX from million of fourth the from quarter quarter revenue million and increased million the $XX

To bringing net the as $XX.X quarter we're to importantly, successfully bottom million this, with the growth we're from $XX.X John outlined. more in million $XX.X loss of and net elements over to quarter $XX.X revenue our of through million quarter. strategy fourth three income accomplish XX% from leveraging this third of More the line million third a all in EBITDA adjusted of

gaining through share We market and strengthening recovery our businesses, margins. are base driving

came Overall facilities, seismicity particularly to growth margins expect stress concerns. online limiting both for contributed to revenue through sources business EIA grew even higher. while segment, industry volumes barrels XX% further percentage the none XXXX, that XX% other continue grew two while while initiatives, in projects though in example pre-acquisitions core water XX by the is during fixed improving freshwater recycled our that million Chemicals of during businesses disposal our advancing will benefited three quarter-over-quarter, and these directly the base acquisitions Our and regions, points, Infrastructure the revenue we efforts, recycling fourth in In margins regards which produced by segment. third-party which XXXX. diversification and our through quarter-over-quarter, latest grew our important ESG came and water from recent and technology, contribute Water of demand low-single-digits. recycling completions in we waste to also areas Chemicals revenues our of alleviates This estimate driving Clearest sources this improvement segment, quarter

at Finally, our efficiencies Rentals. strategic on attractive materially contribute I'll Libre valuations transactions realize We to they although to to was still Agua begun have touch of The HB extremely additional accomplished and we M&A. have bottom these in integration largely believe line. executed during QX each and Complete the regards of we to

forward. those expect course We increased QX margins of the over going with to finish integrations

as regions, strategic our network. add With of well service across opportunities the the development Bakken, acquisition, complementary future and closing and gain consolidated we Haynesville Northeast the will infrastructure assets as water for Nuverra capabilities

particularly completed synergies, Additionally, Nuverra's we the acquisitions year. cost costs. have Overall, and by drive efforts for our given course integration these further should company summer, consolidation standalone profitability we of the expect end the which over of public the expect meaningful to

new facilities. cost additional These assets in gathering recycling the to in bring and networks addition synergies synergies, regard expect also water linking pipelines anticipated infrastructure we In revenue forward. additional to going especially development and potential,

these additional the advanced ability around Given confident projects customer of recently XXXX. in current assets, during acquired some of on to state discussions execute we're our

XX% grew and quarter, in its while gross segments to the XX% Services to margin at between production obscured operational acquisition operations, Looking holding fourth Basic's businesses. and XX%. integration services of other Short-term legacy Water segment and margins individually, related inefficiencies the the revenues the by improvements

million said in fourth New coming driven activity Looking share revenue the improvements will increased modest efforts by XX% This Infrastructure forward, combination recycled Basic's growth Agua additional the the pipeline, and market higher be contributions water by pricing acquired in and newly we and by XX% growth the come initial friction revenue That to from to Libre Mexico margins. first with X% contributions around margin of expect Water our from in consolidation weeks. of Nuverra. operations quarter volumes integration assets. from $XX a through the improvements, will Nuverra grew balanced quarter, margin revenue gains, slightly these improvement

over increased XX% to fourth well. our gross high acquisition produced segment's Additionally, to for a reiterate, with that Agua that these from new percentage margins from quarter the and development and touched the points additional performance contributions with on growth have market combined the activities have and result first Chemicals treatment XX% in anticipate mid growth. XX% contribution traction Oilfield recent quarter to Libre by research full the should I range. water earlier. additional We share reuse in recycling revenue But technologies as to activity in growth the led gross quarter, three gained margins led facilities,

raw material as same see the in higher improvements first to the modestly for around pricing level higher linked costs revenues gross with Chemicals expect as We fourth, quarter oil outdistance margins polymers. the

Our during and reactivated Tyler through well margin is freight enabled improvement performing quarter. reduced facility fourth costs the

total Looking costs the about during million $XX at quarter. accounted transaction SG&A, of for SG&A million our fourth of $X.X

million used the see fourth While negative million $XX million SG&A the about our required additional Cash for acquisitions. the by to $X.X continue million decreased we Combined million. the million. consideration quarters, transaction existing Overall, and CapEx Free quarter and drive year our likely the of the course capital in $XX balance approximately bank consideration the in revenue this total reduce at and full-year. approximately $XXX hand declined recent cash our total retiring usage revenue expect Nuverra for of million QX of synergies consideration efforts, was debt acquisition our we our for was $XX.X integration-related higher fits hand around an third; needs recent X.XX and total our be over cash also million cash We'll to Libre of liquidity the million use we and solid quarter of will fourth by of for the under of platform XX expect Overall, XXXX. tried the X% growth assets. Nuverra Agua increase cost cash will in the to with the bank on we this model. acquisitions full anticipate impending Rentals equity of impacted flow to working targeting across acquisitions quarter with of from and came the with We've integration working relative on during amid another year-end balance, this incremental costs free at debt cash $XX HB continuing as no but for for our we're to while cash issuing couple capital. of strong judiciously shares $XX in for stock flow cash

the QX environment, of to the which business with Looking said quarterly be provided move EBITDA the million at quarter, that continue we will higher to partially result in towards in of half net income with QX contribute the inefficiencies strong macro the year guidance positive net optimistic acquisition guidance. original the to I and In that us $XX incremental near-term sequentially first leaves the year. results will under Nuverra million in of net segment solid XXXX. from we integrating through the we XXXX, combined meaningfully adjusted $X.X able generate CapEx just That will were seen still the finishing just that execute fourth $XX million CapEx earlier, will may growth

acquisitions. have We constantly of water by expected investments opportunities. exiting steps tied of on consolidated facilities using anticipate large recycling about to return of previously portion and our XXXX base, optimizing capitalize that operations continue $XX recycling a exploit asset changing discussions, of million, numerous to gathering from We're in asset spend today. infrastructure throughout environment to cash cannot such through the XXXX our took of that downturn improving that XXXX to ultimate better and the depending a of will flow fixed we fund with maximize execution initiatives The CapEx. us net maintenance difficult contracted and our the inefficient infrastructure to and to seeking $XX contemplated enabled pipelines million on be and half CapEx We on economically in other and cash operations, as higher portion return consolidating assets and sales

We to open customers create to and fragmented targeted Thank dynamic through into we'll disciplined and sustainable chemical up will growing investors solutions, value for our capital water it consolidate to And more for Operator? industry continue investments with our meet management. demand a make questions. stronger that, you. networks enhanced

Operator

a conducting be session. now We'll Instructions]. you. [Operator Thank question-and-answer

comes with Our the Please line Sandler. from your with Piper MacPherson question. Ian first question of proceed

Ian MacPherson

on here and with Just obviously But QX. makes to a outperforming with or quarters the moving seats margins basis. a inflationary across congratulations the to to bit -- pricing And power And those. expand your than you and could expand and going Services. sequential the more going it speak lot of broader a Water acquisitions how of platform wonder I of business in in for environment from the if see Chemicals just pieces margins and recent and foggy in terms little your if generally are organically? our market the was How margins you months from cheap respect on XXXX. business It comping realistic on in Chemicals pricing maintain able forward? organically ambition your you this negotiations rather maybe being in Or think it's encouraging a

John Schmitz

is John. this Ian,

your question to your get we here thanks and Before for question.

we we just Solutions announcement that you As have seen, Environmental released may morning. closed this our Nuverra

With that, put So that started just your here. question. get to before want we'll out there we answer

our still units. One Water environment inflationary we're side is of Ian with we're and mindful So in on are various here. success, an Solutions, thing pricing both having Chemical pushing the we business

success, oil we and raw links are on labor cost materials other polymers, on So still that pressures with here. seeing side

our successful. posting pressures been have results this it to are we good margin. we we continue WTI are in to and Obviously, environment well. cost grow addressing with where But that So as expect is, customers

Michael Skarke

we the adoption well and chemicals. saw Hence really our water. is and this about more more FRs. produced Ian of Those specialty kind been basis. on performed of speaking move for we're demand FRs. just complementary and increase market direction scale us Michael quarter, relation specifically seeing to In other produced good fourth specifically on that helps bigger strides And that we've the We've Skarke of an to well products. pull-through our biocide, And to per able making a products, some entreated, the which a and specialty revenue a our we're seen is

Ian MacPherson

Super. also, Thank pipeline. if into John, your guys. just could dig you we M&A wonder

You've closing been on recently, awfully Nuverra this congratulations. morning, busy

year attitude ahead grow you the to business? How opportunity the already balance your set for set would the use that to to to towards opportunity much were continuing and compare recently. that so sheet done scale you the If you've relative in

John Schmitz

And be in-house. we because as like deep And value. feel mold a going on do. we're and want systems. M&A have chemistry, to Yes. continue really did Yes, to be that It's Ian, to we But to we strategic recycling like the and to a way comes a geographic we want return in we is around want judge think we proper, fixed M&A lot at to add got always open of we it We footprint, make the and go-forward. it we opportunity sure we water that opportunities. where eyes of when asset to really pipeline a fit what feel

assets, assets. and you put all doing the Now chemistry around now together can matching Michael that about said, water think if those the recycling. what things do then, as we is And we produced with these different to industry

assets M&A So today be opportunities discussing got our And got but want watch got to devalue. to it, we've mind, We with where on lot we're in-house. we get is strategic we that it's them. customers of a

Ian MacPherson

I would be with to ask that? rearview it may that you now, spot bid but in think spreads stand of reason disagree sweet the mirror would your

John Schmitz

of of in have really, them buying really When to base that like general. nature, as that going that's far match, or potential and could continue you watch at bought market, our assets, things, bid just assets we ask in find about things M&A. to we really or the you we're maybe total, on more find that, and matching these if as where be look more But devalue and around Ian. Ian, think abilities M&A close we put It our it, the in when the you already strategic asset that

Operator

Citi. your with J.B. proceed the from question next with our comes question. Lowe of Please line And

J.B. Lowe

good guys. of in if business have that the Hey, mine quarters. I could in remarks. don't prepared into question. Bakken kind went you the what I'm on you and visibility do through terms next expect morning QX, of Quick you do this guys know infrastructure, couple the But water just your wondering QX. over

John Schmitz

QX Typically there. do retreat season Historically, breakup we see Bakken. is the in the some

with picked work in fold that systems great the our we with infrastructure there. and up here, into some Nuverra have can Bakken coming However, the assets

as have there, year. beyond longer-term you've with historically expect the a broader peak QX the to not some build But of QX. we'll but noted real We out opportunities Bakken is network

J.B. Lowe

any the -- it's you a you segment on charges? do of the given segment incrementals kind kind also maybe define just one ex a few question a business, think think Fair basis, enough. could moving insight depends kind base what into your by of as do business? just over next basis, Other that guys on corporate transaction expect the guys and was do But base maybe all you guess on have integration the ex of you that your it you a And costs I kind quarters, what of tough what or on but parts.

Nick Swyka

so seen XX% Yes, we've historically, incrementals.

to think estimate seen pricing that are will CapEx going here. XX%, to America continuing reasonable XX%. put feel the see of we we see additional we from gains to We customers XX% and into mentioned that That use what a forward. there to I that's out our have factors XX% discussions customer North and

is that comes stronger than is XX% the environment to usual, cost inflation it but time, also at usual So same than when I'd stronger too. environment say the the incremental, pricing

together. when these I XX% cost think have synergies benefits use of putting finding do to reasonable but is So businesses those we assumption a we're across

HB extent reach synergies the more with Nuverra acquisition do six Rentals to cost an with also not but well. over Libre Agua as have next months, just So and we to here

Operator

line from Tom comes your the Seaport Partners. Please question with question. proceed Research with next Curran Our of

Tom Curran

morning. Good

of the For anchor you growth pre-frac specifically the Water and tenant. business the contribution pipeline highlighted you network then side, built Infrastructure the Legacy big systems, GRR the Delaware By major on Northern two base pipelines. you to I that assume the super sequential that for mean

what mix those you're from two do anchor tenant us this how sales What you you utilization expect tell course sort the to the of expecting For XQ for pipelines, spot of XXXX? between and volume and year? could over XQ pre-frac rose

Nick Swyka

already So which annualized tenant volume for off the really we're expect as working more look more awarded. we see of area anchor to had recycling. thing tenant, the that of spot sales during would QX. participating do are fill water solutions kind And some those But is that on we to spots the other quarter, New the in The like QX, one going an some displays down we the to pick Mexico markets that's out up as I of recycled to activity other and basement year, anchor rest number many had moving an our from the come we providing note have of well. the good we are in and that of had

ability to pipeline the So while revenue that bring volumes, could overall some an opportunity and down margins. have as it increase to we see

Tom Curran

opportunities turning and what's and million your it, then range facility, Got to, recycling $XX I'm could and and is where you water net that opportunity your produced determine CapEx budget growth existing CapEx out investment between in $XX speaking of in that to come specifically million. existing set here, gathering

similar to to execute that's opportunity owned it million the facility any purchase mainly six, that call that existing we that include set nature range consist $X currently customer? in are existing it of projects million and and a to acquire CapEx by an it just seen does of size simply you $X So size does just opportunities

Michael Skarke

to of So set. Michael, I'll is kind this speak opportunity the

able be involved multiple across we've that that the deliver Permian, in multiple I forecast. those to which discussions we're of that customers, really base but to infrastructure the solutions why we've around is we're added in expect to market, some recycling. with going largely And So, provided the

other looking be we CapEx customer exactly you CapEx, the that range or the that be range systems In acquisitions terms of of would kind within competitor right. provided. you're outside systems at would we're What mentioned, in the of of terms

Tom Curran

will you wish well. my as I a sort Got for of it. XXXX. one guess It's two-parter, Michael, list into a last then, be heading And

you investing in And it's already technology, for acquisitions, what First, does are to via you're on want your an that whether targets recycling XXXX? or just in-house have develop going would in what strategy area Where you bolt-on what you have focused are further for expand you Industrial then to to capabilities Walt or turning R&D? focused, the for Group, that Solutions recycling? via

Michael Skarke

Sure, recycling, so primary is around building our the focus infrastructure around footprint. on our out existing

assuming and we service assets So assets. build we've amount There's for acquired considerable existing like on standalone Permian opportunity prevalent in and opportunity also the the systems the a volume and we've the their is a see a from past done us now half Nuverra From or Basin. Agua those most recycling in of that's customers, the where Libre customers geography, around to with those Basin assets probably standpoint. nearby to Midland in Basin rigs Midland an and the

in in got So of are and involved Mexico looking discussions of beyond there. general. to Texas, We've and we're we're outside But West Texas that. focused solutions clearly outside

have this is Industrial Walt that revenue progress come stages strategy. we're start group beginning And year. -- executing of has to momentum a half relates his gaining plan. we're back up business in first make team early of of staffing assessment. really the He's in capable to expecting it that and finished and and the building And As Solutions, with a his market

Operator

comments. the hand concludes John back to the any like call this questions-and-answers final for I Schmitz And the portion over now call. to would of

John Schmitz

Select the with Thanks us next opportunities that forward allowing us we front us to of discuss got XXXX and to participating and quarter. for everybody you and look talking in to for

Operator

ladies And concludes you does thank and today's for participation. gentlemen teleconference. your This

day. your wonderful lines have a You disconnect may and

Select Energy Services (WTTR) 23 Feb 222021 Q4 Earnings call transcript