WTTR - Earnings call 3 2023 | Select Energy Services, Inc.

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Operator

Greetings, and welcome to Select Water Solutions Third 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 Corporate your Sustainability. Development, my Senior Chris now President, Vice Investor is to host, introduce George, It Relations and you. Thank Mr. George, you may begin.

Chris George

views of securities telephonic reading.In laws. The in this accurate until may These forward-looking by be on also federal available the X, Select's November only replay this joining and Officer call Swyka, will of Michael the Executive release. review call Vice be reflect I at or statements Founder, earnings Chief time-sensitive President yesterday's today's of Financial was of XXXX. our XX, the and within Senior We and be by replay today, Officer.Before current to therefore, Schmitz, may note speaks the operational Chief Solutions and information transcript Please operator, management. call President our morning, the a forward-looking information contain turn financial as me call have items longer available us There third website Executive during this XXXX, Operating listening today for selectwater.com. you November John of of quarter webcast over that conference the no to you, Skarke, Chief A housekeeping of reported for and information also and addition, States Vice John, Water replay With for United Officer, replay made recorded and comments as call cover. the time will management Chairman, webcast Thank and our President results access and Nick a Select XXXX. conference accessible the good the meaning included statements I appreciate everyone. few to are from

annual read contingencies those listener from refer changes our XX-Q of measures.As structure by reconciliations Please differ encouraged on quarterly contingencies. its reports cause driven X-K understand the to made second as during reports the risks, our by strategic our XX-K, achievements expressed certain of various segment and on uncertainties operational those were is made Form on our management. report performance and current results, materially The our to announcement or Form yesterday the risks, reporting Form XXXX. However, actual well in could These to earnings as and for non-GAAP company financial to a factors. released uncertainties reminder, to changes several quarter statements

Prior of segment changes the to new is to financial the Please to the to the information or operations cash impact Infrastructure Investors release and like Water logistics and John Schmitz. conform re-casted Founder, I'd reporting for flows. been within current in CEO, the from However, information.Now the with company's and recast concurrent of segment results to earnings the temporary historical include reporting operations no filed the over the periods on section segment.Historical operations position, information water remove Water supplemental Chairman, available and the of at Services company's the additional our segment financial the have report investors.selectwater.com. refer sourcing as Form have structure turn our results in X-K those consolidated call on with SEC company's website water President

John Schmitz

with Thanks, discussing you be for Good Water pleased you Select Chris. and to morning I'm us. joining thank today. again Solutions

continued operating growth flow and segment. free see we the Infrastructure and our to in cash third delivered During substantial quarter, steady Water

million the exceeding continuing helped including returns in able million us vision incremental free of excellence and of the reduction remain projects third bolt-on for of made were organization our through during deliver we ample the XX% well provides free free management million made cash to during the efforts focused cash shareholder a flow, quarterly EBITDA strategic quarter our on paying capital quarter. borrowings to the accounting to to quarter, third our capital on funding progress upcoming facility, leader working capital credit performance Nick $XX to cash chest cash growth infrastructure very $XX across working will in effort quarter, bit quarter payment I'm water recognized supported our flow to on during our full execute organic to continued projects targets during outstanding for additional in to more trusted by heavily about year now we repaid $XX position remaining pleased a believe expect early.Strong building capital off by spent by quarter, and but more and adjusted priorities, M&A water After our tremendous the year-end. entire number our the review opportunities.We with outpacing third against raising with including a our capital toward substantially flow steadfast growth strides and operations expenditures, cash the dividend of sustainability things, our allocation during touch will us side in borrowings are enhance linked further On and our the be flow the than outstanding vision. returns third repaying from allocation increasing the pull enabled quarter. period. Replenishing We and million all dedication our of returns.Having a shareholder I long-term of weigh components weighted our war $XXX capital net CapEx reduce sustainable detail, the partner contracts priorities, see towards growing the our attractive cash that solutions operational achieving opportunities with

more margins projects and on flow still is growth and across to been excellence. flow, around great integration, work improving efficiencies made especially and done on has the cash operational around operational have many XXXX be and for acquisition efficiency these we focus generation.While cash progress focus free Our of integration, infrastructure in organization executing areas, free there and infrastructure the

downward to water outperformed our to of did a completions the services consolidated decline revenue of impact the from and the activity in Chemical than the data, some inside activity onshore overall segments levels XX% activity overall industry both Technology revenue U.S. well more levels. with declines While see we business according

that through solutions the opportunistic vision increased this to also Technology targets XXXX, I to am the and importantly, our and continue this to profitability size, XX% about the to for margin of contracts, as a during Infrastructure infrastructure to the Although demonstrate to margins our than segment, profit hold quarter D&A contractual able have infrastructure around announcements company, past XX% proprietary more disposal the now and technology D&A, revenues recycling customers the to improvements and Select our recycling quarter. to basins. quarter I to saw opportunities the performance, we generations at through growth year-over-year. see third lifecycle chemistry Water we and find technology than company's coming scope Infrastructure quarter, getting provide segment of high on we're as I committed to took expect XX relationships up to quarters in in revenue and long-term infrastructure future infrastructure Chemical grow relationship are back gross of percentage base.Our increasing mid- well. holds volumes and footprint. the additional before third continue experience and during XXXX. Services quarter. relatively around months, flows both were long-term our shareholder M&A application these and opportunity margins can asset We a XX% must in X%, XXX% our able near-term respectively.We margins the with this XXXX.In the before closely we development both existing contribution incremental profitability steady positioned chemistry and contractual were see of these we basins of revenue for a provide what new more seen Water look of footprint, third margins service our to nearly of more our integrate gross as as continuing us in of modest step volumes momentum in and second We deploy and demand value Water segment dollar integrated by across and Infrastructure infrastructure Water company to cash the drive brownfield by our value is where And X% utilization grow the boosting of and relocate challenge all operation or leverage volatility, profitability on project solutions expect certain or for to in will the Even strong create incremental projects make Water profits of has look XXXX.By have infrastructure across locations, to I the and appropriate, the execution projects asset including well consolidate growing to for executing capture double continuing And Haynesville for and growth our of multiple quarter latest the growing and assets remain quarters. determination scope the contracted in our by particularly recent investment uniquely have continue base.I X% to chemistry accounts in especially and service compared high growth margins the to of our be scale during entire further our the to gross automation, systems, around to facilities deploy, opportunity you have activity water we and cash the areas capital than recent constraints infrastructure across growing areas strategic a this XX% XX% excited the with ahead. infrastructure volumes recent our fourth XX% and positioned returns segment Services quarter. With of customers. gross forward overall flow capital opportunity around saw the driving operating remain we where continue attentive we pipeline for with sequential water segment. the during great am most to every incorporate we'll every disposal into of across incremental water opportunity most water prioritize business, our and allocation the chemical strengthen to to beyond we with Ultimately, across third in significant able to dollar recycling our base add Select believe further for expand the continue we delivered We areas solutions of continued full as strategic greenfield network the infrastructure and the organic all firmly gross nonperforming

and discussed, a the I'll I look as more initiatives, results forward and quarters these this third unlocking on ahead.At I focused to firmly enhanced our bit and cash speak detail. in Nick? Nick outlook in to profitability are We more quarter time, let

Nicholas Swyka

on increase shareholder morning, facility good enables cash and Northern adjusting flow recycling cash John, returns dedicated water Delaware to working additions intensified to credit our from everyone. returns Selects With our for of third systems I'm and this cash undrawn the model to we systems while quarter as million. for pristine basins.We're us sum, volume pipeline completely liquidity of Growing capital capital and abundant years cash advance you, out yielded business across and balance both and footprint after as a excited on million shareholder the to with well report pleased generating sheet multiple operating distribution XX% solid sustainability-linked sheet dividend. ahead. Haynesville annual is Thank deliver our and our the quarterly of gathering, quarter, facility our expect acreage as a new credit flow to both us balance $XX $XXX CapEx rates both announce on during rising regular infrastructure which leaving well and that as to through and the expand markets XXXX produced our free we and focus net interest our this volatility era this million cash hand. In of flow balance retired $XX the within

summer met $XX Infrastructure a the X% the adjusted the million of the income segment. saw Water more Services believe declined a will benefit With our along that tandem over our million of upward segment the into revenues and with While industry's million under business impacting and than interim, both appearing and customer and parts backdrop third of over revenue and Water our Water be $XX.X some consolidated $XXX quarters, price quarter. Chemical margin, drilling segments.Overall, of quarter, of solid remainder quarterly step-up expectations in quarter positive third the we seasonal net the in should activity million the we to third $XXX activity secular environment of Technologies completions during of growth budget the from last the second, with and during EBITDA bottoming, just robust the of other momentum near-term see Infrastructure with resume the XXXX continued to XXXX in in constraints. commodity In the softened couple

side under focus count with initiatives with Our segment's declined data our suggests closed operational priority a the in operations yard third operational of depreciation portion third of Water backdrop, services million low-performing XX.X% to to a customers by that advanced technology continued in solutions and closely $XXX from locations, little X%, declined activity closely quarter $XXX coming second. water which through working and decline a evaluating this and be the completions Gross XX%. million XX.X%. deliver from amortization, we will margins, the about driving terms to Services and from costs average speak and each declined in down quarter customarily Against the for with excellence, procurement this of peripheral rig revenue before automation.Industry on by efficiency saw or

back XXs over quarter to fourth Technologies macro of with the a are remaining by bit poised revenue in to revenue for declining this target sequentially. with inflect also mid-single-digit expect stable towards our We which mid-XXs, to the segment.Chemical XXXX, was percentage million bring X% $XX high positively environment, with target near-term affected longer-term our declines margins,

volumes manufactured in about plants our were sequentially. So, XX% down

QX, demand low margins We to to volumetric decline process XX%. declines and facilities, product manufacturing revenues XX% percentage and laboratory proprietary our dollar our and to margins anticipate along at research of product essentially mid-single-digit higher of in growth or support continued held Our $X.X just inside a that XX%. revenue of quarter's efficient seasonal XX% held quarter-over-quarter, stable above with modest development development with resumption to the remains activity X% very margins targeted segment's The segment growing beyond just segment the gross just results.Our to improving for Water of beyond revenue opportunities backlog environment XXXX, delivered in Infrastructure forecast, this strong. should our under million our of next cresting flat,

with additional avenues. In the to a yesterday, actively well opportunities in multiple customers other we contracts as addition new over organic announced as dozen are evaluating growth partnership well

by during of to system higher advance segment this expect and and the build-outs.I previously XXX to capital. mid-single another targets fourth flow again We XXX to couple a quarter grow points revenue margins digits related to sequential basis on cash XXXX continued utilization outlined working and

during strategic receivable to investments potential believe and targeted made, QX XXXX accounts receivable to the progress the of by in and to year future range front quarter approximately on the million absorb we acceleration. second, capital DSO is plan our position Select $XX outstanding million balance due increase and accounts $XXX end recent I'm M&A while and million pleased $X.X exceeded transaction progress, declining credit efforts our flow of a the has liquidity additional million, seen is not advance, debt-free cash with of company we increased progress to third further opportunities, And left to a hand on between million we I'm year. acquisition the the the before over.As a from I up there SG&A a $XXX on $XX capitalize XXXX.Additionally, reduce making continued to sequentially with a us an manage and $X continue down systems our rebranding better improve finish quarter with the consolidated expect made, our to opportunity accounts QX to integration integrations. third remainder million we've sales costs. goals much of sheet. QX, balance that we do working facility receivable XXXX now ample year-end; with to of we've the began primarily and and pleased report the in days First, to in to we having of cash since those level exit paid in reduced quarter by both since with

be net number. which finishing levels in year-end, XXXX.Our million costs of from related representing the the $XX million infrastructure by early SG&A a will should We third and CapEx modest provide similar $XX to initiative majority that reduction current current by quarter's of for rebranding quarter with new the was previous development

where long-term were Haynesville strategic a actively the priority multiple buildout established Permian feel development in by are basins backed we our strong of systems infrastructure XXXX. for is have We Accelerating contract and investing advantages in as our systems. core pace such we opportunities our

Our full $XXX $XX $XXX million CapEx forecast net expected a its after to range million sales. giving remains previous with in roughly XXXX asset within year tightening million to effect to

We continue minimum. after of basis both by one million regular the and and on announced year quarterly added tax $X.XX XX% $XX to to approximately to expense million finish our liquidity.Coming remain annual liquidity million total during an more interest minimal an per expense expect dividend the quarter initiation, We of to to than depreciation XXXX. plan continue evaluate amortization $XX in to through a with increase we at around a quarter, at dividend share. $XXX and its recently We

and from believe $XX.X growth networks solutions returns may value across add seek to will million In the and addition program growing remaining at And into capital we to conditions. core committed market it our solid shareholder that, while to the as multiple contracted enhanced open buyback dividend, we'll ahead, over that returns we capacity we operating infrastructure basins, blended our deploying or capacity up tactical you. term.Thank Operator? investment opportunities utilize our and investors of stock to to shareholder with sheet With have substantial questions. about both accomplished on long all balance and water monitor long-lived a model deliver flow cash substantial

Operator

you. Thank

now please, be conducting questions. One while a will We question-and-answer (Operator session. moment, poll we Instructions). for

comes with of Raymond first from Rollyson The Jim the James. line question

James Rollyson

what can segment. schedule so ahead dozen Any maybe of than see or size just to opportunities of that look Nice revenue little to what about you think future and kind that evaluating contract targets Infrastructure the total -- the Nick, opportunity with stuff. of on teaser mentioned a might we like? in capital cash a the way the frame the CapEx kind about more beating free Water associated working flow up new is the AR

Nicholas Swyka

as And then you've total Jim. is these a ones, fair Sure, capital investment in projects. variation this $XX seen pipeline earlier as release and in from We've projects done press as million. the high amount there of

$X this quarter. have million We announced minimum for a

And so, within there. you're kind that window of working

when into some those in talking a digits. digits are vary. that of So, the well do the about kind there and There's we're mid-single there, double some are dozen,

on of in XXXX.So to the opportunity same projects of may set we more So, great I'd together advantage The basins, average, some stage and say which we time, at won't basins. have fruition. looking have, the Obviously, triple these we putting in reach of on have in those lead that to front of some digits. take across lot we're probably adding to our could multiple first-mover very those us. we're reach discussions status more a At early networks all our opportunities of

Michael Skarke

Skarke. is Michael This

because that opportunity continue infrastructure past, our and we what fair will in see as we're this to that the mentioned it's growth it's think behind an of CapEx see CapEx, in had backlog to developing mentioned and the set to a that Nick vast year go area think where, relative going I that we've majority it. we to the say there growth of we

James Rollyson

exactly and margins Yes, either. aren't the terrible

DSOs, made strides year. Where obviously, you the this you mentioned the think Nick, you've On over you potential quarters? few great DSOs year, normalize and more here mentioned, next next do progress should

Nicholas Swyka

Sure.

noted, anticipated. organization the those work faster A of lot So, hard as across achieved we you goals to than that. do we've

were we M&A. back so, And before we're where effectively

year. opportunity Now we've size advantage I get that that ahead the us. some I of think taken the we can the think But of successfully into same opportunity we down do not have mid-XXs. this of It's

customers invoices. and by conditions waiting Our terms for as have do as customarily we some far to that live have

stand. But will million can all where cylinders which And so, with us that would successfully think that there of to or AR days get if we're mid-XX the put in here, us of DSOs. $XX on another from figure, effectively we I mid-XXs so firing currently I bottom off out think we

James Rollyson

helpful, fantastic. question. Very one last And

kind Services you getting margins we of higher you're help lines, were two targeting. to on where guys the quarters are. Or and the hoping this something divisions Technologies, back bit to unpacks ultimately market strive to you're how think I'm are both margins? move the go quarter just didn't this to trying where from mid-XXs to as to can you kind think mid-XXs On other that over to maybe kind margins internal or next obviously, get the market moves few guys the happen as to this Chemical do about those headwinds of as that you doing? business of or long-term there? you goals Is track But a need Water all get also back bounce about

Michael Skarke

which despite think of and seasonality of the we've Skarke. processes or is we really the hold QX are. it We near kind some have of where I reformulations that manufacturing Yes, Jim, Chemicals, and that Michael XXs, technologies. term look in our at this in think over can as upside to we kind guided is we medium

very better. rationalization, on the a mid high On it the down still but strategic just little or do through what is think we kind with yard that's contracts very doing implementing of where and organic automation operational just leveraging to that kind efficiencies. of gets We're market infrastructure guided further on and focused relationships on have we achievable grinding services we side, and to today, XXs, doing

top going will to think gross There's we follow And we bit line after and so, near-term margin that. rationalize we're be focused yards, disruption a look but on There's trend to it. the little friction. upwards a as be of going some to

James Rollyson

from year bonus get presume? recovery you tailwind any just then the I kind of outlook for is points, And next

Michael Skarke

Correct.

Operator

from comes Piper Lemoine question with Next the Sandler. line Luke of

Luke Lemoine

Jim's on you've you're of year signed a Just notable this and year, a had kind of explosive be I that the current brownfield kind start with coming in both and this we talked greenfield question. year-on-year outlook months. up projects about and XXXX guess Water how coming pretty for evaluating first could the projects follow-up growth should of about this these investments, Infrastructure, thinking within you dozen number segment? the future and

Michael Skarke

From next we've that is a XX%. be coming don't accretive we're increase. be really XX%, we'd margin a today. kind mean, the kind full majority the on for year where being We are guided gross of term being we the perspective, this I that medium at We've still to online, big XX% to which be. some know plan going That lot of said where projects But going quarter a year. I would lion's profit with we're we to are obviously our infrastructure jump of of hit Infrastructure to that got margin. of for and a are share on Chemicals that

we've standpoint of So, the we're infrastructure gross do seen that set both because base in from and front think line what we we've of together pretty us. put and aggressive of a can we opportunity the asset and in just top terms profit

Nicholas Swyka

we increase, so Luke, XX% this not that done, in as favorable with mentioned, macro between quarter a revenue I quarter-on-quarter. the margin grew that profit And about the gross add was backdrop. and that And I'd increase segment

thoughts we'll I And the Michael steps here and to a early that, grow that could for think it's together get as the unreasonable so, see XX%. next that for that to And stages these don't that add profit higher quarter-over-quarter, of to of you as think infrastructure year. forward and but we're see continue projects we our mentioned, work be in XXXX, new pulling I similar margin think third gross

Operator

you. Thank

from question line Tom with Partners. comes Curran Research Next Seaport the of

Thomas Patrick Curran

pull expect the main margin the For three levers beyond Michael, it the that gross to Nick the these Water and comes division, you next and expand internally high mid-XXs to to when first Services year division's XXs. to to then

and third-party technology efficiency such then network. infrastructure growing support moving internally enhancements manifold the initiatives got You've and centralizing automation like procurement, pump leveraging as the

those you mid-XXs? And from For contribute each And of look on each three? how of high XXs, if then there the you as the mid-XXs the far X just mid-XXs, you the do how getting in are? of shift we the to three to along could is expound weightings terms be of three, to the think Phase the should should a

Michael Skarke

great which a fourth No, would really articulated consolidation I question, there's it lever that I couldn't And have it's a add better. rationalization. is there, Tom. yard and

So, we've put is a underperforming. a in lot of of there's there and together, lot yards some and frankly assets together overlap some

more. And that is think a be lever quarter, we're And occurred very get but Haynesville, I so terms would to going few a now contract terms is leveraging the where long-term be and early innings early it.In infrastructure, customer's of place. that one that contract that's in one we we're announcement expecting that that material point the request just the in material, I really going at to we're starting contracts also had had to infrastructure announcement and this we into. the addressing yesterday, of of a relatively that's relationships, service us we secured in that We addressing. put the in in off

you put in kind that to of supply in year, we that's place chain, chain, you are to think as where exist also share moving that going margin both think in centralizing probably structure. to was development. really look we be but those that's something this opportunities And market and more both accretive formalized something segments.Supply for for I'd so, to Nick, we

Nicholas Swyka

the the getting as far innings. as in think I early in contracts procurement and centralized, place we're

terms I the very, in there. think financially seeing early very of results

few the in So, bulk just of will a points the in margin. basis That's service come I probably think current that XXXX. contributing

Michael Skarke

It's final the do cost-effective automation, you think then water that more labor. something reliable that's lower than And automation. really sometimes along. been of can in differentiator. the more safer, something solution is furthest mentioned, that one would one on terms pioneer we relying something Tom, I And we was a way that a and that that We've skilled a we're say

it's we're And you're so, other that initiatives, while the it. it's along that There's than one something we're -- always further never more. done

runway. that pretty so will be innings, still later And a one good but

Thomas Patrick Curran

of Got it. expectations there. you flow here EBITDA or and guidance, run preliminary then, about $X And metrics still per for to XXXX. $XX $XX realize Are and million I you million just quarter, are about conversion XXXX targeting color breakdown some plan free provide still flow CapEx cash in to take, maybe Nick, and the Helpful maintenance to rate finalizing for to but a formal cash two-thirds million? additional expecting give

Nicholas Swyka

Tom, maintenance than next for CapEx million for at we're little looking $XX year. about as that. talk more more of see a that, preliminary it basis, direct the now, on either quarter, but I'd full million side probably CapEx, but maintenance year $XX again, we'll I'd get and lower next I'll give say, me

year. I working we think was this had EBITDA, driven cash opportunity the by partially for of the two-thirds free that capital flow

of shareholder on $XX some hand. within million budget, We've that. that had our cash $XX flow taken $XX critical it's that budget to So, executed lower. over I quarter. and in to And we year, free going stayed adding for out think the this year million debt little first of projects. our CapEx think I million on really we've with this as while paid X on But then for top probably next a returns year, outstanding cash be about We've

strong generating strong a business is next It cash year. this here. So, be will flow

likely year's I have to do than think this as infrastructure projects, Michael higher we mentioned, that in this growth initial are number, number. probably come

do always, with very balance and opportunities, going potentially and sheet excited both all I'm look as and we're organic at well. as the to conservative related about solid that, that, So, a M&A

Michael Skarke

by production investments slightly as recycling because those in so secular and contractual of market good just exist infrastructure projects contracts one them. or next And reiterate strong growth those point, to the being on a even production the about support really generally trends around They're driven the projects secular year, for feel there. down contractual such weighted have long-term we because of and that trends or flat

Thomas Patrick Curran

And the was just to be or year. clear, per it. million $XX saying Got $XX quarter for I million

unchanged, that's it does if as So, Nick. sound

Nicholas Swyka

Sorry, I there, you misheard Tom.

per X XX% So -- XX. good that sounds number maintenance CapEx X, a like not quarter there,

Thomas Patrick Curran

Right. Yes. Exactly.

Operator

Thank you.

line of Next from Rice. the Johnson Crist question Don with comes

Donald Crist

a I Specialty And been solutions now it's is the wanted data you've the formation getting I more in to doing that there? Any of Specialty flowback and couple data, Chemicals increasing still ask segment? quarters tailored you're since know per about of been Chemicals. back, updates demand kind etc.

Michael Skarke

things couple A on Yes. Don. of that,

well results. to produced on continue more operators chemistry and seeing and with more its we're First, just be and compatibility water focused

good And conversations as really customers. our we so, getting have those we're with reception

last seen, In pretty the quarters. I the margins mean, over for we're we're and tolerant with seen terms results And designed we've the in terms doing really of we've what to in few that more solutions creating happy chemistry improvement of produced share market contributed with we water. water

the pumpers. is with internal. operators We're the And customers good providing of both harder we've bigger our with on you our gotten direct the chemistry. for feedback and -- as more of We've one additionally, open pretty pressure dialogue need on chemistry, water know, And with some the is customer so, the chemistry And produced is the got specialty all you for that. customers our frankly, more have, it recycling.

chemistry where back It a this we And that delivered still kind We step it. driven, a we're quarter. is took number tailwinds of are. of so, completion excited there's about the around but pretty been special that's returns

Donald Crist

that some your given And going thoughts [buys]? I may you one M&A that large particular. larger maybe Permian been color company in it better forward? Is basin for the there's or Basin, benefit appreciate there. the the in on consolidation how Select for John, Any and Obviously, you. in

John Schmitz

A a sides we as customer is. you're think transactions it those just we a lot lot of But of integrated our both and base. sizable, we're seeing do on we're lot because also have now. Yes. important, a good customer Don, are infrastructure we with

effect in of And So, saying a good here we also we for acquirers different got the it, this.I'll just are leak system. environmental that system facilities automation, it's keep put that here. that produced favorable and buyers them wells, us movement take have because automation, our we say the and bases, primarily has sources, control, to with size development, within they're this the the to application a and pipes, water, alignment produced to technology, either we're integrations different is customers detection, doing very know that water on risk all hose focused the whether the of our our with environmental with profile larger it, and asset recycling very

Michael Skarke

sophisticated August I'd announced single where with water if we there's delivering pull X.X had a point company lot John, that a million XXX,XXX like another not a moving there's to almost produced solution, a barrels may release job mean sources. mean, And recycled I really highly multiple day water you to of I don't And location. can Endeavor, companies. off we barrels that that's engineered in that. know Don, the I from I technical, add. just a

to that, to it's do scale. larger at that are that of they're like Water. going trusted project partner And the that, things a I can so, be look And in Select and kind that companies going to doing accomplish think going that's to a

Operator

you. Thank

question Next John line with the Daniel from Energy. Daniel of comes

John Daniel

of my away you what what is so just I'm then capacity growth can I of reasonable today, from curious, next And in that over sort a have would is? computer the of you don't your couple me, of that front the recycling me all but rate I'm the utilization capacity years? remind data expect

Michael Skarke

supported I'd are to is recycling continues for transition, we're And the There's just are basins as half the going Permian, A is opportunity at several facilities is it, the pretty of because that of We're ones to John. would transition. saying aware, to in materially those be probably a those or us. on fixed contracts. be barrels by on we're that the adding next in you're time But leader. to stop Half this if Permian, Roughly facilities, majority we're capacity. the but opportunities of need going continue the focused facilities. mobile market And are million take one year. current everyone be looking that where daily we think the three We that's be the of short ambitious. to industry that I to going very those majority higher, can about so think to to are got fixed it's It's but that going not in that where DJ other both, room of going going there outside of the long-term as Permian. facilities really are expand.In We've in be this to disappointed. terms where of are an

John Daniel

safe Yes. that follow Fair of Dan's they a an a are more to not guys, it or I'm building small the larger, all to say, start mistaken little clients the enough. you And bit capabilities, out or sophisticated question. that? or going on is add-on on assume to recycling am when Like operators, the and I

Michael Skarke

we It's because operators I in the actually -- interesting wasn't recycling to our really conversations of from we solutions aware the interest honestly kind off. took largest really some that until have of

couple certainly underwrite and pull a I of and other more recycling of economies forward the there's on further facility but smaller it into scale together ability larger a opportunity solutions. think to and the still exist opportunities commercial the move integrate because there's that

but heavier ignore I the midsize a larger. weighted to definitely it's and wouldn't ones, small So,

Nicholas Swyka

the a It's really sustainable. add more reducing addressing but It's that do a lower large this economically more productive the brings. and we cost. it help value we can I'd It's you're And And operator seismicity, customers. demonstrates for this ground, scale small environment. in also operator, costs there, freshwater wells or the at leaving our great it's your a at for be whether

Michael Skarke

Nick. are be that's them that would And more as environmental focused think the that The so a mid-sized towards and are a operators well. good on stewardship those point, larger generally the component, I and bias

John Daniel

this case, for right? simplistically, you a actually is consolidation So, the positive in

John Schmitz

and very announced of more of in scope you it's that we to of and positive, the the that's ones because as to we companies deal. can two company the one recycling got of that acquired one added that that point surrounding announced, acquired past that just the big got facility deals actually acreage and put scale the And John, announced. got

John Daniel

it. Got A question. final

fact, your the you in mentioned I question in pumping portion that companies. hear to are, customers a pressure Did of think I was response a correctly?

Michael Skarke

On chemical side. the

both pumpers So, well pressure as as Chemical operators. Technologies works direct for

John Daniel

Okay. signs having issues pressure you pumping smaller of with any payment companies? Are seeing the or of any

Nicholas Swyka

paid it, has one there When Part dynamic an there Chemical DSO No, things which eventually. we get. circle by do John, and XX sell customers, both to and days of us pumpers below operators pumpers are from we're that earlier of question call the the pressure is division, how getting, keeps that Technologies back to pressure that turn I low -- not. operators in our through can as

paying of issues deterioration. payment that performance same we're there. the pressure of No very pumpers schedule. we've We typically large successful do a However, and had having work the sign they're for on lot

John Daniel

expect market. Yes. the I players those but didn't just of small the issues, if the so super, you've spot sort know super in mean them, I frac would any question. were it that's frac I having seen carnage the

Michael Skarke

whole lot a do the don't really We with frac super small players.

with We the those side tickets. have given chemistry size on of the time just that hard a

John Schmitz

John, we of don't fair lot We weighted it's even the do with don't. companies business say, spot. that to also think I larger a heavily are

Operator

Thank you.

Robertson of Water the from Tower Jeff with comes question line Research. Next

Thomas Patrick Curran

if XX% move is the and locations water opportunity business? as over drill revenue do have in changing the you completion an you And that do see is of margin about water drilling split production. that they'll laterals? Michael, amount About bigger to companies And they're infrastructure pads, that see longer even will increasing? XX% drive that time area maybe your off the

Michael Skarke

a And that's good parts. think question, really there's Jeff. two I Yes,

we with and as job released months see laterals Endeavour ago. mentioned, do the continued of longer a more water we per that couple So, pad, I

to production, be growth so the away.In split that's of really going And water portion us I increase, and as largely the of and next see company do for really and around a a infrastructure. taking that it managing for is as focus that's or a we're revenue. related production at spend mean a result to certainly terms look derived to providing continue mentioned, opportunity -- water a good I year. that's where that's And really where completion from the weighting majority our production an differently. management the water capital that and of between and as going I of I our little

more going a in split think towards term. what's And so, that's drive I XX-XX something near the a to

Thomas Patrick Curran

that alluded water that in even business. could up Is drag help as chemicals and that Michael, to right? increases, maybe think also the services margins the I you earlier

Michael Skarke

It cost-based chemistry. we That's exactly to relationships usually the can This solution and bundling a right. And it's is We're complete them. that in a I'd Haynesville. logistics-based customer. infrastructure we It do what were contracts really did and asked provide more leverage to the long-term mean, provide those at our the the services able to it grateful we looking to was provide wasn't by we service for for customer. not approach. price and really solution everyone where and be for a is were opportunities I to offer. answer bundling refer approach correct the they to a needed, bundled

Thomas Patrick Curran

offerings in at put seeing front better them to for opportunity a the is in of your take are Select? that, of customers on with of you you one want a kind consolidation company of more last My deal allow margin you to some and question water as only see industry, who your

Michael Skarke

Yes.

largest I few really for one safety, operators scale, about the consolidation all those fortunately, check of can point, the matter. companies these nailed a question when mean, that about of there, how we environmental, And there's -- think I think only size, reputation, automation, and working them. it. to John really And we're your there out boxes. you're

We're three And us creates on consolidation. all services, so, we're proactive. really afraid We and of it not chemistry. it. think We're opportunities embracing infrastructure segments, for

John Schmitz

I to company. procurement area for would in the our that. about this efforts on talked I add Nick And mean,

for do side focuses more less to procurement us. with the is of vendor the with centralized on One

is as we're doing in, the that area to as well and and value very water But especially Our partnership on customers value same business. relates that They're services, forward infrastructure fewer at more this with business companies water the as we chemicals a much the are a which focused in add doing look solutions piece. as to it they more thing. of move in strategic approach,

Operator

no are further over would floor for There John the to I turn like to closing questions comments. at this time. Schmitz

John Schmitz

in joining for Thank about for we forward learning everyone speaking again to to call. your the Select Thanks quarter. to you you Water interest Solutions, and look more next Yes.

Operator

today's Thank This concludes teleconference. you.

your lines at for Thank this disconnect You you time. your participation. may

Select Energy Services (WTTR) 1 Nov 232023 Q3 Earnings call transcript