WTTR - Earnings call transcript Q1 2024 | Select Energy Services, Inc.

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Operator

Good morning ladies and gentlemen, and thank you for standing by. Welcome to Select Water Solutions 2024 First Quarter Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I'll now turn the conference over to your host, Chris George, Executive Vice President & Chief Financial Officer for Select Water Solutions. Thank you.

begin. may You

Chris George

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

the reports A few the only of accessible statements addition, turn John, release. over of also and XXXX, during call be listening management and differ housekeeping be our as uncertainties driven transcript of earnings items will call forward-looking current time-sensitive this contingencies. to may were reported the XX-K, to The Federal meaning reporting encouraged to company in contingencies cover. achievements could XXXX. XX-Q at from the for the reports information this those are statements These structure on selectwater.com. segment today, of to actual conference and quarterly or changes annual of United on non-GAAP quarter statements operational a earnings risks, Please from reflect May accurate well I risks, during made Before There be performance, Form financial factors. by I forward-looking available report on note Form time to however, in Securities longer our was of available the as by uncertainties on replay no or reminder, included Please various yesterday's access X, comments and within released call will strategic understand XX, changes to telephonic until made by that These replay website and replay Listeners webcast laws. certain XXXX. Select's its contain as a call several for cause of States the information reconciliations as today's information to may therefore those the also read X-K, second replay the yesterday current measures.As have our by recorded Form the the May speaks management, refer management. a our views announcement this results, of reading.In expressed our our materially

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

John Schmitz

strategy. expectations. EBITDA, pleased quarter again our have performed you progress be joining ahead in the to water pleased consolidated first margins well Water here growth been us. both I'm morning Select of and XXXX. chemical toward sit very we discussing today. of for continual start thank Good position in strong which into and margin with Chris. segments, quarter Overall, supported of especially I'm revenues the growing during infrastructure included busy X. which Solutions our the execution in and It's business gross technology the a sequential adjusted we made improvements the quarter Thanks, first in water and and the infrastructure came to Highlights you heading a with the

strengthen XXX,XXX X and In disposal both the to adds acquisition network acquisitions Permian Bakken April. This permitted the our January, XXX development. with and area value-oriented previously expand day have we in assets, most nearly And in Each opportunities creative the in to but our permits optionality and regions the the capacity, disposal adding in to miles and of in addition of with of and on efficiently of disposal future Permian assets Delaware the in already pipelines to acquisitions critical component our in March announced our capacity completed opportunities. customers. Midland geographic Haynesville acquired the solution, that develop acquisitions robust to the a necessary more we full with the disposal an demonstrates of infrastructure we our and Basin networks.Disposal acquisitions, development additional XX for infrastructure the are active integrated recent strategic disposal remains X we gathering Permian available our Rockies will closed solutions footprint.With potential across and execute regions significant and some basins, these integrate efficient an these additional primarily ability growth Trinity existing wells infrastructure lifecycle per these for than assets across barrels ability efficient

this our X to in well of slurry our this significant life. add in to we management landfill adds well the Dakota useful waste capacity landfills XX with strategically expands scope facilities we of potential Separately, added acquired solutions so annual scale Bakken X of acquisition disposal North Buckhorn, Coast and acquired operations Montana our Texas, our in Trinity, Gulf the additional and have solution the solids contributing to XXX,XXX Tri-State to waste the These located additional additional solids nearly are far than alongside region solids add remaining in and in with existing that tons and acquisitions East waste we January. the capabilities.With treatment business assets with X Mountain and operations have Iron we of as assets solid capacity basin.Importantly, more and from waste year, years also Additionally, continued the allow management Class through the integrated of in capabilities profile X for industrial We future also addition a but U.S., and the active environmental Trinity permit downstream capture waste assets and high of existing the also performing teams the full very waste Buckhorn few and lifecycle customer these remediation.I'd of to margin employees with lean landfill opportunities service help disposal customers development. our waste our solution, addition believe welcome the These adding one X enhance the Class of and relationships. family. the facilities also disposal our including as experience as will additional us in operations presenting decades management facilities well enhance operational with new highlight the TENORM management Select landfill, both and further of the are logistics operations, with water of that and very revenue we Select Buckhorn, I disposal and into to

our through we water grow execution. infrastructure to business business While continue we through development organic grow also continue the acquisitions, to

add of can in full gathering, make During of this and lifecycle to we integrate as quarter, capital that technologies. where opportunity the Select's asset including be directly first our integrate that of and the Permian. strengths from breadth application contracts our proprietary around to chemistry and also the we solutions prioritize differentiators.It strength And management water Each these acquisitions to us base contracts capital and these automation, the one shareholder is additional most year, existing or geographic pipeline allocation of have of every our projects, of value. long-term the our remain will or demonstrated dollar into we drive we for especially Haynesville directly tied and the the area asset diversity us basin.While most by core a existing infrastructure continue long-term recent each and of recycling allows with capital signed projects attentive the our acquired business, the best prospects quite disposal waste operation to and in X we have infrastructure I competitive of to strategic our decision recently wide recycling array networks provides deploy to regions, active to existing believe in been new

executed our within our acquisition production-based Infrastructure long-term revenue segment. and this we've expand strategy contracted fits Water our Importantly, and grow to year and project each

to our end-to-end strong the of We the contractual are around chemical water we the organic to performance. infrastructure relationship continue have well-positioned have and delivered that services projects scope expand strengthen we've infrastructure recent and recycle solutions to with disposal customers provide our and base.Our able been

assets visibility and we margin continue add seen planning for and I'm than confident very seen excited our and quarters, see standpoint, into improvement both this first acquired year, waste very I'm the the will believe as remaining demand more backlog drive development for double projects. the more Infrastructure next into business quarter, solutions. our brownfield meaningful water to into this over in in opportunities newly last X during providing infrastructure continuing segment and Water NP customer expansion well.From sophisticated future multi-year As the in We've well continued management backlog greenfield a the comprehensive space. in We consolidation to the

the both outstanding more in financial larger the detail, on team for our have proud but needs is aligned an industry find demands.Chris consolidators place during period results will of the the have industry business meet development both performance of I'm the ourselves customers touch with their ourselves to of the oftentimes of growing backlog continued trends. infrastructure sides deals, changing we While extensive we quarter's on in achieving first working and generally

our and investing speak hand outlook in to detail. a strong Chris results to Chris. the We over to our remaining quarter first to on point, return will generate this while assets to and shareholders XXXX it a financial in more capital and continue growing return bit I'll business.At

Chris George

John, you, and morning good everyone. Thank

of we steady our solid During period chemical during did achieving caught we our the first the the technology and as high during segment overall results Infrastructure quarterly and modestly segment profit growth expected, its in quarter trajectory continued gross XXXX, record quarter. gains declined Water first revenues see again, while revenue once saw

to With the full XX% our adjusted quarter revenue more to initiatives, growing X/X infrastructure production are including revenue and the of and adjusted well this than the support organic for during CapEx growth cash second EBITDA the we free to reiterate, seeing to generating for towards more our XXX adjusted chemical water million water infrastructure and and of growth, strategic year, underwriting profitability profitability growing by our and by for our XX% by XXXX our consolidated we expect while year-over-year XXXX, also than targets, year.And combined year achieving more revenues maintenance expect the on our consolidated flow full new infrastructure to related latest of pulling during XX% growth and XX% all track technology segments through activities supported total this into XX% see projects a XX% EBITDA of EBITDA do during of year than after from approximately XXXX.

including EMP high industry consolidation our networks Even demand to unsettled, generation benefit with secular serve pressure business.These as full the future operators. and to quarters activity networks in infrastructure trends seen our with water largest cashflow lifecycle drivers transition profitability water ongoing Select, have aligned levered and Select's to that infrastructure-based the commodity by prices has demands customers, partners for recent and and production increased remain a and company unique commercial more quality our size, continue water critical growth scope to recycling balancing levels

recycling, our acreage networks our disposal ability the expansions assets. our the utilization and value in in uniquely and through a disposal positioned rapidly incremental XXXX demand that significant prices gathering margins, in especially revenue to increased remains recent distribution gathering particularly additional amortization market-leading with gas demand optionality During existing and which operations basis expect X% online to gross segment accretion contracted, XX% balancing percent expansions basin, Infrastructure and our our rising existing LNG gathering, by like capabilities Haynesville, large multi-customer agreements gathering add opportunities XXX Projects new long-term by accretive. volumes gas of we yesterday see customers. These with an revenue slated utilization than stronger gas infrastructure prior by contracting option, long-term to growth to terms more both to integrated demonstrate And networks our commercialization.For steady enhanced QX, XX will though come the by XX% to comprising supported provide of depreciation, Delaware increased and recycling and and robust, highly attractive and natural supported and see acquisitions electricity and announced footprint XXXX.Accordingly, over during and systems disposal infrastructure points even growth the to expanded with and in solutions in the when steady XX%.We demand plus water and have network $XX waste is enhanced nearly very pipeline to make dedications pipeline create with production from our even sources we existing growth QX customarily Water disposal basin new network. water million existing

about in streams. sequentially quarter integration Chemical end QX the margins retain our XXXX revenue to the underpinned by some predictable, back acquired margin margins items While to QX by second impacted we steady during by to expenses newly in QX's see overall, it to to may expect the insurance revenue and but we of standardization water XX%. up and can continue by related assets, non-recurrence push with margins benefited in inventory grew a high and believe the infrastructure the project margin up water believe strong infrastructure will out that XXs.Looking to that these the business performance. repeatable, quarters good continue was with coming of profitability of backlog, X% contracted become very certain The results, over technologies medium-term, our into the adjustment we of and component recovery high strong and more deal see largest

believe operating we QX, our continue continue low Looking improvement and efficiency which opportunities. margins modest XX%-XX% improved forward operations margin and manufacturing provide the delivery single to percentage there of digit growth to see should enhance range.We in-basin expect to the to to improve to opportunities logistics, our are continued revenue

hauling well-testing these levered to regions completions in margin offerings made impacted continue the performance lines Powder elimination the to and geographies have levels of In and consolidate our from was and are service lines. first fluid for streamline in XX% as where operations, the River cost our operations business and the hauling during quarter, of across revenue Basin such our pair quarter modestly segment back water example. certain Wyoming, to non-core order improve the decline for on and full low more by we second efficiency in consolidation offerings will result decisions areas focus solutions. decreases focus single that about the These services digit percentage commoditized quarter on water strategic activity the in critical service our lower during additional opportunities.We These more services. revenue fluids to decisions lifecycle While first service and came multiple are

see QX. by on quarter.SG&A benefit to see QX the the However, costs services to and we quarter the the relative rebranding margins increasing we to or during should compared start to gross of margin water and during XX% side, these while fourth to to expect million $X.X decreased quarter, decisions slowed X% as XX% during second the the first

of acquisitions, balance With we incur the during transaction recent QX. related a continue costs to

on million Infrastructure anticipated the acquisitions chemical adjusted from $XX and our very the to to $XXX quarter utilized revenue range, acquisition decline over forward, growth with first firmly related in XXXX million, at a services.Looking subsequent approximately ticked X million continue Altogether Looking $XX track low are to year-over-year April QX. our of acquisitions by expect we during costs of in expected $XX $XX of to margin a SG&A of expect This QX, for hand year-over-year our ample sheet. to $XXX our balance though segments, with on to balance the end during with substantial recent addition the sheet, million liquidity with transaction consolidated step still Water basis we fund sustainability growing EBITDA even second XXXX, from the $XX up up during facility credit and we ending remain in for a XXXX, decline will quarter has water services million quarter since for conservative the course our we segment continued adjusted leaves to help and linked in borrowings. outstanding us but million meaningful improvement to the QX.Driven outstanding EBITDA cash on million, the

our continue into contribution to a visibility of good the higher disciplined streams, leverage, borrowings and of will ability revenue margin have our in relatively to increased contracted of still the to but remain these return with to $X.XX flow time our business generating period with outstanding of short equating shareholders capital million production share, fund dividend organically.We repay while use growing capital in cash we to of growth We shareholders of return QX. during to the per levered our $X.X

regular to we are we share projects while and tactical to our taxable into open from last capital recently of million in in authorized have and assessment tax end, We repurchase near-term, growing dividend on we our translated capital, we the recent cash bolt-ons profitability position taxable $XX buybacks years, This primary rate use into book first within of Select's transition and sustained year a remain quarter, a an book infrastructure triggered during of maintain quarter. integration balance reviewed position prioritizing flexibility.As infrastructure increased a and on commitment the an remaining overall during did asset we flow and allocation strong execution QX. while in XX% as effective sheet our about of program, at the our

remain to and XXXX modestly in at $XX of accelerates.However, quarter where towards be uptick book in quarter million we becoming remaining the overall state employ quarter-over-quarter, component including CapEx million water should during recent expense million cash tax operating and $XX.X to prior largest generated CapEx. cash XXXX to to going with benefit and tick this impact first should future as we guidance $X an relatively the in net see million interest our we million tax track primarily this at our commencing forwards provide growth during lending would and services. about CapEx and elimination to $X reiterate, $X tax to anticipate to our percentage forecasted will our carry range, XXXX CapEx going in in around modest Net tax time.We a assets as amortization million likely We $XX million $XXX quarterly attributes the However, consolidation during pre-tax of it payments remain $XX to XXXX significant per deferred to sales Though supported million to remains infrastructure of relatively up anticipate $X a acquisitions outlay taxes. of maintenance expense $XX on by though and year to linked quarter. of the accounting payments acquisitions. this full infrastructure year. particular was as the asset million flat a substantial was organic tax first modest QX applied tax increase CapEx XXXX, asset the water perspective, facility existing during rate to From a growth unchanged up anticipate ongoing latest our sustainability our towards in may million accretion $XX $XXX million not depreciation, the XXXX million should with proceeds the from We $X spend cash do sales during million to material generate efforts most years, XXXX.Quarterly expense to income in execute during

profits intensity fund strong growth. While chemical returning to a noted CapEx, water we capital and flows water low infrastructure as after cash technology we at infrastructure, XX% of our water of to expect during XXXX, help XX% invest provide cash in segments combined services our each to previously we flows and

full a during we program cash and positive incentive track substantial all of half we exceed quarter cash XX% than continue for year.As payments impacts, items, and EBITDA annual I've first year well free entirely anticipate was as annual EBITDA and cash ramping the tax CapEx. after back free achieve the cash year While into XXXX property the pulling the maintenance our of growth flow outlined our expect free full payouts, perspective, flow indicative incurred generate we cash cash during we quarter adjusted more to on first the seasonal adjusted previously, through to other to this flow flow of firmly of seasonal target and through outflow of for XXXX, remain our this from not accounting XXXX including

again continuing We to Operator. have us, execute our by to thanking with employees work of ahead up a of forward of open tremendous their and all like on I look support, to that, to and questions. for wrap amount strategy.I'd our hard opportunity and up once it

Operator

with [Operator Northland. Instructions] Our first question is from Brooks Bobby

Robert Brooks

really So integration detractors and Water the occurred spending. Infrastructure and know integrated, I on improvement costs that organic some like despite impressive acquisition segment, margin

you basis year-over-year factors bips pretty much curious, discuss really and in the So segment? drove those up I just for the that sequential step same what drove step XXX the was in could that margins, XXX are up margins points

Chris George

and let start progress Michael the earlier in pleased I'll the year infrastructure Certainly Bobby. we on the water add made Yes, probably with side. on

benefited certainly certainly nature accretive the integration second that basis the generally may also a that we've assets was so and the integrated and by quarter across some relative by we of first to overall, got we right well. as a some as in of are high utilization of certainly quarter contributed enhancement like invest in more overall coming the them improvement acquired in we've the creative on second continue get whole. portfolio, The the you enhanced But around year-over-year projects on to the path do certainly we towards recently base to the that basis the the the to think up in work the the indicated. assets to There's continued of see XXs, acquisitions. a the It's portfolio business,

quarter second accretive a the of first So benefit acquisitions board by and lot improvement in you're and quarter, driven online. application of seeing of really kind the full across the year-over-year, the the coming

Robert Brooks

opportunities both for really the that expanding. infrastructure Brownfield know healthy Greenfield segment I and of then the and for And pipelines is

driver now best just even X ago it's was discuss just last what versus been a you could and the maybe that So help what this it year, it and maybe bit just frame pipeline months to us what's is time compare growth? of it for that maybe pipeline

Michael Skarke

Sure.

we've a is months that in So Bobby, a think or What first the it's opportunities take at I'd doubled. it. ago, this that I been. Relative year got us of largest cut I'll is the X Michael. mentioned to front John say is ever it's

high right now. interest really got we've So

things customer seen able recently we've a the time. is of is lot period which what inbounds, more we've relatively a of create really a to think One here been just I short of testament in

kind of looking terms at in projects every transmission specifics, we're pipeline of and and basin In more segments. across the disposal recycling,

So continue through the we're margin improvement be of fuel really and excited and projects about result. deliver top it. regular in We a in infrastructure, rest line both to to a as growth able think we'll on the continued on basis quarter really

John Schmitz

that we will those up to seeing really systems that's between interactions is is bases bringing Bobby, and can inbounds value. available is they're about. say value the a systems our bring bit of created or now I'll are and the that whether we seeing, John. when economic those asset have adding because both that by as bases that do add brought you're customers is, and what really we're projects you're we and it lot What systems hooking those really Michael's Yes. have get we inbounds, a to the real really to those And value our these created internally. talking that added what, of has systems to assets customers asset acquisition acquisitions Michael this experienced we're little or to that that we happened doing value assets

Robert Brooks

maybe discuss the more why Select think guys differ, have key just we growth and expect should the organic you basins? the possibly if and me, Just which see In mentioned my maybe for the you multi-basin so more focus possibly Mike this as last with agnostic for to one some basins the which and is multi-basin distinguishing why that's approach. could pipeline opinion on growth just it just that and and it sticking that it's with inorganic of a base, I case factor is color you basins as doesn't asset well,

Michael Skarke

Sure.

open right we inorganic, So just opportunistic, most solution the the really that's for stepping us. we're accretive back is want or organic answer the minute, for for whether and be so a whatever and to to customer

that's us you've business recycling, disposals business. So than the we're be largest around seen recycling and and because a acquisitive around more newer is

work inorganic. And has so to putting than organic been more attractive much capital anything

side, have flow a more to disposal at we as below acquiring optionality. cash we're been costs, have We've of John existing able do number assets. that acquisitions On mentioned, or replacement the and

those value to networking assets those of are because We customer by a trying we're and they add we to lot customer. then get contracts think underwritten that

whether the basin, between to on organic acquisitions. development So side, disposal the regardless of we're going be and opportunistic

make sense.And of acquisitions the I look why we seen so at of terms you've or where in In is. we of on the the everywhere else. basins, a Permian we're underwriting do the focused Haynesville, but basin similar. us very acreage customer also Permian. That's the full most capital's we That's Obviously, of spent. the every in be the biggest going to problem mean, most the drill wells and new then that's decide and what water makes where

we the preclude doesn't inorganic so us be or for doing outside and to from but it organic whether deals Permian central going forward, key of either. that's us, the And we've some going of done

John Schmitz

to contribution I I the going going add consistent, acquisitions. that Bobby, the or and and improvement opportunities that, well each approach normalized from just of starting Michael across is, we're our the mentioned, of or be whether recycling profiles see fairly take portfolio I become mean mean, margin pipelines. as on as general And thing applications board to those one generally we of disposal parameters that's across full underwriting the see we're here margin business Well, as to to across the the may the recent infrastructure are

us fairly across to asset gives which generally approach decisions best be that the the So across to opportunity that make the going is consistent underwriting board, overall base.

Robert Brooks

Understood. And I'd great financials show in congrats agree on the starting to and the that's quarter. definitely

Operator

Raymond Rollyson question James. Jim next is from Our with

James Rollyson

bit little landfill quarterly time thing spent And and kind of I'll remarks focused the prepared lately, M&A some great echo of in same solids of you and the your this results. on mentioned activity. on a John, you've your here through

your well this underlying a into kind just side? there, one-stop any done disposal now expect Select solids picture tying we you what's to recycling on deal fill more disposal curious M&A with Just can some or there? And drivers making map out there shop should other and you've thinking? like the big more water Is of sourcing, are as from the

John Schmitz

we're the waste facility our type separation for that our Jim, and it surface and skim area because that that a an is our do you're disposal, we the once area streams customer on extract either Well lot very in base. it It fits of that an working solid for and interested expertise within together or have of is or it. footprint whether managing landfill fluids asset solids base for fits oil you whole

value there's think that interaction also landfill the disposals of probably an between and disposal the the We and our of because leachate.

fits waste So value add base it we within of our management for think it and for thesis the we the think customer. fits asset within

Michael Skarke

co-located base. with because that, it's vertical maybe often as really the John natural infrastructure existing expansion mentioned, And our just add a to solids on management's for us

margin combination. profile, return profile, collaborative fits, And And then really it's very consistent so infrastructure. it's with a it from

same. the them we view largely So

James Rollyson

Yes, makes it to just the you perfect projects, as have guys grow. sense. for of And kind going continues Michael, talked about, to maybe new back backlog

opportunities about do just your and curious it constraints you've network potential there your these becoming all unlock opportunities got more to think because look capital? Like, Is forward many through of there, ability opportunities. in people? it Is as and you you pursue constrains As what growth backlog? to what M&A think so build I'm actually how you out

Michael Skarke

So underwriting previously, is we're we've really that mentioned excited The about they're very returns the robust the in it. backlog and but attractive.

And a and some cash ago. It People advantage I'm the it's near to of confident other so X year be not challenge, between flow was always potentially to it and continue sources take but that growth. fund will a challenge. able are or

see really So either. constraint a I don't that as

really that it asset then sign One or while with a challenges flow. to takes the link the while a operator, long-term it, and Chief, construct work up, just, it out contract is bugs of network and our then a and an deliver cash to to takes with it

I us, several quarters. this one opportunity earnings the materialize set to aren't just the So us for of see front of fully in challenges we but think for is going

John Schmitz

to can thing ago here, than I particularly we Jim, a as adding where where integrated might assets of of acquisition years application we're a add, I of pretty your is standpoint. assets integration through couple discrete people. a were lots from it's more process kind acquisition platform question an think really of that And think efficiently These fairly existing companies. different integration stage streamlined and we one were pretty acquisition on systems into an basis be adding I adding are

sheet we more exercise a balance a from ago well. and be liquidity a standpoint and a of than straightforward years a should certainly So management went as through couple cashflow

James Rollyson

got with before. going Right. look seeing Much more to plug doing XX and you now. play the you've the were kind unfold what backlog over versus months forward next I this of

Operator

with Our Tom Seaport Global Securities. Curran next question is from

Thomas Patrick Curran

enhance gas array into moving this could minerals then beyond expect follow-ons extraction in And with I'll to side? your Jim's be on be solutions and group you the solids to you that the if expanding opportunities, industrial that just solutions question the portfolio there management newly here. has and oil Do waste interested so, start about would of sector? also prospects and metals X and

Michael Skarke

position the slowly the acquisitions. we think expands saline we with wells to disposal I a landfill solids recent we've that the from a that do around been from Nuverra The would be One been it that beneficial reuse. slowly injection really X in think place acquired as mentioned, co-located. space building largely because it fits infrastructure building in It's management, we we've it's or

we've this on. been is something focused So that

multiple For time, in and We've multiple evaluated we've signed got operator. We've large commercial Permian. some pilot with solutions companies. successful got a a a a contract

it And so still There's to the but challenges there's relates bullet, And opportunity is grow. economics. certainly to interest silver continues there. no there as the

is desalinization salts. the One or challenges of the parcel desalinization with

those whether the salts you're challenge solids most solutions. iron that is that's or managing with something And the or so other of a

where solids into. oil think and of that's one drill see so area expansion beyond And reclamation, about mud, as tank we management soil water near-term I expanding bottoms kind cuttings, based

Thomas Patrick Curran

that to and margin of business' the the how yard of turning water have closures, when of reuse disposals, to terms there. all field in rationalization just I be beneficial an you that composition all where targeting you finished? far Makes non-core see expect and at want you the it idea sense. completed having consolidation, you the to you ops are where when give initiatives are could we us enhancement are and have angle But services, would can along with to the

Chris George

the the But technology. overall service overall going today, side benefits areas be that on well of quarter. underway. and application we particularly critical we second of some mentioned of in platform. to on via pace that less to margin But Tom. that particularly the the first the margin quarter consolidation of XX%. the and the fluids carrying scope see being made look up higher commoditized can first the that's year and of that hauling good business of continue up around and geographies assessment labor-intensive going full automation making that solutions the narrowing are some of maintenance the like to efforts around the enhance less XX% can and with is the are also of Yes, to saw more certainly infrastructure picked the we're is non-core And service the that second opportunities to core We quarter, may at areas in to it's some a question, the full here. We part of We overall solutions, the be that into decision around where to focus lifecycle elimination focused infrastructure. light, the of cycle segment little the offerings life The in

talked the to I to make to some time the those here have most half going we we going by the first those of the we're see think decisions.But get of pull made return of competitively, be the all continue replacement at of those if dollar, around not we not some about capital our relative we're or a are worthy Ultimately alternatives, earning Michael looking probably start on. and going year, other in on things of here. largely to to we're things this of of time to but as So investment should a something's spending to through infrastructure don't summer those particularly to core of the end middle need assets

short and making benefits relatively those should see now we're the decisions order. So in

John Schmitz

anytime we to or Yes, on the elimination it doing. there's But our our this in moving margin activity, what keep need the you time value I doing equipment, really margin If out containment trying mean, have is thing just what customers need I of not not stops around above are technology and never right? You to busy bring around one through elimination type that through Tom, value pull not our water can and enhancement add this. really want to the John. is you the pieces be moving enhance you business, to of all be figure to to ground those transfer, that we can value. because side. margins infrastructure necessarily

Thomas Patrick Curran

related as where a of chemical ago? at of of you technologies, infrastructure's CT's produced what generated us that's sort could you versus an operations? sales are idea Got part an it. of water Could And give idea say year give us of water then percentage today being

Chris George

extent ago Yes, small it's Tom, year, still technologies over but relatively get pump. stable But the the and with vast majority it's last the our a an for so rates it's increased revenue. our from infrastructure. portion because It to lesser is recycling has to of for chemical able sure, the chemical from and to support operator a because important technologies year is of pressure attractive increased directly materially portion a we're us to

Michael Skarke

is being a more has a important or now benefit specialty to produced operator the transitioned recycling that water. to distributed chemical that nuance technology that application around that from application to reuse I of think that around the commoditized that's more application

produced become it's they're bit application the operator complex decision for So a a reusing more when of of water.

of You're usable, fluid system going barrel that hold to with make more that's that not you're treating water but specialty only the matching that completion application chemical it complete in well. to down

Chris George

it mean, past. big about in experienced a second of And of the in in fully this the talked is and I really driver is place underway largely taking half and the we've in was that transition the something part 'XX, Permian. 'XX we

basins in unfold. seen not really haven't seen We've We the yet. it unfold other that but start,

that more our elsewhere, continues market. to in will the that Bakken So in be custom think materialize DJ chemistry the as or or that competitive we do

Michael Skarke

transition talk beneficiary that application a advanced competitive you to towards around important and also application do time we of the as view et growth it's relative platform. chemistry treatment there recycling chemicals the think cetera, and and overall really only integrated landscape about the as I more And our the water as advantage over

chemicals do chemical we that R&D transition of capabilities advanced think we our us continue and So benefit as specialty to application towards does more reuse.

Operator

question Rice. next with Don Crist Johnson from Our is

Donald Crist

see to do second the over XX% your towards in up linear and going move mean, ask obviously but kind lumpy water back of in or somewhere of of on, infrastructure. uplift quarter, it projects I ramp have I a and up as we're lot about ramp just XX% going to see goal we being to wanted we kind into you going is you as the of towards in the a the of 'XX, of segment? half that look kind in be neighborhood

Chris George

should to we of get application, assets quarters. well. see fairly acquired assets the those see comes particularly some the step growth continued some spoke an larger coming we trajectory over Yes, couple a of of There growth like a step once to announced larger starting next a a a provide be potentially as to be projects basis bit But has the about over stair steady QX, online handful little quarter, and and that benefit we'll you'll time we on projects large a smaller projects online. enhance Pipeline The as certainly over see of online and integrated next the Thompson Greenfield steady QX quarter of project the benefit individual utilization and start third quarters. smaller this of backlog of in coming certainly execution, very chance that the quarter pretty done remaining we could benefit of that a the bit last stair should as during a

Michael Skarke

coming in ability that 'XX pretty have months, our what more gross think -- online between infrastructure say say stair I'd right good target step over next that about about about profit then of we and good ones think infrastructure. to the is shouldn't we backlog, really is we projects before it, hitting guess have way we X I XX%. backlog and depreciation the our the have our have, feel from currently XX% and we the that or Yes, approach really coming acquisitions Don. the to project feel I margin opportunity And the the of and construction

Donald Crist

you to and I I think me, appreciate that Is M&A color. And share the cash on is and towards possibly, it of just buybacks payback dedicated flow one that if kind further about free not that debt correctly, one right it, from towards can initially. more or at be way future any? sounds least heard the like expand

Chris George

$XX shareholder have we to repurchases, cash. be Certainly be we'll still share organic look of to and a strong And allocation that a today acquisitions. Obviously at good within well the And remaining what decision we've free basis for year open We towards Yes, was authorization application part half first strategy. returns we with million question. that cash the that a time tactical of will our committed as strongly of the recently continue do then that the we're investment got will do here. continued do on shareholder of a overall dividend, these increased the capital think weighted backlog certainly over here. here, with quarter-by-quarter return

focused ample the still half of organic year, of part leave Don, going half to the but M&A overall the the were decisions strategy, back be certainly of more investing on the heavily year probably some to So year we half should over it back in first view But as cash allocation the focused around. of on free we the here, that growth. make certainly

Operator

Research. Jeff Tower is from next question Water with Our Robertson

Jeffrey Robertson

driving to infrastructure, curious more is build John, talked systems? in infrastructure the water margin to and in to you solutions continue as systems your contracts or you what's I'm bit the adding out really whether existing it offer Is little infrastructure, systems about customers. water can a uptick to that that

John Schmitz

Yes.

as and the existing adding asset new that be base to extensions and systems. contracts As systems far the would

a So system are fit good the buy that not necessarily hooked assets yet. to you but up

around assets. those contract You

and You concerned. the have that is to of margin system in new some the far to infrastructure put contract itself, of part a creates the get as them as length

once by value to to return Michael's talking the that as looking backlog disposal. wells the M&A we've sense as hook important gross XX% LOE of our recognized customers, closed to clear different say also we're be is into Those that been those we've things in existing up It's return have systems creates or on inbounds or for being the certain value that into underwriting well or very or what both in think about. other long into that their the I we're all and for contracts disposal to haul the whether a we contracts, new even they're putting getting. recycling each just value of creating that AFE areas that again, profile pipelines able similar pipeline the are their delivers underwritten margins

customer. very it's add So value our to

Jeffrey Robertson

systems? services contract solutions is to customer out periods these more of the for longer willing John, build time you as in

John Schmitz

stability attractive to of company, part customers. got of issues very systems whether a well, the that very various earnings back the not it stacking AFE. got LOE up our you important The in you're in or into you, they next They water well, is the developed just also of of the reserves to it's disposal, it's the water to new their when to a in their taking operational mean, this add or base. big I know predictable, for newly power customer the but taking repeatable, and a flexibility itself, developed value the Yes. power that are our

extension then or as actual just values. And so optionality it's the LOE as predictable in the cost repeatable, to well their then that and economic of their

Michael Skarke

of fixed of together, providing execution of have infrastructure by certainty so higher better And service. the infrastructure efficiency model the flexibility you that that and and cost you service just provide the certainty communication. the It's with a

back the to kind one-stop So it gets of model. shop

And the water success continue and John's benefit see so services in to think infrastructure. to we water we to will point, through have

Jeffrey Robertson

the Michael, you to of of any steady And state seeing around economic any will kind overcome the you're it injection reuse? the march hopes just is try that of to be Or issues done on solution? beneficial reuse a a work on of toward the industry touched on, of challenges beneficial some is what the have that seismicity, accelerated and

Michael Skarke

is customers companies I protect out it's in our ground a aware progress Permian coming and that in of to accelerating or interest think injectivity. of place in solutions have industry secure of mean, pressure the oil order formation's for I and in in pilot and the to the success something our sure. technologies the those programs Basin, for its it's the commission and among and the that operators water reduces railroad up, regulatory evaluating

could a harder and challenge answers. beneficial be harder have of the getting of to reuse going You're rid and one water of that

Operator

Partners. with is next Our from Daniel Daniel John Energy question

John Daniel

a out back versus signs out curious, I where I'm the bit see Are sort when broader strategy play sort opportunistic turmoil might going more potentially the up. organic? pivot organic little opportunities mentioned you from to know at that the if the versus but half you to you're some any look you acquisition, pop market seeing there, of you of in towards shift might actually might that in back M&A

John Schmitz

a or belong Chris as do outcome together Yes. base it's this X what company We investor is that company systems as is that through market it's that I the you're of to same possible the amount and executing Schmitz. we're customer are travel our conditions very the a next to believe whether and whether this believe large time well backlog about. as X both to John the John, describing could that Michael base. We this we other of value talking that over develop that months that bring or

our do I happen, and believe available, minds open, our we something keep John. it So could phones

John Daniel

them. you is guess you've have them do when deals Okay. this you you How is and many a function down I year it the closed see causes some that is either -- typically deal to or And you it X you see deals the the turn is then done, it what happen? down, not turn is environmental it do of concerns? valuation digging Like and more

John Schmitz

buying I at Chris especially now identified we're done, the that that say systems either first you first Yes, look companies. and base. deals those you asset before What is companies really John, as And evaluate if they're assets to companies. said, know would that whole the or bought very ones go were we've we like doing were that, the really companies into we the we in the buy trying that were that fit really

spend them. and well. fits identify on So well the come go don't with can really deal that fit we real time through of up deals lot to us a the one that us We deals

deals, As couldn't environmental was an logically going few a it just for that we the diligence, had John. at things But thought to them of of that and hole we and we be had far to and as were things or environmental strategic away they a it's various we've fit we things or either that reasons. probably due fit conditioned or that turn that the looked our stomach, systems or that we nature found kills yes, most didn't down

Chris George

organically buy that's fit, project and underutilized going already in that's what find an to a we're otherwise continued for of is go at well be maybe would've opportunity to been add replacement which buy replacing costs, opportunities Chris. itself is of oftentimes an manner is I as it capital going that's this a If to some we be us below some organic we in against assets John, the a that for And can able these mentioned, to to might portfolio. in to as strategic add we've a what of interested need be asset investing. growth that and these competitive

Operator

end Schmitz we remarks. session. gentlemen, reached would the call and John back have to question-and-answer to turn I like of Ladies closing the for the

John Schmitz

I talking you add about the to everyone Thank for call earnings to on quarter. to in the you to very and next Thank employees, investors the really continue we the today. Yes. look Select our forward thanks much. joining you customers,

Operator

conference. today's concludes This you. Thank

at lines You this may time. your disconnect

Select Energy Services (WTTR) 1 May 242024 Q1 Earnings call transcript