WTTR - Earnings call transcript Q3 2024 | Select Energy Services, Inc.

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Operator

Ladies and gentlemen, good morning, and welcome to the Select Water Solutions Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Williams, Vice President, Corporate Finance and Investor Relations. Please go ahead, sir.

Garrett Williams

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

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

call the conference management of annual results, measures. report contingencies. reports forward-looking our understand States expressed could performance well XX-K, financial to statements securities management. reflect management, differ as refer on uncertainties encouraged from Select's These Form comments in to read by views The for on announcement by materially risks, forward-looking actual yesterday however, meaning current and contain XX-Q those made the our of current during the is those made and Form federal the law. quarterly within reconciliations earnings this Form to reports non-GAAP listener our our risks, various as United X-K Please on uncertainties statements addition, of cause statements In the may contingencies or achievements to

Now call like turn to over I the John. to would

John Schmitz

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

net we of quarter improve profitability margins Select solid grow delivered flow. while third generating cash the continued able another free gains basis, Infrastructure and revenues, and margin the pullbacks During quarter, unique story. to to Water were consolidated as to broader outperformance improvement a our gross segment On second despite activity increase quarter our revenue continued income and macro in growth fuel in compared margin environment the

third basis, and gross In continued were to net very XX% growth our addition SG&A compared supporting of am XX% XXXX. role the by gross XX% accretive D&A quarter, income a in we compared XXXX. disposal resulting these on Infrastructure another to to growth our level, year-over-year and quarter combination execution operational XX% in We quarter of highly the critical gains, delivered I to and to revenue quarter. a strategic XX% of quarter a second in profits able we projects see and profit play recycling growth the reduce And the and a infrastructure before high before D&A profit the by third market, segment to grew of quarter Underpinning segment. second At pleased performance operations, record organic compared Water and third of improved acquisitions. for gross during revenues is the in revenue the

segment before increase operational increased base in D&A this we margins XX% the a resulting side, gross our to quarter. for On continue utilization, driving Infrastructure margins, Water

dedication under In add Basin first right we development additional contracts, the long-term organic third new of and continue additional in new acres wins. into acres the entered long-term business adding XX,XXX to XX,XXX Permian the we On under front, project an quarter, refusal. multiple

Bakken connection footprint in our in quarter, spanning major basins. XX executed the X also pipeline agreements we wins, Lower industry-leading all further land Permian our to third addition the In new exemplifying

assets, forward producing of market by strategic interconnectivity look XXXX in area. facility construction. to small also and barrels pipeline solutions. bolstering in facilities leader and per fastest-growing active water disposal recycling we projects in ongoing Northern acquisition existing of completed off new third a getting the of disposal organic easily alongside coverage the quarter, other under Select build infrastructure up the our is to a and contracts capacity first developments XX,XXX day not that new water these both supporting with our cycle our approximately adds location current our already This produced replicated. with these the network capacity clear Basin, the a I disposal half in region. life running Late Importantly, operating new scale in and full connecting in growing our remains infrastructure, our Delaware

our both and additional long-term contracts forward, get XXXX. I we of into in negotiate XXXX will continued rest and backlog and am a has will we increase near-term to size number other the confident to see the certainty, continue development line business that throughout of Looking finish opportunities. very to

and to more but forward outperformance combined the consecutive contribute excess margin these the in our heels financial initiatives this detail, of in will in of to of items the and Chris activity in range Water the more profitability All Infrastructure have out deliver company's pull confident cover the Water of on Infrastructure guided quarters. gains This for margin strong record-setting the than from and EBITDA XXXX. Chemical in and coming annual XX% Service company the ability we on set headline our for the goals adjusted Technologies. remain segments, to includes we

efficiency. Services our months, has and recent the become market the and challenging to while maintenance more segments, Water reduce activity in Chemical gain remain outlook opportunities our capital, there improve at operational Looking share

efforts generation. activity segment, impact from flow the of entirety the the free Services steady quarters the From margin and over in the pressure On consolidated pumping these cash side, quarter third legacy revenue coming should with improvement resulted Chemical our customers. Technologies the Water support decreased

with our development the E&P technology free however, continue, out clear product growth cash our quarter performance. share strong supported revenue segment, this we fourth have market by We visibility of flow and and and generate to customers, in gains in new

fourth segment, and revenue to however, anticipate, overall, activity margin Looking the our quarter recovery seasonal that quarter in in by segment. the slowdown fourth do the offset we Water Chemical ahead Technologies will impact the Service

will see certain sourcing, will the ongoing we the and business Delaware in transfer, recycling with operational Additionally, capital of pipeline projects Basin. asset-specific impact certain Northern downtime water our associated that impact

though, have been coordination Importantly, with disruption our customers we working in their any close schedules. avoid and to development discussions to

quarter segment ongoing projects able which and said, segments. Water period. were we quarter, forward short-term revenues and fact, we the facility of and Services these impact That fourth both will upgrades Water our during during into downward Infrastructure third see In construction to the certain activity pull benefited the from outperformance a the to financial the

water quarter for improved further However, central with in operations, integrated and XXXX XXXX, growth come of projects expanded to first a the the Northern creating Northern capabilities the networks remainder sizable of online. artery the fully in our place across serve and we connecting Mexico. new network expect as rebound projects New Delaware in across Southern quarters and strong as These the the first see balancing will and second

per beginning by the all contracted core water and year-to-date operational barrels opportunities projects pipeline of headwinds and will Following and strategy. revenue fourth organic additional diameter our X I align temporary initiatives large provide are the projects, segment. million the first of of this company is the expand completion Ultimately, Water Infrastructure our barrels outlined long-term our capacity growth XX within conviction capital and remains our approximately the of around soon more high. In with projects our interconnections. our of produced to quarter storage will believe these grow million Northern and recycling in encompass throughout interconnected network XXXX. water summary, production-based latest XXXX rest of miles focus than day The improvements, our of XXX on nearly of Delaware and for continuing acquisitions quarter trajectory ongoing the

to industry through our the E&P during demand I believe ability deliver life and growing is believe to activity complex strategic customers and creative capitalize and We positioned seen and cycle challenging operational industry. trends the increasingly efficiency, reduced increasing solutions. scope we these continue trends. largest industry period will with a margins for in and operating with well consolidated Select Our size, opportunities the very full for the there growth This continued consolidation team's and be extract operators and on requires to Select. high-quality operating of to supporting in consolidators networks partners am pleased efforts, serve value

and and now growing in capital third We the well Chris while flow in detail. XXXX I'll are positioned shareholders to to to remaining and free a generate our cash assets business. strong on over Chris? a investing financial and more review quarter results outlook to to bit it hand the continue return returning

Chris George

everyone. morning, Thank you, John, and good

Accordingly, and trajectory, flow again record in third the overall revenue the gross our growth quarter, our During profit segment in on quarter. solid Infrastructure its cash Water once to continued objectives our quarterly Water our generating during growth high and steady third achieved results profitability, segment. Infrastructure free execute we achieving strategic continue

and our the at the remains achieve segments, out Services positioned milestones of consolidated prices company well year. commodity presented Technologies set have industry to While Chemical challenges our and activity the to Water very we beginning

margins record while achieving adjusted our and remain volumes business. growing track EBITDA water infrastructure example, on For handling EBITDA adjusted record we towards in

to with infrastructure-based may continue drivers landscape more future muted growth also growth our though critical our the our life aligns generation to profitability and the infrastructure production-levered cycle unique outsized and flow XX deliver American XXXX. activity term, a Even that growth investments We company business. in to full expect unique experience water build cash model we water successful North Lower near business throughout secular

which networks continues QX, of a points margin combination to and provide secular XX a the terms in the where high of revenue and well utilization rate million Infrastructure strategic forward depreciation, profit percentage recycling for an increased to during generated by the of we third during waste XXXX. increase quarter overall networking This XX% require driven trends, Water in which earlier, quarter. and tremendous D&A to of volumes, an an expectations industry accretion, relative to improved of the XXXX. before represents water benefit increase gross disposal highly of John above pull the as management from Infrastructure. from growth quarter, and QX recycling, compared of for X of A to increased Gross XX% XX% prior and third of completions. to $XX compared increasingly $XX amortization stable and XX% the volumes, assets, from QX customarily million to volumes acquisitions complex growing automated the significantly referenced were increase growth point of increased percentage third Water basis, On quarter solids a we partially activity segment Our volume as existing third integration and well the increased

year-to-date. deliver temporary to We despite activity we of are able fourth we And proud margin of have margin transition quarter outperformance we in the downtime another and excess strong to XX%. in the still the expect as quarter assets, lower been expected deliver certain

quarter, we Looking at XX% expect to the Infrastructure see sequentially. fourth XX% revenue Water to decline

the solids some facilities are from and quarter facilities steady in is to stay in this should we an operational facility's this that Mexico the year-to-date, new XXXX our initiatives seasonal and integrated our we one recycling segment, system the XXXX will there New transition planned is XXXX. expect revenue majority are quarter of While completed. expected disposal second X revenues into reverse to X the at our decline we highest planning and attributable first first volumes downtime as to of More downtime this the operations impact of specifically, be dollar this at of and online of or as project revenue

Basin Southern across Northern the existing will convert will the crucial trunkline Basin a an our larger Additionally, New This offline treated we Mexico. diameter provide in distribution taking asset to large systems interconnection Delaware Northern produced This current interconnected and the will pipeline expect distribution water to infrastructure be between reuse Select economic Overall, freshwater more into also system line. and a while provide pipeline recycling we our and capital margins significant the transition of unique key customers in long-term stay significantly to this quarter. operational and XX% strong footprint. supporting fourth enhances operational disruption, Northern the Even towards efficiency XX% short-term solutions. with and potential nature for recycling at Delaware to further

a more Looking full for the disposal fourth we business the limitations. with year-over-year expect grow year and even progress combined XX% full to year, representing at basis, on recycling quarter tremendous volumes than the

company's with profitability account segment high-margin that should Water profit and streams. Looking out, than XX% of of more XXXX, deal project previously to a guided, on first strong Infrastructure half further bit we predictable, long-term of by and as remains XXXX, the repeatable, believe for profitability end by continue the track component more contracted and underpinned become our during to a the very of the backlog, largest

expect activity to margins a about in expectations with and gains see modest to segment. well, come or continue in We trajectory to activity We XXXX the transfer segment able part outperform QX our net during Services in Revenue growing decline step-up quarter operations, will strong as anticipate by levels activity. X% modestly. exceeded revenue QX to better we though completions XXXX Switching from in there. a to margins down nice were against Permian this upward the were gains in our revenues did see and water levels overall by strong comparable driven third quarter Water

in sourcing seasonality of reductions and the and initiatives, Looking will associated Water with to with D&A in at decline quarter the the asset-specific our activity XX% XX% consolidation anticipate capital along before impact We expected steady we range. project transfer Basin. to to for revenue XX% fourth to Delaware margins businesses water to the build-out hold XX% the certain by with Services, see Northern

to into forward looking XXXX. push believe into we continue margins We the mid-XXs further can

decline. Chemical of pressure through the delivering our Technologies demand manufacturing XX.X%. revenue resulted impacted absorption customers, pumping which the rate Accordingly, a our levels during the in the lower On in with especially lower margins volumes drove gross quarter, quarter the activity plants, decreased side, sequential

well. focused wins, more the the percentages complex fourth sequentially, Increased quarter with in customers by new driven E&P as in water margins on anticipate anticipate mid-single-digit should However, product revenue and development We to manufacturing to fourth improving to the fourth margin that our improvement the are XX% support margins increase we XX% solutions. customer throughput in reuse with quarter. range increase by and to revenue quarter, particularly

during million quarter. by the Looking SG&A $X.X than quarter X% relative decreased more the reduction to efforts, at other cost or second third

of to million million, QX. In While near trend the overall. of quarter to $XX transaction-related of range of of fourth year, integration-related small fourth the to to will net our income million. for we $XX of Altogether, transaction the and to of quarter generated relative compared guidance we $XX have the continue we costs slowed EBITDA to continue increase expect second and XXXX, XX% $X.X first million $XX a revenue and the an the adjusted during similar balance of half costs to third incur the million SG&A quarter, of ahead quarter,

our of consolidated million the fourth segment. recovery For between our quarter, Technologies EBITDA the segment Infrastructure fourth we expect our seasonal approximately Water impacts by a Water combined overall well as operational third our XX% continued growth already adjusted Infrastructure the importantly, in segments path $XX over $XX to offset million Infrastructure the our XXXX, and partially substantial on Chemical more of are planned in with and Water than during course great for revenue QX 'XX, Services in XX% into having Infrastructure, by year. segment, profitability is for next quarter targeted. profit Water Driven reached the to downtime Water Technologies more growth during And consolidated quarter Chemical combined gross as of profitability

Looking cash the the QX our balance million to of we dividends $X a of $X quarter. flow, third during $XX free with sheet, at of reduce the during of and of ended million million million acquisitions, flow from $XX outstanding cash we generated debt and the million the even operating With reduction borrowings, quarter prior net million $XX $XX after $XX quarter. were of CapEx able million

our the conservative at revenue. management quarter liquidity third the sheet of representing with the working quarter, increased XX% capital very We to in end working a our approximately capital and remains third have total strong our continue of Our overall. balance

of disciplined to the capital sense our of what and return for levered we will leverage, at contribution solid and most flow opportunities higher-margin revenue and our with monitor in optionality, We use and sheet company continue streams but makes remain growing pace. continue our as increased have unique production and balance the we'll shareholders our contracted cash outlook,

we is repurchases shareholders the the we XXXX. to payment total a demonstrated focus announcement And increased of On million continue recent to and a the our year per in our dividend share accretive dividend modestly depreciation, $X.XX third investment committed amortization to to attributable lessened we in expense have additional should quarterly to annual distributions basis approximately flow. was as shareholders on XX% outlook growth $XX dividend and capital to other annual priorities. quarter to evaluate with to returning we minimum during contract to share. accretion deployment. our capital opportunities, of basis, lending And for million this free excess facility to sustainability-linked While balance on interest about $XX increase to remain allocation paid total our an and million plan return capital the to Quarterly reduce infrastructure This outstanding as continue relatively able capital our the alongside $XX an were at attributable on cash quarter flat we overall.

Our the we represented additional growing quarter. XX% but as to modestly tax given up million pretax income in step low maintaining mentioned alongside an contract expect range. CapEx moved in expense a rate in down recent earlier, $XX our income the in increase the million long-term QX, of $XX fourth growth from we tax Net QX well, that CapEx wins effective

on of come expenditure with still EBITDA to guided adjusted newly million $XXX to expect the through the capital growth million. to capital cash improve XX% continue lower come our on previously even we we to within quarter, to our fourth the of $XXX range net projects, Even maintenance the flow of end the increased in of our of cash see the range We announced end year, into And CapEx net on XX% free efficiency. with CapEx target flow. pulling outlook expect in in though low the free

that of to generate vast and long-lived our infrastructure cash a CapEx-only at more majority projects, if on and expect is growth view, a maintenance our yield EBITDA reiterate I'd CapEx. the XX% to before CapEx look were Importantly, adjusted you towards contracted going free flow we than

tremendous provides only but not optionality Our opportunities, model with returns capital-light fund us shareholder our future operating to as well. growth

during out steady Looking the poised as accretive well that and our by continue the to investment through as is Technologies Infrastructure into conversion expect highly growing like Chemical are segment XXXX, open it our supported wrap up we that, questions. segments. cash water infrastructure to Water Water up high projects we Operator? employees hard their strategic Services all of by I'd to to like bring online our of I'd year. and the support. again to With once continued for thanking work

Operator

[Operator Instructions] The the Raymond Jim first from Rollyson James. question line of comes from

James Rollyson

an about curious back Kind Congrats -- this this Water that Infrastructure. look in the on that. these embedded year. John, of exceeded long-term in what's performance margin hit XXXX, you margin while in it for obviously quite set outstanding decisions out segment with you a projects it, have all have your goal contracted profile and pricing and as you've of CapEx just talked XX%

of like of next you healthy Just handful curious see quarters. you margins. you're Because not from still next the kind seems XQ, of over we here? the kind year even you're margin over this or in kind looking trajectory from I'm at margin range, where XX%, forward of the pullback it do XX% curious, the -- look with how as X, go

John Schmitz

XX%, thesis Yes, our the think to just added of you for nice continue balance. this we infrastructure still movement intact. off the investment water and start And good whole was a to about And Yes. being we see when goal completely opportunity remarks. is the assets with piece Jim, really The to what base and printed thanks we margin and in XX%, and

movements some And a -- that barrel thinking the turn a or XX% either you those some business disposal profiles. as that for those just job greater assets margin water where it is of higher barrel a it frack and margins works and produce recycle balancing than or infrastructure end. are some that of we're this barrel to to into margins of deliver you other storage long-term within that at But XX% send it's and works different you

Chris George

been existing base thing time. has when pull have to combination it's one about expecting on to factors. continue can of might Yes. driving increase overall. barrel probably think, come the at high platform perspective integrate we we We've And efficiently well, add we been new place to contract from to I Jim, incremental really from to efficiency be still to what's profile. we then kind potential line it, additive mean more the a today far, a can of kind than The I standpoint. efficiently the time in through assets, over every I utilization we were execute a a that as segment margin so able incremental of continues underwriting And think asset through

that John at we maintain XX% think return to find But to range we're still where can kind next over levels continue of think or those I So and that generate XX% definitely improve very obviously anywhere feel opportunities the or we year about attractive good a that X. we now spoke to in to.

James Rollyson

to late you all you of to running, add that have the know how contracts do in I'm when Like up sure. a flex as you of run hand And on at are and revenue you revenue last at of the to is actually just the noise going more transition on, next contracts kind your right over add get fourth before maybe if that and with of for as some then you -- continue now, couple look and things fantastic. think in time take run rate ignoring by that that's Infrastructure kind the to, quarter quarters that these that taking where if in we does but rate base layer follow-up, are you've that business? ones online Chris, announced the year projects XQ it, you point the a so you Water you obviously, Yes, the

Chris George

into organically I'd lot into return slated go and revenue we're going putting over to driving investment on part uplift is early profitability that capital to But year into or speak the so framework at million that obviously place around of of way that do driver can capital be Jim, without dollar key that is course cash-on-cash looking a improve execute the consistent with capital X-year kind to is year for to what and of to capital utilization material more that we've we've both that it, of with spoken We is the to with commercialization before growth Maybe of opportunities we that got the next growth. a around incremental opportunity of a that, that the And and that X- really segment base growth. obviously continue to Yes. have uplift. investment. opportunities utilization $XXX importantly, the

ways look next it about at a outlook a kind XXs you that the of to think and guardrails framework continue add the thinking to into kind margin similar that. as return gives to of So alongside year there's to mid we high profile on to I

Operator

next comes the Markets. line from Brooks Bobby Capital Northland from of The question

Robert Brooks

I you spoke wanted offline? of from Or kind -- about taking EBITDA pretty maybe just Is X a sense much but I of an all the facilities just the third in quarter to step is that Delaware to get stemming of in I think kind First bit how quarter step of thing are remarks, prepared little down the know how a those about fourth much seasonal from impact wanted to -- down, that can that? sequential we EBITDA $XX the being slowdown? more that million

Chris George

to on It's kind of those segment decline majority asset-specific that infrastructure issues. the downtime Yes. kind going come down really of components, the But of from Bobby. side, into broken is the

So decline that's fourth revenue quarter those of coming half that specific assets. be going over from to in the

see it's stability QX. volumes and quarter seasonal remain disposal and third our some to but and the steady overall, management solids we to got impact obviously to it fully expect that segment, to You'll more

The going of more from seasonal services side have those to specific really areas. the So coming is it's impact business asset it. to

a affiliated that see water from that fair high last segment you have profile given those of to infrastructure segment. supports will some it's expected specific that QX, the kind those chemicals are segment have and in mile decline but kind to our recovery to more and directly of of we that seasonal Basin counterbalance half Permian kind that of margin discrete to that in You infrastructure Obviously, some downtime to business impacts, but of impact I'd that transfer with is logistics say out over that going is impact certainly of think particularly that the assets, coming issue.

Robert Brooks

do kind forward? Okay. Got it. why product something I -- could with wins discuss technologies occurred? just you in repeatable where of -- mentioned going I And then that's customers. know guys those you And are E&P think some chemical where you new just occurring and those wins

Michael Skarke

Sure, Michael. Bobby. is This

we has Permian. past direct the had it's part And coming really operators where and that are coming conversation the the now. little our you as strength just it's the where quarter pumping of of most through right from, softness been we region. business in terms a the of through of business expect, of our resilient the more market That's in we're in E&P the It's wins think focused majority not our more some team footprint. the really seeing and the there, one John as operators. would alluded across But share kind this some products We've challenges with taking that targeting with in and we're pressure So to. directly

Robert Brooks

in for in driven guys quarter forward, how water would the pull water And that, just reduction Got activity mentioned you but reduction more of was going Okay. partially the the activities, it. activity the curious, I focused work. assumed XQ a continuing the that benefit release, prepared for have mentioned infrastructure, would press production then is so that, in you activity -- that's fourth be in I then that the and forward in infrastructure remarks, pull on expected kind by given forward

forward pull in off that, I'm given just understand Mike think XQ E&P more that maybe trying just associated am demand So was completion to base? by works or in happened I to that with that. right

Chris George

Yes, volumes right. you're good was particularly weighted pipeline asset Bobby. been to line water. we've years, for converting. production for that's distribution a forward a pull it's side the distribution question, that, but completions into into pipeline, and many to of the historically a of selling freshwater a got that That a was completions opportunity The And that great number activity, for we're with associated convert the great treated us

kind And pulled development customers managing forward planning activity with or then coming our activity and completion out the sure impacting And other space. reuse in was that we we we're to recycling managing asset facility so facility is schedules asset. was that conversation the of the of development also on activity that that that side for where a not had make on delivery

So also that it support to but also the profiles. of flexibility the for us to the into near-term without the chance there, continue assets provides the to more us integrated broadly get and customers' is the network the primary upgraded kind but we ensure fully impact disrupting customer, gives

Robert Brooks

on Does Just more to that complex Just new capacity transitioning expected here. to And outcomes Got me, to of integrated what what it. a handle And just color the on the some means last an workload? for Mexico facility system? for maybe to adding that. are any more the or system infrastructure New piggyback integrated it your clarity network recycling an on of it's connecting maybe plant one to itself that. mean just larger

Michael Skarke

utilization on from around facilities really everything and different parts connecting because region. it's all move increasing you can No, of water the the

start are you we balance long interconnected, you think help stand-alone and as vicinity. one facilities having water the So in them their to activity can immediate next upon move really shorts. you area about When from completion beholden and the them it,

so And making connecting minimize really focused so maximize very building we're systems, on we systems increase utilization that and can and recycling and networks disposal.

Chris George

that really that geographic customers. it to more on more of in coming footprint that have balance enhanced and over that interconnection a footprint reach, through you production Yes. importantly, more side that meet but synthetic barrel and disposal ability to that the also other base, more manage provide provides water allows for demand efficiently to to for geographic reach having but And on broader ability system a provides geographic footprint more that completion

Michael Skarke

breathes the was end really our us it the north northern really and converting to value to of New south system, system, Mexico to water in southern the our water But produced than system that regards New handling which to extends that new north. a to into allows And to asset kind obviously, it. the long-term of from end freshwater because this of allows more of connect and south move one us system pipeline, life a even Mexico

Robert Brooks

Hats great off on the quarter.

Michael Skarke

Thank you, Bobby.

Operator

The from line Seaport next question is the Tom from Curran Research Partners. of

Thomas Patrick Curran

EBITDA to from million volumes. then higher you are of to frack you of your annual measure outlook it activity, in $XX Chris, to spending, What completion terms rebound there. ramp for for assuming change? for of However or consolidated XXXX activity terms and XQ as want the in completions year-over-year

of the assuming you that outlook, in the what are completions? in level year-over-year annual Just changes

Chris George

a From outlook, a of we're neutral year-over-year. an modestly expecting to change pretty kind activity down. environment material overall overall We're not maybe Tom, industry assuming

first have pretty down. a basis, of into coming out to activity a seasonal full the to on it QX year-over-year be the that of You'll over XXXX. and half trajectory But course probably expecting steady the period to of a slightly year

Thomas Patrick Curran

expecting in all pretty over Chris, what margin continued sequential Completion us progression how for much just heavy in expansion it's and environment, lifting Got to you it. XXXX? kind Technology clear of in the that infrastructure can deliver, water the Services of margins the are And Water but

Chris George

good a it's question. Yes,

I chemical recently discussed. more impact an activity from we customer-specific items seen here think and side, the we've on obviously the

through enhance those get and to you're on able continue manufacturing throughput plants pretty absorption manufacturing wins product of some uplift new the of those to pull As some we base. that clear

that margin think continue business So we that that near-term back recover volumes are available is objective and profile for that look we the a into to we teens those high certainly good think to to getting mid grow some up to us. of as

On environment. ensuring of to going I full footprint cycle our overall pretty we're service integrating capture we the continue a particularly life value contracted That logistics have, to utilizing have you're our base service last to think maintain be the activity into side, our and mile pretty a to our solutions that we services infrastructure those footprint that lines, as focused through correlation into can well. integrating focus those going that said, high out containment on high and pretty on

So idiosyncratic But I build some the to will a growth to beyond think good activity correlation footprint activity that obviously overall. completions provide to fairly continue there's the overall to this the infrastructure that is environment it upside environment. still we to environment that base going services maintain out as

Thomas Patrick Curran

EBITDA as what cash Got expecting just can give free finally, of XQ XQ both idea it. for rebound? And you an you to conversion, us flow then for and then you're

Chris George

flow should bottom Yes. to into come full a at year quarter basis adjusted be that the looking in a on kind overall, XX% previous cash XQ the of of at kind free pretty neutral of guide. EBITDA

continue particularly backlog and free on cash of the with base. a will still dependent good there growth, conversations the execute XXXX, backlog continue of resonate and into ability to outlook upon opportunities forward opportunities water flow add that be that to there's the very in strongly to the customer Looking build think grow strong infrastructure. our continues contract We to additional

should investment in see you pretty to I So that you capital probably expect similar of 'XX pace see in a XXXX. think growth that

capital. talking on said we're as cash key out And of the look generation before that we a be year so percent maintenance-only But driver if next pull-through you comes obviously that the growth will at where flow about year. outlook our business flow cash a a of for free earlier, standpoint, XX-plus

base new there and XX-plus of shareholder out the returns how focused base. cash from capital to the organically, maintain expect of assets to flow both out continue the obviously continued then bolt-on we we for add to that So inorganic we'll on to opportunities at growth look opportunities business percent allocate that and be footprint

Thomas Patrick Curran

It's overdue. rerating to stock. of Nice and the ongoing see well the justified

Chris George

Tom. Thanks,

Operator

comes Johnson the The Rice. line from of Crist Don from next question

Donald Crist

to X how Northern different it have once you up the follow wanted and ways this you the on do you complete can I So percentage a want. several you'll years' drive potential additional before have of to spend to you have have on Delaware trying Just you expansion, you Or how come like that utilization expansion? and But any water answer worth capital? potentially. I'll ask do for at system way, to growth another flexibility much additional years asked

Michael Skarke

it the the bit Yes, to really a is roundabout side. seeing us by the that start is a and just Michael. intensity benefit Don, this of answer efficiency in is I'd industry infrastructure on way. saying a that I'll

So volume on the that in you're barrel increase a that rate, basis. every completions, we're barrel in using the for modern revenue increase per generating

And us. so it's just all upside to

expansion but it Northern we're we're about So we're in Delaware. basically to the I trends really terms of more invest quarter, adding in not because we constrained. needs is system the We're for becoming and it the standpoint just to from apparent our system. that in adding it to mean, the seeing excited system, our each And and more services as grow an and adding we're are

a do terms spending And similar so with to, continue, can expect we amount what of year as that to in capital. alluded think of next Chris I we

specific make to the capacity on in from we in that and redeploying we're We're to the seeing In on the assets customers capacity that system, we're quarter this this sure system. front terms utilization of of in basin preserving demand going remain have general. still our the

we have is multiple The we're today. it's And pipe in that place to pipe lot have a of all run oversized large support diameter we so think in so room that we and customers. with what will putting

have do we're reserve jump that when the capacity support shorts a an for we while balancing tenant, anchor out we water. and around ample and in model other build operators the longs we So to

position. We So think continue position. We're to think to any with all the invest to kind to to we'll of heavily, have We've the continue invested room lot keep We're to we before things a excited sum market. heavily. we here. or about have sort up maintenance and going of up market-leading really upgrade make it's run a of

Operator

Jeff Tower Research. the The next Robertson of from question Water comes line from

Jeffrey Robertson

couple the a of Michael, in contracts Northern new Delaware. on questions the

of you press your with in capability? Select because have think seeing a operators inclined water Are and to release. talked XX-year about balancing agreements the a do long-term you XX-year I contract more you

Michael Skarke

Because we're inflation ground, system on to plus of our balancing the able water as on have years, the and annual we that they're needs duration space rates and to the and handle capability water for the for in XX-plus can certainty their that lock we our provide happy well. today assets

to as get build make support the been we've systems. contractual investments So out our that ability very these we and pleased in

Chris George

But about that go the of of kind inverse and recycling anecdotal the in third XX% parties. basis. data other to volumes maybe of application more that third one redeployed barrels it, a treated demand from in assets, the outflow recent synthetic you've think disposal seen if put tenant. to the those around on for produced on of we to one into the on out Delaware parties, on that coming facility tenant anchor the activity, for into balancing new And water about put of you come treated the points about a commercialized being about facility water new the basis with barrels come the bear some facilities our that we we've anchor bring thinking additional place can of XX% seen Basin,

X operators our and gives value visibility out us more and that an base So across margin volumes a but only only ability that managing efficiency that profile X, X to really produced parties, into managed improves only of inflow outflow for barrel of customer, X, and X, creates flexibility third of that the but demand really that add to not to treated get the creates efficiently asset broadly importantly, really balancing barrel. the more not but to water with that not create

Michael Skarke

we the make relationships I across sure longs of example the the across single and And region unique. X something balance see and we matching operators. to and we the mean that we it our interconnections that's and we're importance really speaks have and operator or not to the is ability water a have, not across shorts facilities, that have

Jeffrey Robertson

it generate, cash utilization In which the compounding simple that permanent? margin infrastructure increase flow upside like, the think you're water that reinvesting terms, or pretty into flow, it it investments sounds cash is protection to even fair so margin taking and higher basically margin from or is high-margin

Chris George

mean of growth. pure but some Jeff, increased some also utilization, going into investing obviously I it's in of expansion and it's

only of asset we period use base and certainly asset around reach longer I in we brownfield more over tie have to place, utilization, to stability existing a to think an that asset that can continue time. and invest and importantly, So not of we geographic that duration kind a footprint the broader but expand breadth, increase of can in continue

Michael Skarke

And have chemical part business and maintaining as we're invest backing been we able a free much low to out from the a is we've flow, able contracts services and just take infrastructure, we infrastructure while position. of as in which that well, and and leverage throwing that are reason off have cash also business secure a the spend CapEx to very

Chris George

to really how continue time. through our about think build think is footprint, customers these it. over long-term also the we we're you doing adding if business than the it's different inventory And out contracts. What to of No

over these XX-plus and adds forward. to inventory asset years the of acreage which So agreements, of long-term adding dedication, dedications right here hundreds through of acres first thousands of refusal we're base

to near-term the times utilization and and not but the it's the only add it's adding So to margin, of longevity momentum profile business return over continuing and time.

Jeffrey Robertson

and program. I cash longevity profile of generation attractive company of underpins guess, flow -- an earnings the really is shareholder or what Chris, growth that capacity earnings return

Chris George

how over more base, which the this going time business I to a flexibility returns I to revenue capital of build at manage look think, revenues and capability mean we and us, well. to to see continued can continue time, Yes. it's structure give adding out contracted more around you've levered shareholder as lot the production more the over

Jeffrey Robertson

areas early the regulatory Select's since on business? election changed a any this that see major results you yesterday that impact would morning, be in the was a and or administration could Lastly, altered new do have

John Schmitz

Select for way in. to value our is It for John. intensity is as their brings so blessing business and to and their us it views say customers, is The a acreage. I'd for this the that longer-term is values brings industry need administration Yes, it and customers, support the the we

of space positive position what beneficial Our could we the and federal, states some do stream. application usable reuse on to a and out most but a localized, stream various with regulatory in is our trying balancing, deal to at waste is really water we moment figure regulatory with

Chris George

Yes.

around around general regulatory I the produced overall. the stream solutions trends are think trying around managing find the water waste and environment to industry the

the on of federal where the So of that impacts that's oversight close spend regulatory and most of regional We and impacts where more, think potential and point, level that local of tangible communities customer that to we resource focus is more to we about the direct time. we impact I state, a really and localized a we stay obviously understand water environment, that's how John's level operate think that our tactical in, is really it. but

John Schmitz

half, portion about revenue and the Permian they're come Yes, we from point Basin water does Permian does a injection dealing with. from the Basin, some the effects all big our out should have of

our as the Select on effect to have a concerned, any properly. than and reuse is and far more As on water pressure need had effect not water water for we and balance move ability other recycling

Operator

will now I closing session. comments. question-and-answer hand for our conference the to John his concludes this gentlemen, over and Schmitz Ladies

John Schmitz

next Thank support to quarter. with you joined Select speaking again and that to your everyone in our about forward call continued learning Water today Solutions. more and earnings interest for I you look

Operator

Solutions Water concluded. Thank you. Thank The conference has your you participation. for of now Select

lines. your now may You disconnect

Select Energy Services (WTTR) 6 Nov 242024 Q3 Earnings call transcript