WTTR - Earnings call transcript Q4 2024 | Select Energy Services, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, good morning, and welcome to the Select Water Solutions Fourth Quarter and Year-End 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 at Select Water Solutions. Please go ahead.

Garrett Williams

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

over call items There the from yesterday's replay this turn The John, replay I today's telephonic housekeeping I included Before at also be will was accessible few a to a XXXX. recorded access webcast replay to of information selectwater.com. release. have be our earnings in website and A available for cover. also X, available until call will by March

reported of the February may call Please as accurate XX, information of reading. or and transcript only today, no therefore, XXXX, note on time-sensitive information the replay the as be of listening this that time longer speaks

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

reconciliations encouraged contingencies. However, read well performance expressed differ refer is our materially of management. for on as understand on Form our uncertainties as in by reports Form contingencies from announcement risks, XX-Q current X-K earnings annual on measures. the financial released to those actual Please various quarterly our and our to to risks, or could XX-K, non-GAAP Form listener our uncertainties cause yesterday reports The those and report results, achievements to statements made

call over to like to John. I'd Now, turn the

John Schmitz

through Select, Solutions for Chris off with more the for walk quarter Good joining discuss Garrett. another us. operationally large Water speak start XXXX past by of the today. to it pleased and I general of our outlook and the bit opportunities. a thank and some be in over highlighting to record-setting year, to number to I'll you a Overall, discussing detail. hand year Select wins big both strategic then outlook was for financially. you am future fourth XXXX I'll again and Thanks, morning,

disposed XXXX, transported, to XX% on expediting strong cash this fund XX% bolt-on With EBITDA consolidated services infrastructure volumes. adjusted and strong strategy record operating Infrastructure adjusted strong chemical A cash we water while we during XXXX, support our year, were During the gross growth margins CapEx recycled including profit and to throughout annual performance and acquisitions, able high in base our resulted company. Infrastructure new market-leading a Water plans growth from of operations. organic technologies Water in growth and dividend in focused a nearly dozen our allocation This executing funding the maintenance annual XX% flow diverse also from and our all-time segment, capital capital by revenue segment. EBITDA small flow increasing our year, water for

growth infrastructure strategy, continue large big infrastructure with clear organic we projects focus water dedications. primary sign a our to With on up acreage

XXXX we million XXXX, $XXX to of about growth new up contracts, long-term organic spent encompassing be During infrastructure projects X under signed across capital XXXX. major and

infrastructure and come These We strong will in of initiatives, assets additional well XXXX growth also acquisitions, for XXXX into portfolio potential projects segment enhance the in to provide with the dozen continue assets. the utilization added new online more existing recent broader than and to as contracts continued our bolt-on networking we our a the combined well. and as

of scale grow every to water, X.X day. more moved and Operationally, breadth in billion we continues than barrels that market-leading a XXXX,

and in overall increased increase produced of sustainability-linked our annual year-over-year. grow our percentage infrastructure, far disposal water materially volumes the well. volumes, organic increased our demonstrated expansion profitability recycled as credit from acquisitions a water targets, We systems we've and disposal our our XX% in utilization volumes outpacing coming continue while production-weighted to by as Through facility revenue

currently a potential over combination a now time. of than with leasehold, long-term we contracts this relatively under growth, strong million solutions. Select a new million significant pipeline X.X inventory, revenue area encompassing We of is portfolio disposal, and operational supporting Overall, short very a future financial of the and record at pace our flow it well for Even of dedication, best the I backlog backlog acreage estimated produced outlook future and in built an high. future continues has water acres X.X more ever sits been. These period volumes recycling project cash dedications truly existing believe strongest have opportunity. a acres of of U.S. across grow provide captive to basins and cover the and the

finish From an the pleased contracts line organic the project get quarter. standpoint, was long-term fourth several to I to in additional very

area loyalty we operational, as their the our Permian were to our a the new to customers their recycling customer help trusted existing both Select an and capabilities, anchor stewardship position XXX,XXX greenfield is through fourth Basins. a has and this The dedication achieve multiple the testament in resilience facility operational value-add the quarter, Basin for in able developed plans Basin. water a Central that example, For Delaware financial infrastructure development technical a and Platform of acre project to add solutions. partner and our customer's goals and new underwriting facilities substantial successfully is recycling Midland and add reinforces it and recycle in one This to tenant

Delaware Additionally, another This XX,XXX Delaware miles Lea that per pipeline XX-year our of will day expands just our Northern about incremental broader support total system, network, from to To Delaware pipeline capacity additional XX-plus customer. we spoke dedicated bringing further is new integrated agreement of a position with to water our throughput existing further XX,XXX approximately commercialize line our XXX,XXX in network network newest This in and I Northern expansion we a the into dedicated quarter, for X-mile water existing and infrastructure that and another Northern customers. facility acres buildout an contract in in signed the adds acreage recycling network combined the fourth January, barrels Lea with key directly acquired further County produced alone. County.

current As to longer fourth County largely X,XXX Northern we County plan term, southwest Delaware during acquired in land and of also surface of the acres the system. approximately we ranch Eddy private our Lea the quarter

can reoccurring revenue resource high-margin surface a owner, basis. this us As provide asset standalone on a with streams

the network westward and New recycling positions Northern it further for infrastructure integration future Basin in entire Delaware for across expansion More importantly, Mexico. us and development long-term

will system and recycling, and our plans Basin transportation Our buildout disposal, integrates production commercial balancing the Northern across providing continued Delaware support and the flexibility increasing development their expansion and that operations. increased water and complexity completions intensity both customers' benefit storage, for enhanced

and further the continue the strong during greenfield, additional infrastructure growth fastest acquisitions, see segment brownfield grow to franchises Water expect backlog XXXX. gross growing and to by very profit infrastructure and revenue a of Select's industry. Infrastructure ahead annual is into Accordingly, XX% With and we to XX% in one segment to XXXX bolt-on Infrastructure projects as of established Water

segment and speak markets environment with to across the commodity natural half Chemical both gas to upside views second higher of to segments XXXX. continues and XX Services year. Water Water Overall, to our our expect modestly and hold oil are potential gas for these at XXXX. Technologies Technologies and relative a drive to the to fairly the with LNG growth markets grow. on both and like energy reduce compared maintain the Chemical price U.S. levels we margin Chemical revenue some we flat our to we get this can we the to segments, Technologies expected demand in medium-term Before modestly natural expectations to that I'd to steady activity solid levels, XXXX Lower improve our as activity overall Even profile XXXX expect Services

Water more XX% to Services XXXX. infrastructure fully funding business our segments must of gross out improved providing free critical flow, Technologies free success, Our of into initiatives a to convert We for and drive cash that we into Chemical strong this and our capital cash their and segment. flow, remains growth on than an source continue require to ongoing expect return profit both water of margins continued assets our Water Services overall and

activity flows However, look or over we course as enhance our will for our our cash that underperforming within potential macro on that margins, combined before capital offerings cannot can. service XXXX, basis, and will achieve resources year-over-year and those revenue ways with while are returns the modestly continue Water to redeploy objective of yards for Services, look outlook, down we the improve our non-strategic Services of parts stabilize the into If we should assets of consolidation personnel, to efforts, the These business margins there further modestly potential across improve the drive segment gross Water required during other declining XXXX. determine regions or ultimately a areas D&A period. we evaluate to

the entire firmly seeing in our XXXX, by driven for segment, the continued during EBITDA anticipate primarily adjusted Infrastructure growth across year-over-year we Looking Water company stronger growth XXXX.

EBITDA and should expect investments, additional including free accounting least organic growth initiatives. or shareholder cash pull of maintenance allocation, also incremental CapEx this after for or adjusted flow provide returns, optionality to for XX% into through additional all We at and capital good inorganic strategic

At expertise. growth we strategic the initiatives are spent industry. Select, XX that developing more we We can energy years have and additional water on our always than capitalize solutions for resources reviewing

are Select we contracting, the to water infrastructure municipal, always to a expertise sourcing, operations this advancement markets. recycling development, in is network and our of demanded. that water with and have sector. energy that outside application announce successfully and our platform I legacy it more believed has excited recently the and end, diversification and Colorado has the moving produced to toward of pioneered diversified water large-scale that core traditional we fresh further a While water the transition the And of have where storing on agriculture capitalized expansion industrial potential

acre as per barrels of XX,XXX source annual year water million rights storage or rights barrels committed largest complementary approximately of state XXX,XXX million to to well to is of XXXX, one of the investment consolidate cover to and year portfolios water storage an the feet XXX strategic along $XX February volume we In day. as in per multiple This per water partners with alongside Colorado, initial the equivalent senior assets.

to investment real industrial Select's In estate key projects. partners municipal in our energy bring operational and addition investing this substantial in experience and water, capabilities,

contributing addition And water also capital, rights to markets a our real positioned into these and well Colorado, strategic and enhanced water aggregation property. serve economic to rights, substantially growth are combination a very resources a are in high-end existing creates portfolio mere single of water in of partners the and assets These senior storage consolidated opportunity.

expect to storage the and construct we asset, feet that the further acre the only XX,XXX convert additional of commercialize reservoir water our resource. and storage deliverability we of As options approximately enhances significant value

existing a gross expertise exposure land owner unique and natural Select's flows. provides to that long-term contracted and shareholders is This our and of capabilities cash high as resource growing extension a margin,

With and the a this While compared future paybacks Colorado current believe this commercial, longer social to and and to this very in rights fits industrial land strategic our investments, we that opportunity be well will senior owner foundational will infrastructure within resource strategy we infrastructure years. will have infrastructure our and investment of be storage of become of type business. critical growth of water water expansion a part our coming opportunity, the

several to lease providing our of of couple up project good with through value intersection cash stewardship project. alongside nature Colorado so, years, long-term build forward customers, strives great sign low-risk, agreements highly increased in business municipal supply very water by increasing doing shareholders to and years often contract are XX our can a for both ultra we and and an The next look the on. the to portfolio of stakeholders flows We with our introduce so industrial we agriculture needed space municipality, long-term to providing long-term economies this local to on water long-term operate and water intend to the would at count or with solution term with and contracts provide economics, Over growing agreements proud dependable a that of this good Select income. that returns.

energy on and best in conclude, this the and for advance in and integration further and value. strategy this Select contracted ultimately, high-margin, about I to And sector, firmly vision technology look recently. now into infrastructure. and solutions holds future drive strategy water I competitive of the industrial remains shareholder am landscape, to growth I what during the To very that XXXX to long-term Select chemical Select executing forward uniquely excited believe believe beyond. with XXXX believe I infrastructure undertaken have long-term and we positioned the positions the municipal

it detail. our XXXX point, this At a our over in I'll Chris? results to to to outlook and speak hand financial Chris bit more

Chris George

Thank good everyone. and you, John, morning,

year-end. shareholders we us business finishing XXXX over $X.X our of invest gross billion were across dividends margins As able important activities, balance finally, to many year to million the adjusted of and year free million alongside annual operating enhanced million These of Infrastructure, returns generating subsequent dividend This for $XX further enabled of buybacks to mentioned, key million that the and We raise includes an across the cash revenue, by financial strategically of John a results with sheet was Water XX% in Select to have metrics. from $XXX in while financial $XX XX% $XXX the strong providing EBITDA, cash flow. quarterly flow consolidated course total of year.

In a the of capital Select January $XXX believe within million financing facility help funded markets, of support enhanced bank commitments equity entered X-year term commitments. sustainability-linked time. traditional cost facility, this This returns new year, will provides a of and I which of attractive into very including million over loan revolving credit $XXX

stress has to the we Select always benefited of us has times market, the a of maintain in in use firmly this which cyclical maintained to discipline disciplined expect future. and during approach the leverage,

with in with support company infrastructure-based, Even chance significant our us. substantially However, maintain lifecycle leverage opportunities enhance structure funded overall growing ahead transition full at liquidity. with provides the net a ongoing sheet of enhanced we we loan, capital a ensuring closing us have the ratio water sustain a term Xx, Select's fully of to conservative to production-levered debt-to-EBITDA below strong solutions we a balance

Xx set commitment advancements sustainability-linked a million a more produced XXXX the than to reinforced industry overall substantial recycle surpassed more in X-year annually primary employee of stewardship tremendous our performance record through and in volumes barrels ongoing KPIs, through by XXXX, of and XXXX renewal market-leading our and incident technical produced X.Xx since than recent safety the years by more recordable new below growing This well rate facility and investment, and set back XXX target results. original water a we we our also up to new X than recycled capital water our good maintaining Supported averages. target total operational

recycling balance our expansions, been significant access supply water our and waste optimized produced and manage Increased our has customers to streams by to maintaining demand regions water. their in allowing consistent, and investment customers instrumental completions water geographically for water demand led numerous while facility infrastructure while dependable demand have in that across to networks customers and

facility recently earlier volumes partnership to in increasing reliably we XX reached our recycling second lifetime This our volumes that water barrels need ability OXY. our recycled critical by for these announcement million deliver is recent from and at month, exemplified of highlighting this with

took facility. enhanced able get our this balancing water these that half continue first milestone will These highly utilization with were expansions reach it there we the time to in OXY-backed and to accretive. make see to networks Importantly, capabilities

we As John executed facility best the acreage we a acres examples dedicated Central over opportunities, of The fourth X.X and we noted, and water XXX,XXX dedications, in portfolio to the United quarter Delaware of recycling added and fourth bolstering the overlaying the dedication acres area quarter with, treatment expansion projects we continue alone. between Basin portfolio in expect the Northern project the produced under new Platform have acreage of and highlight our States. types amassed million geology another our handling of in

within XXXX of place years looking revenue length. of dedications was acreage tremendous the so, still of captive our long-term there in duration in contract executed when opportunity XX portfolio. or the the XX And contracts contract past were just over only average weighted of at portfolio, dollar a given scope overall The majority over months amount is our our the put

contracts not completions customer, geography underwriting pride are underwritten of have on we and the them, these the ourselves market we just conservatively, as exposure many do the overall geology well. returns but activity and the ensuring While are to

Water In XXXX, profit our schedule, XX% on of growth greater ahead of well XX% in which significantly year, strong growth of or XX% Infrastructure goal revenue reached gross led of we gross outpacing to margins the for segment. the our

proud well are as profit delivering XXXX, more gross streams. of the maintain our our and We to we contracted the set of targets company. of by revenue accordingly, Select XXXX underpinned as greater And percent transform XX-plus forth during margins XX% Water to gross deliver driving the Infrastructure contribution goals strategic our the high-margin end we we segment consolidated than on gross have expectation for profit by from as

offline Water This to certain alongside X% take as fourth quarter, a during substantially Infrastructure QX support late revenue development D&A we maintained offline were during revenue we XX% anticipated to decline the activities before XX% customers ultimately anticipated less margin was that gross XX% much our taken in a during more originally with the decline modest plan the worked strong to potentially than we than their period. the the quarter decline in as later assets quarter. key

While decline deferral second acquisitions efforts, in combined system quarter, to requirements the the continued driven a supporting single-digit revenues asset revenue percentage new by contracts was during infrastructure multiple first in low benefit result resulting our certain water these this QX, Delaware a delay quarter. and with Northern expansion of buildout, conversion a the further recent will until

course that full significantly XXXX of come a number during half run second set second anticipated over first the Infrastructure's strong rate half. and in anticipate growth exceeds the projects to firmly XXXX, ongoing However, strong of the the with quarter a performance online Water we

and XXXX XXXX. Infrastructure growth of quarters of the trajectory XX% our percentage segment of each the second growth double-digit a towards year-over-year for to upward in in for third driving segment, expect We overall Water XX%

As of new capacity commercialize strategic we the facilities into new the year, over the other there course contract further enhancements. alongside XXXX remains utilization enhancement that continue upside to also drive can believe or wins we

activity at segment by the our Services about driven Looking more other by Water quarter, In XX%, in decline detail. seasonal saw primarily revenues segments the fourth declines.

we from on margins a of our revenue expect XXXX. While the during quarter better guidance, fourth of to end to was outcome, recover gross the services decreased XX.X%, our quarter first before and which D&A expected this during the disappointing

to the first revenue margins We expect quarter percentage Services to improvement increase a Water to in the XX% for back additional digit later range in mid-single margin following with the year. recovering low- with XX%

Switching with seasonal by segment this Even driven market share ongoing gains. quarter, product fourth over continued the growth saw to Chemical key revenue XX% declines wins strong customer sequential new of activity QX, and Technologies. in during development,

improve came first for lighter margins the XX%, continue rates to XXXX and While the segment than across and absorption both our increased production as product in year. this in revenue expect cost manufacturing rest throughout improved to and at drive volumes efficiency expectations we of margins the quarter continued

In million. $XX to increased the modestly fourth quarter, SG&A

towards to shifts the expect higher-margin XX% year to revenue SG&A weighting full XX% to of We increased quarter mix track business the as revenue in streams. an and XXXX to both first

XXXX, bit during consolidated and below the $XX adjusted within our Technologies All EBITDA Water our Chemical we segments. higher Services together, million impacts resulting cost saw from a quarter expectations, largely fourth of of

$XX an as of million low adjusted activity quarter For quarter across XXXX, consolidated the in customer activity uplift the ramps $XX gradually quarter million expect from first to we fourth levels. to EBITDA

accelerated XXXX thereafter. record we and we our anticipated While like starting been, improvement in adjusted to is our XXXX and rate would expect year for firmly have QX in second Infrastructure trajectory expect Chemicals of another of another below Water with half positioning where given year exit in EBITDA we Services segments, the margin the growth this record

investment. percentage our relatively Looking pretax state increased depreciation, I $XX tax below XX% expect income continue million modest cash range book expense will and a and to to anticipate acquisitions from recent capital continued the to line, modestly low tax in stay applied payments we in operating million, taxes likely range. the to quarterly, the XXXX $XX in be low including amortization million and $X accretion

announced increase Additionally, we the quarter million quarterly should in to interest the added structure term of expense component million funded support per recently with to sustainability-linked credit debt $X our loan facility. to $X

of The guidance ongoing of $XXX $XXX which With million CapEx fourth our net bulk million, the $XXX net previous timing CapEx, at mere quarter million. reduction $XX represented million spend, finished into below of carry to we XXXX. a of of should this impact over project year

project the $XX net We CapEx currently expect recent improvement acquisitions are year margin opportunities going and million and development $XXX the to million We ongoing ongoing to maintenance $XXX of with and XXXX. additional $XX this to healthy entering backlog related contracts in anticipate in initiatives. a and million CapEx towards million

water of The XX% growth capital overall is our our at alongside profits towards cash Chemical remaining CapEx, Technologies and segments which after each John noted. growth To provide for as low Water largest is intensity, cash investments, heavily returning of CapEx, flows flow projects. component to weighted infrastructure infrastructure and XX% this returns, these spend Services fund capital ongoing strong

$XX we against year. anticipate net $XX net proceeds the this Additionally, from million spend sales million to during CapEx asset of gross to generating

and a those operations more basis. continue continue year-over-year dollars and evaluate in our into in after should adjusted optionality free to expect consolidated us As of to business. importantly, in on program, growth should XXXX the provide we see EBITDA invest enhancements shareholder CapEx to return XX% This we've to flow to with good convert from outlined, stronger cash further

term enhance perpetual predictable or long-term our and growth. agricultural time anticipated water solutions Accordingly, can projects over about generally investment we recent about very platform. most develop for our of we very portfolio contracts, development. a in rights municipal, repeatable, our way prioritize unique ways stability continue water excited finding and to diversified baseload These can term think I'm to the a great long long provide enhance and we our rights Colorado of we allocation business to framework, As should through stability revenues overall production-weighted the water adding in long-term of industrial a capital

initially limited approximately While to partnership XX% contract partnership, as up invest for as find storage own structured of whereby we Select XX% opportunities and has to the a minority the accumulation in additional of and million XX-plus anticipate ownership infrastructure. the over we X time eventually rights $XX position water next of buildout doing additional term. transitioning the long rights, partnership general the majority these Select these investment, over through In right the percent we a years exclusive so, water and of to and would another operating assets to

take to While million consolidated this more believe time some than rate realized generate underwritings with earnings, upon full and could it commercialization to will realization. million for partnership of double anchor investment the annual translate out earnings we longer-term of potential income to that's that $XX initial $XX contract net

provide primarily pricing Select will excited used to additional structured the to financed growth time. and ways, utilize of be and for or start escalators, should new chemical long-term investment. to more expertise our I'm very predictable profile and low, fund cash are to customers and believe expect the in this there underpinned asset shareholders and anticipated offtake creative can efficiently, by jump many integrated we with that this strengths municipal water opportunities which over initiative flows high-quality, We expected and very repeatable Because are initial long-term of ratable to return risk be these with be that volatility assets

see hit performance. start a first as overall M&A have we more additional growth would the improved pace continued well gates and sheet, into the we'll are Select our year. key XXXX, and financial capitalize number and In bit of strategic out the second And while of balance the of to of year of to opportunities milestones, summary, a believe for throughout to than seen, we have organic half XXXX our our XXXX investments, importantly, strong advanced initiatives a infrastructure enhanced may we half with was slower great liked a I positioned execution continue on

I'm remains look customers, high-margin, infrastructure-oriented and technology distinctively infrastructure. and and our to undertaken forward positioned we've solutions with integration Select it of the contracted chemical the water unique shareholders, a to company ahead. the and I to excited brings about value year our our incremental long-term Ultimately, strategy advance

over I'll to hand for questions. it operator With the Operator? that, any

Operator

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

James Rollyson

information front foray of the and just investment or really and could of kind we the Colorado. into to a we little longer-term start, so in kind maybe could kind with the interesting as new municipal business lot a potential and of about this maybe strategy, have but here of that I guess John, a talked venture of That's side to about side margin unpack, compared what profile But and talk return I Chris of of you the cycle the you maybe line the center. a to time there sense so on you've profile doing recycling little that. bit been get see

John Schmitz

Sure.

Lyons here when you've related an at through met the could Jim. up is really contracts has it, our contracts revenue contract people course with of know too, reduce we margin company with XX at that And gross really over of as to said the But it one we think in life. of put we look beginning efforts or not, to in years yet up but Mike the here be us, Mike length. high escalators the the of these them call, in opportunity I the returns as don't if that that's heading So in he's well. the

repeatable. off in sense just repeatable, away. that it's don't and we rights, way build forward. completely off it we They rights up go repeatable other water They're Chris and and those -- open predictable rights water and we the of addition don't rights to own it maybe they management the really not have let is water Mike those go predictable, or me the it's river they're storage in say when -- that will it a and adjacent we very water water look as we water some The nature for the depleting of But here. and at rights land are

Chris George

of definitely different opportunity. kind a This recycling point and of your how Jim, opportunity. about, really traditional around projects. and development infrastructure Yes, our to resource It's as specific compares type that to more of a we the returns think is

contracts term, would So with meaningfully resources It's large the the I here consolidate spend procure very be our come not in if to a place, frankly, these for little it, create a other quite next anything it investment. projects. a as tenor add? And investment. those like here, and obviously But opportunity. to say higher Mike, our are what uplift more else predictability said, making competitive, stability very might and years and this better that together. are to getting long-term investment our payback traditional opportunities extended upfront profile returns than ultimately does different we're margins provides we of couple the longer the John immediate And and water overall valuation than some infrastructure think the while that we comfortable of

Michael Lyons

with big through These Yes. positions water or model across a truly connectivity. change I'll exchange senior add. the and Select state, The resource land maybe rights here operating programs either broad owner. canal be very reach just is are this to physical

get, that in can And of consolidating is water size here. which feet the immediate the it to partner demand we're of scarce the this is Chris with see the across are a we is Colorado we even go because So of as we And those of and state, in asset that in this need this saying, most. many acre looking XX,XXX holdings I once one now really and just resource largest water high very demand think was who multiples is even to water excess is consolidated. the right vicinity in that up the asset

So us partner are I and with economics competitive. Chris as businesses, a local create communities, think this the think I said, the position great to jobs, local the it, behind puts in very

James Rollyson

you in perspective and follow-up. a a Yes, appealing. sounds you a And on on run you is having to color some the I it a and then puts from revenue the of that that -- XQ. -- here. mid-XXs probably year If there's get oilfield bit into maybe just ramp offline impact obviously, temporarily And higher for being facilities of to that and percentage revenue you're facilities half over fourth about part up kind look out, XX% growth, that the the trying Infrastructure of you I'm that coming of benefit back rate And you that? to of little by to just expansion. year. Water That's put whatever -- into about in hit in is kind the through from change. the XX% guys of a little how or as from gears into revenue get going or business kind of XQ of end growth, the the understand think of Chris, long-term in that in that or bit ZIP as little exit this the your or can or we then a XQ, takes had into rate? year-over-year welcomed you Obviously, XXXX code, timing full certainly you XX% if from you growth you nature puts As does taking if short-term of like Is quarter some shifting seems growth XX% that laid of look XQ. Maybe how going that this background your the takes an offline. where math think time right year of the

Chris George

exit in say, year to as at to year, a, I Yes. Jim, substantially certainly, than of think mean I going across about you we're this half exit versus we the year. trajectory the would rate first see the going full the higher are

quarter business, you of always a that even into run I little of but you'll impact growth the seasonality you'll percentage quarter the the the rate and and kind full to think that basis. or -- if third second the put expect approaches third that should on see perspective, that be kind would something year XX% Now a rate double see half

to incremental absent trajectory good year. trajectory So provide of the to to inherently uplift in into next XXXX, should support And investment, course invest this over that. into continued find we that growth and expect would revenue help your year opportunities continue profitability heading

James Rollyson

I little And in it. thing then here. sneak if just could one Got

is over you've kind of in But at margins. been release range in in this of prepared the mentioned normalized the kick above there facilities XQ mid-XX-plus XX% or fourth You of remarks being back reason you're the by the press to kind through last offline. quarters impacted those obviously in second any couple once think doesn't that the quarters?

Chris George

schedule. certainly No. percent able do to XX-plus higher as ahead to pleased that we've kind be of thought XXXX We those over have here. probably well. than might got quite course been gotten the got I mean, I of of we to Jim, think, we We to levels

XX% So ability that to to maintain range. our XX% in we're quite with comfortable margins

time those certainly, As to look But to to work the bring of of XX% some there's we that online, to to we forward, fourth investments we've range, overall maintain margins through operational performing and little revenue upside were in assets. of expect there. continue bit softness. we even that as able XX% positively XX% to always new the a in we been I think with And maintain the quarter efficiency

maybe lower get that or these continue piece. So as But within assets through near think and that opportunity online new brought that term, have to well to a underwriting initial we're maintain we grow little work that that. efficiency and range I than

James Rollyson

sounds Opportunity that. exciting. Appreciate

Operator

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

Robert Brooks

on to continue want I Colorado the piece. with

really a it. also, up I questions interesting that that of news. there's with of think But come kind was and obviously, lot exciting

the bringing what to to water. dealing Obviously, of of expertise It you're bringing bringing? maybe and just also guess some like kind piece with maybe table? guys here, partners the bringing really But I you're guys what me you your could fresh just So help off, you actually table what you starting are together are the are water. seems supplying

Michael Lyons

thing. sure Yes,

this as a for mentioned, majority space and time. large been that for we've active in Colorado XX operated of in So We've we more than around years.

management, bring canal we managing ditch head everything from movements, gate management. So automation,

think to this. we're So skill definitely operator I the set bringing

years, them and we'd we and commercialized managed basins. XX the and think along be recognize freshwater many our not customers other so of those very do oil built in for still think are I to predominantly and remiss basins successfully, large I gas to continue addition, in I freshwater mean, resources that we very have

a operations. our day-to-day from feel, normal So is much this very

into some higher-value just it's think I it taking markets. expanding and it

I other access land senior water are that has options would other of property rights, infrastructure so about think, The I build and customers large-scale think to customers real very thousands the brought very with, the on reach, we're centers to storage like list. that physical absolutely further also as are reservoirs I these good acres bring And very also similar bring well. partnered of folks with of we access to expertise targeting, mention unique power and that you broad that assets, and as as existing mentioned, extremely some and data entities

summary, capabilities, unlock So this our partners value. really, leveraging and this existing is -- is some key in to new water strategic new

Robert Brooks

That's it. excellent Got color.

about and you Was opportunity And you've Could so talk develop? so XX stuff maybe how just just about did -- with like of around talk there's deal? this of kind revenues? water hey, kind years. for kind diversify it how curious outbound Or team to you could doing the been an just of in really with kind of inbound conversation, Colorado developed. your an this having some it consolidate an assets we here and I'm was opportunity think a maybe

Chris George

build Bobby, how expertise current we make we've some might our strategy, be sense Obviously, our take we that diversification overall focus into expertise current to capabilities, had and start. a what strategies. the deploy do out continue Yes, maybe as to opportunities to look that on to

potential So we the of has the on this kind opportunity as strategy of overall. table out step-out horizons build been always infrastructure future

relationship last want kind dialogues, this one do years. Mike, of But process, So part more it's ongoing you to of specifically? of we've to the development certainly couple been speak thought had the and work over

Michael Lyons

Yes.

a as and we're and next, think what else I think always answers of so this core I what business, largely our part asking that.

industrial a successfully realize own doing that demand, especially to own We're you As you when in day. in core at wells, operations, scale looking I scarcity municipalities, at every large Colorado, we market day. to in said, we challenged. the feel every that it And already that customers, our quite talk you wells, market is own the you rights, and operate storage. source Like water water, look forecasted to all talk just water

markets. very, what touched was I that saw here those think So unique very we largely hadn't asset a

water other ultimately, our again, partners, customers. And new look And think geographies. I pathways freshwater all through to the as we're the to additional basins been in assets of and growth there of we skill across sets to of looking Select, that combination other new see so hold if of new we'll to able the well this we've bring, are to and continue bring

Chris George

about and permitted, Bobby, to thing market very regulated one localized water a resources And add, you when how state are and and region. state think it's region managed by by

applications water of lot agricultural we municipal overlap those applications. managing water demand type of have a of experiences like with so other these And in for terms resources

of And historically these through seniority oftentimes and permitting other so working our are own areas. rights some we water through

And so we there or own. rights develop the how on around other be translate rights what in doing and application are our that of space utilize so, we've able and got might water a experience out across and relationships lot our to

Robert Brooks

business. one base maybe more color. the last just terrific on That's Awesome. for Then one

So Chemical in with guidance nice Technologies, see nice there guys growth you sequential step-up, you've some the that given. and XQ

You why share driving who? you guys just to are have there. dive gains, called winning initiatives share market little I wanted market from deeper so out new product a Where and and

Chris George

in the the of ramp really it new really product to of it's course started We the in our question. certainly back up of quite have progress We recent certainly back year dislocation took a our back over half hold of No, XXXX. but latter part of and of seen as bit year. saw a good some in business little bit in the months half XXXX, chemicals a of the over the development

ebbs water the activity been As space market certainly chemistry relationships. seen But the on towards as around products It's flows, say, to and new water to market and lower particularly products relationships pressure lend completions we application recycling. some towards specialty creative it's and we the definitely barrels. that to those pressure face, a translate are opportunities solve new the would around The of pumping solutions we've our customers, operator lend They continue more to our environment. as towards we with required expertise more, more and push reuse I those to to recycled for developing problems chemistry. translated of apply produced ways more that around

key And focus for well. been to as continue strategy a advance recycling so that's as us our we

certainly to improving forward, you we been that our facilities up think, that's gains. So the in we and production business But we as margins through look see add see manufacturing as focus. there? anything want John, continue growth strong, the and share those But ramp recovering I to the

John Schmitz

front portion important new the would of fresh the We as is Permian big on business it out comes in-basin be important, that there. as of that apply. chemistry formulas point produced a only matching continues we and and of become came Yes. the What's waters water very off to chemistry and which that Basin, and of in with to reactive very out we of the staying in important become waters, has to that have we that's methods new plant

chemistry affected the laterals. is getting The by become very that's thing other is apparent

the applications, horsepower long we're company versus of what and more the water and it's chemistry to these to advance drilling rock that important. do laterals to matched direct in dirty that chemistry now laterals of different And we're the whether goes these that make fracking in to it's that And supposed wells, fresh. owners to it working and or chemistry frac longer operator frac operators, water how really kind the laterals, longer with is with the these becoming it to developed do with do to we using the reservoir through wells. makeup people have chemistry direct more producing relationships specced So the of with the

Chris George

your that of stability a Yes. It end well of No, of type a at a it great a X-mile to that's of a a versus lateral to type out X-mile different get product different length. the the end chemical requires product. productivity raises. full point to of lateral The out that's to application maximize is John of required lateral

key or time. ensure product, one first of that the do been that of that that lateral areas maximize mile. that that's as looking so as you're continue lengths over well you that How the get we end on the type get focused out X And the miles to of second of extend benefit same these we've of efficiency at out you to been

Operator

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

Jeffrey Robertson

did I of On right in XX,XXX demand is this the the can hear that the upwards business, you acre Colorado vicinity feet? venture access with that

Michael Lyons

based Mike. have what that. easy and is this market Yes, Yes. is on thinking mean around the I Jeff, This transfer means. our this exchange accessibility on us just the assets natural I mean, about market is other is higher physical than being demand based -- in through where we the is or either

of size one not by the the asset. the the is answer area municipality at already this that the is state water is asset And larger demand of the yes, moment. directly this the dwarfs that owned really in holdings just So in

So it -- is please.

Jeffrey Robertson

the would demand feet that beyond initial into tap covers go business about to you How to XX,XXX the able see? this be that greater you increasing

Michael Lyons

taking of of bunch actually programs. state looking we're so lifecycle of a -- advantage unique asset, the think initially, I further this

over So time. lease and to of municipal allows farming, also economic fallow begin both and to it some agricultural customers, to practices, to high customers but efficiency us create local bring value water for jobs industrial this

ditch them own these well owner as we continue to systems my If you and at a time, types market. we different of shares look groundwater X carefully that, least these rights are in shares still and in that there to natural of opinion, bring these over share are systems, various

having with play think even end value makes in the it a customers. the higher it storage to consolidated I complementary just

in utility So return marked what profiles power and would rights, that today storage call delivery. continue access coupling infrastructure this land I what of margin assets, of some to think beyond to senior physical even pretty a asset conservative of it's we've other the that and out underwriting I allows potential to grow water and that

Chris George

But and be experts the demand. this to your to it to over the demand definitely space we're to in the there's of talking supplement pretty not the a the comfortable ability this larger here, utilized can research the our confident the and and contracts the effort Albeit Yes. the to but of in capabilities relationships, point, scale supplemented size we're And here. research, into help market time. takes so add underwriting that that for continue the aggregate opportunity We've to opportunity third-party about. resource we're resource Jeff, pretty with region in only total in long-term own addressable our market

Jeffrey Robertson

as it Can reason some in the you where a areas the And together of partners you a like have about little as you sort I'm are to long curious how work to get took to curious the template you point use spoke this talk that I'm is ability about. you to with other today? the to bit

Chris George

Similar a around Select, it's XX to this in partners years XX great if not Yes, water to and XX, I well. basin question. have municipal this our business say, been in as and industrial for, would

folks very So only this I think their core of complementary that the partnership as do is business.

that think buy and water shares, routinely who us, operate markets and I administer that own obviously, water are then folks these shares. and and make sell

think X the the the the probably And together right would from table. into high, ongoing think I desperate contracts market like think And that here. honestly, come need on also I X, there deal the the I the a and say. in demand P&L. let think up eventually so an for I understanding deal there's mean in who quickly starting naturally, I'm market And of is quickly actual water. of are us and I executed the discussions came fairly conservative show and appreciation the customers we across little folks margins coming approach now to So in signed will years, together skills in get being are an But LOIs. I the pretty as itself everybody's

Jeffrey Robertson

I'm to you permitting obviously contracts. familiar Colorado. ultra a that long-term where to with regulatory requirements get you're in point just And lot these have issues curious deal the the have municipal the of to about you with

Michael Lyons

gates, case these work. risk different it's leveraging And -- to it. shares has court We're share taking are state we and fully the a them the to here. lift, water landowners each I of have out so water use -- think say, and of That's work put programs as-existing capability obviously, attached are There's done and I'll I around place the regulatory no to putting partnership farmers, not again, because but or, would this with how ability that and program. lease very a folks this unique actually this know fallow highlight partnership, well. that with it do in a our to small in it

as on that profit us close asset, targets and end towards also Chris mentioned. gets gross ask had higher that been very to the to chime the So this John that foot course, And allows large monetize go XX,XXX to to Jeff, of market. chunk as then gates holding with get of time, of a we'll available that us, out to over acre the want I of continue this. to in he's to this

John Schmitz

various the thing freshwater years. horsepower doing do that a the for We movement to of We've way it's in manner point exact one to for want do beginning in The and DJ meaningful Yes, out the been in bigger all a the municipality. with project that Jeff. XX and really you had The and we important. Jeff. Basin I and this complement moving also we've things that, want mean, the out, dealing DJ swapping applying since the in that been But and sets with these rights while. to people the I because and than believe into other same and been and we've a really things it, skill years. freshwater known with for regulatory XX point been procuring Basin DJ each more way. all doing Basin has is, just We've in procuring

Jeffrey Robertson

areas? the one water for gassier increased business. in you have of ask utilization on infrastructure assets reflect the for your could in Chris, base in some anything I your to on the If more expectations margins just potential do

Chris George

weighted Thinking infrastructure. built we in to see question, markets good particularly some price infrastructure XX%-plus the with I upside a as our in upside John overall. the environment Haynesville. very fairly strong the earlier, think opportunity platform Haynesville that gathering see We've probably position, spoke production a to commodity gas a and out steady our probably said, large Haynesville. business Jeff. about is there we in That's That Yes. Certainly, do market-leading pipeline

in we So that to gas foremost are overall. with is to the start the the that basin. of to the going see disposal and out we think I come first clearly easily And opportunity, extent capitalize to platform market on Haynesville positioned and largest upside probably

Operator

next of Daniel the The line Energy. comes John from question from Daniel

John Daniel

not I guess guys there is opportunities is, and water the way could industrial or first much one markets, that but of knowing municipal in much you about M&A prosecute expand? to the

Chris George

a Yes. I John. it's good mean question,

to of through I and legacy focused partnership, acquire more a on owners rights. extent this these water capital organic be and we're first resources strategy. think foremost, those some to we'll Obviously from deploying consolidate

part contracts portfolio of the into consolidated those a legacy and then can consolidation scale So larger that an be of of is we're play aggregated acquisition the about. talking into here rights effectively

strategy was of that So the a here. component

view of So as this play. more a we resource one

an looking looking we're to get markets. being opportunities, on the We're other and not In mean, into municipal terms owner infrastructure resource a provider. downstream of I focus to

a capital returns be we as are build our I way think should markets long-term into at provide, deploy these us enhanced great can and provide legacy substantially So I our value. we with overall than those competitive gas opportunities energy opportunities, different and business, type that of think that existing and think, do. oil participate can If and acquisitions, values about for trade way to but

John Daniel

back going just then the Okay. And Haynesville. one to

what's out If the you the call -- asked not How are now mistaken, sudden, like to in XXXX opportunity I'm just little aren't there's versus operators Someone capacity do disposal incremental a get sort prepared? treatment much of to gas you Texas? trickier a have? drilling if What Louisiana rules with Louisiana? a about any on in of reaching that. all Like bit in water

Michael Skarke

Michael. John, Yes, is this

know, state Texas would vary challenged. do be similar you or you are rules than more of The as the or to water So treatment. terms to you the perhaps Northeast terms Mexico where can it New the in what in Bakken more Haynesville to state is of

of the very We Haynesville. Marcellus, activity support could we're positioned built in the to up in -- largest so able able to North the Texas, extent that and the in network out the positioned disposal the largest also treatment we're well ramp to gathering water and Louisiana, provider done gas activity. to of there that there have increased the well. disposal take largest as as And the there. We've Marcellus, we and transfer So they're easily advantage East get provider to Utica well

want in positioned and up So to would gas, with from ramp care activity customers. we're Sorry. natural very of we take well our to add? welcome anything LNG and think increase I you associated the John,

John Schmitz

about system. more one it. -- John, little the of know thing addressed some that our He Haynesville, of discussed that bit and see see I recycling, a Michael we in probably the

best And acreage between Louisiana system. unique to our and very across into a Texas. There dispose water It is rights the Louisiana application system and is different goes Our best comes there. system unique as capacity authority into Texas. we of relates in as to deal being a it with to that regulatory disposal position Texas the the have able And in well. area disposal

Michael Skarke

can't the there might we've Permian So region that, a is our that that X.X the The an done under to is obvious to really and the have Permian expect Haynesville. how by and you acres all hopefully at in next that The in system we you last John. announced have do Haynesville we look put and the And million maybe to replicate given it. break until be example deals the bit surprising year you down We one year. region, largest fairly dedication. that the if

where that's getting large concentration as so we're a well. And

John Daniel

How number piping being when of as did if because same And the you the that's of is that you around, few back. nearly down. because trucks go there much know is you or piped? activity don't a drive don't Because I just up see and years today

of just but Just curious. question, I kind micro -- any know it's a

Michael Skarke

variety reducing down, overwhelming goes into we is part is it, but us. majority reliable, in-basin a that Yes. is certainly for that the sets disposal so is offload of apart the predictable that's customer of the what that would have for a I Well, creates that be of really it activity pipe pipeline their mean that us LOE. wells

Chris George

disposal And about about meet disposal think figure John, through you're are you when that when application. quite to think that But to capacity, synthetic with. either you the probably a restrictive out you around new barrel than limitations there's certainly going be familiar you others that, the states need for some disposed demand to that resolve recycling how more

to oil. Texas. think distance reuse. term, recycling for out to the the it figure disposal to system of is your volume beneficial are out-of-basin transition about produce from need without that to you're You When X you longer those Louisiana ability really Or application in limited effectively our barrel towards capacity, long options new what the impeding take is and deploy need via how which Haynesville does, which disposal,

figure And the of solve got produce out so more avenues. of you producing barrels, one or those barrel to keep how going to you're it to if via oil

John Daniel

Congrats contracts. on the continued signing new of

Operator

further over to the no closing questions, for as Schmitz will now I hand his and comments. Ladies John conference are gentlemen, there

John Schmitz

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

Operator

Thank Thank Water for you. gentlemen, the you Solutions of concluded. now your Select conference and Ladies participation. has

You may your now lines. disconnect

Select Energy Services (WTTR) 19 Feb 252024 Q4 Earnings call transcript