Select Water Solutions, Inc. Q1 FY2025 earnings call

• Strong revenue, adjusted EBITDA, and net income growth in Q1. - Secured several large contracts, including in the Northern Delaware Basin with over 1,000,000 acres under dedication. - Converted a freshwater pipeline in Northern Delaware to transport produced water, integrating it into the network. - Rolled out a new ERP system across the company. - Closed a new five-year sustainability linked credit facility with $300 million revolver and $250 million term loan. - Progressed on AV Farms investment in Colorado, with LOIs in place and engaging stakeholders.

In the first quarter, Select Water Solutions saw various segment performances. Water Infrastructure maintained a strong 54% gross margin before D&A. While revenue was modestly down sequentially, it was due to reduced legacy freshwater pipeline revenues, but recycling and disposal volumes increased. Water Services had 8% sequential revenue growth, with gross margins before D&A and services at 19.5% in Q1, expected to decline 5%-10% in Q2 with gross margins improving to 20%-22%. Chemical Technologies saw 21% sequential revenue growth, expected to decline mid-single-digit in Q2 while maintaining 14%-16% gross margins.

• Expect consolidated adjusted EBITDA for Q2 to be $68 million to $72 million. - Revised net CapEx guidance for 2025 to $225 million to $250 million, up from previous estimates. - Anticipate Water Infrastructure to continue growing into 2026 with a margin profile in the 50% plus range. - Expect limited impact from tariffs on water infrastructure due to domestic supply chain and polyethylene pipelines. - Services and Chemical Technologies expect revenue declines in Q2 but maintain stable gross margins.

• Macro pressure and potential activity dislocations from tariffs and global trade announcements. - Uncertainty in oil prices potentially driving decreases in activity in the second half of the year, impacting completions-oriented parts of the business.

Q: Bobby Brooks asked about activity pullback in Permian areas and AV Farms Colorado project progress.

A: Michael Skarke said no pullback seen yet in Permian, John Schmitz mentioned AV Farms is on track with LOIs and engaging stakeholders.

Q: Tom Turrin asked about AV Farms operational roles, water infrastructure anchor tenant contracts, and Chemical Technologies supply chain.

A: Michael Skarke discussed AV Farms operational role as long-term owner operator, water infrastructure contracts have domestic supply and no material tariff impact, Chris George talked about Chemical Technologies domestic supply chain with limited import exposure.

Q: Don Crist asked about Water Infrastructure growth into 2026 and macroeconomic impact on activity.

A: Chris George and Michael Skarke discussed Water Infrastructure growth trajectory into 2026 and John Schmitz talked about reallocation of dollars to base assets in downturns.

Q: Blake McLean asked about dry gas basins activity and M&A environment.

A: Michael Skarke discussed Haynesville and Marcellus activity and John Schmitz talked about M&A as asset purchases fitting organic growth.

Q: Jeffrey Robertson asked about Haynesville capacity utilization and Northern Delaware Basin water balancing.

A: Michael Skarke and John Schmitz discussed Haynesville capacity utilization and water balancing capabilities in Northern Delaware.

Q: Bobby Brooks followed up on net CapEx guidance and asset sales.

A: Michael Skarke confirmed expected asset sales net against CapEx and discussed maintenance CapEx flexibility