WTTR — Select Water Solutions, Inc.

Summary of Select Water Solutions Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $1.4 billion for 2025, with Q4 revenue contributing to this total.
• Adjusted EBITDA: Record $260 million for the full year, with Q4 adjusted EBITDA at $64.2 million, exceeding guidance of $60 million to $64 million.
• Gross Profit: Water Infrastructure segment achieved a gross profit margin of 54% in Q4, while Chemical Technologies saw a gross margin of 20%.
• Capital Expenditures: Net CapEx for 2025 was $279 million, with expectations of $175 million to $225 million for 2026.

2. Strategic Updates and Business Highlights

• Operational Growth: Significant growth in recycled produced water volumes, up 18% in 2025, totaling over 330 million barrels recycled.
• Infrastructure Expansion: Continued build-out of the Northern Delaware water infrastructure network, with nearly 1 million new dedicated acreage added and an average contract term of 11 years.
• Chemical Technologies: 19% revenue growth year-over-year and 45% increase in gross profit before depreciation and amortization (D&A).
• Water Services: Streamlining efforts led to improved operational efficiency, with a 16% growth in gross profit before D&A in Q4.
• New Partnerships: Strategic partnerships for lithium extraction and beneficial reuse initiatives are expected to enhance revenue streams.

3. Forward Guidance and Outlook

• 2026 Expectations: Anticipated 20% to 25% year-over-year growth in Water Infrastructure, with Q1 2026 revenue expected to grow 7% to 10% compared to Q4 2025.
• EBITDA Guidance: Expected increase in consolidated adjusted EBITDA to $65 million to $68 million in Q1 2026.
• Cash Flow: Anticipated modest cash tax payments of $5 million to $10 million in 2026, with a focus on maintaining strong free cash flow generation.

4. Bad News, Challenges, or Points of Concern

• Project Delays: Some project timelines in the Water Infrastructure segment experienced minor delays due to right-of-way issues, potentially impacting growth projections.
• Market Environment: The macroeconomic environment remains uncertain, which could affect upstream capital expenditures and overall activity levels.
• Water Services Segment: Revenue is expected to decline year-over-year due to recent divestments, although operational improvements are anticipated.

5. Notable Q&A Insights

• Expansion Opportunities: Management indicated a shift towards smaller, more accretive opportunities in the Northern Delaware Basin, with potential for larger projects in the future.
• Lithium and Other Extraction Ventures: The company is exploring additional high-margin revenue streams beyond lithium, including iodine and strontium extraction.
• Peak Rentals Strategy: Ongoing evaluation of strategic alternatives for the Peak rentals business, with a focus on maximizing value for shareholders while supporting infrastructure growth.
• Chemical Demand: Increased demand for surfactants in completion activities is noted, with expectations for continued growth in this area.

Overall, Select Water Solutions demonstrated strong financial performance in 2025, with significant operational growth and strategic initiatives in place for continued expansion in 2026, despite facing some project delays and a challenging macro environment.