WTTR — Select Water Solutions, Inc.

Summary of Select Water Solutions Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• Consolidated Revenue: $396 million, an 8% increase from Q1 2026.
• Net Income: $23 million, more than double compared to Q1 2026.
• Adjusted EBITDA: $93 million, a 19% increase from Q1 2026 and significantly above guidance of $77 million to $80 million.
• Water Infrastructure Revenue: $102 million, a 26% year-over-year growth.
• Gross Margins:
  • Water Infrastructure: 58% before D&A.
  • Chemical Technologies: 20% before D&A.
  • Water Services: 23% before D&A, up from 21.8% in Q1 2026.
• Operating Cash Flow: $87 million, improved from Q1 2026.
• Capital Expenditures: $112 million, including $70 million in net CapEx and $42 million in acquisitions.

2. Strategic Updates and Business Highlights:

• All three operating segments (Water Infrastructure, Chemical Technologies, Water Services) performed strongly.
• Water Infrastructure segment saw record revenue driven by increased produced water volumes and improved skim oil recovery.
• New contracts included a 7-year agreement with a large public operator in the Northern Delaware Basin, with a 128 million barrel MVC contract.
• Chemical Technologies segment achieved record revenue, driven by increased demand for higher-margin products.
• Strategic acquisitions and partnerships, including a new mineral extraction agreement for iodine, were highlighted as key growth drivers.
• The company is focusing on enhancing its water management solutions and expanding its infrastructure network.

3. Forward Guidance and Outlook:

• Anticipated revenue growth of 5% to 10% for the Water Infrastructure segment in Q3 2026.
• Full-year growth guidance for Water Infrastructure remains at 25% to 30%.
• Expected adjusted EBITDA for Q3 2026 is projected to be between $90 million and $94 million.
• Continued investment in capital expenditures is expected to rise to $250 million to $290 million for the full year 2026.
• The company is optimistic about maintaining strong performance and growth into 2027, with double-digit growth anticipated.

4. Bad News, Challenges, or Points of Concern:

• Potential headwinds include a fluid geopolitical and commodity price environment, which could impact customer activity.
• The company acknowledged that while they are positioned for growth, there may be seasonal impacts in Q4 2026.
• There is a need to manage expectations regarding the timing and scale of new projects, particularly in the Chemical Technologies segment, where revenue is expected to moderate in Q3 2026.

5. Notable Q&A Insights:

• Analysts inquired about the growth trajectory for Water Infrastructure, with management indicating a strong outlook for continued double-digit growth into 2027.
• Discussions highlighted the strategic importance of ROFR acres and how they could convert into active sites, although no significant conversions have occurred year-to-date.
• Management emphasized the value of their dual-line infrastructure, which enhances operational flexibility and capacity utilization.
• There was a focus on the emerging opportunities in the data center market, with management expressing confidence in their ability to meet the water needs of this sector.
• The Q&A revealed ongoing interest from operators in mineral extraction opportunities, indicating a growing market for Select's services beyond traditional water management.

Overall, Select Water Solutions reported a robust Q2 2026, with strong financial performance across all segments and a positive outlook for continued growth, despite some potential challenges on the horizon.