Select Water Solutions (WTTR) EnerCom Denver – The Energy Investment Conference summary

Business evolution and segment overview

• Transitioned from a service-oriented water completions business to a Water Infrastructure-focused model, now achieving 50%-60% gross margins and higher contracted revenue.

• Water Infrastructure is the fastest-growing segment, supported by investments in recycling and storage facilities, with daily management of 1.5 million barrels of produced water.

• Chemical Technologies and Water Services remain important, with specialized chemistry for recycled water and high free cash flow conversion.

• The company pioneered recycling applications in the Permian Basin, shifting industry practices from disposal to recycling and beneficial reuse.

• Expansion into beneficial reuse includes pilot programs for agricultural and industrial applications.

Growth strategy and operational highlights

• Pulled forward growth targets, achieving 2027 Water Infrastructure goals in 2026, with significant backlog and ongoing capital deployment.

• Recycling capacity now stands at 2.8 million barrels per day, with 118 disposal sites and over 1,000 miles of pipeline across major U.S. basins.

• Contracts are secured with dedication, typically aiming for four-year cash-on-cash returns and leveraging underutilized disposal assets.

• Recent contract extensions added 800,000 acres and extended a key customer relationship by 12 years, while acquiring additional disposal wells.

• Investments are concentrated in Eddy and Lea County, New Mexico, where the dual-line system and large storage capacity address high water-to-oil ratios.

Financial performance and outlook

• Achieved a record $93 million EBITDA in the latest quarter, with guidance for continued growth and additional projects announced.

• Water Infrastructure segment drives margin expansion, with company-wide EBITDA margin expected to reach 35% as new projects come online.

• Free cash flow conversion remains strong, especially in Water Services and Chemical Technologies, supporting infrastructure investments.

• Issued stock for the first time since 2017 to fund front-end capital needs, maintaining a strong balance sheet and liquidity.

• Regular dividends and share buybacks are in place, with expectations for future dividend growth as contracted revenues increase.