Select Water Solutions, Inc.

At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris George. Please go ahead.

Thank you, operator, and good morning, everyone. We appreciate you joining us for the Select Energy conference call and webcast to review our financial and operating results for the first quarter of 2021. With me today are John Schmitz, our Founder, Chairman, President and Chief Executive Officer, Nick Zweika, Senior Vice President and Chief Financial Officer, and Michael Skarke, Executive Vice President and Chief Operating Officer. Before I turn the call over, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our website at selectenergy.com. There will also be a recorded telephonic replay available until May 19, 2021. The access information for this replay was also included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, May 5, 2021, and therefore time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of SELEX management. However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read our annual report on Form 10-K for the year ended December 31, 2020, our current reports on Form 8K, as well as our quarterly report on Form 10Q for the quarter ended March 31st, 2021, which we expect to file later today, to understand those risks, uncertainties, and contingencies. Also, please refer to our first quarter earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now, I'd like to turn the call over to our founder, chairman, president, and CEO, John Schmidt.

Thanks, Chris. Good morning and thanks for joining us. I'm excited to be discussing Select with you today. Having been back in the CEO seat for about four months now, I believe we continue to have good direction for executing and improving our strategy to strengthen and set apart our position as the market leader in sustainable, full livestock water and chemical solutions. My primary strategic objective remains as outlined last quarter. We will drive value in this company. First, through improving and growing the base business in a recovering activity environment by creating value for our customer base with our integrated full lifecycle fluid match solutions, which should drive market share gains and gross margin improvements. Second, through deploying our expertise in water and chemicals both across the energy value chain and and into other industrial applications as a value-add solutions company. And third, through sourcing and evaluating strategic investment opportunities, and M&A focused on consolidation, diversification, and advanced technology. I'd like to start by addressing our progress toward each of these objectives before Nick takes you through the recent financial performance and outlook in more detail. First off, Looking at the performance of the base business, the first quarter's financial results were challenged by severe winter weather that impacted operations in February. That said, we saw revenue growth across each segment with 8% sequential revenue growth overall. I'm certainly disappointed in the regression we saw in terms of profitability. And while we have to realize the February weather hit select hard given our operating footprint, we still underperformed. However, we expect a solid recovery and further growth in quarter two. Additionally, we continue to look for more ways to improve the business. In doing so, we recently completed an organization realignment in April, led by the appointment of Michael Skarkey as COO. Michael, who I've asked to join us here today, has been a longtime partner of mine. Having joined Select back in 2009, shortly after I founded the company, Michael has served in a number of leadership roles within the organization across both operations and finance, most recently serving as EVP, corporate development, sales, and operational support. With other previous leadership roles heading up our water infrastructure segment, our formal water solution segment, and our corporate finance function as treasurer. Michael will oversee all aspects of operations, including sales and technology, with a high focus on integrating our efforts to support our fluid match approach to our sustainable full life cycle water and chemical solution. This realignment will also emphasize commercialization of our integrated solutions on a regional basis. ensuring we have the right people in place to drive sales, direct pricing, control cost, and improve margins in every region. This will allow us to first capitalize on our strong operating leverage to more efficiently take advantage of our large geographic footprint that covers all active unconventional basins. Second, to have real-time visibility and control over our costs. And finally, to leverage our key position in advanced technology to drive our integration initiatives to capture more wallet share around sustainable full ice cycle water and chemical fluid match solutions. As an example, our efforts, focus, and leading position is showing up with two recent wins. And we have commenced operation on these previous announced recycling facilities. We have partnered with two blue chip operators in the core of the Permian Basin to operate two water recycling facilities backed by long-term contracts. These fixed infrastructure facilities streamline our customers' water logistics, reduce their cost, improve their results, and help them achieve their ESG targets by reducing their environmental impact through decreased fresh water usage and decreased waste stream. These recycling projects began operation in the first quarter and are off to a very good start. We have already seen success in further commercialization of these facilities with two more customers now either currently sending or contracted to send volumes during the second quarter. This is in addition to the base load volumes that underwrote the project. As an added revenue driver, we're also pulling through other service lines related to operating these facilities as well. With a solid activity backdrop, a streamlined organization, a strong technology platform, and a market-leading position led by our sustainable full lifecycle water and chemicals fluid match solution, I feel very good about our continued growth prospects in the quarters ahead. Looking at our two remaining strategic objectives, I believe we made a small but unique investment in the first quarter that advances our efforts across both areas. We are innovating and finding new ways to diversify our capabilities and drive our initiatives around energy transition. As part of this effort, we are pleased to announce a strategic investment in ICE thermal harvesting. ICE is a new venture focused on providing zero emission geothermal electric power from flow back and produce water to the oil and gas industry, as well as to industrial customers across multiple sectors. We are excited to collaborate with the ICE team as both capital and strategic partners and look forward to the growth opportunities ahead for the business. We believe Select has much to learn and much to offer to the energy transition, and we will continue to evaluate ways to participate through organic and inorganic growth opportunities. Thinking about the industrial diversification more broadly, we continue to advance opportunities to deploy our assets and expertise into new areas, but we still are developing our long-term strategy. On the corporate development front, We will certainly continue to pursue smaller strategic investments and acquisition opportunities in areas such as technology, energy transition, and ESG solutions. Additionally, there is still a broad set of M&A opportunities with both small and large-scale value-add opportunities, consolidation with meaningful cost energies, as well as opportunities to add strategic diversification and earning stability. We sit in a strong position in the marketplace with no bank debt, strong cash flow capabilities, and a substantial cash balance. In addition to this financial strength, we have the ability to leverage our competitive strengths as the oil and gas industry's leading sustainable water and chemical solutions provider to expand into new areas or other industries to take advantage of the energy transitions in ways that many of our competitors cannot. We are very excited about our recent recycling and energy transition investments, and we continue to believe that additional opportunities lie ahead. We fully expect to see growing activity, improved operational and financial performance in the second quarter and into the back half of the year. With that, I'll hand it over to Nick to discuss the financial performance and outlook in more detail.