Select Water Solutions, Inc.

Greetings, and welcome to the Select Florida Solutions 2025 First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. The 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, Garrett Williams, Vice President of Corporate Finance and Investor Relations. Thank you, sir. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Select Water Solutions conference call and webcast review our financial and operational results for the first quarter of 2025. With me today are John Schmitz, our Founder, Chairman, President, and Chief Executive Officer, Chris George, Executive Vice President and Chief Financial Officer, Michael Scarkey, Executive Vice President and Chief Operating Officer, and Mike Lyons, Executive Vice President and Chief Strategy and Technology Officer. Before I turn the call over to John, 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 selectwater.com. There will also be a recorded telephonic replay available until May 21, 2025. 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 7, 2025, and therefore time sensitive information may no longer be accurate as to 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 Law. These forward looking statements reflect the current view of selects management. However, various risks, uncertainties, and contingencies could call their actual results performance, or achievements to differ materially from those expressed in the statements made by management. The listeners are encouraged to read our annual report on Form 10-K, our current reports on Form 8-K, as well as our quarterly reports on Form 10-Q to understand those risks, uncertainties, and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now, I would like to turn the call over to John.

Thanks, Garrett. Good morning, and thank you for joining us. I am pleased to be discussing Select Water Solutions again with you today. The first quarter of 2025 was a strong start to the year for Select. I'd like to start with some of the key first quarter highlights, an overview of the several large contracts we recently secured, and other strategic and market updates. Then I'll hand it over to Chris to discuss the first quarter results and forward outlook in more detail. In the first quarter, we increased revenue by 7%, outpacing the general macro environment, increased adjusted EBITDA by 14%, and improved consolidated gross margins by one percentage point. We achieved strong revenue growth of 21% in chemical technologies and 8% in water services while maintaining a strong 54% gross margins in water infrastructure. In addition to these operational gains, we reduced consolidated SG&A by 6% and grew net income by $12 million. Water infrastructure saw an increase in both recycling and disposal volumes in the first quarter, a trend we anticipate will continue into the second quarter. While revenue was modestly down sequentially, this was consistent with our expectation and was driven entirely by reduced revenues from our legacy freshwater pipeline assets. This includes a 40-mile freshwater pipeline in the northern Delaware that was taken offline in order to convert the asset to transport produced water. This pipeline has since been integrated into our expanding northern Delaware network and will provide tremendous operational and strategic benefits as the primary north-south trunk line for this system. Since the start of the year, we have signed several new agreements for large gathering, recycling, distribution, and disposal projects that significantly add to our contracted and dedicated acreage position and provide substantial long-term revenue potential. These latest contract awards add to our industry-leading recycling footprint and further advance the weighting of our profitability coming from contracted and full lifecycle and production-weighted revenues. Specifically looking at the Northern Delaware Basin in New Mexico, we have quickly developed a leading water infrastructure network with the recent winds taking our total contracted footprint in the basin to more than 1 million acres under dedication or right of first refusal agreements in this basin alone. The strategic location of our latest development projects encompassing a large portfolio of Tier 1 well inventory combined with the structure of our contracts with industry-leading E&P partners, give us confidence that these infrastructure assets will be strong contributors to our earnings, not only in late 25, but well into the future years to come. While macro pressure and potential activity dislocations caused by the recent tariff and global trade announcements have been major topics as of late, we are well positioned with a diversified footprint across all major U.S. unconventional basins. This includes a rapidly growing asset base in the Permian Basin, as well as market leading positions in natural gas basins such as the Haynesville and the Marcellus Utica, which we expect to demonstrate resilience this year. Looking closer at the latest contract awards, the largest of the new agreements is an 11-year contract supporting the largest single capital project in the history of this company, encompassing water recycling, storage, disposal, and both gathering and distribution pipelines in the Northern Delaware Basin in Eddy County for existing key customers in the region. This agreement adds more than 265,000 additional dedicated and right of first refusal acres supporting the customer's long-term development plans in the basin. Importantly, this project builds off the value of our existing Lee County infrastructure network and will add approximately 100 miles of incremental large-diameter diameter pipelines to our existing network. This build out will provide a critical east-west expansion into Eddy County and will allow us to fully maximize our water balancing and full lifecycle water capabilities across a much broader geographic footprint. Furthermore, we also capitalized on our existing right of first refusal agreements with this same customer exercising our rights to convert an additional 25,000 acres into long-term dedication supported by adding an incremental 14 miles of large diameter pipeline build out. Upon the completion of these recently awarded projects, we will have more than one point 3 million barrels per day of recycling throughput capacity in the Northern Delaware Basin, supported by long-term contracts with blue chip operators. On a pro forma basis, New Mexico will now represent 54% of our total fixed recycling capacity, a significant achievement for us over the last two years. Additionally, in the first quarter, we executed an agreement to expand our infrastructure on the Central Basin Platform recycling project we announced last quarter with a large public E&P operator. The previous announced greenfield recycling facility in the Central Basin Platform added a 124,000 acre dedication and is now being interconnected with 22 miles of parallel produced water gathering and produced water distribution pipelines. Finally, we are also highly encouraged by the long-term growth opportunities in our agricultural, industrial, and municipal water pursuits and have continued to progress our AV Farms investments has planned with an additional senior water rights acquisition during the first quarter. These opportunities should provide further stability and steady earnings to the select for decades to come once fully developed over the next two to three years. Now looking at the rest of the business, our water services and chemical technology segments continue to provide strong source of free cash flow for us With these two segments continue to generate strong conversion of 70% or greater of their gross profit to free cash flow, helping to fund our water infrastructure growth plans. While we expect revenue to decrease sequentially for these two segments, we actually expect them to generate more free cash flow in the second quarter of 2025 relative to the first quarter due to the improved margins and reduced maintenance capital required during the quarter. Looking forward, we do expect a lower commodity price and supply chain dislocations resulting from the tariff and trade related uncertainty to impact the oil and gas industry overall. However, we believe the direct impacts on Select will be limited in near term and we expect continued growth in our consolidated adjusted EBITDA of 6% to 12% during the second quarter. While we haven't seen a material impact to the overall activity levels yet, oil prices at current levels could drive decreases in activity through the second half of the year. We are fully preparing for the potential impact to the more completions-oriented parts of our business, largely within the services and chemicals. However, we have built significant resilience into the business in recent years with our strategic focus on water infrastructure growth, increasing full lifecycle and production-weighted revenues, the strength of our contract portfolio, and the uniqueness of our acreage and inventory we have underwritten. Looking back over the last 24 months, we are very proud of the contract and asset base we have put together in a relatively short period of time, and this gives us strong confidence in our positioning as we look ahead. At this point, I'll hand it over to Chris to speak to our financial results and outlook in a bit more detail. Chris?