Select Water Solutions Q2 Earnings Call Highlights

Key Points

• Select Water Solutions delivered a strong second quarter: Revenue rose 8% sequentially to $396 million, adjusted EBITDA increased 19% to $93 million—above guidance—and net income more than doubled to $23 million.
• Water Infrastructure led growth, with record $102 million revenue, 1.5 million barrels per day handled and a seven-year Northern Delaware Basin agreement backed by a 128 million-barrel minimum-volume commitment. The company expects segment revenue to grow another 5% to 10% in the third quarter.
• Select raised 2026 net capital spending guidance to $250 million–$290 million as infrastructure contracts, acquisitions and new opportunities expand its pipeline. Management also highlighted potential growth in data-center water services and mineral extraction, with mineral-related revenue expected to begin in 2027.

Select Water Solutions NYSE: WTTR reported higher revenue, earnings and adjusted EBITDA for the second quarter of 2026, supported by record results in its Water Infrastructure and Chemical Technologies segments and stronger-than-expected performance in Water Services.

Chief Executive Officer John Schmitz said consolidated revenue rose 8% from the first quarter, adjusted EBITDA increased 19%, and net income more than doubled sequentially. The company reported second-quarter revenue of $396 million, net income of $23 million and adjusted EBITDA of $93 million, exceeding its prior adjusted EBITDA guidance range of $77 million to $80 million.

“The second quarter of 2026 was a very strong quarter for Select,” Schmitz said, citing record revenue and gross profit in both Water Infrastructure and Chemical Technologies.

Water Infrastructure posts record revenue

Water Infrastructure generated record quarterly revenue of $102 million, up 5% sequentially and 26% from the second quarter of 2025. Gross profit before depreciation and amortization increased 9% from the first quarter and 27% year over year, while gross margin before D&A reached 58%.

Chief Financial Officer Chris George said produced-water volumes handled increased to 1.5 million barrels per day. Higher produced-water volumes, improved skim-oil capture and higher pricing supported the segment’s results.

The company expects Water Infrastructure revenue to grow another 5% to 10% in the third quarter, with gross margins before D&A between 56% and 58%. Management said the performance through the first half positions the segment to reach the high end of its 25% to 30% full-year growth target.

During the quarter, Select added several minimum-volume commitments, acreage dedications and interruptible tie-in agreements. It also signed a seven-year agreement with a large public operator in the Northern Delaware Basin that includes a 128 million-barrel minimum-volume commitment.

Under that agreement, the operator conveyed 14 underutilized saltwater disposal wells in Eddy and Lea counties, New Mexico, to Select. The company also acquired two other Delaware Basin disposal wells during the quarter, bringing the total number of new active disposal wells added in the region to 16.

Select expects the project tied to the large minimum-volume commitment to cost approximately $25 million to $30 million and become operational within 12 months. Chief Commercial Officer Michael Skarke said the project will extend Select’s network toward Texas and was structured to meet the customer’s requested capacity while also supporting broader basin opportunities.

Management said conveyed disposal assets can make the broader network more reliable and enable higher utilization of its “Recycle First” system by providing additional disposal capacity when recycling volumes fluctuate.

• Water Infrastructure revenue: $102 million
• Produced-water volumes handled: 1.5 million barrels per day
• Water Infrastructure gross margin before D&A: 58%
• Third-quarter Water Infrastructure revenue growth outlook: 5% to 10%

Chemicals and Water Services outperform expectations

Chemical Technologies reported revenue of $96 million, up 23% from the first quarter, while gross profit before D&A rose 35% sequentially to $19.4 million. The segment’s gross margin before D&A was 20%.

Schmitz said increased completion intensity, demand for higher-specification products and growing interest in surfactant technology contributed to the segment’s record revenue. The company said it expanded market share through in-basin manufacturing, product development and field execution, while maintaining margin gains despite increased oil-based raw-material costs.

For the third quarter, Select expects Chemical Technologies revenue of $85 million to $90 million based on customer schedules, with margins before D&A of 20% to 21%.

Skarke said surfactants remain a relatively small part of the chemicals business but have grown 50% year over year. He said the company estimates that less than 10% of new well completions currently use surfactants and that about 95% of that usage is in the Permian Basin. Management expects the opportunity to grow into 2027 as customers continue testing formulations and applications.

Water Services revenue rose approximately 4% sequentially, compared with management’s prior expectation for a modest decline. Gross margin before D&A improved to 23% from 21.8% in the first quarter, aided by slightly improved activity levels and continued strength in last-mile logistics and rental offerings.

Select forecast generally steady Water Services revenue in the third quarter and margins before D&A of 20% to 22%. George said the segment could benefit from higher activity and pricing if commodity prices remain elevated.

Capital spending rises as project pipeline expands

Select generated $87 million of operating cash flow in the second quarter, improving from the first quarter as working-capital management stabilized. It deployed $112 million toward capital expenditures and acquisitions, including $70 million of net capital expenditures and $42 million of strategic Water Infrastructure bolt-on acquisitions and lease buyouts.

The company also closed its previously announced acquisition of Black River Ranch, a surface position in Eddy County, New Mexico. Management said the acquisition adds future infrastructure development opportunities, surface and mineral cash flows, and cost synergies with Select’s existing network.

Select increased its 2026 net capital expenditure outlook to $250 million to $290 million, citing infrastructure contract awards and the expanding growth opportunity set. Maintenance capital needs remain around $60 million, according to George.

George said the company sees another year of double-digit Water Infrastructure growth in 2027 based on its current project backlog and recent contract wins. He added that additional project awards and bolt-on acquisitions could further expand that outlook.

Management said new infrastructure projects require time to translate into cash flow. The newly announced minimum-volume commitment project, for example, is expected to involve spending over the next 12 months before becoming operational and contributing earnings afterward.

Outlook includes data-center, mineral and multi-basin opportunities

Select forecast consolidated adjusted EBITDA of $90 million to $94 million in the third quarter. The company expects Water Infrastructure growth to offset a more measured near-term outlook for Water Services and Chemical Technologies. It also said modest seasonal effects could affect parts of the business in the fourth quarter.

Management discussed opportunities to use its water sourcing, treatment, logistics and disposal capabilities to support data-center development. George said Select recorded approximately $6 million of Water Services revenue during the second quarter from supporting data-center construction projects, including distributed power solutions from its Peak business as well as rental, storage and logistics offerings.

The company said it is involved in discussions regarding water needs for data centers in West Texas and elsewhere, including potential beneficial reuse of produced water. Management noted that the opportunity includes both construction-phase services and longer-term water-management needs.

Select also continues to pursue mineral-extraction opportunities associated with its water infrastructure. The company announced an iodine-extraction agreement during the quarter and previously discussed lithium projects. Chief Strategy and Technology Officer Mike Lyons said the company and its partners are receiving interest from potential off-takers ranging from glass manufacturers to battery manufacturers.

Lyons said Select has evaluated other minerals, including magnesium and strontium, though he noted magnesium economics are challenging. Management expects mineral-related revenue to begin flowing in 2027 but said scaling the opportunity across facilities and regions will take time.

“We are very pleased with the strong year-over-year trajectory across all parts of the business so far in 2026,” George said.

About Select Water Solutions (NYSE:WTTR)

Select Water Solutions, Inc, headquartered in Houston, Texas, is a water management services provider primarily serving the oil and gas industry. Formerly operating under the name Select Energy Services, the company rebranded to reflect its core focus on water treatment, recycling and disposal. Since its inception in 2016, Select Water Solutions has expanded to key U.S. basins—including the Permian, Eagle Ford, Marcellus and DJ Basin—and maintains strategic operations in select international regions.

The company's offerings span the full water lifecycle, from produced water gathering and transportation to advanced treatment and beneficial reuse.

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