Select Water Solutions Q3 Earnings Call Highlights

Key Points

• Select reported record third-quarter adjusted EBITDA of $93.5 million on $412 million in revenue, and forecast fourth-quarter adjusted EBITDA of $95 million to $100 million.
• Water Infrastructure revenue reached a record $110 million, up about 40% year over year. The recently acquired Pilot Water is expected to add to fourth-quarter results and generate $120 million to $130 million in adjusted EBITDA in 2027, with potential revenue synergies still unquantified.
• Select sold a 55% stake in Peak Rentals for $77 million in consideration, while raising $900 million in senior notes to help fund the Pilot acquisition and refinance debt. Pro forma net debt is approximately two times adjusted EBITDA.

Select Water Solutions NYSE: WTTR reported record adjusted EBITDA in the third quarter of 2026 as higher produced water volumes drove growth in its Water Infrastructure business. Executives said the recently completed acquisition of Pilot Water Solutions will contribute to fourth-quarter results and support further growth in 2027.

The company reported revenue of $412 million, net income of $23 million and adjusted EBITDA of $93.5 million. Founder, Chairman and CEO John Schmitz said adjusted EBITDA of $264 million for the first nine months exceeded Select’s full-year 2025 record, before any contribution from Pilot Water.

Select expects fourth-quarter adjusted EBITDA of $95 million to $100 million. CFO Chris George said the forecast reflects continued growth in Water Infrastructure and a partial-quarter contribution from Pilot, offsetting the sale of a majority stake in Peak Rentals and seasonal effects.

Infrastructure Growth and Pilot Acquisition

Water Infrastructure revenue rose to a record $110 million in the third quarter, up 8% from the second quarter and about 40% from a year earlier. The segment handled 1.7 million barrels of produced water per day, a 14% sequential increase and more than 30% above the year-earlier level. Gross margin before depreciation and amortization was 57%.

Select closed its acquisition of Pilot Water earlier in November. For the fourth quarter, George forecast Water Infrastructure revenue of $150 million to $160 million, including a partial contribution from the acquired business. He projected segment gross margins before depreciation and amortization of 52% to 56%, reflecting integration-related costs and seasonal expenses.

George said Pilot remains on track to meet its previously outlined full-year 2026 outlook of $250 million to $270 million in revenue and $100 million to $110 million in adjusted EBITDA. Select also expects Pilot to achieve $120 million to $130 million in adjusted EBITDA in 2027, primarily from new minimum volume commitments and capital projects coming online early in the year.

Chief Commercial Officer Michael Skarke said Pilot’s disposal assets complement Select’s recycling network and address a reason the company previously lost some project opportunities: an inability or reluctance to offer firm disposal capacity. He said customer inquiries following the acquisition have been “surprising and very encouraging.”

Executives said they are evaluating ways to connect the two networks. George said Select had become more optimistic about potentially accelerating revenue synergies, but the company did not provide a quantified estimate. More detailed 2027 guidance is planned for the year-end earnings call.

Peak Sale and Segment Outlook

Select sold a 55% interest in Peak Rentals in late September and retained a 45% stake. George said the transaction generated $77 million in consideration before customary fees and post-closing adjustments, including $42 million in cash and a $35 million seller note. Select deconsolidated Peak’s financial results at quarter-end.

Peak represented about 21% of Water Services revenue for the year to date, George said. He estimated that its absence would reduce fourth-quarter adjusted EBITDA by $7 million to $10 million compared with its contribution in the third quarter.

Water Services revenue rose approximately 7% sequentially in the third quarter, while gross margin before depreciation and amortization improved to 24% from 23%. For the fourth quarter, Select expects segment revenue of $150 million to $160 million and margins of 21% to 24%, reflecting the Peak divestiture and seasonality.

Chemical Technologies generated $90 million in third-quarter revenue and an 18% gross margin before depreciation and amortization. Select forecast fourth-quarter revenue of $75 million to $80 million and margins of 17% to 18%, citing normal seasonality and customer activity pulled forward into the third quarter.

George said surfactants grew to more than 10% of the company’s overall chemical product portfolio in the third quarter. He expects adoption to accelerate in 2027 as customers assess longer-term well results.

Financing and Spending

After quarter-end, Select raised $900 million through an eight-year senior unsecured notes offering, primarily to fund the Pilot acquisition and refinance existing debt. It also established a five-year, $500 million revolving credit facility that remained undrawn as of the call. George put pro forma net debt at approximately two times adjusted EBITDA following the acquisition.

The company raised its 2026 net capital expenditure forecast to $300 million to $310 million, primarily because of Pilot. George said a similar capital program was a starting point for 2027, although budgeting and integration planning remain underway. He expects free cash flow to build next year as earnings grow.

About Select Water Solutions (NYSE:WTTR)

Select Water Solutions, Inc provides water-management and chemical services to oil and natural gas exploration and production companies. Its services support drilling, completions and ongoing production, with a focus on managing water used in and generated by energy operations.

The company's offerings include water sourcing, transfer, treatment, recycling and disposal, as well as water infrastructure such as pipelines and related facilities. It also supplies specialty chemicals and technical services designed for oilfield operations.

Formerly known as Select Energy Services, the company serves customers in major U.S.

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