Select Water Solutions, Inc. · NYSE:WTTR
Select Water Solutions — Citi Energy & Climate Technology Conference 2024
32 slides from Select Water Solutions's conference presentation, May 14, 2024
Slide 1: Select Water Solutions Company Overview
Select Water Solutions, Inc. Company Overview Citi Energy & Climate Technology Conference May 14-15, 2024
Slide 2: Disclaimer Statement
Disclaimer Statement Cautionary Statement Regarding Forward Looking Statements Industry and Market Data gross margin before D&A are supplemental non-GAAP financial measures that we believe provide useful information to external users of our financial statements, such This presentation, including the
Slide 3: We are Connected by water
Our mission is to deliver operational excellence and develop sustainable water and chemistry solutions every day, with a commitment to conservation and reuse. WATER We are Connected CHEMISTRY by water SUSTAINABILITY 3
Slide 4: Investment Highlights
• Fastest growing water infrastructure platform in the industry with 84% YoY revenue growth in 2023 Market Leader in • Expansive infrastructure and assets in every major U.S. unconventional operating region with high Integrated Water & barriers to entry, differentiated integrated water and chemistry
Slide 5: Company Snapshot
Company Snapshot Segment Overviews Water Infrastructure Water Services Chemical Technologies • Full life-cycle integrated water networks • Comprehensive suite of integrated water • Only Permian in-basin manufacturer of technologies and services for completions proprietary completion chemicals • Wate
Slide 6: Market Leading Full Life-cycle Sustainable Water & Chemical Solutions
Market Leading Full Life-cycle Sustainable Water & Chemical Solutions Select is the only Completions-Oriented Activities: ~70% of 2023 revenue1 Production-Oriented Activities: ~30% of 2023 revenue1 company in the industry with integrated full life Beneficial Recycling & reuse in non- cycle water & R
Slide 7: Scaled water infrastructure networks in all major unconventional basins
Scaled water infrastructure networks and end-to-end water offerings in all major unconventional basins 5% 6% 6% 10% 48% 10% 15% Permian Rockies South Texas Northeast Bakken MidCon ETX/NLA 7
Slide 8: Blue-Chip Customer Base
Select’s expertise, technology and financial strength lead to a premier, diversified customer base with no customer representing more than 9% of our revenue Blue-Chip Customer Base 2023 Top 30(1) 8 1. Represents Select’s top 30 Customers for the period ending December 31, 2023 8
Slide 9: 2023 Key Highlights
Financial Performance Total Revenue $1.6 billion ▲ UP 14% YoY Water Infrastructure Revenue $230 million ▲ UP 84% YoY 2023 Key Net Income $79.2 million ▲ UP 44% YoY Highlights Adjusted EBITDA $258 million ▲ UP 33% YoY Record Operating Cash Flow $285 million ▲ UP 759% YoY Performance across all key Op
Slide 10: Recent Financial Performance Commentary
Consistent Operational Execution & Strong Financial Performance Yearly Revenue1,2,3,4 Yearly Adjusted EBITDA2,3 $1,750 $140 $300 18.0% ($millions per well completion)4 16.0% Adjusted EBITDA Margin $1,500 $120 $250 14.0% ($ in millions) ($ in millions) $1,250 $100 $200 12.0% $1,000 $80 10.0% $150 $75
Slide 11: FCF Funneling to High Value, Margin Accretive Infrastructure Growth
FCF Funneling to High Value, Margin Accretive Infrastructure Growth Water Services + Chemical Technologies Water Infrastructure • Market Leading Positions across all service and product offerings • Secular demand growth for sustainable water recycling • Automation and technology driving efficiency &
Slide 12: Market Leading Water Infrastructure Growth Platform
Market Leading Water Infrastructure Growth Platform • Our near-term growth priorities are around increasing production-weighted and long-term contracted revenues around pipelines, recycling and disposal facilities • Since 2018, high-value Water Infrastructure & Chemical Technologies segments have in
Slide 13: Select is Dedicated to Sustainability
Select is Dedicated to Sustainability Download Select’s current Sustainability Report at selectenergy.com/sustainability Recycled Produced Water Volumes • Select has significantly exceeded its previous targets 250.0 248.2 for produced water recycling established as part of its 192.4 sustainability-l
Slide 14: Disciplined Growth through Acquisitions
Disciplined Growth through Acquisitions Select has a strong historical track record of growing via acquisition, having closed on more than 70 acquisitions in the Company’s history Recent Acquisition Summary Acquisitions must meet Select’s disciplined acquisition criteria • Since 2021, Select has exe
Slide 15: Durable Balance Sheet & Ample Liquidity
Select’s balance sheet and asset light business model provide significant growth and free cash flow generating opportunities Net Debt & Liquidity Profile As Of 03/31/24 Sustainability-Linked Credit Facility Bank Debt $ 75.0 • $270 million, Sustainability-Linked credit facility through Capital Leases
Slide 16: Committed to Shareholder Returns
Select believes that returning capital to shareholders out of positive and growing earnings and free cash flow is an important part of our overall capital allocation strategy Base Dividend Initiation & Increase Discretionary Share Repurchase Program • During Q3 2022, Select initiated base • During N
Slide 17: Key Summary Highlights
Water Solutions Significant Free Strong Balance Market Leader Cash Flow Sheet Key Summary Only integrated water + Targeting over 50% of gross profit Strong balance sheet with over chemistry company in the to come from Water Infrastructure $165mm of total liquidity at energy industry by end of 2025 M
Slide 18: Appendix
Appendix 18
Slide 19: Market trends point to need for end-to-end water midstream segment
Market trends and impacts all point to the need for a large, interconnected, end-to-end water midstream segment Trends Seismic Response Disposal capacity Longer laterals, Low utilization of Capital scarcity Operator ESG Areas require restrictions limiting simulfracs and single-use operator with incr
Slide 20: Recycling is growing but regions will remain long produced water
Recycling is growing but regions will continue to be long produced water even at 100% recycled water for frac Produced Water Volumes …and Customer Focus on continue to grow… Recycling and Reuse Solutions Produced Water in the Permian Basin Recycled Water in the Permian % of New Permian Completion Wa
Slide 21: Technology Suites
Technology Suites Select’s technologies provide real-time monitoring, Measuring & feedback, automation and Monitoring Pump Automation Data Lake Field Automation Predictive Failures control of water throughout • Pond and Pit • Increased Efficiency • Water Metrics • Flow Meter Skids • Hose Testing & M
Slide 22: Automated Water Networks
Select’s suite of automated equipment powered by AquaView® monitoring & measurement solutions provide real-time and reliable data and control. Each component is designed to ensure best-in-class environmental management that’s customizable, powered by SCADA and accessible from phone, tablet, or lapto
Slide 23: Financial Profile by Reporting Segment – Recast Results
Financial Profile by Reporting Segment – Recast Results(1) Recast Results ($ in 000s) 2018 2019 2020 2021 2022 2023 Revenue $ 38,977 $ 37,584 $ 34,807 $ 45,496 $ 125,284 $ 229,970 Gross Profit 14,467 11,534 5,108 7,646 20,779 54,484 Water Gross Margin 37.1% 30.7% 14.7% 16.8% 16.6% 23.7% Infrastructu
Slide 24: Methane & Waste Gas Management
Case Study Methane & Waste Gas Management Old Methods • Select has an exclusive contractual relationship with Emission Venting Rx for high efficiency waste gas combustors (emission control • Regulatory Limits devices) used in the management of methane emissions • Significant GHG Emissions • Environm
Slide 25: Permian Produced Water Recycling Facility
Case Study Permian Produced Water Recycling Facility • Recently commenced operations on state-of-the-art (barrels) Cumulative Completion Water Demand operator-owned produced water recycling facility in 25,000,000 Martin County, TX in the core of the Midland Basin 20,000,000 • Select connected existi
Slide 26: Strategic M&A Updates
Strategic M&A Updates On March 1, 2024, Select completed the acquisition of On April 1, 2024, Select completed the acquisition of Trinity membership interests from Buckhorn Waste Services, LLC and Environmental Services and related entities ("Trinity") equity interests from Buckhorn Disposal, LLC (t
Slide 27: Strategic M&A Updates, continued
Strategic M&A Updates, continued Iron Mountain Energy Rockies Disposal Facilities On January 3, 2024 closed on the acquisition of On January 8, 2024 closed on the acquisition of On January 1, 2024 closed on the acquisition of Tri-State Water Logistics, LLC and affiliates (“Tri- substantially all of
Slide 28: Strategic M&A Updates, continued
Strategic M&A Updates, continued On November 1, 2022 closed on the acquisition of Breakwater Energy On November 1, 2022 closed on the acquisition of a portfolio of water Partners, LLC (“Breakwater”) gathering and disposal assets in the Bakken Shale from Cypress Environmental Solutions, LLC (“Cypress
Slide 29: Strategic M&A Updates, continued
Strategic M&A Updates, continued On February 23, 2022 closed on the acquisition of Nuverra On December 3, 2021 closed on the acquisition of the U.S. onshore assets of Environmental Services, Inc. (NYSE American: NES) (“Nuverra") HB Rentals, L.C., the rentals and accommodations subsidiary of Superior
Slide 30: Strategic M&A Updates, continued
Strategic M&A Updates, continued + On October 1, 2021 closed on the acquisition of substantially all of the On July 9, 2021 closed on the acquisition of Complete Energy Services, Inc., assets of Agua Libre Midstream, LLC and other water-related assets, the water solutions subsidiary of Superior Ener
Slide 31: Non-GAAP Reconciliations
Adjusted EBITDA Reconciliation ($ in 000's) 2021 2022 2023 2024 Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Net Income / (Loss) ($27,421) ($19,616) ($14,204) $11,155 ($50,086) $7,985 $14,581 $24,717 $7,571 $54,854 $13,705 $22,561 $15,314 $27,639 $79,219 $3,875 Interest Expense 435 400 419 457 1,
Slide 32: Non-GAAP Reconciliations Recast Results
Gross Profit before D&A Reconciliation – Recast Results 2018 2019 2020 2021 2022 2023 Gross profit by segment Water services $ 164,897 $ 110,675 $ (40,623) $ (2,134) $ 97,009 $ 126,939 Water infrastructure 14,467 11,534 5,108 7,646 20,779 54,484 Chemical technologies 15,841 29,414 6,990 15,348 42,96
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