Select Water Solutions Announces Third Quarter 2024 Financial Results and Operational Updates
Select Water Solutions (NYSE: WTTR) reported Q3 2024 financial results with revenue of $371 million, up 2% from Q2 2024. Net income increased 26% to $18.8 million, while Adjusted EBITDA grew 4% to $72.8 million. The Water Infrastructure segment showed strong performance with 20% sequential revenue growth and 33% increase in gross profit before D&A. The company secured multiple new long-term contracts for pipeline gathering, recycling & disposal infrastructure projects, with planned capital deployment of $37-42 million. However, Q4 2024 Adjusted EBITDA is expected to decrease to $60-62 million due to seasonal slowdown and temporary asset downtime for infrastructure upgrades.
Select Water Solutions (NYSE: WTTR) ha riportato i risultati finanziari del terzo trimestre 2024 con ricavi di 371 milioni di dollari, in aumento del 2% rispetto al secondo trimestre 2024. L'utile netto è aumentato del 26% a 18,8 milioni di dollari, mentre l'EBITDA rettificato è cresciuto del 4% a 72,8 milioni di dollari. Il segmento delle infrastrutture idriche ha mostrato una forte performance con una crescita sequenziale dei ricavi del 20% e un aumento del 33% del profitto lordo prima di D&A. L'azienda ha ottenuto diversi nuovi contratti a lungo termine per progetti di infrastrutture di raccolta di pipeline, riciclaggio e smaltimento, con un piano di investimento di capitale compreso tra 37 e 42 milioni di dollari. Tuttavia, si prevede che l'EBITDA rettificato del quarto trimestre 2024 diminuisca a 60-62 milioni di dollari a causa del rallentamento stagionale e dei tempi di inattività temporanei per l'aggiornamento delle infrastrutture.
Select Water Solutions (NYSE: WTTR) reportó los resultados financieros del tercer trimestre de 2024 con ingresos de 371 millones de dólares, un aumento del 2% con respecto al segundo trimestre de 2024. La utilidad neta creció un 26% a 18,8 millones de dólares, mientras que el EBITDA ajustado aumentó un 4% a 72,8 millones de dólares. El segmento de Infraestructura Hídrica mostró un rendimiento sólido con un crecimiento secuencial de ingresos del 20% y un aumento del 33% en el beneficio bruto antes de D&A. La empresa aseguró múltiples nuevos contratos a largo plazo para proyectos de infraestructura de recolección de tuberías, reciclaje y eliminación, con una inversión de capital planificada de entre 37 y 42 millones de dólares. Sin embargo, se espera que el EBITDA ajustado del cuarto trimestre de 2024 disminuya a 60-62 millones de dólares debido a la desaceleración estacional y a tiempos de inactividad temporal para actualizaciones de infraestructura.
Select Water Solutions (NYSE: WTTR)는 2024년 3분기 재무 실적을 발표하며 수익이 3억 7천만 달러로 2024년 2분기 대비 2% 증가했다고 밝혔습니다. 순이익은 26% 증가하여 1,880만 달러에 달했으며, 조정 EBITDA는 4% 증가하여 7,280만 달러에 이릅니다. 수자원 인프라 부문은 강력한 성과를 보이며 순차적으로 20%의 수익 성장과 D&A 이전의 총 이익 33% 증가를 기록했습니다. 회사는 파이프라인 수집, 재활용 및 폐기물 처리 인프라 프로젝트를 위한 여러 장기 계약을 체결했으며, 자본 투자는 3,700만에서 4,200만 달러로 계획되었습니다. 그러나 2024년 4분기 조정 EBITDA는 계절적 둔화와 인프라 업그레이드를 위한 일시적인 자산 다운타임으로 인해 6,000만에서 6,200만 달러로 감소할 것으로 예상됩니다.
Select Water Solutions (NYSE: WTTR) a publié ses résultats financiers pour le troisième trimestre 2024 avec des revenus de 371 millions de dollars, en hausse de 2% par rapport au deuxième trimestre 2024. Le bénéfice net a augmenté de 26% pour atteindre 18,8 millions de dollars, tandis que l'EBITDA ajusté a augmenté de 4% pour atteindre 72,8 millions de dollars. Le segment des infrastructures hydriques a montré une performance solide avec une croissance séquentielle du chiffre d'affaires de 20% et une augmentation de 33% du bénéfice brut avant D&A. L'entreprise a obtenu plusieurs nouveaux contrats à long terme pour des projets d'infrastructure de collecte de pipelines, de recyclage et d'élimination, avec une dépense en capital prévue de 37 à 42 millions de dollars. Cependant, l'EBITDA ajusté du quatrième trimestre 2024 devrait diminuer à 60-62 millions de dollars en raison d'un ralentissement saisonnier et de temps d'arrêt temporaire pour des mises à niveau d'infrastructure.
Select Water Solutions (NYSE: WTTR) hat die finanziellen Ergebnisse des 3. Quartals 2024 veröffentlicht mit einem Umsatz von 371 Millionen Dollar, was einem Anstieg von 2% gegenüber dem 2. Quartal 2024 entspricht. Der Nettogewinn stieg um 26% auf 18,8 Millionen Dollar, während das bereinigte EBITDA um 4% auf 72,8 Millionen Dollar wuchs. Der Wasserinfrastruktur-Sektor zeigte eine starke Leistung mit einem sequenziellen Umsatzwachstum von 20% und einem Anstieg des Bruttogewinns vor D&A um 33%. Das Unternehmen sicherte sich mehrere neue langfristige Verträge für Pipeline-Sammel-, Recycling- und Entsorgungsinfrastrukturprojekte, mit einer geplanten Kapitalverwendung von 37 bis 42 Millionen Dollar. Für das 4. Quartal 2024 wird jedoch ein Rückgang des bereinigten EBITDA auf 60 bis 62 Millionen Dollar aufgrund der saisonalen Verlangsamung und vorübergehender Stillstandszeiten von Anlagen für Infrastruktur-Upgrades erwartet.
- Revenue increased 2% sequentially to $371 million in Q3 2024
- Net income grew 26% to $18.8 million compared to Q2 2024
- Water Infrastructure segment revenue increased 20% with gross margins before D&A reaching 56.7%
- Secured new long-term contracts with $37-42 million capital deployment opportunity
- Generated $51.9 million operating cash flow and $20.4 million free cash flow
- Expected Q4 2024 Adjusted EBITDA decline to $60-62 million
- Water Services segment revenue projected to decline 10-15% in Q4 2024
- Chemical Technologies segment showed declining margins, dropping to 12.4% from 16.4% in Q2
- Working capital resulted in $15.4 million cash use in Q3 2024
Insights
Select Water Solutions delivered a strong Q3 2024 with notable improvements across key metrics. Revenue increased
The company's strategic expansion continues with
The balance sheet remains healthy with
The company's infrastructure development strategy is showing excellent execution. Key developments include:
- Secured 25,000 new dedicated acres in the Permian Basin with options for 57,000 more
- New 12-year agreement expanding recycling infrastructure with up to 120,000 barrels per day capacity
- Strategic 8-year Midland Basin project with 20,000 acre dedication
- Two new Bakken pipeline connection agreements spanning 10-20 years
These long-term contracts create a robust, predictable revenue stream while expanding the company's integrated water management network. The temporary Q4 slowdown for infrastructure upgrades will strengthen the network's long-term value proposition and operating efficiency.
Generated revenue of
Produced
Increased Net income
Water Infrastructure segment revenue, gross profit and gross profit before D&A increased sequentially by
Secured multiple new long-term contracts for pipeline gathering, recycling & disposal infrastructure projects, with anticipated new capital deployment of
John Schmitz, Select's Chairman of the Board, President and Chief Executive Officer, stated, "During the third quarter Select delivered another quarter of continued margin improvement and profitability, while generating solid free cash flow. Supported by revenue growth and margin improvement in our Water Infrastructure segment, our unique growth story continued as we were able to improve consolidated gross margins and increase net income and adjusted EBITDA during the third quarter despite activity pullbacks in the broader macro environment.
"The third quarter showcased the strength and growth potential in our Water Infrastructure segment, as demonstrated with a significant increase in profitability and another quarter of record performance. More specifically, the Water Infrastructure segment posted
"The improvements in the Water Infrastructure segment were a culmination of the acquisitions we have executed year-to-date, further commercialization of our end-to-end water networks, and ongoing cost and operational efficiency initiatives. While we continue to grow our infrastructure footprint through both organic and inorganic capital projects, we also have driven increased utilization and volumes through our existing assets via our targeted sales, business development and network optimization efforts. Our ever-growing footprint enables us to network assets across our infrastructure portfolio, including pipelines, fixed-recycling facilities, and disposal wells, positioning us as an all-encompassing water solutions provider for our customers. Our existing footprint, coupled with the contracts we have executed and the robust pipeline of prospective projects, positions the Water Infrastructure segment for significant ongoing growth in 2025.
"In the third quarter we continued to build on our organic infrastructure successes with additional project wins supported by long-term contracts. Since the beginning of the third quarter, we contracted an additional 25,000 acres under long-term dedication in the Permian Basin and continue to add long-term optionality, with an additional 57,000 acres added under right-of-first-refusal commitments. These new contracts build off our existing infrastructure, in each case connecting new assets with other legacy or recently acquired infrastructure to create a more interconnected network. In addition to our Permian wins, we also executed two strategic produced water pipeline connection agreements in the Bakken in the third quarter, further exemplifying our industry-leading infrastructure footprint spanning all major lower 48 land basins. In the third quarter we also completed an additional transaction for a disposal well in the Permian to further bolster our disposal portfolio in the
"Driven by margin outperformance and the pull-forward of activity in our Water Infrastructure segment, we remain confident in our ability to deliver on the headline goals we set out for 2024, including record setting annual Adjusted EBITDA for the Company and more than
"We do anticipate, however, that the seasonal activity slowdown in the fourth quarter will impact the Water Services segment, offset by recovery in our Chemical Technologies segment with new product wins. Additionally, we will see the impact of certain asset specific activity reductions in each of our water transfer, sourcing and recycling businesses associated with certain of our ongoing capital projects in the
"Overall, I am pleased with our financial performance in the third quarter and year-to-date 2024, and I am excited to continue building onto our growing infrastructure platform with additional contract wins expected during the fourth quarter and in 2025. The strength of our overall expected 2024 results, including growing profitability and continued free cash flow generation, combined with our strong project backlog positions the company for steady continued growth looking into 2025 and we remain committed to increasing the profitability of our Water Infrastructure segment to represent more than half of the overall profitability of Select by the end of 2025. Ultimately, we remain committed to delivering industry-leading water and technology solutions with high-margin, long-term contracted infrastructure that is mission critical to our customers and creates significant value for our shareholders," concluded Mr. Schmitz.
Third Quarter 2024 Consolidated Financial Information
Revenue for the third quarter of 2024 was
For the third quarter of 2024, gross profit was
Selling, General & Administrative expenses ("SG&A") during the third quarter of 2024 was
Adjusted EBITDA was
Business Segment Information
The Water Services segment generated revenues of
The Water Infrastructure segment generated revenues of
The Chemical Technologies segment generated revenues of
Cash Flow and Capital Expenditures
Cash flow from operations for the third quarter of 2024 was
Net capital expenditures for the third quarter of 2024 were
Cash flow used in investing activities during the third quarter of 2024 also included
Cash flows provided by financing activities during the third quarter of 2024 included
Balance Sheet and Capital Structure
Total cash and cash equivalents were
As of September 30, 2024 and June 30, 2024, the borrowing base under the sustainability-linked credit facility was
Total liquidity was
Northern Delaware Disposal Acquisition
During the third quarter of 2024, Select completed the acquisition of a disposal well for
Business Development Updates
Since the start of the third quarter of 2024, Select has executed four new long-term contracts including two for comprehensive produced water gathering, recycling and disposal in the Permian Basin and two disposal gathering pipeline connection contracts in the Bakken. The combined capital expenditures associated with these four projects is expected to be
Northern Delaware System Expansion and Acreage Dedication
During the third quarter of 2024, Select signed a 12-year agreement for the construction and expansion of recycling and pipeline infrastructure for a large public operator in the Permian Basin, extending Select's existing
Midland Basin Recycling and Disposal Project
During October 2024, Select signed an eight-year agreement for an integrated water gathering, recycling and disposal project in
Bakken Pipeline Connections
During the third quarter of 2024, Select signed one 10-year agreement and one 20-year agreement for the construction of pipelines to Select's existing Bakken disposal infrastructure. As part of the agreements Select will update one of its Bakken disposals to accommodate increased capacity in addition to tying pipe into the disposal facility. Additionally, Select has also secured a one million barrel minimum volume commitment in the initial year of the contract in one of the two connection agreements signed in the quarter.
Conference Call Information
Select has scheduled a conference call on Wednesday, November 6, 2024 at 11:00 a.m. Eastern time / 10:00 a.m. Central time. Please dial 201-389-0872 and ask for the Select Water Solutions call at least 10 minutes prior to the start time of the call, or listen to the call live over the Internet by logging on to the website at the address https://investors.selectwater.com/events-presentations/current. A telephonic replay of the conference call will be available through November 20, 2024, and may be accessed by calling 201-612-7415 using passcode 13749690#. A webcast archive will also be available at the link above shortly after the call and will be accessible for approximately 90 days.
About Select Water Solutions, Inc.
Select is a leading provider of sustainable water and technology solutions to the energy industry. These solutions are supported by the Company's critical water infrastructure assets, chemical manufacturing and water treatment and recycling capabilities. As a leader in sustainable water and chemical solutions, Select places the utmost importance on safe, environmentally responsible management of water throughout the lifecycle of a well. Additionally, Select believes that responsibly managing water resources throughout its operations to help conserve and protect the environment is paramount to the Company's continued success. For more information, please visit Select's website, https://www.selectwater.com.
Cautionary Statement Regarding Forward-Looking Statements
All statements in this communication other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as "could," "believe," "anticipate," "expect," "intend," "project," "will," "estimates," "preliminary," "forecast" and other similar expressions. Examples of forward-looking statements include, but are not limited to, the expectations of plans, business strategies, objectives and growth, projected financial results and future financial and operational performance, expected capital expenditures, our share repurchase program and future dividends. Although we believe that the expectations reflected, and the assumptions or bases underlying our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause our actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements. These risks and uncertainties include the risks that the benefits contemplated from our recent acquisitions may not be realized, the ability of Select to successfully integrate the acquired businesses' operations, including employees, and realize anticipated synergies and cost savings and the potential impact of the consummation of the acquisitions on relationships, including with employees, suppliers, customers, competitors and creditors. Factors that could materially impact such forward-looking statements include, but are not limited to: the global macroeconomic uncertainty related to the
WTTR-ER
SELECT WATER SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except share and per share data) | |||||||||||||||
Three months ended, | Nine months ended Sept 30, | ||||||||||||||
Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | 2024 | 2023 | |||||||||||
Revenue | |||||||||||||||
Water Services | $ | 234,019 | $ | 230,008 | $ | 251,870 | $ | 692,334 | $ | 791,145 | |||||
Water Infrastructure | 82,017 | 68,564 | 58,375 | 214,089 | 169,118 | ||||||||||
Chemical Technologies | 55,313 | 66,559 | 79,028 | 196,605 | 250,230 | ||||||||||
Total revenue | 371,349 | 365,131 | 389,273 | 1,103,028 | 1,210,493 | ||||||||||
Costs of revenue | |||||||||||||||
Water Services | 186,041 | 178,308 | 200,361 | 545,881 | 626,878 | ||||||||||
Water Infrastructure | 35,503 | 33,581 | 34,992 | 102,776 | 103,718 | ||||||||||
Chemical Technologies | 48,450 | 55,641 | 63,005 | 165,846 | 200,017 | ||||||||||
Depreciation, amortization and accretion | 38,906 | 37,445 | 34,650 | 113,243 | 102,776 | ||||||||||
Total costs of revenue | 308,900 | 304,975 | 333,008 | 927,746 | 1,033,389 | ||||||||||
Gross profit | 62,449 | 60,156 | 56,265 | 175,282 | 177,104 | ||||||||||
Operating expenses | |||||||||||||||
Selling, general and administrative | 37,268 | 38,981 | 38,983 | 120,229 | 109,147 | ||||||||||
Depreciation and amortization | 661 | 748 | 512 | 2,667 | 1,846 | ||||||||||
Impairments and abandonments | — | 46 | 32 | 91 | 11,554 | ||||||||||
Lease abandonment costs | 5 | 17 | (12) | 411 | 73 | ||||||||||
Total operating expenses | 37,934 | 39,792 | 39,515 | 123,398 | 122,620 | ||||||||||
Income from operations | 24,515 | 20,364 | 16,750 | 51,884 | 54,484 | ||||||||||
Other income (expense) | |||||||||||||||
Gain on sales of property and equipment and divestitures, net | 1,624 | 382 | 23 | 2,331 | 1,688 | ||||||||||
Interest expense, net | (1,906) | (2,026) | (765) | (5,204) | (4,290) | ||||||||||
Other | (78) | 42 | 767 | (318) | 2,482 | ||||||||||
Income before income tax expense and equity in gains (losses) of | 24,155 | 18,762 | 16,775 | 48,693 | 54,364 | ||||||||||
Income tax expense | (5,852) | (3,959) | (483) | (11,263) | (1,068) | ||||||||||
Equity in gains (losses) of unconsolidated entities | 507 | 96 | (978) | 154 | (1,716) | ||||||||||
Net income | 18,810 | 14,899 | 15,314 | 37,584 | 51,580 | ||||||||||
Less: net income attributable to noncontrolling interests | (3,019) | (2,031) | (968) | (5,300) | (4,772) | ||||||||||
Net income attributable to Select Water Solutions, Inc. | $ | 15,791 | $ | 12,868 | $ | 14,346 | $ | 32,284 | $ | 46,808 | |||||
Net income per share attributable to common stockholders: | |||||||||||||||
Class A—Basic | $ | 0.16 | $ | 0.13 | $ | 0.14 | $ | 0.32 | $ | 0.46 | |||||
Class B—Basic | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
Net income per share attributable to common stockholders: | |||||||||||||||
Class A—Diluted | $ | 0.15 | $ | 0.13 | $ | 0.14 | $ | 0.32 | $ | 0.45 | |||||
Class B—Diluted | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
SELECT WATER SOLUTIONS, INC. CONSOLIDATED BALANCE SHEETS (unaudited) (in thousands, except share data) | ||||||||||||
Sept 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 10,938 | $ | 16,417 | $ | 12,753 | $ | 57,083 | ||||
Accounts receivable trade, net of allowance for credit losses | 298,676 | 295,115 | 323,113 | 322,611 | ||||||||
Accounts receivable, related parties | 119 | 98 | 330 | 171 | ||||||||
Inventories | 35,819 | 37,501 | 37,636 | 38,653 | ||||||||
Prepaid expenses and other current assets | 51,130 | 35,142 | 37,886 | 35,541 | ||||||||
Total current assets | 396,682 | 384,273 | 411,718 | 454,059 | ||||||||
Property and equipment | 1,363,666 | 1,312,239 | 1,242,133 | 1,144,989 | ||||||||
Accumulated depreciation | (689,978) | (663,284) | (650,952) | (627,408) | ||||||||
Total property and equipment, net | 673,688 | 648,955 | 591,181 | 517,581 | ||||||||
Right-of-use assets, net | 39,714 | 42,293 | 42,931 | 39,504 | ||||||||
Goodwill | 30,259 | 36,664 | 31,202 | 4,683 | ||||||||
Other intangible assets, net | 127,930 | 126,834 | 127,649 | 116,189 | ||||||||
Deferred tax assets, net | 48,879 | 54,529 | 60,489 | 61,617 | ||||||||
Other long-term assets, net | 29,495 | 29,572 | 26,137 | 24,557 | ||||||||
Total assets | $ | 1,346,647 | $ | 1,323,120 | $ | 1,291,307 | $ | 1,218,190 | ||||
Liabilities and Equity | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 41,435 | $ | 36,746 | $ | 54,389 | $ | 42,582 | ||||
Accrued accounts payable | 66,172 | 72,493 | 62,833 | 66,182 | ||||||||
Accounts payable and accrued expenses, related parties | 5,891 | 3,251 | 4,227 | 4,086 | ||||||||
Accrued salaries and benefits | 21,142 | 24,342 | 17,692 | 28,401 | ||||||||
Accrued insurance | 29,970 | 17,399 | 17,227 | 19,720 | ||||||||
Sales tax payable | 2,668 | 2,493 | 2,973 | 1,397 | ||||||||
Current portion of tax receivable agreements liabilities | 469 | 469 | 469 | 469 | ||||||||
Accrued expenses and other current liabilities | 37,866 | 38,282 | 35,800 | 33,511 | ||||||||
Current operating lease liabilities | 16,781 | 16,934 | 16,241 | 15,005 | ||||||||
Current portion of finance lease obligations | 207 | 199 | 196 | 194 | ||||||||
Total current liabilities | 222,601 | 212,608 | 212,047 | 211,547 | ||||||||
Long-term tax receivable agreements liabilities | 37,718 | 37,718 | 37,718 | 37,718 | ||||||||
Long-term operating lease liabilities | 34,792 | 37,938 | 39,667 | 37,799 | ||||||||
Long-term debt | 80,000 | 90,000 | 75,000 | — | ||||||||
Other long-term liabilities | 52,110 | 42,726 | 38,554 | 38,954 | ||||||||
Total liabilities | 427,221 | 420,990 | 402,986 | 326,018 | ||||||||
Commitments and contingencies | ||||||||||||
Class A common stock, | 1,028 | 1,028 | 1,027 | 1,022 | ||||||||
Class B common stock, | 162 | 162 | 162 | 162 | ||||||||
Preferred stock, | — | — | — | — | ||||||||
Additional paid-in capital | 999,812 | 1,001,123 | 1,001,967 | 1,008,095 | ||||||||
Accumulated deficit | (204,507) | (220,298) | (233,166) | (236,791) | ||||||||
Total stockholders' equity | 796,495 | 782,015 | 769,990 | 772,488 | ||||||||
Noncontrolling interests | 122,931 | 120,115 | 118,331 | 119,684 | ||||||||
Total equity | 919,426 | 902,130 | 888,321 | 892,172 | ||||||||
Total liabilities and equity | $ | 1,346,647 | $ | 1,323,120 | $ | 1,291,307 | $ | 1,218,190 | ||||
SELECT WATER SOLUTIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | Sept 30, 2024 | Sept 30, 2023 | ||||||||||||
Cash flows from operating activities | ||||||||||||||||
Net income | $ | 18,810 | $ | 14,899 | $ | 15,314 | $ | 37,584 | $ | 51,580 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||||
Depreciation, amortization and accretion | 39,567 | 38,193 | 35,162 | 115,910 | 104,622 | |||||||||||
Deferred tax expense (benefit) | 5,650 | 3,792 | (54) | 10,571 | (97) | |||||||||||
Gain on disposal of property and equipment and divestitures | (1,624) | (382) | (23) | (2,331) | (1,688) | |||||||||||
Equity in (gains) losses of unconsolidated entities | (507) | (96) | 978 | (154) | 1,716 | |||||||||||
Bad debt expense | (472) | 731 | 1,156 | 855 | 3,987 | |||||||||||
Amortization of debt issuance costs | 122 | 122 | 122 | 366 | 366 | |||||||||||
Inventory adjustments | (95) | (400) | 115 | (528) | 557 | |||||||||||
Equity-based compensation | 5,799 | 6,201 | 5,014 | 18,359 | 12,787 | |||||||||||
Impairments and abandonments | — | 46 | 32 | 91 | 11,554 | |||||||||||
Other operating items, net | (41) | 655 | 2 | 926 | (639) | |||||||||||
Changes in operating assets and liabilities | ||||||||||||||||
Accounts receivable | (2,415) | 31,298 | 74,081 | 29,011 | 70,467 | |||||||||||
Prepaid expenses and other assets | (15,536) | 1,222 | (11,613) | (16,494) | (18,797) | |||||||||||
Accounts payable and accrued liabilities | 2,618 | (13,167) | (2,073) | (27,047) | (34,253) | |||||||||||
Net cash provided by operating activities | 51,876 | 83,114 | 118,213 | 167,119 | 202,162 | |||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchase of property and equipment | (35,204) | (49,113) | (35,166) | (118,080) | (102,401) | |||||||||||
Purchase of equity-method investments | — | — | — | — | (500) | |||||||||||
Acquisitions, net of cash received | (8,650) | (41,477) | — | (158,438) | (13,418) | |||||||||||
Proceeds received from sales of property and equipment | 3,730 | 3,379 | 1,579 | 12,275 | 11,380 | |||||||||||
Net cash used in investing activities | (40,124) | (87,211) | (33,587) | (264,243) | (104,939) | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Borrowings from revolving line of credit | 7,500 | 52,500 | — | 150,000 | 105,250 | |||||||||||
Payments on revolving line of credit | (17,500) | (37,500) | (65,000) | (70,000) | (121,250) | |||||||||||
Payments of finance lease obligations | (49) | (48) | (45) | (163) | (55) | |||||||||||
Dividends and distributions paid | (7,012) | (7,034) | (5,821) | (21,533) | (17,907) | |||||||||||
Distributions to noncontrolling interests | — | — | 1,000 | — | (1,581) | |||||||||||
Contributions from noncontrolling interests | — | — | — | — | 5,950 | |||||||||||
Repurchase of common stock | (171) | (156) | (276) | (7,323) | (49,905) | |||||||||||
Net cash (used in) provided by financing activities | (17,232) | 7,762 | (70,142) | 50,981 | (79,498) | |||||||||||
Effect of exchange rate changes on cash | 1 | (1) | (3) | (2) | (4) | |||||||||||
Net (decrease) increase in cash and cash equivalents | (5,479) | 3,664 | 14,481 | (46,145) | 17,721 | |||||||||||
Cash and cash equivalents, beginning of period | 16,417 | 12,753 | 10,562 | 57,083 | 7,322 | |||||||||||
Cash and cash equivalents, end of period | $ | 10,938 | $ | 16,417 | $ | 25,043 | $ | 10,938 | $ | 25,043 | ||||||
Comparison of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, gross profit before depreciation, amortization and accretion ("D&A"), gross margin before D&A and free cash flow are not financial measures presented in accordance with accounting principles generally accepted in the
Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Gross profit and gross margin are the GAAP measures most directly comparable to gross profit before D&A and gross margin before D&A, respectively. Net cash provided by (used in) operating activities is the GAAP measure most directly comparable to free cash flow. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA, Adjusted EBITDA, gross profit before D&A, gross margin before D&A or free cash flow in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA, Adjusted EBITDA, gross profit before D&A, gross margin before D&A and free cash flow may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
For forward-looking non-GAAP measures, the Company is unable to provide a reconciliation of the forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measure as the information necessary for a quantitative reconciliation, including potential acquisition-related transaction and rebranding costs as well as the purchase price accounting allocation of the recent acquisitions and the resulting impacts to depreciation, amortization and accretion expense, among other items is not available to the Company without unreasonable efforts due to the inherent difficulty and impracticability of predicting certain amounts required by GAAP with a reasonable degree of accuracy at this time.
The following table presents a reconciliation of free cash flow to net cash provided by operating activities, which is the most directly comparable GAAP measure for the periods presented:
Three months ended | |||||||||||
Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | |||||||||
(unaudited) (in thousands) | |||||||||||
Net cash provided by operating activities | $ | 51,876 | $ | 83,114 | $ | 118,213 | |||||
Purchase of property and equipment | (35,204) | (49,113) | (35,166) | ||||||||
Proceeds received from sale of property and equipment | 3,730 | 3,379 | 1,579 | ||||||||
Free cash flow | $ | 20,402 | $ | 37,380 | $ | 84,626 | |||||
The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented:
Three months ended, | ||||||||||
Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | ||||||||
(unaudited) (in thousands) | ||||||||||
Net income | $ | 18,810 | $ | 14,899 | $ | 15,314 | ||||
Interest expense, net | 1,906 | 2,026 | 765 | |||||||
Income tax expense | 5,852 | 3,959 | 483 | |||||||
Depreciation, amortization and accretion | 39,567 | 38,193 | 35,162 | |||||||
EBITDA | 66,135 | 59,077 | 51,724 | |||||||
Trademark abandonment and other impairments | — | 46 | — | |||||||
Non-cash loss on sale of assets or subsidiaries | 368 | 1,432 | 583 | |||||||
Non-cash compensation expenses | 5,799 | 6,201 | 5,014 | |||||||
Non-recurring transaction and rebranding costs | 710 | 2,866 | 4,669 | |||||||
Non-recurring severance expense | — | — | — | |||||||
Lease abandonment costs | 5 | 17 | (12) | |||||||
Equity in (gains) losses of unconsolidated entities | (507) | (96) | 978 | |||||||
Impairments and Abandonments | — | — | 32 | |||||||
Other | 240 | 104 | 1 | |||||||
Adjusted EBITDA | $ | 72,750 | $ | 69,647 | $ | 62,989 | ||||
The following table presents a reconciliation of gross profit before D&A to total gross profit, which is the most directly comparable GAAP measure, and a calculation of gross margin before D&A for the periods presented:
Three months ended, | |||||||||
Sept 30, 2024 | June 30, 2024 | Sept 30, 2023 | |||||||
(unaudited) (in thousands) | |||||||||
Gross profit by segment | |||||||||
Water services | $ | 28,482 | $ | 30,688 | $ | 28,689 | |||
Water infrastructure | 28,957 | 20,354 | 14,191 | ||||||
Chemical technologies | 5,010 | 9,114 | 13,385 | ||||||
As reported gross profit | 62,449 | 60,156 | 56,265 | ||||||
Plus D&A | |||||||||
Water services | 19,496 | 21,012 | 22,820 | ||||||
Water infrastructure | 17,557 | 14,629 | 9,192 | ||||||
Chemical technologies | 1,853 | 1,804 | 2,638 | ||||||
Total D&A | 38,906 | 37,445 | 34,650 | ||||||
Gross profit before D&A | $ | 101,355 | $ | 97,601 | $ | 90,915 | |||
Gross profit before D&A by segment | |||||||||
Water services | 47,978 | 51,700 | 51,509 | ||||||
Water infrastructure | 46,514 | 34,983 | 23,383 | ||||||
Chemical technologies | 6,863 | 10,918 | 16,023 | ||||||
Total gross profit before D&A | $ | 101,355 | $ | 97,601 | $ | 90,915 | |||
Gross margin before D&A by segment | |||||||||
Water services | 20.5 % | 22.5 % | 20.5 % | ||||||
Water infrastructure | 56.7 % | 51.0 % | 40.1 % | ||||||
Chemical technologies | 12.4 % | 16.4 % | 20.3 % | ||||||
Total gross margin before D&A | 27.3 % | 26.7 % | 23.4 % | ||||||
Contacts:
Select Water Solutions
Garrett Williams – VP, Corporate Finance & Investor Relations
(713) 296-1010
IR@selectwater.com
Dennard Lascar Investor Relations
Ken Dennard / Natalie Hairston
(713) 529-6600
WTTR@dennardlascar.com
View original content:https://www.prnewswire.com/news-releases/select-water-solutions-announces-third-quarter-2024-financial-results-and-operational-updates-302296916.html
SOURCE Select Water Solutions, Inc.
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