On July 31, 2024, Select Water Solutions Inc (WTTR, Financial) released its 8-K filing detailing its financial performance for the second quarter of 2024. Select Water Solutions Inc provides sustainable water and chemical solutions to the energy industry, supported by critical water infrastructure assets, chemical manufacturing, and water treatment and recycling capabilities. The company's reportable segments are Water Services, Water Infrastructure, and Chemical Technologies, with the majority of revenue generated from Water Services.
Performance Overview
For Q2 2024, Select Water Solutions Inc reported revenue of $365 million, slightly below the analyst estimate of $371.48 million. However, the company exceeded earnings per share (EPS) expectations, reporting $0.13 per share compared to the estimated $0.11 per share. This performance is significant as it highlights the company's ability to maintain profitability despite a challenging macroeconomic environment.
Financial Achievements and Segment Performance
During the second quarter, Select Water Solutions Inc generated $83.1 million in operating cash flow and $37.4 million in free cash flow. Net income more than tripled sequentially, reaching $14.9 million, up from $3.9 million in Q1 2024. Adjusted EBITDA improved by 17% sequentially to $69.6 million.
The Water Infrastructure segment showed notable growth, with revenue increasing by 8% sequentially to $68.6 million. Gross profit before depreciation and amortization (D&A) for this segment grew by 17%, resulting in a gross margin before D&A of 51%, surpassing the company's 50% margin goal ahead of schedule.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Revenue | $365.1 million | $366.5 million | $404.6 million |
| Net Income | $14.9 million | $3.9 million | $22.6 million |
| Gross Profit | $60.2 million | $52.7 million | $61.2 million |
| Adjusted EBITDA | $69.6 million | $59.8 million | $69.8 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Select Water Solutions Inc had total cash and cash equivalents of $16.4 million, up from $12.8 million as of March 31, 2024. The company reported $90 million in borrowings under its sustainability-linked credit facility, with total liquidity standing at $129.8 million.
Net capital expenditures for the quarter were $45.7 million, and the company completed acquisitions worth $9 million in the Northeast, enhancing its disposal capacity. These strategic investments are expected to bolster the company's market position and support future growth.
Commentary and Outlook
"During the second quarter we achieved our goal and demonstrated our successes in improving the margin and profitability profile of the business, while generating strong free cash flow," stated John Schmitz, Chairman of the Board, President, and CEO.
Looking ahead, Select Water Solutions Inc remains confident in its ability to deliver 50% of its profitability from the Water Infrastructure and Chemical Technologies segments. The company anticipates maintaining Water Infrastructure gross margins above 50%, contributing to overall profitability despite broader market challenges.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Select Water Solutions Inc for further details.
