Select Water Solutions Inc (WTTR, Financial) released its 8-K filing on November 5, 2024, reporting its financial results for the third quarter of 2024. The company, a leading provider of sustainable water and chemical solutions to the energy industry, reported a revenue of $371 million, exceeding the analyst estimate of $350.91 million. This represents a 2% sequential increase from the second quarter of 2024.
Company Overview
Select Water Solutions Inc (WTTR, Financial) specializes in providing sustainable water and chemical solutions to the energy sector. The company operates through three main segments: Water Services, Water Infrastructure, and Chemical Technologies, with the majority of its revenue generated from Water Services.
Financial Performance and Challenges
The company reported a net income of $18.8 million for the third quarter, a 26% increase from the previous quarter. Adjusted EBITDA also improved by 4% sequentially, reaching $72.8 million. Despite these positive results, the company faces challenges such as seasonal activity slowdowns and asset-specific activity reductions, particularly in the Water Services segment.
Key Financial Achievements
One of the significant achievements for Select Water Solutions Inc (WTTR, Financial) was the performance of its Water Infrastructure segment, which saw a 20% increase in revenue and a 33% growth in gross profit before depreciation and amortization (D&A). This segment achieved a gross margin before D&A of 56.7%, surpassing the company's target of 50% well ahead of the 2025 goal.
Income Statement Highlights
| Metric | Q3 2024 | Q2 2024 | Q3 2023 |
|---|---|---|---|
| Total Revenue | $371.3 million | $365.1 million | $389.3 million |
| Net Income | $18.8 million | $14.9 million | $15.3 million |
| Gross Profit | $62.4 million | $60.2 million | $56.3 million |
Balance Sheet and Cash Flow
As of September 30, 2024, Select Water Solutions Inc (WTTR, Financial) reported total assets of $1.35 billion and total liabilities of $427.2 million. The company generated $51.9 million in operating cash flow and $20.4 million in free cash flow during the third quarter. The company's liquidity position remains strong with total liquidity of $138.7 million.
Strategic Developments and Future Outlook
The company secured multiple new long-term contracts for pipeline gathering, recycling, and disposal infrastructure projects, with anticipated capital deployment of $37 – $42 million. These strategic developments are expected to bolster the company's infrastructure footprint and drive future growth.
John Schmitz, Select’s Chairman of the Board, President and CEO, 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.”
Analysis and Conclusion
Select Water Solutions Inc (WTTR, Financial) has demonstrated resilience and growth potential, particularly in its Water Infrastructure segment. The company's ability to exceed revenue estimates and improve profitability metrics highlights its strategic focus on expanding its infrastructure capabilities. However, challenges such as seasonal slowdowns and asset-specific activity reductions may impact short-term performance. Overall, the company's strong financial position and strategic initiatives position it well for continued growth in the energy sector.
Explore the complete 8-K earnings release (here) from Select Water Solutions Inc for further details.
