Select Water Solutions — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated revenue reached $412 million, a 28% year-over-year increase from $322 million in Q3 2025, and a 4% sequential increase from $396 million in Q2 2026.
• Net income was $23 million (specifically $22.9 million), an increase of $21 million compared to $2.3 million in Q3 2025.
• Adjusted EBITDA totaled $93 million (specifically $93.5 million), a 57% year-over-year increase from $59.5 million in Q3 2025.
• Gross profit was $81.4 million with a gross margin of 19.7%, compared to 13.5% in Q3 2025; gross profit before D&A was $129.4 million with a margin of 31.4%.
• SG&A expenses were $53.6 million, impacted by $7.4 million in transaction costs.
• Cash flow provided by operating activities was $84 million, compared to $72 million in Q3 2025.
• Free cash flow was negative $3.6 million, compared to negative $19.4 million in Q3 2025.
• Net capital expenditures were $88.1 million, comprised of $89.5 million in capital expenditures offset by $1.5 million in asset sales proceeds.
• Total liquidity was $271.6 million as of September 30, 2026.

Guidance and Future Outlook:

• Q4 2026 Adjusted EBITDA is anticipated to be between $95 million and $100 million.
• Q4 2026 Water Infrastructure revenue is projected at $150 million to $160 million with gross margins before D&A in the 52%–56% range.
• Q4 2026 Water Services revenue is projected at $150 million to $160 million with gross margins before D&A in the 21%–24% range.
• Q4 2026 Chemical Technologies revenue is projected at $75 million to $80 million with gross margins before D&A in the 17%–18% range.
• Full-year 2026 net capital expenditures are now anticipated to be approximately $300 million to $310 million.
• Management expects continued strength in the Water Infrastructure segment driven by incremental revenue growth in Q4 and the integration of Pilot Water.

Business Segments and Product Lines:

• Water Infrastructure segment revenue reached a record $110 million, a 40% year-over-year increase from $79 million in Q3 2025, with gross margin before D&A of 57.2%.
• Water Infrastructure handled 1.7 million barrels per day of produced water, a 30% increase relative to Q3 2025.
• Water Services segment revenue was $212 million, a 7% sequential increase, with gross margin before D&A of 23.8%.
• Chemical Technologies segment revenue was $90 million, meeting the high end of the guided range, with gross margin before D&A of 17.8%.
• The company completed the recapitalization and sale of a 55% majority interest in Peak Rentals, retaining a 45% minority ownership position.

Market and Competitive Landscape:

• Select Water Solutions is expanding its leading water midstream position across the Delaware Basin through the acquisition of Pilot Water Solutions.
• The company continues to win new contracted organic growth projects that underwrite scaled network expansion.
• The company holds one of the leading credit ratings and leverage profiles amongst its water midstream peer group.

Risks and Challenges:

• Forward-looking statements regarding the Pilot Water acquisition, including integration, synergies, and cost savings, are subject to risks that benefits may not be realized.
• Risks include potential impacts on relationships with employees, suppliers, customers, competitors, and creditors.
• External factors such as global economic distress, geopolitical instability (Russia-Ukraine, Middle East), OPEC+ production levels, and regulatory changes could materially impact results.
• Risks include the potential deterioration of customers' financial conditions, supply chain disruptions, and capacity constraints in regional gathering and processing systems.

Management Commentary and Tone:

• Chairman, President, and CEO John Schmitz described the quarter as "strong" across all three operating segments, highlighting record revenue and gross profit in Water Infrastructure.
• Management expressed excitement about the addition of Pilot Water and the opportunities it enables for solving complex water dynamics in the Delaware basin.
• Schmitz noted that the company is well-positioned to deliver ongoing value creation for shareholders due to a strong balance sheet, resilient contracted earnings profile, and recent growth initiatives.

Other Key Points:

• Subsequent to the quarter end, Select closed the acquisition of Pilot Water Solutions.
• Select issued $900 million in 7.625% Senior Notes due November 1, 2034, to fund the Pilot Water acquisition and repay existing term loans.
• The company entered into a new $500 million senior secured cash flow revolving credit facility, more than doubling available liquidity compared to the prior facility; approximately $483.4 million remains available.
• Select fully repaid and terminated its previous sustainability-linked credit facility.
• The divestment of Peak Rentals generated approximately $41.5 million in cash proceeds and a $35.3 million seller note for Select.
• Quarterly dividends and distributions paid were $9.5 million.
• Total assets were $1.818 billion as of September 30, 2026, with total equity of $1.152 billion.