Select Water Solutions (NYSE:WTTR) management used its fourth-quarter earnings call to highlight what it described as a record-setting 2025, driven by continued expansion of its Northern Delaware Basin “Recycling First” produced-water infrastructure network and market share gains in its Chemical Technologies business.
2025 highlights: infrastructure scale-up and contract additions
Founder, Chairman, President and CEO John Schmitz said 2025 included improved consolidated margins, a streamlined Water Services segment, and “significant market share gains” in Chemical Technologies. He also said the company made investments aimed at diversification across municipal and industrial markets and advanced technology work in beneficial reuse and mineral extraction.
Schmitz also said the company added nearly 1 million new dedicated acres during 2025 through multiple new minimum volume commitments (MVCs), with an average contract term of 11 years. Management reiterated a goal to have Water Infrastructure represent more than 60% of consolidated gross profit within the next 24 months, supported by an expectation of 20% to 25% year-over-year growth for the segment in 2026 compared to 2025.
Northern Delaware Basin build-out and asset conveyances
Schmitz described produced-water handling challenges as particularly acute in the Northern Delaware Basin, citing high water cuts, decreasing disposal availability, and increasing regulatory scrutiny. He said Select’s network gathers hundreds of thousands of barrels per day and uses facilities as distribution hubs to balance “water longs and shorts” across a regional footprint, with dual-line pipelines and interconnected disposal options.
Management also pointed to customer partnerships that can include customers transferring existing water-related assets to Select. Schmitz said Select received conveyances of multiple recycling, disposal, and storage facilities in 2025. In the fourth quarter, he said Select reached an agreement with a top customer for the direct conveyance of three treated produced-water storage facilities and a permit for additional disposal facilities in Eddy County, New Mexico; the company has since drilled and completed that disposal facility and plans to integrate it into its broader network.
Combined with a separate disposal acquisition completed in the fourth quarter, Schmitz said Select added 55,000 barrels per day of new disposal capacity in the Northern Delaware during the quarter. He said new assets, contract awards, and construction backlog are expected to add capacity and geographic reach in 2026.
Financial results and 2026 outlook
Executive Vice President and CFO Chris George said Select generated $1.4 billion of consolidated revenue in 2025, with a record $260 million of Adjusted EBITDA. For the fourth quarter, the company reported consolidated Adjusted EBITDA of $64.2 million, above the high end of its guidance range of $60 million to $64 million. George attributed the result to sequential revenue and gross profit gains across all segments.
On the commodity backdrop, George said Select expects a “fairly steady” 2026 environment, with oil largely expected to remain in the $55 to $65 range seen in the second half of 2025 and early 2026. He also cited potential upside in natural gas and said Select is positioned to benefit due to its positions in key gas basins.
Segment commentary included:
- Water Infrastructure: Fourth-quarter gross profit before depreciation and amortization (D&A) increased 5%, and margins improved to 54%. George said some top customers requested short-term schedule changes late in the quarter, which reduced fixed-infrastructure volume growth versus expectations, but Select supported customers with temporary water transfer. For first-quarter 2026, management expects 7% to 10% growth in Water Infrastructure revenue and gross profit before D&A versus the fourth quarter, and reiterated an expectation for 20% to 25% year-over-year growth in 2026 while maintaining margins similar to the 54% level.
- Water Services: Fourth-quarter gross margin before D&A improved by roughly 2 percentage points to 20%, and gross profit before D&A rose 16% on 7% revenue growth. George said Water Services outperformed prior guidance for modest sequential declines, helped by a 77% sequential increase in New Mexico Water Transfer revenue. For 2026, management expects Water Services revenue to be down year-over-year primarily due to divestments (which George said account for more than 80% of the decline), while holding roughly steady versus the fourth-quarter run rate. The company guided to gross margins before D&A of 19% to 21% for both the first quarter and full year.
- Chemical Technologies: Management said 2025 revenue rose 19% year-over-year and gross profit before D&A increased 45% versus 2024. Fourth-quarter revenue was a record $87 million, up 14% sequentially, and gross profit before D&A rose 16% sequentially, with gross margins before D&A of 20%. For 2026, management expects revenue similar to 2025 with potential upside, with margins in the 19% to 20% range. First-quarter revenue was guided to the high-$70 million to $80 million range with similar margins.
George said fourth-quarter SG&A increased modestly to $43 million, but the company is targeting a 5% to 10% year-over-year reduction in SG&A in 2026 and expects SG&A to fall below 11% of revenue for full-year 2026, potentially as early as the first quarter.
For the first quarter of 2026, George guided to consolidated Adjusted EBITDA of $65 million to $68 million, driven primarily by increased volumes on the Northern Delaware infrastructure network.
Capital spending, free cash flow trajectory, and new revenue concepts
George said Select ended 2025 with net capital expenditures of $279 million, slightly above prior guidance. For 2026, he guided to net capital expenditures of $175 million to $225 million, after expected asset sales of $10 million to $15 million. The plan includes about $50 million to $60 million of maintenance spending, weighted predominantly to Water Services, and is expected to be heavier in the first half of 2026 due to projects already under construction or preparing to start.
Management discussed a longer-term expectation that capital spending could decline in 2027 as the current build-out window matures. George also noted that Water Services and Chemical Technologies are low capital intensity and convert “approximately 70% or greater” of gross profit to cash flow, which helps support infrastructure expansion.
Schmitz and executives also discussed efforts to generate incremental cash flow from produced-water volumes without significant incremental capital. Schmitz pointed to recently announced partnerships for produced-water lithium extraction in the Haynesville and Permian, which he said should begin contributing initial royalty revenues by early 2027. In the Q&A, Chief Strategy and Technology Officer Mike Lyons said Select expects more lithium-related activity and said the company is also anticipating “interesting news” around iodine extraction in the first half of 2026, with partners also discussing minerals such as strontium, magnesium, and others.
Q&A: system maturation, beneficial reuse pilots, Peak Rentals review
During the question-and-answer session, COO Michael Skarke said the Northern Delaware system is “roughly halfway built out” and that the company is seeing more smaller, highly accretive opportunities that leverage the existing system, while still pursuing some “chunkier” projects—particularly as it expands into new territories in Eddy County. Skarke also discussed expansion beyond New Mexico, referencing a move into Winkler County and potential growth toward the Central Basin Platform.
Lyons provided additional detail on beneficial reuse, saying Select has completed several pilots over time using technologies such as wiped film evaporation, multi-effect vacuum distillation, membrane distillation, and reverse osmosis. He highlighted a larger-scale project conducted with an operator, a university, and the Produced Water Consortium where treated produced water was further treated and land-applied as part of a pilot that included growing native and other crops near a treatment facility and routing water into a greenhouse. Lyons said Select is using testing and biological growth data to inform regulatory efforts and is focused on techno-economics and investability as it evaluates commercialization, adding that the company expects to announce plans and bring commercial-scale facilities online over the next several years.
On Peak Rentals, Schmitz said Select continues to evaluate strategic alternatives while Peak generates excess free cash to support infrastructure growth. He described Peak’s legacy accommodations support business and said Peak is now gaining traction in power solutions, including distributed diesel generators, an expansion into natural gas generation, and the use of battery packs to improve efficiency and support production-phase needs such as artificial lift and compression. Management said Peak has also supported Select’s own infrastructure build-out in New Mexico where utility power is limited.
About Select Water Solutions (NYSE:WTTR)
Select Water Solutions, Inc, headquartered in Houston, Texas, is a water management services provider primarily serving the oil and gas industry. Formerly operating under the name Select Energy Services, the company rebranded to reflect its core focus on water treatment, recycling and disposal. Since its inception in 2016, Select Water Solutions has expanded to key U.S. basins—including the Permian, Eagle Ford, Marcellus and DJ Basin—and maintains strategic operations in select international regions.
The company’s offerings span the full water lifecycle, from produced water gathering and transportation to advanced treatment and beneficial reuse.
