Executive Summary

Solid start to 2025: revenue rose 7% q/q to $374.4M and Adjusted EBITDA increased 14% q/q to $64.0M; GAAP diluted EPS was $0.08, up from $(0.02) in Q4 as gross margin improved 220 bps to 14.9% .
Beat on revenue vs S&P Global consensus ($374.4M vs $360.8M*) and beat on S&P “Primary EPS” ($0.1335 vs $0.06*), while S&P EBITDA (non‑GAAP definition) came in below consensus ($58.2M vs $60.7M*) even as company-reported Adjusted EBITDA exceeded internal guidance . Values marked with * retrieved from S&P Global.
Strategic momentum: announced multiple long-term Permian water infrastructure contracts (incl. an 11-year, largest-ever project) and bolt-on SWD acquisitions; raised 2025 net capex plan to $225–$250M (from $170–$190M) to fund growth; adjusted 2025 FCF conversion to ~5–15% of Adjusted EBITDA .
Near-term outlook: Q2’25 Adjusted EBITDA guided to $68–$72M, driven by a “sharp” increase in Water Infrastructure, with Services and Chemicals facing sequential revenue pressure but stable-to-higher gross margins before D&A .
Liquidity and returns: closed a new $550M sustainability-linked credit facility (revolver $300M, term loan $250M) and declared a $0.07 dividend payable May 16, 2025 .

What Went Well and What Went Wrong

What Went Well

Broad-based improvement vs Q4: revenue +7% q/q to $374.4M; gross margin expanded to 14.9%; Adjusted EBITDA +14% to $64.0M; GAAP net income swung to $9.6M from a $(2.1)M loss in Q4 .
Water Infrastructure resilience: gross margin before D&A held at 53.7% with rising recycling and disposal volumes; management expects Q2 segment revenue to increase by low double-digits with >50% gross margin before D&A sustained .
Strategic backlog and scale: new long-term Permian projects expand an integrated Northern Delaware network to >1 million acres under dedication/ROFR, with an 11-year, largest-ever capital project adding ~100 miles of pipelines and significant capacity; management highlighted confidence in decade-long revenue potential .

Quotes:

“The first quarter represented a strong start to the year for Select… in excess of our guidance… coupled with an increase in our consolidated margins.” — CEO John Schmitz .
“We expect continued growth in our consolidated Adjusted EBITDA in the second quarter to an estimated $68–$72 million.” .
“Pro forma… we expect to have more than 1.3 million barrels per day of fixed facility recycling throughput capacity in the Northern Delaware Basin alone…” .

What Went Wrong

Sequential Infrastructure revenue dip: Water Infrastructure revenue fell 5.8% q/q to $72.4M on legacy freshwater pipeline declines (conversion to produced water service), despite higher recycling and disposal volumes .
Working capital headwind and cash usage: operating cash flow was $(5.1)M vs $67.8M in Q4, with a $61.8M working capital build, including a $57.1M rise in A/R; free cash flow was $(51.5)M as net capex ran $46.5M .
Higher growth capex lowers 2025 FCF conversion: net capex raised to $225–$250M; 2025 FCF conversion revised to ~5–15% of Adjusted EBITDA (from 2024’s ~30% result), reflecting aggressive infrastructure buildout .

Financial Results

Consolidated performance (GAAP unless noted)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($M)	$371.3	$349.0	$374.4
Diluted EPS ($)	$0.15	$(0.02)	$0.08
Gross Margin (%)	16.8%	12.7%	14.9%
Gross Margin before D&A (%)	27.3%	24.2%	25.2%
Adjusted EBITDA ($M)	$72.8	$56.2	$64.0
Cash from Operations ($M)	$51.9	$67.8	$(5.1)
Free Cash Flow ($M)	$20.4	$16.2	$(51.5)
Net Capex ($M)	$31.5	$51.5	$46.5

Non-GAAP adjustments (Q1 2025): Adjusted EBITDA adds back $1.2M transaction costs, $1.1M impairments/abandonments, $0.7M lease abandonment, ~$0.7M other; plus $3.5M non-cash comp .

Segment revenue and margins

Segment	Q3 2024 Revenue ($M)	Q3 GM before D&A (%)	Q4 2024 Revenue ($M)	Q4 GM before D&A (%)	Q1 2025 Revenue ($M)	Q1 GM before D&A (%)
Water Infrastructure	82.0	56.7%	76.8	54.7%	72.4	53.7%
Water Services	234.0	20.5%	209.3	16.4%	225.6	19.5%
Chemical Technologies	55.3	12.4%	62.9	12.9%	76.3	15.2%

KPIs and Balance Sheet

KPI	Q3 2024	Q4 2024	Q1 2025
Working Capital Δ ($M)	$(15.4) use	$(1.8) use	$61.8 build
Liquidity ($M)	$138.7	$134.8	$260.2
Term Loan Balance ($M)	—	—	$250.0 (new facility)
ERP rollout impact	—	—	ERP rollout contributed to WC build; normalization expected

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($M)	Q2 2025	—	$68–$72	New
Water Infrastructure revenue (seq.)	Q2 2025	Q4’24: WI q/q down low single digits in Q1; “sharp double-digit” increases Q2/Q3	Increase by low double-digits; GM before D&A >50%	Reaffirmed trajectory (quantified)
Water Services revenue (seq.)	Q2 2025	Q1’25 GM before D&A 21–22% guided; revenue to increase low/mid single digits in Q1	Revenue down 5–10%; GM before D&A 20–22%	Lowered near-term revenue; margins maintained
Chemical Technologies revenue (seq.)	Q2 2025	Q1’25 revenue +10–15% guided; GM 14–15%	Revenue down mid-single digits; GM 14–16%	Lower near-term revenue; margins steady
Water Infrastructure FY growth	FY 2025	Revenue & gross profit growth +15–25% y/y	Tracking toward low end (~15%)	Tilt to low end
Net Capital Expenditures ($M)	FY 2025	$170–$190	$225–$250	Raised
FCF conversion (of Adj. EBITDA)	FY 2025	—	~5–15%	New
SG&A as % of revenue	Q2 2025	—	~10–11%	New
D&A ($M per quarter)	2025 run-rate	—	Low $40s per quarter	New
Interest expense ($M per quarter)	2025 run-rate	—	~$4–$5 per quarter	New
Effective book tax rate	2025	—	Low 20% (cash taxes ~≤$10M)	New
Dividend	Q2 2025	$0.07 declared Oct’24	$0.07 per share payable May 16, 2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
Permian/N. Delaware infrastructure	Q3: Pull-forward activity; converting freshwater line; new dedications and acquisitions	11-year largest-ever project; +~100 miles pipe; >1.3MM bpd recycling capacity pro forma; continued bolt-ons	Expanding scale and contract coverage
Macro/tariffs/supply chain	Seasonal/services pressure in Q4; 2025 activity modestly down	Limited direct tariff impact; polymers not steel; resilient Chemicals supply chain, domesticated >50%	Managed risk; minimal near-term impact
Segment mix and margins	WI GM before D&A surpassed 50% ahead of plan	WI GM before D&A ~54%; Services and Chemicals margins stable/improving despite lower revenue	Margin quality sustained
Dry gas basins (Haynesville/Marcellus)	Footprint and acquisitions to support growth	Strong disposal networks; capacity to grow; LNG offtake a demand tailwind (Haynesville)	Growing focus and opportunity
Non-energy water (Colorado AV Farms)	Announced $62M initial investment, long-cycle, ultra-long contracts	Ownership to 39% via +$10M; LOIs progressing; Select to operate long term; remaining $74M commitments	Execution advancing; commercialization in progress
Systems/technology	—	ERP rolled out company-wide; WC spike to normalize; “digital twin” for system planning	Operational enablement, forecasting

Management Commentary

“Gross margins before D&A for the Water Infrastructure segment remained strong at 54% during the quarter… revenue declines were driven entirely by our legacy freshwater pipeline assets… converted… into produced water distribution lines tied into our key recycling infrastructure network.” — CEO John Schmitz .
“We expect continued growth in our consolidated Adjusted EBITDA in the second quarter to an estimated $68–$72 million… primarily from our Water Infrastructure segment.” .
“With our latest long-term contract awards, we are adding new capital projects that should continue to provide a further level of growth… into 2026 and beyond.” .
“We reduced consolidated SG&A by 6% and grew net income by $12 million.” — CEO on Q1 vs Q4 .
“We achieved a single facility record 500,000 barrel per day peak recycling rate… helping a new monthly record for total barrels recycled at a single facility.” — CFO Chris George .

Q&A Highlights

Activity/macro: No pullback seen yet in core Permian assets; strong rocks and contracts underpin resilience; preparing for potential H2 activity reductions in services-oriented businesses .
AV Farms commercialization: LOIs in place; will scale construction with offtake contracts; Select expects to own/operate long term, leveraging pipeline/reservoir ops expertise; ownership pathway to majority over 2–3 years .
Tariffs/pass-through risk: Minimal impact to WI as supply chain is domestic and pipe is polyethylene; economics intact; Chemicals supply chain largely domesticated; added vertical integration .
WI growth cadence: Double-digit seq. growth into Q2/Q3; 2026 uplift from new 11-year project; tracking FY’25 WI growth towards low end of +15–25% .
Dry gas basins: Largest disposal provider in Haynesville/Marcellus; capacity and brownfield expansion opportunities; LNG growth supportive .

Estimates Context

Q1 2025 vs S&P Global consensus: Revenue $374.4M actual vs $360.8M estimate* (beat); S&P “Primary EPS” $0.1335 actual vs $0.06 estimate* (beat); S&P EBITDA $58.2M actual vs $60.7M estimate* (miss) — note S&P EBITDA and “Primary EPS” definitions differ from company-reported Adjusted EBITDA and GAAP diluted EPS ($0.08) . Values marked with * retrieved from S&P Global.
Q2 2025 consensus snapshot: Revenue $364.9M estimate*; S&P “Primary EPS” $0.1422 estimate*; S&P EBITDA $69.0M estimate* versus company’s Adjusted EBITDA guidance of $68–$72M . Values marked with * retrieved from S&P Global.

Metric	Q1 2025 Consensus*	Q1 2025 Actual	Q2 2025 Consensus*
Revenue ($M)	360.8	374.4	364.9
Primary EPS ($)	0.06	0.1335	0.1422
EBITDA ($M)	60.7	58.2	69.0

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

The core thesis—contracted, production‑weighted Water Infrastructure—continues to play out: margin quality >50% and backlog visibility improved, supporting Q2 sequential growth and a 2026 ramp from the largest project in company history .
Near-term Services/Chemicals revenue headwinds appear manageable given expected margin resilience (Services 20–22%, Chemicals 14–16%) and consolidated Q2 EBITDA guide of $68–$72M .
Working capital normalization is an important watch item for FCF in 2025 after Q1 ERP-driven build; management expects abatement and cash release over coming quarters .
Capex raised to fund high-return, contracted WI growth ($225–$250M); FCF conversion trimmed to ~5–15% in 2025 as growth outlays are prioritized, but balance sheet/liquidity strengthened via new $550M credit facility and term loan .
Gas basin optionality (Haynesville/Marcellus) and LNG tailwinds could diversify cycle risk and offer high-ROI brownfield expansions .
AV Farms (Colorado) offers ultra long-dated, higher-margin, non-energy cash flows; LOIs progressing; Select to operate the asset over time .
Dividend maintained at $0.07/share (May 16) provides a base return while growth projects scale .

Appendix: Q1 2025 Additional Details

Segment outlook Q2’25: WI revenue up low double-digits, GM before D&A >50%; Services revenue down 5–10% with GM 20–22%; Chemicals revenue down mid-single digits with GM 14–16% .
Non-GAAP definitions and reconciliations provided in the earnings release (Adjusted EBITDA, Gross Profit before D&A, Free Cash Flow) .
Dividend: $0.07 per share declared April 24; payable May 16 to holders of record May 6 .

Notes: Where estimates are shown with an asterisk (*), values were retrieved from S&P Global.

Select Water Solutions, Inc. (WTTR)·Q1 2025 Earnings Summary