On February 18, 2025, Select Water Solutions Inc (WTTR, Financial) released its 8-K filing detailing its financial performance for the fourth quarter and full year of 2024. The company, a leader in sustainable water and chemical solutions for the energy industry, reported consolidated revenue of $1.5 billion for the year and $349 million for the fourth quarter. These figures exceeded analyst estimates, which projected quarterly revenue of $333.62 million and annual revenue of $1.436 billion. The company's earnings per share (EPS) for the quarter was a loss of $0.02, missing the estimated EPS of $0.08.
Company Overview
Select Water Solutions Inc provides sustainable water and chemical solutions to the energy industry, leveraging its critical water infrastructure assets, chemical manufacturing, and water treatment and recycling capabilities. The company operates through three segments: Water Services, Water Infrastructure, and Chemical Technologies, with the majority of its revenue generated from Water Services.
Performance and Challenges
The company's performance in 2024 was marked by strategic investments and expansions, particularly in its Water Infrastructure segment, which saw a 26% increase in revenue year-over-year. However, the overall revenue for the year decreased from $1.6 billion in 2023 to $1.5 billion in 2024. Net income also declined significantly from $79.2 million in 2023 to $35.5 million in 2024, partly due to the absence of a $61.9 million tax benefit realized in the previous year.
Financial Achievements
Despite the challenges, Select Water Solutions achieved several financial milestones. The Water Infrastructure segment's gross profit increased by 62% year-over-year, and the company generated $235 million in operating cash flow for the year. These achievements underscore the company's strategic focus on expanding its infrastructure capabilities, which are crucial for supporting long-term growth in the oil and gas industry.
Income Statement Highlights
For the fourth quarter of 2024, Select Water Solutions reported a gross profit of $44.2 million, down from $54.6 million in the same quarter of 2023. The gross margin for the quarter was 12.7%, compared to 14.6% in the previous year. The company's adjusted EBITDA for the quarter was $56.2 million, slightly lower than the $58.3 million reported in Q4 2023.
Balance Sheet and Cash Flow
As of December 31, 2024, the company had total assets of $1.37 billion, with cash and cash equivalents amounting to $20 million. Net capital expenditures for the year were $157.3 million, reflecting the company's ongoing investments in infrastructure projects. Free cash flow for the year was $77.4 million, demonstrating the company's ability to generate cash despite increased capital spending.
Strategic Commentary
John Schmitz, Chairman of the Board, President, and CEO, stated, "The fourth quarter concluded another record-setting year for Select, both operationally and financially. With another year of strong earnings, margin gains, record Adjusted EBITDA and steady free cash flow generation, we were able to invest in and grow our business organically, execute several strategic acquisitions, and pay out record dividends."
Analysis and Outlook
Select Water Solutions Inc's strategic focus on expanding its Water Infrastructure segment is evident in its financial results and future plans. The company anticipates continued growth in this segment, with expectations of a 15% to 25% increase in revenue and gross profit in 2025. However, the company faces challenges in its Water Services segment, where revenue is expected to decline modestly due to potential consolidations or divestments. Overall, Select Water Solutions remains committed to leveraging its infrastructure capabilities to drive long-term growth and profitability.
Explore the complete 8-K earnings release (here) from Select Water Solutions Inc for further details.
