Select Water Solutions Beats Q2 EBITDA, Infrastructure Revenue Soars

Select Water Solutions beat its second-quarter adjusted EBITDA guidance as record revenue from Water Infrastructure and Chemical Technologies drove a 19% sequential profit increase.

Consolidated revenue rose 8% from the first quarter to $396 million. Adjusted EBITDA came in at $93 million, above the company's prior forecast range of $77 million to $80 million. Net income more than doubled to $23 million.

“The second quarter of 2026 was a very strong quarter for Select,” Chief Executive Officer John Schmitz said.

Water Infrastructure

Water Infrastructure generated record quarterly revenue of $102 million, up 5% sequentially and 26% from a year earlier. Gross profit before depreciation and amortization increased 9% from the first quarter and 27% year over year. Gross margin before D&A reached 58%.

Produced-water volumes handled averaged 1.5 million barrels per day. Chief Financial Officer Chris George said higher volumes, improved skim-oil capture and better pricing supported the segment.

During the quarter, Select signed a seven-year agreement with a large public operator in the Northern Delaware Basin. The deal includes a 128 million-barrel minimum-volume commitment. Under that agreement, the operator conveyed 14 underutilized saltwater disposal wells in Eddy and Lea counties, New Mexico, to Select. The company also acquired two other Delaware Basin disposal wells during the quarter, bringing the total new active disposal wells added in the region to 16.

Chief Commercial Officer Michael Skarke said the project tied to the large minimum-volume commitment will cost about $25 million to $30 million and become operational within 12 months. He said the project extends Select's network toward Texas and was structured to meet the customer's requested capacity while supporting broader basin opportunities.

Management expects Water Infrastructure revenue to grow another 5% to 10% in the third quarter, with gross margins before D&A between 56% and 58%. The first-half performance positions the segment to reach the high end of its 25% to 30% full-year growth target.

Chemical Technologies

Chemical Technologies reported revenue of $96 million, up 23% from the first quarter. Gross profit before D&A rose 35% sequentially to $19.4 million. The segment's gross margin before D&A was 20%.

Schmitz said increased completion intensity, demand for higher-specification products and growing interest in surfactant technology drove the record revenue. The company expanded market share through in-basin manufacturing and product development while maintaining margin gains despite higher oil-based raw-material costs.

For the third quarter, Select expects Chemical Technologies revenue of $85 million to $90 million based on customer schedules, with margins before D&A of 20% to 21%.

Skarke said surfactants remain a small part of the chemicals business but have grown 50% year over year. He estimated that less than 10% of new well completions currently use surfactants, with about 95% of that usage in the Permian Basin. The opportunity should grow into 2027 as customers continue testing formulations.

Water Services

Water Services revenue rose roughly 4% sequentially, compared with management's prior expectation for a modest decline. Gross margin before D&A improved to 23% from 21.8% in the first quarter, aided by slightly improved activity levels and continued strength in last-mile logistics and rental offerings.

Select forecast generally steady Water Services revenue in the third quarter and margins before D&A of 20% to 22%. George said the segment could benefit from higher activity and pricing if commodity prices remain elevated.

Cash Flow and Capital Spending

Select generated $87 million of operating cash flow in the second quarter, improving from the first quarter as working-capital management stabilized. It deployed $112 million toward capital expenditures and acquisitions, including $70 million of net capital expenditures and $42 million of strategic Water Infrastructure bolt-on acquisitions and lease buyouts.

The company also closed its previously announced acquisition of Black River Ranch, a surface position in Eddy County, New Mexico. Management said the acquisition adds future infrastructure development opportunities, surface and mineral cash flows, and cost synergies with Select's existing network.

Select increased its 2026 net capital expenditure outlook to $250 million to $290 million, citing infrastructure contract awards and the expanding growth opportunity set. Maintenance capital needs remain around $60 million, according to George.

George said the company sees another year of double-digit Water Infrastructure growth in 2027 based on its current project backlog and recent contract wins. Additional project awards and bolt-on acquisitions could further expand that outlook.

Emerging Opportunities

Management discussed opportunities to use its water sourcing, treatment, logistics and disposal capabilities to support data-center development. George said Select recorded about $6 million of Water Services revenue during the second quarter from supporting data-center construction projects, including distributed power solutions from its Peak business as well as rental, storage and logistics offerings.

The company is involved in discussions regarding water needs for data centers in West Texas and elsewhere, including potential beneficial reuse of produced water. The opportunity includes both construction-phase services and longer-term water-management needs.

Select also continues to pursue mineral-extraction opportunities associated with its water infrastructure. The company announced an iodine-extraction agreement during the quarter and has discussed lithium projects. Chief Strategy and Technology Officer Mike Lyons said the company and its partners are receiving interest from potential off-takers ranging from glass manufacturers to battery manufacturers. Lyons said Select has evaluated other minerals, including magnesium and strontium, though magnesium economics are challenging. Management expects mineral-related revenue to begin flowing in 2027 but said scaling across facilities and regions will take time.

Third-Quarter Outlook

Select forecast consolidated adjusted EBITDA of $90 million to $94 million in the third quarter. The company expects Water Infrastructure growth to offset a more measured near-term outlook for Water Services and Chemical Technologies. Modest seasonal effects could affect parts of the business in the fourth quarter.

“We are very pleased with the strong year-over-year trajectory across all parts of the business so far in 2026,” George said.