$WTTR earnings report

Select Water Solutions reported Q3 2026 total revenue of $412 million, up from $322 million in Q3 2025 and $396 million in Q2 2026. Gross profit rose to $81.4 million from $43.6 million a year earlier, and gross margin reached 19.7% against 13.5%. Gross margin before D&A, a non-GAAP measure, was 31.4% against 27.0% in Q3 2025. Net income was $22.9 million, against $2.3 million in Q3 2025, and Adjusted EBITDA was $93.5 million, against $59.5 million. Income from operations was $26,886 thousand, compared with $(1,772) thousand a year earlier. The Q3 2026 figures include a $4.2 million gain on the deconsolidation of Peak Rentals and $4.8 million of other adjustments that the company describes as primarily non-recurring gains related to a historical insurance claim, both excluded from Adjusted EBITDA.

Mix shifted toward the higher-margin infrastructure business. Water Infrastructure revenue reached a record $110 million, up 40% year over year and 8.4% sequentially, and the company states this reflects produced water volumes of 1.7 million barrels per day against 1.5 million in Q2 2026. The segment's gross margin before D&A was 57.2%, against 58.3% in Q2 2026. Water Services revenue was $212 million, up 7.1% sequentially, which the company attributes primarily to Permian Basin revenue gains. Its gross margin before D&A improved to 23.8% from 23.0%. Chemical Technologies revenue fell to $90 million from $96 million, and its gross margin before D&A declined to 17.8% from 20.2%. The release gives no driver for that decline.

Cash generation and capital spending absorbed most of the operating cash flow. Operating cash flow was $84 million, and purchases of property and equipment were $(89,546) thousand, leaving free cash flow of $(3.6) million against $17.0 million in Q2 2026. SG&A rose to $53.6 million from $41.2 million, including $7.4 million of transaction costs tied to the Peak and Pilot transactions. On the balance sheet, the company repaid $15.8 million of debt in the quarter, reduced term loan borrowings to $234.4 million, and ended the quarter with cash of $34.1 million and total liquidity of $271.6 million, both lower than at March 31, 2026. The Peak Rentals sale for approximately $76.8 million of consideration, including $41.5 million in cash, added $39.4 million of net proceeds in financing activities as the company describes them.

After quarter end, the company issued $900 million of 7.625% senior notes due 2034 and closed the Pilot Water acquisition, and it replaced the sustainability-linked credit facility with a new $500 million revolving credit facility that was undrawn on November 9, 2026, with approximately $483.4 million available. The Q4 2026 guidance calls for Adjusted EBITDA of $95 - $100 million, Water Infrastructure revenue of $150 - $160 million, Water Services revenue of $150 - $160 million, and Chemical Technologies revenue of $75 - $80 million. The company now expects 2026 net capital expenditures of approximately $300 – $310 million. The release does not provide a full-year revenue or EBITDA guide and does not include a reconciliation of forward-looking non-GAAP measures, which the company says it cannot provide without unreasonable efforts.

The figures that deserve attention are the gap between Adjusted EBITDA growth and free cash flow, the segment margin trends in Chemical Technologies, the rise in SG&A including transaction costs, and the pace at which Pilot Water contributes to Water Infrastructure revenue in Q4 2026. The release does not state consensus expectations, and no share price reaction is included in the documents.

Select reported broad sequential improvement in the second quarter of 2026. Consolidated revenue was $395.8 million versus $366.0 million in the first quarter, net income was $22.6 million versus $9.4 million, and Adjusted EBITDA was $92.7 million versus $77.6 million. Gross profit increased to $76.8 million, while total gross margin increased to 19.4% from 17.8%. Gross margin before D&A increased to 31.3% from 30.3%.

Water Infrastructure and Chemical Technologies set segment revenue records. Water Infrastructure revenue was $101.6 million, supported by higher produced-water volumes handled and improved skim-oil volumes and pricing, while gross margin before D&A reached 58.3%. The Company handled approximately 1.5 million barrels of produced water recycled or disposed per day. Chemical Technologies revenue was $96.0 million, with gross margin before D&A of 20.2%, as market-share gains and demand for higher-margin offerings offset increases in oil-based raw-material input costs. Water Services revenue increased to $198.2 million and gross margin before D&A increased to 23.0% amid modestly improved customer activity.

Cash generation improved materially from the first quarter. Cash flow provided by operating activities was $86.7 million and free cash flow was $17.0 million, compared with $10.2 million and ($67.1) million, respectively, in the first quarter. Net capital expenditures were $69.7 million, and investing cash flows included $42.0 million of acquisition-related outflows. The Company ended the quarter with $33.4 million of cash and cash equivalents, $250.0 million of term-loan borrowings, $12.9 million under the agricultural loan and no revolving-credit-facility borrowings.

The Company raised its 2026 net capital expenditure expectation to $250 – $290 million in support of infrastructure awards and opportunities. A new agreement includes a 128-million-barrel minimum-volume commitment over seven years and direct conveyance of 14 saltwater disposal wells. The Company also paid $9.6 million of quarterly dividends and distributions, while financing cash flow reflected $13.0 million of net agricultural-loan proceeds.

Third-quarter guidance calls for Adjusted EBITDA of $90 – $94 million. Water Infrastructure is expected to increase revenue by 5% – 10% from the second quarter with margins of 56% – 58%, while Water Services is expected to have steady revenue and 21% – 22% gross margins before D&A. Chemical Technologies is expected to generate $85 – $90 million of revenue and gross margins before D&A of 20% – 21%, making segment-level execution and raw-material-cost management key items for the next reported period.