Select Water Solutions Inc (WTTR) 2023 Q4 法說會逐字稿

Greetings, and welcome to the Select Water Solutions 2023 fourth-quarter and year-end earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Select Water Solutions 2023 年第四季和年終收益電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Chris George, Senior Vice President, Corporate Development, Investor Relations, and Sustainability. Thank you. You may begin.

現在我很高興向您介紹主持人克里斯喬治（Chris George），他是負責企業發展、投資者關係和永續發展的高級副總裁。謝謝。你可以開始了。

Thank you, operator, and good morning, everyone. We appreciate you joining us for Select Water Solutions conference call and webcast to review our financial and operational results for the fourth quarter and full year of 2023.

謝謝接線員，大家早安。我們感謝您參加 Select Water Solutions 電話會議和網路廣播，回顧我們 2023 年第四季和全年的財務和營運表現。

With me today are, John Schmitz, our Founder, Chairman, President, and Chief Executive Officer; Nick Swyka, Senior Vice President and Chief Financial Officer; and Michael Skarke, Executive Vice President and Chief Operating Officer.

今天和我在一起的有我們的創辦人、董事長、總裁兼執行長約翰‧施密茨 (John Schmitz)； Nick Swyka，資深副總裁兼財務長；執行副總裁兼營運長 Michael Skarke。

Before I turn the call over to John, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our website at selectwater.com. There will also be a recorded telephonic replay available until March 6, 2024. The access information for this replay was also included in yesterday's earnings release.

在我把電話轉給約翰之前，我有一些家務事項需要處理。今天的電話會議將透過網路廣播重播，也可透過我們的網站 selectwater.com 存取。截至 2024 年 3 月 6 日，也將提供錄音電話重播。這次重播的存取資訊也包含在昨天的財報中。

Please note that the information reported on this call speaks only as of today, February 21, 2024. And therefore, time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading.

請注意，本次電話會議報告的資訊僅截至今天（2024 年 2 月 21 日）。因此，從重播聆聽或文字記錄閱讀時起，時間敏感的資訊可能不再準確。

In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of Select's management.

此外，管理階層在本次電話會議中發表的評論可能包含美國聯邦證券法含義內的前瞻性陳述。這些前瞻性陳述反映了 Select 管理層當前的觀點。

However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listener is encouraged to read our annual report on Form 10-K, our current report on Form 8-K, as well as our quarterly reports on Form 10-Q to understand those risks, uncertainties, and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures.

然而，各種風險、不確定性和意外事件可能導致我們的實際結果、績效或成就與管理層聲明中表達的結果有重大差異。我們鼓勵聽眾閱讀我們的 10-K 表年度報告、8-K 表當前報告以及 10-Q 表季度報告，以了解這些風險、不確定性和意外情況。請參閱我們昨天發布的收益公告，以了解非公認會計準則財務指標的調節表。

As a reminder, the company made certain changes to its segment reporting structure during the second quarter of 2023. These changes were driven by several operational and strategic factors. However, the changes in segment reporting have no impact on the company's historical financial position, results of operations, or cash flows.

謹此提醒，該公司在 2023 年第二季對其分部報告結構進行了某些更改。這些變化是由幾個營運和策略因素所驅動的。然而，分部報告的變化對公司的歷史財務狀況、經營業績或現金流量沒有影響。

Prior periods have been recast to include the water sourcing and temporary water logistics operations within the water services segment and remove these results of operations from the water infrastructure segment. Historical segment information recasted to conform to the new reporting structure is available as supplemental financial information in the Investors section of the company's website at www.investors.selectwater.com. Please refer to the company's current report on Form 8-K filed with the SEC concurrent with our earnings release for additional information.

先前的會計期間已重新調整，將水源採購和臨時水務物流業務納入水服務部門，並將這些營運結果從水基礎設施部門中刪除。為符合新的報告結構而重新調整的歷史分部信息可作為補充財務信息，在公司網站 www.investors.selectwater.com 的投資者部分中獲取。請參閱與我們的收益發布同時向 SEC 提交的公司當前 8-K 表格報告，以了解更多資訊。

Now, I'd like to turn the call over to our Founder, Chairman, President, and CEO, John Schmitz.

現在，我想將電話轉給我們的創辦人、董事長、總裁兼執行長約翰‧施密茨 (John Schmitz)。

Thanks, Chris. Good morning, and thank you for joining us. I am pleased to be discussing Select Water Solutions again with you today. Overall, 2023 was a record-setting year for Select. I'd like to start by highlighting some of our key achievements over the past year. And we'll let Nick speak to the fourth quarter in a bit more detail.

謝謝，克里斯。早安，感謝您加入我們。我很高興今天再次與您討論精選水解決方案。總體而言，2023 年對 Select 來說是創紀錄的一年。首先，我想強調一下我們在過去一年中取得的一些主要成就。我們將讓尼克更詳細地談論第四季。

During 2023, we grew revenues by 14% and adjusted EBITDA by 33% year over year, finishing the year with total revenues of approximately $1.6 billion and adjusted EBITDA of $258 million. As importantly, we also finished the year with record net income, earnings per share, and free cash flow.

2023 年，我們的營收年增 14%，調整後 EBITDA 年成長 33%，全年總營收約為 16 億美元，調整後 EBITDA 為 2.58 億美元。同樣重要的是，我們今年的淨利、每股盈餘和自由現金流也創下了歷史新高。

Each of our segments saw year-over-year revenue and gross profit gains during 2023. Most critically, we made tremendous progress, accelerating the growth and profitability of our water infrastructure segment. With contributions from a number of acquisitions in late 2022 and early 2023, as well as organic projects that came online throughout the year, we grew water infrastructure revenue by 84% and gross profit by 162% during 2023, as compared to 2022.

2023 年，我們每個細分市場的營收和毛利都達到年增。最重要的是，我們取得了巨大進步，加速了水基礎設施領域的成長和獲利能力。由於 2022 年底和 2023 年初的多項收購以及全年上線的有機項目的貢獻，與 2022 年相比，2023 年我們的水務基礎設施收入增長了 84%，毛利增長了 162%。

Operationally, we significantly exceeded our expectations by growing recycled volumes by more than 100% year-over-year, while disposal volumes and systems utilization increased materially as well. We also continue to find ways to capture market share and improve the efficiency of our capital-light water services and chemical technology segments, growing gross margins by more than 200 basis points in each segment during 2023, and generating a significant amount of cash flow from these segments to fund our growth strategy.

在營運方面，我們的回收量年增超過 100%，大大超出了我們的預期，同時處理量和系統利用率也大幅增加。我們也繼續尋找方法來佔領市場份額並提高輕資本水服務和化學技術領域的效率，到 2023 年每個領域的毛利率將增長 200 個基點以上，並從以下方面產生大量現金流：這些部門為我們的成長策略提供資金。

With record operating cash flow, we were able to fund a diverse capital allocation strategy throughout 2023, including funding our modest maintenance CapEx needs, expediting our growth CapEx plans, particularly around our water infrastructure segment, increasing our base dividend by 20% during the year, expanding our share repurchase program while also executing six small bolt-on acquisitions.

憑藉創紀錄的營運現金流，我們能夠在2023 年為多樣化的資本配置策略提供資金，包括為我們適度的維護資本支出需求提供資金，加快我們的成長資本支出計劃，特別是圍繞我們的水基礎設施部門，並將我們的基本股利在這一年增加20% ，擴大我們的股票回購計劃，同時也執行六項小型補充收購。

Importantly, we were able to execute these capital allocation priorities while also repaying all of our outstanding debt throughout the year and building a substantial $57 million cash position on the balance sheet at year-end. The strength of our recent financial performance, including the strong free cash flow generation from our water services and chemical technology segments, positions us to continue to execute a number of strategic priorities already in 2024, including funding a trio of additional strategic asset acquisitions during the first quarter of 2024, while also announcing a number of additional organic capital projects.

重要的是，我們能夠執行這些資本配置優先事項，同時償還全年所有未償債務，並在年底在資產負債表上建立了 5700 萬美元的大量現金頭寸。我們近期的財務表現強勁，包括水服務和化學技術領域產生的強勁自由現金流，使我們能夠繼續執行 2024 年的一系列戰略優先事項，包括在 2024 年期間為三項額外的戰略資產收購提供資金2024 年第一季度，同時也宣布了一些額外的有機資本項目。

The recent acquisitions for Tri-State and Iron Mountain in the Haynesville, as well as additional disposal and recycling assets in the Rockies, provide accretive operations and further development potential for two of our critical regional infrastructure networks. The addition of the slurry and solid treatment facilities also expand the scope of Select capabilities in the Haynesville region, broadening our full life cycle waste stream management capabilities for our customers and adding incremental value across our pro forma position in the basin.

最近收購了海恩斯維爾的 Tri-State 和 Iron Mountain，以及落基山脈的額外處置和回收資產，為我們的兩個關鍵區域基礎設施網絡提供了增值業務和進一步發展潛力。泥漿和固體處理設施的增加也擴大了Select 在海恩斯維爾地區的能力範圍，擴大了我們為客戶提供的全生命週期廢物流管理能力，並為我們在該盆地的預計地位增加了增量價值。

Importantly, each deal fits our near-term strategy to grow and expand our production base and contracted revenues within our water infrastructure segment. Most significantly, following our latest acquisition, we expect more than 90% of our Haynesville revenues to be production oriented during 2024, representing stability in the basin that may face near-term drilling and completion activity disruption from recent natural gas price volatility.

重要的是，每筆交易都符合我們在水基礎設施領域發展和擴大生產基地和合約收入的近期策略。最重要的是，在我們最新的收購之後，我們預計2024 年海恩斯維爾超過90% 的收入將用於生產，這代表著該盆地的穩定性，該盆地可能面臨近期天然氣價格波動造成的近期鑽井和完井活動中斷。

As a company, we expect to see more than a third of our overall revenues come from production-related activities during 2024. This is a tremendous strategic shift for our business in the span of only a few years, as less than 10% of our revenues were production weighted during our previous peak revenue years.

作為一家公司，我們預計 2024 年將有超過三分之一的總收入來自與生產相關的活動。這對我們的業務來說是在短短幾年內發生的巨大策略轉變，因為在先前的收入高峰年中，我們的收入中只有不到 10% 是按生產加權的。

From an organic project standpoint, I am pleased to get several additional long-term contracts through the finish line in recent months. In the Permian, we were able to add substantial incremental acreage dedication to one of our largest Midland Basin recycling facilities, while we added additional contracted pipeline connections into our recently completed flagship Delaware Basin recycling facility.

從有機專案的角度來看，我很高興在最近幾個月內獲得了幾份額外的長期合約。在二疊紀，我們能夠為我們最大的米德蘭盆地回收設施之一增加大量增量專用面積，同時我們在我們最近竣工的旗艦特拉華盆地回收設施中增加了額外的合約管道連接。

In the Northeast, we added additional acreage dedication with a targeted minimum volume commitment to supplement the long-term income stream of an existing disposal asset. The largest project, both from a capital spend and long-term value creation standpoint, however, is our Thompson Pipeline system in the Bakken. This project is supported by a 225,000-acre dedication from a blue-chip operator in the region.

在東北部，我們增加了額外的土地投入和有針對性的最低產量承諾，以補充現有處置資產的長期收入流。然而，從資本支出和長期價值創造的角度來看，最大的項目是我們位於巴肯的湯普森管道系統。該計畫得到了該地區一家藍籌業者 225,000 英畝土地的支持。

This pipeline will utilize the third and last remaining federal permit we have of Lake Sakakawea in North Dakota. As many of you may recall, this has been a very lengthy permitting and business development effort. But I'm very pleased we've been able to partner with a premier operator in the region to underwrite the development of the system, which should come online late summer of 2024.

該管道將利用我們在北達科他州薩卡卡維亞湖獲得的第三個也是最後一個聯邦許可證。你們中的許多人可能還記得，這是一項非常漫長的授權和業務開發工作。但我很高興我們能夠與該地區的一家頂級營運商合作，共同承擔該系統的開發工作，該系統將於 2024 年夏末上線。

While the Permian clearly remains the largest portion of our business and the greatest area for additional opportunities, so far, this year we've already announced new projects and acquisitions in the Haynesville, Northeast, Rockies, and Bakken regions in addition to the Permian. Additionally, these opportunities have encompassed a comprehensive range of Select's capabilities, including water recycling, pipeline distributions, gathering and disposal, water transfer, fluids handling, and solid waste management.

雖然二疊紀顯然仍然是我們業務的最大部分，也是提供更多機會的最大區域，但到目前為止，今年我們已經宣布了除二疊紀之外的海恩斯維爾、東北部、落基山脈和巴肯地區的新項目和收購。此外，這些機會涵蓋了 Select 的全面能力，包括水回收、管道分配、收集和處置、輸水、流體處理和固體廢物管理。

Despite recent commodity price and activity volatility, we continue to experience increased demand for new infrastructure development opportunities across all basins, as water infrastructure constraints remain a significant challenge for our customers. I believe Select's operational and geographic diversity is one of our core strengths, providing us with an array of capital allocation prospects that allow us to make the best decisions to drive long-term shareholder value across a portfolio of opportunities.

儘管近期商品價格和活動波動，但我們對所有流域新基礎設施開發機會的需求持續增加，因為水基礎設施的限制仍然是我們客戶面臨的重大挑戰。我相信 Select 的營運和地理多樣性是我們的核心優勢之一，為我們提供了一系列資本配置前景，使我們能夠做出最佳決策，透過一系列機會推動長期股東價值。

With a very strong backlog of additional greenfield, brownfield, and bolt-on infrastructure, systems, projects, and acquisitions, Select's water infrastructure segment is positioned to be one of the fastest-growing infrastructure franchises in the industry. Accordingly, we expect to see annual water infrastructure segment revenues grow by 30% to 40% during 2024, with segment gross profits growing by 40% to 50% on a year-over-year basis.

Select 的水基礎設施部門擁有大量未完成的新增綠地、棕地和補充基礎設施、系統、項目和收購，預計將成為業內成長最快的基礎設施特許經營業務之一。因此，我們預計2024年水基礎設施部門的年收入將成長30%至40%，部門毛利將年增40%至50%。

We expect about half the segment growth to come from M&A and the remaining half to come from organic projects. With continued organic growth and other potential strategic efforts, I believe we could potentially see water infrastructure gross profits reach as high as 50% of our consolidated profitability on a standalone basis by the end of 2025. Similar to the growth in our production-weighted revenues, this would represent a significant achievement for a segment that represented a mere 7% of the company's profitability during our previous peak revenue year in 2018.

我們預計大約一半的細分市場成長將來自併購，剩下的一半將來自有機專案。透過持續的有機成長和其他潛在的策略努力，我相信到 2025 年底，我們有可能看到水基礎設施毛利高達我們綜合獲利能力的 50%。與我們生產加權收入的成長類似，對於在 2018 年收入高峰年僅占公司盈利能力 7% 的細分市場來說，這將是一項重大成就。

While we maintain a high level of conviction around the continued growth opportunities in our water infrastructure segment and the oil prices remain attractive at current levels for our customers, recent volatility in the natural gas prices and anticipated declines in our customers' budget on a year-over-year basis are likely to have impacts to the completions-weighted revenues within our water services and chemical technology segments, though we believe we can continue to find opportunities to improve the margin profile of each segment on a year-over-year basis in 2024.

雖然我們對水基礎設施領域的持續增長機會保持高度信心，並且油價在當前水平對我們的客戶仍然具有吸引力，但近期天然氣價格的波動以及客戶預算的預期下降 -同比增長可能會對我們的水服務和化學技術領域的完工加權收入產生影響，儘管我們相信我們可以繼續尋找機會來改善每個細分市場的利潤狀況2024 年。

Additionally, as we look for ways to further improve our margins and stabilize our cash flows, we will continue to evaluate our water services segment, in particular, for underperforming or nonstrategic locations for potential consolidation during 2024, which, when combined with the modest declining macro activity outlook, will drive water service segment revenues down on a year-over-year basis. Our water services business remains critical to our overall success, as we must drive free cash flow and strong return on assets out of this segment.

此外，當我們尋找進一步提高利潤率和穩定現金流的方法時，我們將繼續評估我們的水服務部門，特別是在2024 年期間尋找表現不佳或非策略性的潛在整合地點，再加上水務業務的小幅下滑，宏觀活動前景將導致供水服務部門收入年減。我們的水服務業務對於我們的整體成功仍然至關重要，因為我們必須推動該領域的自由現金流和強勁的資產回報。

If there are yards or components of this segment that we determine cannot achieve these objectives, we will look to redeploy those personnel, resources, and capital into other regions or parts of our business that can. We expect our water services and chemical technology segments to generate more than 70% to 80% of their gross profit into free cash flow, providing a very attractive source of capital funding for our water infrastructure growth initiatives.

如果我們確定該部門的某些船廠或組成部分無法實現這些目標，我們將尋求將這些人員、資源和資本重新部署到我們業務的其他地區或部分。我們預計我們的水服務和化學技術部門將超過 70% 至 80% 的毛利轉化為自由現金流，為我們的水基礎設施成長計畫提供非常有吸引力的資金來源。

Accordingly, driven by the substantial continued growth in our water infrastructure segment over the course of 2024, we firmly anticipate growing our adjusted EBITDA on a year-over-year basis during 2024 and expect to pull through at least 40% of this adjusted EBITDA into free cash flow after accounting for all maintenance and growth CapEx, providing substantial optionality for additional strategic initiatives or incremental shareholder returns.

因此，在 2024 年水基礎設施領域持續大幅增長的推動下，我們堅信 2024 年調整後 EBITDA 將同比增長，並預計將調整後 EBITDA 的至少 40% 轉化為考慮到所有維護和增長資本支出後的自由現金流，為額外的策略性舉措或增量股東回報提供了大量的選擇。

We will remain attentive to every dollar of capital we deploy. And with this free cash flow, we will prioritize capital allocation to the most strategic areas of our business, especially where we have the most opportunity to grow our production-weighted and long-term contracted revenues; expand our proprietary application of automation, chemistry, or recycling technologies; and integrate full-lifecycle water infrastructure and chemistry solutions around our existing water infrastructure asset base.

我們將繼續關注我們部署的每一美元資本。有了這種自由現金流，我們將優先將資本配置到我們業務中最具戰略意義的領域，特別是我們最有機會增加生產加權和長期合約收入的領域；擴大我們在自動化、化學或回收技術方面的專有應用；並圍繞我們現有的水基礎設施資產基礎整合全生命週期水基礎設施和化學解決方案。

I firmly believe in the infrastructure growth strategy we've undertaken recently, which I believe best positions Select to drive long-term shareholder value. And ultimately, I believe that Select remains uniquely positioned in a competitive energy landscape to advance the integration of water and chemical technology solutions with high-margin, long-term contracted infrastructure.

我堅信我們最近採取的基礎設施成長策略，我認為最好的選擇是推動長期股東價值。最終，我相信 Select 在競爭激烈的能源格局中保持獨特的地位，以推動水和化學技術解決方案與高利潤、長期承包基礎設施的整合。

I am very excited about what the future holds for Select and look forward to executing on this vision during 2024. At this point, I'll hand it over to Nick to speak about our financial results and 2024 outlook in a bit more detail. Nick?

我對 Select 的未來感到非常興奮，並期待在 2024 年實現這個願景。現在，我將把它交給尼克，讓他更詳細地談論我們的財務表現和 2024 年展望。缺口？

Thank you, John, and good morning, everyone. As John mentioned, 2023 marked a record year for Select across many annual financial metrics. These include $1.6 billion of revenue, $74.4 million of net income, $0.73 earnings per share, $258 million of adjusted EBITDA, and finally, $285 million of cash provided by operating activities.

謝謝約翰，大家早安。正如 John 所提到的，2023 年對於 Select 的許多年度財務指標來說都是創紀錄的一年。其中包括 16 億美元的收入、7,440 萬美元的淨利潤、0.73 美元的每股收益、2.58 億美元的調整後 EBITDA，以及最後由經營活動提供的 2.85 億美元的現金。

These record financial results enabled us to provide $87 million of total returns to shareholders over the course of the year, raise our quarterly dividend by 20%, and retire our outstanding debt balance, finishing the year in a strong net cash position and with $307 million of liquidity. Importantly, we achieved this success despite the steady headwind from declining levels of drilling and completions activity over the back half of the year.

這些創紀錄的財務業績使我們能夠在這一年中為股東提供8,700 萬美元的總回報，將季度股息提高20%，並償還未償債務餘額，以3.07 億美元的強勁淨現金狀況結束這一年。流動性。重要的是，儘管下半年鑽井和完井活動水準不斷下降，但我們仍取得了這項成功。

Select's ongoing transition to a more infrastructure-based production-levered full-lifecycle water company has aligned our profitability and cash flow generation with critical secular growth drivers unique to our business; increased water recycling by our customers' infrastructure networks that balanced water supply and demand across customers and regions; and industry consolidation that demands high-quality partners with the size, scope, and networks to serve the largest operators, all continue to benefit Select Water Solutions, even as activity levels have softened with recent commodity price volatility.

Select 正在向一家更加以基礎設施為基礎、以生產為槓桿的全生命週期水務公司轉型，這使我們的盈利能力和現金流生成與我們業務獨特的關鍵長期增長動力保持一致；透過客戶的基礎設施網路增加水的回收利用，平衡客戶和地區的供水和需求；儘管最近的商品價格波動導致活動水平減弱，但行業整合需要具有規模、範圍和網絡的高品質合作夥伴來為最大的運營商提供服務，所有這些都將繼續使 Select Water Solutions 受益。

While the more completions-levered water services and chemical technologies segments were ultimately impacted by industry activity declines, the fourth quarter saw continued revenue and profitability gains in the water infrastructure segment. During Q4, the water infrastructure segment increased revenue by more than 4% to $60.8 million. And gross margins, which we customarily provide in terms of prior to depreciation and amortization, increased by over 300 basis points to 43%.

雖然更多以完工為槓桿的水服務和化學技術領域最終受到產業活動下降的影響，但第四季水基礎設施領域的收入和獲利能力持續成長。第四季度，水利基礎設施部門的收入成長了 4% 以上，達到 6,080 萬美元。我們通常以折舊和攤銷前的毛利率計算，增加了 300 個基點，達到 43%。

The projects we announced yesterday exemplify our ability to add value to our existing infrastructure networks through steady incremental commercialization. We have a long history of unique access and usage agreements across many regions, which in the case of the Thompson Pipeline put us in an exclusive position to execute a new greenfield project, backed by a long-term contract.

我們昨天宣布的項目體現了我們透過穩步增量商業化為現有基礎設施網路增加價值的能力。我們在許多地區擁有獨特的訪問和使用協議的悠久歷史，就湯普森管道而言，這使我們處於執行新綠地項目的獨家地位，並有長期合約的支持。

For the recycling network expansions on both the Delaware and Midland sides of the Permian, our existing systems comprising large acreage and multi-customer gathering, recycling, transmission, and disposal create both optionality and additional contracting opportunities with new and existing infrastructure customers. These expanded networks will see enhanced utilization and water-balancing capabilities that make the expansions highly accretive.

對於二疊紀特拉華州和米德蘭兩側的回收網路擴張，我們現有的系統包括大面積和多客戶收集、回收、傳輸和處置，為新的和現有的基礎設施客戶創造了選擇性和額外的合約機會。這些擴建後的網路將提高利用率和水平衡能力，從而使擴建具有高度增值性。

And finally, even in gas basins like the Marcellus and Utica, long-term water gathering and disposal agreements from steady production sources remain an attractive growth option. In addition to these organic growth opportunities, we also announced three recent infrastructure acquisitions across multiple basins in January.

最後，即使在像馬塞勒斯和尤蒂卡這樣的天然氣盆地，來自穩定生產來源的長期集水和處理協議仍然是一個有吸引力的成長選擇。除了這些有機成長機會外，我們還在 1 月宣布了近期跨多個流域的三項基礎設施收購。

These are not economically distressed entities similar to our previous acquisition wave, but rather discrete, underutilized, or highly contracted assets located within the footprint of two of our regional infrastructure networks. While the first quarter will see some expenses related to integration and standardization of these newly acquired assets, pushing the expected gross margin in water infrastructure down slightly to 39% to 42%, we expect revenues to move higher by mid-single-digit percentages.

這些不是與我們先前的收購浪潮類似的經濟困境實體，而是位於我們兩個區域基礎設施網路範圍內的離散、未充分利用或高度收縮的資產。雖然第一季將出現一些與這些新收購資產的整合和標準化相關的費用，導致水利基礎設施的預期毛利率小幅下降至 39% 至 42%，但我們預期收入將成長中個位數百分比。

As we move through the year, we expect gross margins to resume their upward trajectory into the mid-to-high-40s, as we connect these acquired assets to our network to boost utilization, bring on new projects like the ones announced yesterday, and continue to execute on our backlog of additional projects currently under discussion. We may also elect to move forward with additional acquisitions where we see discrete assets with the ability to provide accretive economics to our existing networks.

隨著這一年的推移，我們預計毛利率將恢復上升趨勢，進入 40 多歲的中高水平，因為我們將這些收購的資產連接到我們的網絡以提高利用率，引入昨天宣布的新項目，以及繼續執行目前正在討論的其他積壓項目。我們也可能選擇繼續進行額外的收購，因為我們認為離散資產能夠為我們現有的網路提供增值的經濟效益。

As John mentioned, we believe in aspirational but achievable goal for this segment, is to reach 50% of our overall corporate gross profit contribution by the end of 2025, underpinned by repeatable, predictable, high-margin revenue streams. The growing weight of these higher-margin revenue streams allows us to provide additional certainty around return of capital to shareholders. We returned nearly 10% of our current market cap in cash to shareholders in 2023 in the form of dividends, distributions, and buybacks.

正如約翰所提到的，我們相信這一領域的理想但可實現的目標是，在可重複、可預測、高利潤的收入流的支持下，到 2025 年底達到我們公司整體毛利貢獻的 50%。這些高利潤收入流的比重不斷增加，使我們能夠為股東的資本回報提供額外的確定性。2023 年，我們以股利、分配和回購的形式將目前市值的近 10% 以現金回饋給股東。

In the fourth quarter, we raised our quarterly dividend by 20% to $0.06 a share, while completing another 12 million of share buybacks. While we remain open to tactical buybacks from within cash flow and a strong balance sheet, in the near term, we are prioritizing execution on infrastructure projects and potential incremental asset bolt-ons as a use of capital, while we maintain our commitment to the recently increased regular dividend.

第四季度，我們將季度股息提高了 20% 至每股 0.06 美元，同時完成了另外 1,200 萬股股票回購。雖然我們仍然對現金流和強勁的資產負債表內的戰術性回購持開放態度，但在短期內，我們將優先考慮基礎設施項目的執行和潛在的增量資產補充，作為資本的使用，同時我們保持對最近的承諾增加定期股息。

To fund these investments alongside capital returns, our water services and chemical technology segments each provide strong cash flow at low capital intensity, returning 70% to 80% of profits and cash flows after CapEx, as John noted. In the fourth quarter, the water services segment outperformed the overall industry activity data, with revenues declining by 4%, against a decline in completions activity of about 8% for the EIA, while margins increased by nearly 200 basis points with our cost management and margin enhancement efforts.

正如約翰指出的那樣，為了在資本回報的同時為這些投資提供資金，我們的水服務和化學技術部門各自以低資本密集度提供強勁的現金流，在資本支出後返回70% 至80% 的利潤和現金流。第四季度，水務部門的表現優於整體產業活動數據，營收下降了4%，而EIA 的竣工活動下降了約8%，而透過我們的成本管理和成本管理，利潤率增加了近200 個基點.提高利潤率的努力。

With continued activity volatility and some operational consolidation underway, we expect a modest mid-single-digit percentage step-back in first quarter revenue, with margins in the 19% to 21% range, followed by additional margin improvement later in the year.

隨著活動持續波動和一些營運整合正在進行，我們預計第一季營收將出現中個位數百分比小幅回落，利潤率在19% 至21% 範圍內，隨後利潤率將在今年稍後進一步改善。

Chemical technologies revenue declined by a bit over 8% sequentially in Q4, relatively in line with activity levels, with margins down 6 points to 14%. The business was impacted by a bit over $2 million of legacy production chemicals inventory write-downs and year-end insurance adjustments, accounting for about 3 percentage points of the gross margin decline.

第四季化學技術收入季減 8% 以上，與活動水準相對一致，利潤率下降 6 個百分點至 14%。該業務受到超過 200 萬美元的傳統生產化學品庫存減記和年終保險調整的影響，約佔毛利率下降的 3 個百分點。

Even so, the results here came in below our expectations for the fourth quarter, even after accounting for the items I referenced. We expect both revenue and margins to improve modestly for this segment in the first quarter due to certain key customer activity increases and cost realignments to match manufacturing throughput.

即便如此，即使考慮了我引用的項目，第四季的結果仍低於我們的預期。我們預計，由於某些關鍵客戶活動的增加以及為匹配製造吞吐量而進行的成本調整，第一季該細分市場的收入和利潤率將略有改善。

While fourth-quarter SG&A increased by $7.4 million to $46 million, the majority of this or $6.2 million related to higher transaction and rebranding costs in the fourth quarter relative to the third, we expect SG&A to decline to the low $40 million range in the first quarter, as our rebranding initiative winds down, though transaction costs related to our recent acquisitions will remain.

雖然第四季的SG&A 增加了740 萬美元，達到4,600 萬美元，其中大部分（即620 萬美元）與第四季度相對於第三季度更高的交易和品牌重塑成本有關，但我們預計第一季的SG&A 將下降至4,000 萬美元的低水平。隨著我們的品牌重塑計劃逐漸結束，儘管與我們最近收購相關的交易成本仍然存在。

Altogether, for the first quarter of 2024, we expect consolidated adjusted EBITDA of $52 million to $56 million, as customer activity and operational consolidation activities impact our water services segment and short-term integration-related costs from our new acquisitions affect the quarter as well.

總的來說，2024 年第一季度，我們預計綜合調整後EBITDA 為5,200 萬至5,600 萬美元，因為客戶活動和營運整合活動影響我們的水服務部門，而我們新收購的短期整合相關成本也會影響該季度。

However, driven by the substantial continued growth in our water infrastructure segment over the course of 2024 and anticipated margin improvement in our services and chemicals segments, we firmly anticipate growing our adjusted EBITDA on a year-over-year basis during 2024.

然而，在 2024 年水基礎設施領域持續大幅成長以及服務和化學品領域預期利潤率改善的推動下，我們堅信 2024 年調整後 EBITDA 將同比增長。

The fourth quarter also saw multiple sizable tax-related impacts. Select's growing and sustained profitability in recent years has triggered an assessment that our long-standing net operating loss carry forwards covered by our tax receivable agreement or TRA, is likely to provide a benefit to the company under reasonably evaluated forward-looking projections in the next few years.

第四季也出現了多項相當大的稅務相關影響。Select 近年來不斷增長且持續的盈利能力引發了一項評估，即我們的應收稅協議或TRA 所涵蓋的長期淨營業虧損結轉可能會根據合理評估的前瞻性預測在未來為公司帶來利益幾年。

And currently, we have recognized a deferred tax asset related to future tax savings in the TRA liability into our quarterly and annual financial statements. These adjustments reflect forward-looking assessments and formed by independent third-party advisers and may change as time progresses and company financial performance and capital spending evolves.

目前，我們已在季度和年度財務報表中確認了與 TRA 負債中未來節稅相關的遞延稅資產。這些調整反映了由獨立第三方顧問形成的前瞻性評估，可能會隨著時間的推移以及公司財務表現和資本支出的變化而變化。

They also may be impacted by changes to the US tax code. I encourage all listeners to review our 2022 annual 10-K financial report found on our website as well as our 2023 10-K, which should be made available this week, to understand our tax attributes in the TRA in greater detail.

他們也可能受到美國稅法變更的影響。我鼓勵所有聽眾查看我們網站上的 2022 年年度 10-K 財務報告以及將於本週發布的 2023 年 10-K 財務報告，以更詳細地了解 TRA 中的稅務屬性。

Our fourth-quarter net income of $27.6 million was positively benefited by a $61.9 million release of a valuation allowance associated with deferred tax assets, partially offset by tax receivable agreements expense of $38.2 million. While we anticipate cash tax payments in 2024 to be a relatively modest $4 million to $6 million, including state taxes, our book tax expense percentage applied to pretax operating income is likely to increase to the low 20% range.

我們第四季淨利為 2,760 萬美元，受惠於與遞延稅項資產相關的 6,190 萬美元估值備抵釋放，部分被 3,820 萬美元的應收稅協議費用所抵銷。雖然我們預計 2024 年的現金稅款支付相對溫和，為 400 萬至 600 萬美元（包括州稅），但我們應用於稅前營業收入的帳面稅費百分比可能會增加至 20% 的低水平。

From an accounting perspective, this forecasted tax expense would primarily impact existing deferred tax assets in 2024 prior to becoming a cash outlay in future years. Depreciation and amortization, I expect, will continue in the mid- to high $30 million range quarterly, modestly increase from recent acquisitions and organic infrastructure development. And quarterly interest expense should increase to $2 million to $3 million per quarter as we employ our sustainability-linked lending facility to execute our recent acquisitions.

從會計角度來看，這項預測的稅收支出將主要影響 2024 年現有的遞延稅資產，然後再成為未來幾年的現金支出。我預計，折舊和攤銷將繼續保持在每季 3000 萬美元的中高水平，由於最近的收購和有機基礎設施開發而略有增加。由於我們利用與永續發展相關的貸款工具來執行最近的收購，因此季度利息支出應增加至每季 200 萬至 300 萬美元。

This facility provides an attractive cost of capital for us. And we will continue to see the interest rate reduction benefits of outperforming our sustainability KPIs for water recycling and employee safety targets for the second consecutive year since the facility's initiation.

該設施為我們提供了極具吸引力的資本成本。自從設施啟動以來，我們將繼續看到因在水回收和員工安全目標方面連續第二年超越我們的永續發展關鍵績效指標而帶來的降息效益。

With fourth-quarter net CapEx of $28 million, we finished the year at $118 million, just below our previous guidance of $120 million to $130 million. We are entering 2024 with a healthy ongoing project backlog and additional development opportunities related to the recent acquisitions and expect $140 million to $160 million of net CapEx in 2024.

第四季淨資本支出為 2,800 萬美元，全年營收為 1.18 億美元，略低於先前 1.2 億至 1.3 億美元的指引值。進入 2024 年，我們將擁有健康的持續項目積壓以及與最近收購相關的額外發展機會，預計 2024 年淨資本支出將達到 1.4 億至 1.6 億美元。

We anticipate $50 million to $60 million of this CapEx going towards ongoing maintenance and about $15 million going towards margin improvement initiatives. The remaining largest component of this overall spend is for growth CapEx, which is heavily weighted towards infrastructure growth projects.

我們預計該資本支出中的 5,000 萬至 6,000 萬美元將用於持續維護，約 1,500 萬美元將用於利潤率改善計畫。整體支出中剩餘的最大部分是成長資本支出，其中主要用於基礎設施成長項目。

Additionally, we anticipate generating $10 million to $20 million of proceeds from asset sales to net against this growth CapEx spend during the year in 2024. As we've outlined, we expect to exceed our 2023 adjusted EBITDA in 2024 and convert more than 40% of those dollars into free cash flow from operations after CapEx.

此外，我們預計 2024 年資本支出支出的成長將透過資產出售產生 1,000 萬至 2,000 萬美元的淨收益。正如我們所概述的，我們預計到 2024 年將超過 2023 年調整後的 EBITDA，並將其中超過 40% 的資金轉化為資本支出後營運的自由現金流。

As we move forward with our vision of growing long-life high-return water infrastructure and shareholder value in 2024, I'd like to conclude with a couple of our accomplished financial goals from 2023. We reduced our accounts receivable balances over the course of the year by over $110 million or $170 million from the end of Q1 and ended the year not just debt-free, but with $57 million of cash on hand.

隨著我們朝著 2024 年發展長壽命、高回報的水利基礎設施和股東價值的願景邁進，我想以 2023 年以來我們已完成的幾個財務目標作為結束語。與第一季末相比，我們在這一年中減少了應收帳款餘額超過 1.1 億美元或 1.7 億美元，到年底不僅沒有債務，而且手頭上有 5700 萬美元的現金。

During 2023, we converted nearly two-thirds of our adjusted EBITDA into free cash flow to the bottom line, while investing the dollars needed to grow water and infrastructure profitability by over 160% year on year. This success is due to sustained dedicated performance across many Select teams, both support and operations, to integrate and realize value from our investments and translate that value to dollars in the door.

2023 年，我們將近三分之二的調整後 EBITDA 轉化為自由現金流，達到淨利潤，同時投資所需的資金，使水務和基礎設施盈利能力同比增長 160% 以上。這項成功歸功於許多精選團隊（包括支援和營運）的持續專注表現，以整合和實現我們投資的價值，並將該價值轉化為收入。

I'd like to thank them for their hard work. And with that, I'll open it up to questions. Operator?

我要感謝他們的辛勤工作。接下來，我將開放提問。操作員？

(Operator Instructions) Jim Rollyson, Raymond James.

（操作說明）Jim Rollyson、Raymond James。

(technical difficulty) guys, and certainly a great year from a free cash flow and capital return perspective. John, on your comments -- when I look at water infrastructure, which is clearly the growth driver here with a lot of outlook for incremental capital projects that's all backed by contract, you're kind of talking about mid-single-digit growth in the first quarter for revenues, but 30% to 40% growth for the full year.

（技術難度）夥計們，從自由現金流和資本回報的角度來看，這無疑是偉大的一年。約翰，關於你的評論——當我看到水基礎設施時，這顯然是這裡的增長動力，對增量資本項目有很多前景，這些項目都是由合同支持的，你在談論的是中個位數的成長第一季營收成長30%至40%，但全年成長30%至40%。

Can you maybe just kind of lay out the timeline of how -- the combination of M&A that you recently completed plus growth projects -- how that kind of drives revenues throughout the course of the year? Just trying to think about how we step up from modest growth in 1Q to getting to the 30% to 40% for the full year.

您能否列出一下時間表——您最近完成的併購加上成長項目——如何推動全年收入？只是想想我們如何從第一季的溫和成長提升到全年 30% 至 40%。

Yeah. So Jim, it's a combination of some of these M&A things that we've done or assets that are being utilized and are performing well within the guidance that we're applying here and has an effect. Some of the M&A or assets that -- once they're in our system, they will provide that kind of margin improvement and stability as well.

是的。吉姆，這是我們已經完成的一些併購事情或正在利用的資產的組合，並且在我們在這裡應用的指導範圍內表現良好並且產生了效果。一些併購或資產一旦進入我們的系統，它們也將提供這種利潤率的提高和穩定性。

But we have to lay pipe to hook them up or to make them (technical difficulty) the system, if you will. If you just look at our general organic application, it's all going to be from four months to eight months at the time you approve the AEFA, get the right to start building the facility, laying the pipe, and then bringing that system online, and then getting the utilization fully up to speed.

但如果你願意的話，我們必須鋪設管道來連接它們或使它們（技術難度）成為系統。如果你只看我們一般的有機應用程序，當你批准 AEFA、獲得開始建造設施、鋪設管道、然後將該系統上線的權利時，這一切都需要四個月到八個月的時間，並且然後充分加快利用率。

So it's going to be a progression across the whole year to get the margin improvement that we're looking for. But we think -- shorter period, we'd think that we can get that up in the 40 and 45 and headed toward our goal of 50 as we walk through this period of development and interconnection. But I'm going to let Michael speak on it a little bit to Jim to make sure. He is direct with me on the operational side the company.

因此，這將是全年的一個進步，以實現我們所尋求的利潤率改善。但我們認為，在更短的時間內，我們認為我們可以在 40 和 45 年內實現這一目標，並在經歷這個發展和互聯時期時朝著 50 的目標邁進。但我會讓邁克爾向吉姆談一下這個問題，以確保確定。他在公司的營運方面直接與我合作。

Yeah, thank you, John. So Jim, as an example, the Thomson Pipeline that we announced, that's not going to contribute in the first half of this year. But we do expect it to be a meaningful contributor in the back half of the year.

是的，謝謝你，約翰。吉姆，舉個例子，我們宣布的湯姆森管道不會在今年上半年做出貢獻。但我們確實預計它將在今年下半年做出有意義的貢獻。

And that's not to say that's the difference, but that's just an example. We have a number of other projects that we're working on and expect to come to fruition that we think would be contributing in the back half of the year as well.

這並不是說這就是區別，但這只是一個例子。我們還有許多其他項目正在進行，預計將取得成果，我們認為這些項目也會在今年下半年做出貢獻。

So it's really just kind of a steady ramp. As we integrate the assets we've acquired, we increase the utilization and expand upon the assets we acquired. And then we're successful in executing the construction projects that we've already announced, as well as some that we hope to announce in future quarters.

所以這實際上只是一種穩定的斜坡。當我們整合所收購的資產時，我們提高了利用率並擴展了所收購的資產。然後我們成功地執行了我們已經宣布的建設項目，以及我們希望在未來幾季宣布的一些建設項目。

Got it. So it sounds like a pretty radical step-up throughout the course of the year as that stuff hits. And with all the new kind of project announcements that you see, it's kind of an ongoing growth story from that perspective. I presume the contracting strategy that you guys have had for some time on payback periods is still in place.

知道了。因此，隨著這些東西的出現，這聽起來像是全年中相當激進的進步。從你看到的所有新型項目公告來看，從這個角度來看，這是一個持續成長的故事。我認為你們一段時間以來在投資回收期上採用的承包策略仍然有效。

As you talk about things like the Thompson Pipeline project and the Delaware Basin recycling project, et cetera, that kind of contracting strategy and implied margin and payback period embedded there is still something we should expect?

當您談論湯普森管道項目和特拉華盆地回收項目等時，這種承包策略以及隱含的利潤和投資回收期仍然值得我們期待嗎？

That's correct. It's the same investment thesis we've had. All of the projects we're bringing on are accretive from a margin standpoint. And you're seeing us kind of bounce around our footprint because we really have asset optionality between recycling and distribution and gathering and disposal.

這是正確的。這與我們的投資理論相同。從利潤的角度來看，我們所進行的所有專案都是增值的。你會看到我們的足跡有所反彈，因為我們在回收和分配以及收集和處置之間確實擁有資產選擇權。

We've got geographic diversification across our footprint. So we're really looking for the right project, the right investment, the right strategic fit. And we'll do it organically or inorganically. And so it's really trying to make sure that we have the right solution across a pretty wide arrangement of investment opportunities.

我們的足跡遍佈地域多元化。因此，我們確實在尋找合適的專案、合適的投資、合適的策略契合點。我們將以有機或無機的方式進行。因此，我們確實在努力確保我們在相當廣泛的投資機會中擁有正確的解決方案。

And I might add that on expansion opportunity, those are even more accretive. I see at the Thomson greenfield large dollars, great margin living within those contracting guidelines we set. But when we talk about the Midland Basin expansion, the Delaware Basin network expansion, those are very quick paybacks because you have a smaller capital outlay, but higher utilization on the system from that.

我還可以補充一點，在擴張機會方面，這些機會更具增值性。我在湯姆森綠地看到了大筆資金，在我們制定的合約指導方針內生活著巨大的利潤。但是，當我們談論米德蘭盆地擴建、特拉華盆地網路擴建時，這些都是非常快速的回報，因為您的資本支出較小，但係統利用率較高。

Right. And then just one last question. Nick, last year, you obviously got a lot of benefit from getting your working capital efficiency kind of down to where you wanted and certainly contributed a lot to the free cash flow.

正確的。最後一個問題。尼克，去年，您顯然通過將營運資本效率降低到您想要的水平而獲得了很多好處，並且肯定為自由現金流做出了很大貢獻。

Maybe as you switch into '24 -- I think you mentioned in the press release -- you won't get the same incremental working capital benefits. So how are you thinking about free cash flow in absolute or maybe relative to your 2023 levels?

也許當你進入 24 世紀時——我想你在新聞稿中提到過——你將不會獲得同樣的增量營運資金收益。那麼，您如何看待絕對或相對於 2023 年水準的自由現金流？

I know you gave the 40% flow-through from EBITDA, but you didn't give us full year EBITDA. So I'm just kind of trying to understand how you're thinking about year-over-year free cash flow?

我知道您提供了 40% 的 EBITDA 流動資金，但您沒有提供我們全年的 EBITDA。所以我只是想了解您如何看待同比自由現金流？

Good observation, Jim. So certainly, cash flow and returns to shareholders are a core priority to us. Did not give the full-year EBITDA guidance. But I think from that trajectory, you can indicate -- you could assume that we are indicating a higher adjusted EBITDA through the quarters.

觀察力很好，吉姆。因此，現金流和股東回報無疑是我們的核心優先事項。沒有給予全年 EBITDA 指引。但我認為從這個軌跡來看，你可以假設我們在整個季度顯示了更高的調整後 EBITDA。

And that's backed by the infrastructure projects that we listed, as well as Michael said, the ones that are currently on discussion, and the incremental investments we're making in the acquisitions that take those assets we've acquired at a very reasonable prices, and then boost the utilization through connecting them to our network.

這得到了我們列出的基礎設施項目的支持，以及邁克爾所說的目前正在討論的項目，以及我們在收購中進行的增量投資，這些投資是我們以非常合理的價格收購的資產，然後通過將它們連接到我們的網路來提高利用率。

So correct, we don't have the same working capital opportunity this year. That's a positive reflection on the overall health and efficiency of the company. But we do see a continued opportunity to generate substantial free cash flow with our strong balance sheet.

沒錯，我們今年沒有同樣的營運資金機會。這是對公司整體健康狀況和效率的正面反映。但我們確實看到了透過我們強大的資產負債表產生大量自由現金流的持續機會。

We'll have multiple options to not just invest that free cash flow in highly accretive infrastructure, long lives, contracted investments there, but also continue our legacy of nearly $90 million in 2023, shareholder returns through regular dividend through tactical share buybacks. So that's all on the table, and we'll continue progressing that.

我們將有多種選擇，不僅可以將自由現金流投資於高度增值的基礎設施、長壽命、合約投資，而且還可以在2023 年繼續我們的近9,000 萬美元的遺產，透過戰術性股票回購定期股息來回報股東。所以這一切都擺在桌面上，我們將繼續取得進展。

Okay. Thanks for answering my questions, guys.

好的。謝謝你們回答我的問題，夥伴們。

Thanks, Jim.

謝謝，吉姆。

Thanks, Jim.

謝謝，吉姆。

Tom Curran, Seaport Research Partners.

湯姆‧柯蘭，海港研究夥伴。

Good morning, guys. Dollars in the door indeed. A few questions on your water infrastructure operation in the Bakken. Is the anchor tenant behind this contracted build-out of the Point Thompson branch a historical user of either of the other pipelines to [Charleston or Iverson] branch?

早上好傢伙。美元確實進門了。關於巴肯水利基礎設施運作的幾個問題。湯普森角分支的這個合約擴建背後的主要租戶是否是通往[查爾斯頓或艾弗森]分支的其他管道的歷史用戶？

And then, would you expect any of the customers on that Bakken sourcing and pre-frac water transfer network to lead to produced water handling or recycling opportunities in the Bakken? And just where are you at in the Bakken in general on the produced water handling and recycling side in terms of opportunities?

然後，您是否期望巴肯採購和壓裂前輸水網路上的任何客戶能夠在巴肯帶來採出水處理或回收機會？就機會而言，您在巴肯的採出水處理和回收方面總體處於什麼位置？

Sure, John. This is Michael. I'll take the first cut at it. So very astute question. You're showing your tenure with the company by this question.

當然，約翰。這是邁克爾。我會先切掉它。這是一個非常精明的問題。你透過這個問題展示了你在公司的任期。

The short answer is yes. The customer that we're contracting who's going to underwrite the Thomson for us is one of the legacy customers under our Charleston system and has a long-term relationship for us in North Dakota.

簡短的回答是肯定的。我們正在簽約的將為我們承保湯姆森的客戶是我們查爾斯頓系統下的傳統客戶之一，並且與我們在北達科他州有著長期的合作關係。

We are excited about the opportunity. It has been in the works for a very long time. It's the right solution for them. That's going to allow them to unlock a lot of the acreage north of the river, the lake.

我們對這個機會感到很興奮。它已經醞釀了很長時間了。這對他們來說是正確的解決方案。這將使他們能夠釋放河流、湖泊以北的大量土地。

And we're going to be able to provide the water and provide the water transfer. So it's an infrastructure service solution that we're excited about. And we think that we'll have the opportunity to continue to expand it beyond that anchor tenant.

我們將能夠提供水並進行輸水。因此，這是一個令我們興奮的基礎設施服務解決方案。我們認為我們將有機會繼續將其擴展到主要租戶之外。

In terms of the second question around produced water, North Dakota, as I think we've talked in the past, is one of the more challenging basins to migrate towards produced water. Part of it is the constituents of the flowback and produced water. Part of it is state regulations on transferring that water.

就有關採出水的第二個問題而言，正如我認為我們過去討論過的那樣，北達科他州是向採出水遷移更具挑戰性的盆地之一。其中一部分是回流水和採出水的成分。其中一部分是國家關於調水的規定。

But we do expect to see produced water reuse occur in North Dakota like we're seeing, frankly, in every other basin. And I think despite this contracted position, we are well positioned to serve our customers there just like we're doing everywhere else. So it -- I would still say, it's an opportunity for us to help these customers on those -- in North Dakota.

但我們確實希望看到北達科他州能夠實現採出水的再利用，坦白說，就像我們在其他所有盆地看到的那樣。我認為，儘管有這個合約職位，但我們有能力為那裡的客戶提供服務，就像我們在其他地方所做的那樣。因此，我仍然想說，這對我們來說是一個幫助北達科他州客戶的機會。

Got it. And then, Michael, I'll stick with you for my second one as well. A bit of a -- I step out here to a longer-term topic. But on the topic of surface water discharge, stay, to rivers and creeks and potential beneficial reuse such as for agriculture, the state of Colorado, New Mexico, and Texas have each formed a produced water consortium to study where the science and technology are at and consider whether it's become sufficiently viable to propose regulatory changes as the time started to arrive.

知道了。然後，邁克爾，我也會和你一起完成第二個任務。有點——我在這裡討論一個更長期的話題。但在地表水排放、滯留、河流和小溪以及潛在的有益再利用（例如農業）方面，科羅拉多州、新墨西哥州和德克薩斯州各自成立了一個採出水聯盟來研究科學和技術的現狀並考慮隨著時間的到來，提出監管改革是否足夠可行。

I know that Select has been involved in several aspects of this R&D, including multiple smaller-scale pilot projects. Would you just update us on when and where you might see the first meaningful commercial opportunities related to surface water discharge and/or beneficial reuse; and then what Select is currently focused on to help the industry reach the point at which that necessary level of treatment and filtration can be done economically and at scale?

我知道 Select 參與了這項研發的多個方面，包括多個較小規模的試點計畫。您能否向我們介紹一下您可能在何時何地看到與地表水排放和/或有益再利用相關的第一個有意義的商業機會的最新情況？那麼 Select 目前的重點是什麼，以幫助該行業達到可以經濟且大規模地完成必要水平的處理和過濾的程度？

Great question, Tom. So we're aware of all the organizations and consortiums that you mentioned. We're active members in all of them. We have a very strong and seasoned technical team that's participating in those commissions, trying to make sure that Select and the industry arrives at the right spot.

好問題，湯姆。所以我們知道你提到的所有組織和聯盟。我們是所有這些組織中的積極成員。我們擁有一支非常強大且經驗豐富的技術團隊，他們正在參與這些委員會，努力確保 Select 和整個產業到達正確的位置。

We've got an R&D team that's invested millions of dollars over the last couple of years to try to make sure that we're aware of the leading solutions in the market and working to drive the cost down. It really has not been a technical issue. It's been a cost issue and a reliability issue.

我們的研發團隊在過去幾年中投資了數百萬美元，以確保我們了解市場上領先的解決方案並努力降低成本。這確實不是一個技術問題。這是一個成本問題和一個可靠性問題。

So we've been working hard to try to bring the capital costs as well as the operating costs down to something that might not necessarily compete with disposal, but provides a certainty. And so if you think about an insurance premium on top of disposal, it could be viewed as somewhat economic. We're working with a number of operators on that.

因此，我們一直在努力將資本成本和營運成本降低到不一定與處置競爭的水平，但提供了確定性。因此，如果您考慮處置以外的保險費，這可能會被認為是比較經濟的。我們正在與一些運營商就此進行合作。

We haven't done many press releases. And I don't think you will because it still is kind of in the R&D phase for us. But we're very active. We're a participant. I think we'll be one of the leaders in the space that brings the solutions to the market. We're looking at multiple -- I mean, there's really three technologies that people believe are viable, and we're participating in studies in all three.

我們還沒有發布很多新聞稿。我認為你不會，因為它對我們來說仍然處於研發階段。但我們非常活躍。我們是參與者。我認為我們將成為將解決方案推向市場的領域的領導者之一。我們正在研究多種技術——我的意思是，人們認為實際上有三種技術是可行的，我們正在參與這三種技術的研究。

In terms of your last question, where we will see that first, I still think it'll be the Permian Basin. That's where you have the largest amount of produced water coming out per barrel of oil. You've got the most benches. As of recently, you've had the most induced seismicity.

就你的最後一個問題而言，我們將首先看到的地方，我仍然認為它將是二疊紀盆地。那裡每桶石油產出的水量最多。你有最多的板凳。截至最近，這裡的誘發地震活動最強。

And so for a number of reasons -- and from an economic standpoint, it's going to be one of the most competitive areas. So from a number of reasons, I think that's going to be where you'll see the majority of the pilots. And they will be a first mover to this solution, much like they were a first mover around produced water reuse.

因此，出於多種原因，從經濟角度來看，它將成為最具競爭力的領域之一。因此，出於多種原因，我認為這將是大多數飛行員的所在地。他們將成為該解決方案的先行者，就像他們是採出水回用的先行者一樣。

Very helpful. Thorough answer, Michael. Thank you. I'll turn it back.

很有幫助。徹底的回答，麥可。謝謝。我會把它轉回來。

Jeff Robertson, Water Tower Research.

傑夫·羅伯遜，水塔研究。

Thank you, good morning. John, you talked about the notion that Select's business will transition over time to more and more long-term revenue backed by contracts. Can you talk about how the system integrations that you all have in various producing basins really underpin that idea of being able to help operators balance their supply-demand needs?

謝謝你，早安。約翰，您談到了這樣的想法：隨著時間的推移，Select 的業務將轉變為越來越多由合約支持的長期收入。您能否談談您們在各個生產盆地中擁有的系統整合如何真正支持能夠幫助營運商平衡供需需求的想法？

Sure. The way I think about it and where the value is really driven toward the sustainability or reduced cost to the operator is when it becomes a system with optionality. So a system of gathering large quantities with effective choice of where that volume could be driven to, whether it's disposal, recycle, out of basin -- movement across other asset bases becomes part of the system.

當然。我的想法是，當它成為一個具有可選性的系統時，價值真正被驅動到永續性或降低營運商的成本。因此，一個收集大量數據的系統，可以有效地選擇這些數據可以被驅動到哪裡，無論是處置、回收還是流域外——跨其他資產基礎的移動成為系統的一部分。

And when it does, it really brings them a real value to either at least operating expense or through authority for expenditures on the drilling completion side of the business on it. So that's the way that we really have been able to come up with these ideals, opportunities, conversations that turn into contracts, as we've taken all these assets out of these different transactions and started building systems out of them with real value add or choices to be made with that volume of water.

當它發生時，它確實為他們帶來了真正的價值，至少是營運費用，或透過對鑽井完井業務方面的支出授權。因此，這就是我們真正能夠提出這些理想、機會、轉化為合約的對話的方式，因為我們從這些不同的交易中取出了所有這些資產，並開始用它們建立具有實際增值或價值的系統。用該體積的水做出選擇。

Maybe just to expand on that, Jeff, a little bit, I mean, we really like the infrastructure, the contracted cash flow, the production-related cash flow from infrastructures. That's why it's been a strategic initiative of ours to grow that.

也許只是為了擴展這一點，傑夫，我的意思是，我們真的很喜歡基礎設施、合約現金流、來自基礎設施的與生產相關的現金流。這就是為什麼我們將發展這項策略作為一項策略舉措。

We like the ability to provide that along with the service, to provide the full solution. So it's an infrastructure service solution. And we've had a really strong service business historically. But as John mentioned here a few minutes ago, at our previous revenue peak, infrastructure was 7% of gross profit.

我們喜歡能夠提供這種服務以及完整的解決方案。所以它是一個基礎設施服務解決方案。歷史上我們擁有非常強大的服務業務。但正如約翰幾分鐘前在這裡提到的，在我們先前的收入高峰期，基礎設施佔毛利的 7%。

And this year, we expect infrastructure chemicals to be north of 50% and infrastructure alone to be 50%. So we're really looking to expand that. And then once we have that built out, it will just provide the optionality that Nick spoke to earlier, as well as the ability for us to have kind of contracted and uncontracted volumes flowing through our system. So that's truly the archetype of what we're working on.

今年，我們預計基礎設施化學品佔比將超過 50%，僅基礎設施佔比將達到 50%。所以我們真的希望擴大這個範圍。然後，一旦我們建造了這個系統，它將提供尼克之前談到的可選性，以及讓我們能夠讓某種合約和未合約的交易量流經我們的系統。這確實是我們正在研究的原型。

Okay. Michael, just a --

好的。邁克爾，只是一個--

What's that, Jeff? Sorry.

那是什麼，傑夫？對不起。

I was going to say does the pricing volatility -- you mentioned pricing volatility and obviously affecting operator budgets. But this pricing volatility and consolidation, is it having an impact on the type of conversations Select has with its customers over the duration of contracts or how contracts are structured?

我想說的是定價波動——你提到定價波動顯然會影響營運商的預算。但這種定價波動和整合是否會對 Select 在合約期限內與其客戶的對話類型或合約的結構產生影響？

Not necessarily. I don't think that's the case. I mean, there are implications for consolidations for sure. We're -- if you look at our customer base, we work for everyone. But we have a bias towards the larger operators.

不必要。我認為情況並非如此。我的意思是，整合肯定會產生影響。如果你看看我們的客戶群，你會發現我們為每個人服務。但我們偏向較大的業者。

And so consolidation is something that we certainly welcome because we believe scale seeks out scale. And a lot of times, larger operators are ones that are really looking ahead kind of at a long-term solution.

因此，我們當然歡迎整合，因為我們相信規模會帶來規模。很多時候，較大的營運商是真正著眼於長期解決方案的營運商。

And so it allows us to have a very productive conversation around expansive or extensive economic -- asset expansion -- excuse me -- or an existing -- or expansion of our existing assets. And when we do that, we obviously need a partner to underwrite it. So we're having those conversations. I think with more consolidation, there will be more of those to be had.

因此，它使我們能夠圍繞擴張性或廣泛的經濟資產擴張（對不起）或現有資產或現有資產的擴張進行非常有成效的對話。當我們這樣做時，我們顯然需要一個合作夥伴來承保。所以我們正在進行這些對話。我認為，隨著更多的整合，將會有更多這樣的事情發生。

Yeah, Jeff, one thing that I'd add to Michael's -- I mean, there is consolidation. There is movement. We're all watching it. We're feeling it. But what we're very focused on is how we can do something that will bring value.

是的，傑夫，我要在邁克爾的基礎上補充一件事——我的意思是，有整合。有動靜。我們都在看著它。我們感覺到了。但我們非常關注的是如何做一些能帶來價值的事情。

And when we bring value, we want to make sure that we share that value properly. We believe there is value in these systems, and we prove that and continue to find opportunity to prove it. And we also bring there -- we believe there's real value in being able to pull those services through that contract, just like Michael talked about.

當我們帶來價值時，我們希望確保正確分享該價值。我們相信這些系統具有價值，我們證明了這一點，並將繼續尋找機會來證明這一點。我們也帶來了——我們相信能夠透過合約提供這些服務具有真正的價值，就像麥可談到的那樣。

And the system we're putting on the north side of Lake Sakakawea, water transfer will be part of that overall solution, which is a value to that acreage and that customer.

我們在薩卡卡韋亞湖北側安裝的系統，輸水將成為整體解決方案的一部分，這對該面積和客戶來說都是有價值的。

Thanks. And the last question you -- just on the -- some of the adjusted EBITDA outlook for 2024 that you mentioned, does that outlook only includes the three acquisitions you announced in the first quarter? Or are you factoring in the expectation of other acquisitions, and how you're talking about 2024 adjusted EBITDA?

謝謝。最後一個問題是，您提到的 2024 年調整後的 EBITDA 前景是否僅包括您在第一季宣布的三項收購？或者您考慮了其他收購的預期，以及您如何談論 2024 年調整後 EBITDA？

No, Jeff, that's purely the acquisitions we've made. And then the projects we've given here now in our overall growth CapEx for water infrastructure. We have a number of projects under discussion. If they all come to fruition, that CapEx number would move higher. If none of them do, then that would move lower.

不，傑夫，這純粹是我們進行的收購。然後是我們現在在水基礎設施總體成長資本支出中給出的項目。我們有許多項目正在討論中。如果它們全部實現，資本支出數字將會更高。如果他們都不這麼做，那麼這個數字就會下降。

I certainly don't expect either of those outcomes there. But we do anticipate that a number of conversions, of new infrastructure projects that we look forward to announcing in the next few quarters and most of those that are announced over the next quarter or two will have some impact in 2024.

我當然不希望出現這些結果。但我們確實預計，我們期待在未來幾季宣布的許多新基礎設施項目的改造，以及在未來一兩個季度宣布的大部分項目將在 2024 年產生一些影響。

Thank you.

謝謝。

John Daniel, Daniel Energy Partners.

約翰‧丹尼爾，丹尼爾能源合夥人。

Can you hear me, okay? Just one question. I'm curious if you're starting to see any signs of distressed opportunities from a consolidation perspective, particularly, in places like the Haynesville?

你聽得到我說話嗎？只有一個問題。我很好奇你是否開始從整合的角度看到任何不良機會的跡象，特別是在像海恩斯維爾這樣的地方？

Yeah, this is John S. I would say, there's -- the acquisitions and the opportunities have ingredients in them in various ways. But the downturn or the activity traction that we're seeing right now is definitely -- had a positive effect on those conversations, yeah, as we go forward.

是的，這是約翰·S。我想說的是，收購和機會以各種方式包含在其中。但我們現在看到的經濟低迷或活動吸引力肯定對這些對話產生了積極影響，是的，隨著我們的前進。

But we I'd also tell you that a lot of these assets that you're watching us do, they really fit into our system extremely well. And their value is either getting diluted by these systems. Or their value could be enhanced, but they got to be part of the system. And that's driving these conversations as well, John.

但我們也要告訴您，您正在觀看我們所做的許多資產，它們確實非常適合我們的系統。它們的價值要么被這些系統稀釋。或者它們的價值可以提高，但它們必須成為系統的一部分。約翰，這也推動了這些對話。

Okay. That's all I had. Thank you for including me.

好的。這就是我所擁有的一切。謝謝你把我包括在內。

There are no further questions at this time. I'd like to hand the call back to John Schmitz for closing remarks.

目前沒有其他問題。我想將電話轉回給約翰·施密茨（John Schmitz），讓他致閉幕詞。

Yeah. Thanks to everyone for joining the call and your interest in learning more about Select Water Solutions. I look forward to speaking with you again next quarter.

是的。感謝大家加入此次電話會議並有興趣了解有關 Select Water Solutions 的更多資訊。我期待下個季度再次與您交談。

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。此時您可以斷開線路。祝你有美好的一天。