Select Water Solutions Inc (WTTR) 2024 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Select Water Solutions' 2024 first-quarter earnings conference call. (Operator Instructions) Please note this conference is being recorded.

早安，女士們先生們，感謝你們的支持。歡迎參加 Select Water Solutions 2024 年第一季財報電話會議。（操作員說明）請注意，本次會議正在錄製中。

I will now turn the conference over to your host, Chris George, Executive Vice President and Chief Financial Officer for Select Water Solutions. Thank you. You may begin.

我現在將會議交給主持人克里斯喬治 (Chris George)，他是 Select Water Solutions 的執行副總裁兼財務長。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 first quarter of 2024.

謝謝接線員，大家早安。我們感謝您參加 Select Water Solutions 的電話會議和網路廣播，回顧我們 2024 年第一季的財務和營運表現。

With me today are John Schmitz, our Founder, Chairman, President, and CEO; and Michael Skarke, Executive Vice President and Chief Operating Officer. Before I turn the call over to John, I have a few housekeeping items to cover.

今天與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)；執行副總裁兼營運長 Michael Skarke。在我把電話轉給約翰之前，我有一些家務事項需要處理。

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 May 15, 2024. The access information for this replay was also included in yesterday's earnings release.

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 5 月 15 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, May 1, 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 5 月 1 日），因此，在重播收聽或閱讀文字記錄時，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. However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements by management. The listener is encouraged to read our annual report on Form 10-K, our current reports on Form 8-K, as well as our quarterly reports on Form 10-Q, to understand those risks, uncertainties, and contingencies.

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。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。

Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures.

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 had no impact on the company's historical consolidated 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驅動的，但是，分部報告的變化對公司的歷史合併財務狀況、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 the results of those operations from the water infrastructure segment. Historical segment information recast to conform to the new reporting structure is available as supplemental financial information in the Investors section of the company's website at 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，並將這些業務的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 Investors.selectwater.com 的投資者部分獲取。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'm pleased to be discussing Select Water Solutions again with you today.

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。

It's been a very busy start to 2024. Overall, the business performed well during the first quarter, and we sit here in a strong position heading into quarter two. Highlights of the first quarter included growing revenues and margins in both the water infrastructure and chemical technology segments, which supported sequential improvements in the consolidated gross margin and adjusted EBITDA, which came in ahead of our expectations.

2024 年是一個非常忙碌的開始。總體而言，第一季的業務表現良好，進入第二季我們處於有利地位。第一季的亮點包括水基礎設施和化學技術領域的收入和利潤成長，這支持了綜合毛利率和調整後 EBITDA 的連續改善，超出了我們的預期。

I'm especially pleased with the continual progress we have made toward the execution of our water infrastructure growth strategy. In addition to the three previous announced acquisitions in the Haynesville and the Rockies regions that we closed in January, we completed additional acquisitions in the Permian and Bakken regions in March and April. Each of these acquisitions demonstrates our ability to execute on strategic but value-oriented opportunities to efficiently expand our infrastructure network across the geographic footprint.

我對我們在執行水基礎設施成長策略方面所取得的持續進展感到特別高興。除了我們在 1 月完成的先前宣布的在海恩斯維爾和落基山脈地區的三項收購外，我們還在 3 月和 4 月完成了在二疊紀和巴肯地區的額外收購。這些收購中的每一項都表明我們有能力抓住策略性但以價值為導向的機會，以有效地擴展我們在地理範圍內的基礎設施網絡。

With the recent Trinity acquisitions, we are adding more than 600,000 barrels per day of permitted disposal capacity, primarily in the Permian Basin, across 24 active disposal wells and nine additional disposal permits available for future development. This acquisition adds critical disposal capacity in both the Midland and Delaware basins, an area with some of our most robust growth opportunities.

透過最近的 Trinity 收購，我們主要在二疊紀盆地增加了超過 60 萬桶/天的許可處置能力，涵蓋 24 個活躍處置井和 9 個可供未來開發的額外處置許可證。此次收購增加了米德蘭和特拉華盆地的關鍵處置能力，該地區擁有我們最強勁的成長機會。

And with the nearly 100 miles of gathering pipelines already integrated in the acquired assets, we have significant optionality and development potential to integrate these assets with our existing Permian infrastructure networks. Disposal remains a necessary component of an efficient full life cycle infrastructure solution, and these disposal assets will strengthen our ability to develop efficient and creative solutions for our customers.

由於近 100 英里的集輸管道已整合到所收購的資產中，我們擁有將這些資產與我們現有的二疊紀基礎設施網路整合的巨大選擇和發展潛力。處置仍然是高效的全生命週期基礎設施解決方案的必要組成部分，這些處置資產將增強我們為客戶開發高效和創造性解決方案的能力。

Additionally, we have continued to add to our solids waste management solutions as well, with four of the five acquisitions so far this year contributing additional assets to our waste solution capabilities. With Trinity, we have added additional slurry well in the Gulf Coast region that adds scale to our solids waste management business in East Texas alongside the solids treatment and disposal assets and operations we acquired from Tri-State and Iron Mountain in January.

此外，我們還繼續增加我們的固體廢物管理解決方案，今年迄今為止的五次收購中有四次為我們的廢物解決方案能力貢獻了額外的資產。透過Trinity，我們在墨西哥灣沿岸地區增加了更多的泥漿井，除了我們一月份從Tri-State 和Iron Mountain 收購的固體處理和處置資產及業務之外，這還擴大了我們在德克薩斯州州東部的固體廢棄物管理業務的規模。

Separately, with Buckhorn, we acquired two solid waste landfills in the Bakken with nearly 400,000 tons of annual capacity and more than 50 years of remaining potential useful life. These facilities are strategically located in North Dakota and Montana and add significant additional capacity to our existing landfill operations in the basin. Importantly, this acquisition also expands the scope of our service capabilities through the addition of a Class 2 landfill, one of the very few active TENORM disposal facilities in the US, as well as a Class 1 industrial waste disposal permit presenting additional opportunities for future development.

另外，我們也與 Buckhorn 合作收購了位於巴肯的兩個固體廢棄物掩埋場，年處理量近 40 萬噸，剩餘潛在使用壽命超過 50 年。這些設施策略性地位於北達科他州和蒙大拿州，為我們流域內現有的垃圾掩埋場業務增加了大量的額外容量。重要的是，此次收購還透過增加2 級垃圾掩埋場（美國極少數活躍的TENORM 處置設施之一）以及1 級工業廢棄物處置許可證，擴大了我們的服務能力範圍，為未來的發展提供了更多機會。

We believe the addition of the Buckhorn assets will also help us enhance the revenue and margin profile of our existing landfill operations with the integrated logistics and enhanced customer relationships. These facilities allow Select to further capture the full water and waste life cycle of our customers' operations, including environmental management and downstream remediation. I'd also highlight that with both Trinity and Buckhorn, we are also adding lean but very high-performing operational teams with decades of experience in disposal and waste management solution, and I welcome these new employees into the Select family.

我們相信，Buckhorn 資產的增加也將有助於我們透過綜合物流和增強的客戶關係提高現有垃圾掩埋場業務的收入和利潤狀況。這些設施使 Select 能夠進一步捕獲客戶營運的整個水和廢棄物生命週期，包括環境管理和下游修復。我還要強調的是，對於Trinity 和Buckhorn，我們也增加了精幹但績效非常高的營運團隊，他們在處置和廢棄物管理解決方案方面擁有數十年的經驗，我歡迎這些新員工加入Select 大家庭。

While we continue to grow our water infrastructure business through acquisitions, we also continue to grow through the organic business development execution. During the first quarter, we signed four additional long-term contracts for new pipeline gathering, recycling, and disposal projects that will integrate directly into our existing infrastructure in the Haynesville and the Permian. Each of these contracts can be tied directly to the strength of our existing networks in these regions, including from the recently acquired asset in each basin.

在我們繼續透過收購發展水基礎設施業務的同時，我們也透過有機業務開發執行繼續發展。在第一季度，我們簽署了四份新管道收集、回收和處置項目的長期合同，這些項目將直接整合到我們在海恩斯維爾和二疊紀的現有基礎設施中。每份合約都可以直接與我們在這些地區現有網路的實力掛鉤，包括最近在每個盆地收購的資產。

While we have been quite active this year, we remain attentive to every dollar of capital we deploy and continue to prioritize capital to the most strategic area of our business, especially where we have the most opportunity to integrate full life cycle water infrastructure and waste management solutions around our existing asset base or add proprietary application of automation, chemistry, or recycling technologies. And as demonstrated by the breadth of our recent acquisitions and projects, I believe Select's operation and geographic diversity is one of our core strengths and competitive differentiators.

雖然我們今年相當活躍，但我們仍然專注於我們部署的每一美元資本，並繼續將資本優先用於我們業務中最具戰略意義的領域，特別是我們最有機會整合全生命週期水基礎設施和廢物管理的領域圍繞著我們現有資產基礎的解決方案或添加自動化、化學或回收技術的專有應用。正如我們最近的收購和專案的廣度所證明的那樣，我相信 Select 的營運和地理多樣性是我們的核心優勢和競爭優勢之一。

It also provides us with a wide array of capital allocation prospects that allows us to make the best decision to drive long-term shareholder value. Importantly, each acquisition and project we have executed this year fits our strategy to grow and expand our production-based and long-term contracted revenue within our water infrastructure segment. We are well positioned to continue to strengthen the contractual relationship we have with our customers and expand the scope of our end-to-end water services and chemical solutions that we've been able to provide around the infrastructure base.

它還為我們提供了廣泛的資本配置前景，使我們能夠做出最佳決策來推動長期股東價值。重要的是，我們今年執行的每項收購和項目都符合我們在水基礎設施領域成長和擴大基於生產的長期合約收入的策略。我們處於有利位置，可以繼續加強與客戶的合約關係，並擴大我們能夠圍繞基礎設施基礎提供的端到端水服務和化學解決方案的範圍。

Our recent organic recycle and disposal infrastructure projects have delivered strong performance, as seen in the meaningful margin improvement in the water infrastructure segment during the first quarter. I am very confident in our remaining multiyear backlog for both greenfield and brownfield infrastructure projects. We've seen this backlog more than double over the last two quarters, providing visibility into continuing expansion opportunities well into next year, and I am very excited to add the newly acquired assets into our future business development planning as well.

我們最近的有機回收和處置基礎設施項目取得了強勁的業績，第一季水基礎設施領域的利潤率顯著提高就表明了這一點。我對綠地和棕地基礎設施項目剩餘的多年積壓工作非常有信心。在過去兩個季度中，我們看到積壓的訂單數量增加了一倍多，這為明年持續擴張的機會提供了可見性，我很高興將新收購的資產也添加到我們未來的業務發展規劃中。

From a customer standpoint, we continue to see consolidation in the E&P space. We believe this will drive continued demand for more sophisticated and comprehensive water management and waste solutions. While we oftentimes find ourselves working for both customers on both sides of the larger deals, we have generally aligned ourselves with the industry consolidators and have an extensive business development backlog in place to meet the needs of their growing infrastructure demands.

從客戶的角度來看，我們持續看到勘探與生產領域的整合。我們相信，這將推動對更複雜、更全面的水管理和廢棄物解決方案的持續需求。雖然我們經常發現自己在較大交易的雙方客戶中工作，但我們通常與行業整合者保持一致，並擁有廣泛的業務開發積壓，以滿足他們不斷增長的基礎設施需求。

Chris will touch on the first quarter's financial performance in more detail, but I'm proud of the continued outstanding results our team is achieving during the period of changing industry trends. We will continue to generate a strong return on assets and return capital to our shareholders while investing in and growing the business.

克里斯將更詳細地談到第一季的財務業績，但我對我們的團隊在行業趨勢不斷變化的時期持續取得的出色業績感到自豪。我們將繼續創造強勁的資產回報率，並在投資和發展業務的同時向股東返還資本。

At this point, I'll hand it over to Chris to speak to our first-quarter financial results and remaining 2024 outlook in a bit more detail. Chris?

現在，我將把它交給 Chris 來更詳細地介紹我們第一季的財務表現和 2024 年的剩餘前景。克里斯？

Thank you, John, and good morning, everyone. During the first quarter of 2024, while we did see overall revenues modestly decline during the period as expected, we saw solid gains in our chemical technologies segment, and our water infrastructure segment continued its steady growth trajectory, once again achieving record-high quarterly revenue and gross profit results during the first quarter.

謝謝約翰，大家早安。2024年第一季度，雖然我們確實看到整體收入在預期期間小幅下降，但我們看到化學技術部門實現了穩健增長，水基礎設施部門繼續保持穩定增長軌跡，再次實現了創紀錄的季度收入以及第一季的毛利結果。

With the support of our latest strategic initiatives, we expect to see consolidated revenue and adjusted EBITDA growth during the second quarter and are well on track towards achieving our 2024 full-year targets, including growing adjusted EBITDA year over year, underwriting approximately $100 million of new organic infrastructure projects, generating more than a third of our revenues from production-related activities during 2024, growing water infrastructure revenue by 30% to 40% and profitability by 40% to 50% during the year, and supported by this growth, seeing our water infrastructure and chemical technologies segments combined for more than 50% of our total consolidated profitability for the year. And to reiterate, we also expect to do this while pulling through more than 40% of our adjusted EBITDA into free cash flow, after all maintenance and growth CapEx for the full year 2024.

在我們最新策略措施的支持下，我們預計第二季將實現合併收入和調整後 EBITDA 成長，並有望實現 2024 年全年目標，包括調整後 EBITDA 逐年成長、承保約 1 億美元的新的有機基礎設施項目，到2024 年，我們超過三分之一的收入來自與生產相關的活動，年內水基礎設施收入增長30% 至40%，盈利能力增長40% 至50%，並受到這種增長的支持，看到我們的水基礎設施和化學技術部門合計占我們今年綜合盈利總額的 50% 以上。重申一下，在完成 2024 年全年的維護和成長資本支出之後，我們也預計將超過 40% 的調整後 EBITDA 轉化為自由現金流。

Even as activity levels have seen pressure in recent quarters and commodity prices remain unsettled, Select's ongoing transition to a more infrastructure-based, production-levered full life cycle water company has aligned our future profitability and cash flow generation with critical secular growth drivers unique to our business. These trends continue to benefit Select, including increased water recycling by our customers, demand for infrastructure networks and commercial water balancing, and E&P industry consolidation that demands high-quality partners with the size, scope, and networks to serve the largest operators.

儘管最近幾季的活動水平面臨壓力，大宗商品價格仍然不穩定，但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，這使我們未來的盈利能力和現金流生成與我們獨特的關鍵長期成長動力保持一致。這些趨勢繼續使Select 受益，包括我們的客戶增加水循環利用、對基礎設施網路和商業水平衡的需求，以及勘探與生產行業整合，需要具有規模、範圍和網路的高品質合作夥伴來為最大的運營商提供服務。

During Q1, the water infrastructure segment increased revenue by more than 4% to $64 million, and gross margins, which we customarily provide in terms of prior to depreciation, amortization, and accretion, increased by over 360 basis points to nearly 47%. We expect to see even stronger 10%-plus revenue growth during Q2, with significant 30% to 40% growth in our disposal and waste solution volumes, supported by our recent acquisitions and enhanced utilization of existing assets.

第一季度，水利基礎設施部門的收入成長了 4% 以上，達到 6,400 萬美元，而毛利率（我們通常以折舊、攤提和增值之前的形式提供）增加了 360 個基點，達到近 47%。我們預計，在我們最近的收購和現有資產利用率提高的支持下，第二季度的收入增長將更加強勁，超過10% 以上，我們的處置和廢物解決方案數量將大幅增長30% 至40% 。

Projects we announced yesterday demonstrate our ability to add value to our existing infrastructure networks through steady, incremental commercialization. For the recycling and gathering pipeline network expansions in the Delaware Basin, our existing systems, comprising large acreage dedications and multi-customer gathering, recycling, distribution, and disposal operations, create both optionality and additional contracting opportunities with new and existing infrastructure customers.

我們昨天宣布的項目證明了我們有能力透過穩定、增量的商業化為現有基礎設施網路增加價值。對於特拉華盆地的回收和收集管網擴建，我們現有的系統（包括大面積專用和多客戶收集、回收、分配和處置業務）為新的和現有的基礎設施客戶創造了選擇性和額外的承包機會。

These expanded networks will see enhanced utilization and water balancing capabilities that make the expansions highly accretive. And even though natural gas prices have contracted, long-term gas demand is very robust, particularly with electricity demand rising rapidly and new LNG demands slated to come online in 2025 and 2026.

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。儘管天然氣價格有所收縮，但長期天然氣需求仍然非常強勁，特別是在電力需求迅速增長以及預計於 2025 年和 2026 年上線的新液化天然氣需求的情況下。

Accordingly, in a gas basin like the Haynesville, long-term water gathering and disposal agreements from steady production sources remains an attractive growth option, especially when integrated with our market-leading disposal footprint, supported by our uniquely positioned gathering pipeline network. While the second quarter may see some expenses related to integration and standardization of our newly acquired assets, we expect to retain steady margins in water infrastructure during Q2 and believe we can continue to push these margins up over the coming quarters into the high 40s.

因此，在像海恩斯維爾這樣的天然氣盆地，來自穩定生產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，特別是在與我們市場領先的處​​理足跡相結合，並得到我們獨特定位的集水管網的支撐時。雖然第二季可能會出現一些與我們新收購資產的整合和標準化相關的費用，但我們預計第二季水基礎設施的利潤率將保持穩定，並相信我們可以在未來幾季繼續將這些利潤率推高至40 多歲。

Looking out more medium term, we continue to believe that, with a very strong project and deal backlog, water infrastructure will become the largest component of our profitability by the end of 2025, underpinned by repeatable, predictable, high-margin, and contracted revenue streams.

展望更中期，我們仍然相信，憑藉非常強勁的項目和交易積壓，到 2025 年底，水基礎設施將成為我們盈利的最大組成部分，並得到可重複、可預測、高利潤和合約收入的支撐溪流。

Chemical technologies revenue grew by 4% sequentially in Q1, with margins back up to about 17%. The business benefited by the non-recurrence of certain insurance and inventory adjustment items that impacted Q4's results, but overall, it was good to see the strong recovery in margin performance.

第一季化學技術營收季增 4%，利潤率回升至 17% 左右。該業務受益於影響第四季度業績的某些保險和庫存調整項目不再發生，但總體而言，利潤率表現強勁復甦是一件好事。

Looking forward to Q2, we expect to see continued low single-digit percentage revenue growth and margins improve to the 17%, 19% range. We believe there are opportunities to continue to improve the operating efficiency of our manufacturing operations and enhance our in-basin delivery logistics, which should continue to provide modest margin improvement opportunities.

展望第二季度，我們預期營收將持續維持低個位數百分比成長，利潤率將改善至 17% 至 19% 的範圍。我們相信，我們有機會繼續提高製造業務的營運效率，並加強我們的盆地內交付物流，這將繼續提供適度的利潤改善機會。

While the more completions-levered water services segment was impacted by modestly lower activity levels during the first quarter, about 85% of the revenue decline during the first quarter came from our fluids hauling and well testing service lines. These are more commoditized areas of the business where we continue to focus on cost efficiency and consolidation and elimination opportunities.

雖然較完井槓桿的水服務部門受到第一季活動水準小幅下降的影響，但第一季約 85% 的收入下降來自我們的流體運輸和試井服務線。這些是更商品化的業務領域，我們將繼續專注於成本效率以及整合和淘汰機會。

We have made decisions in multiple regions across these service lines to consolidate operations and pare back certain non-core offerings and geographies, such as fluids hauling in the Powder River Basin in Wyoming, for example, in order to streamline our operations, improve our margin performance, and focus on strategic service offerings that are critical to our full life cycle solutions. These decisions will result in additional low single-digit percentage revenue decreases in the second quarter for water services. However, we should start to see the benefit of these decisions on the margin side, and we expect to see gross margins in water services increasing to 21% to 24% during the second quarter.

我們已在這些服務線的多個地區做出決定，以整合運營並削減某些非核心產品和地區，例如懷俄明州粉河盆地的流體運輸，以簡化我們的運營，提高我們的利潤率績效，並專注於對我們的全生命週期解決方案至關重要的策略服務產品。這些決定將導致第二季供水服務收入進一步減少個位數百分比。然而，我們應該開始看到這些決策在利潤方面的好處，我們預計第二季供水服務的毛利率將增加至 21% 至 24%。

SG&A during the first quarter decreased by 5%, or $2.4 million, as compared to the fourth quarter. While the rebranding costs slowed during Q1 relative to Q4, with the recent acquisitions, we continue to incur a balance of transaction-related costs during Q1. Looking forward, we expect SG&A to decline to the low $40 million range, though transaction costs related to our recent acquisitions will remain during Q2.

與第四季相比，第一季的 SG&A 下降了 5%，即 240 萬美元。雖然第一季的品牌重塑成本相對於第四季有所放緩，但隨著最近的收購，我們在第一季繼續產生交易相關成本的平衡。展望未來，我們預計 SG&A 將下降至 4000 萬美元的低水平，儘管與我們最近收購相關的交易成本在第二季度仍將存在。

Altogether, for the second quarter of 2024, we expect consolidated adjusted EBITDA of $64 million to $68 million, a meaningful step up from Q1. Driven by the substantial continued growth in our water infrastructure segment over the course of 2024 and anticipated margin improvement in our services and chemical segments, we are firmly on track to continue growing our adjusted EBITDA on a year-over-year basis during 2024, even with the expected year-over-year revenue decline from water services.

總的來說，我們預計 2024 年第二季的綜合調整後 EBITDA 為 6,400 萬美元至 6,800 萬美元，較第一季顯著提高。在我們的水基礎設施領域在 2024 年大幅持續增長以及我們的服務和化學品領域的預期利潤率改善的推動下，我們堅定地走在 2024 年期間繼續同比增長調整後 EBITDA 的軌道，即使預計供水服務收入將年減。

Looking at the balance sheet, we utilized our sustainability-linked credit facility, in addition to cash on hand, to help fund four acquisitions for $108 million during Q1, ending the first quarter with $75 million of outstanding borrowings. This has ticked up to $100 million outstanding since quarter-end with the subsequent acquisition in April for approximately $29 million, but still leaves us with ample liquidity and a very conservative balance sheet.

從資產負債表來看，除了手頭現金外，我們還利用與永續發展相關的信貸額度，在第一季度為四項收購提供了1.08 億美元的資金，第一季末的未償借款為7500萬美元。自季度末以來，隨著 4 月以約 2,900 萬美元的價格進行收購，未償債務已上升至 1 億美元，但我們仍然擁有充足的流動性和非常保守的資產負債表。

We will remain disciplined in our use of leverage. But with the growing contribution of our higher-margin production-levered and contracted revenue streams, we have good visibility into our ability to repay these outstanding borrowings at a relatively short period of time while still generating cash flow to fund the growth of the business organically.

我們將繼續嚴格使用槓桿。但隨著我們利潤率較高的生產槓桿和合約收入流的貢獻不斷增加，我們對自己在相對較短的時間內償還這些未償還借款的能力有了很好的了解，同時仍然產生現金流來為業務的有機成長提供資金。

We continue to return capital to shareholders with our increased dividend of $0.06 per share, equating to $7.5 million of capital returned to shareholders during Q1. We have $21 million remaining authorized on our share repurchase program. And 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 integration of our infrastructure asset bolt-ons as a primary use of capital, while we maintain our commitment to the recently increased regular dividend and overall capital allocation flexibility.

我們繼續向股東返還資本，每股股息增加至 0.06 美元，相當於第一季向股東返還的資本為 750 萬美元。我們的股票回購計畫尚有 2,100 萬美元的授權。儘管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基礎設施資產附加項目的整合，作為資本的主要用途，同時我們維持致力於最近增加的定期股利和整體資本配置彈性。

As we reviewed last quarter, Select's growing and sustained profitability in recent years triggered an assessment of our taxable position at year-end, and we did transition into a book-taxable position during Q1. This translated into an effective book tax rate of about 25% during the first quarter.

正如我們上季度回顧的那樣，Select 近年來不斷增長且持續的盈利能力引發了對我們年底應稅狀況的評估，我們在第一季度確實過渡到了賬面應稅狀況。這意味著第一季的有效帳面稅率約為 25%。

However, to reiterate, we do not anticipate material cash tax payments during 2024, as our substantial tax attributes and carry-forwards will provide significant benefit during the year. We anticipate cash tax payments in 2024 to be a relatively modest $4 million to $6 million, including state taxes, though our book tax expense applied to pre-tax operating income should remain at a percentage rate around where it was during the first quarter.

然而，需要重申的是，我們預計 2024 年不會產生大量現金稅款，因為我們的大量稅收屬性和結轉將在這一年帶來顯著的效益。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，儘管我們應用於稅前營業收入的帳面稅費應保持在第一季度左右的百分比水平。

From an accounting perspective, this forecasted tax expense would primarily impact existing deferred tax assets in 2024 and 2025, prior to becoming a cash outlay in future years, most likely commencing in 2026.

從會計角度來看，這項預測的稅收支出將主要影響 2024 年和 2025 年的現有遞延稅資產，然後在未來幾年（最有可能從 2026 年開始）成為現金支出。

Quarterly depreciation, amortization, and accretion should tick up modestly with the latest acquisitions to the $38 million to $40 million range, 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.

隨著最新收購的增加，季度折舊、攤提和增值應小幅上升至3,800 萬至4,000 萬美元，當我們利用與永續發展相關的貸款工具來執行我們的計劃時，季度利息支出應增加至每季度200 萬至300 萬美元。

Net CapEx of $28.6 million was relatively flat quarter over quarter, though we may see a modest uptick during Q2 as our organic water infrastructure growth CapEx accelerates. However, our full-year net CapEx guidance of $140 million to $160 million in 2024 remains unchanged at this time. We anticipate $50 million to $60 million of this CapEx going towards ongoing maintenance, with the largest component of the remaining overall spend going towards infrastructure growth CapEx.

淨資本支出為 2,860 萬美元，與上一季相比相對持平，但隨著我們的有機水基礎設施成長資本支出加速，我們可能會在第二季看到小幅上升。然而，我們 2024 年全年淨資本支出指引為 1.4 億至 1.6 億美元，目前維持不變。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，其餘總體支出的最大部分將用於基礎設施成長資本支出。

We generated asset sales of about $5 million during the first quarter and remain on track to generate up to $20 million of proceeds from asset sales during 2024, supported in particular by the consolidation and elimination efforts in water services.

我們在第一季實現了約 500 萬美元的資產銷售，並預計在 2024 年從資產銷售中獲得高達 2000 萬美元的收益，特別是在水務領域的整合和消除工作的支持下。

While we invest in water infrastructure, we expect each of our water services and chemical technologies segments to provide strong cash flows at low capital intensity during 2024, returning a combined 70% to 80% of profits in cash flows after CapEx, as we previously noted, to help fund our water infrastructure growth. While the first quarter was not entirely indicative of this from a free cash flow perspective, as we incurred substantial seasonal cash impacts, including annual incentive program payouts, annual property tax payments, and other seasonal cash outflow items, we continue to generate positive free cash flow during the first quarter and anticipate this ramping through the back half of the year.

在我們投資水務基礎設施的同時，我們預計我們的每個水服務和化學技術部門都將在2024 年以較低的資本密集度提供強勁的現金流，正如我們之前指出的，在資本支出後總共返回70% 至80% 的現金流利潤，幫助資助我們的水基礎設施發展。雖然從自由現金流的角度來看，第一季並不能完全說明這一點，但由於我們遭受了重大的季節性現金影響，包括年度激勵計劃支出、年度財產稅支付和其他季節性現金流出項目，我們繼續產生正的自由現金第一季的流量預計將在今年下半年增加。

As I've outlined previously, we firmly expect to exceed our 2023 adjusted EBITDA during 2024, and we remain well on track to achieve our full-year cash flow target of pulling through more than 40% of our adjusted EBITDA into free cash flow for the full year 2024 after accounting for all maintenance and growth CapEx. We have a tremendous amount of opportunity ahead of us, and I look forward to continuing to execute on our strategy.

正如我之前概述的那樣，我們堅信 2024 年將超過 2023 年調整後 EBITDA，並且我們仍有望實現全年現金流目標，即將 40% 以上的調整後 EBITDA 轉化為自由現金流考慮所有維護和增長資本支出後的2024 年全年。我們面前有大量的機會，我期待繼續執行我們的策略。

I'd like to wrap up by once again thanking all of our employees for their hard work and support and, with that, open it up to questions. Operator?

最後，我想再次感謝所有員工的辛勤工作和支持，並歡迎大家提問。操作員？

(Operator Instructions) Bobby Brooks, Northland.

（操作員說明）Bobby Brooks，北國。

Hey. Good morning, guys. So really impressive margin improvement on the water infrastructure segment, and I know that occurred despite some detractors like acquisition integration costs and organic spending. So I was just curious, could you talk -- could you discuss really what drove that 900 bps year-over-year step-up in margins? And are those pretty much the same factors that drove the 360-basis-point sequential step-up in margins for the segment?

嘿。早上好傢伙。水基礎設施領域的利潤率改善確實令人印象深刻，我知道儘管存在收購整合成本和有機支出等不利因素，但這種情況還是發生了。所以我只是很好奇，你能談談——你能真正討論一下是什麼推動了利潤率同比增長 900 個基點嗎？這些因素是否與推動該細分市場利潤率連續上升 360 個基點的因素相同？

I'll start, and probably let Michael add on, Bobby. Certainly pleased with the progress we made earlier in the year on the water infrastructure side. The first quarter was certainly benefited by the accretive nature of the acquisitions. There's certainly some more work to do around the integration and enhancement of the assets that we've recently acquired to get them integrated into the portfolio, so you may see some of that in the second quarter as well.

我先開始，也許讓麥可補充一下，鮑比。當然，我們對今年稍早在水利基礎設施方面取得的進展感到高興。第一季無疑受益於收購的增值性質。當然，圍繞著我們最近收購的資產的整合和增強，還有更多工作要做，以便將它們整合到投資組合中，因此您也可能會在第二季度看到其中的一些工作。

But overall, we certainly think we've got the right path towards continued improvement up to the high 40s like we indicated. It's certainly, on a year-over-year basis, contributed also by the enhanced utilization of the base business, the assets across the overall portfolio, and the projects that we continue to invest in are generally coming in on an accretive basis relative to the segment as a whole. So you're really seeing kind of the full benefit across the board year over year, and in the first quarter and second quarter, a lot of improvement driven by the accretive application of the acquisitions coming online.

但總的來說，我們當然認為我們已經找到了持續改進的正確道路，直到我們指出的 40 多歲。當然，與去年同期相比，這也是由於基礎業務、整個投資組合中的資產利用率的提高以及我們繼續投資的項目相對於片段作為一個整體。因此，您確實看到了逐年全面的全面收益，並且在第一季和第二季度，線上收購的增值應用程式推動了許多改進。

Got it. That's terrific color. And then, I know that the pipeline of opportunities for both green and brownfields for the infrastructure segment is really healthy and expanding. So could you just maybe help frame that pipeline for us? And maybe it's best just to compare it to what it is now versus this time last year or even maybe what it was six months ago and just discuss a bit what's been the driver of that pipeline growth.

知道了。那是很棒的顏色。然後，我知道基礎設施領域的綠地和棕地的機會管道確實健康且不斷擴大。那麼您能否幫助我們建立該管道？也許最好將其與現在的情況與去年的這個時候進行比較，甚至可能與六個月前的情況進行比較，然後討論管道成長的驅動因素。

Sure. So Bobby, this is Michael. I'll take a first cut at it.

當然。鮑比，這是麥可。我會先切一下。

What I'd say is that the opportunities that we've got in front of us is the largest it's ever been. Relative to six months or a year ago, I think John mentioned it's doubled, so we've got really high interest right now. One of the things we've seen recently is a lot more customer inbounds, which I think is really just a testament of what we've been able to create here in a relatively short period of time.

我想說的是，我們面前的機會是有史以來最大的。相對於六個月或一年前，我認為約翰提到它增加了一倍，所以我們現在的興趣非常高。我們最近看到的一件事是更多的客戶入境，我認為這實際上只是我們能夠在相對較短的時間內在這裡創造的成果的證明。

In terms of kind of more specifics, we're looking at projects in every basin and across the recycling, disposal, and pipeline transmission segments. So we're really excited about it. We think we'll continue to be able to deliver projects on a regular basis through the rest of the quarter and really fuel continued improvement on infrastructure, both in top-line growth and in margin as a result.

就更具體的情況而言，我們正在研究每個流域以及回收、處置和管道傳輸領域的項目。所以我們對此感到非常興奮。我們認為，我們將繼續能夠在本季度剩餘時間內定期交付項目，並真正推動基礎設施的持續改善，無論是在營收成長還是在利潤率方面。

Bobby, this is John. I'll add to a little bit what Michael's talking about.

鮑比，這是約翰。我將補充一點邁克爾所說的內容。

What we really have now experienced is we really have created systems, and as we're doing these acquisitions that you're seeing, you're really adding assets that are available to the systems. And has that happened, it created a lot of real value projects that are value brought to our customers by hooking those assets up to those systems and bringing that economic value. And that is what -- when Michael say we get inbounds, that's -- the inbounds we're seeing is the value that we can really bring to our customers because of interactions between those systems and those asset bases, whether they're both acquisition or added asset bases that we'll do internally.

我們現在真正經歷的是，我們確實創建了系統，當我們進行您所看到的這些收購時，您實際上正在添加系統可用的資產。如果發生了這種情況，它創造了許多真正有價值的項目，透過將這些資產連接到這些系統並帶來經濟價值，為我們的客戶帶來價值。這就是——當邁克爾說我們獲得入站時，我們看到的入站是我們真正可以為客戶帶來的價值，因為這些系統和這些資產基礎之間的相互作用，無論它們都是收購或添加我們將在內部完成的資產基礎。

Got it. Thank you for the color. And just the last one for me, sticking with the pipeline, and you just -- I think Mike just mentioned it as well, with the multi-basin approach, in my opinion, that is a key distinguishing factor for Select is that you guys have this multi-basin asset base. So could you possibly just discuss which basins you see organic growth as more of the focus and which basins maybe we should expect more inorganic growth? And if it doesn't differ, maybe possibly some color on why that's the case and why it's agnostic to basins?

知道了。謝謝你的顏色。對我來說，最後一個就是堅持管道，我想麥克也提到過，在我看來，採用多流域方法，這是 Select 的一個關鍵區別因素，就是你們擁有這種多流域的資產基礎。那麼您能否討論一下您認為哪些盆地的有機增長更受關注，以及哪些盆地我們應該期待更多的無機增長？如果沒有不同，也許可能有一些解釋為什麼會發生這種情況以及為什麼它與盆地無關？

Sure. So just stepping back for a minute, we're really -- we want to be opportunistic. And so whether that's organic or inorganic, we're really open to whatever is the right solution for the customer and the most accretive answer for us. So you'll see us be -- you've seen us be more acquisitive around disposals than around recycling, and that's because recycling's a newer business and we're the largest business, and so putting organic capital to work has been much more attractive than anything inorganic.

當然。因此，退一步來說，我們真的想投機取巧。因此，無論是有機的還是無機的，我們都願意接受任何對客戶來說正確的解決方案以及對我們來說最有價值的答案。所以你會看到我們對垃圾處理比對回收更感興趣，這是因為回收是一項較新的業務，而我們是最大的業務，因此將有機資本投入使用更具吸引力比任何無機物。

On the disposal side, we have more optionality. We've been able to do a number of acquisitions that have existing cash flow at or below replacement cost. And as John mentioned, we're acquiring assets, we're networking those assets, and then we're trying to get those underwritten by customer contracts because we think they believe they add a lot of value to that customer. So on the disposal side, regardless of the basin, we're going to be opportunistic between organic development and acquisitions.

在處置方面，我們有更多的選擇。我們已經能夠進行許多現有現金流等於或低於重置成本的收購。正如約翰所提到的，我們正在收購資產，我們正在將這些資產聯網，然後我們試圖讓這些資產由客戶合約承保，因為我們認為他們相信他們為該客戶增加了很多價值。因此，在處置方面，無論哪個盆地，我們都將在有機開發和收購之間抓住機會。

In terms of basins, we look at every basin similar. I mean, we do a full underwriting of the acreage, of the customer, and then we decide what makes the most sense, and so that's why you've seen us make acquisitions or drill new wells in the Haynesville, but also in the Permian and everywhere else. Obviously, we're very focused on the Permian, that's where most of the capital is going to be spent, that's where the biggest water problem is. And so that's going to be key and central for us, whether organic or inorganic going forward, but it doesn't preclude us from doing some of the deals we've done outside the Permian either.

就盆地而言，我們對每個盆地的看法都是相似的。我的意思是，我們對客戶的面積進行全面承保，然後我們決定什麼是最有意義的，這就是為什麼你看到我們在海恩斯維爾以及二疊紀進行收購或鑽探新井的原因以及其他地方。顯然，我們非常關註二疊紀盆地，這是大部分資金將被花費的地方，也是最大的水問題。因此，無論是有機還是無機，這對我們來說都是關鍵和核心，但這也不妨礙我們在二疊紀以外進行一些交易。

One thing I may just add on to that, Bobby, is, as Michael mentioned, I mean our general underwriting parameters are going to be consistent, whether that's recycling or disposal or pipelines. And generally, we're going to take that approach across the full portfolio of opportunities here, and we're starting to see the margin profiles across each of those applications of the infrastructure business become fairly normalized across the board as well, as we see the margin improvement and the contribution from the recent acquisitions. So generally, that underwriting approach is going to be fairly consistent across the board, which gives us that opportunity to make the best decisions across the overall asset base.

鮑比，我要補充的一件事是，正如邁克爾提到的那樣，我的意思是我們的整體承保參數將保持一致，無論是回收、處置還是管道。一般來說，我們將在整個機會組合中採用這種方法，並且我們開始看到基礎設施業務的每個應用程式的利潤狀況也全面變得相當正常化，正如我們所看到的利潤率的提高以及最近收購的貢獻。因此，一般來說，承保方法將在整體上相當一致，這使我們有機會在整個資產基礎上做出最佳決策。

Understood. And I'd agree that's definitely starting to show in the financials, and congrats on the great quarter. I'll return back to the queue. Thanks, guys.

明白了。我同意這肯定開始在財務數據中體現出來，並祝賀這個偉大的季度。我會返回隊列。多謝你們。

Jim Rollyson, Raymond James.

吉姆·羅利森，雷蒙德·詹姆斯。

Hey, good morning, guys, and I'll echo the same thing on great quarterly results. John, you've spent a little bit of time here lately, and you mentioned this in your prepared remarks, kind of focused on some of the solids and landfill through your M&A activity. Just curious, what's your big picture thinking?

嘿，早上好，夥計們，我會在出色的季度業績上回應同樣的事情。約翰，你最近在這裡花了一點時間，你在準備好的演講中提到了這一點，重點關注了你的併購活動中的一些固體和垃圾掩埋場。只是好奇，你的大局想法是什麼？

Is there -- is this just tying into making Select a more one-stop shop from water sourcing, recycling, disposal, and now, you can deal with solids as well? Or are there some other underlying drivers there, and should we expect any more M&A to kind of fill out the map there like you've done on the disposal side?

是否有——這是否只是為了讓 Select 成為一個從水源獲取、回收到處理的一站式服務，而現在，您也可以處理固體？或者是否還有其他一些潛在的驅動因素，我們是否應該期待更多的併購來填補那裡的地圖，就像您在處置方面所做的那樣？

Well, Jim, it is an area that we're very interested in in managing full life cycle waste streams for our customer base. It is an area that fits together because, whether you're working a solid surface facility, and once you do the separation and extract either skim oil or solids for landfill or fluids for disposal, it fits within our footprint of our expertise and the asset base that we have on it.

好吧，吉姆，這是我們非常感興趣的一個領域，為我們的客戶群管理整個生命週期的廢物流。這是一個相互融合的領域，因為無論您是在固體表面設施中工作，還是在進行分離和提取脫脂油或固體以進行垃圾填埋或液體進行處置後，它都適合我們的專業知識和資產足跡我們以此為基礎。

We also think there's probably an interaction between the landfill and our disposals and the value of that disposal because of the leachate. So we think it fits within the asset base, and we think it fits within the thesis of value add for waste management for our customer.

我們也認為，垃圾掩埋場和我們的處置物之間可能存在相互作用，由於滲濾液，處置物的價值也可能存在相互作用。因此，我們認為它符合資產基礎，也符合我們客戶廢棄物管理增值的主題。

And maybe just to add on that, it's really a natural vertical expansion for us because, as John mentioned, the solids management's often co-located with our existing infrastructure base, and so it's a very collaborative combination. And then from a return profile, a margin profile, it really fits, it's consistent with infrastructure. So we view them largely the same.

也許只是補充一點，這對我們來說確實是一種自然的垂直擴張，因為正如約翰所提到的那樣，固體管理通常與我們現有的基礎設施基地位於同一地點，因此這是一個非常協作的組合。然後從回報情況、利潤情況來看，它確實適合，與基礎設施一致。所以我們對它們的看法大致相同。

Yeah, makes perfect sense. And maybe, Michael, just going back to the backlog for new projects, as you guys have talked about it, continues to grow. As you look forward and build out your network through M&A and just unlock more opportunities there, curious what you think of as becoming constraints to growth there because you've got so many potential opportunities. Is it capital? Is it people? How do you think about what actually constrains your ability to pursue all these opportunities and backlog?

是的，很有道理。也許，邁克爾，只要回到新項目的積壓工作，正如你們所談論的那樣，就會繼續增長。當您展望並透過併購建立您的人脈並釋放更多機會時，請好奇您認為哪些因素會成為那裡成長的限制因素，因為您有很多潛在的機會。是資本嗎？是人嗎？您如何看待到底是什麼限制了您追求所有這些機會和積壓的能力？

So the backlog is very robust, and we're really excited about it. The returns, we've mentioned the underwriting previously, but they're attractive, and so I'm confident between cash flow and potentially some other sources, we'll be able to continue to fund it and take advantage of that growth. People are always a challenge, but it's not near the challenge it was a year or two ago, so I really don't see that as a constraint either.

因此，積壓工作非常強勁，我們對此感到非常興奮。回報，我們之前提到過承銷，但它們很有吸引力，因此我對現金流和其他潛在來源充滿信心，我們將能夠繼續為其提供資金並利用這種增長。人總是一個挑戰，但它與一兩年前的挑戰相差甚遠，所以我也不認為這是一個限制。

One of our challenges is just when we -- it takes a while to sign a long-term contract with an operator, and then it takes a while to construct that asset or link it up, network it, and then to work out the bugs and really deliver the cash flow. So I think one of the challenges just for us is we see this opportunity set in front of us, but the earnings aren't going to fully materialize for several quarters.

我們面臨的挑戰之一就是——需要一段時間與運營商簽署長期合同，然後需要一段時間來構建該資產或將其連接、聯網，然後解決錯誤並真正交付現金流。因此，我認為我們面臨的挑戰之一是我們看到這個機會擺在我們面前，但盈利在幾個季度內都不會完全實現。

I think one thing I might add, Jim, to your question is, particularly as we're adding assets through acquisition here, I think it's a pretty different stage of acquisition integration than where we were a couple of years ago, where we were adding companies and lots more application assistance process people. These are really adding assets on a discrete basis into an existing platform that can be integrated pretty efficiently and fairly streamlined from an acquisition integration standpoint. So certainly should be a more straightforward exercise than we went through a couple of years ago from a balance sheet and a liquidity and a cash flow management standpoint as well.

吉姆，對於你的問題，我想我要補充的一件事是，特別是當我們透過收購來增加資產時，我認為這是一個與幾年前我們增加資產的收購整合階段截然不同的階段。公司和更多應用程式協助流程人員。這些實際上是在離散的基礎上將資產添加到現有平台中，從收購整合的角度來看，該平台可以非常有效且相當簡化地整合。因此，從資產負債表、流動性和現金流管理的角度來看，這當然應該是比我們幾年前更直接的做法。

Right, much more plug-and-play versus what you were doing before. I look forward to seeing this kind of unfold over the next 24 months with the backlog you've got going now. Again, great quarter. Thanks.

是的，與您之前所做的相比，即插即用要多得多。我期待在接下來的 24 個月內看到這種情況的展開，以及目前積壓的工作。再次，偉大的季度。謝謝。

Tom Curran, Seaport Global Securities.

湯姆柯蘭 (Tom Curran)，海港環球證券公司。

Good morning, guys. I'll just start with two follow-ons to Jim's question about your newly expanding solids management and waste solutions portfolio here. Do you expect there to be opportunities? And if so, would you be interested in moving into minerals and metals extraction on that side? And then, could this also enhance the array of prospects that the industrial solutions group has beyond the oil and gas sector?

早上好傢伙。我將首先回答吉姆關於您新擴展的固體管理和廢物解決方案組合的問題的兩個後續問題。你期望有機會嗎？如果是這樣，您是否有興趣涉足礦物和金屬開採領域？那麼，這是否也能增強工業解決方案集團在石油和天然氣領域之外的一系列前景？

Thanks for the question, Tom. The solids management, as we mentioned, we really think it fits the infrastructure because it's largely co-located. It's a space that we've been slowly building or in a position we've been slowly building with the landfill from Nuverra and the three slurry injection wells that we acquired from the recent disposal acquisitions.

謝謝你的提問，湯姆。正如我們所提到的，固體管理確實適合基礎設施，因為它基本上位於同一地點。這是我們一直在慢慢建設的空間，或者是我們一直在慢慢建設的位置，包括 Nuverra 的垃圾掩埋場和我們從最近的處置收購中獲得的三口泥漿注入井。

One place that I do think it expands to would be around beneficial reuse. So this is something that we've been focused on for some time. We've evaluated multiple solutions and multiple companies. We've got a signed commercial contract with a large operator. We've got a successful pilot in Permian.

我確實認為它擴展到的一個地方是有益的再利用。所以這是我們一段時間以來一直在關注的事情。我們評估了多種解決方案和多家公司。我們與一家大型營運商簽訂了商業合約。我們在二疊紀有一位成功的飛行員。

And so there is opportunity there. There's still certainly challenges as it relates to the economics. And there's no silver bullet, but the interest continues to grow. One of the challenges with desalinization or partial desalinization is the solids. And so whether you're managing the salts or the iron or other solids, that's something that is a challenge with most of those solutions. And so as we think about expanding solids management beyond drill cuttings, oil and water-based mud, soil reclamation, tank bottoms, that's one area where I kind of see near-term expansion into.

所以那裡有機會。與經濟相關的挑戰仍然存在。雖然沒有什麼靈丹妙藥，但人們的興趣卻持續增長。脫鹽或部分脫鹽的挑戰之一是固體。因此，無論您要管理鹽、鐵還是其他固體，這對大多數解決方案來說都是一個挑戰。因此，當我們考慮將固體管理擴展到鑽屑、油基和水基泥漿、土壤復墾、罐底之外時，我認為近期會擴展到這個領域。

Makes sense, and I can see the beneficial reuse angle there. Turning to water services, could you give us an idea of how far along you are with the rationalization and margin enhancement initiatives and when you would expect to have that business's composition where you want it to be in terms of having completed, all of the yard closures, the field ops consolidation, the non-core disposals, just where are we at and when are you targeting to have that all finished?

有道理，我可以看到那裡有益的重用角度。談到供水服務，您能否告訴我們您在合理化和利潤提高計劃方面進展到了什麼程度，以及您希望何時使該業務的組成達到您想要的水平，所有院子都已完成關閉、外地行動整合、非核心處置，我們現在處於什麼階段？

Good question, Tom. We've certainly picked up the pace of some of that decision making in the first part of the year here, and that's carrying into the second quarter. The consolidation elimination efforts are focused around narrowing the scope of particularly some of the more commoditized service offerings that we mentioned, like fluids hauling and geographies, that may be a little less non-core to the overall full life cycle solutions, particularly around the infrastructure platform.

好問題，湯姆。當然，我們在今年上半年加快了一些決策的步伐，並將持續到第二季​​。合併消除工作的重點是縮小我們提到的一些更商品化的服務產品的範圍，例如流體運輸和地理，這些服務對於整個全生命週期解決方案來說可能不是那麼非核心，特別是在基礎設施方面平台。

We can also continue to look at opportunities and areas where we can enhance the segment via automation and technology. But the overall focus is on the core application of the business around the maintenance light, less labor-intensive and higher margin areas of service that are going to be critical to the overall full life cycle solutions with infrastructure.

我們還可以繼續尋找可以透過自動化和技術來增強該細分市場的機會和領域。但總體重點是圍繞輕維護、勞動密集和利潤率較高的服務領域的核心業務應用，這些領域對於基礎設施的整體全生命週期解決方案至關重要。

But that assessment is being made today. It's well underway. We saw some of that in the first quarter, and in the second quarter, we're going to see the benefits of that on the margin side of up to 21% to 24%. So we're going to start to see some of the pull-through of those decisions, but we're going to continue to make those here in the first half of the year. But I think we should largely have made most of those by the time we get to the middle end of the summer here.

但這項評估是今天做出的。一切進展順利。我們在第一季看到了其中的一些，在第二季度，我們將看到利潤率高達 21% 至 24% 的好處。因此，我們將開始看到這些決定的一些落實，但我們將在今年上半年繼續做出這些決定。但我認為，當我們到夏末時，我們應該已經完成了大部分工作。

Ultimately, if something's not core or not earning a return on assets worthy of a replacement investment dollar, relative to our other alternatives, particularly around infrastructure, as Michael talked about, we're looking at all of this capital competitively. Some of those things are probably things we don't need to be spending time on, so we're making those decisions now and should see the benefits in relatively short order.

最終，如果某件事不是核心的，或者沒有獲得值得替代投資美元的資產回報，相對於我們的其他選擇，特別是在基礎設施方面，正如邁克爾所說，我們正在以競爭性的方式看待所有這些資本。其中一些事情可能是我們不需要花時間的事情，所以我們現在正在做出這些決定，並且應該會在相對較短的時間內看到好處。

I want to -- this is John -- add one thing to this. I mean, anytime you have technology moving around, activity moving around, the type of equipment, it never stops, Tom. You keep busy all the time and trying to figure out what you need to be doing and what you need to not be doing.

我想——我是約翰——增加一件事。我的意思是，只要技術不斷流動，活動不斷流動，設備類型不斷流動，它就永遠不會停止，湯姆。你一直保持忙碌，並試圖弄清楚你需要做什麼和不應該做什麼。

But in our business, margin enhancement is not just on the elimination side. If we can really pull value to our customers through our water transfer, through those infrastructure, or above-ground containment, there's pieces that really enhance margins because of the value we can bring that are not necessarily elimination margin value.

但在我們的業務中，利潤率的提高不僅僅在於消除方面。如果我們真的能夠透過調水、透過這些基礎設施或地上遏制措施為客戶帶來價值，那麼有些東西就能真正提高利潤，因為我們可以帶來的價值不一定是消除利潤價值。

Got it. And then chemical technologies, could you give us an idea of what percentage of CT's sales are being generated as part of water infrastructures produced water-related operations? Could you give us an idea of sort of where that's at today versus, say, a year ago?

知道了。然後是化學技術，您能否告訴我們 CT 銷售額的百分比是作為水基礎設施生產的水相關業務的一部分而產生的？您能給我們介紹一下今天與一年前的情況嗎？

So it's increased from a year ago for sure because our recycling has increased materially from over the last year, Tom, but it's still a relatively small portion of chemical technologies revenue. It's an important portion for us because it's stable and we're able to get attractive rates to support our infrastructure. But the vast majority of chemical technologies is to the operator and with a lesser extent directly to the pressure pumper.

所以肯定比一年前有所增加，因為我們的回收量比去年有實質增加，湯姆，但它仍然只佔化學技術收入的一小部分。這對我們來說是一個重要的部分，因為它很穩定，而且我們能夠獲得有吸引力的價格來支持我們的基礎設施。但絕大多數的化學技術是針對操作員，少數是直接針對壓力泵的。

I think the important nuance to that is that chemical technology that's being distributed to the operator now has transitioned from a more commoditized application to a more specialty application around that recycling reuse application of produced water. So it's become a bit more of a complex application of decision for the operator when they're reusing produced water. You're not only treating that barrel of water to make it usable, but you're matching that with more specialty chemical application in that completion fluid system that's going downhole to complete the well.

我認為重要的細微差別是，現在分配給營運商的化學技術已經從更商品化的應用轉變為圍繞采出水回收再利用應用的更專業的應用。因此，當業者重複使用採出水時，這變得更加複雜的決策應用。您不僅要處理那桶水以使其可用，還要在完井液系統中將其與更專業的化學應用相匹配，以完成井的完井。

And this is something we've talked about in the past. I mean, it was really a big part of the driver we experienced in the second half of '22 and in '23. That transition is fully underway and largely taking place in the Permian. We haven't seen that really unfold in the other basins yet. We've seen it start, but not unfold. So as that continues to materialize in the DGA or the Bakken or elsewhere, we do think that our custom chemistry will be more competitive in that market.

這是我們過去討論過的事情。我的意思是，這確實是我們在 22 年下半年和 23 年經歷的車手的重要組成部分。這種轉變正在全面展開，並且主要發生在二疊紀。我們還沒有看到其他盆地真正出現這種情況。我們已經看到它開始，但還沒有展開。因此，隨著這種情況在 DGA 或巴肯或其他地方繼續實現，我們確實認為我們的客製化化學品在該市場上將更具競爭力。

And I think it's also important that, as you talk about the application of recycling and growth there and the transition towards more advanced treatment over time around beneficial reuse, et cetera, we do view our chemicals application as a competitive advantage relative to the overall landscape is really the only integrated water and chemistry platform. So we do think that our R&D capabilities and specialty application of chemicals does continue to benefit us as we transition more towards advanced chemical reuse.

我認為同樣重要的是，當您談論回收和增長的應用以及隨著時間的推移圍繞有益的再利用等向更先進的處理過渡時，我們確實將我們的化學品應用視為相對於整體景觀的競爭優勢是真正唯一的綜合水和化學平台。因此，我們確實認為，隨著我們更多地轉向先進的化學品再利用，我們的研發能力和化學品的專業應用確實繼續使我們受益。

Understood. Helpful. I appreciate the time and thoughtful responses.

明白了。有幫助。我很感謝您的時間和深思熟慮的回應。

Don Crist, Johnson Rice.

唐克里斯特、約翰遜賴斯。

Good morning, gentlemen. Just wanted to ask about the ramp-up in water infrastructure. I mean, obviously, you have a lot of projects going on, and we're going to see somewhere in the neighborhood of 10% uplift in the second quarter. But as we look towards the back half and into '25, do you see a kind of linear ramp-up, or is it going to be kind of lumpy as we kind of move towards your goal of being over 50% in that segment?

早安，先生們。只是想問水利基礎建設的建設。我的意思是，顯然，有很多項目正在進行，我們將在第二季度看到 10% 左右的成長。但是，當我們展望後半段並進入25 年時，您是否看到了一種線性增長，或者當我們朝著您在該細分市場中超過50% 的目標邁進時，它會變得有點不穩定嗎？

Yeah, you'll certainly see a pretty steady trajectory of growth, Don, over the next couple of quarters. There could be some stair-step benefit of some of the larger projects like the Thompson pipeline that we spoke about last quarter should be coming online during the third quarter as a very large greenfield project that has a chance to provide a bit of a stair-step benefit once that comes online.

是的，唐，在接下來的幾個季度裡，你肯定會看到相當穩定的成長軌跡。一些較大的項目可能會帶來一些階梯式的好處，比如我們上季度談到的湯普森管道應該在第三季度上線，作為一個非常大的綠地項目，有機會提供一點階梯-一旦上線，就將受益匪淺。

The remaining projects we announced this quarter, a little bit smaller on an individual basis, starting to benefit in Q3 and Q4, and we should see a continued backlog of execution of smaller and potentially larger projects coming online over the next handful of quarters. But we'll certainly see a fairly steady growth application, particularly as we get the acquired assets integrated and start to enhance the utilization of those assets over time as well.

我們本季宣布的其餘項目（單一項目規模稍小）將在第三季和第四季開始受益，我們應該會看到在接下來的幾個季度中繼續積壓執行較小和可能較大的項目。但我們肯定會看到應用程式相當穩定的成長，特別是當我們整合所收購的資產並隨著時間的推移開始提高這些資產的利用率時。

I think the stair-step approach is the right way to think about it, Don. I guess what I'd say is, between the acquisitions and the project backlog and the ones that we have -- I shouldn't say backlog -- opportunities that we have, and then the construction projects currently that we have coming online over the next six months, we feel really good about our ability to have 50% or more of our gross profit before depreciation in '25 coming from infrastructure, and we feel really pretty good about hitting our target margin in infrastructure of 50%.

我認為階梯式的方法是正確的思考方式，唐。我想我想說的是，在收購和專案積壓以及我們擁有的機會之間——我不應該說積壓——我們擁有的機會，然後是我們目前上線的建設項目接下來的六個月，我們對25 年折舊前50% 或更多的毛利來自基礎設施的能力感到非常滿意，而且我們對實現基礎設施50% 的目標利潤率感到非常滿意。

I appreciate that color. And just one further one from me, if I heard correctly, it sounds like the free cash flow is going to be dedicated more towards future M&A and debt payback possibly and not towards share buybacks, at least initially. Is that the right way to think about it, or can you expand on that any?

我很欣賞那種顏色。我還想說一點，如果我沒聽錯的話，聽起來自由現金流將更多地用於未來的併購和債務償還，而不是用於股票回購，至少在最初是這樣。這是正確的思考方式嗎？

Good question. Certainly, the first half of the year here, the capital allocation was certainly weighted towards these acquisitions. We do still have the open authorization of $21 million today for share repurchases, and we'll continue to look at a tactical application of that as part of our overall shareholder return strategy.

好問題。當然，今年上半年，資本配置肯定偏重於這些收購。今天，我們仍然擁有 2,100 萬美元的公開授權用於股票回購，我們將繼續考慮其戰術應用，作為我們整體股東回報策略的一部分。

Obviously, with the recently increased dividend, we're strongly committed to shareholder returns over time here, and we do think that we've got a strong organic investment backlog that will be well within free cash. And then what we do with that remaining cash will be a continued decision on a quarter-by-quarter basis here.

顯然，隨著最近股息的增加，我們堅定地致力於股東回報，而且我們確實認為我們擁有強大的有機投資積壓，這將完全在自由現金範圍內。然後，我們如何處理剩餘現金將是逐季度持續做出的決定。

So we certainly view it as part of the overall allocation strategy, Don, but certainly, the first half of the year here, we were focused on M&A. Back half of the year, probably going to be more heavily focused on investing in the organic growth, but that should still leave ample free cash over the back half of the year to make some decisions around.

因此，我們當然將其視為整體配置策略的一部分，但當然，今年上半年，我們專注於併購。下半年，可能會更注重投資於有機成長，但這仍應在今年下半年留下充足的自由現金來做出一些決定。

I appreciate the color. I'll turn it back.

我很欣賞它的顏色。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 a little bit about the systems in water infrastructure, and I'm curious as to whether you continue to build out infrastructure systems that can offer more solutions to your customers. Is that really what's driving the margin uptick in water infrastructure, or is it adding contracts to existing systems?

謝謝。早安.約翰，您談到了水基礎設施中的系統，我很好奇您是否繼續建立基礎設施系統，為您的客戶提供更多解決方案。這真的是水利基礎設施利潤上升的原因，還是為現有系統增加了合約？

As far as the asset base and the systems, that would be adding contracts and new extensions to existing systems. So you buy assets that are a good fit but not necessarily hooked up to the system yet, you contract around those assets, you have to put some infrastructure in to get them part of the system itself, and that creates a new contract of the length.

就資產基礎和系統而言，這將是向現有系統添加合約和新的擴展。因此，您購買非常適合但不一定連接到系統的資產，您圍繞這些資產簽訂合同，您必須放置一些基礎設施以使它們成為系統本身的一部分，這會創建一個長度的新合同。

As far as the margin is concerned, I think we've been clear. We have a certain return value in the contracts, whether they're both new contracts for recycling or existing things that we've closed on M&A or even putting just pipelines in to hook up disposal wells into long-haul pipeline systems into different areas of disposal. Those are all underwritten very similar to each other, and that underwriting delivers that 50% gross margins that Michael's talking about.

就利潤率而言，我認為我們已經很清楚了。我們在合約中具有一定的回報價值，無論是新的回收合同還是我們已經完成併購的現有合同，甚至只是將管道連接到不同區域的長途管道系統中的處置井。這些承保都非常相似，而且承保帶來了邁克爾所說的 50% 的毛利率。

It's also important to say, again, in the sense of what creates the backlog, once the value is being able to be recognized by our customers, those inbounds are looking for the value that we're creating to their LOE or their AFE, as well as the return profile that we're getting. So it's very value add to our customer.

同樣重要的是，再次強調，就造成積壓的原因而言，一旦價值能夠被我們的客戶認可，這些入站人員就會尋找我們為他們的 LOE 或他們的 AFE 創造的價值，因為以及我們得到的回報概況。所以這對我們的客戶來說非常有價值。

John, is the customer willing to contract services for longer periods of time as you build out more solutions in these systems?

約翰，當您在這些系統中建立更多解決方案時，客戶是否願意簽訂更長期限的服務合約？

Yes. I mean, when you've got various issues that are attractive to you, the repeatable predictable, it's not just in the earnings power of this company, but it's also in the operational power of our customers. They know they've got stability in a very important part of their LOE and their AFE.

是的。我的意思是，當你遇到各種對你有吸引力的問題時，可重複、可預測的問題不僅在於這家公司的獲利能力，還在於我們客戶的營運能力。他們知道他們的 LOE 和 AFE 的一個非常重要的部分已經穩定。

The flexibility of the systems itself, whether you're taking the water back to a new developed well or stacking the water up into reserves for the next newly developed well or taking it to disposal, that is a very big value add to our customer base. And so it's in that optionality, as well as just the repeatable predictable, and then the actual cost to their LOE or extension of their economic values.

系統本身的靈活性，無論您是將水帶回新開發的井，還是將水堆放在下一個新開發的井的儲備中，或者將其進行處理，這對我們的客戶群來說都是一個非常大的增值。因此，這取決於可選擇性，以及可重複的可預測性，以及其 LOE 的實際成本或經濟價值的擴展。

It's the infrastructure service model so that you provide the certainty and the cost efficiency of fixed infrastructure with the flexibility of service. And by providing that together, you have a higher certainty of execution and just better communication. So it gets back to kind of the one-stop shop model. And so to John's point, we have and think we will continue to see benefit to water services through the success in water infrastructure.

它是基礎設施服務模型，使您能夠提供固定基礎設施的確定性和成本效率以及服務的靈活性。透過共同提供這些，您將獲得更高的執行確定性和更好的溝通。所以它又回到了一站式商店模式。因此，就約翰的觀點而言，我們已經並且認為我們將繼續看到透過水基礎設施的成功為水服務帶來的好處。

Thanks. And Michael, on the beneficial reuse you touched on, has any of the issues around injection and seismicity, has that accelerated any of the work that you're seeing done to try to overcome some of the economic challenges of beneficial reuse, or is it just kind of a steady state march toward what the industry hopes will be a solution?

謝謝。邁克爾，關於您提到的有益再利用，有關於注入和地震活動的任何問題，這是否加速了您所看到的為克服有益再利用的一些經濟挑戰所做的任何工作，或者只是一種穩定的狀態邁向業界希望的解決方案嗎？

I think it's accelerating interest among our customers in those solutions and in our progress in evaluating companies and technologies and success of pilot programs, for sure. I mean, it's something that the industry is aware of, and in order to protect the oil coming out of the ground in the Permian Basin, the customers or the operators have to secure a place for that water. And as formations pressure up or the regulatory railroad commission reduces injectivity, you're going to have a harder and harder challenge of getting rid of that water, and beneficial reuse could be one of the answers.

我認為，這肯定會加速我們的客戶對這些解決方案、我們在評估公司和技術以及試點專案成功方面取得的進展的興趣。我的意思是，業界都意識到這一點，為了保護二疊紀盆地地下的石油，客戶或營運商必須確保有地方存放這些水。隨著地層壓力的增加或鐵路監管委員會減少注入量，消除這些水將面臨越來越嚴峻的挑戰，而有益的再利用可能是答案之一。

Thank you.

謝謝。

John Daniel, Daniel Energy Partners.

約翰‧丹尼爾，丹尼爾能源合夥人。

Hey, guys. Good morning. I know you mentioned in the back half you're going to sort of shift more towards organic versus acquisition. But I'm curious, when you look at sort of the turmoil in the broader market out there, if you might actually see some opportunistic opportunities pop up, are you seeing any signs that that might potentially play out where the strategy might pivot a little bit from back to M&A versus organic?

大家好。早安.我知道您在後半部分提到您將更多地轉向有機而非收購。但我很好奇，當你觀察更廣泛市場的動盪時，如果你實際上可能會看到一些機會主義機會出現，你是否看到任何跡象表明這可能會在策略可能會稍微轉向的地方發揮作用有點回到併購與有機？

John, this is John Schmitz. We believe that that is a very possible outcome as we travel through the next six to nine months that, whether it's market conditions or whether it's systems that belong together to bring value both to the investor base of this company or the other company, as well as our customer base, we do believe that what you're describing could develop over at the same time that we're executing a large amount of this backlog that Michael and Chris and I are talking about. So something we keep our minds open, our phones available. And I do believe it could happen, John.

約翰，這是約翰‧施密茨。我們相信，隨著我們在未來六到九個月的時間裡，這是一個非常有可能的結果，無論是市場狀況還是系統是否共同為該公司或另一家公司的投資者基礎帶來價值作為我們的客戶群，我們確實相信您所描述的內容可以在我們執行邁克爾、克里斯和我正在談論的大量積壓工作的同時得到發展。所以我們要保持開放的心態，我們的手機可用。我確實相信這可能會發生，約翰。

Okay. And then, you've done, I guess, the five deals this year, have closed them. How many deals do you see that you turn down, and is it typically -- when you turn them down, is it a function of either -- is it more valuation or is it you do the digging and you see some environmental concerns? What causes the deal not to happen?

好的。然後，我想，今年你已經完成了五筆交易，而且已經完成了。你看到有多少交易被你拒絕了，這通常是——當你拒絕它們時，它是兩者的一個函數——是估值更高還是你在挖掘時發現了一些環境問題？是什麼原因導致交易未能達成？

I would say first that, if you look at the deals that we've done, especially, as Chris said, the first ones we were doing were really companies and the companies were -- the companies that you know, John, that we bought whole companies, what we're buying now is really assets that fit those systems in that, and they're very identified before we go into really trying to either evaluate or buy the asset base. So we don't go through a lot of deals to come up with the one deal that fits us well. We really identify the deals that fit us real well and spend time on them.

我首先要說的是，如果你看看我們所做的交易，特別是，正如克里斯所說，我們所做的第一批交易實際上是公司，而這些公司是——約翰，你知道的我們收購的公司整個公司，我們現在購買的實際上是適合這些系統的資產，並且在我們真正嘗試評估或購買資產基礎之前，它們已經非常明確。因此，我們不會經歷很多交易才能找到最適合我們的交易。我們確實找到了真正適合我們的交易，並花時間在上面。

As far as the environmental and logically the due diligence, yeah, we've had a few things that we looked at that we just couldn't stomach when we found that they didn't fit. And it was, I doubt, things that we thought were strategic and we had to turn them away for various reasons. But it's either going to be a systems fit or an environmental or condition downhole or things of that nature that probably kills most of our deals, John.

就環境和邏輯上的盡職調查而言，是的，我們研究了一些東西，但當我們發現它們不合適時，我們就無法忍受。我懷疑，我們認為這些事情具有戰略意義，但由於各種原因，我們不得不拒絕它們。但約翰，要嘛是系統適配，要嘛是井下環境或條件，要嘛是類似性質的事情，可能會毀掉我們大部分的交易。

And John, this is Chris. I'll maybe add to that. Some of these opportunities as well, as we've mentioned, we're able to buy some of these assets at below replacement costs which, in and of itself, is oftentimes replacing what is growth capital that we might otherwise be interested in organically investing.

約翰，這是克里斯。我也許會補充一點。正如我們所提到的，其中一些機會我們能夠以低於重置成本的價格購買其中一些資產，這些資產本身通常會取代我們可能對有機投資感興趣的成長資本。

We can go find an asset that's a strategic fit, underutilized, and buy it in a manner that's going to be competitive against what would have already been a need for an organic project. But that's going to be a continued opportunity for us to add to the portfolio.

我們可以去尋找一種策略上適合、未充分利用的資產，並以一種對有機項目已有的需求具有競爭力的方式購買它。但這將是我們繼續增加投資組合的機會。

Okay, thanks for keeping me in the loop here and letting me in the call. Thanks.

好的，感謝您讓我了解情況並讓我參與通話。謝謝。

Ladies and gentlemen, we have reached the end of the question-and-answer session. I would like to turn the call back to John Schmitz for closing remarks.

女士們、先生們，問答環節已經結束。我想將電話轉回給約翰‧施密茨，讓他致閉幕詞。

Thanks. Thank you, everyone, for joining the earnings call today. Continue to add on -- thanks to our employees, the customers, the investors. And we really look forward to talking to you about Select in the next quarters. Thank you very much.

謝謝。感謝大家參加今天的財報電話會議。繼續添加—感謝我們的員工、客戶和投資者。我們非常期待在接下來的幾季與您討論 Select。非常感謝。

Thank you. This concludes today's conference. You may disconnect your lines at this time.

謝謝。今天的會議到此結束。此時您可以斷開線路。