Select Water Solutions Q3 2026 net income rises to $20.6M
Future dividend payments are subject to quarterly review and approval by the board of directors.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Select Water Solutions, Inc. (WTTR) reported third-quarter revenue of $412.2 million, versus $322.2 million a year earlier, and net income attributable to the company of $20.6 million, versus $2.7 million. Gross profit was $81.4 million, compared with $43.6 million. Nine-month operating cash flow was $181.4 million, compared with $149.2 million.
On September 23, 2026, SES Holdings sold a 55% interest in Peak to Headwall. SES Holdings retained 45%, which Select accounts for as an equity-method investment. SES Holdings received $1.5 million in cash and a secured seller note with a $35.3 million face amount; the note bears 8.5% interest and matures five years after closing, or earlier upon certain change-of-control events. Select recorded a $4.2 million gain on deconsolidation.
Select LLC closed its acquisition of all issued and outstanding equity interests in Pilot Water on November 2, 2026, after entering the purchase agreement on September 24, 2026. Borrowings outstanding under the sustainability-linked credit facility were $234.4 million as of September 30, 2026, compared with $320.0 million as of December 31, 2025. The term loan was repaid on October 21, 2026; the revolving facility was repaid and the credit facility terminated on November 2, 2026.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter revenue was $412.2 million, versus $322.2 million a year earlier.
- Moderate pointThird-quarter net income attributable to Select was $20.6 million, versus $2.7 million.
- Moderate pointNine-month operating cash flow was $181.4 million, compared with $149.2 million a year earlier.
- Minor pointPeak deconsolidation generated a $4.2 million gain.
Negative
- None.
Key Figures
Key Terms
deconsolidation financial
equity method financial
Borrowing Base financial
asset retirement obligations financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were WTTR’s third-quarter revenue and net income in 2026?
What did Select receive for selling part of Peak?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _______________ to ________________
Commission File Number
(Exact name of registrant as specified in its charter)
| |
(State of incorporation) | (IRS Employer Identification Number) |
| |
(Address of principal executive offices) | (Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
| | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | |
Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | |
| | | Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant is a shell company. Yes
As of November 5, 2026, the registrant had
Table of Contents
SELECT WATER SOLUTIONS, INC.
TABLE OF CONTENTS
| | |
| | Page |
PART I—FINANCIAL INFORMATION | | |
| | |
Item 1. | Financial Statements (Unaudited) | 7 |
| | |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 47 |
| | |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 67 |
| | |
Item 4. | Controls and Procedures | 68 |
| | |
PART II—OTHER INFORMATION | | |
| | |
Item 1. | Legal Proceedings | 68 |
| | |
Item 1A. | Risk Factors | 68 |
| | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 70 |
| | |
Item 3. | Defaults Upon Senior Securities | 71 |
| | |
Item 4. | Mine Safety Disclosures | 71 |
| | |
Item 5. | Other Information | 71 |
| | |
Item 6. | Exhibits | 71 |
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| | |
|
GLOSSARY OF CERTAIN TERMS |
The terms and abbreviations defined in this section are used throughout this quarterly report. AMI. Areas of Mutual Interest ARO. Asset Retirement Obligation ASC. Accounting Standards Codification ASU. Accounting Standards Update AV Farms. AV Farms, LP BRR. Black River Ranch C&A. C&A Rollover Company, LLC CODM. Chief Operating Decision Maker E&P. Exploration and Production EBITDA. Earnings before Interest, Taxes, Depreciation and Amortization FCF. Free Cash Flow GAAP. Generally Accepted Accounting Principles Geneses. Geneses Water, L.P. Headwall. Headwall I LLC LPA. Limited Partnership Agreement MidCon. Midcontinent MVC. Minimum Volume Commitment NOLs. Net Operating Losses OPEC/OPEC+. Organization of the Petroleum Exporting Countries (+ allies) Peak. Peak Rentals HoldCo, LLC (together with its subsidiaries) Pilot Water. Pilot Water Solutions LLC (together with its subsidiaries) PSU. Performance Share Unit ROA. Return on assets ROFR. Right of First Refusal ROW. Right-of-way SEC. Securities and Exchange Commission Select LLC. Select Water Solutions, LLC Select Holdings. Select Water Holdings LLC SES Holdings. SES Holdings, LLC SES Holdings LLC Agreement. The Eighth Amended and Restated Limited Liability Company Agreement of SES Holdings SES Holdings LLC Units. Common units in SES Holdings Select Inc. Select Water Solutions, Inc. SOFR. Secured Overnight Financing Rate SWD. Saltwater Disposal Well SWR. Select Water Reuse, LLC The Exchange Act. Securities Exchange Act of 1934, as amended The Securities Act. Securities Act of 1933, as amended TRAs. Tax Receivable Agreements TSR. Total Shareholder Return U.S. United States of America VIE. Variable Interest Entity WTI. West Texas Intermediate |
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|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical fact, included in this Quarterly Report regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” “preliminary,” “forecast,” and similar expressions or variations are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in our most recent Annual Report on Form 10-K, in this Quarterly Report and those set forth from time to time in our other filings with the Securities and Exchange Commission (the “SEC”). These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.
Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, those summarized below:
| ● | the effects and benefits of the Pilot Water Acquisition (as defined herein), including any anticipated operation or corporate synergies, our ability to integrate operations and the anticipated impact of the Pilot Water Acquisition on our results of operations, financial position, growth opportunities and competitive position; |
| ● | the amount of any cash true-up payment we may be required to make in respect of the equity consideration if the trading price of our Class A common stock declines following the closing of the Pilot Water Acquisition, and the amount of any contingent payment that becomes payable upon the satisfaction of certain operational milestones; |
| ● | global economic distress, including that resulting from the sustained Russia-Ukraine war and related economic sanctions, instability and continued hostilities in the Middle East and elsewhere, including military conflict involving Iran, instability in Venezuela, economic uncertainty as a result of changing trade policies, disruptions in global oil and gas markets and inflation and high interest rates, each of which may decrease demand for oil and natural gas or contribute to volatility in the prices for oil and natural gas, which may decrease demand for our services; |
| ● | actions taken by the members of the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (together with OPEC and other allied producing countries, “OPEC+”) with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with announced supply limitations, which may be exacerbated by military conflict in the Middle East involving Iran and the resumption of sales of previously sanctioned oil from Venezuela and Russia; |
| ● | impacts related to changing United States (“U.S.”) and foreign trade policies, including increased trade restrictions or tariffs, the impact of changes in diplomatic and trade relations, and the results of countermeasures and any tariff mitigation initiatives; |
| ● | changes in global political, regulatory or economic conditions, generally, including as a result of the fall 2026 United States midterm elections and any resultant political, regulatory and economic uncertainty, including potential changes in regulatory policies, the rate of inflation and potential economic recession; |
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Table of Contents
| ● | changes in safety, health, environmental and other governmental policy and regulation; |
| ● | the enactment or promulgation of new laws or regulations or changes or modifications in existing laws, regulations, rules or governmental policies with respect to taxation; |
| ● | the level of capital spending and access to capital markets by oil and gas companies in response to changes in commodity prices or reduced demand; |
| ● | the impact of central bank policy actions and disruptions in the banking industry and capital markets; |
| ● | the potential deterioration of our customers’ financial condition, including defaults resulting from actual or potential insolvencies; |
| ● | the degree to which consolidation among our customers may affect spending on U.S. drilling and completions, including the recent consolidation in the Permian Basin; |
| ● | trends and volatility in oil and gas prices, and our ability to manage through such volatility; |
| ● | the impact of current and future laws, rulings, governmental regulations and policies, including those related to accessing water, disposing of wastewater, transferring produced water, interstate freshwater and produced water transfer, chemicals, carbon pricing, pipeline construction, emissions, hydraulic fracturing, leasing, permitting or drilling on federal lands and various other environmental matters; |
| ● | the ability to source certain raw materials and other critical components or manufactured products globally on a timely basis from economically advantaged sources, including any delays and/or supply chain disruptions; |
| ● | regional impacts to our business, including our key infrastructure assets within the Permian Basin, the Bakken, and the Haynesville regions; |
| ● | capacity constraints on regional oil, natural gas and water gathering, processing and pipeline systems that result in a slowdown or delay in drilling and completion activity, and thus a decrease in the demand for our services in our core markets; |
| ● | the impact of regulatory and related policy actions by federal, state and/or local governments, such as the Inflation Reduction Act of 2022, which may negatively impact the future production of oil and gas in the U.S., thereby reducing demand for our services; |
| ● | our ability to hire and retain key management and employees, including skilled labor; |
| ● | our access to capital to fund expansions, acquisitions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms, or at all; |
| ● | our health, safety and environmental performance; |
| ● | the impact of competition on our operations; |
| ● | the degree to which our Exploration and Production (“E&P”) customers may elect to operate their water-management services in-house rather than source these services from companies like us; |
| ● | our level of indebtedness and our ability to comply with covenants contained in our current or future debt instruments; |
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Table of Contents
| ● | delays or restrictions in obtaining permits by us or our customers; |
| ● | constraints in supply or availability of equipment used in our business; |
| ● | the impact of advances or changes in well-completion technologies or practices that result in reduced demand for our services, either on a volumetric or time basis; |
| ● | acts of terrorism, war or political or civil unrest in the U.S. or elsewhere, such as the Russia-Ukraine war, the instability and continued hostilities in the Middle East and elsewhere, including military conflict involving Iran and any potential instability in Venezuela; |
| ● | information technology failures or cyberattacks; |
| ● | accidents, weather, natural disasters or other events affecting our business; and |
| ● | the other risks identified in our most recent Annual Report on Form 10-K and under the headings “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Part II—Item 1A. Risk Factors” in this Quarterly Report. |
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could have material adverse effects on our future results. Our future results will depend upon various other risks and uncertainties, including those described under the heading “Part I―Item 1A. Risk Factors” in our most recent Annual Report on Form 10-K and under the heading “Part II―Item 1A. Risk Factors” in this Quarterly Report. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. All forward-looking statements attributable to us are qualified in their entirety by this cautionary note.
6
Table of Contents
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
SELECT WATER SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
| | (unaudited) | | | ||
Assets | | | | | | |
Current assets |
| | | | | |
Cash and cash equivalents | | $ | | | $ | |
Accounts receivable trade, net of allowance for credit losses of $ | |
| | |
| |
Accounts receivable, related parties | |
| | |
| |
Inventories | |
| | |
| |
Prepaid expenses and other current assets | |
| | |
| |
Total current assets | |
| | |
| |
Property and equipment | |
| | |
| |
Accumulated depreciation | |
| ( | |
| ( |
Total property and equipment, net | |
| | |
| |
Right-of-use assets, net | | | | | | |
Goodwill | |
| | |
| |
Other intangible assets, net | |
| | |
| |
Deferred tax assets, net | | | | |
| |
Investments in unconsolidated entities | | | | |
| |
Note receivable | | | | |
| — |
Other long-term assets | |
| | |
| |
Total assets | | $ | | | $ | |
Liabilities and Equity | |
| | |
| |
Current liabilities | |
| | |
| |
Accounts payable | | $ | | | $ | |
Accrued accounts payable | | | | | | |
Accounts payable and accrued expenses, related parties | |
| | |
| |
Accrued salaries and benefits | |
| | |
| |
Accrued insurance | |
| | |
| |
Sales tax payable | | | | | | |
Accrued expenses and other current liabilities | |
| | |
| |
Current operating lease liabilities | | | | | | |
Current portion of long-term debt | | | | | | |
Current portion of finance lease obligations | |
| | |
| |
Total current liabilities | |
| | |
| |
Long-term tax receivable agreements liabilities | | | | |
| |
Long-term operating lease liabilities | |
| | |
| |
Long-term debt, net | |
| | |
| |
Other long-term liabilities | |
| | |
| |
Total liabilities | |
| | |
| |
Commitments and contingencies (Note 9) | |
| | |
| |
Class A common stock, $ | |
| | |
| |
Class B common stock, $ | |
| | |
| |
Preferred stock, $ | |
| — | |
| — |
Additional paid-in capital | |
| | |
| |
Accumulated deficit | |
| ( | |
| ( |
Total stockholders’ equity | |
| | |
| |
Noncontrolling interests | |
| | |
| |
Total equity | |
| | |
| |
Total liabilities and equity | | $ | | | $ | |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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Table of Contents
SELECT WATER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share data)
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Revenue |
| | |
| | | | | | | | |
Water Infrastructure | | $ | | | $ | | | $ | | | $ | |
Water Services | | | | | | | | | | | | |
Chemical Technologies | |
| | |
| | | | | | | |
Total revenue | |
| | |
| | | | | | | |
Costs of revenue | |
| | |
| | | | | | | |
Water Infrastructure | | | | | | | | | | | | |
Water Services | | | | | | | | | | | | |
Chemical Technologies | |
| | | | | | | | | | |
Depreciation, amortization and accretion | |
| | | | | | | | | | |
Total costs of revenue | |
| | |
| | | | | | | |
Gross profit | |
| | |
| | | | | | | |
Operating expenses | |
| | |
| | | | | | | |
Selling, general and administrative | |
| | | | | | | | | | |
Depreciation and amortization | |
| | | | | | | | | | |
Impairments and abandonments | |
| — | | | | | | | | | |
Lease abandonment costs | |
| ( | | | | | | ( | | | |
Total operating expenses | |
| | |
| | | | | | | |
Income (loss) from operations | |
| | |
| ( | | | | | | |
Other income (expense) | |
| | |
| | | | | | | |
Gain on sales of property and equipment and divestitures, net | | | | | | | | | | | | |
Interest expense, net | |
| ( | | | ( | | | ( | | | ( |
Gain on deconsolidation of subsidiary | | | | | | — | | | | | | — |
Remeasurement gain on business combination | | | — | | | | | | — | | | |
Other | |
| | | | ( | | | | | | ( |
Income before income tax expense and equity in losses of unconsolidated entities | |
| | |
| | | | | | | |
Income tax expense | |
| ( | | | ( | | | ( | | | ( |
Equity in losses of unconsolidated entities | | | ( | | | ( | | | ( | | | ( |
Net income | |
| | |
| | | | | | | |
Less: net (income) loss attributable to noncontrolling interests | |
| ( | | | | | | ( | | | ( |
Net income attributable to Select Water Solutions, Inc. | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
Net income per share attributable to common stockholders (Note 15): | | | | |
| | | | | | | |
Class A—Basic | | $ | | | $ | | | $ | | | $ | |
Class B—Basic | | $ | — | | $ | — | | $ | — | | $ | — |
| | | | | | | | | | | | |
Net income per share attributable to common stockholders (Note 15): | | | | |
| | | | | | | |
Class A—Diluted | | $ | | | $ | | | $ | | | $ | |
Class B—Diluted | | $ | — | | $ | — | | $ | — | | $ | — |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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SELECT WATER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(in thousands)
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income | | $ | | | $ | | | $ | | | $ | |
Comprehensive income | |
| | |
| | | | | | | |
Less: comprehensive (income) loss attributable to noncontrolling interests | |
| ( | |
| | | | ( | | | ( |
Comprehensive income attributable to Select Water Solutions, Inc. | | $ | | | $ | | | $ | | | $ | |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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SELECT WATER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the nine months ended September 30, 2026 and 2025 (unaudited)
(in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | | | | | | | | | | | | | | | ||||||
| | Stockholders | | Stockholders | | | | | | | | | | | | | | | |||||||
| | | | Class A | | | | Class B | | Additional | | | | Total | | | | | | | |||||
| | | | Common | | | | Common | | Paid-In | | Accumulated | | Stockholders’ | | Noncontrolling | | | | ||||||
| | Shares | | Stock | | Shares | | Stock | | Capital | | Deficit | | Equity | | Interests | | Total | |||||||
Balance as of December 31, 2025 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | | | $ | |
Issuance of shares for underwritten offering | | | | | |
| — | | | — | | | | | | — | | | | | | | | | |
Exchange of SES Holdings LLC Units and Class B common stock for Class A common stock | | | | | |
| ( | | | ( | | | | | | — | | | | | | ( | | | ( |
Equity-based compensation | | — | | | — |
| — | | | — | | | | | | — | | | | | | | | | |
Issuance of restricted shares |
| | | | |
| — | | | — | | | | | | — | | | | | | ( | | | — |
Cashless exercise of options | | | | | |
| — | | | — | | | | | | — | | | | | | — | | | |
Repurchase of common stock | | ( | | | ( |
| — | | | — | | | ( | | | — | | | ( | | | ( | | | ( |
Restricted shares forfeited | | ( | | | — |
| — | | | — | | | ( | | | — | | | ( | | | | | | — |
Performance shares vested | | | | | |
| — | | | — | | | | | | — | | | | | | ( | | | — |
Contributions from noncontrolling interests | | — | | | — |
| — | | | — | | | — | | | — | | | — | | | | | | |
Dividend and distribution declared: | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A common stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unvested restricted stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Class B common stock ($ | | — | | | — | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Net income |
| — | | | — | | — | | | — | | | — | | | | | | | | | | | | |
Balance as of September 30, 2026 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | | | | | | | | | | | | | | | ||||||
| | Stockholders | | Stockholders | | | | | | | | | | | | | | | |||||||
| | | | Class A | | | | Class B | | Additional | | | | Total | | | | | | | |||||
| | | | Common | | | | Common | | Paid-In | | Accumulated | | Stockholders’ | | Noncontrolling | | | | ||||||
| | Shares | | Stock | | Shares | | Stock | | Capital | | Deficit | | Equity | | Interests | | Total | |||||||
Balance as of December 31, 2024 |
| | | $ | |
| | | $ | |
| $ | | | $ | ( | | $ | | | $ | | | $ | |
Equity-based compensation | | — | | | — | | — | | | — | | | | | | — | | | | | | | | | |
Issuance of restricted shares | | | | | | | — | | | — | | | | | | — | | | | | | ( | | | — |
Cashless exercise of options | | | | | — | | — | | | — | | | | | | — | | | | | | — | | | |
Issuance of shares for acquisitions | | | | | | | — | | | — | | | | | | — | | | | | | | | | |
Repurchase of common stock | | ( | | | ( | | — | | | — | | | ( | | | — | | | ( | | | ( | | | ( |
Restricted shares forfeited | | ( | | | ( | | — | | | — | | | ( | | | — | | | ( | | | | | | — |
Performance shares vested | | | | | | | — | | | — | | | | | | — | | | | | | ( | | | — |
Contributions from noncontrolling interests | | — | | | — | | — | | | — | | | — | | | — | | | — | | | | | | |
Dividend and distribution declared: | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A common stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unvested restricted stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Class B common stock ($ | | — | | | — | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Net income |
| — | |
| — |
| — | |
| — |
|
| — | |
| | |
| | |
| |
|
| |
Balance as of September 30, 2025 |
| | | $ | |
| | | $ | |
| $ | | | $ | ( | | $ | | | $ | | | $ | |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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SELECT WATER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the three months ended September 30, 2026 and 2025 (unaudited)
(in thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | | | | | | | | | | | | | | | ||||||
| | Stockholders | | Stockholders | | | | | | | | | | | | | | | |||||||
| | | | Class A | | | | Class B | | Additional | | | | Total | | | | | | | |||||
| | | | Common | | | | Common | | Paid-In | | Accumulated | | Stockholders’ | | Noncontrolling | | | | ||||||
| | Shares | | Stock | | Shares | | Stock | | Capital | | Deficit | | Equity | | Interests | | Total | |||||||
Balance as of June 30, 2026 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | | | $ | |
Exchange of SES Holdings LLC Units and Class B common stock for Class A common stock | | | | | | | ( | | | ( | | | | | | — | | | | | | ( | | | ( |
Equity-based compensation | | — | | | — | | — | | | — | | | | | | — | | | | | | | | | |
Issuance of restricted shares |
| | |
| |
| — | |
| — | |
| | |
| — | |
| | |
| ( |
|
| — |
Cashless exercise of options | | | | | — | | — | | | — | | | | | | — | | | | | | — | | | |
Repurchase of common stock | | ( | | | ( | | — | | | — | | | ( | | | — | | | ( | | | ( | | | ( |
Restricted shares forfeited | | ( | | | — | | — | | | — | | | ( | | | — | | | ( | | | | | | — |
Dividend and distribution declared: | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A common stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unvested restricted stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Class B common stock ($ | | — | | | — | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Net income |
| — | |
| — |
| — | |
| — | |
| — | |
| | |
| | |
| |
|
| |
Balance as of September 30, 2026 |
| | | $ | |
| | | $ | | | $ | | | $ | ( | | $ | | | $ | | | $ | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | Class A | | Class B | | | | | | | | | | | | | | | | ||||||
| | Stockholders | | Stockholders | | | | | | | | | | | | | | | |||||||
| | | | Class A | | | | Class B | | Additional | | | | Total | | | | | | | |||||
| | | | Common | | | | Common | | Paid-In | | Accumulated | | Stockholders’ | | Noncontrolling | | | | ||||||
| | Shares | | Stock | | Shares | | Stock | | Capital | | Deficit | | Equity | | Interests | | Total | |||||||
Balance as of June 30, 2025 |
| | | $ | |
| | | $ | |
| $ | | | $ | ( | | $ | | | $ | | | $ | |
Equity-based compensation | | — | | | — | | — | | | — | | | | | | — | | | | | | | | | |
Issuance of restricted shares | | | | | — | | — | | | — | | | | | | — | | | | | | ( | | | — |
Issuance of shares for acquisitions | | | | | | | — | | | — | | | | | | — | | | | | | | | | |
Repurchase of common stock | | ( | | | — | | — | | | — | | | ( | | | — | | | ( | | | ( | | | ( |
Restricted shares forfeited | | ( | | | ( | | — | | | — | | | ( | | | — | | | ( | | | | | | — |
Dividend and distribution declared: | | | | | | | | | | | | | | | | | | | | | | | | | |
Class A common stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Unvested restricted stock ($ | | — | | | — | | — | | | — | | | ( | | | — | | | ( | | | — | | | ( |
Class B common stock ($ | | — | | | — | | — | | | — | | | — | | | — | | | — | | | ( | | | ( |
Net income (loss) |
| — | |
| — |
| — | |
| — |
|
| — | |
| | |
| | |
| ( |
|
| |
Balance as of September 30, 2025 |
| | | $ | |
| | | $ | |
| $ | | | $ | ( | | $ | | | $ | | | $ | |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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SELECT WATER SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
Cash flows from operating activities |
| | | | | |
Net income | | $ | | | $ | |
Adjustments to reconcile net income to net cash provided by operating activities | |
| | |
| |
Depreciation, amortization and accretion | |
| | |
| |
Deferred tax expense | | | | | | |
Gain on disposal of property and equipment and divestitures | |
| ( | |
| ( |
Equity in losses of unconsolidated entities | | | | | | |
Credit loss expense | |
| | |
| |
Amortization and write off of debt issuance costs | |
| | |
| |
Inventory adjustments | | | | | | |
Equity-based compensation | |
| | |
| |
Impairments and abandonments | |
| | |
| |
Remeasurement gain on business combination | |
| — | |
| ( |
Gain on deconsolidation of subsidiary | | | ( | | | — |
Non-cash revenue | | | ( | | | — |
Other operating items, net | |
| | |
| |
Changes in operating assets and liabilities | |
| | |
| |
Accounts receivable | |
| ( | |
| |
Prepaid expenses and other assets | |
| ( | |
| ( |
Accounts payable and accrued liabilities | |
| | |
| ( |
Net cash provided by operating activities | |
| | |
| |
Cash flows from investing activities | |
| | |
| |
Net cash disposed in deconsolidation of subsidiary | |
| ( | |
| — |
Purchase of property and equipment | |
| ( | |
| ( |
Equity-method and preferred stock investments | | | ( | |
| ( |
Acquisitions, net of cash received | |
| ( | |
| ( |
Proceeds received from sales of property and equipment | |
| | |
| |
Net cash used in investing activities | |
| ( | |
| ( |
Cash flows from financing activities | |
| | |
| |
Borrowings from revolving line of credit | | | | | | |
Payments on revolving line of credit | |
| ( | |
| ( |
Borrowings from long-term debt | | | | | | |
Payments on long-term debt | |
| ( | |
| — |
Payment of debt issuance costs | |
| ( | |
| ( |
Payments of finance lease obligations | | | ( | | | ( |
Net proceeds from underwritten offering | | | | | | — |
Dividends and distributions paid | |
| ( | |
| ( |
Payments under tax receivable agreements | | | — | | | ( |
Contributions from noncontrolling interests | |
| | |
| |
Repurchase of common stock | |
| ( | |
| ( |
Net cash provided by financing activities | |
| | |
| |
Effect of exchange rate changes on cash | |
| ( | |
| |
Net increase (decrease) in cash and cash equivalents | |
| | |
| ( |
Cash and cash equivalents, beginning of period | |
| | |
| |
Cash and cash equivalents, end of period | | $ | | | $ | |
Supplemental cash flow disclosure: | |
| | |
| |
Cash paid for interest | | $ | | | $ | |
Cash paid for income taxes, net | | $ | | | $ | |
Supplemental disclosure of noncash investing activities: | |
| | |
| |
Issuance of shares for acquisitions | | $ | — | | $ | |
Assets and liabilities transferred in business combination | | $ | — | | $ | |
Property and equipment obtained in revenue agreement | | $ | | | $ | — |
Asset retirement costs capitalized to property and equipment in connection with asset retirement obligations assumed | | $ | | | $ | — |
Property and equipment obtained by assuming liabilities | | $ | — | | $ | |
Capital expenditures included in accounts payable and accrued liabilities | | $ | | | $ | |
Note receivable received from sale of Peak | | $ | | | $ | — |
Equity-method investment in Peak | | $ | | | $ | — |
The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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SELECT WATER SOLUTIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1—BUSINESS AND BASIS OF PRESENTATION
Description of the business: Select Water Solutions, Inc. (“Select Inc.” and, together with its consolidated subsidiaries unless the context otherwise requires, “Select,” the “Company,” “we,” “us” or “our”), formerly Select Energy Services, Inc., was incorporated as a Delaware corporation on November 21, 2016. On May 8, 2023, Select Energy Services, Inc.’s Fifth Amended and Restated Certificate of Incorporation became effective upon filing with the Secretary of State of the State of Delaware which, among other things, changed the name of Select Inc. from Select Energy Services, Inc. to Select Water Solutions, Inc. to reflect our strategic focus as a water-focused company. We retained our stock ticker “WTTR” trading on the New York Stock Exchange and announced on August 14, 2025 our dual listing on NYSE Texas, Inc. Select Inc. is a holding company whose sole material asset consists of common units (“SES Holdings LLC Units”) in SES Holdings, LLC (“SES Holdings”).
We are a leading provider of sustainable water and chemical solutions to the energy industry. These solutions are supported by our water infrastructure assets, chemical manufacturing and water treatment and recycling capabilities.
On September 23, 2026, SES Holdings sold a
On September 24, 2026, Select Water Solutions, LLC (“Select LLC”), a subsidiary of SES Holdings, entered into a membership interest purchase agreement to acquire all of the issued and outstanding equity interests of Pilot Water Solutions LLC (together with its subsidiaries, “Pilot Water”), a privately held disposal-focused water midstream company with a core position in the Delaware Basin. The transaction closed on November 2, 2026. See Note 17—Subsequent Events.
Common Stock Offering: In February 2026, the Company completed an underwritten public offering of
Class A and Class B common stock: As of September 30, 2026, the Company had both Class A and Class B common shares issued and outstanding. Holders of shares of our Class A common stock, par value $
Exchange rights: Under the Eighth Amended and Restated Limited Liability Company Agreement of SES Holdings (the “SES Holdings LLC Agreement”), SES Legacy Holdings LLC (“Legacy Owner Holdco”) and its permitted transferees have the right (an “Exchange Right”) to cause SES Holdings to acquire all or a portion of the exchanging unitholder’s SES Holdings LLC Units for, at SES Holdings’ election, (i) shares of Class A common stock at an exchange ratio of
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number of shares of Class A common stock the exchanging unitholder would have received under the Exchange Right or (ii) cash in an amount equal to the Cash Election Value of such Class A common stock. In connection with any exchange of SES Holdings LLC Units pursuant to an Exchange Right or Call Right, the corresponding number of shares of Class B common stock will be cancelled.
Basis of presentation: The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) and pursuant to the rules and regulations of the SEC. These unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all disclosures required for annual financial statements prepared in conformity with GAAP.
This Quarterly Report relates to the three and nine months ended September 30, 2026 (the “Current Quarter” and the “Current Period”, respectively) and the three and nine months ended September 30, 2025 (the “Prior Quarter” and the “Prior Period”, respectively). The Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), filed with the SEC on February 18, 2026, includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report. All material adjustments (consisting solely of normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of the results for the interim periods have been reflected. The results for the Current Quarter and Current Period may not be indicative of the results to be expected for the full year.
The unaudited interim consolidated financial statements include the accounts of the Company and all subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation.
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies: The Company’s significant accounting policies are disclosed in Note 2 of the consolidated financial statements for the year ended December 31, 2025, included in the 2025 Form 10-K.
Use of estimates: The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
On an ongoing basis, the Company evaluates its estimates, including those related to the recoverability of long-lived assets and intangibles, useful lives used in depreciation, amortization and accretion, allowance for credit losses, inventory reserve, income taxes, self-insurance liabilities, share-based compensation, contingent liabilities, lease-related reasonably certain option exercise assessments, the incremental borrowing rate for leases and the fair value of asset retirement obligations (“AROs”). The Company bases its estimates on historical and other pertinent information that are believed to be reasonable under the circumstances. The accounting estimates used in the preparation of the consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes.
Allowance for credit losses: The Company’s allowance for credit losses relates to trade accounts receivable and a note receivable from Headwall. The Company treats trade accounts receivable as one portfolio and records an initial allowance calculated as a percentage of revenue recognized based on a combination of historical information and future expectations. Additionally, the Company adjusts this allowance based on specific information in connection with aged receivables. Historically, most credit losses have been incurred when a customer’s financial condition significantly deteriorates, which in some cases leads to bankruptcy. Market volatility is highly uncertain and, as such, the impact on expected losses is subject to judgment and may cause variability in the Company’s allowance for credit losses in future periods.
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The note receivable is carried at amortized cost. The Company evaluates expected credit losses on the note considering the borrower’s ability to repay, collateral, and reasonable and supportable forecasts. The seller note is secured by a first-priority lien on Headwall’s
The change in the allowance for credit losses is as follows:
| | | |
| | Nine months ended September 30, 2026 | |
| | (in thousands) | |
Balance as of December 31, 2025 | | $ | |
Increase to allowance based on a percentage of revenue | |
| |
Adjustment based on aged receivable analysis | |
| ( |
Charge-offs | | | ( |
Divestiture | | | ( |
Recoveries | | | |
Balance as of September 30, 2026 | | $ | |
Asset retirement obligations: The Company’s AROs relate to disposal facilities and landfills with obligations for plugging wells, removing surface equipment, and returning land to its pre-drilling condition. Assumed AROs represent obligations recognized upon the Company obtaining control of
| | | |
| | Nine months ended September 30, 2026 | |
|
| (in thousands) | |
Balance as of December 31, 2025 |
| $ | |
Assumed AROs | | | |
Accretion expense |
| | |
Acquired AROs |
| | |
Settlements | | | ( |
Balance as of September 30, 2026 |
| $ | |
| | | |
Short-term ARO liability | | | |
Long-term ARO liability | | | |
Balance as of September 30, 2026 | | $ | |
The Company reviews the adequacy of its ARO liabilities whenever indicators suggest the estimated cash flows underlying the liabilities have changed. The Company’s ARO liabilities are included in accrued expenses and other current liabilities and other long-term liabilities in the accompanying consolidated balance sheets.
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Lessor Income: The Company is a lessor for a nominal number of owned facilities and also recognizes income related to multiple facility subleases that are accounted for as follows:
| | | | | | | | | | | | | | |
| | | | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | | | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | | | (in thousands) | ||||||||||
Category | | Classification | | | | | | | | | | | | |
Lessor income | | Costs of revenue | | $ | | | $ | | | $ | | | $ | |
Sublease income | | Lease abandonment costs and Costs of revenue | | | | | | | | | | | | |
The Company also generates short-term equipment rental revenue. See “Note 4—Revenue” for a discussion of revenue recognition for the accommodations and rentals business.
Defined Contribution Plan: The Company sponsors the Select Water Solutions, Inc. 401(k) Plan for the benefit of substantially all employees of the Company. The Company incurred match expense of $
Severance: During 2025, the Company incurred $
Dividends: During the Current Period, the Company paid $
Segment reporting: The Company has
The Water Infrastructure segment consists of the Company’s fixed infrastructure assets, including operations associated with its gathering and distribution pipelines, water recycling facilities, saltwater disposal wells (“SWDs”), water storage facilities, and solids management facilities, primarily serving E&P companies.
The Water Services segment primarily consists of the Company’s water-related services businesses, including water sourcing, water transfer, fluids hauling, water monitoring, water containment and water network automation, primarily serving E&P companies. Additionally, this segment included Peak operations on a consolidated basis prior to its deconsolidation on September 23, 2026.
The Chemical Technologies segment provides technical solutions, products and expertise related to chemical applications in the oil and gas industry. This segment develops, manufactures, manages logistics and provides a full suite of chemicals used in hydraulic fracturing, stimulation, cementing and well completions for customers ranging from pressure pumpers to major integrated and independent oil and gas producers. This segment also utilizes its chemical experience and lab testing capabilities to customize tailored water treatment solutions designed for the recycling and treatment of produced water and to optimize the fracturing fluid system in conjunction with the quality of water used in well completions.
Equity Investments: For investments in subsidiaries that are not wholly-owned, but where the Company exercises control, the equity held by the minority owners and their portion of net income or loss are reflected as
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noncontrolling interests. Investments in entities in which the Company exercises significant influence over operating and financial policies are accounted for using the equity-method, and investments in entities for which the Company does not have significant control or influence are accounted for using the cost-method or other appropriate basis as applicable. As of September 30, 2026, the Company had
On February 14, 2025, the Company entered into a new partnership arrangement through AV Farms, LP, a newly-formed Delaware limited partnership (“AV Farms”), pursuant to a limited partnership agreement (the “LPA”) by and among Select Water Reuse, LLC, a wholly-owned subsidiary of the Company (“SWR”), C&A Rollover Company, LLC, (“C&A”) and Geneses Water, L.P., (“Geneses”), as limited partners, and AV Farms Management, LLC as the general partner (“AV GP”), effective as of February 28, 2025. SWR contributed $
The Company accounts for its retained
The Company’s investments in unconsolidated entities are summarized below:
| | | | | | | | | | | | |
| | | | Year | | | | | As of September 30, | | As of December 31, | |
Investment | | Ownership % | | Attained | | Accounting method | | 2026 |
| 2025 | ||
| | | | | | | | (in thousands) | ||||
Water Infrastructure | | | | | | | | | | | | |
AV Farms, LP | | | 2025 | | Equity-method | | $ | | | $ | | |
AquaNyx Midstream LP | | | 2021 | | Equity-method | | | | | | | |
Water Services | | | | | | | | | | | | |
Peak Rentals HoldCo, LLC(1) | | | 2026 | | Equity-method | | | | | | — | |
ESG Solutions Group, Inc. | | | 2020 | | Equity-method | | | | | | | |
ICE Thermal, Inc.(2) | | | 2021 | | Equity-method | | | — | | | | |
Total investment in unconsolidated entities | | | | | | | | $ | | | $ | |
| (1) | During the Current Quarter, the controlling interest in Peak was sold resulting in its deconsolidation and the Company’s remaining interest is now accounted for as an equity investment. |
| (2) | In the Current Period, cumulative losses in excess of the Company’s investment resulted in |
Variable Interest Entities
AV Farms is a Variable Interest Entity (“VIE”). The limited partner interests held by C&A and Geneses are not considered equity at risk as the put option held by each protects their return. This leaves the Company as the only holder of equity at risk, and the holders of equity at risk do not have the power to direct the activities that most significantly affect AV Farms' economic performance. The Company is not the primary beneficiary as it holds
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Select holds a call option, such that the other limited partners may be required to sell their interests in AV Farms and the general partner at a formula price, and the other limited partners hold a put option that, subject to certain conditions, could require the Company to purchase their interests in AV Farms and the general partner at a formula price, and Select Inc. guarantees that obligation. The Company's maximum exposure to loss is limited to the $
Peak is a VIE as the $
Headwall is a VIE as the $
Recent accounting pronouncements:
In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40)" ("ASU 2024-03"). The amendments in this update enhance disclosures about a public business entity’s expenses and provide more detailed information about the types of expenses included in certain expense captions in the consolidated financial statements. ASU 2024-03 is effective for the Company for the year ending December 31, 2027, and for interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impacts of the adoption of ASU 2024-03.
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NOTE 3—ACQUISITIONS AND DIVESTITURES
The following table presents key information connected with our 2026 and 2025 acquisitions (in thousands, except share amounts):
| | | | | | | | | | | | | | | |
Assets and Operations Acquired | | | Acquisition Date | | Shares Issued | | Cash Consideration | | Other Consideration | | Value of Shares Issued | | Total Consideration | | Segments |
Smaller Asset Acquisitions | | | Multiple 2026 Dates | | — | $ | | $ | — | $ | — | $ | | | Water Infrastructure |
Lease buyouts | | | June 30, 2026 | | — | | | | — | | — | | | | Water Services |
Black River Ranch | | | May 1, 2026 | | — | | | | — | | — | | | | Water Infrastructure |
Reeves County Acquisition | | | May 1, 2026 | | — | | | | — | | — | | | | Water Infrastructure |
Smaller Asset Acquisition | | | January 8, 2026 | | — | | | | — | | — | | | | Water Services |
Eight Smaller Asset Acquisitions | | | Multiple 2025 Dates | | — | | | | — | | — | | | | Water Infrastructure |
Lease buyout | | | August 29, 2025 | | — | | | | — | | — | | | | Corporate-Other |
Omni | | | July 1, 2025 | | | | | | | | | | | | Water Infrastructure |
One Smaller Asset Acquisition | | | April 1, 2025 | | — | | | | — | | — | | | | Water Services |
Total | | | | | | $ | | $ | | $ | | $ | | | |
2026 Asset Acquisitions
During the Current Period, the Company paid $
On May 29, 2026, the Company acquired a saltwater disposal facility and related assets located in Lea County, New Mexico for $
On May 1, 2026, a subsidiary of the Company acquired the Black River Ranch (“BRR”) in Eddy County, New Mexico for a purchase price of $
Additionally on May 1, 2026, a subsidiary of the Company acquired a saltwater disposal facility and related assets located in Reeves County, Texas for total cash consideration of $
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2025 Business Combination with Omni
On July 1, 2025, the Company acquired certain assets and operations of Omni Environmental Solutions (“Omni”) in the Bakken region. The acquired assets include:
| ● | A solids waste landfill with approximately |
| ● | A processing, recovery, and disposal facility for reclaiming diesel and other hydrocarbons from oilfield waste streams; |
| ● |
| ● | A commercial oil storage tank farm with total capacity of approximately |
The purchase consideration included (i) $
This acquisition enhances the Company’s Water Infrastructure segment by expanding landfill and disposal capacity in the Bakken and introducing new service offerings. The transaction was accounted for as a business combination under the acquisition method in accordance with Accounting Standards Codification (“ASC”) 805. The Company engaged third-party valuation experts to assist in the purchase price allocation for the net assets received. These estimates, judgments, assumptions and valuation of the property and equipment acquired, current assets, current liabilities and long-term liabilities were finalized as of June 30, 2026. The Company also used a third-party analysis for the valuation of property and equipment divested, which resulted in a $
The following table summarizes the consideration transferred and the estimated fair value of identified assets acquired and liabilities assumed at the date of acquisition:
| | | |
Final purchase price allocation | | Amount | |
Consideration transferred | | (in thousands) | |
Cash paid | | $ | |
Class A common stock ( | | | |
Property and equipment ($ | | | |
Other assets and liabilities transferred/assumed | | | |
Total consideration transferred |
| | |
Less: identifiable assets acquired and liabilities assumed |
| | |
Working capital |
| | ( |
Property and equipment |
| | |
Long-term ARO | | | ( |
Total identifiable net assets acquired | | | |
Goodwill |
| | |
Fair value allocated to net assets acquired |
| $ | |
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2025 Asset Acquisitions
During 2025, the Company acquired certain assets and associated liabilities in the Permian Basin from
2026 Divestitures
On September 23, 2026, SES Holdings completed the sale of a
Immediately prior to closing, Peak entered into a $
The Company recognized a gain on deconsolidation of approximately $
| | | |
Gain calculation | | Amount | |
| | | (in thousands) |
Cash consideration from Headwall | | $ | |
Seller note receivable at estimated fair value | | | |
Retained | | | |
Total consideration and retained interest | | | |
Less: carrying amount of Peak net assets derecognized | | | ( |
Gain on deconsolidation of subsidiary | | $ | |
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The major classes of assets and liabilities derecognized are presented in the table below:
| | | |
Balance sheet classification | | Amount | |
| | | (in thousands) |
Assets divested | | | |
Cash | | $ | |
Accounts receivable, net | | | |
Prepaid expenses and other current assets | | | |
Property and equipment, net | | | |
All other assets | | | |
Total assets divested | | | |
Liabilities divested | | | |
Accounts payable | | | ( |
Accrued accounts payable | | | ( |
Accrued expenses and other current liabilities | | | ( |
Long-term debt | | | ( |
All other liabilities | | | ( |
Total liabilities divested | | | ( |
Net assets divested | | $ | |
The Company estimated the fair value of its retained equity-method investment by reference to the consideration negotiated as part of the overall transaction with Headwall, including the cash received, the seller note and the retained interest. The seller note was measured using a discounted cash flow technique. The estimated fair values of the retained investment and seller note were $
The Company’s continuing involvement with Peak includes a transition services agreement (“TSA”). Under the TSA, the Company provides certain back office and human resources services through January 1, 2028, and certain tax, audit, information technology, accounting, security and other transition services through December 31, 2026, unless terminated earlier. Peak may terminate the agreement or individual services with 30 days’ notice. Transactions with Peak after deconsolidation are considered to be related-party transactions. Amounts billed to Peak from September 23, 2026 through September 30, 2026 were nominal.
NOTE 4—REVENUE
The Company follows ASC 606, Revenue from Contracts with Customers, for most revenue recognition, which provides a five-step model for determining revenue recognition for arrangements that are within the scope of the standard: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies the five-step model only to contracts when it is probable that the Company will collect the consideration the Company is entitled to in exchange for the goods or services the Company transfers to the customer. The accommodations and rentals revenue continues to be guided by ASC 842 – Leases, which is discussed further below.
The following factors are applicable to the Company’s segments for the Current Quarter, Prior Quarter, Current Period and Prior Period:
| ● | The vast majority of Water Services and Chemical Technologies customer agreements are short-term, lasting less than one year. Water Infrastructure contains both short-term and long-term agreements. |
| ● | Contracts are seldom combined together as virtually all of our customer agreements constitute separate performance obligations. Each job or project is typically distinct, thereby not interdependent or interrelated with other customer agreements. |
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| ● | Most contracts allow either party to terminate at any time without substantive penalties. If the customer terminates the contract, the Company is unconditionally entitled to the payments for the services rendered and products delivered to date. This largely applies to Water Services and Chemical Technologies. |
| ● | Contract terminations before the end of the agreement are rare. |
| ● | Sales returns are rare and no sales return assets have been recognized on the balance sheet. |
| ● | There are minimal volume discounts. |
| ● | There are no service-type warranties. |
| ● | There is no long-term customer financing. |
| ● | Taxes assessed by government authorities included on customer invoices are excluded from revenue. |
In the Water Infrastructure and Water Services segments, performance obligations arise in connection with services provided to customers in accordance with contractual terms, in an amount the Company expects to collect. Services are generally sold based on customer orders or contracts with customers that include fixed or determinable prices. Revenues are generated by services rendered and measured based on the output generated, which is usually simultaneously received and consumed by customers at their job sites. As a multi-job site organization, contract terms, including the pricing for the Company’s services, are negotiated on a job site level on a per-job basis. Most jobs are completed in a short period of time, usually between one day and one month. Revenue is recognized as performance obligations are completed on a daily, hourly or per-unit basis with unconditional rights to consideration for services rendered reflected as accounts receivable trade, net of allowance for credit losses. In cases where a prepayment is received before the Company satisfies its performance obligations, a contract liability is recorded in accrued expenses and other current liabilities. Final billings generally occur once all of the proper approvals are obtained. Mobilization and demobilization are factored into the pricing for services. Billings and costs related to mobilization and demobilization are not material for customer agreements that start in one period and end in another. The Company recognizes revenue from certain sales when title passes to the customer, the customer assumes risks and rewards of ownership, collectability is reasonably assured and delivery occurs as directed by the customer.
Within the Water Infrastructure segment, we have contracts containing acreage dedications, areas of mutual interest (“AMIs”), wellbore dedications and minimum volume commitments (“MVCs”). Acreage dedications are longer-term contracts pursuant to which a customer dedicates certain activities or volumes to Select within a defined set of the customer’s leased acreage, typically committing to us all water demanded by future wells they complete or produced from current and future wells that they operate, and we commit to provide, gather, recycle or dispose such water volumes. AMI arrangements similarly are defined by a geographic right to current and future customer volumes, though AMIs may encompass a broader geographic area beyond a customer’s existing leasehold acreage. Wellbore dedications are similar to acreage dedications; however, they limit the contractual obligations to a defined set of existing or future wells. Under our MVC agreements, our customers guarantee to deliver certain minimum volumes of produced water to our pipeline networks at an agreed-upon fee or pay a deficiency fee for the minimum volume that is not met for a specified period. In most cases, these contracts are covenant to the land and assets they encompass.
The following table presents supplementary information regarding accounts receivable arising from rental agreements, accounts receivable related to contracts with customers and contract liabilities associated with contracts with customers. The Company did not have any contract assets during the periods presented. Contract liabilities of $
| | | | | | |
| | As of September 30, | | As of December 31, | ||
| | 2026 | | 2025 | ||
| | (in thousands) | ||||
| | | | | | |
Trade Accounts Receivable - Lease Arrangements (ASC 842)(1)(2) | | $ | — | | $ | |
Trade Accounts Receivable - Revenue (ASC 606)(1) | | | | | | |
Contract liabilities - Revenue (ASC 606) | | | ( | | | ( |
| (1) | Trade accounts receivable is net of the allowance for credit losses and includes related party receivables. |
| (2) | Following the September 23, 2026 deconsolidation of Peak, which held substantially all of the Company’s lease-related (ASC 842) receivables, Trade Accounts Receivable – Lease Arrangements (ASC 842) was |
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Accommodations and rentals revenue is included in the Water Services segment and the Company accounts for its accommodations and rentals agreements as an operating lease. The Company recognizes revenue from renting equipment on a straight-line basis. Accommodations and rental contract periods are generally daily, weekly or monthly. During the Current Quarter, Prior Quarter, Current Period and Prior Period, approximately $
In the Chemical Technologies segment, the typical performance obligation is to provide a specific quantity of chemicals to customers in accordance with the customer agreement in an amount the Company expects to collect. Products and services are generally sold based upon customer orders or contracts with customers that include fixed or determinable prices. Revenue is recognized as the customer takes title to chemical products in accordance with the agreement. Products may be provided to customers in packaging or delivered to the customers’ containers through a hose. In some cases, the customer takes title to the chemicals upon consumption from storage containers on their property, where the chemicals are considered inventory until customer usage. In cases where the Company delivers products and recognizes revenue before collecting payment, the Company has an unconditional right to payment reflected in accounts receivable trade, net of allowance for credit losses. Customer returns are rare and immaterial and there were no material in-process customer agreements for this segment as of September 30, 2026, lasting greater than one year.
The following table sets forth certain financial information with respect to the Company’s disaggregation of revenues by geographic location:
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | ||||||||||
Geographic Region | | | | | | | | | | | | |
Permian Basin | | $ | | | $ | | | $ | | | $ | |
Rockies | | | | | | | | | | | | |
Marcellus/Utica | | | | | | | | | | | | |
Eagle Ford | | | | | | | | | | | | |
Mid-Continent | | | | | | | | | | | | |
Haynesville/E. Texas | | | | | | | | | | | | |
Bakken | | | | | | | | | | | | |
Eliminations and other regions | | | ( | | | ( | | | ( | | | ( |
Total | | $ | | | $ | | | $ | | | $ | |
| | | | | | | | | | | | |
In the Water Infrastructure segment, the most recent top
Non-cash consideration
As part of a long-term agreement to receive and transport water that was executed in the Current Period, the Company received non-cash consideration in the form of saltwater disposal assets. The assets were measured at fair value at contract inception and included in the transaction price in accordance with ASC 606. Upon receipt, the Company recorded $
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representing its obligation to provide future services. The Company also recorded $
NOTE 5—INVENTORIES
Inventories, which are comprised of chemicals and raw materials available for resale, are valued at the lower of cost or net realizable value, with cost determined under the weighted-average method. The significant components of inventory are as follows:
| | | | | | |
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Raw materials | | $ | | | $ | |
Finished goods | |
| | |
| |
Total | | $ | | | $ | |
During the Current Quarter, Prior Quarter, Current Period and Prior Period, the Company recorded net charges to the reserve for excess and obsolete inventory of $
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NOTE 6—PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation. Depreciation (and amortization of finance lease assets) is calculated on a straight-line basis over the estimated useful life of each asset. Property and equipment consists of the following as of September 30, 2026 and December 31, 2025:
| | | | | | |
| | | | | | |
| | September 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Gathering and disposal infrastructure | | $ | | | $ | |
Machinery and equipment | | | | | | |
Pipelines | | | | | | |
Recycling facilities | | | | | | |
Buildings and leasehold improvements | |
| | |
| |
Land | | | | | | |
Computer equipment and software | | | | | | |
Vehicles and equipment | |
| | |
| |
Machinery and equipment - finance lease | |
| | |
| |
Office furniture and equipment | |
| | |
| |
Computer equipment and software - finance lease | |
| | |
| |
Construction in progress | |
| | |
| |
| |
| | |
| |
Less accumulated depreciation(1) | |
| ( | |
| ( |
Total property and equipment, net | | $ | | | $ | |
| (1) | Includes $ |
During the Current Quarter, the deconsolidation of Peak resulted in the removal of $
During the Current Period, the Company paid $
During the Prior Quarter, the Company recognized $
During the Current Period, the Company recognized $
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Total depreciation, amortization and accretion expense related to property and equipment and finance leases presented in the table above, as well as amortization of intangible assets presented in Note 7—Goodwill and Other Intangible Assets is as follows:
| | | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | | ||||
| | (in thousands) | | ||||||||||
Category | | | | | | | | | | | | | |
Depreciation expense from property and equipment | | $ | | | $ | | | $ | | | $ | | |
Amortization expense from finance leases | | | | | | | | | | | | | |
Amortization expense from intangible assets | | | | | | | | | | | | | |
Accretion expense from asset retirement obligations | | | | | | | | | | | | | |
Total depreciation, amortization and accretion | | $ | | | $ | | | $ | | | $ | | |
NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS
The Company recorded
The carrying amounts of goodwill by reportable segment for the Current Period are as follows:
| | | | | | | | | |
| | Water | | Water | | | | ||
| | Infrastructure | | Services | | Total | |||
| | (in thousands) | |||||||
Balance as of December 31, 2025 | | $ | | | $ | | | $ | |
Additions | | | — | | | — | | | — |
Balance as of September 30, 2026 | | $ | | | $ | | | $ | |
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During the Current Quarter, the Company removed customer relationships of $
| | | | | | | | | | | | | | | | | | |
| | As of September 30, 2026 | | As of December 31, 2025 | ||||||||||||||
| | Gross | | Accumulated | | Net | | Gross | | Accumulated | | Net | ||||||
| | Value | | Amortization | | Value | | Value | | Amortization | | Value | ||||||
| | (in thousands) | | (in thousands) | ||||||||||||||
Definite-lived | | | | | | | | | | | | | | | | | | |
Customer relationships | | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | |
Patents and other intellectual property | | | | | | ( | | | | | | | | | ( | | | |
Water rights | | | | | | ( | | | | |
| | |
| ( | |
| |
Total definite-lived | | | | | | ( | | | | | | | | | ( | | | |
Indefinite-lived | | | | | | | | | | | | | | | | | | |
Water rights | | | | | | — | | | | | | | | | — | | | |
Total indefinite-lived | | | | | | — | | | | | | | | | — | | | |
Total other intangible assets, net | | $ | | | $ | ( | | $ | | | $ | | | $ | ( | | $ | |
The weighted-average periods for customer relationships, patents and other intellectual property, and water rights were
| | | |
| | Amount | |
| | (in thousands) | |
Remainder of 2026 | | $ | |
2027 | |
| |
2028 | |
| |
2029 | |
| |
2030 | |
| |
Thereafter | | | |
Total | | $ | |
NOTE 8—DEBT
Sustainability-linked credit facility and revolving line of credit
On January 24, 2025 (the “Closing Date”), SES Holdings and Select LLC entered into a $
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four years following the Closing Date. Capitalized terms used but not defined herein have the meaning ascribed to them in the Sustainability-Linked Credit Facility.
The Borrowing Base for the Revolving Credit Facility is calculated as the sum of (i)
The Term Advance Borrowing Base for the Term Loan Facility is calculated as the lesser of (i) the product of
Borrowings under the Sustainability-Linked Credit Facility bear interest, at Select LLC’s election, at either Term secured overnight financing rate (“SOFR”) (subject to a
Under the Sustainability-Linked Credit Facility, the interest rate margin and the facility fee rates are also subject to annual adjustments based on Select LLC’s performance of specified sustainability target thresholds with respect to (i) total recordable incident rate, as the Employee Health and Safety Metric, and (ii) barrels of recycled produced water recycled at facilities of the Credit Parties, as the Water Stewardship Metric, in each case, subject to limited assurance verification by a qualified independent external reviewer. The adjustment for the interest rate margin is a range of plus and minus
The obligations under the Sustainability-Linked Credit Facility are guaranteed by SES Holdings and certain subsidiaries of SES Holdings and Select LLC and secured by a security interest in substantially all of the personal property assets of SES Holdings, Select LLC and their domestic subsidiaries that are guarantors.
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The Sustainability-Linked Credit Facility contains certain customary representations and warranties, affirmative and negative covenants and events of default. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the Sustainability-Linked Credit Facility to be immediately due and payable.
In addition, the Sustainability-Linked Credit Facility restricts SES Holdings’ and Select LLC’s ability to make distributions on, or redeem or repurchase, its equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default or event of default exists under the Sustainability-Linked Credit Facility or would result from the making of such distribution and (a) the fixed charge coverage ratio of SES Holdings is equal to or greater than
The Sustainability-Linked Credit Facility requires SES Holdings to maintain a fixed charge coverage ratio of not less than
Certain lenders party to the Sustainability-Linked Credit Facility and their respective affiliates have from time to time performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for the Company and its affiliates in the ordinary course of business for which they have received and would receive customary compensation. In addition, in the ordinary course of their various business activities, such parties and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investments and securities activities may involve the Company’s securities and/or instruments.
In connection with the entry into the Sustainability-Linked Credit Facility, the obligations of SES Holdings, Select LLC and their applicable subsidiaries under the prior credit facility were repaid in full and the prior credit facility was terminated on the Closing Date.
The Company had $
In connection with the entry into the Sustainability-Linked Credit Facility, the Company incurred $
On August 20, 2026, the Sustainability-Linked Credit Facility was amended to allow the Company to guarantee, on an unsecured basis, purchase money debt of SES Holdings and its subsidiaries.
The Company was in compliance with all debt covenants as of September 30, 2026.
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Prior to closing of the Notes Offering and in connection with the Reorganization, Select Holdings was substituted for SES Holdings as “Parent” under the Sustainability-Linked Credit Facility, upon which SES Holdings was released as a guarantor thereunder and its assets were released from the liens securing the Sustainability-Linked Credit Facility. On October 21, 2026, in connection with the closing of the Notes Offering, the Term Loan Facility under the Sustainability-Linked Credit Facility was repaid in full and terminated. Concurrent with the closing of the Pilot Water Acquisition, and the “Effective Date” under the New Credit Agreement, the Revolving Credit Facility under the Sustainability-Linked Credit Facility was repaid in full and the Sustainability-Linked Credit Facility was terminated. See Note 17—Subsequent Events.
Pilot Water Acquisition Financing
In connection with the Pilot Water Acquisition, SES Holdings obtained financing commitments pursuant to debt commitment letters, pursuant to which certain financing sources committed, subject to satisfaction of certain customary terms and conditions, to provide debt financing sufficient to consummate the Pilot Water Acquisition. Concurrent with the closing of the Pilot Water Acquisition on November 2, 2026, such financing commitments terminated and the New Credit Agreement became effective. See Note 17—Subsequent Events.
Agricultural loan
On May 1, 2026, a subsidiary of the Company acquired the BRR in Eddy County, New Mexico (See “Note 3—Acquisitions and Divestitures”). This acquisition was funded with a combination of cash on hand and a $
The principal maturities of debt outstanding as of September 30, 2026 were as follows:
| | | | | | | | | |
| | Amount | |||||||
| | (in thousands) | |||||||
| | Agricultural Loan | | Term Loan | | | Total | ||
Remainder of 2026 | | $ | | | $ | | | $ | |
2027 | |
| | | | | | | |
2028 | | | | | | | | | |
2029 | | | | | | | | | |
2030 | | | | | | | | | |
2031 | | | | | | — | | | |
Total | | $ | | | $ | | | $ | |
Less: Debt issuance costs | | | ( | | | ( | | | ( |
Less: Current portion of long-term debt | | | ( | | | ( | | | ( |
Long-term debt, net | | $ | | | $ | | | $ | |
| | | | | | | | | |
Interest rate as of September 30, 2026 | | | | | | | | ||
Unamortized debt issuance costs as of September 30, 2026 and December 31, 2025, were $
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NOTE 9—COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to a number of lawsuits and claims arising out of the normal conduct of its business. The ability to predict the ultimate outcome of such matters involves judgments, estimates and inherent uncertainties. Based on a consideration of all relevant facts and circumstances, including applicable insurance coverage, it is not expected that the ultimate outcome of any currently pending lawsuits or claims against the Company will have a material adverse effect on its consolidated financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters.
Retentions
We are self-insured up to certain retention limits with respect to workers’ compensation, general liability and vehicle liability matters, and health insurance. We maintain accruals for self-insurance retentions that we estimate using third-party data and claims history.
NOTE 10—EQUITY-BASED COMPENSATION
As of September 30, 2026, there were
Stock Option Awards
The Company has outstanding stock option awards as of September 30, 2026 but there have been
A summary of the Company’s stock option activity and related information as of and for the Current Period is as follows:
| | | | | | | | | | |
| | For the nine months ended September 30, 2026 | ||||||||
| | | | | | | Weighted-average | | | |
| | | | Weighted-average | | Remaining Contractual | | Aggregate Intrinsic | ||
| | Stock Options | | Exercise Price | | Term (Years) | | Value (in thousands) (a) | ||
Beginning balance, outstanding |
| | | $ | | | | $ | | |
Other |
| | | | | | | | | |
Exercised | | ( | | | | | | | | |
Expired | | ( | | | | | | | | |
Ending balance, outstanding |
| | | $ | | | | $ | | |
Ending balance, exercisable | | | | $ | | | | $ | | |
Nonvested as of September 30, 2026 | | — | | $ | — | | | | | |
(a) Aggregate intrinsic value for stock options is based on the difference between the exercise price of the stock options and the quoted closing Class A common stock price of $
All equity-based compensation expense related to stock options has been previously recognized.
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Restricted Stock Awards
The value of the restricted stock awards granted was established by the market price of the Class A common stock on the date of grant and is recorded as compensation expense ratably over the vesting term, which is generally over
During the Current Quarter, the Company’s board of directors approved (with the Company’s CEO recusing himself from the board’s approval) an award of
A summary of the Company’s restricted stock awards activity and related information for the Current Period is as follows:
| | | | | |
| | For the nine months ended September 30, 2026 | |||
| | | | Weighted-average | |
| | Restricted Stock Awards | | Grant Date Fair Value | |
Nonvested as of December 31, 2025 | | | | $ | |
Granted | | | | | |
Vested | | ( | | | |
Forfeited | | ( | | | |
Nonvested as of September 30, 2026 | | | | $ | |
Performance Share Units (“PSUs”)
During the Current Quarter, the Company's board of directors approved (with the Company’s CEO recusing himself from the board’s approval) an award of
During 2026, the Company approved grants of PSUs that are subject to both performance-based and service-based vesting provisions related to relative and absolute total shareholder return (“TSR”), with relative TSR measured against a defined peer group specified in the grant agreement, over the performance period from January 1, 2026 to December 31, 2028. The target number of shares of Class A common stock subject to each PSU granted in 2026 is
The PSUs granted in 2026 that become earned in connection with TSR will be determined (as defined in the applicable PSU agreement) in accordance with the following table:
| | | | | | | | |
Performance Level | | Relative TSR (%) | | Absolute TSR between 0% and 15%* | | Absolute TSR greater than 15% | | Absolute TSR less than 0% |
Maximum | | Greater than or equal to | | | | |||
Target | | | | | ||||
Threshold | | | | | ||||
Below Threshold | | Less than | | | |
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*The percentage of target PSUs that become earned PSUs for performance that is between the values set forth in the table above, excluding between the third and fourth rows of the table, shall be linearly interpolated between the values in the table.
During 2026, the Company also approved grants of divisional PSUs, with vesting contingent upon achievement of specified performance metrics for designated business units over a
The fair value on the date the PSUs were granted during 2026, 2025 and 2024 was $
As of September 30, 2026, the unrecognized compensation cost related to our unvested PSUs is estimated to be $
A summary of the Company’s PSUs and related information for the Current Period is as follows:
| | |
| | PSUs |
Nonvested as of December 31, 2025 | | |
Target shares granted | | |
Target shares vested (1) | | ( |
Adjustment for performance factor(1) | | |
Target shares forfeited (1) | | ( |
Target shares outstanding as of September 30, 2026 | | |
| (1) | The PSUs granted in 2023 related to ROA and free cash flow (“FCF”) vested at |
Share Repurchases
During the Current Quarter, the Company repurchased
During the Current Period, the Company repurchased
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The 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations enacted as part of the Inflation Reduction Act of 2022 applies to our open-market share repurchase program.
NOTE 11—FAIR VALUE MEASUREMENT
The Company utilizes fair value measurements to measure assets and liabilities in a business combination or assess impairment and abandonment of property and equipment, intangible assets and goodwill or to measure the value of securities marked to market. Fair value is defined as the amount at which an asset (or liability) could be bought (or incurred) or sold (or settled) in an orderly transaction between market participants at the measurement date. Further, ASC 820, Fair Value Measurements, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and includes certain disclosure requirements. Fair value estimates are based on either (i) actual market data or (ii) assumptions that other market participants would use in pricing an asset or liability, including estimates of risk.
ASC 820 establishes a three-level valuation hierarchy for the disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:
Level 1—Unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2—Quoted prices for similar assets or liabilities in non-active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3—Inputs that are unobservable and significant to the fair value measurement (including the Company’s own assumptions in determining fair value).
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. There were
As discussed in Note 4—Revenue, the Company received saltwater disposal assets as noncash consideration under a long-term customer agreement and recorded the assets at fair value using Level 3 inputs, with a corresponding contract liability and related day-one repair liabilities. The fair value of the
The fair value of the Company’s retained
The fair value of the $
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collateral and mandatory prepayment provisions, as well as the credit and liquidity risks associated with the note. Accordingly, the note’s principal amount approximated its fair value at initial recognition.
Following initial recognition, the retained investment is not subsequently remeasured at fair value and is instead accounted for under the equity method in accordance with ASC 323. Additionally, the seller note receivable is not subsequently remeasured at fair value, and the note is evaluated for expected credit losses under ASC 326. See Note 3—Acquisitions and Divestitures and Note 2—Significant Accounting Policies for further discussion of this transaction.
Other fair value considerations
The agricultural loan bears interest at a fixed rate of
The carrying values of the Company’s current financial instruments, which include cash and cash equivalents, accounts receivable trade and accounts payable, approximate their fair value as of September 30, 2026 and December 31, 2025 due to the short-term nature of these instruments. The carrying value of debt as of September 30, 2026 approximates fair value due to variable market rates of interest. The estimated fair values of the Company’s financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.
NOTE 12—RELATED-PARTY TRANSACTIONS
The Company considers its related parties to be those stockholders who are beneficial owners of more than
During the Current Quarter, sales to related parties were $
During the Prior Quarter, sales to related parties were $
During the Current Period, sales to related parties were $
During the Prior Period, sales to related parties were $
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Effective as of September 23, 2026, Peak became a related party of the Company through the Company’s
Tax Receivable Agreements
In connection with the Select 144A Offering, the Company entered into two TRAs with certain then-affiliates of the then-holders of SES Holdings LLC Units. As of September 30, 2026, certain of the TRA Holders were employed by the Company, on the Company’s board of directors and/or owned shares of the Company’s Class A and/or Class B common stock.
The first of the TRAs, which Select Inc. entered into with Legacy Owner Holdco and Crestview Partners II GP, L.P. (“Crestview GP”) generally provides for the payment by Select Inc. to such TRA Holders of
The second of the TRAs, which Select Inc. entered into with an affiliate of Legacy Owner Holdco and Crestview GP, generally provides for the payment by Select Inc. to such TRA Holders of
On June 23, 2023, the TRAs were amended to replace references to one year LIBOR with references to the 12-month term SOFR published by CME Group Benchmark Administration Limited plus
Select Inc. has recognized a liability associated with the TRAs as of September 30, 2026 and December 31, 2025 of $
The recognized liability associated with the TRAs represents
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common stock, the value of our Class A common stock, changes in our economic projections and actual results, passage of future legislation, and consummation of significant transactions in the future.
NOTE 13—INCOME TAXES
The Company’s income tax information is presented in the table below. The effective tax rate is different than the
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | ||||||||||
Current income tax (benefit) expense | | $ | | | $ | ( | | $ | | | $ | |
Deferred income tax expense | | | | | | | | | | | | |
Total income tax expense | | $ | | | $ | | | $ | | | $ | |
Effective Tax Rate | | | | | | | | | ||||
The Company regularly reviews its deferred tax assets for realization and establishes a valuation allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company considers all available positive and negative evidence in determining whether realization of the tax benefit is more likely than not. This evidence includes historical income/loss, projected future income, the expected timing of the reversal of existing temporary differences and the implementation of tax planning strategies. Management has continued to assess both positive and negative evidence and determined that no adjustments to the remaining valuation allowance were necessary as of September 30, 2026.
NOTE 14—NONCONTROLLING INTERESTS
The Company’s noncontrolling interests fall into two categories as follows:
| ● | Noncontrolling interests attributable to joint ventures formed for water-related services. |
| ● | Noncontrolling interests attributable to holders of Class B common stock. |
| | | | | | |
| | As of | | As of | ||
| | September 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Noncontrolling interests attributable to joint ventures formed for water-related services | | $ | ( | | $ | ( |
Noncontrolling interests attributable to holders of Class B common stock | | | | |
| |
Total noncontrolling interests | | $ | | | $ | |
During the Current Period, the Company received a $
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For all periods presented, there were changes in Select Inc.’s ownership interest in SES Holdings. The effects of the changes in Select Inc.’s ownership interest in SES Holdings are as follows:
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Net income attributable to Select Water Solutions, Inc. | | $ | | | $ | |
Transfers from noncontrolling interests: | | | | |
| |
Decrease in additional paid-in capital from reallocation to Class B holders in connection with underwritten offering | | | ( | | | — |
Decrease in additional paid-in capital as a result of issuing shares for business combination | | | — | |
| ( |
Increase in additional paid-in capital as a result of restricted stock issuance, net of forfeitures | |
| | |
| |
Increase in additional paid-in capital as a result of vested PSUs | | | | | | |
Increase in additional paid-in capital as a result of the repurchase of SES Holdings LLC Units | |
| | |
| |
Increase in additional paid-in capital as a result of exchanges of SES Holdings LLC Units (an equivalent number of shares of Class B common stock) for shares of Class A common stock | | | | | | — |
Change to equity from net income attributable to Select Water Solutions, Inc. and transfers from noncontrolling interests | | $ | | | $ | |
Variable Interest Entity
Noncontrolling interests deficit of $
While multiple partners contributed capital to the subsidiary, the Company’s increased ownership during the Current Quarter reinforces the Company’s ongoing involvement with the VIE and supports the conclusion that the Company is the primary beneficiary, as it reflects a demonstrated willingness to provide financial resources necessary to sustain the subsidiary’s operations. Since inception, the consolidated subsidiary has been included within the Company’s Water Services segment.
NOTE 15—INCOME PER SHARE
Income per share is based on the amount of income allocated to the stockholders and the weighted-average number of shares outstanding during the period for each class of common stock. Outstanding options are included in the calculation of diluted weighted-average shares outstanding to the extent they may be dilutive upon exercise and are excluded to the extent they would be antidilutive. Accordingly, outstanding options to purchase
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During the Current Quarter and Current Period, certain holders of SES Holdings LLC Units exchanged
The following tables present the Company’s calculation of basic and diluted earnings per share for the Current and Prior Quarter and the Current and Prior Period (dollars in thousands, except share and per share amounts):
| | | | | | | | | | | | | | | | | | | |
| | Three months ended September 30, 2026 | | Three months ended September 30, 2025 | |||||||||||||||
| | | | | | | | | | | | | | | | | | ||
| | Select Water Solutions, Inc. | | Class A | | Class B | | Select Water Solutions, Inc. | | Class A | | | Class B | ||||||
Numerator: | | | | | | | | | | | | | | | | | | | |
Net income | | $ | | | | | | | | | $ | | | | | | | | |
Net (income) loss attributable to noncontrolling interests | | | ( | | | | | | | | | | | | | | | | |
Net income attributable to Select Water Solutions, Inc. — basic | | $ | | | $ | | | $ | — | | $ | | | $ | | | | $ | — |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock | | | | | | | | | — | | | | | | | | | | — |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of performance units | | | | | | | | | — | | | | | | | | | | — |
Net income attributable to Select Water Solutions, Inc. — diluted | | $ | | | $ | | | $ | — | | $ | | | $ | | | | $ | — |
Denominator: | | | | | | | | | | | | | | | | | | | |
Weighted-average shares of common stock outstanding — basic | | | | | | | | | | | | | | | | | | | |
Dilutive effect of restricted stock | | | | | | | | | — | | | | | | | | | | — |
Dilutive effect of performance share units | | | | | | | | | — | | | | | | | | | | — |
Dilutive effect of stock options | | | | | | | | | — | | | | | | | | | | — |
Weighted-average shares of common stock outstanding — diluted | | | | | | | | | | | | | | | | | | | |
Income per share: | | | | | | | | | | | | | | | | | | | |
Basic | | | | | $ | | | $ | — | | | | | $ | | | | $ | — |
Diluted | | | | | $ | | | $ | — | | | | | $ | | | | $ | — |
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| | | | | | | | | | | | | | | | | | | |
| | Nine months ended September 30, 2026 | | Nine months ended September 30, 2025 | |||||||||||||||
| | | | | | | | | | | | | | | | | | ||
| | Select Water Solutions, Inc. | | Class A | | Class B | | Select Water Solutions, Inc. | | Class A | | | Class B | ||||||
Numerator: | | | | | | | | | | | | | | | | | | | |
Net income | | $ | | | | | | | | | $ | | | | | | | | |
Net income attributable to noncontrolling interests | | | ( | | | | | | | | | ( | | | | | | | |
Net income attributable to Select Water Solutions, Inc. — basic | | $ | | | $ | | | $ | — | | $ | | | $ | | | | $ | — |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of restricted stock | | | | | | | | | — | | | | | | | | | | — |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of performance units | | | | | | | | | — | | | | | | | | | | — |
Add: Reallocation of net income attributable to noncontrolling interests for the dilutive effect of stock options | | | | | | | | | — | | | | | | | | | | — |
Net income attributable to Select Water Solutions, Inc. — diluted | | $ | | | $ | | | $ | — | | $ | | | $ | | | | $ | — |
Denominator: | | | | | | | | | | | | | | | | | | | |
Weighted-average shares of common stock outstanding — basic | | | | | | | | | | | | | | | | | | | |
Dilutive effect of restricted stock | | | | | | | | | — | | | | | | | | | | — |
Dilutive effect of performance share units | | | | | | | | | — | | | | | | | | | | — |
Dilutive effect of stock options | | | | | | | | | — | | | | | | | | | | — |
Weighted-average shares of common stock outstanding — diluted | | | | | | | | | | | | | | | | | | | |
Income per share: | | | | | | | | | | | | | | | | | | | |
Basic | | | | | $ | | | $ | — | | | | | $ | | | | $ | — |
Diluted | | | | | $ | | | $ | — | | | | | $ | | | | $ | — |
NOTE 16—SEGMENT INFORMATION
Select is a leading provider of sustainable water and chemical solutions to the energy industry in the U.S. The Company’s services are offered through
The Company’s CODM assesses performance and allocates resources on the basis of the following
Water Infrastructure — The Water Infrastructure segment consists of the Company’s fixed infrastructure assets, including operations associated with its gathering and distribution pipelines, water recycling facilities, SWDs, water storage facilities, and solids management facilities, primarily serving E&P companies.
Water Services — The Water Services segment primarily consists of the Company’s water-related services businesses, including water sourcing, water transfer, fluids hauling, water monitoring, water containment and water network automation, primarily serving E&P companies. Additionally, this segment included the operations of our Peak business on a consolidated basis prior to its deconsolidation on September 23, 2026.
Chemical Technologies — The Chemical Technologies segment provides technical solutions, products and expertise related to chemical applications in the oil and gas industry. This segment develops, manufactures, manages logistics and provides a full suite of chemicals used in hydraulic fracturing, stimulation, cementing and well completions for customers ranging from pressure pumpers to major integrated and independent oil and gas producers. This segment also utilizes its chemical experience and lab testing capabilities to customize tailored water treatment solutions designed for the recycling and treatment of produced water and to optimize the fracturing fluid system in conjunction with the quality of water used in well completions.
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In assessing segment results and allocating resources, the CODM places particular emphasis on significant expense categories, including cost of revenue, selling, general & administrative expenses, and depreciation, accretion, and amortization. The CODM evaluates segment performance primarily based on segment EBITDA, which serves as the key profitability measure for decision-making. The Company reports EBITDA by segment as a measure of segment performance. The Company defines EBITDA as net income, plus interest expense, income taxes, and depreciation, amortization and accretion.
Financial information by segment for the Current and Prior Quarter and the Current and Prior Period is as follows:
| | | | | | | | | | | | | | | | | | |
| | For the three months ended September 30, 2026 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | |
| | Water Infrastructure | | Water Services | | Chemical Technologies | | Other | | Eliminations | | Totals | ||||||
Revenue | | $ | | | $ | | | $ | | | $ | — | | $ | ( | | $ | |
Costs of revenue excluding depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | — | | | | | | ( |
Depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Selling, general and administrative | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Other(1) | | | | | | | | | | | | ( | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | | | | | | | $ | |
Interest expense, net | | | | | | | | | | | | | | | | | | |
Tax expense | | | | | | | | | | | | | | | | | | |
Depreciation, amortization and accretion | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | | | $ | | | $ | | | $ | ( | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
Capital expenditures(2) | | $ | | | $ | | | $ | | | $ | | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
| | For the three months ended September 30, 2025 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | |
| | Water Infrastructure | | Water Services | | Chemical Technologies | | Other | | Eliminations | | Totals | ||||||
Revenue | | $ | | | $ | | | $ | | | $ | — | | $ | ( | | $ | |
Costs of revenue excluding depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | — | | | | | | ( |
Depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Selling, general and administrative | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Other(1) | | | ( | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | | | | | | | $ | |
Interest expense, net | | | | | | | | | | | | | | | | | | |
Tax expense | | | | | | | | | | | | | | | | | | |
Depreciation, amortization and accretion | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | | | $ | | | $ | | | $ | ( | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
Capital expenditures(2) | | $ | | | $ | | | $ | | | $ | | | | | | $ | |
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| | | | | | | | | | | | | | | | | | |
| | For the nine months ended September 30, 2026 | ||||||||||||||||
| | | | | | | | | | | | | | | ||||
| | Water Infrastructure | | Water Services | | Chemical Technologies | | Other | | Eliminations | | Totals | ||||||
Revenue | | $ | | | $ | | | $ | | | $ | — | | $ | ( | | $ | |
Costs of revenue excluding depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | — | | | | | | ( |
Depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Selling, general and administrative | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Other(1) | | | ( | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | | | | | | | $ | |
Interest expense, net | | | | | | | | | | | | | | | | | | |
Tax expense | | | | | | | | | | | | | | | | | | |
Depreciation, amortization and accretion | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | | | $ | | | $ | | | $ | ( | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
Capital expenditures(2) | | $ | | | $ | | | $ | | | $ | | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
| | For the nine months ended September 30, 2025 | ||||||||||||||||
| | | | | | | | | | | | | | | ||||
| | Water Infrastructure | | Water Services | | Chemical Technologies | | Other | | Eliminations | | Totals | ||||||
Revenue | | $ | | | $ | | | $ | | | $ | — | | $ | ( | | $ | |
Costs of revenue excluding depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | — | | | | | | ( |
Depreciation, amortization and accretion | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Selling, general and administrative | | | ( | | | ( | | | ( | | | ( | | | | | | ( |
Other(1) | | | | | | | | | | | | ( | | | | | | |
| | | | | | | | | | | | | | | | | | |
Net income | | | | | | | | | | | | | | | | | $ | |
Interest expense, net | | | | | | | | | | | | | | | | | | |
Tax expense | | | | | | | | | | | | | | | | | | |
Depreciation, amortization and accretion | | | | | | | | | | | | | | | | | | |
EBITDA | | $ | | | $ | | | $ | | | $ | ( | | | | | $ | |
| | | | | | | | | | | | | | | | | | |
Capital expenditures(2) | | $ | | | $ | | | $ | | | $ | | | | | | $ | |
| (1) |
| (2) | Amounts above include accruals for capital expenditures. |
Total assets by segment as of September 30, 2026 and December 31, 2025, is as follows:
| | | | | | |
| | As of | | As of | ||
| | September 30, 2026 | | December 31, 2025 | ||
| | (in thousands) | ||||
Water Infrastructure |
| $ | |
| $ | |
Water Services | | | | | | |
Chemical Technologies |
| | |
| | |
Other | | | | | | |
Total | | $ | | | $ | |
NOTE 17—SUBSEQUENT EVENTS
Credit Agreement
On October 13, 2026, Select Water Holdings LLC (“Select Holdings”), an indirect subsidiary of the Company, executed a Credit Agreement (the “New Credit Agreement”), among Select Holdings, as borrower, SES Holdings, as parent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and issuing banks party thereto from time to time.
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The New Credit Agreement provides for a senior secured revolving credit facility of up to $
The New Revolving Credit Facility will mature on the earlier of (i) the fifth anniversary of the date on which it becomes effective and (ii) to the extent that more than $
Borrowings bear interest, at Select Holdings’ option, at the Term SOFR Rate (as defined in the New Credit Agreement) plus a margin ranging from
The obligations under the New Credit Agreement are guaranteed by Select Holdings’ material wholly owned domestic subsidiaries (including, as of the Effective Date, Pilot Water) and are secured by substantially all of the personal property and certain material real property of Select Holdings and the guarantors, subject to certain exclusions, and by a pledge by SES Holdings of its equity interests in Select Holdings. Neither Select Inc. nor SES Holdings guarantees the obligations under the New Credit Agreement.
The New Credit Agreement contains restrictions on the ability of Select Holdings and its restricted subsidiaries to make distributions on, or redeem or repurchase their equity interests, or to prepay or redeem certain unsecured or subordinated indebtedness, prior to scheduled maturity, subject to certain exceptions, including that, such transactions are permitted so long as (i) no default or event of default exists or would result therefrom, (ii) the pro forma net total leverage ratio of Select Holdings is not more than
The New Credit Agreement also requires Select Holdings to maintain (i) a net total leverage ratio of not more than
The New Credit Agreement contains certain customary representations and warranties, affirmative covenants and additional negative covenants and events of default. If an event of default occurs and is continuing, the lenders may declare all amounts outstanding under the New Credit Agreement to be immediately due and payable and terminate all outstanding commitments thereunder; provided that, in the case of certain bankruptcy or insolvency events, such acceleration and termination will occur automatically.
Notes Offering
On October 21, 2026, Select Holdings (in such capacity, the “Issuer”) completed a private offering (the “Notes Offering”) of $
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received net proceeds of approximately $
Reorganization
On October 20, 2026, in connection with the Notes Offering, SES Holdings contributed substantially all of its assets, including its equity interests in its subsidiaries other than Select Holdings, to Select Holdings (the “Reorganization”). SES Holdings is the sole member of Select Holdings. In connection with the Reorganization, Select Holdings was substituted for SES Holdings as “Parent” under the Sustainability-Linked Credit Facility, upon which SES Holdings was released as a guarantor thereunder and its assets were released from the liens securing the Sustainability-Linked Credit Facility.
Pilot Water Acquisition
On September 24, 2026, Select LLC, a subsidiary of SES Holdings, entered into a definitive agreement (the “Pilot Water Acquisition Agreement”) with Pilot OFS Holdings LLC (“Pilot OFS”) and Minerva Infrastructure IA LLC (together with Pilot OFS, the “Sellers”) to acquire all of the issued and outstanding membership interests of Pilot Water, a disposal-focused water midstream company with a core position in the Delaware Basin, for aggregate consideration consisting of $
Select acquired Pilot Water to expand the scale and geographic reach of its Water Infrastructure platform and increase its portfolio of long-term, production-related revenue. Pilot Water’s water midstream infrastructure and contracted customer base complement Select’s existing operations, particularly in the Delaware Basin, while also expanding Select’s presence across several other operating regions. The acquisition is also expected to provide operational efficiencies and opportunities to integrate Pilot Water’s disposal infrastructure with Select’s recycling capabilities, further supporting Select’s strategy of capturing the full lifecycle economics of produced water. During the Current Period, the Company incurred $
On November 2, 2026, in connection with the closing of the Pilot Water Acquisition, Select Holdings, the existing guarantors, Pilot Water Solutions LLC and certain of its subsidiaries entered into a first supplemental indenture
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to the indenture governing the Notes, pursuant to which Pilot Water Solutions LLC and such subsidiaries became guarantors of the Notes.
Repayment and Termination of Existing Credit Facility
On October 21, 2026, following the closing of the Notes Offering, the Company repaid in full and terminated the Term Loan Facility under the Sustainability-Linked Credit Facility. At the time of repayment, $
On November 2, 2026, upon closing of the Pilot Water Acquisition and the Effective Date occurring under the New Credit Agreement, the Revolving Credit Facility under the Sustainability-Linked Credit Facility was repaid in full and the Sustainability-Linked Credit Facility was fully terminated. At the time of repayment, $
Termination of Debt Commitments
Concurrent with the closing of the Pilot Water Acquisition on November 2, 2026, the financing commitments pursuant to the debt commitment letters entered into in connection with the Pilot Water Acquisition terminated.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report, as well as the historical consolidated financial statements and notes thereto included in 2025 Form 10-K and in our Quarterly Report on Form 10-Q for the period ended June 30, 2026, filed with the Securities and Exchange Commission on August 5, 2026 (our “Q2 2026 Form 10-Q”). This discussion and analysis contains forward-looking statements based upon our current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors as described under “Cautionary Note Regarding Forward-Looking Statements” and other cautionary statements described under the heading “Risk Factors” included in our 2025 Form 10-K, our Q2 2026 Form 10-Q and this Quarterly Report on Form 10-Q. We assume no obligation to update any of these forward-looking statements.
This discussion relates to the Current Quarter, the Current Period, the Prior Quarter and the Prior Period.
Overview
We are a leading provider of sustainable water and chemical solutions to the energy industry in the U.S. These solutions are supported by our water infrastructure assets, chemical manufacturing and water treatment and recycling capabilities.
Recent Developments
Notes Offering
On October 21, 2026, the Issuer completed the Notes Offering of $900.0 million aggregate principal amount of the Notes, issued at par. Interest on the Notes is payable semiannually on May 1 and November 1, beginning May 1, 2027. The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of the Issuer’s existing restricted subsidiaries and by certain future restricted subsidiaries that guarantee certain indebtedness of the Issuer or a guarantor under any credit facility. The Notes are not guaranteed by Select Inc. or SES Holdings. The Issuer received net proceeds of approximately $886.5 million, after deducting the initial purchasers’ discount. The Issuer used a portion of the net proceeds from the Notes Offering, together with cash on hand, (i) to fund the cash consideration for the Pilot Water Acquisition, (ii) to repay the outstanding obligations under the Term Loan Facility in full and repay any outstanding loans (together with accrued and unpaid interest thereon) under the Revolving Credit Facility, and (iii) to pay the fees, premiums, expenses and costs incurred in connection with the foregoing and the transactions related thereto. The Issuer intends to use the remainder for general corporate purposes and working capital.
Reorganization
On October 20, 2026, in connection with the Notes Offering, SES Holdings completed the Reorganization, pursuant to which SES Holdings contributed substantially all of its assets, including its equity interests in its subsidiaries other than Select Holdings, to Select Holdings, a wholly owned subsidiary of SES Holdings. In connection with the Reorganization, Select Holdings was substituted for SES Holdings as “Parent” under the Sustainability-Linked Credit Facility, upon which SES Holdings was released as a guarantor thereunder and its assets were released from the liens securing the Sustainability-Linked Credit Facility.
Pilot Water Acquisition
On September 24, 2026, Select LLC, a subsidiary of SES Holdings, entered into the Pilot Water Acquisition Agreement with the Sellers to acquire all of the issued and outstanding membership interests of Pilot Water, a privately held disposal-focused water midstream company with a core position in the Delaware Basin, for aggregate consideration consisting of $600.0 million in cash (subject to customary purchase price adjustments), the Equity Consideration and $15.0 million of contingent consideration payable in cash to Pilot OFS upon the achievement of certain operational
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milestones. In addition, the Pilot Water Acquisition Agreement provides that if the Measurement Date Share Price is less than the Closing Share Price, Select LLC will make (or cause to be made) a true-up payment to Pilot OFS in cash in an amount equal to (x) (a) the difference between the Closing Share Price and the Measurement Date Share Price multiplied by (b) the number of shares of our Class A common stock delivered to Pilot OFS at closing, minus (y) any cash dividends received or declared (if the record date occurs prior to the Measurement Date) on the Equity Consideration from the closing through the Measurement Date.
On October 27, 2026, Select LLC and the Sellers entered into the MIPA Amendment to provide that the closing of the Pilot Water Acquisition will take place on November 2, 2026, subject to the satisfaction or waiver of the closing conditions.
Pilot Water is a leading disposal-focused water midstream company with a core position in the Delaware Basin with approximately 2.7 million barrels per day of active permitted disposal capacity, approximately 0.8 million barrels per day of undeveloped permitted disposal capacity and more than 700 miles of pipeline infrastructure. Pilot Water’s revenues are supported by an attractive contract portfolio, with more than 80% of its annual revenue supported by long-term contracts, including approximately 480,000 barrels per day of minimum volume commitments and 306,000 dedicated acres. Pilot Water’s operational footprint complements our existing Water Infrastructure footprint. We expect the Pilot Water Acquisition and integration into our Delaware Water Infrastructure network to create a balanced recycling and disposal platform to capture the full lifecycle economics of produced and treated-produced water. Unless otherwise indicated, the financial and operating information presented herein does not give effect to the Pilot Water Acquisition and is that of Select only.
The Pilot Water Acquisition closed on November 2, 2026 and we issued 5,149,331 shares of Class A common stock in connection therewith.
Credit Agreement
On October 13, 2026, Select Holdings, an indirect subsidiary of the Company, entered into the New Credit Agreement, among Select Holdings, as borrower, SES Holdings, as parent, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and issuing banks party thereto from time to time.
The New Credit Agreement provides for the New Revolving Credit Facility, a senior secured revolving credit facility of up to $500.0 million, including a $50.0 million letter of credit sublimit, which became effective on the Effective Date, November 2, 2026, upon the satisfaction or waiver of certain conditions specified in the New Credit Agreement, including the consummation of the Pilot Water Acquisition. See Note 17—Subsequent Events.
Repayment and Termination of Existing Credit Facility
On October 21, 2026, following the closing of the Notes Offering, the Company repaid in full and terminated the Term Loan Facility under the Sustainability-Linked Credit Facility. At the time of repayment, $218.8 million of principal was outstanding under the Term Loan Facility.
On November 2, 2026, upon closing of the Pilot Water Acquisition and the Effective Date occurring under the New Credit Agreement, the Revolving Credit Facility under the Sustainability-Linked Credit Facility was repaid in full and the Sustainability-Linked Credit Facility was fully terminated. At the time of repayment, $10.0 million of borrowings was outstanding under the Revolving Credit Facility.
Termination of Debt Commitments
Concurrent with the closing of the Pilot Water Acquisition on November 2, 2026, the financing commitments pursuant to the debt commitment letters entered into in connection with the Pilot Water Acquisition terminated.
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Infrastructure Investments and Contracted Growth Initiatives
We are prioritizing investments in Water Infrastructure projects, which often bring a more predictable and steady revenue stream through long-term contracts and production-related operations. These investments typically produce higher gross margins and also foster stronger partnerships with customers, as we become an integral partner in ensuring well productivity for ongoing customer production over the life of a well. Our focus is on integrated solutions that enhance contracted infrastructure projects with logistics services and chemical solutions, and expanding the value we provide to our customers. Our approach has been to streamline operations and offer a more comprehensive and valuable overall package to customers that is built around optimizing the entire water lifecycle, as such integrated solutions drive revenue growth and enhance overall value to clients.
Water Infrastructure
During the Current Quarter, we continued executing our strategy of expanding our Water Infrastructure segment as a key component of our long-term growth platform. Our integrated water management systems support operators by providing produced water gathering, transportation, recycling, and disposal services designed to reduce costs to our customers, reduce trucking activity, improve operational reliability, and increase water management efficiency across development programs.
Our infrastructure footprint in the Northern Delaware Basin represents a core area of development for our business. Our in-service and under construction systems in New Mexico in Eddy and Lea counties include approximately 1.7 million barrels per day of active fixed recycling capacity, more than 400 miles of pipeline, and 22.2 million barrels of storage capacity across more than 1.5 million dedicated acres. This interconnected infrastructure network positions us to manage large volumes of produced water and support customer development programs across the region.
Peak Update
On September 23, 2026, SES Holdings completed the sale of a 55% interest in Peak to Headwall. SES Holdings retained a 45% ownership interest in Peak and two of five board seats. Headwall owns 55% of Peak, appoints three directors, and directs Peak’s ordinary-course activities and business operations. As a result, we deconsolidated Peak as of September 23, 2026 and began accounting for our retained interest under the equity method. Peak’s results are included in our consolidated results through September 23, 2026.
Prior to the deconsolidation transaction, Peak, while still wholly owned and consolidated, borrowed $40.0 million under a new first-lien term loan and distributed the net proceeds of $37.5 million to SES Holdings. The Peak term loan is an obligation of Peak and is not guaranteed by Select. At closing, SES Holdings received $1.5 million of cash consideration from Headwall, a $35.3 million secured seller note and retained a 45% equity interest with an estimated closing-date fair value of $30.1 million. The cash consideration is subject to customary post-closing adjustments for cash, indebtedness and working capital, which Headwall may elect to settle in cash or through a corresponding adjustment to the principal amount of the seller note. We recognized a gain of approximately $4.2 million before final closing and valuation adjustments.
Following the transaction, our consolidated revenue and costs no longer include Peak after September 23, 2026.
Chemical Technologies
During the Current Quarter, we continued to compete across a range of completion chemistry applications through our Chemical Technologies segment. Our in-basin manufacturing capabilities and continued research and development investments support our ability to supply friction reducers, surfactants and other completion chemistry products used in increasingly complex completion designs, including longer laterals and high-intensity completion programs. Demand for friction reducers and customized surfactant offerings remained supported by completion activity levels and the increasing use of recycled produced water in hydraulic fracturing operations.
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Long-Term Contract Revenue
During the Current Quarter, we executed an amended and restated long-term produced water services agreement with a leading public operator in the Northern Delaware Basin, extending our relationship for an additional 12-year term and expanding our contracted acreage position to approximately 500,000 dedicated acres and 375,000 right-of-first-refusal (“ROFR”) acres across Eddy and Lea Counties, New Mexico, including the conversion of 104,000 acres of prior ROFR acreage into dedicated acreage and the addition of 256,000 newly dedicated acres. In connection with this agreement, we expect to invest approximately $120 million to construct approximately 100 miles of additional pipeline, three million barrels of incremental storage capacity and 60,000 barrels per day of additional recycling throughput capacity in Eddy County, New Mexico, with the expanded system expected to interconnect with our existing and ongoing buildout of our broader Northern Delaware network in New Mexico and be fully operational by the end of 2027. The amendment also increases certain fixed pricing terms under the agreement and grants us an exclusive option to take assignment of multiple saltwater disposal wells in Lea County, New Mexico and Culberson County, Texas, further enhancing our integrated recycling and disposal network and supporting predictable, long-term earnings in the region.
We also continued to expand our portfolio of contracted, recurring revenue opportunities through additional commercial agreements, including produced water takeaway and disposal arrangements, water supply agreements, minimum volume commitments and additional delivery point commitments. These included a 12-year produced water services agreement with a customer in Lea County, New Mexico, providing produced water gathering, treatment and disposal services on a firm basis, together with an acreage-wide right of first refusal covering future development in the area and a separate right of first refusal over the customer's treated water purchase requirements, as well as a complementary pair of seven-year water takeaway and supply agreements in Eddy County, New Mexico, supported by new pipeline infrastructure and exclusive rights of first refusal for both produced water takeaway and treated water supply. We also amended an existing produced water gathering and pipeline agreement in the Bakken (Williams and Mountrail Counties, North Dakota), updating pricing terms and the associated area of dedication, and entered into a new five-year salt water disposal services agreement in the Haynesville/East Texas region (Panola and Shelby Counties, Texas, and DeSoto Parish, Louisiana), supported by our Bethlehem Transfer Station and associated disposal wells, with a minimum volume commitment of 18,000 barrels per day during the first three contract years, stepping down to the greater of a volume election or 12,000 barrels per day thereafter. Collectively, these agreements are intended to increase utilization of our existing infrastructure, support selective capital investments in new pipeline connectivity and delivery points, and provide greater predictability in future revenue generation across our operating regions.
Diversification
During the Current Quarter, we continued advancing our diversification initiatives, including opportunities related to municipal and industrial water markets, lithium extraction partnerships, iodine recovery, and beneficial reuse technologies, intended to evaluate potential opportunities to leverage our existing water infrastructure platform across additional end markets. These initiatives are ongoing and continue to progress.
Market Trends and Outlook
Geopolitical Conflicts
Geopolitical tensions and related hostilities across the Middle East continued during the third quarter of 2026, resulting in increased instability in oil and gas-producing regions as well as in key adjacent shipping lanes and supply chains. These developments have heightened concerns over potential supply disruptions and transportation risks, contributing to volatility in global oil and natural gas prices. In particular, disruptions to maritime traffic through key shipping corridors, including the Strait of Hormuz, have adversely affected global energy markets and contributed to volatility and elevated prices for oil and natural gas.
Further, disruptions to maritime traffic through key shipping corridors have caused disruptions to the global chemicals and oil-derived goods markets, reducing supplies and availability worldwide and resulting in increased prices.
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While we are not reliant on any chemicals or other commodities that are exclusively transported through any single shipping corridor due to our continued focus on domestic sourcing, such global disruptions to commodities markets can have downstream effects in the domestic markets, including elevated domestic prices, reduced supply and business interruptions to our suppliers. While the ultimate duration, impact and magnitude of these disruptions is currently unknown, a prolonged interruption to the global chemicals commodities and oil-derived goods markets has the potential to materially adversely affect our business and operations and those of our suppliers.
Additionally, the armed conflict between Ukraine and Russia has continued into 2026. Severe sanctions imposed by the U.S., U.K., European Union and other actors on Russian entities have driven significant volatility in global oil and natural gas prices. U.S. actions in Venezuela, including tanker seizures and a limited military intervention in early 2026, have added uncertainty; as relations stabilize, the potential release of previously sanctioned oil into global markets could depress prices. Changes in sanctions, regimes, waivers, export restrictions or other governmental actions affecting the global energy markets may have a significant effect on hydrocarbon prices. Such commodity swings, combined with higher inflation and interest rates that have raised our cost of capital, have created a more challenging planning environment for us and our customers. The ultimate outcomes remain unpredictable and could materially affect the world economy, customer activity levels, and demand for our services.
Commodity Prices
Industry conditions during the first nine months of 2026 reflected a relatively disciplined North American upstream activity environment. Commodity prices, while significantly fluctuating in the first nine months of 2026, remained supportive of development activity, although, even with the recent increases in oil prices following geopolitical tensions in the Middle East, North American operators continued to emphasize capital efficiency, free cash flow generation, and moderated production growth. As a result, drilling and completion activity across key U.S. basins remained generally stable compared to recent periods, with the Permian Basin continuing to represent the primary area of development and the largest concentration of completions activity and associated water handling demand.
Since 2021, OPEC+ countries have instituted production cuts (as well as voluntary production cuts). More recently, however, OPEC+ has announced a phased return of previously curtailed production. OPEC+ may, at its discretion, continue to decrease or increase production, which will continue to impact crude oil and natural gas price volatility. The actions of OPEC+ countries with respect to oil production levels and announcements of potential changes in such levels, including agreement on and compliance with production targets may result in volatility in the industry in which we and our customers operate.
Though geopolitical tensions remained elevated across the Middle East, production from OPEC+ countries increased during the Current Quarter as shipments through major oil transit routes, including the Strait of Hormuz, partially recovered. However, uncertainty remains regarding the flow of traffic through key shipping lanes as tensions in the Middle East continue. The average price of West Texas Intermediate (“WTI”) crude oil increased in the Current Quarter versus the Prior Quarter due to a combination of factors, including geopolitical developments in the Middle East, heightened trade tensions, global demand, and other various influences and impacts. During the Current Quarter, the average spot price of WTI crude oil was $87.12 versus an average price of $65.78 for the Prior Quarter. The average Henry Hub natural gas spot price during the Current Quarter was $2.87 versus an average of $3.03 for the Prior Quarter. Henry Hub natural gas price levels in the Current Quarter decreased relative to the Prior Quarter due to a variety of factors, including easing concerns over near-term supply disruptions and continued strength in domestic natural gas production.
Commodity markets during the quarter were influenced by geopolitical developments in the Middle East, which contributed to volatility in global oil prices and increased market attention on potential supply disruptions. Higher commodity prices during portions of the quarter improved operator cash flows and supported the economics of ongoing development programs, which may contribute to sustained activity levels across core U.S. basins.
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Industry Consolidation and Customer Demand for Water Solutions
Demand for produced water gathering, transportation, disposal, and recycling services remained closely linked to industry activity levels and the steady growth in produced water volumes associated with existing production. Produced water generation continues to increase as operators develop longer laterals and higher-intensity completion designs. Additionally, water-to-oil ratios in the Southern Delaware and Northern Delaware Basins are among the highest within the Permian Basin, and furthermore, across the United States, contributing to growing produced water volumes in the Permian Basin. These structural trends continue to support demand for integrated water management infrastructure, including pipeline gathering systems, disposal capacity, and recycling capabilities.
Across the Permian Basin and the broader industry, operators increasingly utilize pipeline-based gathering systems and centralized disposal and recycling facilities to manage water volumes more efficiently. These infrastructure systems can improve cost efficiency, reduce truck traffic, and support more reliable water management across large development programs. Recycling and beneficial reuse of produced water also continue to gain importance as operators seek to reduce freshwater consumption and improve water management practices.
Heightened inflation in recent years has driven higher interest rates and increased cost of capital for Select and our customers. In September 2026, the Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75% to 4.00%, its first increase since 2023, further increasing borrowing costs. Many customers have responded by tightening capital budgets, focusing on cash flow generation and returning capital to investors. Customer consolidation in the Permian Basin can temporarily disrupt activity levels, yet it also creates larger blocks of contiguous acreage that can increase demand for our integrated, long-term water lifecycle solutions. While acquired customers may initially slow activity to integrate operations, we are well-positioned to support these larger entities with comprehensive water management, reuse, recycling and balancing services.
Looking ahead, we expect industry activity levels to continue to be influenced by commodity price volatility, operator capital allocation priorities, and broader macroeconomic conditions. While near-term activity may fluctuate in response to customer budget adjustments, long-term fundamentals supporting produced water handling and infrastructure development remain favorable. Continued growth in produced water volumes, increasing infrastructure intensity in the Permian Basin, and expanding recycling adoption are expected to support demand for integrated water management services.
Trade Policy Developments
Global macroeconomic developments, including changes in international trade policies and tariffs, may adversely affect our ability to source raw materials and customer demand for our services. Although we are not reliant on any single supplier and can secure alternatives, disruptions from tariffs or trade restrictions could still impact our business. Beginning in the first quarter of 2025, the U.S. imposed new tariffs on imported steel, aluminum and other materials, prompting retaliatory measures from the European Union, Canada and China. We continue to monitor evolving trade policies, including potential additional tariffs on Chinese goods and ongoing litigation before the U.S. Supreme Court regarding presidential tariff authority. Any expansion of trade restrictions or a trade war could adversely affect us and the global economy.
In the first quarter of 2026, the U.S. Supreme Court struck down certain broad tariffs previously imposed through executive orders under the International Emergency Economic Powers Act of 1977 on a wide range of imported goods. In response, President Trump promptly implemented a wide sweeping 10% import surcharge on goods under Section 122 of the Trade Act of 1974, which expired in July 2026. These tariffs targeted various categories of imports, including several raw materials used in our operations, including steel, aluminum and copper. While the full scope, duration, and economic impact of these new tariffs remain uncertain, they could result in higher input costs, supply chain disruptions, and potential retaliatory measures from affected trading partners. We continue to monitor these developments closely and evaluate their potential effects on our cost structure and customer demand.
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Our Segments
Our services are offered through three reportable segments: (i) Water Infrastructure; (ii) Water Services; and (iii) Chemical Technologies.
| ● | Water Infrastructure. The Water Infrastructure segment consists of the Company’s fixed infrastructure assets, including operations associated with its gathering and distribution pipelines, water recycling facilities, SWDs, water storage facilities, and solids management facilities, primarily serving E&P companies. |
| ● | Water Services. The Water Services segment primarily consists of the Company’s water-related services businesses, including water sourcing, water transfer, fluids hauling, water monitoring, water containment and water network automation, primarily serving E&P companies. Additionally, this segment included the operations of our Peak business on a consolidated basis prior to its deconsolidation on September 23, 2026. |
| ● | Chemical Technologies. The Chemical Technologies segment provides technical solutions, products and expertise related to chemical applications in the oil and gas industry. We develop, manufacture, manage logistics and provide a full suite of chemicals used in hydraulic fracturing, stimulation, cementing and well completions for customers ranging from pressure pumpers to major integrated and independent oil and gas producers. This segment also utilizes its chemical experience and lab testing capabilities to customize tailored water treatment solutions designed for the recycling and treatment of produced water and to optimize the fracturing fluid system in conjunction with the quality of water used in well completions. |
How We Generate Revenue
Refer to “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K.
Costs of Conducting Our Business
The principal expenses involved in conducting our business are labor costs, vehicle and equipment costs (including depreciation, rental, repair and maintenance and leasing costs), raw materials including water sourcing costs and fuel costs. Overall, our fixed costs are relatively low and most of the costs of serving our customers are variable, i.e., they are incurred only when we provide water and water-related services, or chemicals and chemical-related services to our customers.
Labor costs associated with our employees and contract labor comprise the largest portion of our costs of doing business. We incurred labor and labor-related costs of $122.7 million, $115.8 million, $355.6 million and $369.6 million for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. The majority of our recurring labor costs are variable and dependent on the market environment and are incurred only while we are providing our operational services. We also incur costs to employ personnel to ensure safe operations, sell and supervise our services and perform maintenance on our assets, which is not as directly tied to our level of business activity. Additionally, we incur selling, general and administrative costs for compensation of our administrative personnel at our field sites and in our operational and corporate headquarters, as well as for third-party support, permitting, licensing and services.
We incur significant vehicle and equipment costs in connection with the services we provide, including depreciation, repairs and maintenance, rental and leasing costs. We incurred vehicle and equipment costs of $88.0 million, $71.7 million, $252.7 million and $230.9 million for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively.
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We incur raw material costs in manufacturing our chemical products, as well as for water that we source for our customers. We incurred raw material costs of $76.3 million, $60.4 million, $215.8 million and $184.4 million for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively.
We incur variable transportation costs associated with our service lines, predominantly fuel and freight. We incurred fuel and freight costs of $24.8 million, $16.0 million, $69.4 million and $56.8 million for the Current Quarter, Prior Quarter, Current Period and Prior Period, respectively. Changes to fuel prices impact our transportation costs, which affects the results of our operations.
How We Evaluate Our Operations
We use a variety of operational and financial metrics to assess our performance. Among other measures, management considers each of the following:
| ● | Revenue; |
| ● | Gross Profit; |
| ● | Gross Margins; |
| ● | EBITDA; |
| ● | Adjusted EBITDA; |
| ● | Cash Flows; and |
| ● | Free Cash Flow. |
Revenue
We analyze our revenue and assess our performance by comparing actual monthly revenue to our internal projections and across periods. We also assess incremental changes in revenue compared to incremental changes in direct operating costs, and selling, general and administrative expenses across our reportable segments to identify potential areas for improvement, as well as to determine whether segment performance is meeting management’s expectations.
Gross Profit
To measure our financial performance, we analyze our gross profit, which we define as revenues less direct operating expenses (including depreciation, amortization and accretion expenses). We believe gross profit provides insight into profitability and the true operating performance of our assets. We also compare gross profit to prior periods and across segments to identify trends as well as underperforming segments.
Gross Margins
Gross margins provide an important gauge of how effective we are at converting revenue into profits. This metric works in tandem with gross profit to ensure that we do not seek to increase gross profit at the expense of lower margins, nor pursue higher gross margins at the expense of declining gross profits. We track gross margins by segment and service line and compare them across prior periods and across segments and service lines to identify trends as well as underperforming segments.
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EBITDA and Adjusted EBITDA
We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income, plus interest expense, income taxes, and depreciation, amortization and accretion. We define Adjusted EBITDA as EBITDA plus any impairment and abandonment charges or asset write-offs pursuant to GAAP, plus non-cash losses on the sale of assets or subsidiaries, less gain on deconsolidation of subsidiary, less remeasurement gains on fixed assets related to business combinations, non-cash compensation expense, and non-recurring or unusual expenses or charges, including severance expenses, transaction costs, or facilities-related exit and disposal-related expenditures, plus/(minus) foreign currency losses/(gains), plus/(minus) losses/(earnings) on unconsolidated entities and plus TRAs expense. The adjustments to EBITDA are generally consistent with such adjustments described in our Sustainability-Linked Credit Facility. See “—Comparison of Non-GAAP Financial Measures—EBITDA and Adjusted EBITDA” for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP.
Cash Flows and Free Cash Flow
We define FCF as net cash provided by (used in) operating activities less purchases of property and equipment, plus proceeds received from sale of property and equipment. Our board of directors and executive management team use FCF to assess our liquidity and ability to repay maturing debt, fund operations and make additional investments. We believe FCF provides useful information to investors because it is an important indicator of our liquidity, including our ability to reduce net debt, make strategic investments, pay dividends and distributions and repurchase common stock. Our measure of FCF may not be directly comparable to similar measures reported by other companies. Furthermore, FCF is not a substitute for, or more meaningful than, net cash provided by (used in) operating activities nor any other measure prescribed by GAAP, and there are limitations to using non-GAAP measures such as FCF. Accordingly, FCF should not be considered a measure of the income generated by our business or discretionary cash available to it to invest in the growth of our business.
Factors Affecting the Comparability of Our Results of Operations to Our Historical Results of Operations
Our future results of operations may not be comparable to our historical results of operations for the periods presented, primarily for the reasons described below and those described in “—Recent Developments” above.
Acquisition Activity
As described above, we continuously evaluate potential investments, particularly in water infrastructure and other water-related services and technology. To the extent we consummate acquisitions, any pre-transaction revenues or expenses from such transactions are not included in our historical results of operations.
Our historical financial statements for periods prior to the respective date each acquisition was completed do not include the results of operations of that acquisition. See “—Recent Developments” and “Note 3—Acquisitions and Divestitures” for a description of these transactions.
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Results of Operations
The following tables set forth our results of operations for the periods presented.
Current Quarter Compared to the Prior Quarter
| | | | | | | | | | | | | |
| | Three months ended September 30, | | Change |
| | |||||||
| | 2026 | | 2025 | | Dollars | | Percentage |
| | |||
| | | (in thousands) | | | | | |
| | |||
Revenue |
| | |
| | |
| | |
| | | |
Water Infrastructure | | $ | 110,119 | | $ | 78,805 | | $ | 31,314 | | 39.7 | % | |
Water Services | | | 212,264 | | | 166,877 | | | 45,387 |
| 27.2 | % | |
Chemical Technologies | | | 89,806 | | | 76,561 | |
| 13,245 |
| 17.3 | % | |
Total revenue | |
| 412,189 | |
| 322,243 | |
| 89,946 |
| 27.9 | % | |
| | | | | | | | | | | | | |
Costs of revenue | |
| | |
| | |
| |
| | | |
Water Infrastructure | | | 47,170 | | | 36,964 | |
| 10,206 |
| 27.6 | % | |
Water Services | |
| 161,774 | |
| 136,795 | |
| 24,979 |
| 18.3 | % | |
Chemical Technologies | | | 73,833 | | | 61,352 | | | 12,481 | | 20.3 | % | |
Depreciation, amortization and accretion | |
| 48,020 | |
| 43,578 | |
| 4,442 |
| 10.2 | % | |
Total costs of revenue | |
| 330,797 | |
| 278,689 | |
| 52,108 |
| 18.7 | % | |
Gross profit | |
| 81,392 | |
| 43,554 | |
| 37,838 |
| 86.9 | % | |
| | | | | | | | | | | | | |
Operating expenses | |
| | |
| | |
| |
| | | |
Selling, general and administrative | |
| 53,610 | |
| 41,674 | |
| 11,936 |
| 28.6 | % | |
Depreciation and amortization | |
| 963 | |
| 1,310 | |
| (347) |
| (26.5) | % | |
Impairments and abandonments | | | — | | | 2,279 | | | (2,279) | | NM | | |
Lease abandonment costs | |
| (67) | |
| 63 | |
| (130) |
| (206.3) | % | |
Total operating expenses | |
| 54,506 | |
| 45,326 | |
| 9,180 |
| 20.3 | % | |
Income (loss) from operations | |
| 26,886 | |
| (1,772) | |
| 28,658 |
| 1617.3 | % | |
| | | | | | | | | | | | | |
Other income (expense) | |
| | |
| | |
| |
| | | |
Gain on sales of property and equipment and divestitures, net | | | 1,134 | | | 2,600 | | | (1,466) |
| NM | | |
Interest expense, net | |
| (5,354) | |
| (5,963) | |
| 609 |
| (10.2) | % | |
Gain on deconsolidation of subsidiary | | | 4,175 | | | — | | | 4,175 |
| NM | | |
Remeasurement gain on business combination | | | — | | | 14,924 | | | (14,924) |
| NM | | |
Other | |
| 5,578 | |
| (2,277) | |
| 7,855 |
| NM | | |
Income before income tax expense and equity in losses of unconsolidated entities | |
| 32,419 | |
| 7,512 | |
| 24,907 |
| 331.6 | % | |
Income tax expense | |
| (9,043) | |
| (434) | |
| (8,609) |
| 1983.6 | % | |
Equity in losses of unconsolidated entities | |
| (449) | |
| (4,784) | |
| 4,335 |
| NM | | |
Net income | | $ | 22,927 | | $ | 2,294 | | $ | 20,633 |
| 899.4 | % | |
NM = Not Meaningful
Revenue
Our revenue increased by $89.9 million, or 27.9%, to $412.2 million for the Current Quarter compared to $322.2 million for the Prior Quarter. This increase was composed of a $45.4 million increase in Water Services revenue, a $31.3 million increase in Water Infrastructure revenue and a $13.2 million increase in Chemical Technologies revenue. For the Current Quarter, our Water Infrastructure, Water Services and Chemical Technologies constituted 26.7%, 51.5% and 21.8% of our total revenue, respectively, compared to 24.5%, 51.7% and 23.8%, respectively, for the Prior Quarter. The revenue changes by reportable segment are as follows:
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Water Infrastructure. Revenue increased $31.3 million, or 39.7%, to $110.1 million for the Current Quarter compared to $78.8 million for the Prior Quarter. The increase was primarily driven by higher recycling revenues associated with the continued ramp-up of volumes under long-term agreements, as well as increased activity supported by our ongoing New Mexico infrastructure buildout and related Permian customer development. Results were also supported by increased disposal and solids revenues, reflecting the expansion of our asset base through recent acquisitions. Recycling and disposal revenues also benefited from higher skim oil volumes and pricing. These increases were partially offset by lower pipeline revenue.
Water Services. Revenue increased $45.4 million, or 27.2%, to $212.3 million for the Current Quarter compared to $166.9 million in the Prior Quarter. The increase was primarily driven by underlying organic growth as well as higher water transfer revenues, driven by market share gains supported by our Tideline® hose offering as well as higher Peak revenue driven by increased power generation activity.
Chemical Technologies. Revenue increased by $13.2 million, or 17.3%, to $89.8 million for the Current Quarter compared to $76.6 million for the Prior Quarter. The increase in revenues was primarily driven by enhanced sales performance and new product developments as well as price increases to offset increased raw materials costs.
Costs of Revenue
Costs of revenue increased $52.1 million, or 18.7%, to $330.8 million for the Current Quarter compared to $278.7 million for the Prior Quarter. The increase was comprised of a $25.0 million increase in Water Services costs, a $10.2 million increase in Water Infrastructure costs, a $12.5 million increase in Chemical Technologies costs, and a $4.4 million increase in depreciation, amortization and accretion.
Water Infrastructure. Costs of revenue increased $10.2 million, or 27.6%, to $47.2 million for the Current Quarter compared to $37.0 million for the Prior Quarter. Cost of revenue as a percentage of revenue decreased from 46.9% to 42.8% primarily driven by a greater mix of higher-margin recycling revenues, reflecting higher skim oil sales and economies of scale from higher volumes.
Water Services. Costs of revenue increased $25.0 million, or 18.3%, to $161.8 million for the Current Quarter compared to $136.8 million for the Prior Quarter. As a percentage of revenue, cost of revenue decreased from 82.0% in the Prior Quarter to 76.2% in the Current Quarter. The decrease was primarily driven by improved water transfer margins from increased utilization of Tideline® hose assets, which support greater efficiency and service quality, as well as effective cost controls.
Chemical Technologies. Costs of revenue increased $12.5 million, or 20.3%, to $73.8 million for the Current Quarter compared to $61.4 million for the Prior Quarter. Cost of revenue as a percentage of revenue increased from 80.1% to 82.2% attributable to higher raw material costs and increased fuel and freight due to higher diesel prices.
Depreciation, amortization and accretion. Depreciation, amortization and accretion expense increased $4.4 million, or 10.2%, to $48.0 million for the Current Quarter compared to $43.6 million for the Prior Quarter primarily due to increased capital expenditures made into new organic infrastructure projects as well as a higher fixed asset base resulting from recent acquisitions partially offset by a decreased asset base in our Water Services segment due to the assets divested in the Omni transaction as well as assets becoming fully depreciated.
Gross Profit
Gross profit was $81.4 million for the Current Quarter compared to $43.6 million for the Prior Quarter primarily driven by a $21.1 million increase in gross profit from our Water Infrastructure segment, a $20.4 million increase in gross profit from our Water Services segment, and a $0.8 million increase in gross profit from our Chemical Technologies segment partially offset by a $4.4 million increase in depreciation, amortization and accretion expense. Gross margin as a percentage of revenue was 19.7% and 13.5% in the Current Quarter and Prior Quarter, respectively.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $11.9 million, or 28.6%, to $53.6 million for the Current Quarter compared to $41.7 million for the Prior Quarter, driven primarily by a $5.5 million increase in incentive and equity-based compensation, a $6.6 million increase in transaction costs and $2.0 million in other expenses partially offset by $1.5 million in Prior Quarter severance expense and a $0.7 million decrease in wages and associated payroll taxes.
Impairments and Abandonments
During the Prior Quarter, we recognized $2.3 million in impairments and abandonments primarily due to the abandonment of a SWD well in the Water Infrastructure segment.
Net Interest Expense
Net interest expense decreased by $0.6 million, or 10.2%, to $5.4 million for the Current Quarter compared to $6.0 million in the Prior Quarter primarily driven by lower interest rates on the term loan.
Gain on Deconsolidation of Subsidiary
During the Current Quarter, we sold a 55% interest in Peak, which resulted in a gain of $4.2 million.
Remeasurement Gain on Business Combination
A remeasurement gain of $14.9 million was recognized in the Prior Quarter in connection with Water Services property and equipment that was part of the purchase consideration transferred to Omni.
Other Income (Expense)
Other Income was $5.6 million for the Current Quarter compared to Other Expense of $2.3 million for the Prior Quarter. Current Quarter amounts include a $5.5 million insurance reimbursement for lost profits related to a 2024 business combination, while Prior Quarter amounts were primarily attributable to sales tax audit settlements.
Income Tax Expense
Income tax expense increased $8.6 million to $9.0 million for the Current Quarter compared to $0.4 million for the Prior Quarter primarily due to higher pre-tax income. The effective tax rate was 27.9% and 5.8% for the Current Quarter and Prior Quarter, respectively, and differs from the 21% U.S. federal statutory rate primarily due to net income allocated to noncontrolling interests, state income taxes, income tax credits and nondeductible items. The difference in the effective tax rate in the Current Quarter versus the Prior Quarter is related to the items impacting the rate above relative to the amount of pretax earnings.
Net Income
Net income increased by $20.6 million to $22.9 million for the Current Quarter compared to $2.3 million for the Prior Quarter, driven primarily by higher gross profit, other income, lower equity investment losses and impairments and abandonments and the gain on deconsolidation of subsidiary, partially offset by the remeasurement gain on business combination in the Prior Quarter, increased selling, general and administrative expenses and higher income tax expense.
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Current Period Compared to the Prior Period
| | | | | | | | | | | | | |
| | Nine months ended September 30, | | Change |
| | |||||||
| | 2026 | | 2025 | | Dollars | | Percentage |
| | |||
| | | (in thousands) | | | | | |
| | |||
Revenue |
| | |
| | |
| | |
| | | |
Water Infrastructure | | $ | 308,469 | | $ | 232,051 | | $ | 76,418 | | 32.9 | % | |
Water Services | | | 601,648 | | | 608,185 | | | (6,537) |
| (1.1) | % | |
Chemical Technologies | | | 263,837 | | | 220,606 | |
| 43,231 |
| 19.6 | % | |
Total revenue | |
| 1,173,954 | |
| 1,060,842 | |
| 113,112 |
| 10.7 | % | |
| | | | | | | | | | | | | |
Costs of revenue | |
| | |
| | |
| |
| | | |
Water Infrastructure | | | 131,941 | | | 106,668 | |
| 25,273 |
| 23.7 | % | |
Water Services | |
| 463,882 | |
| 491,825 | |
| (27,943) |
| (5.7) | % | |
Chemical Technologies | | | 213,631 | | | 181,965 | | | 31,666 | | 17.4 | % | |
Depreciation, amortization and accretion | |
| 140,987 | |
| 123,307 | |
| 17,680 |
| 14.3 | % | |
Total costs of revenue | |
| 950,441 | |
| 903,765 | |
| 46,676 |
| 5.2 | % | |
Gross profit | |
| 223,513 | |
| 157,077 | |
| 66,436 |
| 42.3 | % | |
| | | | | | | | | | | | | |
Operating expenses | |
| | |
| | |
| |
| | | |
Selling, general and administrative | |
| 135,339 | | | 118,041 | |
| 17,298 |
| 14.7 | % | |
Depreciation and amortization | |
| 3,293 | | | 4,153 | |
| (860) |
| (20.7) | % | |
Impairments and abandonments | | | 5,947 | | | 4,904 | | | 1,043 | | NM | | |
Lease abandonment costs | |
| (264) | | | 785 | |
| (1,049) |
| (133.6) | % | |
Total operating expenses | |
| 144,315 | |
| 127,883 | |
| 16,432 |
| 12.8 | % | |
Income from operations | |
| 79,198 | |
| 29,194 | |
| 50,004 |
| 171.3 | % | |
| | | | | | | | | | | | | |
Other income (expense) | |
| | |
| | |
| |
| | | |
Gain on sales of property and equipment and divestitures, net | | | 1,703 | | | 10,468 | | | (8,765) |
| NM | | |
Interest expense, net | |
| (16,282) | | | (16,484) | |
| 202 |
| (1.2) | % | |
Gain on deconsolidation of subsidiary | | | 4,175 | | | — | |
| 4,175 |
| NM | | |
Remeasurement gain on business combination | | | — | | | 14,924 | | | (14,924) |
| NM | | |
Other | |
| 5,272 | | | (1,856) | |
| 7,128 |
| NM | | |
Income before income tax expense and equity in losses of unconsolidated entities | |
| 74,066 | |
| 36,246 | |
| 37,820 |
| 104.3 | % | |
Income tax expense | |
| (17,836) | |
| (7,849) | |
| (9,987) |
| 127.2 | % | |
Equity in losses of unconsolidated entities | | | (1,309) | |
| (4,872) | |
| 3,563 |
| NM | | |
Net income | | $ | 54,921 | | $ | 23,525 | | $ | 31,396 |
| 133.5 | % | |
NM = Not Meaningful
Revenue
Our revenue increased by $113.1 million, or 10.7%, to $1.174 billion for the Current Period compared to $1.061 billion for the Prior Period. This increase was composed of a $76.4 million increase in Water Infrastructure revenue and a $43.2 million increase in Chemical Technologies revenue partially offset by a $6.5 million decrease in Water Services revenue. For the Current Period, our Water Infrastructure, Water Services and Chemical Technologies constituted 26.3%, 51.2% and 22.5% of our total revenue, respectively, compared to 21.9%, 57.3% and 20.8%, respectively, for the Prior Period. The revenue changes by reportable segment are as follows:
Water Infrastructure. Revenue increased $76.4 million, or 32.9%, to $308.5 million for the Current Period compared to $232.1 million for the Prior Period. The increase was primarily driven by higher recycling revenues associated with the continued ramp-up of volumes under long-term agreements, as well as increased activity supported
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by our ongoing New Mexico infrastructure buildout and related Permian customer development. Results were also supported by increased disposal and solids revenues, reflecting the expansion of our asset base through recent acquisitions. Recycling and disposal revenues also benefited from higher skim oil volumes and pricing. These increases were partially offset by lower pipeline revenue.
Water Services. Revenue decreased $6.5 million, or 1.1%, to $601.6 million for the Current Period compared to $608.2 million in the Prior Period. The decrease was primarily driven by $45.5 million lower Fluids Hauling revenue primarily due to divested operations in connection with the Omni transaction. These decreases were partially offset by higher water transfer revenues, driven by market share gains supported by our Tideline® hose offering as well as higher Peak revenue driven by increased power generation activity.
Chemical Technologies. Revenue increased by $43.2 million, or 19.6%, to $263.8 million for the Current Period compared to $220.6 million for the Prior Period. The increase in revenues was primarily driven by enhanced sales performance and new product developments as well as price increases to offset increased raw materials costs.
Costs of Revenue
Costs of revenue increased $46.7 million, or 5.2%, to $950.4 million for the Current Period compared to $903.8 million for the Prior Period. The increase was comprised of a $31.7 million increase in Chemical Technologies costs and a $25.3 million increase in Water Infrastructure costs partially offset by a $27.9 million decrease in Water Services costs. Depreciation, amortization and accretion also increased $17.7 million.
Water Infrastructure. Costs of revenue increased $25.3 million, or 23.7%, to $131.9 million for the Current Period compared to $106.7 million for the Prior Period. Cost of revenue as a percentage of revenue decreased from 46.0% to 42.8% primarily driven by a greater mix of higher-margin recycling revenues, reflecting higher skim oil sales and economies of scale from higher volumes.
Water Services. Costs of revenue decreased $27.9 million, or 5.7%, to $463.9 million for the Current Period compared to $491.8 million for the Prior Period. As a percentage of revenue, cost of revenue decreased from 80.9% in the Prior Period to 77.1% in the Current Period. The favorable decrease in costs as a percentage of revenue was primarily driven by higher water transfer margins resulting from increased utilization of Tideline® hose assets, which supported greater operating efficiency and service quality, as well as effective cost controls. The decrease was also favorably impacted by a lower relative revenue contribution from fluids hauling following the Omni transaction.
Chemical Technologies. Costs of revenue increased $31.7 million, or 17.4%, to $213.6 million for the Current Period compared to $182.0 million for the Prior Period. Cost of revenue as a percentage of revenue decreased from 82.5% to 81.0% attributable to a higher proportion of sales from higher margin products partially offset by higher raw material costs and increased fuel and freight due to higher diesel prices.
Depreciation, amortization and accretion. Depreciation, amortization and accretion expense increased $17.7 million, or 14.3%, to $141.0 million for the Current Period compared to $123.3 million for the Prior Period primarily due to increased capital expenditures made into new organic infrastructure projects as well as a higher fixed asset base resulting from recent acquisitions partially offset by a decreased asset base in our Water Services segment due to the assets divested in the Omni transaction as well as assets becoming fully depreciated.
Gross Profit
Gross profit was $223.5 million for the Current Period compared to $157.1 million for the Prior Period primarily driven by a $51.1 million increase in gross profit from our Water Infrastructure segment, a $21.4 million increase in gross profit from our Water Services segment and an $11.6 million increase in gross profit from our Chemical Technologies segment partially offset by a $17.7 million increase in depreciation, amortization and accretion expense. Gross margin as a percentage of revenue was 19.0% and 14.8% in the Current Period and Prior Period, respectively.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $17.3 million, or 14.7%, to $135.3 million for the Current Period compared to $118.0 million for the Prior Period, driven primarily by a $14.0 million increase in incentive and equity-based compensation, an increase of $4.7 million in transaction costs, $1.6 million in higher legal and professional costs and $0.9 million in higher information technology costs partially offset by $1.5 million Prior Period severance expense, a $0.8 million decrease in wages and associated payroll taxes, a $0.5 million decrease in credit loss expense, and $1.1 million in other expenses.
Impairments and Abandonments
During the Current Period, we recognized $5.9 million in impairments and abandonments primarily due to the abandonment of a SWD well in the Haynesville region of our Water Infrastructure segment. During the Prior Period, we recognized $4.9 million in impairments and abandonments, consisting of $3.1 million in the Water Infrastructure segment primarily associated with SWD abandonments and the termination of a disposal lease, $1.2 million related to the abandonment of back-office software development costs and $0.6 million of property and equipment in the Water Services segment related to the relocation of operations from a leased facility.
Gain on sales of property and equipment and divestitures, net
During the Current Period, we recognized $1.7 million in gains on sales of property and equipment and divestitures compared to $10.5 million in gains during the Prior Period. Prior Period amounts were comprised of $5.5 million in underutilized or obsolete property and equipment in our Water Services segment, $4.0 million related to the sale of excess land in the Haynesville/E. Texas region in our Water Infrastructure segment, and $1.0 million of obsolete property and equipment in our Chemical Technologies segment.
Net Interest Expense
Net interest expense decreased by $0.2 million, or 1.2%, to $16.3 million for the Current Period compared to $16.5 million in the Prior Period.
Gain on Deconsolidation of Subsidiary
During the Current Quarter, we sold a 55% interest in Peak, which resulted in a gain of $4.2 million.
Remeasurement Gain on Business Combination
A remeasurement gain of $14.9 million was recognized in the Prior Period in connection with Water Services property and equipment that was part of the purchase consideration transferred to Omni.
Other Income (Expense)
Other Income was $5.3 million for the Current Period compared to Other Expense of $1.9 million for the Prior Period. Current Period amounts include a $5.5 million insurance reimbursement for lost profits related to a 2024 business combination, while Prior Period amounts were primarily attributable to sales tax audit settlements.
Income Tax Expense
Income tax expense increased $10.0 million to $17.8 million for the Current Period compared to $7.8 million for the Prior Period primarily due to higher pre-tax income. The effective tax rate was 24.1% and 21.7% for the Current Period and Prior Period, respectively, and differs from the 21% U.S. federal statutory rate primarily due to net income allocated to noncontrolling interests, state income taxes, income tax credits and nondeductible items. The difference in
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the effective tax rate in the Current Period versus the Prior Period is related to the items impacting the rate above relative to the amount of pretax earnings.
Net Income
Net income increased by $31.4 million, or 133.5%, to $54.9 million for the Current Period compared to $23.5 million for the Prior Period, driven primarily by higher gross profit, other income, a decrease in equity investment losses and the gain on deconsolidation of subsidiary, partially offset by higher selling, general and administrative expenses, the remeasurement gain in the Prior Period, lower gains on sale of fixed assets, higher impairments and abandonments, and higher income tax expense.
Comparison of Non-GAAP Financial Measures
Our board of directors, management and investors use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, amortization and accretion) and items outside the control of our management team. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.
Note Regarding Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to the exclusion of some but not all items that affect the most directly comparable GAAP financial measures. One should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
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The following table sets forth our reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP measure for the periods presented:
| | | | | | | | | | | | |
| | Three months ended September 30, | | Nine months ended September 30, | ||||||||
| | 2026 | | 2025 | | 2026 | | 2025 | ||||
| | (in thousands) | ||||||||||
Net income | | $ | 22,927 | | $ | 2,294 | | $ | 54,921 | | $ | 23,525 |
Interest expense, net | | | 5,354 | | | 5,963 | | | 16,282 | | | 16,484 |
Income tax expense | | | 9,043 | | | 434 | | | 17,836 | | | 7,849 |
Depreciation, amortization and accretion | | | 48,983 | | | 44,888 | | | 144,280 | | | 127,460 |
EBITDA | | | 86,307 | | | 53,579 | | | 233,319 | | | 175,318 |
Non-cash compensation expenses(1) | | | 8,336 | | | 7,398 | | | 22,732 | | | 14,077 |
Non-recurring severance expenses(2) | | | — | | | 1,467 | | | — | | | 1,467 |
Non-cash loss on sale of assets or subsidiaries | | | 3 | | | 875 | | | 121 | | | 1,312 |
Transaction costs | | | 7,449 | | | 3,289 | | | 8,343 | | | 6,490 |
Lease abandonment costs | | | (67) | | | 63 | | | (264) | | | 785 |
Impairments and abandonments | | | — | | | 2,279 | | | 5,947 | | | 4,904 |
Remeasurement gain on business combination | | | — | | | (14,924) | | | — | | | (14,924) |
Gain on deconsolidation of subsidiary | | | (4,175) | | | — | | | (4,175) | | | — |
Equity in losses of unconsolidated entities | | | 449 | | | 4,784 | | | 1,309 | | | 4,872 |
Other(3) | | | (4,829) | | | 671 | | | (3,488) | | | 1,825 |
Adjusted EBITDA | | $ | 93,473 | | $ | 59,481 | | $ | 263,844 | | $ | 196,126 |
| (1) | Current Period includes $0.2 million of other cash incentive compensation. |
| (2) | Prior Quarter and Prior Period amounts relate to severance expense in connection with the termination of certain former management employees related to a reorganization. |
| (3) | Current Quarter and Current Period amounts include $5.5 million in insurance proceeds from lost profits related to a 2024 business combination. |
EBITDA was $86.3 million for the Current Quarter compared to $53.6 million for the Prior Quarter. The $32.7 million increase in EBITDA was driven primarily by a $42.3 million increase in gross profit, a $7.9 million increase in other income, a decrease of $4.3 million in equity investment losses, the $4.2 million gain on the deconsolidation of Peak, and a $2.3 million decrease in impairments and abandonments partially offset by the $14.9 million remeasurement gain in the Prior Quarter, an $11.9 million increase in selling, general and administrative expenses and a $1.5 million decrease in gains on asset sales. Adjusted EBITDA was $93.5 million for the Current Quarter compared to $59.5 million for the Prior Quarter.
EBITDA was $233.3 million for the Current Period compared to $175.3 million for the Prior Period. The $58.0 million increase in EBITDA was driven primarily by an $84.1 million increase in gross profit, a $7.1 million increase in other income, the $4.2 million gain on the deconsolidation of Peak and a decrease of $3.6 million in equity investment losses partially offset by a $17.3 million increase in selling, general and administrative expenses, a $14.9 million Prior Period remeasurement gain and an $8.8 million decrease in gains on asset sales. Adjusted EBITDA was $263.8 million for the Current Period compared to $196.1 million for the Prior Period.
Liquidity and Capital Resources
Overview
Following the effectiveness of the New Revolving Credit Facility on November 2, 2026, our primary sources of liquidity are cash on hand, borrowing capacity under the New Revolving Credit Facility, cash flows from operations, proceeds from the sale of excess property and equipment, proceeds from opportunistic underwritten public offerings of our Class A common stock and the remaining net proceeds from the Notes Offering. Our primary uses of capital have
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been to fund current operations, maintain our asset base, implement technological advancements, make capital expenditures to support organic growth, fund acquisitions and equity investments, pay dividends and distributions, make payments under the TRAs, and when appropriate, repurchase shares of Class A common stock in the open market. Depending on available opportunities, market conditions and other factors, we may also issue additional debt and equity securities in the future, if needed.
We prioritize sustained positive FCF and a strong balance sheet and evaluate potential acquisitions and investments in the context of those priorities, in addition to the economics of the opportunity. We believe this approach provides us with additional flexibility to evaluate larger investments as well as improved resilience in a sustained downturn versus many of our peers.
We believe our cash on hand, cash flows from operations and available borrowings under the New Revolving Credit Facility will be sufficient to fund our operations, capital expenditures, contractual obligations and working capital needs and to remain in compliance with our debt covenants for at least the next twelve months.
Prior to closing, Peak, while still wholly owned and consolidated, borrowed $40.0 million under a new first-lien term loan and distributed the net proceeds of $37.5 million to SES Holdings. The Peak term loan is an obligation of Peak and is not guaranteed by Select. At closing, SES Holdings received $1.5 million in cash and a $35.3 million secured seller note from Headwall. The cash consideration is subject to customary post-closing adjustments for cash, indebtedness and working capital, which Headwall may elect to settle in cash or through a corresponding adjustment to the principal amount of the seller note.
During the fourth quarter of 2022, we initiated a quarterly dividend and distribution program of $0.05 per share and $0.05 per unit for holders of shares of Class A and Class B common stock, respectively. We paid quarterly dividends at the same rate through the third quarter of 2023, then the board of directors increased the quarterly dividend paid on November 17, 2023 to $0.06 per share and $0.06 per unit for holders of shares of Class A and Class B common stock, respectively. We paid quarterly dividends at the same rate through the third quarter of 2024, then the board of directors increased the quarterly dividend paid on November 15, 2024 to $0.07 per share and $0.07 per unit for holders of shares of Class A and Class B common stock, respectively. This program resulted in a financing outflow of $27.9 million in the Current Period, and this quarterly dividend program is expected to continue. All future dividend payments are subject to quarterly review and approval by our board of directors. Upon its effectiveness, the New Revolving Credit Facility will restrict our ability to make distributions, including to fund our dividends, subject to certain exceptions, including restricted payments (including dividends) of up to $15.0 million per fiscal quarter. See Note 17—Subsequent Events.
As of September 30, 2026, cash and cash equivalents totaled $34.1 million, and we had approximately $237.5 million of available borrowing capacity under the Revolving Credit Facility under our Sustainability-Linked Credit Facility. As of September 30, 2026, we had $247.2 million in outstanding indebtedness, the borrowing base for the Revolving Credit Facility under the Sustainability-Linked Credit Facility was $256.2 million, the borrowing base for the Term Loan Facility under the Sustainability-Linked Credit Facility was $426.3 million and outstanding letters of credit totaled $18.7 million.
Senior Notes
On October 21, 2026, the Issuer completed the Notes Offering pursuant to which it issued $900.0 million aggregate principal amount of the Notes. The Issuer received net proceeds of approximately $886.5 million, after deducting the initial purchasers’ discount. The Issuer used a portion of the net proceeds from the Notes Offering, together with cash on hand, (i) to fund the cash consideration for the Pilot Water Acquisition, (ii) to repay the outstanding obligations under the Term Loan Facility in full and repay any outstanding loans (together with accrued and unpaid interest thereon) under the Revolving Credit Facility, and (iii) to pay the fees, premiums, expenses and costs incurred in connection with the foregoing and the transactions related thereto. The Issuer intends to use the remainder for general corporate purposes and working capital. Interest on the Notes accrues from October 21, 2026, at an annual rate of 7.625% and is payable semiannually on May 1 and November 1 of each year, beginning May 1, 2027.
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The Notes will mature on November 1, 2034 and are senior unsecured obligations of the Issuer, guaranteed, jointly and severally, on a senior unsecured basis by the Issuer’s existing subsidiaries that are borrowers or guarantors under the Revolving Credit Facility and by certain of its future restricted subsidiaries. The Issuer may redeem all or a portion of the Notes at any time on or after November 1, 2029 at the redemption prices set forth in the indenture governing the Notes, plus accrued and unpaid interest. Prior to November 1, 2029, the Issuer may redeem all or a portion of the Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, and may also redeem up to 40% of the aggregate principal amount of the Notes with an amount not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 107.625% of the principal amount thereof, plus accrued and unpaid interest. Upon the occurrence of certain types of change of control, accompanied by a downgrade of the Notes by at least two rating agencies, the Issuer will be required to offer to repurchase the Notes at a purchase price of 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase.
The indenture governing the Notes contains covenants that, among other things, limit the ability of the Issuer and its restricted subsidiaries to (i) incur or guarantee additional indebtedness or issue certain preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from the Issuer’s restricted subsidiaries to the Issuer; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications, and certain of these covenants will terminate if the Notes receive an investment grade rating and no default or event of default has occurred and is continuing.
Sustainability-Linked Credit Facility
On January 24, 2025, SES Holdings, Select LLC, the Administrative Agent, and the other lenders party thereto entered into the Sustainability-Linked Credit Facility, which initially provides for $300.0 million in revolving commitments under the Revolving Credit Facility and $250.0 million in term commitments under the Term Loan Facility, in each case, subject to a borrowing base. The Sustainability-Linked Credit Facility also has a sublimit of $50.0 million for letters of credit and a sublimit of $30.0 million for swingline loans. Subject to obtaining commitments from existing or new lenders, Select LLC has the option to increase the maximum amount under the Sustainability-Linked Credit Facility by (i) $150.0 million for additional revolving commitments and (ii) $50.0 million for additional term commitments, in each case, during the first four years following the Closing Date. As of the Closing Date, (i) there were no borrowings outstanding under the Revolving Credit Facility and approximately $20.0 million of letters of credit issued and outstanding thereunder and (ii) the Term Loan Facility was fully funded. Capitalized terms used but not defined herein have the meaning ascribed to them in the Sustainability-Linked Credit Facility.
On October 21, 2026, in connection with the closing of the Notes Offering, the Term Loan Facility under the Sustainability-Linked Credit Facility was repaid and terminated in full. Concurrent with the closing of the Pilot Water Acquisition, and the Effective Date under the New Credit Agreement, the Revolving Credit Facility under the Sustainability-Linked Credit Facility was repaid in full and the Sustainability-Linked Credit Facility was terminated.
Refer to “Note 8—Debt” for further discussion of the Sustainability-Linked Credit Facility and “Note 17—Subsequent Events” for further discussion of the New Revolving Credit Facility.
New Revolving Credit Facility
The New Revolving Credit Facility provides for up to $500.0 million of commitments, including a $50.0 million letter of credit sublimit. It became effective upon satisfaction or waiver of specified conditions, including the closing of the Pilot Water Acquisition on November 2, 2026. As of November 5, 2026, we had zero borrowings, outstanding letters of credit totaled $16.6 million and the available borrowing capacity under our New Revolving Credit Facility was $483.4 million. We must maintain a net total leverage ratio of not more than 4.25 to 1.00, a net senior secured leverage ratio of not more than 2.50 to 1.00 and an interest coverage ratio of not less than 2.50 to 1.00, tested quarterly. See Note 17—Subsequent Events.
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Cash Flows
The following table summarizes our cash flows for the periods indicated:
| | | | | | | | | | | | |
| | Nine months ended September 30, | | Change | | |||||||
| | 2026 | | 2025 | | Dollars | | Percentage | | |||
| | (in thousands) | | | | | | | ||||
Net cash provided by operating activities | | $ | 181,422 | | $ | 149,221 | | $ | 32,201 | | 21.6 | % |
Net cash used in investing activities | | | (285,542) | | | (333,706) | | | 48,164 | | 14.4 | % |
Net cash provided by financing activities | | | 120,113 | | | 182,330 | | | (62,217) | | (34.1) | % |
Subtotal | | | 15,993 | | | (2,155) | | | | | | |
Effect of exchange rate changes on cash and cash equivalents | | | (3) | | | 5 | | | (8) | | NM | |
Net increase (decrease) in cash and cash equivalents | | $ | 15,990 | | $ | (2,150) | | | | | | |
NM = Not Meaningful
Analysis of Cash Flow Changes between the nine months ended September 30, 2026 and 2025
Operating Activities. Net cash provided by operating activities was $181.4 million for the Current Period, compared to $149.2 million for the Prior Period. The $32.2 million increase is comprised primarily of an increase of $84.2 million of net income combined with non-cash adjustments partially offset by a $52.0 million increase in working capital.
Investing Activities. Net cash used in investing activities was $285.5 million for the Current Period, compared to $333.7 million for the Prior Period. The $48.2 million decrease in net cash used in investing activities was due primarily to a $71.6 million decrease in equity-method and preferred stock investments, and a $7.9 million decrease in spending for acquisitions net of cash received partially offset by a $15.9 million increase in purchases of property and equipment, $9.9 million lower proceeds received from sales of property and equipment and $5.5 million in net cash disposed in deconsolidation of subsidiary.
Financing Activities. Net cash provided by financing activities was $120.1 million for the Current Period, compared to $182.3 million for the Prior Period. The decrease was driven primarily by lower financing inflows, as proceeds from the Class A common stock offering in the Current Period were less than borrowings in the Prior Period. The $62.2 million decrease in net cash provided by financing activities was comprised of a $253.5 million decrease in borrowings net of repayments, a $2.6 million increase in dividends and distributions paid, a $2.4 million decrease in cash received from noncontrolling interest holders and a $1.4 million increase in repurchases of common stock partially offset by $191.6 million in proceeds received from a public offering of our Class A common stock and $6.0 million lower debt issuance costs.
Free Cash Flow
The following table summarizes our free cash flow for the periods indicated:
| | | | | | |
| | Nine months ended September 30, | ||||
| | 2026 | | 2025 | ||
| | (in thousands) | ||||
Net cash provided by operating activities | | $ | 181,422 | | $ | 149,221 |
Purchase of property and equipment | | | (238,942) | | | (223,063) |
Proceeds received from sale of property and equipment | | | 3,847 | | | 13,757 |
Free cash flow | | $ | (53,673) | | $ | (60,085) |
Common Stock Offering
In February 2026, the Company completed an underwritten public offering of 15,784,315 shares of Class A common stock at a public offering price of $12.75 per share. Refer to “Note 1—Business and Basis of Presentation” for further discussion of the underwritten public offering.
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Contractual Obligations
Our contractual obligations include, among other things, our Sustainability-Linked Credit Facility and operating leases. Refer to “Note 6—Leases” in our 2025 Form 10-K for operating lease obligations as of December 31, 2025 and “Note 8—Debt” in Part I, Item 1 of this Quarterly Report for an update to our Sustainability-Linked Credit Facility as of September 30, 2026.
Critical Accounting Policies and Estimates
There were no changes to our critical accounting policies from those disclosed in our 2025 Form 10-K.
Recent Accounting Pronouncements
Refer to “Note 2—Significant Accounting Policies” for recent accounting pronouncements.
Off-Balance-Sheet Arrangements
As of September 30, 2026, we had no material off-balance-sheet arrangements. As such, we are not exposed to any material financing, liquidity, market or credit risk that could arise if we had engaged in such financing arrangements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The demand, pricing and terms for oilfield services provided by us are largely dependent upon the level of drilling and completion activity in the U.S. oil and gas industry as well as the level of oil and gas production. The level of drilling and completion activity is influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and gas; war, armed conflicts, economic sanctions and other constraints to global trade and economic growth; current price levels as well as expectations about future prices of oil and gas, including announcements and actions taken by the members of OPEC+ with respect to oil production levels; such as announced production cuts and the willingness of member countries to follow such cuts; the magnitude and timing of capital spending by our customers; the cost of exploring for, developing, producing and delivering oil and gas; the extent to which our E&P customers choose to drill and complete new wells to offset decline from their existing wells; the extent to which our E&P customers choose to invest to grow production; discoveries of new oil and gas reserves; available storage capacity and pipeline and other transportation capacity; weather conditions; domestic and worldwide economic conditions; instability in oil-producing countries; environmental regulations; technical advances in alternative forms of energy (e.g., wind and solar electricity, electric vehicles) that encourage substitution for or displacement of oil and gas consumption in end-use markets; the price and availability of alternative fuels; the ability of oil and gas producers to raise equity capital and debt financing; changes in global trade policy, including the imposition or lifting of tariffs and sanctions; global health events; merger and acquisition activity and consolidation in our industry, and other factors.
Any combination of these factors that results in sustained low oil and gas prices and, therefore, lower capital spending and/or reduced drilling and completion activity by our customers, would likely have a material adverse effect on our business, financial condition, results of operations and cash flows.
Interest Rate Risk
As of September 30, 2026, we had $234.4 million in outstanding borrowings and $237.5 million of available borrowing capacity under our Sustainability-Linked Credit Facility. Interest is calculated under the terms of our Sustainability-Linked Credit Facility based on our selection, from time to time, of one of the index rates available to us plus an applicable margin that varies based on certain factors. A hypothetical one percentage point increase in interest rates on our borrowings under our Sustainability-Linked Credit Facility as of September 30, 2026, would increase our annual interest expense by approximately $2.3 million. The Term Loan Facility was repaid in full on October 21, 2026, and the Revolving Credit Facility was repaid in full and the Sustainability-Linked Credit Facility was terminated on
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November 2, 2026. As of November 5, 2026, we have no outstanding borrowings under the New Credit Agreement. We do not currently have or intend to enter into any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to provide reasonable assurance that the information required to be disclosed by us in our reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any legal proceedings that, if determined adversely against us, individually or in the aggregate, would have a material adverse effect on our financial position, results of operations or cash flows. We are, however, named defendants in certain lawsuits, investigations and claims arising in the ordinary course of conducting our business, including certain environmental claims and employee-related matters, and we expect that we will be named defendants in similar lawsuits, investigations and claims in the future. While the outcome of these lawsuits, investigations and claims cannot be predicted with certainty, we do not expect these matters to have a material adverse impact on our business, results of operations, cash flows or financial condition. We have not assumed any liabilities arising out of these existing lawsuits, investigations and claims.
Item 1A. Risk Factors
Our results of operations and financial condition are subject to various risks and uncertainties as disclosed in Part I, Item 1A. of our 2025 Form 10-K. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, Risk Factors of our 2025 Form 10-K, which are incorporated herein by reference. You should carefully consider the risks set forth in our 2025 Form 10-K and the following risks, together with all the other information in this report, including our condensed consolidated financial statements and notes thereto. If any of the risks actually materialize, our operating results, financial condition and liquidity could be materially and adversely affected. Except as disclosed below, there have been no material changes from the risk factors disclosed in our 2025 Form 10-K. The following risk factors below are hereby added to the risk factors disclosed in our 2025 Form 10-K.
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We have incurred, and expect to continue to incur significant transaction costs in connection with the Pilot Water Acquisition.
We have incurred and expect to continue to incur a number of non-recurring costs associated with the Pilot Water Acquisition, the integration of Pilot Water’s operations with ours and the realization of the expected benefits from the Pilot Water Acquisition. A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors. Although we expect the elimination of duplicative costs and the realization of other expected benefits related to the integration of Pilot Water’s assets to allow us to offset these transaction costs over time, this net benefit may not be achieved in the near term or at all.
Our actual operating results, costs and activities could differ materially from the guidance we have released in connection with the Pilot Water Acquisition.
In connection with our announcement of the Pilot Water Acquisition, we released certain forecasted operating results, costs and activities, including, without limitation, future expected financial and operating metrics. This forward-looking guidance is based upon a number of assumptions that are inherently uncertain and is subject to numerous business, economic, competitive, financial and regulatory risks, including the risks described under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report and in our most recent Annual Report on Form 10-K. Many of these risks and uncertainties are beyond our control.
If any of these risks and uncertainties actually occur or the assumptions underlying our guidance are incorrect, our actual operating results, costs and activities may be materially and adversely different from our guidance. In addition, investors should also recognize that the reliability of any guidance diminishes the farther in the future that the data is forecast. In light of the foregoing, investors are urged to put our guidance in context and not to place undue reliance upon it.
The integration of Pilot Water into the Company may not be as successful as anticipated, and the Company may not achieve the intended benefits or do so within the intended time frame.
The Pilot Water Acquisition involves numerous operational, strategic, financial, accounting, legal, tax and other risks, including potential liabilities associated with the acquired business. Difficulties in integrating Pilot Water into the Company, and the Company’s ability to manage the combined company, may result in the combined company performing differently than expected, in operational challenges or in the delay or failure to realize anticipated expense-related efficiencies, and could have an adverse effect on the financial condition, results of operations or cash flows of the Company. Potential difficulties that may be encountered in the integration process include, among other factors:
| ● | the inability to successfully integrate Pilot Water’s disposal-focused water midstream business into the Company’s Delaware Water Infrastructure network, operationally and culturally, in a manner that permits the Company to achieve the full revenue and cost savings anticipated from the Pilot Water Acquisition; |
| ● | complexities associated with managing a larger, more complex, integrated business, including the Company’s efforts to combine Pilot Water’s disposal assets with the Company’s recycling infrastructure to create a balanced recycling and disposal platform; |
| ● | the inability to retain key employees and otherwise integrate personnel from the Company and Pilot Water and the loss of key employees; |
| ● | integrating relationships with customers, vendors and business partners; and |
| ● | the disruption of, or the loss of momentum in, the ongoing business of the Company or Pilot Water or inconsistencies in standards, controls, procedures and policies. |
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Additionally, the success of the Pilot Water Acquisition will depend, in part, on the Company’s ability to realize the anticipated benefits and cost savings from combining the Company’s and Pilot Water’s businesses, including operational and other synergies that the Company believes the combined company will achieve. The anticipated benefits and cost savings of the Pilot Water Acquisition may not be realized fully or at all, may take longer to realize than expected or could have other adverse effects that the Company does not currently foresee. Some of the assumptions that the Company has made, such as the achievement of operating synergies, may not be realized.
Global geopolitical conflicts may increase our costs and disrupt our supply chain.
Escalating conflict in or near major oil-producing or shipping corridors could lead to higher fuel and energy prices, increasing our transportation, manufacturing, and distribution costs, as well as resulting in downstream effects to global chemicals commodities markets. In particular, ongoing geopolitical tensions and military conflicts in key oil-producing regions, including potential disruptions to major shipping routes, may adversely affect our operations. Disruptions to global shipping corridors have caused disruptions to the global chemicals and oil-derived goods markets, reducing supplies and availability worldwide and resulting in increased prices. While we are not reliant on any chemicals or other commodities that are exclusively transported through any single shipping corridor due to our continued focus on domestic sourcing, such global disruptions to commodities markets can have downstream effects in the domestic markets, including elevated domestic prices, reduced supply and business interruptions to our suppliers. These events may also cause shipping delays, rerouted freight, port congestion, or higher logistics and insurance costs, which could disrupt the movement of raw materials upon which our suppliers rely. While the ultimate duration, impact and magnitude of these disruptions is currently unknown, a prolonged interruption to the global chemicals commodities and oil-derived goods markets has the potential to materially adversely affect our business and operations and those of our suppliers.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Common Stock Repurchases Made in the Quarter
During the Current Quarter, we repurchased the shares of Class A common stock as shown in the table below, which included 5,998 shares purchased to satisfy the cashless exercise of options and tax withholding obligations related to vested shares under the Select Energy Services, Inc. 2016 Equity Incentive Plan and Select Water Solutions, Inc. 2024 Equity Incentive Plan previously awarded to certain of our current and former employees. The Company did not make any open market repurchases in the Current Quarter.
| | | | | | | | | |
Period | | Total Number of Shares Purchased | | Weighted-Average Price Paid Per Share(1) | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(2) | |
July 1, 2026 to July 31, 2026 | | 730 | | | $17.99 | | — | | $21,177,432 |
August 1, 2026 to August 31, 2026 | | 5,268 | | | $20.88 | | — | | $21,177,432 |
September 1, 2026 to September 30, 2026 | | — | | | $0.00 | | — | | $21,177,432 |
(1) | The average price paid per share includes commissions. |
(2) | On November 8, 2023, our board of directors authorized a share repurchase program of up to $25.0 million of outstanding shares of Class A common stock. This new authorization was in addition to the $7.5 million remaining outstanding under our previous authorization, as of November 8, 2023. Repurchases under the share repurchase program may be made at any time or from time to time, without prior notice, in the open market or in privately negotiated transactions at prevailing market prices, or such other means as will comply with applicable state and federal securities laws and regulations, including the provisions of the Securities Exchange Act of 1934, including Rule 10b5-1 and, to the extent practicable or advisable, Rule 10b-18 thereunder, and consistent with the Company’s contractual limitations and other requirements. |
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Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended September 30, 2026, none of our directors or officers adopted and/or terminated a “
Item 6. Exhibits
The following exhibits are filed, furnished or incorporated by reference, as applicable, as part of this report.
HIDDEN_ROW | | |
Exhibit | | Description |
| | |
#+2.1 | | Membership Interest Purchase Agreement, dated as of September 24, 2026, by and among Select Water Solutions, LLC, Pilot OFS Holdings LLC, Minerva Infrastructure IA LLC and, for the limited purposes therein, Pilot Travel Centers LLC (incorporated by reference herein to Exhibit 2.1 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed September 24, 2026). |
| | |
*2.2 | | Amendment No. 1 to Membership Interest Purchase Agreement, dated as of October 27, 2026, by and among Select Water Solutions, LLC, Pilot OFS Holdings LLC and Minerva Infrastructure IA LLC. |
| | |
3.1 | | Fifth Amended and Restated Certificate of Incorporation of Select Water Solutions, Inc. dated as of May 8, 2023 (incorporated by reference herein to Exhibit 3.1 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed May 8, 2023). |
| | |
3.2 | | Third Amended and Restated Bylaws of Select Water Solutions, Inc. dated as of May 8, 2023 (incorporated by reference herein to Exhibit 3.2 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed May 8, 2023). |
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4.1 | | Indenture, dated as of October 21, 2026, by and among Select Water Holdings LLC, the Guarantors party thereto and U.S. Bank Trust Company, National Association, as Trustee. (incorporated by reference herein to Exhibit 4.1 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed October 21, 2026). |
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4.2 | | Form of 7.625% Senior Notes due 2034 (included as Exhibit A to Exhibit 4.1) (incorporated by reference herein to Exhibit 4.2 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed October 21, 2026). |
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4.3 | | First Supplemental Indenture, dated as of November 2, 2026, by and among Select Water Holdings LLC, the Guarantors party thereto and U.S. Bank Trust Company, National Association, as Trustee (incorporated by reference herein to Exhibit 4.1 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed November 2, 2026). |
| | |
*10.1 | | First Amendment to Credit Agreement dated as of August 20, 2026, by and among Select Water Solutions, LLC, as borrower, SES Holdings, LLC, as parent, the other credit parties party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. |
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| | |
#10.2 | | Credit Agreement, dated as of October 13, 2026, by and among Select Water Holdings LLC, as borrower, SES Holdings, LLC, as parent, the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference herein to Exhibit 10.1 to Select Water Solutions, Inc.’s Current Report on Form 8-K, filed October 13, 2026). |
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†*10.3 | | Performance Share Unit Grant Notice and Performance Share Unit Agreement between John Schmitz and Select Water Solutions, Inc. under the Select Water Solutions, Inc. 2024 Equity Incentive Plan. |
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†*10.4 | | Restricted Stock Grant Notice and Restricted Stock Agreement between John Schmitz and Select Water Solutions, Inc. under the Select Water Solutions, Inc. 2024 Equity Incentive Plan. |
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*31.1 | | Certification of Chief Executive Officer required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934. |
| | |
*31.2 | | Certification of Chief Financial Officer required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934. |
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**32.1 | | Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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**32.2 | | Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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*101 | | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Equity, (v) Consolidated Statements of Cash Flow, and (vi) Notes to Consolidated Financial Statements. |
| | |
*104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
*Filed herewith
†Management contract or compensatory plan or arrangement.
**Furnished herewith
#Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
+Portions of this exhibit have been redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K. The registrant hereby undertakes to provide an unredacted copy on a supplemental basis upon request by the SEC.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | |
| SELECT WATER SOLUTIONS, INC. | |
| | |
Date: November 9, 2026 | By: | /s/ John D. Schmitz |
| | John D. Schmitz |
| | Chairman, President and Chief Executive Officer |
| | |
| | |
Date: November 9, 2026 | By: | /s/ Chris George |
| | Chris George |
| | Executive Vice President and Chief Financial Officer |
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