Select Water Solutions, Inc. WTTR used its second-quarter 2026 earnings call to emphasize a longer growth runway for Water Infrastructure, supported by new contracts, rising utilization and a larger project backlog.
The quarter also delivered a broad operating beat. Reported earnings of $0.17 per share beat the Zacks Consensus Estimate of $0.11, while revenues of $395.8 million exceeded the $365.9 million estimate.
WTTR Extends Its Northern Delaware Network
CEO John Schmitz said that Water Infrastructure remains the central growth engine after segment revenues reached a record $101.6 million and gross margin before D&A rose to 58.3%.
The key addition was a seven-year agreement backed by a 128-million-barrel minimum volume commitment. The customer also conveyed 14 saltwater disposal wells, while Select will build 19 miles of pipeline for an estimated $25 million to $30 million.
Chief commercial officer Michael Skarke said that the project expands the network toward the Texas-New Mexico border and creates capacity that can serve both the anchor customer and additional operators.
Select Raises Its Capital Commitment
CFO Chris George said that 2026 net capital expenditures are now expected at $250 million to $290 million, above the prior guidance ceiling of $250 million.
George tied the increase to additional infrastructure awards and an opportunity set that has expanded with the Northern Delaware system. Select also added two separately acquired disposal wells, bringing second-quarter additions to 16.
The CFO said that the current build phase will constrain free cash flow this year, but the contracted projects are designed to support improved free cash flow potential in 2027 and beyond.
WTTR Guides to Another Strong Quarter
George projected third-quarter adjusted EBITDA of $90-$94 million, following $92.7 million in the second quarter and exceeding the prior second-quarter outlook of $77-$80 million.
George said that Water Infrastructure revenues should grow 5-10% sequentially, with gross margins before D&A of 56-58%. He expects full-year segment growth near the high end of the 25-30% range.
The CFO forecast Chemical Technologies revenues of $85 million to $90 million with margins of 20% to 21%, while Water Services revenues are expected to remain generally steady.
Select Sees More Growth Without New Capital
A Water Tower Research analyst asked how added disposal capacity could affect utilization and margins. Chief commercial officer Skarke said that higher throughput carries strong incremental margins and disposal capacity lets the recycling network operate closer to its limits.
Skarke added that utilization can continue rising through commercialization and customer drilling plans even without further capital spending. Recycling, rather than disposal, has driven much of the network's recent volume growth.
A Northland Capital Markets analyst also asked about right-of-first-refusal acreage. Skarke said that year-to-date conversions into dedicated acreage were not material, leaving that opportunity as future option value rather than a current earnings driver.
WTTR Builds 2027 Growth Options
A Raymond James analyst asked whether infrastructure growth can remain strong next year. George said that the current base case begins with another year of double-digit growth in 2027, with additional project wins or bolt-on acquisitions offering upside to that profile.
In chemicals, Skarke stated that surfactants remain a small share of revenue but grew 50% year over year. Fewer than 10% of new-well completions use surfactants today, and Skarke expects more meaningful volumes in 2027.
CEO John Schmitz said that mineral extraction should begin contributing dollars in 2027. CFO Chris George added that second-quarter Water Services revenues included about $6 million tied to data-center construction support.
WTTR Maintains a Contract-Led Focus
Management's tone remained confident but disciplined. Schmitz emphasized long-term contracts, network utilization and projects that strengthen Select's integrated recycling and disposal position.
George also flagged potential fourth-quarter seasonality, keeping the near-term outlook measured even as the company positions its infrastructure backlog for growth into 2027 and 2028.
What the Zacks Signals Say About WTTR
WTTR currently carries a Zacks Rank #3 (Hold). Its Growth Score of A and VGM Score of A are complemented by a Value Score of B and a Momentum Score of B, indicating favorable characteristics across the three investing styles. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Style Score is most powerful when paired with a Zacks Rank #1 or #2. A Rank #3 provides a more neutral signal, and the rank can change as analyst earnings estimates are revised following the newly reported results.
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Select Water Solutions, Inc. (WTTR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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