Greetings, and welcome to the Select Water Solutions Fourth Quarter Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Garrett Williams, Vice President, Corporate Finance and Investor Relations. Garrett, please proceed.

Thank you, operator, and good morning, everyone. We appreciate you joining us for Select Water Solutions conference call and webcast to review our financial and operational results for the fourth quarter and full year of 2025. With me today are John Schmitz, our Founder, Chairman, President, and Chief Executive Officer; Chris George, Executive Vice President and Chief Financial Officer; Michael Skarke, Executive Vice President and Chief Operating Officer; and Mike Lyons, Executive Vice President and Chief Strategy and Technology Officer. Before I turn the call over to John, I have a few housekeeping items to cover. A replay of today's call will be available by webcast and accessible from our website at selectwater.com. There will also be a recorded telephonic replay available until March 4, 2026. The access information for this replay was also included in yesterday's earnings release. Please note that the information reported on this call speaks only as of today, February 18, 2026, and therefore, time-sensitive information may no longer be accurate as of the time of the replay listening or transcript reading. In addition, the comments made by management during this conference call may contain forward-looking statements within the meaning of the United States federal securities laws. These forward-looking statements reflect the current views of Select's management. However, various risks, uncertainties, and contingencies could cause our actual results, performance, or achievements to differ materially from those expressed in the statements made by management. The listeners are encouraged to read our annual report on Form 10-K, our current reports on Form 8-K, as well as our quarterly reports on Form 10-Q to understand these risks, uncertainties, and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now I would like to turn the call over to John.

Thanks, Garrett. Good morning, and thank you for joining us. I am pleased to be discussing Select Water Solutions again with you today. 2025 was another record-setting year for Select, both operationally and financially. I'll start with some of our 2025 highlights and provide an update on our key strategic development efforts. Now I'll hand it off to Chris to speak to the fourth quarter and the financial outlook in more detail. In 2025, we improved our consolidated margins, streamlined our Water Services segment, and drove significant market share gains in our Chemical Technologies segment. We made key investments in long-term diversification efforts across the municipal and industrial space and advanced our technology efforts in both beneficial reuse and mineral extraction. But importantly, we made great strides in our core water infrastructure growth strategy, including the ongoing build-out of our premier Northern Delaware water infrastructure network. During 2025, we grew recycled produced water volumes by 18%, resulting in more than 330 million barrels recycled during the year. We also hit a significant milestone during the fourth quarter, achieving 1 billion barrels recycled since the beginning of 2021, which helped drive the water infrastructure revenue growth of more than 800% across that same 5-year period. During that time, we have seen Water Infrastructure grow from our smallest segment to now our largest segment by profitability. Importantly, we continue to add inventory and underwrite future infrastructure growth, and in 2025, we executed multiple new MVCs and added nearly 1 million new dedicated acreage with an average contract term of 11 years. Accordingly, we are well on track towards growing our Water Infrastructure to our stated target of greater than 60% of our consolidated gross profit in the next 24 months, supported by sizable additional year-over-year growth of 20% to 25% in 2026 as compared to '25. Our industry faces significant evolving produced water challenges, and these challenges are perhaps most keenly felt in the Northern Delaware Basin. We've made a strategic choice to focus in this basin, which contains some of the most productive geology and lowest breakevens in the industry, but also produces the highest water cuts in a region with decreasing disposal availability and increasing regulatory scrutiny. In the Northern Delaware, our recycling-first infrastructure network gathers hundreds of thousands of barrels per day, with our facilities acting as distribution hubs that can balance water longs and shorts across a broad regional footprint through expansive dual-aligned pipeline networks. Additionally, the network can be balanced as needed with our interconnected traditional disposal solutions or alternatively enable future beneficial reuse and out-of-basin disposal solutions. Our unique infrastructure model positions Select to be the cost-advantaged provider versus other competitors in the industry, creating significant economic value and cost savings for our customers while generating attractive long-term returns for Select. We also continue to partner with our customers to find the most economic and operationally efficient ways to enhance the utilization of their existing infrastructure. Notably, at times, this may result in our customers operationally transferring our direct conveyance of their existing water-related infrastructure assets to us. Select's ability to integrate these assets into our existing commercial network drives greater operational efficiencies, reduces costs, and yields enhanced systems reliability. Throughout 2025, we have been conveyed multiple recycling, disposal, and storage facilities from key partner customers. This continued in the fourth quarter as we reached an agreement with a top customer for the direct conveyance of three existing treated produced water storage facilities, as well as a permit for additional disposal facilities in Eddy County, New Mexico. We have since drilled and completed this disposal facility with immediate plans to integrate it into our broader network. We believe this is a strong endorsement of our customers' trust in Select and the value-added solutions we are providing. When combined with an additional disposal acquisition we completed in the fourth quarter, we added 55,000 barrels per day of new disposal capacity in the Northern Delaware during the quarter. These new assets and contract awards, combined with the significant backlog of our ongoing construction projects, will drive additional network capacity and geographic reach across the entirety of the Northern Delaware Basin, supporting the strong 20% to 25% growth outlook I mentioned for the Water Infrastructure segment in 2026. We are also finding new ways to leverage the produced water volumes within our existing infrastructure asset base to generate incremental cash flow and high-margin royalty streams without requiring incremental capital investment. This includes a recently announced strategic partnership for produced water lithium extraction in both the Haynesville and the Permian regions, which should begin contributing initial royalty revenues by early 2027 and growing from there. In summary, our Water Infrastructure growth strategy is working. I'm excited to see the continued growth from this segment in the years ahead. Now shifting briefly over to our other segments before I hand it over to Chris. Our Chemical Technologies segment proved adaptable during 2025, achieving tremendous growth and market share gains in spite of a softer activity environment. This included 19% year-over-year revenue growth and more importantly, 45% growth in gross profit before D&A. Our research and development efforts continue to drive new product enhancements and demand for advanced chemical technologies. Growing lateral lengths and increased focus on enhancing recovery rates for oil in place continue to drive demand from our highest quality friction reducers and our advanced surfactant product offerings. I am very pleased with our recent market share gains and technology advancements, and I am cautiously optimistic about the renewed focus from our customers on securing high-quality offerings that improve well performance. On the Water Services side, we were focused on streamlining this segment throughout the past year to simplify our service offerings and position us for long-term operational efficiency and margin enhancement. Overall, our Water Services segment performed quite well against a challenging market environment in 2025, maintaining its market-leading positions across each of the segment's core service offerings. We continue to evaluate strategic alternatives for our Peak rentals business with a measured and disciplined approach to ensure an outcome that best serves both Peak and select strategic focuses and growth initiatives while maximizing the value for Select shareholders. While we proceed with this process, Peak continues to garner increased traction in its power solutions offering while generating ample excess free cash to support Select's core Water Infrastructure growth strategy. To conclude, I believe that Select remains extremely well positioned to meaningfully grow our adjusted EBITDA in 2026 with a unique integration of high-growth Water Infrastructure solutions alongside steady market-leading Water Services and Chemical Technologies solutions. I'm excited for the year ahead and firmly believe our current strategy will continue to drive long-term value for Select shareholders. At this point, I'll hand it over to Chris to speak to our recent financial results and the 2026 outlook in a bit more detail.

Thank you, John, and good morning, everyone. As John mentioned, 2025 was an important year for Select across many financial and operational metrics. While 2025 brought a challenging macro environment overall, I believe the business performed quite well within those conditions, generating $1.4 billion of consolidated revenue with improved consolidated margins and a record $260 million of adjusted EBITDA. I'll start by covering a few high-level market perspectives before getting into the financial performance and outlook in more detail. Looking forward, we anticipate a commodity price environment in 2026 that is fairly steady overall, with oil largely expected to stay within the $55 to $65 price range we've seen during the second half of 2025 and so far, early in 2026. Near-term, we do foresee potential upside to the natural gas market outlook and are well positioned to benefit from our market-leading positions in key gas basins if incremental opportunities arise. Generally, we believe this current commodity environment supports overall activity levels holding relatively steady to the second half of 2025. Now looking at our recent segment level performance and outlook in more detail. We saw meaningful annual growth in each of our Water Infrastructure and Chemical Technology segments across 2025, and more recently, we grew both revenue and gross profit across all three of our segments during the fourth quarter. In the fourth quarter of 2025, the Water Infrastructure segment increased gross profit before D&A by 5%, while improving margins to 54%. As we continue our New Mexico system expansion, we work closely with our customers to support their evolving development schedules alongside our planned construction timelines. During late Q4, certain top customers requested short-term schedule changes, resulting in modestly lighter than anticipated volume growth across our fixed infrastructure. However, given the breadth of Select's integrated service offerings, including our temporary water transfer capabilities, we were readily able to support these changing development needs during the quarter, allowing key customers to achieve their adjusted production objectives while maintaining our originally planned infrastructure build-out timelines. This resulted in a 77% sequential uplift in our water transfer revenues in New Mexico during Q4, driving a sizable outperformance in the period for our Water Services segment, more than offsetting the expected seasonal impacts for that segment and driving 7% overall revenue growth for Water Services compared to the prior guidance of modest sequential declines. With the continued infrastructure build-out in New Mexico and new facilities coming online, we expect a growing shift in volume activity onto our fixed infrastructure network in the coming months, which should drive high-margin sequential growth for the Water Infrastructure segment during the first quarter and further throughout 2026. Accordingly, we anticipate 7% to 10% growth in Water Infrastructure's revenue and gross profit before D&A during the first quarter of 2026 compared to the fourth quarter of '25. With several projects planned to come online during the first three quarters of 2026, we anticipate a continued growth trajectory for Water Infrastructure over the course of the year. Altogether, we expect very meaningful 20% to 25% year-over-year growth for the segment, while maintaining strong, steady margins throughout the year, similar to the 54% gross margin before D&A we generated in Q4. As we continue to commercialize the new facilities over the course of the year, we also believe there remains capacity utilization enhancement that can drive further upside into 2027 alongside other new potential contract wins. For Water Services, gross margin before D&A improved during the fourth quarter by approximately 2 percentage points to 20%. And when combined with the aforementioned 7% revenue gains, this drove strong 16% growth in gross profit before D&A for the segment during Q4. Coming off a strong fourth quarter, we anticipate steady revenue in the first quarter for Water Services. While we anticipate revenues to be down year-over-year for the segment, recent divestments account for more than 80% of this decline, and we expect to maintain relatively steady revenue consistent with the recent Q4 run rate and current Q1 outlook throughout the full year 2026. Supported by our recent rationalization and operational improvement efforts, we expect to see near-term margin improvement for the segment, with gross margin before D&A of 19% to 21% for both the first quarter and full year 2026. As John mentioned, the Chemical Technologies segment had a tremendous year in 2025 with annual revenue growth of 19% and 45% growth in gross profit before D&A relative to 2024. The segment finished the year strong with record quarterly revenue generation of $87 million during the fourth quarter, a 14% sequential increase. Gross profit before D&A grew further with 16% sequential gains, resulting in 20% gross margins before D&A during Q4. On the back of recent gains, we expect this segment can produce similar annual revenue in '26 to that of the prior year with upside potential, while gross margins before D&A should hold steady in the 19% to 20% range. Based on current customer activity outlook for the first quarter of 2026, we anticipate Q1 revenue to return to the high 70s up to the $80 million range with margins remaining in the 19% to 20% range. While SG&A increased modestly to $43 million during the fourth quarter of '25, we are targeting a 5% to 10% year-over-year reduction in SG&A, and SG&A is expected to reduce back below 11% of revenue for the full year '26 and potentially as early as Q1, as we recognize the benefits of ongoing cost reduction and business optimization efforts. Altogether, we generated consolidated adjusted EBITDA of $64.2 million during the fourth quarter of '25, above the high end of our adjusted EBITDA guidance of $60 million to $64 million, driven by sequential revenue and gross profit gains across all segments during the fourth quarter. For the first quarter of 2026, we expect an increase in consolidated adjusted EBITDA to $65 million to $68 million, primarily attributable to increased volumes on our Northern Delaware infrastructure network, with a continued upward trajectory throughout the year, setting the stage for solid year-over-year adjusted EBITDA growth. Looking below the line, we anticipate cash tax payments in 2026 to be a relatively modest $5 million to $10 million, including state taxes, and our book tax expense percentage applied to pretax operating income is likely to stay in the low 20% range. Driven by the continued capital investment in our infrastructure business, I expect depreciation, amortization, and accretion will continue in the $46 million to $50 million range during the first quarter while trending up into the low 50s over the course of 2026. Interest expense should remain in the $5 million to $7 million range per quarter. With fourth quarter net CapEx of $70 million, we finished the year at $279 million in net CapEx, just slightly above our previous guidance. The continued strong customer demand for recycling-centric Water Infrastructure solutions led to significant capital investment throughout '25 with numerous facility expansions and pipeline projects that are currently underway. To fund our continued water infrastructure growth, we anticipate net capital expenditures of $175 million to $225 million in 2026, after considering an expected $10 million to $15 million of ongoing asset sales. This includes approximately $50 million to $60 million of maintenance spend weighted predominantly towards the Water Services segment, consistent with the prior year. We are entering 2026 with several projects already under construction, with contracts in place and construction commencing soon, which should result in a heavier CapEx weighting to the first half of 2026. While this 2026 capital program includes all existing contracted projects, we do have an additional backlog of future opportunities. We are in the middle of a unique build-out window, especially for our premier infrastructure position in the Northern Delaware, and we would be excited to convert some of these opportunities into future growth throughout 2026 and into 2027. The Water Infrastructure assets we placed in service have very low maintenance capital needs, which should result in very strong discretionary cash flow for Select over time. With an 11-year average contract tenor for our current projects, we expect to deliver highly accretive long-term revenue and cash flow benefits. While the build window and growth capital associated with the projects continues at pace in the short term, we would expect capital expenditures to come down in 2027, providing ample long-term free cash flow generation. Additionally, as we have discussed before, our Water Services and Chemical Technologies segments also each provide strong cash flow conversion given their low capital intensity, converting approximately 70% or greater of their gross profit to cash flow, helping to support the near-term build-out of our footprint while maintaining a very disciplined balance sheet. While we are very focused on executing our near-term infrastructure investment and growth strategy, we believe we are positioning the business to deliver healthy and durable free cash flows over the long term that will provide us with good optionality for future capital allocation frameworks over time, including future growth investments, diversification opportunities, or enhancements to our shareholder return program. To conclude, I am very excited about the year ahead. I believe we have a clear execution path to increase shareholder value with a growing long-term contract portfolio supporting a multiyear growth trajectory and increased through-cycle stability. In addition to nascent long-term diversification potential across opportunities such as our Colorado municipal and industrial project, beneficial reuse, and mineral extraction. With that, I'll hand it over to the operator for any questions.

And our first question comes from the line of Scott Gruber with Citigroup.

You guys have a couple of larger expansions coming online in Northern Delaware this year. But you mentioned there are some additional opportunities in the Northern Delaware. So just curious, would the additional opportunities be kind of smaller bolt-ons to your system? Or would they require larger trunkline expansion? I'm just curious after kind of what's in the queue has become operational, kind of where do you stand in the maturation of that Northern Delaware system?

Yes. Thanks for the question, Scott. This is Michael. We are seeing a lot more smaller opportunities than we saw last year and the year before as the system gets built out, and it's roughly half to be built out, but we're continuing to move forward. We're really able to find some small opportunities that leverage the entire system, and they create really attractive returns because you're leveraging the full system and adding acreage. So I'd say that we're seeing a lot more of those than we've seen in the last couple of years. There still are a couple of pieces that are chunkier out there that we're still chasing as we expand into new territories, specifically in Eddy County that are becoming available. So I'm hopeful that we can deliver on some bigger projects. But really, as you look past that and into the back half of '26 and beyond, I think you're going to see more and more of the smaller opportunities that are just highly accretive because you're leveraging the full system.

And just thinking longer term, after the Northern Delaware is established, and as you said, you'll keep tapping into those smaller opportunities. Is there an opportunity to kind of really expand the system, whether it's into the Southern Delaware, we hadn't further east at all or other basins? Kind of what's the next leg of growth for the infrastructure business longer term? How do you think about that?

Yes. So you saw us announce something in Winkler County, which is really the first time that we stepped below the Texas State line out of New Mexico inside the Delaware in a meaningful way. We will continue to expand within Lea and Eddy County. I go back to those two counties have the most economic inventory. They're underbuilt, and there's just a tremendous opportunity there. I think what we're building in Lea and Eddy County is really truly differentiated. There's not another asset system like that in the Permian or outside the Permian, and it's certainly where you want to be. Now having said that, that system can expand into the Central Basin platform, where you're seeing the development for the Barnett and the Woodford, and that's kind of what we were looking at when we moved into the Winkler. So I think you'll see us continue to grow that system beyond just Lea and Eddy County and then possibly expand some of the existing systems like what we have in Upton trying to meet in the middle somewhere on the platform.

The next question comes from the line of Bobby Brooks with Northland Capital Markets.

So first, you guys have announced two different lithium extraction partnerships in the past few months. And it seems like a really exciting way to add another incremental high-margin revenue stream to the business, along with highlighting how your infrastructure can further deleverage the uplift in financials. With that in mind, I was just curious to hear what other opportunities might you be evaluating in a similar lane as lithium extraction or just other opportunities where you see things that could be kind of similar, high revenue, low cost uplift?

Bobby, this is Mike. Thanks for the question. And yes, we're really happy with our progress over basically a year of really characterizing our asset base across all of our basins and a lot of engagement with technology partners. And I think you're seeing the results yield in some exciting announcements recently, but there's more to come there. The strategic decision we made was to participate, spend our capital on building out Water Infrastructure, large volume available at a single point, water storage and in particular, as Michael was mentioning, that Northern New Mexico system, where we're treating water anyway, that is a very unique capability that we have, and it is a big OpEx reduction for these technology partners. So we're in a position where we can provide the water with already a big chunk of that cost done for them essentially. So we're looking across the available market, picking the best-of-breed operators. This recycling-first model has really put us in a pole position and a very attractive partner for these folks. So you will see more of these lithium deals. We have something in the New Mexico area that we haven't given details on, but we will also, hopefully, in the first half of this year, we're expecting also some interesting news around iodine extraction. And even some of our partners are talking strontium magnesium. So we are always very thoughtful about bringing the right technology to the right water. And I think when you've got that marriage right, you can make some of that really high-margin royalty revenue that you're referring to.

Got it. Super helpful color. And then just was curious to hear a little bit more of an update on kind of how you guys are looking at the Peak rental business and kind of strategic moves there. It seems like nothing has happened yet, but just curious like kind of what outcomes do you guys see as most likely? And then could you also just remind us like what type of equipment does Peak own?

Yes. This is John. So we continue to engage strategically around Peak rentals and making sure that both the outcome is very positive for Peak because of the uniqueness of the opportunity that they have as well as the outcome to Select and the capital that we're deploying in the Water Infrastructure and the various areas around these networks that have been described. But Peak was built around an accommodations business that supported accommodations around drilling rigs and frac equipment. And any time you do that, you support that accommodations with power generation, communications, security, water application of both sewage as well as fresh to support that mechanism. So our power generation were diesel-powered distributed mobile generators, and they supported everything on the drilling side and everything on the completion side. What we have inside of Peak that we think is very special is about 350 MSAs with the people that are drilling wells and completing wells. We're now taking Peak into the production phase of the well, where they're lacking power, and we have both the MSAs as well as the network and the knowledge base to distribute that power properly. We also have found a very unique opportunity and Peak has now harvested it and put it out, demonstrating the value, but putting a battery pack between that distributed power, basically our diesel power units and then the use has really shown value, both in the economics of the usage of diesel or the economics of the cycle time of those generators or really the value of the electric current going into the user system. Especially if you can take it away from smaller generations where you're putting it into trailer houses with air conditioning and computers and TVs and refrigerators and start taking it into artificial lift, compression, and things of that nature. So, artificial lift equipment is very sensitive in their prior needs and what they do. They're already a customer, they're already in the MSA, and we've now entered that market with what we've got. We've also started to expand the distributed power business from diesel-powered natural gas — I mean, diesel power generation to natural gas power generation. It fits really well both in the movement of water, compression, and artificial lift. So, it's just natural. But we're being very careful, and we want to make sure that we protect Peak because it's got a very good thesis in it. At the same time, we're looking for the right capital structure both for Peak as well as the right outcome for Select.

And maybe one thing to add to that, Bobby, is what we've seen with that business and the transition to the nat gas genset capabilities, primarily on a recent basis. But we've used that to support the build-out and the pace of our own Water Infrastructure development, particularly in New Mexico, where power is short and you're talking about 3- to 5-year build windows for full power build-out. So we've had the need and the opportunity to build our own integrated power capabilities through that business to support the pace of our own growth and development. So we're going to be thoughtful and diligent around the approach on how we support our own internal needs to Select, to generate cash out of the Peak business to support our growth, and then find the right long-term opportunity set for it.

That's terrific color. I really appreciate all that detail. And then just one last one for me is in the press release and your prepared remarks kind of hinted that you guys had multiple successful benefits of reuse pilots. And I was just hoping to get a little bit more color there. Where these pilots in collaboration with the E&P is testing their own internally developed technology or maybe there was internally developed technology by Select? Were all the pilots focused on Permian? Or were there pilots happening in other basins? And maybe what were some — just generally, what were some key learnings from these pilots and ultimately, like what made them successful?

Yes. Bobby, this is Mike again, a great question. And it's interesting because you're touching on another area where because of our recycling-first and large-scale treatment capabilities, this is another area that benefits directly from that. So starting from treated produced water versus raw really gives you a leg up in this area. So we've, over the years and more recently, completed several pilots of increasing scale, everything from life film evaporation to multi-effect vacuum distillation, the membrane distillation, normal RO units. The fact is we touch a lot of different colors and types of water, and we always want to be able to bring the right technology, which, again, because we're multi-basin and we touch a lot of that water, we want to be ready. More recently, in conjunction with one of our premier operators, a university in the Price Water Consortium, we did one of our larger scale projects where we were able to take treated produced water, treat it fully. And actually, we were land applying it as a part of a pilot with this university, and we are growing all sorts of native and other crop plants out nearby our treatment facility, and also the water is going into a greenhouse for what we would consider to be one of the largest and more technically advanced plant growing tests. So we're proving up the water quality not only by just running the standard tests, but we're also proving it by looking at biological growth and soil quality. So all of that is kind of our strategy, is our contribution to prove that this is a viable way to operate in the future. We're helping inform regulatory efforts with this data. Ultimately, I think the reason we're chasing this is to push the industry, but also it's transformational. It's a critical long-term solution that we need to bring to life. Our focus now is around the techno-economics of these different solutions. Ultimately, we need to make money on this. So we're going to look very carefully and build the systems that have the right capital return and investability. Really, what we're trying to solve here ultimately is what we all know is a pinch point in the industry, especially in the areas where we operate in New Mexico and around the Texas border, we have to find ways to dispose of barrels. What we're doing is defining the future of Select to be a pioneer in the space and to continue to create for the next 5, 10, 20 years, the way that our system we are investing in now can live on as that portfolio shifts to perhaps a more disposal-oriented solution. You'll see from us that over the next couple of years, we will begin to announce plans, and we will begin to brand commercial scale facilities online.

Congrats on a good quarter.

The next question comes from the line of Derrick Whitfield with Texas Capital.

Congrats on a strong quarter and update as well.

Thank you, Derrick.

I wanted to start with the macro environment for Water Infrastructure. With all macro being a bit murky at present, a) how are you guys thinking about growth opportunities in the second half on the upstream side? And b) when do you see a potential inflection in capital for municipal growth opportunities?

Good questions, Derrick. So from a back half of the year kind of near-term macro outlook perspective, as we define from a capital program, we're going to be heavily weighted towards the first half of the year on the current capital outlay based on contracts in hand, but we do have some strong backlog opportunities and continued excitement around the ability to layer on some incremental capital opportunities beyond the current program, and we'll be excited to win some of those, as Michael outlined. Looking at the back half of the year in '27, we do anticipate a maturation phase, as Michael outlined in New Mexico, and we think that you're going to see a transition towards some of the incremental growth opportunities around the diversification set and some of the things that Mike mentioned around beneficial reuse as well. So we would anticipate that the larger committed portion of our municipal project up in Colorado sees its large investment cycle in 2027 to the extent that aligns with the timeline of getting contracts in hand. We think that we'll start to see a maturity phase out of the New Mexico footprint over the course of '26 and into early '27, and there continues to be an exciting opportunity set. But we do think that you'll start to see excess free cash flow generation and more capital allocation, discretionary choice availability for us.

Great. And for my follow-up, I wanted to focus on your prepared comments on the chemicals segment. We're hearing from the upstream sector, increasing levels of interest in integrating surfactants in both completion and workover activities. I guess, are you guys seeing that demand out in the field? And if you are, how much of that are you baking into your revenue guidance?

We are indeed seeing demand in the field. We are receiving inquiries and have noted comments from some of the largest operators regarding the benefits of surfactants. Fortunately, we have significant experience with surfactants in both completions and EUR technology. Surfactants are tailored specifically to the rock formation, which aligns well with our value proposition of custom chemistry to enhance oil recovery. We experienced an increase in surfactants in Q4, and we anticipate that this trend will continue to benefit us in '26. There are certainly opportunities beyond what we currently have in place. We are currently investing in our technical team to ensure we accurately understand which surfactant and chemical packages are compatible with various rock types, determining which are neutral and which may impair performance. By combining that knowledge with our in-basin manufacturing of surfactants in Midland, Texas, we believe we are well positioned to take advantage of the expected growth in that chemical offering.

One final point to mention is that as we see continued growth and demand, reusing produced water and treated produced water creates a more complex situation for aligning the right combination of chemistry with the desired outcomes. As Michael mentioned, these specialized and customized solutions based on geology, combined with our water recycling and treatment capabilities, offer us a unique advantage to explore the application of advanced chemistry as well.

The next question comes from the line of Derek Podhaizer with Piper Sandler.

I wanted to focus on the Chemical Technology segment and ask about your market share in this area. The potential for friction reducers and surfactants seems promising from a growth perspective. Considering your current run rate of $300 million in top line revenue, what are your projections for growth? Additionally, do you have the capacity to exceed $300 million in revenue, or will you need to invest capital to significantly enhance growth as demand for friction reducers and surfactants increases?

Yes, Derek. To begin with, we are very enthusiastic about the increase in our market share. We see a lot of potential in surfactants given our experience and our technology team. While we observed some progress in Q4, most of that quarter was dominated by our friction reducers and related chemistry. We perform exceptionally well when stronger, more durable chemistry is required. We have a larger market share in produced water jobs compared to fresh water jobs, and we have a higher market share on longer laterals than on shorter ones. Our market share is also greater on simul fracs than on other types. The more complicated the solution, the more we excel. We believe we are aligning ourselves with the future demand for complex technical chemistry. The team has excelled in developing solutions, which has contributed to our market share growth heading into 2025.

And to your point on capacity and capital needs, Derek, we do have, as Michael said, our in-basin manufacturing plant in Midland, we've got another sizable plant in East Texas. As it currently sits today, we've got continued opportunity for expansion. The business generates great free cash flow out of its core profitability. To the extent there's opportunities to add efficiency or add new line scale. We can do that in a meaningful way out of the current plant footprint and do it in a manner that's going to continue to allow us to generate in excess of something like 70% of free cash flow on the profitability of the business.

Got it. That's helpful. And then maybe kind of piggybacking off your last point there. I mean, kind of I'm reading this correctly, that would get into more of a steady state as far as the capital needs for the overall business? I mean, how should we really start thinking about free cash flow generation maybe out of EBITDA? I mean, obviously, like we've ranged from negative to 25%, 30%. I mean, what’s the — where do you see this going? Could we get kind of in that 40% range, 50% range? Just looking longer term as we recalibrate the CapEx here and you flip more to free cash flow generation for the overall business?

Certainly, a good question. We are in a pretty unique build-out phase for the business, particularly in that Mexico footprint. This year, we did guide to a lower capital program than we undertook in '25. But certainly, to the extent we can continue to build a backlog of opportunities beyond that, we're going to be excited to do that and look to capitalize on that in the next 12 to 18 months. Looking out further, we think that the free cash flow generating capabilities of the business certainly could replicate something or beyond what you've outlined there. The core legacy services and chemicals businesses, as we've outlined before, generating strong free cash flow to fund our growth in excess of 70%. Infrastructure is largely consuming its capital or its cash flow today for capital growth, but it’s even, I would say, more maintenance-light application of operations than the rest of the business. As we get to a through-cycle maturity phase here over the next 24 months, it will be making further choices around incremental growth, diversification, acquisitions, or shareholder return enhancement. We're pretty excited about what that can look like over the next 24 months as we get into '27 and beyond. The maintenance needs of the business at $50 million to $60 million today are very modest and will continue to be so.

The next question comes from the line of Conor Jensen with Raymond James.

You noted a little project timing slippage in Water Infrastructure from the fourth quarter into '26. Just maybe a little color on what happened there and some puts and takes on how that could impact the 20% to 25% growth in 2026 on either side of the calendar there?

Yes, thank you, Conor. The project slippage, we just had some, I think, fairly minor delays when we're building something of this size and magnitude and it's all linear, a few things can set you back. This one specifically around right-of-way. We had some delays in getting some of the right of way that we needed, which pushed it back a little bit, but it's all things that we've secured now. We're moving forward, and I think we're in a good position to execute across the front half of this year.

Got it. That makes sense. And then for Water Services, I was wondering if anything changed there to drive a little bit stronger outlook, a little bit stronger run rate than we thought previously. Is any of that water transfer outperformance expected to continue going forward?

Yes, good question. As we outlined, we definitely saw some strong uplift in New Mexico in tandem with the build-out timelines we talked about on the Water Infrastructure side. We were able to supplement that with the temporary water logistics in the fourth quarter, which drove a 70-plus percent growth in that New Mexico last-mile logistics business, which was a great outcome. We talked about previously some of the opportunity we had to integrate water transfer into our long-term infrastructure contracts with sizable dedications that incorporated that water transfer. We continue to be excited about the opportunity to see further stability and growth out of that part of the business within services over time, particularly in the Delaware Basin region. It was a great outcome for our ability to support our customers with changing schedules, both on their side and on our side in the fourth quarter. As we continue to get the infrastructure up and running, we've got a good view into an ability to continue to see some stability and growth out of that segment or that region, and we think that will provide kind of a steady state for the business over time here. Obviously, we had the rationalization and the divestment activities in 2025 that were the right choices for the business. On the backside of that, the second half of '25, we think, provides a pretty good run rate for the business, and you should see that through all the way for '26.

The next question comes from the line of Jeff Robertson with Water Tower Research.

Michael or Chris, would you anticipate that any of the efforts to increase utilization in the Northern Delaware Basin could have a positive impact on Water Infrastructure margins in 2027 versus what you think in 2026?

Good question, Jeff. So obviously, every incremental barrel you can push through a piece of infrastructure is generally an accretive barrel. We do think over time, as we grow the utilization, we bring on commercial volumes beyond our core anchor tenants on the new assets that we'll continue to see opportunities to enhance the margins over time. That's something we'll continue to be focused on. There is some exposure on the commodity side of oil sales through the asset base across both the disposal and recycling footprint that we'll be cognizant of as we think through margin profiles as well. Generally speaking, Jeff, you're right, there's definitely opportunity to continue to see the enhancement to the margin profile. We'll continue to be active in undertaking new build-out and contract opportunities, and we'd be happy to underwrite those in any margin profile in that 50% to 60% range as we've historically done. We'll be focused on what that looks like to continue to improve.

Regarding your gas exposure, especially in the Haynesville, would increased usage affect infrastructure margins noticeably? Additionally, what opportunities exist for Select to expand its presence there?

Yes. No, thanks for the question. We're seeing good strength in the natural gas basins. We're very fortunate that we have the leading disposal position in both the Haynesville and in the Marcellus. We're having conversations regularly with customers about expansion opportunities or contracts. Those were conversations that really weren't being had 12 or 18 months ago, and that's just as a result of the gas price and the activity there. I do expect that we will continue evaluating solutions in both basins, and I think you'll see us make some expansions outside of the Permian in 2026. Now, having said that, again, most of the opportunity is around the Permian, and most of it's in Lea and Eddy County as we've mentioned.

One final point to add back to your first question as well, Jeff, as we think about the margin profile long term, as we outlined earlier and Mike talked through the continued ability to add on some of these incremental royalty streams to the business. We're talking low to no-cost type of revenue dollars that are benefiting from the existing capital investments we've already made. To the extent we start to see those projects come online in late '26, early '27, and ramp over time, those will continue to provide meaningful margin accretion opportunities as well.

And lastly, Mike, with respect to some of the beneficial reuse pilots, is it fair to think that if you can tie benefits to reuse into your Northern Delaware system, for example, that would attract more customers to the system because it would enhance Select's water balancing capabilities in that area?

Yes, Jeff, absolutely. I think, in particular, in New Mexico, we need to continue to support the state and the legislation to get to a, I would say, environmentally responsible, but industrial-friendly outcome. I think that will help as we think about either land application or water discharge. There are other technologies that we're evaluating as well that will get incremental disposal, like non-traditional disposal, let's say, onto the system as well. That's absolutely a part of what we consider to be the end-to-end full life cycle of the barrel solution. Again, yes, you're right. It is part of something that we can offer because of the large infrastructure footprint that we already have, which includes treatment, which reduces costs and increases the viability techno-economically of all these solutions. We do believe we're in a very unique position to support our customers that way.

The next question comes from the line of Sean Mitchell with Daniel Energy Partners.

You guys mentioned earlier in the Q&A, simul-frac. I'm just curious if you guys have an estimate or any color around simul-frac growth today versus maybe 2 years ago? I mean obviously, there's a lot more sand and water going down hole with this completion design. Where is that today relative to maybe where it was 3 years ago? And where do you think the industry is at large on simul-frac? Are we 25% of the industry, 30% of the industry using it? And where can that go potentially? Do you have any comments around that that would be helpful?

Yes. This is John. First of all, I think I'd start the answer by percentage-wise of where that is today and where it's going. We would say that it's definitely increasing. But the way that we see it and primarily water and chemistry is the intensity in the space, whether it's simul-frac or tribal frac or longer laterals or how much you can do in a 24-hour period, that intensity is real, and it also is very engineered. What this company is seeing right now is the effects of all intensity, all complexity of multiple water sources in recycling application and delivering mechanisms for massive water throughout long periods because of movement into simul-frac for frac or longer laterals or what it is. I probably can't answer your position as a percentage, but I'll tell you that this company sees a heavy-weighted engineered intensity.

This concludes the question-and-answer session, and I'd like to turn the call back over to John Schmitz for closing remarks.

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

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.