Select Water 2025 Q2 Earnings Misses Targets with Net Income Decline of 21.7%

Select Water Solutions (WTTR) reported its Q2 2025 earnings on August 6, 2025. The results fell short of expectations with a 21.7% year-over-year decline in net income. The company also adjusted its guidance downward, reflecting lower-than-expected performance across several business segments. Despite sequential improvements in the Water Infrastructure segment and a strong EBITDA increase, overall revenue and profitability metrics showed a mixed performance.

Revenue
The total revenue of Select Water Solutions decreased by 0.3% to $364.21 million in Q2 2025, down from $365.13 million in Q2 2024. The Water Infrastructure segment reported $80.86 million in revenue, while Water Services contributed $215.66 million and Chemical Technologies $67.70 million. Depreciation, amortization, and accretion expenses were $0 million, maintaining the total revenue figure at $364.21 million. The Water Infrastructure segment saw a 11.7% sequential revenue increase, but overall revenue was slightly down year-over-year.

Earnings/Net Income
Select Water’s EPS declined by 23.1% to $0.10 in Q2 2025 from $0.13 in Q2 2024. Net income fell to $11.67 million in Q2 2025, a 21.7% decrease from $14.90 million in Q2 2024. The earnings decline reflects reduced profitability across the Water Services and Chemical Technologies segments, despite improved performance in Water Infrastructure.

Price Action
The stock price of Select Water edged up 1.29% during the latest trading day but tumbled 8.58% during the most recent full trading week. Month-to-date, it has dropped 4.85%, indicating a mixed market response to the earnings report.

Post Earnings Price Action Review
The strategy of buying Select Water (WTTR) shares after a revenue increase in a quarter and holding for 30 days delivered moderate returns over the past three years. The strategy returned 20.10%, significantly underperforming the benchmark return of 49.40%. The Sharpe ratio was 0.14, indicating a modest risk-adjusted return. Notably, the strategy managed a maximum drawdown of 0.00%, effectively avoiding losses during market downturns.

CEO Commentary
John Schmitz, Chairman, President, and CEO, highlighted a 22% sequential increase in net income and a 13% rise in adjusted EBITDA during Q2 2025. The Water Infrastructure segment achieved a 55% gross margin. Schmitz emphasized growth in recycling and disposal volumes, which contributed to 12% and 17% sequential revenue and gross profit growth, respectively. Strategic priorities include expanding Water Infrastructure via the OMNI asset swap and evaluating strategic alternatives for Peak Rentals to enhance capital structure and value.

Guidance
Select Water expects to see margin improvements from the OMNI transaction, with plans to upgrade and expand the Bakken region assets in H2 2025. These improvements are expected to add high-margin growth to the Water Infrastructure segment starting in 2026. The company is also evaluating strategic options for Peak Rentals to optimize the Water Services portfolio and accelerate growth.

Additional News
Select Water announced a significant asset swap with OMNI Environmental Solutions, acquiring infrastructure assets in the Bakken region and divesting trucking operations in the Northeast, MidCon, and Bakken areas. This transaction is expected to improve consolidated margins over time and reduce operational complexity. Additionally, the company signed new long-term Water Infrastructure contracts in the Permian Basin, backed by 60,000 dedicated leasehold acres and 385,000 acres under right-of-first-refusal. Select Water also announced the evaluation of strategic alternatives for Peak Rentals, its power solutions and equipment rental business, to enhance capital structure and value. These updates highlight the company's strategic focus on core growth initiatives and operational optimization.