WaterBridge Infrastructure’s Earnings Call: Clashing Speedway 2 Timelines, Shifting Capital Priorities

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Date of Call: Aug 6, 2026

Financials Results

• Revenue: $217.8 million, up 8% sequentially
• Gross Margin: 58.1%, up from 48.2% in Q1

Guidance:

• Full year 2026 volumes raised to 2.55 to 2.75 million barrels per day.
• Full year 2026 adjusted EBITDA range raised to $435 to $475 million.
• FY 2026 CapEx guidance raised by $100 million to $530 to $590 million.

Business Commentary:

Record Revenue and EBITDA Growth:

• WaterBridge reported record revenue of $217.8 million for Q2 2026, representing 8% sequential growth.
• The company also achieved an adjusted EBITDA of $115.8 million, up 12% from the first quarter.
• The growth was driven by higher produced water volumes and higher rates on contracts that became operational during the quarter.

Increased Guidance and Strategic Acquisitions:

• WaterBridge raised its full-year 2026 guidance, expecting volumes to be between 2.55 to 2.75 million barrels per day and adjusted EBITDA between $435 to $475 million.
• The company also increased its capital expenditures guidance by $100 million, reflecting planned investments in acquisitions like Ranger and the construction of a new landfill facility.
• The strategic acquisitions and new investments were aimed at strengthening WaterBridge's position in the Delaware Basin and enhancing its operational flexibility.

Strong Operational Performance and Project Developments:

• Speedway Phase 1 launched on schedule, with first volumes coming online in July as expected, contributing to high-margin volume growth.
• Customer demand for Speedway Phase 2 has been robust, with commercial discussions advancing towards underwriting the project.
• The strong customer demand across the footprint is driving the need for additional out-of-basin disposal capacity, which is supported by WaterBridge's infrastructure network.

Expansion into Environmental Waste Management:

• WaterBridge acquired the NDB landfill in Lee County, expanding its waste management footprint, and plans to construct a new facility in the state line region.
• These transactions are expected to double the company's total facility count and more than double its permitted waste handling capacity in the Delaware Basin.
• The expansion is complementary to WaterBridge's core water business, providing high return opportunities and enhancing operational efficiencies.

Digital Infrastructure and Long-term Opportunities:

• WaterBridge is positioned to participate in the digital infrastructure opportunity in the Delaware Basin, leveraging its scale and partnership with Landbridge.
• The company aims to serve as a full-scale utility partner to hyperscalers by supplying data center water needs for cooling and managing the recycling and disposal of byproducts.
• This opportunity is underpinned by WaterBridge's ability to access large volumes of brackish water, satisfying multi-gigawatt scale data center needs.

Sentiment Analysis:

Overall Tone: Positive

• Management expressed strong performance with record revenues and adjusted EBITDA growth, citing 'another strong quarter' and 'delivered another strong quarter, achieving record revenues and adjusted EBITDA.' Guidance was raised for volumes and adjusted EBITDA for the second consecutive quarter, and the tone was confident regarding growth opportunities and capital allocation.

Q&A:

• Question from Derek Whitfield (Texas Capital): I wanted to start with the landfill acquisition and your organic landfill opportunity in the state lawn area. Could you speak to why you chose to buy versus build in New Mexico and also the kind of broader growth opportunity you see for solid waste over the next few years across the Delaware and perhaps ending with just how you see the convergence in value between water and solid waste streams?
  Response: The acquisition was driven by natural synergies with the core water business, overlapping customers, and competitive regulatory barriers. It provides vertical integration benefits and high returns, similar to a successful Canadian analog.

• Question from Derek Whitfield (Texas Capital): extremely helpful and that's my follow-up I wanted to focus on the Ranger water and midstream acquisition its fits and value are very clear as shown on slides eight and nine but as we think about the sizing of project Speedway phase two could you elaborate on the impact this acquisition could have on total throughput as you as you're closing in on your FID decision
  Response: Ranger assets are complementary and could add volumes to the Speedway system, with mutual overflow capabilities. The acquisition is expected to be competitive with or better than the five-times investment multiple sought for organic projects.

• Question from Jackie Kolates (Goldman Sachs): Hi, thank you so much for the time. First, just wanted to touch a little bit again on the waste management business. I mean, so... Is there appetite for further waste management investments from here? Are there incremental opportunities for you to grow this further in the near term? And how do those returns compare to the water opportunities across your footprint? From a margin perspective, how would you potentially square the difference between those two businesses?
  Response: The company will continue to evaluate acquisitions that meet underwriting thresholds and are not cannibalistic. Organic build-out for waste management offers returns that eclipse water projects, with a two-year capital payback and margins equivalent to or slightly better than water handling.

• Question from Jackie Kolates (Goldman Sachs): That's helpful, Keller. I appreciate it. And just as a follow-up, touching a little bit more on your data center opportunities, water security is rapidly emerging as a critical gating item for data center development. In your discussions with potential hyperscaler customers, how high of a priority is securing long-term water solutions? Could treated produced water help support a water-positive narrative for these companies required to meet ESG mandates? And how do you see commercial demand for water treatment evolving as a result?
  Response: Water is critical for operations. Discussions are active with counterparties on using non-potable brackish or treated produced water for cooling, with high confidence in operational and commercial viability. The company is working on defining the regulatory framework and expects optimistic news in the back half of the year.

• Question from Michael Furrow (Pickering Energy Partners): Hi, good morning. Thanks for taking our questions. Based on the updated produced water handling guidance range, the upper end of the range implies a meaningful ramp in volumes over the next two quarters, which I think you guys hit on in the prepared remarks. So what would you need to see in order to bring the lower half of guidance into play based on what you're seeing on the current ramp of speedway and other projects? Is that sort of dependent on a meaningful pullback and drilling activity?
  Response: The lower half of guidance is a low-probability outcome unless there is a significant negative commodity price shock and a halt in drilling activity. The company is providing conservative guidance.

• Question from Michael Furrow (Pickering Energy Partners): yeah that makes a lot of sense and as a follow-up just just staying with the northern delaware basin landfill we're trying to get a better understanding of the unit economics so looking at slide eight the deck discloses uh 44 million cubic yards of capacity that represents 40 years of solid waste handling capacity so The rough math would suggest something like a million cubic yards per year. From what we can find, a waste management facility can often collect somewhere between $25 to $30 a cubic yard. But of course, that's dependent upon a multitude of factors. So from your perspective, does that sound like the right ballpark for the acquired facility?
  Response: The all-in rate is expected to be higher, closer to $40 to $45 per cubic yard, making it an attractive investment.

• Question from Don Crist (Johnson Rice): I wanted to talk about Speedway. I know you said it's taking volumes now and it's going to ramp up as we go into the back half of the year. But I also wanted to ask about Speedway 2 and the timeline of sanctioning and kind of inflationary factors there. Just any comments around, number one, the ramp up of Speedway 1, but the progress with Speedway 2 as we move forward?
  Response: Speedway Phase 1 is online and will ramp to around 100,000 barrels per day over the next months, exiting the year above that. Commercial discussions for Speedway 2 are progressing well with sophisticated counterparties, and sanctioning is expected imminently or by year-end.

• Question from Don Crist (Johnson Rice): Okay. And if I could squeeze in one more, just on customer... um activity going forward you know we've seen a bunch of rigs being added to the to the rig count um but we haven't seen a lot of completion crews and you know it's it's our analysts and contention that you know there's going to be a whole lot more activity as we move into 27. are you i know you you're early in the process when these guys are planning. Are you seeing increased activity as we move into 27 from kind of the bigger guys? I know we've seen a little bit from the smaller guys to date, but are you seeing increased activity as we move into 27 from the bigger operators out there?
  Response: Increased activity is expected in 2027, supported by public statements from operators contingent on commodity prices. The company expects a more constructive year than initially anticipated and has seen evolution to the positive over the last few months.

Contradiction Point 1

Speedway Phase 2 Sanctioning Timeline

Contradiction on when a final investment decision (FID) for Speedway 2 will be made.

Don Crist (Johnson Rice) - Don Crist (Johnson Rice)

2026Q2: A sanction is expected by year-end. - Michael Chopp-Brights(COO), Scott McNeely(CFO)

Could you provide an update on Speedway 1's ramp-up and Speedway 2's sanctioning timeline, including any inflationary impacts? - Don Crist (Johnson Rice)

2026Q2: A decision is expected imminently in H2 2026. - Michael Reitz(COO), Scott McNeely(CFO)

Contradiction Point 2

Northern Delaware Basin Landfill Revenue Estimate

Contradiction on the expected revenue per cubic yard for the landfill.

Michael Furrow (Pickering Energy Partners) - Michael Furrow (Pickering Energy Partners)

2026Q2: The all-in figures would be higher, likely closer to $40-$45 per cubic yard. - Scott McNeely(CFO)

Is the $25-$30 per cubic yard revenue estimate accurate for the northern Delaware Basin landfill? - Michael Furrow (Pickering Energy Partners)

2026Q2: The all-in figures are expected to be higher than the simple math suggests, likely in the range of $40-$45 per cubic yard. - Scott McNeely(CFO)

Contradiction Point 3

Growth Outlook for Speedway Phase 1 Throughput

Contradiction on the projected volume and ramp-up for Speedway Phase 1.

Don Crist (Johnson Rice) - Don Crist (Johnson Rice)

2026Q2: Speedway Phase 1 is online and will be ramped up to around 100,000 barrels per day over the next few months, with expectations to exit the year above that level. - Michael Chopp-Brights(COO)

Can you discuss the ramp-up of Speedway 1, the timeline for sanctioning Speedway 2, and any inflationary factors? - Michael Travis Joelson (J.P. Morgan Securities LLC)

2026Q1: Speedway Phase One is fully committed, with volumes expected to ramp through 2028. - Michael Reitz(CFO)

Contradiction Point 4

Timing for Formal Sanctioning of Speedway Phase 2

Inconsistency regarding the timeline for reaching a final investment decision (FID) on Speedway Phase 2.

Don Crist (Johnson Rice) - Don Crist (Johnson Rice)

2026Q2: Commercial discussions for Speedway 2 are progressing well, but contracting... takes time. A sanction is expected by year-end. - Michael Chopp-Brights(COO)

Can you discuss the ramp-up of Speedway 1, the timeline for sanctioning Speedway 2, and any inflationary factors impacting costs? - John Mackay (Goldman Sachs)

2026Q1: Commercialization and documentation for Speedway Phase Two are still being finalized. ... will provide more details once final investment decision (FID) is reached. - Don Crist(CFO)

Contradiction Point 5

Growth Project Capital Allocation and Timing

Shift in capital allocation priority from new commercial projects to acquisitions.

Jackie Kolates (Goldman Sachs) - Jackie Kolates (Goldman Sachs)

2026Q2: The company will continue to evaluate waste management acquisitions that meet underwriting thresholds... - Scott McNeely(CFO)

Is there appetite for further waste management investments, and how do returns and margins compare between waste management and water opportunities? - Eli Jossen (J.P. Morgan)

2025Q4: The priority will remain on high-return organic growth projects (like Kraken, Speedway Phase II). M&A will be considered if it meets the same risk-adjusted return criteria. - Scott McNeely(CFO)

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