Select Water Solutions, Inc.

Large water-management franchise but sub-median returns and a heavy cash burn from growth capex.

Strengths

• $1.4B diversified water platform with long-term contracted infrastructure and 18.5% growth in Chemical Technologies
• Positive OCF margin 15.3% (70.6th) and moderate leverage (debt/equity 0.35)

Risks

• Thin profitability — net margin 1.5% (41st), ROE 2.6% and ROA 1.3% all below median; net income fell 39%
• Negative FCF of -$80M and cash runway of just 0.9 quarters (12.8th pct) signal liquidity reliance on the credit facility

Notable findings

• Restatement● Our amended and restated certificate of incorporation may limit certain corporate opportunities 8-K ↗
• Exec changeRecent 8-K item 5.02 8-K ↗
• Cash burnNegative free cash flow (-79.9M)
• Customer concentration~22% of revenue from one customer/distributor — 9% and 21