Select Water Solutions second quarter earnings conference call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris George, Executive Vice President and Chief Financial Officer. Thank you, Chris. You may begin. 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 Q2 of 2024. With me today are John Schmitz, our Founder, Chairman, President, and Chief Executive Officer, and Michael Skarke, Executive Vice President and Chief Operating 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 August 14, 2024. 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, July 31st, 2024, 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 listener is 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 those risks, uncertainties, and contingencies. Please refer to our earnings announcement released yesterday for reconciliations of non-GAAP financial measures. Now I'd like to turn the call over to John. Thanks, Chris. Good morning, and thank you for joining us. I am pleased to be discussing Select Water Solutions again with you today. During the Q2, we continued to make progress on our key objectives, such as improving our consolidated operating margins, generating strong free cash flow, and executing on our water infrastructure strategy. On a consolidated basis, we were able to improve gross margins by 2 percentage points sequentially. In addition to these operational gains, we reduced SG&A by 11% during the Q2, allowing us to grow net income by $11 million and adjusted EBITDA by $10 million on a flat consolidated revenue relative to the Q1. At a segment level, we grew water infrastructure revenues by 8% and gross profit before D&A by 17% sequentially. I'm very pleased with the continued progress we've made toward the execution of our water infrastructure growth and margin improvement strategy, resulting in another quarter of record-high revenue and gross profit for the segment. Our accretive acquisitions and recent organic recycling and disposal infrastructure projects have delivered steady performance, and we continue to increase the utilization of the legacy assets as well. In addition to the revenue gains, more importantly, we've made tremendous progress in improving the profitability of the segment, increasing gross margins before D&A for water infrastructure to 51% during the Q2. In doing so, we've been able to achieve the 50% margin target we set for this segment much earlier than we planned. Looking at the water services and chemical segments, while the activity outlook has become more challenging in recent months, I am confident we can continue to find ways to reduce our maintenance capital, gain market share, and improve our operational efficiency. These efforts support continued consolidated margin improvements across the business and steady free cash flow generation. On the M&A front, in addition to the previously announced April acquisition of Trinity Environmental Services, we completed the acquisition of additional disposal assets in the Northeast region during the Q2. On a combined basis, these strategic acquisitions added more than 615,000 barrels per day of permitted disposal capacity, primarily in the Permian. This includes 25 active disposal wells, one well in development, and 10 additional disposal permits available for future development. Including our Q1 deals, we've now completed acquisitions in six of our seven primary operating regions this year, adding substantial scale to our leading infrastructure platforms across the Lower 48. While we continue to grow our water infrastructure business through acquisitions, we also continue to grow through new organic business development. During the Q2, we signed multiple new contracts with leading operators that added new acreage dedication in the Northern Delaware Basin. These agreements contributed more than 30,000 acres of additional primary dedication and another 110,000 acres under right of first refusal for potential future development projects. This brings the Northern Delaware system to a total of more than 90,000 acres under combined dedication and more than 200,000 acres under right of first refusal. These contracts underwrite the construction of up to 360,000 barrels per day of incremental water recycling capacity and 4 million barrels of storage, and will significantly expand the capacity and geographic footprint of our Northern Delaware system. Select remains the clear market leader in produced water recycling, and I look forward to getting these new facilities up and running by the Q1 of 2025. More importantly, I'm excited to create the value for our customers through these new projects, and I remain grateful for their continued trust in Select's ability to provide them with safe, efficient, and sustainable full lifecycle water solutions. As I mentioned last quarter, our business development opportunity set has continued to increase in size and certainty. We continue to negotiate a number of other potential projects, and looking forward, I'm very confident that we will continue to see additional long-term contracts get to the finish line throughout the rest of 2024 and into 2025. As demonstrated by the breadth and quality of our recent acquisitions and projects, I believe that Select's operational and geographic diversity is one of our core strengths and competitive differentiators. This diversity provides us with a wide array of capital allocation prospects and optionality that allows us to make the best decision to drive long-term shareholder value. While we continue to refine our water services and chemical technology segments, our core focus is on continuing to grow and expand our production base and long-term contracted revenue within our water infrastructure segment. I believe each of these recent acquisitions and projects align with this strategy. Chris will discuss the Q2 's financial performance in more detail. But overall, I'm pleased with our team's ability to deliver increasing consolidated operating margins during a period of reduced activity and changing industry trends. We are well-positioned to continue to generate free cash flow and a strong return on assets while returning capital to our shareholders and investing and growing in our business. At this point, I'll hand it back to Chris to review our Q2 financial results and remaining 2024 outlook in a bit more detail. Chris? Thank you, John. During the Q2, we saw solid growth in our overall profitability, generated strong free cash flow, and continued to execute on strategic acquisitions to support our water infrastructure growth strategy. Accordingly, our water infrastructure segment continued its steady growth trajectory, once again achieving record high quarterly revenue and gross profit results during the Q2. While oil prices have generally held steady at levels that provide an attractive economic return for our customers, natural gas prices have been more challenging, pressuring overall activity levels in the first half of the year. Our water services and chemical technology segments have seen the impact of these activity levels, particularly on the completion side. However, with the support of our latest strategic initiatives and continued growth in water infrastructure, we generally remain on track towards achieving our key 2024 objectives. Furthermore, Select's ongoing transition to a more infrastructure-based, production-levered, full lifecycle water company continues to align our future profitability and cash flow generation with critical secular growth drivers unique to our business, particularly as we continue to add more long-term contracts into the portfolio, such as the large 15-year acreage dedication agreement we entered into in the Northern Delaware Basin during Q2, which significantly expanded our partnership with a core customer in the region. The industry continues to seek creative solutions for the challenges created by growing produced water volumes, including increasing induced seismicity. We believe Select is well-positioned to be a leading driver of our industry's ability to solve these challenges through increasing produced water recycling, expanded infrastructure networks, and strategic commercial water balancing. Additionally, as our E&P customers continue to extract value through industry consolidation, we believe there will be growing demand for high-quality partners with the size, scope, and networks to serve the largest operators and consolidators, supporting continued growth opportunities for Select. During Q2, the water infrastructure segment benefited from these trends, seeing increased utilization of existing assets, as well as the benefit of multiple strategic acquisitions. We increased both recycling and disposal volumes during the Q2, generating revenue growth of approximately 8% to $69 million. Although revenue came in slightly lower than expected, gross margins significantly outperformed our expectations. Q2 still delivered strong sequential revenue growth, and more importantly, the water infrastructure segment gross profit, which we customarily provide in terms of prior to depreciation, amortization, and accretion, improved to $35 million. This represents an increase of 17% compared to Q1, and a tremendous 67% growth rate from where we were just one year ago. On a relative basis, gross margin before D&A increased to 51% during Q2, an increase of four percentage points compared to Q1, and a thirteen percentage point increase from where we were a year ago. We are excited about the significant improvements we've made in the profitability of this segment in such a short period of time, and reaching the 50% margin target ahead of plan was a terrific achievement for the team. We have also been able to efficiently integrate acquired assets into the portfolio while reducing costs along the way, and believe our ongoing projects under construction and under future development provide additional long-term opportunity to drive further margin improvement. In the immediate near term, we expect to see comparably steady mid- to high single-digit percentage revenue growth during Q3, supported by our recent acquisitions and enhanced utilization of existing assets and steady gross margin of 50%-52%. While we originally expected to see a small contribution from our new Thompson Pipeline in the Bakken region during the Q3, certain permitting delays have impacted the construction timeline, though we still fully anticipate the pipeline coming online by the end of 2024. Looking out more medium term, we continue to believe that with a very strong project and deal backlog, water infrastructure remains on track to become the largest component of our profitability by the end of 2025, underpinned by repeatable, predictable, high margin, and contracted revenue streams. Though we may see some seasonal impacts to margins in the Q4, we otherwise expect to maintain and potentially improve upon this 50%+ margin profile for the segment moving forward into 2025. Our continued new project wins in the Northern Delaware demonstrate our ability to add value to our existing infrastructure networks through incremental networking and commercialization. These expanded systems will deliver enhanced utilization and water balancing capabilities that will make these projects highly accretive, and we look forward to executing more contracts in the quarters to come. Switching to the water services segment, we were able to outperform both industry activity levels and our own internal expectations, modestly growing revenues by about 1%, while improving margins by two percentage points to 22.5%. Revenue gains during the quarter were driven in part by traditional water sourcing volumes. Notably, we were able to pull forward key water sourcing opportunities with both our future Thompson Pipeline anchor tenant in the Bakken, as well as two key customers in the Northern Delaware. In the Northern Delaware, these are the same two customers we just signed new contracts with to develop additional infrastructure projects in the region, and in the short term, we will supplement their ongoing activities with traditional water sourcing ahead of the new recycling facilities getting up and running in early 2025. Offsetting these gains is the continued trimming of revenues from other areas of the business, notably our legacy fluids hauling service line. This remains an area where we continue to focus on cost efficiency and consolidation opportunities as we continue to increase the amount of volume we transport via pipeline over time. These efforts also act as the primary driver for what is expected to be a mid- to high single-digit revenue decline in Q3 for water services, though we expect to maintain margins in the 22%-23% range in spite of additional yard closure costs. We continue to believe that we can push margins further over time and remain vigilant in our search for efficiency in this segment. On the chemical technology side, we certainly had a more challenging Q2. With the continued decrease in overall industry activity levels, we saw a roughly 9% decline in our manufacturing volumes during the quarter, rather than the modest growth we anticipated. Accordingly, the decreased volumes resulted in a lower absorption rate through our manufacturing plants, delivering slightly lower gross margins of 16.4%. Looking at the Q3, while we expect to see steady overall volume demand from our direct-to-operator E&P customers, we are seeing continued activity reductions from some of our pressure pumping customers. There are a number of additional completion crews that have been identified for idling during Q3 that had been utilizing our high-margin full chemical suite. In response, we believe we have a path towards recouping these recently retreated volumes. However, until we do, we likely will see a constrained ability to get margins back to our target of 20% in the near term. In the meantime, we are undertaking a number of cost reduction initiatives that are expected to be completed by the end of the year. For the Q3, we anticipate flat to modestly down low single-digit percentage revenues, with margins in the 14%-16% range. Looking at other cost reduction efforts, SG&A during the Q2 decreased by more than 11% or $5 million relative to the Q1. While the transaction-related costs have slowed compared to earlier in the year, with acquisitions continuing throughout Q2, we will continue to incur a modest balance of transaction and integration-related costs during the Q3. Looking forward, we expect SG&A to continue to trend closer to 10% of revenue during the back half of the year. Altogether, for the Q2 of 2024, we generated net income of $15 million and adjusted EBITDA of $69.5 million during the Q2, a substantial increase of $10 million relative to the Q1, and ahead of our guidance of $64 million-$68 million. For the Q3, we expect consolidated Adjusted EBITDA of between $66 million and $70 million, relatively steady to Q2, as continued Water Infrastructure gains are offset by some of the ongoing consolidation and elimination efforts in the Water Services segment. Driven by the substantial growth in our Water Infrastructure segment over the course of 2024, we continue to believe we will see our Water Infrastructure and Chemical Technologies segments reach 50% of consolidated gross profit by the end of the year, as expected, and Water Infrastructure is on a great path for continued growth well into 2025. Now, looking at the balance sheet, we utilized our sustainability-linked credit facility in addition to cash on hand, to help fund an additional $41 million of acquisitions during Q2, ending the Q2 with $90 million of outstanding borrowings. With $83 million of operating cash flow generated during Q2, we were able to materially limit our net debt increase during the quarter to a mere $12 million, even after the $41 million of acquisitions and $49 million of CapEx during the quarter. Operating cash flow actually exceeded adjusted EBITDA for the third time in the last four quarters, as we continued to make tremendous progress in further reducing our working capital, pushing total working capital below 11% of revenue and decreasing accounts receivable days outstanding to 72 days for the period, a substantial decrease from a year ago. These efforts still leave us with ample liquidity and a very conservative balance sheet. We will remain disciplined in our use of leverage, but with the growing contribution of our higher margin, production-levered, and contracted revenue streams, we have good visibility into our ability to repay these outstanding borrowings in a relatively short period of time, should we so choose, while still generating cash flow to fund the growth of the business organically. Additionally, we remain committed to returning capital to shareholders with our quarterly dividend of $0.06 per share, equating to $15 million of capital returned to shareholders so far year to date. Quarterly depreciation, amortization, and accretion remain fairly steady, though this could increase closer to $40 million per quarter by the end of the year with additional capital deployment. As expected, quarterly interest expense ticked up modestly during Q2 as we employed our sustainability-linked lending facility to execute our recent acquisitions, and our income tax expense moved up modestly alongside our growing pre-tax income as well, at around a 21% effective rate as anticipated. Net CapEx of $46 million represented a decent step-up during Q2 as our organic water infrastructure growth CapEx accelerates. Given the additional recent long-term contract wins that we mentioned earlier, growth CapEx will increase in the back half of the year. However, we also remain quite disciplined in our approach to maintenance spending and believe we will see a $10 million-$20 million reduction in maintenance CapEx on the year. Put together, we now expect full-year net CapEx of $170 million-$190 million in 2024, an increase of $30 million net. With our reduced maintenance CapEx targets, we continue to expect each of our water services and chemical technology segments to provide strong cash flows at low capital intensity during 2024, returning a combined 70%-80% of their profits and free cash flow after CapEx, helping to fund our latest contracted water infrastructure growth projects. Even with the increased net CapEx outlook, we still expect to modestly build on the $41 million of free cash flow we generated in the first half of the year, with an updated target of pulling through 25%-35% of our adjusted EBITDA into free cash flow for the full year of 2024, after accounting for all maintenance and growth CapEx spend. We have a tremendous amount of opportunity still ahead of us, and I look forward to continuing to execute on our strategy. I'd like to wrap up by once again thanking all of our employees for their hard work and continued support, especially those that were impacted by the recent severe weather events around Texas, including Hurricane Beryl. With that, I'd like to open it up to questions. Operator? Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first questions come from the line of Luke Lemoine with Piper Sandler. Please proceed with your questions. Hey, good morning. You all detailed the two new projects in the Delaware and, you know, kind of the growth CapEx associated with that. I mean, you all have a variety of, you know, projects here that you've been investing in, you know, over time, and it looks like next year you could as well. You know, how do you, how do you balance this, and how should we think about the returns? A lot of other North American service companies, and they don't have the growth lag that you do. So when just kind of thinking about incremental CapEx, incremental projects, can you just kind of help frame the returns and, and how we should think about this? Sure, Luke. This is Michael Skarke. A couple of thoughts there. I think part of the growth profile is really the core focus we've got around infrastructure and probably more specifically, recycling as it relates to the northern Delaware. There's a bit of a secular tailwind there as we're looking at competing with traditional freshwater sourcing and disposal and the challenges that exist in that area. So we're seeing a lot of traction there. The returns are really consistent with what we've said in the past. We're trying to get a three-year return on our capital under the underwritten contract, with the ability to connect it beyond that with other operators to improve upon that return. ... most of the projects we've announced, unfortunately, there's a long lead time, as I know we've discussed in the past, and so we're literally looking to try to get those on by the end of the year. But we are expecting a meaningful contribution from the capital spend this year for next year. And then as we build out that system and that network, we're finding projects, you know, really, we get more projects. So more opportunities, more extensions, more connections, more optionality with operators. All of that is what's really driving our backlog and really the enthusiasm we have around water infrastructure as we look forward to 2025. And Luke, maybe a couple of points I'll add on to that, you know, to your question, specifically around the kind of allocation of capital, the returns, or and particularly how that compares to, you know, maybe the competitive landscape. I mean, I think one of the unique things about Select as a platform, you know, we are a rapidly growing growth, you know, platform around infrastructure, but we are able to, you know, self-cap or self-fund a lot of that capital outlay through the, you know, strength of our leading platform around water services and chemicals. You know, the diversified, you know, platform we have all across the U.S. as well, gives us, you know, quite a bit of flexibility and optionality to, you know, to look at at different basins and different components of the infrastructure supply chain as well, to really find the best opportunities. But to Michael's point, I mean, clearly, the expertise we have around recycling and our ability to integrate that with the logistical application of services is definitely providing us some clear, differentiated, you know, project wins and success there. But I think the underwriting support, you know, whether it's infrastructure around disposal, recycling facilities or pipelines, we generally take, you know, take a similar approach towards our underwriting economics, you know, kind of across the board in that segment, and we're seeing that on the solids side as well with some of our more recent, you know, entry into that part of the business. So, you know, it's definitely a rapidly growing, you know, capital allocation point for us in terms of making some of those decisions. But our ability to self-fund a lot of that out of the base business and utilize the liquidity we have in the facility has been, you know, quite effective for us here recently, although the pace of that is obviously picking up here in the back half of the year, but for the right reasons. Okay. And then the water infrastructure margins, I mean, those hopped over the 50% mark, which is pretty important, and it happened a lot sooner than, you know, we expected. I'm not sure about, you know, if you guys expected it this soon as well. But can you just talk about, you know, kind of what drove the acceleration there and allowed that to happen quicker than expected? Sure. So, you know, certainly was very pleased to see us get to that 50% point here in the first half of the year. You know, we were striving to get there, you know, potentially in 2024, but certainly, you know, targeting getting there by 2025. So pleased with the pace of our ability to get there in the Q2. It was... You know, a couple of things contributed to that. You know, when you think about the incremental utilization of existing capacity within the base infrastructure business, every incremental barrel of throughput through a piece of fixed pipe or a facility provides a pretty attractive incremental margin, and we were able to drive, you know, revenue growth in the first half of the year through both, you know, organic business development, as well as bringing on accretive acquisitions that contributed to the segment on a margin basis that's higher than where we'd been. We've been able to take costs out of some of the recent acquisitions faster than anticipated. So there's still a little bit of work to get them integrated into the networks, particularly out in East Texas. But generally speaking, the assets that we've been able to bring into the system, we've been able to utilize quickly and get some costs out sooner than we anticipated. So all of that's, you know, really contributing, but I think first and foremost, it's just the continued, you know, ability to drive volumetric throughput, you know, through the assets at a higher rate, and we expect to see, you know, a material continued pace of that into Q3 here that, you know, I think should stabilize those margins above 50% and give us clear visibility into continuing to, you know, to take those further over, you know, the next year or so. Okay, got it. I'll turn it back. Thanks. Thanks, Luke. Thank you. Our next question has come from the line of Jim Rollyson with Raymond James. Please proceed with your questions. Hey, good morning, guys. Just maybe circling back on water infrastructure. Chris, you talked about just this quarter didn't quite get to the sequential growth you originally hoped for, and you talked about Thompson Pipeline as it relates to Q3 guidance. But if I recall correctly, kind of start of the year, you were thinking water infrastructure revenues were probably gonna be up somewhere between 30%-40%. Curious if you still think that, given the kind of delay in the Thompson Pipeline, because obviously, that implies a pretty big step up in 4Q if and when that hits. Yeah, it's a good question, Jim. I'd say that, you know, the Thompson, you know, pushing into, into the Q4 is, is certainly gonna impact the top line, you know, contribution expectations for the year. So probably coming in, you know, towards the, the bottom end of, of that guide. But I think importantly, the profitability has improved at such a pace that we're likely tracking towards something that's at the top end or potentially exceeding the top end of the growth on the, the profit side, which was expected to be 40%-50% year-over-year growth. So I think we're in a position we might be able to, to push above the top end of that range on the profitability side. So on a gross dollar basis, still on track or potentially ahead of, you know, where we expected to be at this point, even if the top line's gonna be a little lower than we might have liked. But obviously, that's really just a timing question of getting some of those assets up and running, and certainly once they come online in Q4 and the new projects in Q1, we should see a pretty, you know, heady pace of growth in the next, you know, six to nine months from those new projects. And those should continue to be additive to the margin profile as well. Absolutely. Yep, appreciate that. I just trying to make sure we get the timing right. And then on that, you know, you're kind of leaning into growth CapEx as opportunities are there for contracted high return projects. I realize this is probably an ongoing moving target, but if you kind of add up all of the projects you have contracted for now, plus the recent M&A, what... You know, when all this is on, let's say it's 1Q or ramping up into second half of next year, what kind of revenue run rate are you already do you already have visibility on for water infrastructure? Just trying to understand, you know, how this unpacks as we go in through 2025, based on what you already have kind of in hand today. Yeah, it's a good question, Jim. Obviously, with the dollars we're spending in the back half of this year, there's not gonna be a ton of contribution from a revenue standpoint from those projects, you know, until we get into 2025. And there'll be, you know, a continued pace of that spend in the first half of next year. You know, I think that from an overall growth capital, you know, standpoint, I think we have a pretty high level of confidence towards seeing a, you know, a comparable level of growth spend next year that we see this year with additional contract wins. In terms of thinking about how that starts to pull through the top line and, and translates into, into a growth rate, you know, I think you can generally think about the growth capital we you know, we're actively deploying now, based on the announced projects, as well as kind of the full year guide. You know, take that, you know, three-year cash-on-cash approach from our organic capital deployment and, you know, 50%+, you know, gross margin, and, and that's gonna be a, a pretty good way to think about the, the timing of that capital contributing to the overall growth. Yep, got it. Appreciate that. I'll turn it back. Thank you. Thank you. Our next question has come from the line of Jeff Robertson with Water Tower Research. Please proceed with your question. Thanks. Chris, just to follow up on the margins. If you're ahead on margins in water infrastructure, should we think that you'll accelerate your goal of getting to the +50% on gross profitability before year-end 2025? I think it certainly, you know, gives us an opportunity, Jeff, to get there faster. And obviously, with you know, with the activity environment, you know, providing a little more of a governor on the completions parts of the business around services and chemicals, it provides a you know, an additional layer of profit weighting out of infrastructure in the relative near term. I'd say that based on the backlog of projects we see and the timeline of when we expect to get those projects underwritten and deployed, you know, I think that's still an appropriate way to kind of frame it, you know, our expectations here. But certainly, as we look into 2025, you know, I think there's an opportunity for us to, you know, to pull that, you know, timing forward, potentially, Jeff, but it would certainly require some additional contracts, getting under our, you know, under our belt here in the back half of this year. As you think about the business over the next several years, with an increasing share of revenue and cash flow being underwritten by long-term infrastructure projects, does that impact the way you think about capital budgeting and, you know, cash return to shareholders plan and just the ability to compound that growth into continuing to expand the water infrastructure segment? Yeah. No, it's a great question. You know, we certainly think that we've got an ability to, you know, deploy the growth capital we, you know, we have in front of us this year out of free cash flow. You know, we've been able to grow the dividend over the last year. We've... You know, we were quite active from a repurchase standpoint last year, a little bit more constrained from a buyback standpoint this year, as we've been, you know, picking up the pace of the organic capital deployment. You know, looking out 12 months from now, you know, I think that getting more underwritten contracts, you know, in the books is definitely going to give us more optionality and flexibility into how we underwrite the business, both in terms of, you know, taking a look at the capital structure on the balance sheet, as well as the stability and, you know, opportunity for shareholder return, growth. So, you know, I think for now, we've certainly kind of shifted focus from from an M&A standpoint in the first half of the year towards an organic capital deployment standpoint in the back half of this year. We remain with a $21 million authorization on the share repurchase that we'll continue to have for tactical deployment. But I think the pace of opportunity in front of us from an organic project standpoint is picking up at, you know, at a rate that is, you know, the best opportunity for us to put good capital to work here, if we can continue to add long-term, you know, 10, 15-year underwritten contracts for new growth in water infrastructure. And I think that's a really important point. I mean, our strategy is working. We've been really more successful at growing water infrastructure, revenue, and profitability than we anticipated so far, and we really are focused on and gonna continue to execute that strategy. And it's fueled by driving more volume through existing systems and networks, as Chris mentioned. ... And also, as I mentioned earlier, the fact that as we expand our system and networks, we're seeing more and more deals that are just expansions of those existing systems. So we're really excited about kind of the opportunity to drive further growth despite what is a, you know, soft or uncertain macro environment. And maybe to your specific question around contracts, Jeff, you know, probably around half of the infrastructure segment today is supported by long-term contract. And looking forward into next year, that should, you know, with the new projects coming online, you know, make up a substantial majority of that segment's revenue and profitability, you know, by the time we get to the end of 2025. So having that visibility into a growing segment with a, you know, a large base of underwritten contracts is definitely gonna give us that optionality to make different decisions. But, you know, ultimately, it's gonna give us the opportunity to make good decisions. Thank you. Thank you. Our next question comes from the line of Tom Curran with Seaport Research Partners. Please proceed with your questions. Good morning. Hey, Tom. Chris, by my calculations, the Water Infrastructure division's average annual revenue per recycled barrel, so this is excluding chemical technologies on-the-fly revenue. Just for that Water Infrastructure division, my calculations say that annual average revenue per recycled barrel doubled in 2022, and then rose roughly another 50% in 2023. You know, assuming my math is accurate enough, could you break down those steps up in revenue intensity by key driver contribution? And then do you expect that uptrend to continue into 2025? Yeah, it's certainly an interesting way to look at it, Tom. You know, we have seen a very, you know, rapid pace of growth from a top-line standpoint and a volumetric standpoint across both the recycling and the disposal side of the business. From a disposal standpoint, we've obviously been, you know, adding to that part of the business through acquisition this year, whereas on the recycling side, it's been adding more through organic project development. So we're adding from kind of both, you know, both parts of the strategic channels there. From an actual recycling, you know, rate of growth, you know, we saw a substantial growth up to, you know, in excess of 250 million barrels recycled in 2023, and we think that that's gonna continue to pick up a rapid pace of growth, similar to some of the things you were talking about, Tom. I think that looking forward, the contracts that we just announced are really recycling- based, you know, facilities build out. So we should see the pace of growth in recycling be the majority of the driver into 2025. You know, whereas this year, that split, you know, last year was more recycling weighted. This year's probably gonna be more disposal weighted with the acquisitions and the continued utilization of those assets as we network them into the system. I think you're probably gonna have an inversion of that, you know, growth this year, reverting back to being a recycling, you know, heavy weighted growth next year. Maybe, Tom, just to put a finer point on it, what Chris said, from a disposal capacity, the acquisitions we've made have given us about a 30% uplift in our available capacity. And on the recycling, the announcements we just had in the script and earnings, that's gonna expand our fixed facilities, which I think is what you referenced, capacity by 20%. So, you know, from today to really Q1, kind of mid-late Q1 next year, we should have a 20% uplift in our fixed facility capacity for recycling. That's, you know, that's obviously on a capacity basis, but, you know, we've got obviously an ability to pull through increased utilization of the existing asset base that, you know, that provides us, you know, quite a bit of opportunity to grow at a, you know, at a rate comparable or, or higher than. That's really where the interconnections come into play in the system expansions. That's the importance of those two. Yep. Got it. Yeah, I was more trying to dig into sort of disaggregating by, you know, anchor tenant ramp, then scaling up the facility further by tying in additional customers and then maybe pushing pricing as you've proved yourself and your market reputation's expanded. But I can dig into that more with you in a follow-up call. Just, Michael, regarding the Water Infrastructure division's organic opportunity set, for the Permian projects that you're most optimistic about winning, can you give us an idea what the rough split is between the Midland and Northern Delaware? And then, what percentage of those high probability awards, again, the ones you're most confident about getting across the finish line here over the second half, how many of those include fixed recycling capacity, whether it's a, a brownfield expansion or, or new build construction? Sure. So we've got a diverse footprint, Tom, as you know, and are really excited about that. I think John mentioned that the operational and geographic diversity was one of our strengths and differentiators, and he's exactly right. I mean, we've executed business development opportunities in five basins. We've had strategic M&A in six. So we're really focused everywhere, but northern Delaware is where we're primarily focused. It's where we announced these two deals. It's where the majority of our high confidence business development opportunity set lies. Most of that is around the water recycling, and that's just, that's where the market is trending. We're the market leader in water recycling. We have kind of first-mover advantage, but it's, frankly, it's become a core competency of ours. And so it's a real strength, and it's something that we're looking to advance and capitalize on, and that's why you're seeing the increase in CapEx. That's why you're seeing the increase in contracts... and that's where I suspect we will continue to execute over the back half of this year. Hey, Tom, this is John. One thing to add about the Northern Delaware, to Michael's point, I mean, two counties in New Mexico, it's really developing as it relates to coming off freshwater and getting on produced recycled water. It's really developing in water exchange. It's heavily weighted to needing the solutions that Select has, so it demands, really, the capital and the solutions for this acreage to be developed and developed correctly. So we feel really strong about our position in the Northern Delaware. Got it. And then last one for me, and I, you know, I would love to hear all three of you weigh in on this. But on the solids management front, how would you describe Select's strategy at this point and the full scope of what you seek to do commercially in advancing wastewater treatment and cleanup, you know, toward or ever closer to economically viable, beneficial reuse? You know, specifically for solids management, do you plan to stick with just separation and disposal for now, or do you already intend to expand into extracting and monetizing valuable mineral deposits like lithium, cadmium, and bromine? Tom, this is Michael. I'll take a shot. I think that was probably a 3- or 4-part question, so you'll have to bear with me as I wade through it. So, starting with solids management, I mean, from an operational and financial perspective, it really fits nicely with water infrastructure. The financial profile, the returns, the operations, the employee intensity all matches very well. It allows us to manage the total waste stream, and we're excited to be able to provide that total solution for our customer. It leverages an existing water infrastructure footprint, so we're really pleased with what we've acquired so far. And I think we would look to kind of strategically expand that if the right opportunity were to arise. You know, beneficial reuse, we really think of as separate from solids management. There's certainly a component of it. We have a very strong team focused on it. We're partnered with a very large operator in a joint development agreement. We had a successful field trial earlier this year and are gearing up for another one, another trial, the back half of this year. So, it's something we've invested, you know, real time and money in over the last couple of years and are continuing to do so. Our primary focus on that is really taking cost out of the system. The challenge there is not the technical feasibility, but more the economic effectiveness, and so we're focused on reducing both CapEx and OpEx in that system. You know, obviously, while still developing reliable and adaptable system to the changing water qualities. So that's not something that, you know, we've talked a lot about, but it is something we're gonna continue to work on, and we do think the market is heading that direction, and we're gonna be ready for it. The last part, at least the one that I recall, was around, you know, mineral extraction. That's again, something that we're, you know, paying attention to. We know that there are several different elements that exist in produced water that do have economic viability. We've measured it across our extensive footprint and are working and engaged with companies to see what that would look like in terms of extracting it, who would do what, what the economics would be. But that's still, you know, similar to beneficial reuse in the earlier stages of becoming a true economic solution. But it's something that we're obviously aware of, we're evaluating and seeing what role we would play. Maybe a couple of things I'd add to it, Tom. To Michael's point around the cost management side of beneficial reuse and your point around solids, you know, one of the things that you ultimately have come to bear when you're treating water to a beneficial reuse level of quality is, you know, you generally have a fresh water quality on one side and a heavy concentrated brine on the other side, as well as solids that have to be managed. So it provides a kind of more vertically integrated cost management approach if we have that solids piece as an integrated part of a solution. And then that concentrated brine that you get on the backside also provides more optionality around looking at that mineral extraction as a part of that system that's already, you know, necessary for that, you know, water treatment to get to a beneficial, you know, treatment quality. So it does provide kind of a full, you know, opportunity set as you go across the different applications of how you might approach this. And so we're certainly looking at that on an integrated basis, as well as analyzing the various technologies and the various geographic discrepancies between what those water qualities look like and the demand for both the waste stream management as well as the extraction. Got it. Thank you for all the very thoughtful answers. Thank you. Our next questions come from the line of Bobby Brooks with Northland Capital Markets. Please proceed with your questions. Hey, good morning, guys. Thank you for taking my question. First one that I've got is just, could you help quantify how much of a revenue headwind were the divestments and consolidations of non-core assets within Water Services? You know, the segment was up slightly sequentially above the low-single-digit decline guide that you guys have given. So just looking for a little bit more color on what drove the strength, and are those factors causing the strength in the Q2 expected to dissipate in the Q3, given the mid- to high-single-digit decline? Or maybe that decline is more a factor of divestments that you are looking to execute. Just looking for color on that. ... Yeah, good question, Bobby. So if you think about the, you know, obviously, we, I think, outperformed what we thought we'd be able to do in the Q2, and that was largely on the back of the pull forward of some water sourcing opportunities that we were able to get with our kind of key infrastructure, you know, contracts and customers. So we were able to do that in both the Delaware side of things as well as up in North Dakota, with the customer off that Thompson system, to kind of meet their completions demand in the near term as we get those projects continued to built out over the next couple of quarters. So that was the substantial driver of what got us to, you know, to growth, to counteract what continues to be some active consolidation efforts, as we've kind of mentioned, primarily around the more commoditized application of fluids hauling. You know, everything that we can do to get a piece of water onto pipe is obviously a high margin benefit to the company. And so, there's definitely an application of approach towards continuing to focus on getting volumes off of truck and onto pipe over time, and you'll continue to see that as we build out the systems. But year to date, if you look at the last six months, you know, really, the kind of entire majority of the volume or the revenue dollars we've seen come off the segment from a water services standpoint year to date have, you know, relative to Q4, are out of that fluids hauling segment. So we've seen quite a bit of stability in other parts of services, particularly around our water transfer and logistics business. That's, you know, pretty core to supporting the overall efforts around infrastructure. And so we'll continue to focus on what that might look like over the back half of the year here. But, you know, overall, the decisions we're making should ultimately be margin accretive to the segment over time. You know, I think that they're, you know, beneficial to the overall strategic efforts of getting that volume put on pipe over time and into our infrastructure networks. Got it. Appreciate that color. Then, switching to Water Infrastructure, obviously nice 8% sequential revenue growth there. You guys have talked about... You mentioned increased utilization, but, in terms of the driving factor there, but you guys also had a couple of acquisitions, right, that would have contributed there. So I was just looking to get a sense on, how much of that growth was through organic development or increased utilization of legacy assets versus, you know, inorganic acquisitions, growth there? Yeah. For the Q2, the gross profit gains in infrastructure was about a 50/50 split, you know, contribution from additional acquisitions and contribution from organic growth and enhanced utilization of the existing asset base. On a year-to-date basis, you've taken the Q1 into account, it's certainly going to have a higher weighting towards acquisition, probably more of a 75/25 split on a year-to-date basis. But I would say that, you know, even though the back half of the year will continue to be focused around the organic project build-out, there's still quite a bit of utilization enhancement we can get out of the acquired assets. You know, there's a little bit of effort and undertaking to get those networked into the system. As we get those networked, you know, it's going to give us quite a bit of opportunity to enhance the utilization of those acquired assets. That's, you know, really the strategic reason for a number of these deals. And so, you know, I think looking forward, we'll be able to drive utilization improvement across the business, but that'll be, you know, both on the existing assets as well as the recently acquired assets beyond, you know, what we've been able to see on a, you know, kind of day one or quarter forward basis from the recent deals. Got it. And when you're saying the split, you're comparative on the year to date, are you comparing that to first half 2023 comparatively, right? Good question. I was comparing that sequentially coming off of Q4. So picking up the first acquisitions in the early part of January in 2024, and that relative split was on a sequential basis, looking at Q4 of 2023 forward into Q1 and the first half of the year on a consolidated basis. Got it. Thanks for that clarification. And just last question from me is: on the PR, you mentioned how the Northern Delaware system expansion will effectively triple the capacity of your current system there. So my question is: Is all of that added capacity already dedicated to certain long-term production agreements? And essentially, when that's up and running in Q1 of 2025, its utilization is going to already be at 100%. And if that is so, all the added capacity that will be you, I'm sorry. And if that's so, where all the added capacity is going to be utilized once it's up and running, does the tripling in capacity essentially translate to a tripling in terms of financial impact? Bobby, this is Michael. To talk about the operational side of it. So all of that capacity is not dedicated to a single operator. So when we underwrite these projects, we underwrite somewhere between a third and really probably closer to a half of the capacity by the cornerstone customer. And they're going to have kind of the right of first refusal on the asset, but then we work to commercialize the remaining portion. And so we do expect the anchor tenant to come online in Q1 and really ramp up in Q2 as we work through some of the kind of early inefficiencies of building a system. ... but we do expect to have additional excess capacity and meaningful excess capacity on the system that we would commercialize with offset operators in the area. Bobby, one of the, I mean, the clear strategic benefits and value adds to the customer of getting these recycling facilities up and running is it provides effectively a disposal off-ramp for the produced water that they need to manage and get rid of. But it also provides an opportunity to match and manage water in the marketplace to the comp-- you know, completion demand across multiple operators. So it really is a water balancing effort to bring in multiple operators into those assets so that you have steady pace of production coming into the system from multiple operators, and then that provides optionality to redeploy that treated barrel back towards new development across multiple operators as well. And the more you can add that flexibility with additional operators, it creates a more effective balanced network overall. Got it. That's, that's a very virtuous cycle. I appreciate the time. Congrats on the good quarter, and I'll return back to you. Thanks. Thanks, Bobby. Thank you, Bobby. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next questions come from the line of John Daniel with Daniel Energy Partners. Please proceed with your question. Hey, guys. Thank you for keeping this call going. And I'm gonna apologize in advance for my Water 101 questions, but when you look at the expansion you've got in the Northern Delaware, that to the dedication of 81,000 acres and then the right of first refusal for the 162,000 extra, do you have, at this point, visibility into the customer's activity levels for 2025? And if you do, is it—are they simply moving assets, you know, rigs and so forth, from one area to the other, or is it incremental gains if you were to exercise that 162? So when we enter an agreement like this, John, we, we partner with the operator. We, we need to understand their long-term development plan, as well as kind of their, their near-term needs, to make sure that we're sizing the system correctly, we're building it out to where they need it built out first. And so we're really partnered with the operator. So we, we do get regular schedules, drilling schedules. Obviously, they change, and, and we're working to accommodate those changes. But this is a long-term planning with our customer, and so we, we know what they're doing in 2025 and beyond. Yeah, it's a material change to the relationship and a partnership approach there, John. And as it relates to, you know, the active acreage dedicated as well as, you know, the opportunity and the look towards the, you know, the ROFR acreage, you know, those are active, ongoing dialogues that, you know, that are underway. So it's, you know, really around how do we meet the needs of their current schedules and what they have visibility into over, you know, the visible period of 12-24 months, and then how do we think about what that translates into around the larger, you know, acreage footprint as they also potentially add acreage from their own acquisition opportunities in the future as well. We see the ROFR as important because it really, once you have the system, just expanding it a little bit here or there is a natural solution for both us and the operator. Mm-hmm. Again, speaking to the importance of balancing long and shorts within the operator, but for other operators as well, as Chris mentioned. And so we're really looking to see how that our customers' needs expand and grow within the dedicated interest, but within the larger ROFR period as well, so that we can expand our system to take care of those customers and offset operators there as well. And John, you know, John mentioned it earlier as well, but I mean, frankly, these solutions are becoming critical to the customer's ability to even develop the acreage they have in some of these areas, particularly, you know, in northern New Mexico. So, you know, I think that it's changed the way that they approach water, it's changed the way that we partner with them around water, and it changes the way they evaluate opportunities to grow further on their own side. So, you know- Right ... we definitely are focused on how we match those solutions to their, you know, their needs and what they see as their opportunity. Yeah, John, when I think about it, I, you know, when we say dedicated, we got to know where they're gonna drill, how many they're gonna drill- Mm-hmm. What time they're gonna do that, and we are in full contact and conversations, planning with them as we get that dedicated position, as we invest that money that we wrap around that three-year cash on cash or 50% plus gross margin. But that ROFR stuff, that is really holding hands to make sure that we can plan the system out in the future to bring that value to them, and to make sure that we can, you know, move that water properly and we don't duplicate the asset base that's already been put in place because of poor planning. Okay. And then just a few more, and if you want to hang up on me, that's cool. But when you talk about constructing the multiple recycling facilities and the upgrades, is that for the 81,000 acres, or is that for the 81,000 plus the 162? That would just be for the 81, John. Yeah. So the ROFR acreage would be incremental and well beyond that. So that's additional long-term development potential for us. Got it. Okay. Turning to the acquisitions, I recognize not all SWD facilities are created equally, but when you look at the, compare sort of the Northeast, where you get one active well and one uncompleted one, and you essentially buy that for $9 million, and you compare that to, say, the Trinity deal, where you got 22 SWDs and a lot of other stuff... Is there, I assume there's differences in volumes, the capacity per well, or is this perhaps suggestive that the, just the Northeast market is structurally better than the Permian? I wouldn't say that it's better than the Permian, John. It's just different. Yeah. The disposal wells in the Northeast are considerably smaller than the ones in the Permian. So you can have a 15, 20, 25 thousand barrel a day disposal well in the Permian. You don't have anything like that in the Northeast. You're gonna have a, you know, 3 or 5 thousand barrel a day well, and that might be a good well. The pricing is materially different in the Northeast and the Permian. I mean, those are probably two of the most extreme markets that we participate in, and it gets back to, you know, the volume of the well. Mm-hmm. So they're just, they're just fundamentally different markets. It's-- you can compare disposal wells within a basin of similar depth. It's much more challenging to compare disposal wells in different basins, particularly if they have different depths. What I would say that is consistent, though, is how we've made the acquisitions, whether it's the Northeast or East Texas or the Permian. We're pretty consistent in our valuation. We're gonna make sure that it is accretive on a historic and go-forward basis. And that's really the case, whether it's a $9 million acquisition or a $22 million acquisition. Okay. That's all I have. John? Thank you, sir. Yes, John. John, on the, you know, when you're buying disposal wells, this company's a little bit different in some respect, because if you think about it, we got three different ways of looking at it. One, just needed volume in a certain area. They need to be able to dispose water that they're creating as they complete these wells in certain areas. But then we have, you know, pretty large pipe systems now that gather water and take it to a place that you can dispose of it in higher volumes or at lower cost to bring value to that customer. Get it off a truck, get it on pipe, and actually save money disposing of it. But the... What we've realized, and probably this is, is developed under our nose, is that we also now have these systems that are really water exchange systems. You have a capacity of disposal that these wells fit into, that are needed sometimes, but not all times, because sometimes that piece of water is getting recycled, and it's a needed recycled barrel for completion. So it becomes a water exchange system of water balancing, and these assets fit into those equations in all three ways. Got it. Okay, well, congrats. Thanks for letting me get on the call, and congrats on hitting the 50% margin threshold. Thank you, John. Thanks, John. Thank you. This now concludes our question and answer session. I would now like to turn the floor back over to John Schmitz for closing remarks. Thank you to everyone that joined our earnings call today, and for your continued support and interest in learning more about Select Water Solutions. I look forward to speaking to you again next quarter. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a wonderful day.