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NEW YORK - Select Water Solutions, Inc. (NYSE:WTTR), a provider of water solutions to the energy sector with a market capitalization of $1.34 billion and annual revenue of $1.48 billion, has secured a new $550 million sustainability-linked credit facility. According to InvestingPro analysis, the company is currently trading at Fair Value, with strong financial metrics supporting its growth initiatives. The credit agreement, finalized earlier this week, includes a $300 million revolving credit component and a $250 million term loan, both with a five-year maturity.
The company announced there were no outstanding borrowings on the revolving credit at the time of closing, with approximately $20 million in issued letters of credit and the term loan fully funded. This new credit facility replaces Select’s prior agreement, which was settled in full and terminated at the closing. The company’s strong financial position is evidenced by its healthy current ratio of 1.78 and moderate debt-to-equity ratio of 0.17, as reported by InvestingPro.
This credit arrangement incorporates sustainability-linked targets, continuing Select’s commitment to environmental and safety standards. Achieving specific goals related to water recycling volumes and safety will result in reduced borrowing costs, while penalties will apply if these targets are not met.
Select’s Chairman, President, and CEO, John Schmitz, highlighted the credit facility’s role in bolstering the company’s balance sheet and liquidity, supporting growth plans, and funding contracted infrastructure projects. Schmitz also emphasized the company’s focus on sustainable and safe solutions for customers.
Executive Vice President and CFO, Chris George, remarked on the credit facility’s alignment with Select’s strategy for accretive investments and maintaining a conservative financial profile. The company’s financial strength is reflected in its impressive 74.29% return over the past year and robust EBITDA of $215.73 million. Discover more detailed insights and 8 additional ProTips about WTTR with an InvestingPro subscription, including exclusive access to comprehensive Pro Research Reports covering 1,400+ top stocks. George pointed out that the facility’s term loan component enhances the company’s capacity to fund capital projects and develop long-term revenue streams. He also noted nearly $400 million in pro forma liquidity, positioning the company for growth through organic and acquisition opportunities.
The credit facility was led by Bank of America, N.A., with JPMorgan Chase (NYSE:JPM) Bank, N.A., Bank OZK (NASDAQ:OZK), and MUFG Bank, LTD. as co-arrangers. Legal counsel for the transaction was provided by Vinson & Elkins LLP for Select, and Winston & Strawn LLP for Bank of America and the lender group.
This financial move is part of Select Water Solutions’ broader strategy to expand its water infrastructure networks and advance water recycling and automation technologies while adhering to its core values of environmental stewardship and safety excellence. The information is based on a press release statement from Select Water Solutions, Inc.
In other recent news, Select Water Solutions has set its quarterly dividend at $0.07 per share, marking a consistent increase for the third consecutive year. This financial move comes on the heels of the company’s robust growth in its third-quarter earnings, with a notable 20% increase in revenues and a 33% rise in gross profit before depreciation and amortization compared to the previous quarter. Year-over-year figures were even more impressive, with revenue up by 40% and gross profit surging by 99% compared to the same quarter in 2023.
The company also reported record revenues of $82 million with a 57% gross margin in its Water Infrastructure segment. In addition, Select Water Solutions secured 25,000 acres under long-term contracts in the Permian Basin and two pipeline agreements in the Bakken. A disposal acquisition in the Northern Delaware Basin added 10,000 barrels per day of capacity.
Despite an anticipated 10%-15% revenue decline in the Water Infrastructure segment, the company expects Q4 margins to remain strong at 51%-54%. Net income for Q3 2024 stood at $19 million, with an adjusted EBITDA of $73 million, surpassing guidance. These are some of the recent developments for Select Water Solutions.
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