SELECT ENERGY SERVICES REPORTS FIRST QUARTER 2022 FINANCIAL RESULTS AND PROVIDES OPERATIONAL UPDATE

Revenue of $294.8 million generated during the first quarter of 2022, up 16% sequentially from the fourth quarter of 2021

Net income of $8.0 million and Adjusted EBITDA of $32.2 million during the first quarter of 2022

Repurchased 2.3 million shares of Class A common stock in the open market for $16.4 million in the first quarter of 2022

Closed on the acquisition of Nuverra Environmental Solutions, Inc. (NYSE American: NES) ("Nuverra")

Closed on $270 million sustainability-linked credit facility with innovative pricing structure prioritizing increased recycled water volumes and delivering superior employee safety performance

Issued its 2021 Sustainability Report, the Company's inaugural report

HOUSTON, May 3, 2022 /PRNewswire/ -- Select Energy Services, Inc. (NYSE: WTTR) ("Select" or the "Company"), a leading provider of sustainable water and chemical solutions to the U.S. unconventional oil and gas industry, today announced its financial results for the first quarter ended March 31, 2022.

John Schmitz, Chairman of the Board, President and CEO, stated, "Overall, I'm very pleased with our first quarter performance and the continued progress we've made in executing our strategy to improve and bolster the base business, advance our technology, ESG and diversification efforts, and execute on strategic M&A. The first quarter represented another strong quarter of sequential revenue growth while we expanded margins and recorded positive net income. Select benefitted from a strong commodity price backdrop and continued positive momentum from an industry activity standpoint. This combination of factors led to 16% consolidated sequential revenue growth during the quarter, reaching gross revenue levels not seen since mid-2019. Additionally, we produced net income of $8.0 million and Adjusted EBITDA increased significantly to $32.2 million, up 22% sequentially, supported by both improvements in our base business and our recent acquisitions.

"On the M&A front, we have seen meaningful contributions from our recent acquisitions, including a partial quarter contribution from Nuverra Environmental Solutions, which closed in late February. Setting aside the partial quarter growth contributions from Nuverra, the business grew revenue sequentially by 12%. This continued growth was driven by a combination of activity expansion, market share capture and, most importantly, continued pricing improvements and operational efficiencies achieved from the integration of our 2021 acquisitions.

"We continue to see significant opportunities to build upon the infrastructure footprint we've assembled through our recent acquisitions. During the first quarter, we executed a long-term acreage dedication contract for a new recycling facility in the Northern Delaware Basin with a large independent operator, thereby expanding the scope of our relationship with this existing recycling customer. This facility will be further supported by a multi-year contract with another third party water midstream company to allow them to tie in via pipeline, which provides dedicated produced water for additional recycling volumes. We also reached an agreement to increase the size of our previously announced DJ Basin recycling facility, supported by additional long-term committed contractual volumes from our anchor customer. Additionally, we've signed numerous new multi-year contracts, including wellbore dedications and minimum volume commitments, to build additional gathering pipelines to tie in produced water volumes into existing disposal facilities in the MidCon and Haynesville regions. Several of these recent development opportunities are built around infrastructure assets acquired from our recent M&A activities. While I'm excited about these recent successes, I believe a very strong pipeline of additional development opportunities remains.

"I'm also proud of the recent commitments we've made to our sustainability strategy through the closing of our $270 million sustainability-linked credit facility, as well as the issuance of our inaugural Sustainability Report. We take our leadership in providing sustainable full life cycle water and chemical solutions seriously, and embrace additional accountability and transparency as we work to expand this leading position, as displayed by our ambitious water recycling and safety performance targets tied to our new sustainability-linked credit facility. Select is committed to implementing a corporate strategy that supports the long-term viability of its business model in a manner that focuses on its people, its customers, the environment, and the communities in which we operate.

"Additionally, as we look at our overall capital allocation priorities, we continue to believe that returning capital to shareholders is a key part of our overall business strategy. To this end, we executed the opportunistic open market repurchase of approximately 2.3 million Class A shares during the first quarter for approximately $16.4 million.

"Ultimately, I am excited about our recent financial performance, M&A execution, our infrastructure development projects and our other sustainability-focused investments and initiatives. I firmly believe the strategy we've undertaken not only leaves us well positioned to execute on additional growth ahead, but also positions us to further evaluate opportunities to return capital to shareholders in the future. With growing activity, strong commodity prices and improved operational and financial performance, the future remains bright for Select," concluded Schmitz.

Consolidated Financial Information

Revenue for the first quarter of 2022 was $294.8 million as compared to $255.1 million in the fourth quarter of 2021 and $143.7 million in the first quarter of 2021. Net income for the first quarter of 2022 was $8.0 million as compared to $11.2 million in the fourth quarter of 2021 and a net loss of $27.4 million in the first quarter of 2021.

For the first quarter of 2022, gross profit was $24.7 million, as compared to $17.9 million in the fourth quarter of 2021 and a gross loss of $4.4 million in the first quarter of 2021. Total gross margin was 8.4% in the first quarter of 2022 as compared to 7.0% in the fourth quarter of 2021 and (3.1)% in the first quarter of 2021. Gross margin before depreciation and amortization ("D&A") for the first quarter of 2022 was 17.4% as compared to 16.6% for the fourth quarter of 2021 and 12.0% for the first quarter of 2021.

SG&A during the first quarter of 2022 was $28.3 million as compared to $25.2 million during the fourth quarter of 2021 and $19.9 million during the first quarter of 2021. SG&A during the first quarter of 2022 and the fourth quarter of 2021 was impacted by non-recurring transaction costs of $3.6 million and $2.0 million, respectively. SG&A during the first quarter of 2021 was impacted by $3.2 million of non-recurring severance costs relating to our CEO transition.

Adjusted EBITDA was $32.2 million in the first quarter of 2022 as compared to $26.4 million in the fourth quarter of 2021 and $0.9 million in the first quarter of 2021.  Adjusted EBITDA was negatively impacted by the deduction of $11.4 million of non-recurring bargain purchase price gains that benefited Net Income during the quarter related to our recent acquisition activity. Additionally, Adjusted EBITDA was impacted by $3.6 million of non-recurring transaction costs, $0.5 million of non-cash losses on asset sales, $0.1 million in lease abandonment costs, and $0.1 million in other adjustments. Non-cash compensation expense accounted for an additional $3.3 million adjustment. Please refer to the end of this release for reconciliations of gross profit (loss) before D&A (non-GAAP measure) to gross profit (loss) and of Adjusted EBITDA (non-GAAP measure) to net income (loss).

Business Segment Information

The Water Services segment generated revenues of $163.6 million in the first quarter of 2022 as compared to $140.7 million in the fourth quarter of 2021 and $64.2 million in the first quarter of 2021.  Gross margin before D&A for Water Services was 16.2% in the first quarter of 2022 as compared to 15.4% in the fourth quarter of 2021 and 3.0% in the first quarter of 2021. Revenues improved 16.3% sequentially, with approximately 70% of the revenue growth from the existing business and approximately 30% of the growth from the Nuverra acquisition that closed during the first quarter. Looking at the second quarter of 2022, the Company expects to see 8% – 12% revenue growth with modest continued improvements to gross margins before D&A, supported by continued pricing improvements, market activity and incremental contributions from the recently closed acquisition of Nuverra.

The Water Infrastructure segment generated revenues of $58.6 million in the first quarter of 2022 as compared to $46.9 million in the fourth quarter of 2021 and $37.8 million in the first quarter of 2021. Gross margin before D&A for Water Infrastructure was 24.2% in the first quarter of 2022 as compared to 25.8% in the fourth quarter of 2021 and 30.2% in the first quarter of 2021.  Revenues improved 24.9% sequentially, driven by increased volumes at our recycling and pipeline facilities. Additionally, the Nuverra acquisition accounted for approximately a quarter of the sequential revenue growth for the segment. Gross margins were impacted by increased integration costs incurred during the quarter, as well as operational downtime related to the maintenance and upgrades of recently acquired assets. For the second quarter of 2022, the Company anticipates revenue growth of 5% – 10%, with gross margins before D&A in mid- to high-20 percent range.  

The Oilfield Chemicals segment generated revenues of $72.6 million in the first quarter of 2022 as compared to $67.5 million in the fourth quarter of 2021 and $41.7 million in the first quarter of 2021.  Gross margin before D&A for Oilfield Chemicals was 14.4% in the first quarter of 2022 as compared to 12.6% in the fourth quarter of 2021 and 9.5% in the first quarter of 2021. Revenues improved 7.5% sequentially, well exceeding expectations, driven by strong growth in the Haynesville and Eagle Ford shale regions. The revenue expansion in these areas was supported by growth from our recently reactivated Tyler manufacturing facility in east Texas. Gross margins improved sequentially driven by a combination of continued absorption of the Tyler manufacturing facility and pricing improvements. Supported by the recent strong revenue growth in the first quarter of 2022, the Company anticipates relatively stable revenues in this segment during the second quarter of 2022 with gross margins before D&A holding steady as operational efficiencies and pricing improvements counteract continued supply chain challenges.

Cash Flow and Capital Expenditures

Cash flow from operations for the first quarter of 2022 was ($18.6) million as compared to ($2.4) million in the fourth quarter of 2021 and ($3.9) million in the first quarter of 2021. Cash flow from operations during the first quarter of 2022 was significantly impacted by a $44.9 million use of cash to fund working capital needs of the business, including the settlement of acquired Nuverra liabilities.

Net capital expenditures for the first quarter of 2022 were $3.3 million, comprised of $15.5 million of capital expenditures, largely offset by $12.1 million of cash proceeds from asset sales, including the divestment of underutilized equipment and real estate from recently acquired businesses. Cash flow from operations less net capital expenditures, was ($21.9) million during the first quarter of 2022.

Cash flow used in investing activities during the first quarter of 2022 included an inflow of approximately $6.9 million of cash and restricted cash received from the Company's acquisition of Nuverra, and outflows of $1.8 million of additional investment in AquaNyx Midstream and $1.7 million of additional investment in ICE Thermal Solutions.

Cash flow from financing activities during the first quarter of 2022 included $18.8 million for the repayment of outstanding Nuverra indebtedness, $18.9 million for the repurchase of outstanding Class A common stock, including $16.4 million of repurchases in the open market, and $2.0 million of debt issuance costs related to the Company's sustainability-linked credit facility

Balance Sheet and Capital Structure
Total cash and cash equivalents were $24.8 million as of March 31, 2022 as compared to $85.8 million as of December 31, 2021. The Company had no borrowings outstanding under its sustainability-linked credit facility as of March 31, 2022 and no borrowings under its previous credit facility as of December 31, 2021.

As of March 31, 2022 and December 31, 2021, the borrowing base under the sustainability-linked credit facility and the previous credit facility was $204.1 million and $132.7 million, respectively. The Company had available borrowing capacity under its sustainability-linked credit facility and its previous credit facility as of March 31, 2022 and December 31, 2021, of approximately $188.5 million and $117.1 million, respectively, after giving effect to $15.6 million of outstanding letters of credit as of both March 31, 2022 and December 31, 2021.

Total liquidity was $213.3 million as of March 31, 2022, as compared to $202.9 million as of December 31, 2021. The Company had 91,821,906 weighted average Class A shares outstanding and 16,221,101 weighted average Class B shares outstanding during the first quarter of 2022.

Acquisition of Nuverra Environmental Solutions, Inc.

On February 23, 2022, Select closed on the acquisition of Nuverra. Under the terms of the agreement, Nuverra stockholders received 0.2551 shares of Select Class A common stock for each share of Nuverra common stock, or approximately 4.2 million shares of Select Class A common stock in exchange for all outstanding shares of Nuverra. Additionally, Select repaid approximately $18.8 million of Nuverra's indebtedness at closing. The transaction was unanimously approved by each of Select's and Nuverra's board of directors and a majority of Nuverra's stockholders.

Nuverra is an energy-focused solutions company, providing environmental solutions, including the removal, treatment, recycling, transportation and disposal of restricted solids, fluids and hydrocarbons for exploration and production companies operating across the U.S., including in the Bakken, Haynesville, Marcellus and Utica Shales.

The acquisition strengthens Select's geographic footprint with a unique set of water logistics and infrastructure assets, particularly in the Bakken, Haynesville and Northeast, while continuing to expand Select's production-related revenues. Select also acquired a 60-mile underground twin pipeline network in the Haynesville Shale in Texas and Louisiana. The pipeline network provides for the collection of produced water for transport to interconnected disposal wells and the delivery or re-delivery of water from water sources to operator locations for use in well completion activities. Additionally, Nuverra operates a landfill facility in North Dakota located on a 50-acre site. The facility provides a unique opportunity for Select to expand its logistics capabilities into a new service offering. The acquisition is expected to result in a bargain purchase gain based on our preliminary evaluation.

Sustainability-linked Credit Facility

On March 17, 2022, Select successfully transitioned its existing Asset-Backed Loan credit facility into a Sustainability-Linked credit facility, while extending the facility through March of 2027. Under the terms of the amended facility, Select will receive pricing benefits for achieving ambitious targets associated with escalating volumes of produced water recycled through its permanent or semi-permanent facilities and operating substantially more safely than industry peers, or pay higher fees for failing to hit those targets.

The Lead Arranger for the facility was Wells Fargo Bank, N.A., with Bank of America, N. A. acting as Joint Lead Arranger and Joint Bookrunner. Wells Fargo Capital Finance, LLC acted as Sustainability Structuring Agent. Amegy Bank, Royal Bank of Canada, Cadence Bank and BOK Financial each serve as additional Lenders in the facility.

2021 Sustainability Report

On April 28, 2022, Select issued its 2021 Sustainability Report, the Company's inaugural release. Select's 2021 Sustainability Report highlights the policies, processes, procedures and performance by which Select establishes and advances Environmental, Social, and Governance ("ESG") goals and criteria, as well as how the Company aims to act as a force for environmental stewardship and promote sustainable development in communities in which it operates. The report reviews the application of Select's business principles and supporting policies across the business. The report includes information based on internal discussions, external stakeholder feedback, and consultations with third-party experts. Select intends to regularly report on our ESG policies, procedures, and performance, both on our website and through our annual Sustainability Report. Readers are encouraged to read the report in its entirety, which is accessible at https://www.selectenergy.com/sustainability/.

Business Development Updates

Northern Delaware Produced Water Recycling Facility
During the first quarter of 2022, Select signed a long-term acreage dedication contract from a large independent operator to build a 50,000 barrel per day recycling facility in the Northern Delaware Basin. The facility will be supported by a previous pipeline Select constructed for this customer to transport volumes between multiple fields of their operations. Additionally, this facility will be supported by a multi-year contract with an independent third party water midstream provider to tie in via pipeline its existing produced water for additional recycling volumes. This facility will be supplemented by 1.2 million barrels of surface storage capacity and is expected to be completed during the second quarter of 2022 at a cost of approximately $5 million.

DJ Basin Produced Water Gathering, Disposal and Recycling Facility
During the first quarter of 2022, Select amended its previously announced agreement with a major integrated oil and gas company supporting its produced water gathering, disposal and recycling facility in the DJ Basin. The amended agreement will increase the take-or-pay volume commitment in exchange for increasing the size of the facility to 25,000 barrels per day of capacity, an increase of 10,000 barrels per day. The facility commenced operations during the first quarter of 2022 and the expansion is expected to be fully operational in the second quarter of 2022.

Haynesville Gathering and Disposal Facility
During the first quarter of 2022, Select signed a 10-year wellbore dedication agreement with a large independent operator to reactivate a recently acquired disposal facility that had been previously shut in. As part of the agreement, Select will be providing a capacity guarantee to the operator and the facility is expected to be on line during the second quarter of 2022.

MidCon Gathering and Disposal Agreements
During the first quarter of 2022, Select signed a multi-year gathering and disposal agreement with a minimum volume commitment in exchange for a capacity dedication with a large independent operator in the MidCon region. Additionally, Select signed an agreement with an additional operator to tie in their existing pipeline infrastructure. These facilities were recently acquired assets and represent our first new contractual dedication in the MidCon region since the Complete Energy Services acquisition in the third quarter of 2021.

Conference Call

Select has scheduled a conference call on Wednesday, May 4, 2022 at 11:00 a.m. Eastern time / 10:00 a.m. Central time.  Please dial 201-389-0872 and ask for the Select Energy Services call at least 10 minutes prior to the start time of the call, or listen to the call live over the Internet by logging on to the website at the address http://investors.selectenergy.com/events-and-presentations.  A telephonic replay of the conference call will be available through May 18, 2022 and may be accessed by calling 201-612-7415 using passcode 13729213#.  A webcast archive will also be available at the link above shortly after the call and will be accessible for approximately 90 days. 

About Select Energy Services, Inc.

Select Energy Services, Inc. and its consolidated subsidiaries (collectively referred to as "Select" or the "Company") is a leading provider of sustainable water and chemical solutions to the oil and gas industry. Select develops, manufactures and delivers a full suite of chemical products for use in oil and gas well completion and production operations as well as integration into the full water life-cycle. These solutions are supported by the Company's critical water infrastructure assets and water treatment and recycling capabilities. As a leader in sustainable water and chemical solutions, Select places the utmost importance on safe, environmentally responsible management of oilfield water throughout the lifecycle of a well. Additionally, Select believes that responsibly managing water resources throughout its operations to help conserve and protect the environment is paramount to the continued success of the Company.  For more information, please visit Select's website, http://www.selectenergy.com.

Cautionary Statement Regarding Forward-Looking Statements

All statements in this communication other than statements of historical facts are forward-looking statements which contain our current expectations about our future results. We have attempted to identify any forward-looking statements by using words such as "could," "believe," "anticipate," "expect," "project," "will," "estimate" and other similar expressions. Although we believe that the expectations reflected, and the assumptions or bases underlying our forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Such statements are not guarantees of future performance or events and are subject to known and unknown risks and uncertainties that could cause our actual results, events or financial positions to differ materially from those included within or implied by such forward-looking statements. Factors that could materially impact such forward-looking statements include, but are not limited to: the severity and duration of world health events, including the COVID-19 pandemic, which had a negative impact on our business; the global macroeconomic uncertainty related to the Russia-Ukraine war; actions by the members of OPEC+ with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; the level of capital spending and access to capital markets by oil and gas companies, trends and volatility in oil and gas prices, and our ability to manage through such volatility; and other factors discussed or referenced in the "Risk Factors" section of our most recent Annual Report on Form 10-K and those set forth from time to time in our other filings with the SEC. Investors should not place undue reliance on our forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

Contacts:    

Select Energy Services


Chris George – Senior Vice President, Corporate
Development, Investor Relations & Sustainability


(713) 296-1073


IR@selectenergyservices.com




Dennard Lascar Investor Relations


Ken Dennard


713-529-6600


WTTR@dennardlascar.com

 

WTTR-ER

SELECT ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share data)










Three months ended March 31, 



2022


2021

Revenue







     Water Services


$

163,606


$

64,223

     Water Infrastructure



58,554



37,803

     Oilfield Chemicals



72,609



41,716

          Total revenue



294,769



143,742

Costs of revenue







     Water Services



137,046



62,324

     Water Infrastructure



44,378



26,399

     Oilfield Chemicals



62,163



37,766

     Depreciation and amortization



26,500



21,650

          Total costs of revenue



270,087



148,139

          Gross profit (loss)



24,682



(4,397)

Operating expenses







     Selling, general and administrative



28,315



19,894

     Depreciation and amortization



567



649

     Lease abandonment costs



91



104

          Total operating expenses



28,973



20,647

Loss from operations



(4,291)



(25,044)

Other income (expense)







     Gain (loss) on sales of property and equipment and divestitures, net



1,653



(579)

     Interest expense, net



(720)



(435)

     Foreign currency gain, net



3



3

     Bargain purchase gain



11,434



     Other



249



(1,629)

Income (loss) before income tax (expense) benefit



8,328



(27,684)

Income tax (expense) benefit



(214)



263

Equity in losses of unconsolidated entities



(129)



Net income (loss)



7,985



(27,421)

Less: net (income) loss attributable to noncontrolling interests



(1,183)



4,314

Net income (loss) attributable to Select Energy Services, Inc.


$

6,802


$

(23,107)








Net income (loss) per share attributable to common stockholders:







     Class A—Basic


$

0.07


$

(0.27)

     Class B—Basic


$


$








Net income (loss) per share attributable to common stockholders:







     Class A—Diluted


$

0.07


$

(0.27)

     Class B—Diluted


$


$

 









SELECT ENERGY SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 (in thousands, except share data)




March 31, 2022


December 31, 2021



(unaudited)



Assets







Current assets







     Cash and cash equivalents


$

24,797


$

85,801

     Restricted cash



2,602



     Accounts receivable trade, net of allowance for credit losses of $4,972 and $4,401, respectively



293,595



232,824

     Accounts receivable, related parties



157



219

     Inventories



43,074



44,456

     Prepaid expenses and other current assets



33,979



31,486

          Total current assets



398,204



394,786

Property and equipment



997,229



943,515

Accumulated depreciation



(556,764)



(551,727)

     Total property and equipment, net



440,465



391,788

Right-of-use assets, net



54,933



47,732

Other intangible assets, net



105,881



108,472

Other long-term assets, net



12,437



7,414

     Total assets


$

1,011,920


$

950,192

Liabilities and Equity







Current liabilities







     Accounts payable


$

57,311


$

36,049

     Accrued accounts payable



49,935



52,051

     Accounts payable and accrued expenses, related parties



2,375



1,939

     Accrued salaries and benefits



16,517



22,233

     Accrued insurance



18,664



13,408

     Sales tax payable



2,609



2,706

     Accrued expenses and other current liabilities



20,100



19,544

     Current operating lease liabilities



18,101



13,997

     Current portion of finance lease obligations



57



113

          Total current liabilities



185,669



162,040

Long-term operating lease liabilities



55,464



53,198

Other long-term liabilities



47,395



39,780

          Total liabilities



288,528



255,018

Commitments and contingencies







Class A common stock, $0.01 par value; 350,000,000 shares authorized and 98,111,119 shares issued and outstanding as of March 31, 2022; 350,000,000 shares authorized and 94,172,920 shares issuedand outstanding as of December 31, 2021



981



942

Class A-2 common stock, $0.01 par value; 40,000,000 shares authorized; no shares issued or
outstanding as of March 31, 2022 and December 31, 2021





Class B common stock, $0.01 par value; 150,000,000 shares authorized and 16,221,101 shares issued and outstanding as of March 31, 2022 and December 31, 2021



162



162

Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding as of March 31, 2022 and December 31, 2021





Additional paid-in capital



971,282



950,464

Accumulated deficit



(352,670)



(359,472)

     Total stockholders' equity



619,755



592,096

Noncontrolling interests



103,637



103,078

     Total equity



723,392



695,174

          Total liabilities and equity


$

1,011,920


$

950,192















 

SELECT ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)










Three months ended March 31, 



2022


2021

Cash flows from operating activities







     Net income (loss)


$

7,985


$

(27,421)

     Adjustments to reconcile net income (loss) to net cash used in operating activities







          Depreciation and amortization



27,067



22,299

          (Gain) loss on disposal of property and equipment and divestitures



(1,653)



579

          Equity in losses of unconsolidated entities



129



          Bad debt expense



571



300

          Amortization of debt issuance costs



294



172

          Inventory write-downs





54

          Equity-based compensation



3,275



1,422

          Bargain purchase gain



(11,434)



          Unrealized loss on short-term investment



40



1,831

          Other operating items, net



99



(129)

     Changes in operating assets and liabilities







          Accounts receivable



(46,622)



(11,187)

          Prepaid expenses and other assets



4,554



(2,696)

          Accounts payable and accrued liabilities



(2,855)



10,903

               Net cash used in operating activities



(18,550)



(3,873)

Cash flows from investing activities







     Purchase of property and equipment



(15,463)



(4,534)

     Purchase of equity method investments



(3,467)



(2,000)

     Collection of note receivable



184



     Distribution from cost method investment



20



     Acquisitions, net of cash and restricted cash received



6,941



     Proceeds received from sales of property and equipment



12,123



2,316

     Other 



(429)



          Net cash used in investing activities



(91)



(4,218)

Cash flows from financing activities







     Borrowings from revolving line of credit



20,000



     Payments on revolving line of credit



(20,000)



     Payments on long-term debt



(18,780)



     Payments of finance lease obligations



(61)



(75)

     Payment of debt issuance costs



(2,031)




     Proceeds from share issuance



12



14

     Repurchase of common stock



(18,908)



(874)

          Net cash used in financing activities



(39,768)



(935)

Effect of exchange rate changes on cash



7



8

Net decrease in cash, cash equivalents, and restricted cash



(58,402)



(9,018)

Cash, cash equivalents, and restricted cash beginning of period



85,801



169,039

Cash, cash equivalents, and restricted cash end of period


$

27,399


$

160,021

 

 Comparison of Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, gross profit before depreciation and amortization (D&A) and gross margin before D&A are not financial measures presented in accordance with GAAP. We define EBITDA as net income (loss), plus interest expense, income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus/(minus) loss/(income) from discontinued operations, plus any impairment charges or asset write-offs pursuant to accounting principles generally accepted in the U.S. ("GAAP"), plus non-cash losses on the sale of assets or subsidiaries, non-recurring compensation expense, non-cash compensation expense, and non-recurring or unusual expenses or charges, including severance expenses, transaction costs, or facilities-related exit and disposal-related expenditures, plus/(minus) foreign currency losses/(gains) and plus/(minus) losses/(gains) on unconsolidated entities less bargain purchase gains from business combinations. We define gross profit before D&A as revenue less cost of revenue, excluding cost of sales D&A expense. We define gross margin before D&A as gross profit before D&A divided by revenue. EBITDA, Adjusted EBITDA, gross profit before D&A and gross margin before D&A are supplemental non-GAAP financial measures that we believe provide useful information to external users of our financial statements, such as industry analysts, investors, lenders and rating agencies because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization) and non-recurring items outside the control of our management team. We present EBITDA, Adjusted EBITDA, gross profit before D&A and gross margin before D&A because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.

Net income (loss) is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Gross profit (loss) is the GAAP measure most directly comparable to gross profit before D&A. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA, Adjusted EBITDA or gross profit before D&A in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA, Adjusted EBITDA and gross profit before D&A may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The following table presents a reconciliation of EBITDA and Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented:



Three months ended,

(unaudited) (in thousands)


March 31, 2022


December 31, 2021


March 31, 2021

Net income (loss)


$

7,985


$

11,155


$

(27,421)

  Interest expense, net



720



457



435

  Income tax expense (benefit)



214



358



(263)

  Depreciation and amortization



27,067



25,051



22,299

EBITDA



35,986



37,021



(4,950)

  Bargain purchase gain



(11,434)



(18,985)



  Non-recurring severance expenses







3,225

  Non-cash compensation expenses



3,275



3,221



1,422

  Non-cash loss on sale of assets or subsidiaries



520



1,560



697

  Non-recurring transaction costs



3,617



2,386



412

  Lease abandonment costs



91



414



104

  Other non-recurring charges





608



  Equity in losses of unconsolidated entities



129



150



  Foreign currency gain, net



(3)



(1)



(3)

  Adjusted EBITDA


$

32,181


$

26,374


$

907

 

The following table presents a reconciliation of gross profit before D&A to total gross loss, which is the most directly comparable GAAP measure, and a calculation of gross margin before D&A for the periods presented:













Three months ended,

(unaudited) (in thousands)


March 31, 2022


December 31, 2021


March 31, 2021

Gross profit (loss) by segment










     Water services


$

10,998


$

7,047


$

(11,156)

     Water infrastructure



5,745



4,720



5,149

     Oilfield chemicals



7,939



6,142



1,610

     Other







As reported gross profit (loss)



24,682



17,909



(4,397)











Plus depreciation and amortization










     Water services



15,562



14,686



13,055

     Water infrastructure



8,431



7,396



6,255

     Oilfield chemicals



2,507



2,374



2,340

     Other







          Total depreciation and amortization



26,500



24,456



21,650











     Gross profit before D&A


$

51,182


$

42,365


$

17,253











Gross profit before D&A by segment










     Water services



26,560



21,733



1,899

     Water infrastructure



14,176



12,116



11,404

     Oilfield chemicals



10,446



8,516



3,950

     Other







          Total gross profit before D&A


$

51,182


$

42,365


$

17,253











Gross margin before D&A by segment










     Water services



16.2%



15.4%



3.0%

     Water infrastructure



24.2%



25.8%



30.2%

     Oilfield chemicals



14.4%



12.6%



9.5%

     Other



n/a



n/a



n/a

          Total gross margin before D&A



17.4%



16.6%



12.0%

 

 

Cision View original content:https://www.prnewswire.com/news-releases/select-energy-services-reports-first-quarter-2022-financial-results-and-provides-operational-update-301538976.html

SOURCE Select Energy Services, Inc.

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