Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Equity Bottom-Up

Select Water Solutions / Equity Bottom-Up

<ul><li>3Q24 Water Infrastructure Segment revenue grew 41% Y/Y and gross profit (before D&amp;A) grew 99%.</li><li>Gross profit margin was 56.7% compared with 40.1% in 3Q23.</li><li>The expansion lifted total company margin to 27.3% in 3Q24 from 23.4% in 3Q23. The segment contributed 46% of total gross profit in 3Q24.</li></ul>

3Q24 Water Infrastructure Segment revenue grew 41% Y/Y and gross profit (before D&amp;A) grew 99%.Gross profit margin was 56.7% compared with 40.1% in 3Q23.The expansion lifted total company margin to 27.3% in 3Q24 from 23.4% in 3Q23. The segment contributed 46% of total gross profit in 3Q24.

Select Water Solutions, Inc. -  Infrastructure Growth Increases Earnings and Cash Flow Visibility

<ul><li>Y/Y Water Infrastructure segment revenue increased 41% in 3Q24 and gross profit before D&amp;A increased 99%.</li><li>The strong profit performance allowed Select to overcome a 5% Y/Y total revenue decrease to generate an 11% total gross profit increase.</li><li>Water Infrastructure gross profit before D&amp;A margin increased to 56.7% in 3Q24 from 51.0% in 2Q24 and 40.1% in 3Q23. </li></ul>

Y/Y Water Infrastructure segment revenue increased 41% in 3Q24 and gross profit before D&amp;A increased 99%.The strong profit performance allowed Select to overcome a 5% Y/Y total revenue decrease to generate an 11% total gross profit increase.Water Infrastructure gross profit before D&amp;A margin increased to 56.7% in 3Q24 from 51.0% in 2Q24 and 40.1% in 3Q23. 

Select Water Solutions, Inc. - High-Margin Water Infrastructure Segment Leads Growth Trajectory

<ul><li>Gross profit margin before D&amp;A in Select’s Water Infrastructure Segment crossed the 50% threshold in 2Q24.</li><li>Segment revenue totaled $68.6 million, a 24% increase from 2Q23 and gross profit before D&amp;A totaled $35.0 million, a 68% Y/Y gain.</li><li>Gross profit margin before D&amp;A was 51%, compared with 46.9% in 1Q24 and 37.8% in 2Q23.</li></ul>

Gross profit margin before D&amp;A in Select’s Water Infrastructure Segment crossed the 50% threshold in 2Q24.Segment revenue totaled $68.6 million, a 24% increase from 2Q23 and gross profit before D&amp;A totaled $35.0 million, a 68% Y/Y gain.Gross profit margin before D&amp;A was 51%, compared with 46.9% in 1Q24 and 37.8% in 2Q23.

Select Water Solutions, Inc. - Water Infrastructure Segment Crosses 50% Margin Threshold

<ul><li>Select Water Solutions provides a suite of solutions to meet the full life cycle water needs of customers in nearly every major producing region in the US.</li><li>In 2023, the Permian region contributed 48% of total revenue.</li><li>Select’s business is segmented in three reportable segments: Water Infrastructure, Water Services, and Chemical Technologies. </li></ul>

Select Water Solutions provides a suite of solutions to meet the full life cycle water needs of customers in nearly every major producing region in the US.In 2023, the Permian region contributed 48% of total revenue.Select’s business is segmented in three reportable segments: Water Infrastructure, Water Services, and Chemical Technologies. 

Select Water Solutions, Inc. - Free Cash Flow Funds Accretive Growth

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<ul>
<li>The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.</li>
<li>We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.</li>
<li>Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218</li>
</ul>


The Fed injected some volatility into the market after their December meeting, as they noted an uncertain inflation outlook and the SEP less expected rate cuts for 2025.
We discussed in our latest report (12/23/24 ETF Pathfinder), and continue to believe, that this is a buying opportunity.
Market dynamics remain risk-on, the SPX remains above 5850 (a key support level we have discussed since late-November), mid-caps (IJH) and small-caps (IWM) are above supports at $61.50 and $218


Semiconductors Re-Emerge as Leadership; $SPX $QQQ $IWM Outlook Remains Bullish

United States

Select Water Solutions, Inc. provides water management services to the oil and gas industry. The Company offers real-time water data and sourcing, transfer, containment, filtering, well testing, and treatment services, as well as well testing, fluid handling, and disposal solutions. Select Water Solutions serves customers throughout the United States.

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Select Water Solutions (WTTR US)

Select Water Solutions, Inc. - Infrastructure Growth Increases Earnings and Cash Flow Visibility

3Q24 Water Infrastructure Segment revenue grew 41% Y/Y and gross profit (before D&A) grew 99%. Gross profit margin was 56.7% compared with 40.1% in...

Water Tower Research

Select Water Solutions, Inc. - High-Margin Water Infrastructure Segment Leads Growth Trajectory

The strong profit performance allowed Select to overcome a 5% Y/Y total revenue decrease to generate an 11% total gross profit increase.

Water Tower Research

Select Water Solutions, Inc. - Water Infrastructure Segment Crosses 50% Margin Threshold

Segment revenue totaled $68.6 million, a 24% increase from 2Q23 and gross profit before D&A totaled $35.0 million, a 68% Y/Y gain.

Water Tower Research

Select Water Solutions, Inc. - Free Cash Flow Funds Accretive Growth

Select Water Solutions provides a suite of solutions to meet the full life cycle water needs of customers in nearly every major producing region in...

Water Tower Research

Semiconductors Re-Emerge as Leadership; $SPX $QQQ $IWM Outlook Remains Bullish

Semiconductors Re-Emerge as Leadership $SMH $TSM $NVDA; $SPX $QQQ $IWM Outlook Remains Bullish Despite Recent Consolidation. Market Dynamics Remain...

Vermilion Research

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