Stock in Focus: Select Energy Services (NYSE: WTTR)

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On Friday, Shares of Select Energy Services (NYSE: WTTR) declined -1.19% to $11.08. The stock grabbed the investor’s attention and traded 2,823,837 shares as compared to its average daily volume of 496.95K shares. The stock’s institutional ownership stands at 80.10%.

Select Energy Services, Inc. (WTTR), a leading provider of water management and chemical solutions to the North American unconventional oil and gas industry, recently declared results for the fourth quarter and fiscal year ended December 31, 2018.

Revenue for fiscal year 2018 was $1,528.90M as contrast to $692.50M in fiscal year 2017.  Revenue for the fourth quarter of 2018 was $362.30M as contrast to $397.00M in the third quarter of 2018 and $304.20M in the fourth quarter of 2017.  Net income for fiscal year 2018 was $54.30M as contrast to a net loss of $35.10M in fiscal year 2017.  Net loss for the fourth quarter of 2018 was $18.10M, driven in part by a number of non-recurring charges as detailed below, contrast to net income of $31.30M in the third quarter of 2018 and a net loss of $15.00M in the fourth quarter of 2017.

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Gross profit was $34.40M in the fourth quarter of 2018 as contrast to $59.40M in the third quarter of 2018 and $26.30M in the fourth quarter of 2017.  Total gross margin for Select was 9.5% in the fourth quarter of 2018 as contrast to 15.0% in the third quarter of 2018 and 8.6% in the fourth quarter of 2017.  Gross margin before depreciation and amortization (“D&A”) for the fourth quarter of 2018 was 19.8% as contrast to 23.0% for the third quarter of 2018 and 20.0% for the fourth quarter of 2017.

Gross profit for fiscal year 2018 was $198.50M as contrast to $57.80M in fiscal year 2017, and gross margin was 13.0% in fiscal year 2018 as contrast to 8.3% in fiscal year 2017.  Gross margin before D&A for fiscal year 2018 was 21.5% as contrast to 23.0% for fiscal year 2017.

Adjusted EBITDA was $56.10M or 15.5% of revenue in the fourth quarter of 2018 as contrast to $73.70M or 18.6% of revenue in the third quarter of 2018 and $43.90M or 14.4% of revenue in the fourth quarter of 2017.  Adjusted EBITDA for fiscal year 2018 was $257.60M as contrast to $117.30M in fiscal year 2017.

mifinance

Cash Flow and Balance Sheet:

Cash flow from operations for fiscal year 2018 was $232.40M, of which $107.80M was generated in the fourth quarter of 2018.  Improvements in our working capital management supported the cash flow generated by the business.  Capital expenditures for fiscal year 2018 were $151.40M, net of asset sales of $14.00M, of which $51.20M was spent in the fourth quarter of 2018.  Cash flow from operations less net capital expenditures was $81.00M for fiscal 2018 and $56.60M during the fourth quarter.

Other cash uses, before debt repayment, during the fourth quarter included $15.70M to fund the repurchase of 1.70M shares of our Class A common stock and $15.00M for acquisitions, counting $12.40M for Pro Well Testing and Wireline, Inc. (“Pro Well”), a regional flowback and well testing operator in the Northern Delaware Basin, which expanded our flowback business into a new geography in New Mexico.

Total liquidity was $221.90M as of December 31, 2018, as contrast to $218.10M as of September 30, 2018.  Outstanding borrowings under the Company’s revolving credit facility totaled $45.00M as of December 31, 2018, contrast to $65.00M as of September 30, 2018.  As of December 31, 2018, the Company had about $205.00M of available borrowing capacity under its revolving credit facility, after giving effect to $20.80M of outstanding letters of credit.  Total cash and cash equivalents were $17.20M at December 31, 2018 as contrast to $13.00M at September 30, 2018.

WTTR has a market value of $1.25B while its EPS was booked as $0.26 in the last 12 months. The stock has 106.39M shares outstanding. In the profitability analysis, the company has gross profit margin of 13.00% while net profit margin was 1.80%. Analyst recommendation for this stock stands at 1.80.

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