WBI

WaterBridge Infrastructure LLC - 10-Q Summary (Q1 2026)

Business Context and Reporting Period

This Quarterly Report on Form 10-Q covers the period ended March 31, 2026. WaterBridge Infrastructure LLC (WBI) is a leading integrated, pure-play water infrastructure company operating primarily in the Delaware Basin. The company provides produced water handling, recycling, and disposal services to oil and natural gas exploration and production (E&P) companies. The reporting period reflects the consolidated results following the "WaterBridge Combination" completed in September 2025, which significantly expanded the company's asset base and operational scale.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased 105% year-over-year, driven primarily by a 114% increase in produced water handling revenues ($181.9M vs $85.1M). This growth was fueled by the WaterBridge Combination, which added significant volumes, and organic growth in the Stateline area.
• Profitability: Net income surged 456% to $9.5 million. Adjusted EBITDA increased 105% to $102.9 million, maintaining a 51% margin.
• Volume Expansion: Total produced water handling volumes rose 105% to 2,460 MBbl/d. Conversely, water solutions volumes decreased 28% to 271 MBbl/d due to lower upstream drilling activity.
• Cost Structure: Direct operating costs increased 100% and depreciation/amortization increased 228%, largely attributable to the acquisition of new assets in the WaterBridge Combination and higher capital investment activity.
• Capital Deployment: Capital expenditures increased significantly to $110.9 million, primarily funding the construction of the Speedway project.

Guidance, Outlook, and Risks

Outlook: Management views the outlook for energy infrastructure in the Permian Basin as positive, supported by executive orders expediting energy approvals. The company expects continued growth in produced water handling capacity requirements. A quarterly dividend of $0.05 per share was declared for Class A shares, payable in June 2026.

Risks and Contingencies:

• Regulatory Enforcement: The Railroad Commission of Texas (RRC) issued an enforcement action seeking approximately $6.9 million for the plugging of an orphan well near a WBI facility. The company believes the action is without merit and has not accrued a liability.
• Geopolitical and Economic Factors: Risks include global economic volatility, trade tariffs, and geopolitical conflicts (e.g., Middle East, Russia-Ukraine) that could impact oil prices and E&P spending.
• Customer Concentration: The company relies on a limited number of customers and operations in the Delaware Basin for the majority of its revenues.
• Debt Service: The company carries significant debt ($1.486 billion principal) and must maintain specific leverage and interest coverage ratios under its credit facility.

Investor Verification Checklist

• Verify the status and potential financial impact of the RRC enforcement action regarding the $6.9 million orphan well plugging cost.
• Monitor the progress and capital requirements of the "Speedway" project, which drove the majority of Q1 capital expenditures.
• Assess the sustainability of the 105% volume growth in produced water handling versus the 28% decline in water solutions volumes.
• Review the Tax Receivable Agreement (TRA) liability, which increased to $217.1 million, and its impact on future cash flows.
• Confirm compliance with debt covenants, specifically the consolidated net leverage ratio (max 5.00:1.00) and interest coverage ratio (min 2.50:1.00).