Liberty Energy Inc. (NYSE: LBRT) (“Liberty” or the “Company”)
announced today first quarter 2024 financial and operational
results.
Summary Results and Highlights
- Revenue of $1.1 billion, flat sequentially
- Net income1 of $82 million, or $0.48 fully diluted earnings per
share (“EPS”)
- Adjusted EBITDA2 of $245 million, a 3% decrease
sequentially
- Delivered 32% TTM Adjusted Pre-Tax Return on Capital Employed
(“ROCE”)3
- Distributed $42 million to shareholders through share
repurchases and cash dividends
- Repurchased and retired 0.9% of shares outstanding during the
first quarter, and a cumulative 12.5% of shares outstanding since
reinstatement of the repurchase program in July 2022
- Record TTM safety performance and operational efficiency
- Released 2024 Bettering Human Lives report, highlighting the
critical need to advance energy systems and Liberty’s leadership
role in energy technology advancement.
“As we enter the fourth year of what appears to be a durable
cycle for North American oil and gas production, consolidation
across the energy industry is pushing larger companies to seek
technical solutions and expertise to drive value creation.
Liberty’s strong first quarter results demonstrate the continued
benefits of leading the industry in technology innovation, service
quality and investment in talent. Over the last year, the
operations teams delivered our highest combined safety performance
and average daily pumping efficiency in Liberty’s history,”
commented Chris Wright, Chief Executive Officer. “Our 32% Adjusted
Pre-Tax Return on Capital Employed for the twelve months ended
March 31, 2024, represents a continuance of our history of strong
returns. I’m proud of the continued outstanding results our
team achieved during a period marked by softening industry activity
trends.”
“We are in a generational shift towards low emissions, capital
efficient natural gas fueled technologies. Our comprehensive
solution from critical power generation to the CNG fuel supply
supports our digiFleet deployments and uniquely serves our
customers in their development of oil and gas resources,” continued
Mr. Wright. “Furthermore, a growing demand for power from AI-driven
data centers and reshoring of industrial and manufacturing activity
require reliable sources of energy, which we believe will be best
served by domestic natural gas. Liberty Power Innovations (LPI) is
well-positioned to benefit from these wider opportunities beyond
the oilfield.”
“We are focused on generating strong returns and free cash
flow. We are pairing investment in profitable growth
initiatives that increase our competitive advantage with a robust
return of capital program,” continued Mr. Wright. “Since July 2022,
we have now distributed $417 million to shareholders through the
retirement of 12.5% of shares outstanding and quarterly cash
dividends.”
Outlook
Frac industry dynamics remain constructive, as relatively steady
demand in recent months has focused service companies on
disciplined pricing and quality of service. Superior performance
and reliability drive higher returns for both E&P operators and
service companies alike. Liberty’s continual focus on technical
innovation in equipment technology and software automation augments
our industry leading service offerings while lowering the total
delivered cost to the customer, reinforcing our position as the
supplier of choice.
Global oil and gas commodity prices have diverged and moved
materially in recent months. Yet these changes have not materially
impacted demand for North American frac services. Oil prices have
rallied since early in the year, owing to an improved global
economic outlook, ongoing OPEC+ voluntary production cuts, and
rising geopolitical tensions. Natural gas prices have conversely
declined considerably since last fall, primarily owing to strong
production and mild winter weather driving high natural gas
inventories. Natural gas prices are likely to strengthen in the
future with increasing LNG exports and surging domestic power
demand in the years ahead. Global energy demand continues to march
higher, supporting a strong North American oil and gas industry in
future years.
“Our focus is profitable growth through disciplined investment
in talent, technology, and equipment that leads the industry in
efficiency and emissions. We are confident that our strategic
investment in digiFleets and power and fuel supply through LPI
better positions us to deliver superior returns over cycles. We are
also excited by our latest partnerships in the Australian Beetaloo
shale gas basin, which exemplify our continued efforts toward
growing reliable energy sources worldwide,” commented Mr.
Wright.
“In the second quarter, we expect low double-digit sequential
growth in revenue on stable pricing and increased efficiency and
corresponding improvement in profitability. We continue to expect
strong cash flow generation in 2024, supporting our technology
transition investments and industry-leading return of capital
program,” continued Mr. Wright.
Share Repurchase Program
On January 23, 2024, the Board increased Liberty’s existing
share repurchase authorization announced July 25, 2022 to $750
million, a $250 million increase from the previously authorized and
upsized amount. The Board also extended the authorization through
July 31, 2026.
During the quarter ended March 31, 2024, Liberty repurchased and
retired 1,480,084 shares of Class A common stock at an average of
$20.36 per share, representing 0.9% of shares outstanding, for
approximately $30 million. Liberty has cumulatively repurchased and
retired 12.5% of shares outstanding at program commencement on July
25, 2022. Total remaining authorization for future common share
repurchases is approximately $392 million.
The shares may be repurchased from time to time in open market
transactions, through block trades, in privately negotiated
transactions, through derivative transactions or by other means in
accordance with federal securities laws. The timing, as well as the
number and value of shares repurchased under the program, will be
determined by the Company at its discretion and will depend on a
variety of factors, including management’s assessment of the
intrinsic value of the Company’s common stock, the market price of
the Company’s common stock, general market and economic conditions,
available liquidity, compliance with the Company’s debt and other
agreements, applicable legal requirements, and other
considerations. The exact number of shares to be repurchased by the
Company is not guaranteed, and the program may be suspended,
modified, or discontinued at any time without prior notice. The
Company expects to fund the repurchases by using cash on hand,
borrowings under its revolving credit facility and expected free
cash flow to be generated through the authorization period.
Cash Dividend
During the quarter ended March 31, 2024, Liberty paid a
quarterly cash dividend of $0.07 per share of Class A common stock,
or approximately $12 million in aggregate to shareholders.
On April 16, 2024, the Board declared a cash dividend of $0.07
per share of Class A common stock, to be paid on June 20, 2024 to
holders of record as of June 6, 2024.
Future declarations of quarterly cash dividends are subject to
approval by the Board of Directors and to the Board’s continuing
determination that the declarations of dividends are in the best
interests of Liberty and its stockholders. Future dividends may be
adjusted at the Board’s discretion based on market conditions and
capital availability.
First Quarter Results
For the first quarter of 2024, revenue was $1.1 billion, a
decrease of 15% from $1.3 billion in the first quarter of 2023 and
approximately flat from $1.1 billion in the fourth quarter of
2023.
Net income1 (after taxes) totaled $82 million for the first
quarter of 2024 compared to $163 million in the first quarter of
2023 and $92 million in the fourth quarter of 2023.
Adjusted EBITDA2 of $245 million for the first quarter of 2024
decreased 26% from $330 million in the first quarter of 2023 and
decreased 3% from $253 million in the fourth quarter of 2023.
Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP
measure) to net income (a GAAP measure) in this earnings
release.
Fully diluted earnings per share of $0.48 for the first quarter
of 2024 compared to $0.90 for the first quarter of 2023 and $0.54
for the fourth quarter of 2023.
Balance Sheet and Liquidity
As of March 31, 2024, Liberty had cash on hand of $24 million, a
decrease from fourth quarter levels, and total debt of $166
million, drawn on the secured asset-based revolving credit facility
(“ABL Facility”). Total liquidity, including availability under the
credit facility, was $315 million as of March 31, 2024.
Conference Call
Liberty will host a conference call to discuss the results at
8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday,
April 18, 2024. Presenting Liberty’s results will be Chris Wright,
Chief Executive Officer, Ron Gusek, President, and Michael Stock,
Chief Financial Officer.
Individuals wishing to participate in the conference call should
dial (833) 255-2827, or for international callers, (412) 902-6704.
Participants should ask to join the Liberty Energy call. A live
webcast will be available at http://investors.libertyfrac.com. The
webcast can be accessed for 90 days following the call. A telephone
replay will be available shortly after the call and can be accessed
by dialing (877) 344-7529, or for international callers (412)
317-0088. The passcode for the replay is 3209553. The replay will
be available until April 25, 2024.
About Liberty
Liberty is a leading North American energy services firm that
offers one of the most innovative suites of completion services and
technologies to onshore oil and natural gas exploration and
production companies. Liberty was founded in 2011 with a relentless
focus on developing and delivering next generation technology for
the sustainable development of unconventional energy resources in
partnership with our customers. Liberty is headquartered in Denver,
Colorado. For more information about Liberty, please contact
Investor Relations at IR@libertyenergy.com.
1 Net income attributable to controlling
and non-controlling interests.
2 “Adjusted EBITDA” is not presented in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”). Please see the supplemental financial
information in the table under “Reconciliation of Net Income to
EBITDA and Adjusted EBITDA” at the end of this earnings release for
a reconciliation of the non-GAAP financial measure of Adjusted
EBITDA to its most directly comparable GAAP financial measure.
3 Adjusted Pre-Tax Return on Capital
Employed (“ROCE”) is a non-U.S. GAAP operational measure. Please
see the supplemental financial information in the table under
“Calculation of Adjusted Pre-Tax Return on Capital Employed” at the
end of this earnings release for a calculation of this measure.
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and
operational measures, including EBITDA, Adjusted EBITDA, and
Adjusted Pre-Tax Return on Capital Employed (“ROCE”). We believe
that the presentation of these non-GAAP financial and operational
measures provides useful information about our financial
performance and results of operations. We define Adjusted EBITDA as
EBITDA adjusted to eliminate the effects of items such as non-cash
stock-based compensation, new fleet or new basin start-up costs,
fleet lay-down costs, costs of asset acquisitions, gain or loss on
the disposal of assets, bad debt reserves, transaction, severance,
and other costs, the loss or gain on remeasurement of liability
under our tax receivable agreements, the gain on investments, and
other non-recurring expenses that management does not consider in
assessing ongoing performance.
Our board of directors, management, investors, and lenders use
EBITDA and Adjusted EBITDA to assess our financial performance
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, depletion, and amortization) and
other items that impact the comparability of financial results from
period to period. We present EBITDA and Adjusted EBITDA because we
believe they provide useful information regarding the factors and
trends affecting our business in addition to measures calculated
under GAAP.
We define ROCE as the ratio of pre-tax net income (adding back
income tax and tax receivable agreement impacts) for the three
months ended March 31, 2024 to Average Capital Employed. Average
Capital Employed is the simple average of total capital employed
(both debt and equity) as of March 31, 2024 and March 31, 2023.
ROCE is presented based on our management’s belief that these
non-GAAP measures are useful information to investors when
evaluating our profitability and the efficiency with which
management has employed capital over time. Our management uses ROCE
for that purpose. ROCE is not a measure of financial performance
under U.S. GAAP and should not be considered an alternative to net
income, as defined by U.S. GAAP
Non-GAAP financial and operational measures do not have any
standardized meaning and are therefore unlikely to be comparable to
similar measures presented by other companies. The presentation of
non-GAAP financial and operational measures is not intended to be a
substitute for, and should not be considered in isolation from, the
financial measures reported in accordance with U.S. GAAP. See the
tables entitled Reconciliation and Calculation of Non-GAAP
Financial and Operational Measures for a reconciliation or
calculation of the non-GAAP financial or operational measures to
the most directly comparable GAAP measure.
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts,
included herein concerning, among other things, statements about
our expected growth from recent acquisitions, expected performance,
future operating results, oil and natural gas demand and prices and
the outlook for the oil and gas industry, future global economic
conditions, improvements in operating procedures and technology,
our business strategy and the business strategies of our customers,
the deployment of fleets in the future, planned capital
expenditures, future cash flows and borrowings, pursuit of
potential acquisition opportunities, our financial position, return
of capital to stockholders, business strategy and objectives for
future operations, are forward-looking statements. These
forward-looking statements are identified by their use of terms and
phrases such as “may,” “expect,” “estimate,” “outlook,” “project,”
“plan,” “position,” “believe,” “intend,” “achievable,” “forecast,”
“assume,” “anticipate,” “will,” “continue,” “potential,” “likely,”
“should,” “could,” and similar terms and phrases. However, the
absence of these words does not mean that the statements are not
forward-looking. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, they
do involve certain assumptions, risks and uncertainties. The
outlook presented herein is subject to change by Liberty without
notice and Liberty has no obligation to affirm or update such
information, except as required by law. These forward-looking
statements represent our expectations or beliefs concerning future
events, and it is possible that the results described in this
earnings release will not be achieved. These forward-looking
statements are subject to certain risks, uncertainties and
assumptions identified above or as disclosed from time to time in
Liberty's filings with the Securities and Exchange Commission. As a
result of these factors, actual results may differ materially from
those indicated or implied by such forward-looking statements.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, we do not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for us to predict all such factors. When considering these
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in “Item 1A. Risk Factors”
included in our Annual Report on Form 10-K for the year ended
December 31, 2023 as filed with the SEC on February 9, 2024 and in
our other public filings with the SEC. These and other factors
could cause our actual results to differ materially from those
contained in any forward-looking statements.
Liberty Energy Inc.
Selected Financial
Data
(unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2024
2023
2023
Statement of Operations Data:
(amounts in thousands, except
for per share data)
Revenue
$
1,073,125
$
1,074,958
$
1,262,077
Costs of services, excluding depreciation,
depletion, and amortization shown separately
782,680
777,251
888,416
General and administrative
52,986
55,296
53,036
Transaction, severance, and other
costs
—
249
617
Depreciation, depletion, and
amortization
123,186
118,421
94,401
(Gain) loss on disposal of assets
(1,160
)
(13
)
487
Total operating expenses
957,692
951,204
1,036,957
Operating income
115,433
123,754
225,120
Gain on remeasurement of liability under
tax receivable agreements
—
(1,817
)
—
Interest expense, net
7,063
6,364
7,891
Net income before taxes
108,370
119,207
217,229
Income tax expense
26,478
26,824
54,483
Net income
81,892
92,383
162,746
Less: Net income attributable to
non-controlling interests
—
—
91
Net income attributable to Liberty Energy
Inc. stockholders
$
81,892
$
92,383
$
162,655
Net income attributable to Liberty Energy
Inc. stockholders per common share:
Basic
$
0.49
$
0.55
$
0.92
Diluted
$
0.48
$
0.54
$
0.90
Weighted average common shares
outstanding:
Basic
166,325
168,016
176,569
Diluted
171,441
172,661
181,088
Other Financial and Operational
Data
Capital expenditures (1)
$
141,993
$
133,610
$
129,654
Adjusted EBITDA (2)
$
244,786
$
252,507
$
329,885
_______________
(1)
Net capital expenditures presented above
include investing cash flows from purchase of property and
equipment, excluding acquisitions, net of proceeds from the sales
of assets.
(2)
Adjusted EBITDA is a non-GAAP financial
measure. See the tables entitled “Reconciliation and Calculation of
Non-GAAP Financial and Operational Measures” below.
Liberty Energy Inc.
Condensed Consolidated Balance
Sheets
(unaudited, amounts in
thousands)
March 31,
December 31,
2024
2023
Assets
Current assets:
Cash and cash equivalents
$
23,788
$
36,784
Accounts receivable and unbilled
revenue
649,208
587,470
Inventories
210,060
205,865
Prepaids and other current assets
94,952
124,135
Total current assets
978,008
954,254
Property and equipment, net
1,694,232
1,645,368
Operating and finance lease right-of-use
assets
284,440
274,959
Other assets
140,939
158,976
Total assets
$
3,097,619
$
3,033,557
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
588,337
$
572,029
Current portion of operating and finance
lease liabilities
74,028
67,395
Total current liabilities
662,365
639,424
Long-term debt
166,000
140,000
Long-term operating and finance lease
liabilities
207,403
197,914
Deferred tax liability
102,340
102,340
Payable pursuant to tax receivable
agreements
75,027
112,471
Total liabilities
1,213,135
1,192,149
Stockholders’ equity:
Common stock
1,652
1,666
Additional paid in capital
1,070,383
1,093,498
Retained earnings
822,256
752,328
Accumulated other comprehensive loss
(9,807
)
(6,084
)
Total stockholders’ equity
1,884,484
1,841,408
Total liabilities and equity
$
3,097,619
$
3,033,557
Liberty Energy Inc.
Reconciliation and Calculation
of Non-GAAP Financial and Operational Measures
(unaudited, amounts in
thousands)
Reconciliation of Net Income to EBITDA
and Adjusted EBITDA
Three Months Ended
March 31,
December 31,
March 31,
2024
2023
2023
Net income
$
81,892
$
92,383
$
162,746
Depreciation, depletion, and
amortization
123,186
118,421
94,401
Interest expense, net
7,063
6,364
7,891
Income tax expense
26,478
26,824
54,483
EBITDA
$
238,619
$
243,992
$
319,521
Stock-based compensation expense
7,327
9,288
7,178
Fleet start-up costs
—
—
2,082
Transaction, severance, and other
costs
—
249
617
(Gain) loss on disposal of assets
(1,160
)
(13
)
487
Provision for credit losses
—
808
—
Gain on remeasurement of liability under
tax receivable agreements
—
(1,817
)
—
Adjusted EBITDA
$
244,786
$
252,507
$
329,885
Calculation of Pre-Tax Return on
Capital Employed
Twelve Months Ended
March 31,
2024
2023
Net income
$
475,554
Add back: Income tax expense
150,477
Add back: Gain on remeasurement of
liability under tax receivable agreements (1)
(1,817
)
Adjusted Pre-tax net income
$
624,214
Capital Employed
Total debt
$
166,000
$
210,000
Total equity
1,884,484
1,590,119
Total Capital Employed
$
2,050,484
$
1,800,119
Average Capital Employed (2)
$
1,925,302
Adjusted Pre-Tax Return on Capital
Employed (3)
32
%
(1)
Loss on remeasurement of the liability
under tax receivable agreements is a result of the release of the
valuation allowance on the Company’s deferred tax assets and should
be excluded in the determination of pre-tax return on capital
employed.
(2)
Average Capital Employed is the simple
average of Total Capital Employed as of March 31, 2024 and
2023.
(3)
Adjusted Pre-tax Return on Capital
Employed is the ratio of pre-tax net income for the twelve months
ended March 31, 2024 to Average Capital Employed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240417983570/en/
Michael Stock Chief Financial Officer
Anjali Voria, CFA Director of Investor Relations
303-515-2851 IR@libertyenergy.com
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