Part I [Business](index=5&type=section&id=Item%201.%20Business) Liberty Energy Inc. provides hydraulic fracturing and complementary services to North American E&P companies, emphasizing technology and vertical integration, with its top five customers accounting for **34% of 2023 revenue** - The company's core business is providing hydraulic fracturing services, along with complementary offerings like wireline services, proppant delivery, field gas processing, and data analytics across major North American shale basins[21](index=21&type=chunk)[22](index=22&type=chunk) - Liberty has grown significantly from one active hydraulic fracturing fleet in December 2011 to over **40 active fleets** as of December 31, 2023[30](index=30&type=chunk) - The company focuses on ESG-friendly technologies, including its Liberty Quiet Fleet®, dual-fuel DGB fleets, and innovative digiFleets℠, which have a lower CO2e emission profile[33](index=33&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - In 2023, Liberty launched Liberty Power Innovations (LPI) and acquired Siren Energy to provide integrated natural gas supply and power solutions, supporting the transition to lower-emission fleets[29](index=29&type=chunk) - For the year ended December 31, 2023, the company's top five customers accounted for approximately **34% of its revenues**, with no single customer exceeding 10%[67](index=67&type=chunk) [Risk Factors](index=16&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from volatile commodity prices, E&P capital spending, extensive environmental regulations, reliance on large customers, operational liabilities, cybersecurity threats, and significant obligations under Tax Receivable Agreements - The business is highly dependent on E&P capital spending, which is influenced by volatile oil and natural gas prices, global economic conditions, and OPEC+ actions[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Extensive and evolving federal, state, and local regulations on hydraulic fracturing, emissions, and water disposal could impose significant costs, operational delays, and reduce demand for services[76](index=76&type=chunk)[77](index=77&type=chunk)[81](index=81&type=chunk) - The company is required to make potentially significant payments under its Tax Receivable Agreements (TRAs), which could negatively impact liquidity; a change of control could trigger an immediate lump-sum payment[120](index=120&type=chunk)[123](index=123&type=chunk) - Reliance on a few large customers is a key risk, with the top five customers representing **34% of consolidated revenue** in 2023[128](index=128&type=chunk) - Cybersecurity threats pose a significant risk; the company experienced a denial-of-service attack in early 2020, which was managed without material impact, but future incidents remain a possibility[129](index=129&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[155](index=155&type=chunk) [Cybersecurity](index=31&type=section&id=Item%201C.%20Cybersecurity) Liberty has an integrated cybersecurity risk management program overseen by the Audit Committee, managed by senior leadership including a CIO, and supported by external experts and simulated incidents - The Board of Directors has designated the Audit Committee to oversee risk management associated with cybersecurity threats[161](index=161&type=chunk) - A cybersecurity risk management committee, including the CIO, evaluates risks and provides at least quarterly briefings to the Audit Committee[162](index=162&type=chunk) - The company periodically engages external experts and auditors to evaluate and test its information systems and has processes to oversee risks associated with third-party service providers[158](index=158&type=chunk)[159](index=159&type=chunk) [Properties](index=32&type=section&id=Item%202.%20Properties) The company's corporate headquarters are leased in Denver, Colorado, with numerous owned and leased principal properties across key operating areas in North America, deemed adequate for operations Key Owned and Leased Properties | District Facility Location | Size | Leased or Owned | | :--- | :--- | :--- | | Midland, TX | 90,000 sq. ft on 35 acres | Owned | | Odessa, TX | 77,500 sq. ft on 48 acres | Owned | | Kermit, TX | 5,000 acres | Owned | | Monahans, TX | 3,200 acres | Owned | | Shreveport, LA | 215,000 sq ft. on 45 acres | Owned | | Cheyenne, WY | 115,000 sq. ft on 60 acres | Owned | | Red Deer, AB | 170,000 sq. ft on 42 acres | Owned | [Legal Proceedings](index=32&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 15—Commitments & Contingencies in the financial statements section of the report - The company is subject to various legal proceedings from time to time, but management does not believe any current matters will have a material adverse effect on its financial position or results of operations[167](index=167&type=chunk)[501](index=501&type=chunk)[503](index=503&type=chunk) [Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Information concerning mine safety violations and other regulatory matters is included in Exhibit 95 to the Form 10-K - Mine safety disclosure information is provided in Exhibit 95 of the 10-K filing[168](index=168&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=33&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Liberty's Class A Common Stock trades on the NYSE under 'LBRT', with a reinstated quarterly dividend totaling **$37.5 million in 2023**, and a significant share repurchase program increased to **$750 million** cumulative authorization - The company's dividend was reinstated in Q4 2022, totaling **$37.5 million** for the year[173](index=173&type=chunk)[174](index=174&type=chunk) - The Board authorized increases to the share repurchase program, reaching a cumulative authorization of **$750 million**, extended through July 31, 2026[176](index=176&type=chunk) - During the year ended December 31, 2023, the company repurchased and retired **13.7 million shares** of Class A Common Stock for **$203.1 million** at an average price of **$14.82 per share**[177](index=177&type=chunk) Share Repurchases for Q4 2023 | Period | Total number of shares purchased | Average price paid per share | Approximate dollar value of shares that may yet be purchased under the plans or programs (1) | | :--- | :--- | :--- | :--- | | October 1, 2023 - October 31, 2023 | 351,632 | $19.91 | $203,968,909 | | November 1, 2023 - November 30, 2023 | 1,161,489 | $19.45 | $181,379,741 | | December 1, 2023 - December 31, 2023 | 518,615 | $18.22 | $171,930,956 | | **Total** | **2,031,736** | **$19.21** | **$171,930,956** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, revenue increased **14% to $4.7 billion**, driving operating income to **$760.6 million**, with a stable 2024 outlook supported by strong liquidity and strategic investments in advanced technologies [Results of Operations](index=40&type=section&id=7.1%20Results%20of%20Operations) For fiscal year 2023, revenue grew by **$598.7 million (14%) to $4.7 billion** compared to 2022, with operating income increasing to **$760.6 million** and Adjusted EBITDA reaching **$1.21 billion** Consolidated Results of Operations (2023 vs. 2022) | Description | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | **Revenue** | **$4,747,928** | **$4,149,228** | **$598,700** | | Cost of services | $3,349,370 | $3,149,036 | $200,334 | | General and administrative | $221,406 | $180,040 | $41,366 | | Depreciation, depletion, and amortization | $421,514 | $323,028 | $98,486 | | **Operating income** | **$760,579** | **$495,890** | **$264,689** | | Net income before income taxes | $734,890 | $399,509 | $335,381 | | **Net income attributable to Liberty Energy Inc. stockholders** | **$556,317** | **$399,602** | **$156,715** | - The **14% increase in revenue** was primarily driven by higher service pricing and an activity-driven increase in fleet efficiency[208](index=208&type=chunk) Reconciliation of Net Income to Adjusted EBITDA | Description | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Net income | $556,408 | $400,302 | $156,106 | | EBITDA | $1,183,910 | $745,252 | $438,658 | | **Adjusted EBITDA** | **$1,213,068** | **$860,267** | **$352,801** | [Liquidity and Capital Resources](index=42&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) The company's liquidity is primarily sourced from **$1.0 billion** in 2023 cash flow from operations and its upsized ABL Facility, funding significant capital expenditures, share repurchases, and dividends Summary of Cash Flows | Description | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $1,014,583 | $530,364 | $484,219 | | Net cash used in investing activities | ($672,328) | ($450,656) | ($221,672) | | Net cash used in financing activities | ($349,315) | ($55,770) | ($293,545) | - In January 2023, the company borrowed **$106.7 million** on its ABL Facility to pay off and terminate its Term Loan Facility[226](index=226&type=chunk) - As of December 31, 2023, the company had **$140.0 million** outstanding under its ABL Facility, with **$277.7 million** of remaining availability[224](index=224&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=48&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company is exposed to market risks including industry volatility from commodity prices, interest rate risk on variable-rate debt, commodity price risk affecting costs, and foreign translation risk from Canadian operations - The business is exposed to industry risk, as demand is dependent on volatile oil and natural gas drilling and completion activity[261](index=261&type=chunk) - The company has interest rate risk from its ABL Facility; a **1% change** in the weighted average interest rate would impact annual interest expense by about **$1.4 million**[263](index=263&type=chunk) - Foreign translation risk is present due to Canadian operations, with a foreign currency translation gain of **$1.3 million** recorded in 2023[265](index=265&type=chunk) [Financial Statements and Supplementary Data](index=48&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes the company's audited consolidated financial statements for 2023, showing total assets of **$3.03 billion**, total revenue of **$4.75 billion**, and net income of **$556.4 million**, along with detailed notes on accounting policies and transactions [Consolidated Statements of Operations](index=63&type=section&id=8.1%20Consolidated%20Statements%20of%20Operations) For 2023, total revenues were **$4.75 billion**, operating income was **$760.6 million**, and net income attributable to stockholders was **$556.3 million**, or **$3.15 per diluted share** Key Operating Results (2023 vs. 2022) | Description (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total revenue | $4,747,928 | $4,149,228 | | Operating income | $760,579 | $495,890 | | Net income attributable to Liberty Energy Inc. stockholders | $556,317 | $399,602 | | Diluted EPS | $3.15 | $2.11 | [Consolidated Balance Sheets](index=62&type=section&id=8.2%20Consolidated%20Balance%20Sheets) As of December 31, 2023, total assets were **$3.03 billion**, with total liabilities of **$1.19 billion** and total stockholders' equity increasing to **$1.84 billion** Key Balance Sheet Items (As of Dec 31) | Description (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total current assets | $954,254 | $956,673 | | Property and equipment, net | $1,645,368 | $1,362,364 | | **Total assets** | **$3,033,557** | **$2,575,932** | | Total current liabilities | $639,424 | $649,497 | | Long-term debt, net | $140,000 | $217,426 | | **Total liabilities** | **$1,192,149** | **$1,078,626** | | **Total stockholders' equity** | **$1,841,408** | **$1,495,017** | [Consolidated Statements of Cash Flows](index=66&type=section&id=8.3%20Consolidated%20Statements%20of%20Cash%20Flows) For 2023, the company generated **$1.01 billion** in cash from operating activities, with **$672.3 million** used in investing activities and **$349.3 million** in financing activities, resulting in a **$7.06 million decrease** in cash Cash Flow Summary (For the year ended Dec 31) | Description (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,014,583 | $530,364 | | Net cash used in investing activities | ($672,328) | ($450,656) | | Net cash used in financing activities | ($349,315) | ($55,770) | | **Net (decrease) increase in cash** | **($7,060)** | **$23,938** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=48&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[267](index=267&type=chunk) [Controls and Procedures](index=49&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of December 31, 2023, with the accounting functions of the acquired Siren entity integrated during the year - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[268](index=268&type=chunk) - The company integrated the accounting functions of Siren Energy following its acquisition on April 6, 2023[269](index=269&type=chunk) [Other Information](index=49&type=section&id=Item%209B.%20Other%20Information) This section discloses the adoption of Rule 10b5-1 trading plans by CFO Michael Stock and CEO Chris Wright in December 2023 for the potential sale of shares acquired from vested restricted stock units - CFO Michael Stock adopted a Rule 10b5-1 trading plan in December 2023 for the potential sale of up to **200,000 shares** of Class A common stock between March and December 2024[272](index=272&type=chunk) - CEO Chris Wright adopted a Rule 10b5-1 trading plan in December 2023 for the potential sale of up to **240,000 shares** of Class A common stock between March and August 2024[273](index=273&type=chunk) Part III Part III of the report, covering directors, executive compensation, security ownership, and certain relationships, incorporates information by reference from the company's definitive proxy statement for its 2024 annual meeting of stockholders [Directors, Executive Officers and Corporate Governance](index=50&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2024 proxy statement - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2024 proxy statement[277](index=277&type=chunk) [Executive Compensation](index=50&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the forthcoming 2024 proxy statement - Information regarding executive compensation is incorporated by reference from the forthcoming 2024 proxy statement[278](index=278&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=50&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the forthcoming 2024 proxy statement - Information regarding security ownership is incorporated by reference from the forthcoming 2024 proxy statement[279](index=279&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=50&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the forthcoming 2024 proxy statement - Information regarding related party transactions and director independence is incorporated by reference from the forthcoming 2024 proxy statement[280](index=280&type=chunk) [Principal Accountant Fees and Services](index=50&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the forthcoming 2024 proxy statement - Information regarding principal accountant fees and services is incorporated by reference from the forthcoming 2024 proxy statement[281](index=281&type=chunk) Part IV Part IV contains the list of financial statements, schedules, and exhibits filed with the report; Item 16, Form 10-K Summary, is noted as 'None' [Exhibits and Financial Statement Schedules](index=51&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists the financial statements, schedules, and exhibits filed as part of the Annual Report - This section refers to the Index to Financial Statements and the Index to Exhibits for a list of all filed documents[283](index=283&type=chunk)[284](index=284&type=chunk) [Form 10-K Summary](index=52&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a Form 10-K summary - None[286](index=286&type=chunk)

Liberty Energy Inc. (NYSE:LBRT) Q4 2023 Earnings Conference Call January 25, 2024 12:00 PM ET Company Participants Anjali Voria - Strategic Finance and Investor Relations Lead Chris Wright - Chief Executive Officer Ron Gusek - President Michael Stock - Chief Financial Officer Conference Call Participants Scott Gruber – Citigroup Luke Lemoine – Piper Sandler Atidrip Modak – Goldman Sachs Stephen Gengaro – Stifel Derek Podhaizer – Barclays Marc Bianchi – TD Cowen Waqar Syed – ATB Capital Markets Keith MacKey ...

Financial Data and Key Metrics Changes - The company achieved a third quarter net income after tax of $149 million, representing a 1% increase from the prior year and a modest decrease from the $153 million in the second quarter [77] - Fully diluted net income per share was $0.85, a 10% increase from the prior year, highlighting the benefits of the share buyback program [77] - Third quarter adjusted EBITDA increased 15% year-over-year and 2% sequentially to $319 million [78] - Revenue for the third quarter was $1.2 billion, a 2% year-over-year increase and a 2% increase from the second quarter [97] Business Line Data and Key Metrics Changes - The company reported record average daily pumping efficiencies, achieving the highest pump hours of sand pumped in its history, despite idling one fleet during the quarter [63][77] - The deployment of the proprietary digiPrime units commenced in late September, quickly becoming a favorite technology among crews and customers [87] - The company increased its quarterly cash dividend by 40% to $0.07 per share, reflecting significant growth in per share earnings and cash generation abilities [68] Market Data and Key Metrics Changes - The company noted that fleets across the industry were idled in response to softness in completions activity, supporting a better supply-demand balance of marketed fleets compared to prior cycles [69] - The sustained strength in crude oil prices is stimulating demand for frac fleets among smaller private oil producers, with modest growth in frac activity expected in 2024 [70][92] - The company anticipates that the rig count is likely bottoming and will grow over the next 6 to 12 months, albeit at a slower pace [42] Company Strategy and Development Direction - The company is focused on vertical integration and technology investments, which have positioned it to address the diversity and complexity of customer needs [94] - The company aims to maximize operational efficiency and optimize equipment maintenance through advanced analytical tools and processes [89] - The long-term demand outlook for North American energy is expected to anchor a more durable cycle, with OPEC+ decisions supporting commodity prices [71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate strong free cash flow through cycles, with expectations for adjusted EBITDA growth at the high end of the guidance range for 2023 [95][120] - The company expects modest seasonal softness in the fourth quarter but does not plan to idle any additional fleets due to demand in Q1 of 2024 [80] - Management highlighted the importance of long-term partnerships with customers, emphasizing that the business thrives when both the company and its customers succeed [129] Other Important Information - The company has returned $325 million to shareholders over the past five quarters through its buyback program [119] - The company ended the quarter with a cash balance of $27 million and net debt of $196 million, which decreased by $60 million from the end of the second quarter [78] Q&A Session All Questions and Answers Question: Can you provide insights on the pricing power and customer relationships? - Management noted that customers are increasingly looking for quality service rather than just the cheapest option, indicating a shift in how pricing power is perceived in the industry [108][109] Question: What is the outlook for capital expenditures and free cash flow? - Management indicated that capital expenditures are expected to fall as a percentage of EBITDA, leading to robust free cash flow next year [104][106] Question: How do you view the future mix of digiFrac versus digiPrime? - Management explained that both technologies will be used in combination, with the mix depending on customer needs and access to grid power [135] Question: What are the expectations for the fourth quarter given the strong performance in the third quarter? - Management acknowledged seasonal slowdowns but expressed confidence in maintaining efficiency and picking up activity in Q1 of 2024 [121]

[CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions that the report contains forward-looking statements, subject to inherent risks and not routinely updated - The report includes forward-looking statements regarding expected performance, future operating results, oil and natural gas demand and prices, industry outlook, global economic conditions, and business strategies[10](index=10&type=chunk) - Actual results could differ materially from forward-looking statements due to important factors, many beyond the company's control, including risks and uncertainties detailed in the Annual Report and this Quarterly Report[10](index=10&type=chunk) - The Company does not intend or is obligated to update or revise any forward-looking statements, except as required by law[10](index=10&type=chunk) [PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis of financial results [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section provides Liberty Energy Inc.'s unaudited condensed consolidated financial statements and related notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total Assets | $3,089,123 | $2,575,932 | | Total Liabilities | $1,300,561 | $1,078,626 | | Total Equity | $1,788,562 | $1,497,306 | - Current assets increased from **$956,673 thousand** at December 31, 2022, to **$1,067,624 thousand** at September 30, 2023, primarily driven by an increase in accounts receivable—trade and unbilled revenue[15](index=15&type=chunk) - Property and equipment, net, significantly increased from **$1,362,364 thousand** at December 31, 2022, to **$1,613,437 thousand** at September 30, 2023[15](index=15&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net income Condensed Consolidated Statements of Income (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Total Revenue | $1,215,905 | $1,188,247 | $27,658 | 2.33% | | Operating Income | $205,227 | $182,983 | $22,244 | 12.16% | | Net Income attributable to Liberty Energy Inc. stockholders | $148,608 | $146,953 | $1,655 | 1.13% | | Basic EPS | $0.88 | $0.79 | $0.09 | 11.39% | | Diluted EPS | $0.85 | $0.78 | $0.07 | 8.97% | Condensed Consolidated Statements of Income (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Total Revenue | $3,672,970 | $2,923,636 | $749,334 | 25.63% | | Operating Income | $636,825 | $297,426 | $339,399 | 114.04% | | Net Income attributable to Liberty Energy Inc. stockholders | $463,934 | $246,733 | $217,201 | 88.03% | | Basic EPS | $2.68 | $1.33 | $1.35 | 101.50% | | Diluted EPS | $2.62 | $1.30 | $1.32 | 101.54% | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's comprehensive income, including net income and other comprehensive income items Condensed Consolidated Statements of Comprehensive Income (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Net Income | $148,608 | $147,263 | $1,345 | 0.91% | | Foreign Currency Translation | $(3,148) | $(6,343) | $3,195 | -50.37% | | Comprehensive Income attributable to Liberty Energy Inc. | $145,460 | $140,621 | $4,839 | 3.44% | Condensed Consolidated Statements of Comprehensive Income (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Net Income | $464,025 | $247,122 | $216,903 | 87.77% | | Foreign Currency Translation | $(1,618) | $(8,299) | $6,681 | -80.50% | | Comprehensive Income attributable to Liberty Energy Inc. | $462,315 | $238,444 | $223,871 | 93.89% | [Condensed Consolidated Statements of Changes in Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) This section details changes in the company's equity accounts, including retained earnings and additional paid-in capital Condensed Consolidated Statements of Changes in Equity | Metric | Dec 31, 2022 (in thousands) | Sep 30, 2023 (in thousands) | Change (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Stockholders' Equity | $1,495,017 | $1,788,562 | $293,545 | | Retained Earnings | $234,525 | $671,924 | $437,399 | | Additional Paid in Capital | $1,266,097 | $1,123,967 | $(142,130) | - Key activities impacting equity during the nine months ended September 30, 2023, included **$463.9 million** in net income, **$23.7 million** in stock-based compensation expense, and **$164.0 million** in share repurchases[24](index=24&type=chunk) - The company paid **$26.5 million** in Class A Common Stock dividends during the nine months ended September 30, 2023[24](index=24&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :---------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net Cash Provided by Operating Activities | $719,841 | $292,610 | $427,231 | | Net Cash Used in Investing Activities | $(528,435) | $(333,875) | $(194,560) | | Net Cash (Used in) Provided by Financing Activities | $(208,340) | $45,642 | $(253,982) | | Cash and Cash Equivalents—End of Period | $26,603 | $24,045 | $2,558 | - Purchases of property and equipment and construction in-progress increased to **$465.2 million** in 2023 from **$327.0 million** in 2022[27](index=27&type=chunk) - The Siren Energy acquisition used **$75.7 million** in cash, net of cash received, during the nine months ended September 30, 2023[27](index=27&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1—Organization and Basis of Presentation](index=11&type=section&id=Note%201%E2%80%94Organization%20and%20Basis%20of%20Presentation) This note describes the company's business, corporate structure, and the basis for financial statement presentation - Liberty Energy Inc. is a leading integrated energy services and technology company focused on hydraulic fracturing and related services for onshore oil and natural gas E&P companies in North America[32](index=32&type=chunk) - Effective January 31, 2023, Liberty LLC merged into the Company, resulting in the redemption of all Class B Common Stock for Class A Common Stock[31](index=31&type=chunk) - The company's name changed from "Liberty Oilfield Services Inc." to "Liberty Energy Inc." effective April 25, 2022[31](index=31&type=chunk) [Note 2—Significant Accounting Policies](index=12&type=section&id=Note%202%E2%80%94Significant%20Accounting%20Policies) This note outlines the key accounting policies and recent accounting pronouncements adopted by the company - The Company completed the acquisition of Siren Energy on April 6, 2023, for **$76.0 million** in cash, recognizing **$42.0 million** in goodwill[40](index=40&type=chunk) - Transaction and integration costs associated with acquisitions are expensed as incurred[38](index=38&type=chunk) - The Company adopted ASU No. 2021-08, Business Combinations: Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, effective December 15, 2022, with no material impact[39](index=39&type=chunk) [Note 3—Inventories](index=12&type=section&id=Note%203%E2%80%94Inventories) This note provides a breakdown of inventory categories and related accounting adjustments Inventories | Inventory Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :----------------- | :-------------------------- | :-------------------------- | | Proppants | $17,691 | $31,350 | | Chemicals | $17,554 | $32,392 | | Maintenance parts and other | $176,502 | $150,712 | | **Total Inventories** | **$211,747** | **$214,454** | - The company recorded an inventory write-down of **$2.2 million** for the nine months ended September 30, 2023[43](index=43&type=chunk) [Note 4—Property and Equipment](index=13&type=section&id=Note%204%E2%80%94Property%20and%20Equipment) This note details the composition of property and equipment, including depreciation and assets held for sale Property and Equipment, Net | Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Field services equipment | $2,398,065 | $1,925,848 | | Construction in-progress | $179,345 | $158,518 | | **Property and equipment, net** | **$1,613,437** | **$1,362,364** | - Depreciation expense for the nine months ended September 30, 2023, was **$280.9 million**, up from **$219.9 million** in the prior year period[45](index=45&type=chunk) - As of September 30, 2023, the company classified **$0.7 million** of land and **$0.8 million** of buildings as assets held for sale[47](index=47&type=chunk) [Note 5—Leases](index=13&type=section&id=Note%205%E2%80%94Leases) This note provides information on the company's lease arrangements, including lease costs and right-of-use assets Lease Cost Components (9 Months Ended Sep 30) | Lease Cost Component | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :------------------------- | :----------------------------------------- | :----------------------------------------- | | Amortization of ROU assets (Finance) | $11,008 | $3,796 | | Interest on lease liabilities (Finance) | $3,271 | $1,066 | | Operating lease cost | $30,562 | $32,809 | | Variable lease cost | $3,932 | $3,473 | | Short-term lease cost | $6,359 | $5,113 | | **Total Lease Cost** | **$55,132** | **$46,257** | - Right-of-use assets obtained in exchange for new finance lease liabilities increased substantially to **$105.3 million** for the nine months ended September 30, 2023, from **$14.7 million** in the prior year[53](index=53&type=chunk) - The company leases dry and wet sand containers and conveyor belts to customers through operating leases, generating **$27.8 million** in revenue for the nine months ended September 30, 2023[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 6—Accrued Liabilities](index=16&type=section&id=Note%206%E2%80%94Accrued%20Liabilities) This note presents a breakdown of the company's accrued liabilities by category Accrued Liabilities | Accrued Liability Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :------------------------- | :-------------------------- | :-------------------------- | | Accrued vendor invoices | $104,033 | $119,801 | | Operations accruals | $73,270 | $72,348 | | Accrued benefits and other | $90,715 | $84,670 | | **Total Accrued Liabilities** | **$268,018** | **$276,819** | [Note 7—Debt](index=16&type=section&id=Note%207%E2%80%94Debt) This note details the company's debt instruments, including the ABL Facility and Term Loan Facility Debt, Net of Deferred Financing Costs and Original Issue Discount | Debt Category | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :-------------------------------------------------- | :-------------------------- | :-------------------------- | | Term Loan outstanding | $0 | $104,716 | | Revolving Line of Credit | $223,000 | $115,000 | | **Total debt, net of deferred financing costs and original issue discount** | **$223,000** | **$218,446** | - The ABL Facility's maximum revolver amount was increased from **$425.0 million** to **$525.0 million**, and its maturity date was extended to January 23, 2028[62](index=62&type=chunk) - The Term Loan Facility was paid off and terminated on January 23, 2023, using proceeds from the ABL Facility[63](index=63&type=chunk)[65](index=65&type=chunk) [Note 8—Fair Value Measurements and Financial Instruments](index=17&type=section&id=Note%208%E2%80%94Fair%20Value%20Measurements%20and%20Financial%20Instruments) This note describes the fair value measurements of financial instruments and assets held for sale - The carrying values of cash and cash equivalents, accounts receivable, accounts payable, long-term debt, and lease obligations approximated their fair values as of September 30, 2023, and December 31, 2022[73](index=73&type=chunk) - The Siren Acquisition involved nonrecurring fair value measurements for acquired assets and liabilities[75](index=75&type=chunk) - As of September 30, 2023, assets held for sale (land and buildings) were recorded at a total fair value of **$0.8 million**, based on Level 3 inputs[76](index=76&type=chunk) [Note 9—Equity](index=19&type=section&id=Note%209%E2%80%94Equity) This note provides details on the company's equity, including share repurchases, dividends, and stock-based compensation Non-vested Equity Awards Outstanding | Metric | Sep 30, 2023 | Dec 31, 2022 | | :-------------------------------- | :----------- | :----------- | | Non-vested RSUs Outstanding | 3,064,132 | 2,985,727 | | Non-vested PSUs Outstanding | 1,339,568 | 1,390,588 | - The company repurchased **11,673,886 shares** of Class A Common Stock for **$164.0 million** during the nine months ended September 30, 2023, under its expanded **$500.0 million** share repurchase program[91](index=91&type=chunk)[92](index=92&type=chunk) - Cash dividends of **$0.05 per share** of Class A Common Stock were paid quarterly, totaling **$25.8 million** for the nine months ended September 30, 2023[89](index=89&type=chunk) [Note 10—Net Income per Share](index=21&type=section&id=Note%2010%E2%80%94Net%20Income%20per%20Share) This note presents the basic and diluted net income per share calculations for various periods Net Income per Share (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | | Basic Net Income per Share | $0.88 | $0.79 | | Diluted Net Income per Share | $0.85 | $0.78 | Net Income per Share (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------------------------- | :-------------------------- | :-------------------------- | | Basic Net Income per Share | $2.68 | $1.33 | | Diluted Net Income per Share | $2.62 | $1.30 | [Note 11—Income Taxes](index=21&type=section&id=Note%2011%E2%80%94Income%20Taxes) This note details the company's income tax expense, effective tax rate, and Tax Receivable Agreements liability Income Tax Metrics (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | | Effective Global Income Tax Rate | 24.6% | 1.5% | | Income Tax Expense (in thousands) | $151,658 | $3,637 | - The increase in the effective tax rate is primarily due to recording taxes on U.S. activity in 2023, compared to having a valuation allowance on U.S. net deferred tax assets in 2022[104](index=104&type=chunk)[159](index=159&type=chunk) - The company's liability under the Tax Receivable Agreements (TRAs) was **$119.5 million** as of September 30, 2023, with related deferred tax assets totaling **$100.6 million**[109](index=109&type=chunk) [Note 12—Defined Contribution Plan](index=22&type=section&id=Note%2012%E2%80%94Defined%20Contribution%20Plan) This note provides information on company matching contributions to the defined contribution plan Company Matching Contributions (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | Company Matching Contributions | $24,400 | $18,800 | [Note 13—Related Party Transactions](index=23&type=section&id=Note%2013%E2%80%94Related%20Party%20Transactions) This note discloses transactions and balances with related parties, including revenue from services and share repurchases - The company repurchased **3,000,000 shares** of Class A Common Stock for **$45.0 million** from Schlumberger, which ceased to be a related party after January 31, 2023[111](index=111&type=chunk) Related Party Transactions (9 Months Ended Sep 30) | Related Party | Service/Transaction | 9 Months Ended Sep 30, 2023 (in millions) | 9 Months Ended Sep 30, 2022 (in millions) | | :------------------------ | :-------------------------------- | :---------------------------------------- | :---------------------------------------- | | Franklin Mountain Energy, LLC | Hydraulic fracturing services revenue | $128.0 | $79.0 | | Liberty Resources LLC | Hydraulic fracturing services revenue | $33.5 | $10.3 | - Amounts outstanding from Liberty Resources LLC under an amended payment agreement were **$14.7 million** as of September 30, 2023, generating **$1.3 million** in interest income for the nine months ended September 30, 2023[115](index=115&type=chunk)[116](index=116&type=chunk) [Note 14—Commitments & Contingencies](index=24&type=section&id=Note%2014%E2%80%94Commitments%20%26%20Contingencies) This note outlines the company's contractual commitments, purchase obligations, and potential legal contingencies Purchase Obligations | Commitment Period | Amount (in thousands) | | :---------------- | :-------------------- | | Remainder of 2023 | $91,442 | | 2024 | $87,643 | | **Total** | **$179,085** | - The company has committed to purchase **2,041,893 tons** of proppant through December 31, 2024[118](index=118&type=chunk) - Potential shortfall fees for failing to purchase minimum volumes could be **$31.0 million** for the remainder of 2023 and **$17.7 million** for 2024, though the company does not expect to incur significant fees[119](index=119&type=chunk) [Note 15—Selected Quarterly Financial Data](index=25&type=section&id=Note%2015%E2%80%94Selected%20Quarterly%20Financial%20Data) This note provides a summary of key financial data for recent quarterly periods - For the three months ended September 30, 2023, net income was **$148.6 million**, while share repurchases amounted to **$29.3 million** and dividends paid were **$8.7 million**[123](index=123&type=chunk) - For the three months ended September 30, 2022, net income was **$147.0 million**, and share repurchases were **$70.0 million**[123](index=123&type=chunk) [Note 16—Subsequent Events](index=25&type=section&id=Note%2016%E2%80%94Subsequent%20Events) This note discloses significant events occurring after the reporting period but before financial statement issuance - A quarterly dividend of **$0.07 per share** of Class A Common Stock was declared on October 17, 2023, payable on December 20, 2023[124](index=124&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial performance, operational highlights, market trends, liquidity, and non-GAAP measures [Overview](index=26&type=section&id=Overview) This section provides a general description of Liberty Energy Inc.'s business, services, and recent strategic acquisitions - Liberty Energy Inc. provides hydraulic fracturing services, wireline services, proppant delivery, field gas processing, CNG delivery, data analytics, and lower emission technologies to North American E&P companies[127](index=127&type=chunk) - The company has grown from one active hydraulic fracturing fleet in December 2011 to over **40 active fleets** as of September 30, 2023[127](index=127&type=chunk) - Liberty Power Innovations (LPI) acquired Siren Energy on April 6, 2023, for **$76.0 million**, expanding its natural gas compression and CNG delivery capabilities in the Permian Basin[129](index=129&type=chunk) [Recent Trends and Outlook](index=26&type=section&id=Recent%20Trends%20and%20Outlook) This section discusses current industry trends, market conditions, and the company's expectations for future activity - The frac industry has stabilized with a better supply and demand balance due to consolidation, technological progress, disciplined investment, and underutilized fleets exiting the market[131](index=131&type=chunk) - Seasonal softness, winter weather, and holiday disruptions are expected in Q4 2023, but a modest increase in activity is anticipated in 2024 due to strengthening commodity prices[132](index=132&type=chunk)[133](index=133&type=chunk) Key Market Metrics | Metric | Q3 2023 | Q3 2022 | Q2 2023 | | :-------------------------------- | :------ | :------ | :------ | | Average WTI Price (per Bbl) | $82.25 | $93.06 | $73.54 | | Average Domestic Onshore Rig Count (US & Canada) | 817 | 942 | 815 | [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's financial results, detailing changes in revenues, costs, and profitability for specific periods [Three Months Ended September 30, 2023, Compared to Three Months Ended September 30, 2022](index=27&type=section&id=Three%20Months%20Ended%20September%2030%2C%202023%2C%20Compared%20to%20Three%20Months%20Ended%20September%2030%2C%202022) This section compares the company's financial performance for the three months ended September 30, 2023, against the prior year period Consolidated Results (3 Months Ended Sep 30) | Metric | 3 Months Ended Sep 30, 2023 (in thousands) | 3 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Total Revenue | $1,215,905 | $1,188,247 | $27,658 | 2.3% | | Cost of Services (excl. DDA) | $850,247 | $874,453 | $(24,206) | -2.8% | | General and Administrative | $55,040 | $50,473 | $4,567 | 9.0% | | Depreciation, Depletion, and Amortization | $108,997 | $82,848 | $26,149 | 31.6% | | Operating Income | $205,227 | $182,983 | $22,244 | 12.2% | | Net Income attributable to Liberty Energy Inc. stockholders | $148,608 | $146,953 | $1,655 | 1.1% | - The decrease in cost of services was primarily related to lower costs of materials and lower operating overhead costs[138](index=138&type=chunk) - The increase in depreciation, depletion, and amortization was due to additional equipment placed in service, including digiTechnologies[142](index=142&type=chunk) [Nine Months Ended September 30, 2023, Compared to Nine Months Ended September 30, 2022](index=29&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202023%2C%20Compared%20to%20Nine%20Months%20Ended%20September%2030%2C%202022) This section compares the company's financial performance for the nine months ended September 30, 2023, against the prior year period Consolidated Results (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Total Revenue | $3,672,970 | $2,923,636 | $749,334 | 25.6% | | Cost of Services (excl. DDA) | $2,572,119 | $2,258,190 | $313,929 | 13.9% | | General and Administrative | $166,110 | $130,953 | $35,157 | 26.8% | | Depreciation, Depletion, and Amortization | $303,093 | $234,815 | $68,278 | 29.1% | | Operating Income | $636,825 | $297,426 | $339,399 | 114.0% | | Net Income attributable to Liberty Energy Inc. stockholders | $463,934 | $246,733 | $217,201 | 88.0% | - The increase in cost of services was primarily due to higher materials and parts consumption, increased labor costs related to additional fleets and efficiency, and inflationary impacts[151](index=151&type=chunk) - General and administrative expenses increased due to labor cost inflation, corporate costs related to increased activity, and higher share-based compensation[152](index=152&type=chunk) [Comparison of Non-GAAP Financial Measures](index=30&type=section&id=Comparison%20of%20Non-GAAP%20Financial%20Measures) This section reconciles and analyzes non-GAAP financial measures such as EBITDA and Adjusted EBITDA - EBITDA is defined as net income before interest, income taxes, and depreciation, depletion, and amortization. Adjusted EBITDA further adjusts for non-cash stock-based compensation, fleet costs, transaction costs, asset disposal gains/losses, and other non-recurring items[160](index=160&type=chunk) Non-GAAP Financial Measures (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | YoY Change (%) | | :---------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | :------------- | | Net Income | $464,025 | $247,122 | $216,903 | 87.8% | | EBITDA | $939,918 | $501,533 | $438,385 | 87.4% | | Adjusted EBITDA | $960,561 | $564,793 | $395,768 | 70.1% | - The increases in EBITDA and Adjusted EBITDA were primarily driven by improved market conditions and increased activity levels[165](index=165&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, capital structure, and financial flexibility [Overview](index=32&type=section&id=Overview_Liquidity) This section outlines the company's primary sources of liquidity and current cash position - Primary liquidity sources are cash flows from operations and borrowings under the ABL Facility, supplemented by an additional equipment leasing facility[167](index=167&type=chunk) Cash and Cash Equivalents | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Cash and Cash Equivalents | $26,603 | $43,676 | $(17,073) | - The ABL Facility was increased to **$525.0 million**, with **$295.6 million** of remaining availability as of September 30, 2023[169](index=169&type=chunk)[170](index=170&type=chunk) [Share Repurchase Program](index=33&type=section&id=Share%20Repurchase%20Program_Liquidity) This section details the company's share repurchase activities and remaining authorization under the program - The share repurchase program's cumulative authorization was increased to **$500.0 million**[175](index=175&type=chunk) - During the nine months ended September 30, 2023, the company repurchased **$164.0 million** of Class A Common Stock[175](index=175&type=chunk) - As of September 30, 2023, **$211.0 million** remained authorized for future repurchases[93](index=93&type=chunk) [Cash Flows](index=33&type=section&id=Cash%20Flows_Liquidity) This section analyzes the company's cash flows from operating, investing, and financing activities Cash Flows (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2022 (in thousands) | Change (in thousands) | | :---------------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net Cash Provided by Operating Activities | $719,841 | $292,610 | $427,231 | | Net Cash Used in Investing Activities | $(528,435) | $(333,875) | $(194,560) | | Net Cash (Used in) Provided by Financing Activities | $(208,340) | $45,642 | $(253,982) | - The increase in operating cash flow was primarily due to a **$749.3 million** increase in revenues, partially offset by increased costs and a decrease in cash from changes in working capital[177](index=177&type=chunk) - Investing activities were higher due to investments in new equipment (digiTechnologies) and the **$75.7 million** Siren Energy acquisition[178](index=178&type=chunk) [Cash Requirements](index=33&type=section&id=Cash%20Requirements) This section identifies the company's material cash commitments, including debt, leases, and purchase obligations - Material cash commitments include long-term debt, TRAs, finance and operating leases, share repurchases, dividends, and purchase obligations[180](index=180&type=chunk) - Purchase obligations for the remainder of 2023 and 2024 total **$179.1 million**[180](index=180&type=chunk) - Finance lease obligations increased by **$105.3 million** during the three months ended September 30, 2023, due to expanded equipment lease facilities[181](index=181&type=chunk) [Income Taxes](index=34&type=section&id=Income%20Taxes_MD%26A) This section discusses the company's income tax expense and effective tax rate, including factors influencing changes Income Tax Metrics (9 Months Ended Sep 30) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------- | :-------------------------- | :-------------------------- | | Effective Global Income Tax Rate | 24.6% | 1.5% | | Income Tax Expense (in thousands) | $151,700 | $3,600 | - The increase in the effective tax rate is primarily due to recording taxes on U.S. activity in 2023, following the release of a valuation allowance on U.S. net deferred tax assets in 2022[184](index=184&type=chunk) [Tax Receivable Agreements](index=34&type=section&id=Tax%20Receivable%20Agreements_MD%26A) This section explains the company's obligations and benefits under the Tax Receivable Agreements - The company's liability under the TRAs was **$119.5 million** as of September 30, 2023, with related deferred tax assets totaling **$100.6 million**[109](index=109&type=chunk) - TRAs provide for payments by the Company of **85%** of net cash savings in U.S. federal, state, and local income tax resulting from certain tax basis increases and net operating losses[106](index=106&type=chunk) [Critical Accounting Estimates](index=34&type=section&id=Critical%20Accounting%20Estimates) This section highlights key accounting estimates and assumptions that are fundamental to the company's financial results - Financial statements are prepared using GAAP, requiring estimates and assumptions, particularly for critical accounting estimates that are fundamental to results of operations[187](index=187&type=chunk) - No material changes in critical accounting policies and estimates have occurred since the Annual Report[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosure about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company faces market risk primarily from foreign currency translation in its Canadian operations, with no other material changes since December 31, 2022 - The company's operations in Canada expose it to foreign currency translation risk, as the Canadian dollar is the functional currency of its foreign subsidiary[190](index=190&type=chunk) Foreign Currency Translation Losses | Metric | 9 Months Ended Sep 30, 2023 (in millions) | 9 Months Ended Sep 30, 2022 (in millions) | | :-------------------------- | :---------------------------------------- | :---------------------------------------- | | Foreign Currency Translation Losses | $1.6 | $8.3 | - No other material changes to market risk exposures have occurred since December 31, 2022[191](index=191&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) As of September 30, 2023, disclosure controls were effective, with updates to internal controls following the Siren Acquisition - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of September 30, 2023[192](index=192&type=chunk) - Accounting functions of the Siren Acquisition were integrated during the quarter, resulting in updates to internal controls over financial reporting[193](index=193&type=chunk) - No other material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[194](index=194&type=chunk) [PART II: OTHER INFORMATION](index=36&type=section&id=PART%20II%20OTHER%20INFORMATION) This part provides additional information, including legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates legal proceedings information from Note 14, indicating no material adverse effects are expected from current matters - The company is subject to legal and administrative proceedings from time to time, but management does not believe any current matters will have a material adverse effect on financial position or results of operations[121](index=121&type=chunk)[197](index=197&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors in the Annual Report, noting no new or material changes in this Quarterly Report - Readers should consider the risk factors described in the Annual Report and other SEC filings[198](index=198&type=chunk) - No new risk factors or material changes to existing risk factors were identified in this Quarterly Report[199](index=199&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase program, including shares bought and remaining authorization for the quarter Share Repurchase Program Activity (July 1 - Sep 30, 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value Remaining | | :-------------------------- | :--------------------- | :--------------------------- | :--------------------------------- | | July 1 - Sep 30, 2023 | 1,784,899 | $16.38 | $210,968,900 | - The share repurchase program's cumulative authorization was increased to **$500.0 million** on January 24, 2023[200](index=200&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There were no defaults upon senior securities[202](index=202&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section refers to Exhibit 95 for mine safety disclosures, as required by the Federal Mine Safety and Health Act of 1977 - Mine safety disclosures, as required by the Federal Mine Safety and Health Act of 1977, are provided in Exhibit 95[203](index=203&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No director or Section 16 officer adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter - No director or Section 16 officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2023[204](index=204&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including agreements, corporate documents, certifications, and XBRL files - The exhibits include the Master Transaction Agreement, Amended and Restated Certificate of Incorporation, Bylaws, CEO/CFO certifications, Mine Safety Disclosure, and XBRL taxonomy files[206](index=206&type=chunk) [SIGNATURES](index=38&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers - The report was signed by the Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer on October 19, 2023[211](index=211&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-38081 Liberty Energy Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation or Organization) 950 17th Street, Suite ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-38081 Liberty Energy Inc. (Exact Name of Registrant as Specified in its Charter) (State or Other Jurisdiction of Incorporation or Organization) 950 17th Street, Suit ...

23% Return 11-Year Average CROCI(1)(2) Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024 Production Consumption Liberty's Investment Philosophy 3 Managing the Cycle for Long Term Returns Build the BDFC! 1 … while demand Liberty Built with Cash Flow LIBERTA ➢ North America is expected to be a meaningful supplier of incremental supply continues to increase • Recovery in travel (jet fuel) • Modest global GDP growth • China emergence from Covid lockdowns Reinvest at High Rates of Return Strong Balance She ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-38081 Liberty Energy Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 81-4891595 (State or Other Jurisdiction of Incorporation or Organization) 950 17 ...

Liberty Energy Inc. (NYSE:LBRT) Q4 2022 Earnings Conference Call January 26, 2023 10:00 AM ET Company Participants Anjali Voria - Head of IR Chris Wright - CEO Ron Gusek - President Michael Stock - CFO Conference Call Participants Derek Podhaizer - Barclays Stephen Gengaro - Stifel Scott Gruber - Citigroup Marc Bianchi - Cowen Atidrip Modak - Goldman Sachs Arun Jayaram - JPMorgan Chase Waqar Syed - ATB Capital Markets Keith MacKey - RBC Capital Markets Tom Curran - Seaport Research Partners Saurabh Pant - B ...

PART I: FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) The unaudited condensed consolidated financial statements for the period ended September 30, 2022, reflect significant financial performance improvement and strategic capital management [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2.53 billion** as of September 30, 2022, driven by current assets and property, with total equity rising to **$1.41 billion** Condensed Consolidated Balance Sheet Highlights (as of Sep 30, 2022 vs. Dec 31, 2021) | Balance Sheet Item | Sep 30, 2022 ($ in thousands) | Dec 31, 2021 ($ in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | 996,061 | 630,377 | | **Property and equipment, net** | 1,295,189 | 1,199,287 | | **Total Assets** | **2,525,158** | **2,040,660** | | **Total Current Liabilities** | 704,857 | 569,247 | | **Long-term debt, net** | 252,682 | 121,445 | | **Total Liabilities** | **1,117,720** | **810,221** | | **Retained earnings (accumulated deficit)** | 90,779 | (155,954) | | **Total Equity** | **1,407,438** | **1,230,439** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved a significant turnaround in profitability, with Q3 2022 revenue surging to **$1.19 billion** and net income reaching **$147.0 million** Q3 2022 vs Q3 2021 Performance | Metric | Q3 2022 ($ in thousands) | Q3 2021 ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | 1,188,247 | 653,727 | +81.8% | | **Operating Income (Loss)** | 182,983 | (39,566) | N/A | | **Net Income (Loss) to Stockholders** | 146,953 | (38,890) | N/A | | **Diluted EPS** | $0.78 | $(0.22) | N/A | Nine Months 2022 vs Nine Months 2021 Performance | Metric | Nine Months 2022 ($ in thousands) | Nine Months 2021 ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Total Revenue** | 2,923,636 | 1,787,047 | +63.6% | | **Operating Income (Loss)** | 297,426 | (117,789) | N/A | | **Net Income (Loss) to Stockholders** | 246,733 | (123,655) | N/A | | **Diluted EPS** | $1.30 | $(0.72) | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations significantly increased to **$292.6 million** for the nine months ended September 30, 2022, supporting higher capital expenditures and share repurchases Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2022 ($ in thousands) | 2021 ($ in thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | 292,610 | 80,142 | | **Net cash used in investing activities** | (333,875) | (119,319) | | **Net cash provided by financing activities** | 45,642 | 5,149 | | **Net increase (decrease) in cash** | 4,377 | (34,028) | | **Cash and cash equivalents - end of period** | 24,045 | 34,705 | - Key financing activities in the first nine months of 2022 included net borrowings of **$132.0 million** on the line-of-credit and **$70.1 million** used for share repurchases[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail the PropX acquisition integration, ABL facility amendment, a **$250 million** share repurchase program, and the reinstatement of a quarterly dividend - On July 25, 2022, the Board authorized a share repurchase program of up to **$250.0 million** During the nine months ended Sep 30, 2022, the company repurchased **4.7 million** shares for **$70.1 million**[88](index=88&type=chunk)[91](index=91&type=chunk) - In July 2022, the ABL Facility was amended to increase the maximum borrowing amount by **$75.0 million** to **$425.0 million** and replace LIBOR with SOFR as the interest rate benchmark[60](index=60&type=chunk)[62](index=62&type=chunk) - Subsequent to quarter end, on October 18, 2022, the board approved the reinstatement of a quarterly dividend of **$0.05** per share of Class A Common Stock[126](index=126&type=chunk) - The company maintains a full valuation allowance on its U.S. net deferred tax assets but believes there is a reasonable possibility that it could be reversed as soon as Q4 2022, which would impact income tax expense and the TRA liability[102](index=102&type=chunk)[185](index=185&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q3 2022 performance to robust demand and higher pricing in a tight frac market, driving significant revenue and EBITDA growth [Recent Trends and Outlook](index=27&type=section&id=Recent%20Trends%20and%20Outlook) Management observes a tight frac market with near-full utilization, driven by capital discipline and supply constraints, potentially strengthening demand for North American energy - The frac market is described as relatively tight with near-full utilization of available capacity, making service quality and reliability important differentiators for customers[135](index=135&type=chunk) - Global supply risks, including OPEC+ production cuts and sanctions on Russia, alongside low global inventories, may strengthen demand for North American energy[134](index=134&type=chunk) Key Market Indicators (Q3 2022) | Indicator | Q3 2022 | Q3 2021 | Q2 2022 | | :--- | :--- | :--- | :--- | | **WTI Price (Avg. per Bbl)** | $93.06 | $70.58 | $108.83 | | **US & Canada Rig Count (Avg.)** | 942 | 634 | 810 | [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Financial results dramatically improved year-over-year, with Q3 2022 revenue increasing **81.8%** to **$1.2 billion** and a significant swing to operating income Q3 2022 vs Q3 2021 Results Summary | Description | Q3 2022 ($ in thousands) | Q3 2021 ($ in thousands) | Change ($ in thousands) | | :--- | :--- | :--- | :--- | | **Revenue** | 1,188,247 | 653,727 | 534,520 | | **Operating income (loss)** | 182,983 | (39,566) | 222,549 | | **Net income (loss) to Stockholders** | 146,953 | (38,890) | 185,843 | - The **$534.5 million** (**81.8%**) increase in Q3 revenue was attributed to higher service pricing and an activity-driven increase in fleet utilization and efficiency[139](index=139&type=chunk) Nine Months 2022 vs 2021 Results Summary | Description | Nine Months 2022 ($ in thousands) | Nine Months 2021 ($ in thousands) | Change ($ in thousands) | | :--- | :--- | :--- | :--- | | **Revenue** | 2,923,636 | 1,787,047 | 1,136,589 | | **Operating income (loss)** | 297,426 | (117,789) | 415,215 | | **Net income (loss) to Stockholders** | 246,733 | (123,655) | 370,388 | [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA significantly increased to **$276.9 million** for Q3 2022 and **$564.8 million** for the nine-month period, reflecting improved market conditions and operational leverage Reconciliation of Net Income (Loss) to Adjusted EBITDA | Metric ($ in thousands) | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss)** | 147,263 | (39,379) | 247,122 | (130,467) | | **EBITDA** | 239,456 | 31,233 | 501,533 | 81,585 | | **Adjusted EBITDA** | **276,853** | **32,008** | **564,793** | **100,266** | [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with **$273.6 million** available under its ABL Facility and a **$250.0 million** share repurchase program - As of September 30, 2022, the company had **$273.6 million** of remaining availability under its **$425.0 million** ABL Facility[169](index=169&type=chunk) - A share repurchase program authorizes up to **$250.0 million** in repurchases through July 31, 2024[175](index=175&type=chunk) Cash Flow Summary (Nine Months Ended Sep 30) | Description ($ in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | 292,610 | 80,142 | | Net cash used in investing activities | (333,875) | (119,319) | | Net cash provided by financing activities | 45,642 | 5,149 | [Quantitative and Qualitative Disclosure about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company's primary market risk is foreign currency exchange rates, resulting in an **$8.3 million** translation loss for the nine months ended September 30, 2022 - The company's main market risk is foreign currency translation due to its Canadian subsidiary For the nine months ended September 30, 2022, this resulted in a translation loss of **$8.3 million**[191](index=191&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, following the integration of PropX accounting functions - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of September 30, 2022[193](index=193&type=chunk) - During Q3 2022, the company integrated the accounting functions of the PropX acquisition and updated its internal controls over financial reporting to reflect the changes[194](index=194&type=chunk) PART II: OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to legal proceedings but does not anticipate a material adverse effect on its financial position or operations - The company is subject to legal proceedings but does not expect them to have a material adverse effect on its financial condition or operations[124](index=124&type=chunk)[198](index=198&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Key risk factors include the Russia-Ukraine conflict, OPEC+ production decisions impacting oil and gas prices, and choice of forum provisions in the company's charter - The ongoing military conflict between Russia and Ukraine is cited as a significant risk that could lead to market disruptions, commodity price volatility, and supply chain interruptions[201](index=201&type=chunk) - Actions by OPEC+ to set and maintain oil production levels are a key uncertainty that could lead to increased volatility in oil and natural gas prices, affecting the company's business[204](index=204&type=chunk) - The company's charter includes choice of forum provisions that designate Delaware courts for certain disputes and federal courts for Securities Act claims, which may limit stockholders' ability to choose a favorable judicial forum[202](index=202&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **4.7 million** shares for **$70.1 million** during Q3 2022, with **$180.0 million** remaining authorized under the share repurchase program Share Repurchases (Q3 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Value Remaining for Repurchase ($) | | :--- | :--- | :--- | :--- | | **July 2022** | — | — | 250,000,000 | | **August 2022** | 3,196,002 | $15.08 | 201,792,691 | | **September 2022** | 1,506,164 | $14.47 | 180,000,041 | | **Total Q3** | **4,702,166** | **$14.89** | **180,000,041** | [Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - None[207](index=207&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures, as required by the Dodd-Frank Act, are provided in Exhibit 95 of this quarterly report - Mine safety disclosures required under Regulation S-K are provided in Exhibit 95 of the report[208](index=208&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No other material information is reported in this section - None[209](index=209&type=chunk)