Liberty Energy (LBRT) - 2025 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Liberty Energy Inc.'s unaudited condensed consolidated financial statements for the quarter ended June 30, 2025, including balance sheets, statements of operations, comprehensive income, equity changes, and cash flows Condensed Consolidated Balance Sheets Total assets increased to $3.44 billion as of June 30, 2025, from $3.30 billion at year-end 2024, with total liabilities rising to $1.41 billion and stockholders' equity reaching $2.03 billion Condensed Consolidated Balance Sheet Highlights (in thousands of USD) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $921,377 | $848,523 | | Property and equipment, net | $1,929,426 | $1,890,998 | | Total Assets | $3,441,048 | $3,296,394 | | Total Current Liabilities | $793,378 | $666,523 | | Long-term debt | $160,000 | $190,500 | | Total Liabilities | $1,406,065 | $1,317,525 | | Total Stockholders' Equity | $2,034,983 | $1,978,869 | Condensed Consolidated Statements of Operations Q2 2025 revenue decreased to $1.04 billion from $1.16 billion year-over-year, with net income falling to $71.0 million, while six-month revenue declined to $2.02 billion and net income to $91.1 million Statement of Operations Summary (in thousands of USD, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,042,521 | $1,159,884 | $2,019,982 | $2,233,009 | | Operating Income | $37,073 | $141,833 | $55,245 | $257,266 | | Net Income | $71,016 | $108,421 | $91,127 | $190,313 | | Diluted EPS | $0.43 | $0.64 | $0.55 | $1.12 | - A significant contributor to net income in Q2 2025 was a $68.2 million gain on investments, compared to a $7.2 million gain in Q2 2024[17] Condensed Consolidated Statements of Cash Flows Net cash from operating activities for H1 2025 was $362.7 million, a decrease from the prior year, with net cash used in investing activities decreasing and financing activities increasing, leading to a slight overall decrease in cash Cash Flow Summary for Six Months Ended June 30 (in thousands of USD) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $362,707 | $407,587 | | Net cash used in investing activities | ($189,293) | ($292,130) | | Net cash used in financing activities | ($174,083) | ($121,988) | | Net decrease in cash and cash equivalents | ($669) | ($6,531) | | Cash and cash equivalents—end of period | $19,563 | $30,043 | - Key financing activities in H1 2025 included $24.9 million in share repurchases and $26.9 million in dividend payments[25] - Investing activities in H1 2025 included $271.4 million in property and equipment purchases and proceeds of $80.8 million from the sale of equity securities[25] Notes to Condensed Consolidated Financial Statements This section details accounting policies, recent acquisitions, debt facilities, equity transactions, and subsequent events, highlighting the IMG Energy Solutions acquisition, ABL Facility replacement, share repurchases, dividends, and equity investment gains - On March 3, 2025, the Company acquired IMG Energy Solutions for approximately $19.6 million in cash, recording $12.6 million in goodwill and intangible assets[38] - The Company's investment in Oklo Inc. was valued at $58.0 million as of June 30, 2025, resulting in a gain of $87.2 million during the first six months of 2025, with $80.8 million in shares sold during this period[75] - Subsequent to the quarter end, on July 24, 2025, the Company terminated its $525.0 million ABL Facility and entered into a new Credit Agreement for a $750.0 million Revolving Credit Facility[63][133][134] - During the six months ended June 30, 2025, the Company repurchased 1.55 million shares for $24.0 million and paid cash dividends of $0.16 per share totaling $25.9 million[89][95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 10% year-over-year revenue decline for Q2 2025 due to lower pricing and reduced activity, anticipating a gradual slowdown in completions for H2 2025, while highlighting strong operating cash flow and a new credit facility Recent Trends and Outlook North American oil production remains stable, but a gradual slowdown in completions activity is anticipated for H2 2025, leading to pricing pressure and planned modest reductions in the company's deployed fleet count - Completions activity is expected to gradually slow during the second half of 2025 due to disciplined capital deployment by producers[146] - The Company plans to modestly reduce its deployed fleet count for the remainder of 2025 and reposition horsepower to support expanded simul-frac offerings[147] Key Market Indicators | Indicator | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Avg. WTI Price ($/Bbl) | $64.57 | $71.78 | $81.81 | | Avg. Henry Hub Price ($/MMBtu) | $3.19 | $4.14 | $2.06 | | Avg. US & Canada Rig Count | 686 | 788 | 716 | Results of Operations Q2 2025 revenue decreased 10% year-over-year to $1.0 billion due to lower pricing and activity, significantly impacting operating income, though a $87.5 million gain on investments partially offset the decline in H1 2025 net income Results of Operations Comparison (in thousands of USD) | Description | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,042,521 | $1,159,884 | ($117,363) | | Operating income | $37,073 | $141,833 | ($104,760) | | Net income | $71,016 | $108,421 | ($37,405) | Non-GAAP Reconciliation: Net Income to Adjusted EBITDA (in thousands of USD) | Description | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $71,016 | $108,421 | $91,127 | $190,313 | | EBITDA | $234,681 | $272,339 | $399,883 | $510,958 | | Adjusted EBITDA | $180,798 | $273,256 | $348,948 | $518,042 | - The decrease in Adjusted EBITDA for Q2 2025 compared to Q2 2024 was primarily driven by lower pricing, partially offset by changes in activity levels[169] Liquidity and Capital Resources The company's liquidity is supported by operating cash flow and a new $750.0 million Revolving Credit Facility, replacing the prior ABL Facility, with H1 2025 operating cash flow at $362.7 million used for capital expenditures, share repurchases, and dividends - As of June 30, 2025, the company had $160.0 million outstanding on its ABL Facility with $256.4 million of remaining availability[174] - Effective July 24, 2025, the ABL Facility was terminated and replaced by a new Credit Agreement with a $750.0 million revolving credit facility, enhancing financial flexibility[176] Cash Flow Summary for Six Months Ended June 30 (in thousands of USD) | Description | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $362,707 | $407,587 | | Net cash used in investing activities | ($189,293) | ($292,130) | | Net cash used in financing activities | ($174,083) | ($121,988) | Item 3. Quantitative and Qualitative Disclosure about Market Risk The company's primary market risk is foreign currency exchange rates from Canadian and Australian operations, resulting in a $6.1 million translation gain for H1 2025, with no other material changes to market risk exposures - The company's operations in Canada and Australia expose it to foreign currency translation risk[193] - For the six months ended June 30, 2025, a foreign currency translation gain of $6.1 million was recorded, compared to a loss of $5.4 million for the same period in 2024[194] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, following the integration of IMG Energy Solutions' accounting functions and corresponding internal control updates - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of June 30, 2025[196] - During Q2 2025, the company integrated the accounting functions of the recently acquired IMG Energy Solutions, modifying business processes and internal controls accordingly[197] PART II: OTHER INFORMATION Item 1. Legal Proceedings Information on legal proceedings is incorporated by reference from Note 14, with management not expecting any current matters to materially adversely affect the company's financial position - The company is subject to various legal proceedings from time to time, but management does not expect them to have a material adverse effect on financial results[129][201] Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K have been identified - No material changes to the risk factors set forth in the Annual Report were identified[203] Item 5. Other Information This section details significant post-quarter corporate financing activities, including the termination of the existing ABL Facility and the establishment of a new, larger $750.0 million revolving credit facility on July 24, 2025 - On July 24, 2025, the Company terminated its ABL Facility and entered into a new Credit Agreement[208][209] - The new Credit Agreement provides for a revolving credit facility with initial commitments of $750.0 million, an increase from the previous facility, and includes an accordion feature for an additional $200.0 million[210] Item 6. Exhibits This section indexes exhibits filed with the Form 10-Q, including corporate governance documents, the new Credit Agreement, officer certifications, and XBRL data files - Key exhibits filed include the new Credit Agreement dated July 24, 2025, and officer certifications pursuant to the Sarbanes-Oxley Act[219]