Liberty Energy (LBRT) - 2024 Q1 - Quarterly Results

Executive Summary & Highlights Liberty reported flat Q1 2024 revenue, decreased net income and Adjusted EBITDA, strong capital returns, and record safety, reflecting technology leadership Q1 2024 Performance Highlights Liberty Energy Inc. announced its first quarter 2024 financial and operational results, reporting flat sequential revenue, a decrease in net income and Adjusted EBITDA, but a strong TTM Adjusted Pre-Tax Return on Capital Employed Q1 2024 Key Financial and Operational Highlights | Metric | Value | | :----- | :---- | | Revenue | $1.1 billion (flat sequentially) | | Net income | $82 million | | Fully diluted EPS | $0.48 | | Adjusted EBITDA | $245 million (3% decrease sequentially) | | TTM Adjusted Pre-Tax Return on Capital Employed | 32% | | Distributed to shareholders | $42 million | | Shares repurchased (Q1) | 0.9% of shares outstanding | | Cumulative shares repurchased (since July 2022) | 12.5% of shares outstanding | - Achieved record TTM safety performance and operational efficiency[4] CEO Commentary & Strategic Vision CEO Chris Wright highlighted Liberty's leadership in technology innovation, service quality, and talent investment, resulting in strong Q1 results despite softening industry activity - Liberty's strong first quarter results demonstrate the continued benefits of leading the industry in technology innovation, service quality and investment in talent[4] - The operations teams delivered the highest combined safety performance and average daily pumping efficiency in Liberty's history over the last year[4] - The company is in a generational shift towards low emissions, capital efficient natural gas fueled technologies, with digiFleet deployments and Liberty Power Innovations (LPI) supporting customers and benefiting from growing power demand from AI-driven data centers and reshoring industrial activity[4] Shareholder Returns Liberty increased share repurchase authorization to $750 million, repurchased $30 million in Q1 2024, and maintained a $0.07 quarterly cash dividend Share Repurchase Program Liberty's Board increased the share repurchase authorization to $750 million, extending it through July 2026, with $30 million repurchased in Q1 2024, bringing cumulative repurchases to 12.5% of shares outstanding - Board increased Liberty's existing share repurchase authorization to $750 million, a $250 million increase, and extended the authorization through July 31, 2026[5] Share Repurchase Details | Metric | Q1 2024 | Cumulative (since July 2022) | | :------------------------------------ | :------ | :--------------------------- | | Shares repurchased and retired | 1,480,084 | - | | Average price per share | $20.36 | - | | Total value of repurchases | ~$30 million | ~$417 million (including dividends) | | % of shares outstanding repurchased | 0.9% | 12.5% | | Total remaining authorization | ~$392 million | - | - Repurchases may be conducted through open market transactions, block trades, privately negotiated transactions, derivative transactions, or other means, funded by cash on hand, revolving credit facility, and expected free cash flow[24] Cash Dividend Liberty paid a quarterly cash dividend of $0.07 per share in Q1 2024, totaling approximately $12 million, and declared another $0.07 per share dividend for Q2 2024 Cash Dividend Details | Quarter | Dividend per Share | Total Payout (Q1 2024) | Declaration Date | Payment Date | Record Date | | :------ | :----------------- | :--------------------- | :--------------- | :----------- | :---------- | | Q1 2024 | $0.07 | ~$12 million | - | - | - | | Q2 2024 | $0.07 | - | April 16, 2024 | June 20, 2024 | June 6, 2024 | - Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and their continuing determination that the declarations are in the best interests of Liberty and its stockholders, and may be adjusted based on market conditions and capital availability[25] Outlook & Industry Dynamics The frac industry remains constructive with steady demand; Liberty anticipates low double-digit sequential revenue growth in Q2 2024 from strategic investments Industry Outlook The frac industry remains constructive with steady demand, disciplined pricing, and a focus on service quality, with oil prices rallying and natural gas prices expected to strengthen - Frac industry dynamics remain constructive, with relatively steady demand focusing service companies on disciplined pricing and quality of service[9] - Oil prices have rallied since early in the year due to an improved global economic outlook, ongoing OPEC+ voluntary production cuts, and rising geopolitical tensions[10] - Natural gas prices have declined considerably but are likely to strengthen in the future with increasing LNG exports and surging domestic power demand[10] Company Outlook Liberty is focused on profitable growth through disciplined investment in talent, technology, and equipment, expecting low double-digit sequential revenue growth in Q2 2024 with improved profitability - Focus is on profitable growth through disciplined investment in talent, technology, and equipment that leads the industry in efficiency and emissions[11] - Strategic investment in digiFleets and power and fuel supply through LPI is expected to deliver superior returns over cycles[11] - For Q2 2024, the company expects low double-digit sequential growth in revenue on stable pricing and increased efficiency, with corresponding improvement in profitability and strong cash flow generation[12] First Quarter Financial Results Liberty reported Q1 2024 revenue of $1.1 billion, flat sequentially, with decreased net income and Adjusted EBITDA, maintaining $315 million liquidity Results Overview Liberty reported Q1 2024 revenue of $1.1 billion, flat sequentially but down 15% year-over-year, with net income of $82 million and Adjusted EBITDA of $245 million Q1 2024 Financial Performance Overview | Metric | Q1 2024 | Q4 2023 | Q1 2023 | YoY Change (Q1 24 vs Q1 23) | QoQ Change (Q1 24 vs Q4 23) | | :---------------- | :------ | :------ | :------ | :-------------------------- | :-------------------------- | | Revenue | $1.1 billion | $1.1 billion | $1.3 billion | -15% | Flat | | Net Income | $82 million | $92 million | $163 million | -49.7% | -10.9% | | Fully Diluted EPS | $0.48 | $0.54 | $0.90 | -46.7% | -11.1% | | Adjusted EBITDA | $245 million | $253 million | $330 million | -25.8% | -3.2% | Statement of Operations Data The detailed statement of operations shows Q1 2024 revenue at $1,073,125 thousand, with total operating expenses of $957,692 thousand, leading to an operating income of $115,433 thousand Consolidated Statements of Operations Data (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | March 31, 2023 | | :-------------------------------------------------------------------- | :------------- | :---------------- | :------------- | | Revenue | $1,073,125 | $1,074,958 | $1,262,077 | | Costs of services, excluding depreciation, depletion, and amortization | $782,680 | $777,251 | $888,416 | | General and administrative | $52,986 | $55,296 | $53,036 | | Depreciation, depletion, and amortization | $123,186 | $118,421 | $94,401 | | Total operating expenses | $957,692 | $951,204 | $1,036,957 | | Operating income | $115,433 | $123,754 | $225,120 | | Net income attributable to Liberty Energy Inc. stockholders | $81,892 | $92,383 | $162,655 | | Diluted EPS | $0.48 | $0.54 | $0.90 | | Capital expenditures | $141,993 | $133,610 | $129,654 | Balance Sheet and Liquidity As of March 31, 2024, Liberty reported total assets of $3,097,619 thousand and total liabilities of $1,213,135 thousand, with total liquidity of $315 million Consolidated Balance Sheet Data (in thousands) | Metric (in thousands) | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $23,788 | $36,784 | | Accounts receivable and unbilled revenue | $649,208 | $587,470 | | Total current assets | $978,008 | $954,254 | | Property and equipment, net | $1,694,232 | $1,645,368 | | Total assets | $3,097,619 | $3,033,557 | | Accounts payable and accrued liabilities | $588,337 | $572,029 | | Total current liabilities | $662,365 | $639,424 | | Long-term debt | $166,000 | $140,000 | | Total liabilities | $1,213,135 | $1,192,149 | | Total stockholders' equity | $1,884,484 | $1,841,408 | - Total liquidity, including availability under the credit facility, was $315 million as of March 31, 2024[27] Company Information This section outlines Liberty Energy's profile, Q1 conference call, non-GAAP measures, forward-looking statements, and investor contact About Liberty Liberty is a leading North American energy services firm, founded in 2011, specializing in innovative completion services and technologies for onshore oil and natural gas exploration and production companies - Liberty is a leading North American energy services firm offering innovative suites of completion services and technologies to onshore oil and natural gas exploration and production companies[29] - Founded in 2011, Liberty focuses on developing and delivering next-generation technology for the sustainable development of unconventional energy resources[29] - Liberty is headquartered in Denver, Colorado[29] Conference Call Details Liberty hosted a conference call on April 18, 2024, to discuss Q1 results, featuring CEO Chris Wright, President Ron Gusek, and CFO Michael Stock - A conference call to discuss results was hosted on Thursday, April 18, 2024, at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time)[17] - Presenting Liberty's results were Chris Wright (Chief Executive Officer), Ron Gusek (President), and Michael Stock (Chief Financial Officer)[17] - A live webcast was available at http://investors.libertyfrac.com, and a telephone replay was available until April 25, 2024[28] Non-GAAP Financial Measures This section defines non-GAAP financial and operational measures used by Liberty, including EBITDA, Adjusted EBITDA, and Adjusted Pre-Tax Return on Capital Employed (ROCE) - The earnings release includes unaudited non-GAAP financial and operational measures: EBITDA, Adjusted EBITDA, and Adjusted Pre-Tax Return on Capital Employed ("ROCE")[18][30][31] - Adjusted EBITDA is defined as EBITDA adjusted to eliminate effects of items such as non-cash stock-based compensation, new fleet/basin start-up costs, asset disposal gains/losses, bad debt reserves, and other non-recurring expenses[18] - ROCE is defined as the ratio of pre-tax net income (adjusted for income tax and tax receivable agreement impacts) for the three months ended March 31, 2024, to Average Capital Employed, which is the simple average of total capital employed as of March 31, 2024, and March 31, 2023[31][34] Forward-Looking Statements The release contains forward-looking statements regarding expected growth, performance, industry outlook, business strategy, and financial position, which involve assumptions, risks, and uncertainties - The information includes "forward-looking statements" concerning expected growth, performance, future operating results, oil and natural gas demand and prices, industry outlook, business strategy, planned capital expenditures, future cash flows, and return of capital to stockholders[19] - These statements involve certain assumptions, risks, and uncertainties, and actual results may differ materially from those indicated or implied[19] - Liberty has no obligation to affirm or update such information, except as required by law, and advises readers to consider risk factors in its Annual Report on Form 10-K and other SEC filings[19][35] Contact Information Contact information for investor relations is provided, including Michael Stock (Chief Financial Officer) and Anjali Voria, CFA (Director of Investor Relations) - Contact information for investor relations includes Michael Stock, Chief Financial Officer, and Anjali Voria, CFA, Director of Investor Relations[20][21] - Investor Relations email: IR@libertyenergy.com[1][29] Supplemental Financial Information This section details reconciliations of net income to EBITDA and Adjusted EBITDA, plus the 32% Adjusted Pre-Tax Return on Capital Employed calculation Reconciliation of Net Income to EBITDA and Adjusted EBITDA This section provides a reconciliation of net income to EBITDA and Adjusted EBITDA for the three months ended March 31, 2024, December 31, 2023, and March 31, 2023 Reconciliation of Net Income to EBITDA and Adjusted EBITDA | Metric | March 31, 2024 | December 31, 2023 | March 31, 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 | | (Gain) loss on disposal of assets | $(1,160) | $(13) | $487 | | Adjusted EBITDA | $244,786 | $252,507 | $329,885 | Calculation of Pre-Tax Return on Capital Employed This section details the calculation of Adjusted Pre-Tax Return on Capital Employed (ROCE) for the twelve months ended March 31, 2024, which was 32% Calculation of Adjusted Pre-Tax Return on Capital Employed | Metric | Twelve Months Ended March 31, 2024 | Twelve Months Ended March 31, 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 | - | | 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% | - | - Average Capital Employed is the simple average of Total Capital Employed as of March 31, 2024, and March 31, 2023[34] - 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[34]