Liberty Energy (US:LBRT)2022-10-20 19:50Financial Data and Key Metrics Changes - Revenue for Q3 2022 was $1.2 billion, representing a 26% sequential increase and an 82% year-over-year increase [7][18] - Net income for the quarter was $147 million, or $0.78 per fully diluted share, compared to $105 million and $0.55 per share in the previous quarter [7][19] - Adjusted EBITDA increased to $277 million, a 41% increase from the previous quarter [7][21] - General and administrative expenses totaled $50 million, reflecting an increase due to performance-based compensation and inflationary pressures [20] Business Line Data and Key Metrics Changes - The deployment of six fleets acquired from OneStim contributed significantly to revenue growth, with nearly half of the sequential growth attributed to this deployment [18] - The operational execution led to record-breaking metrics in profit pumped, pump hours, and technology rollouts [8] Market Data and Key Metrics Changes - The frac market is near full utilization, with operators focused on securing reliable crews and supply chains [10][15] - Demand for next-generation digiFrac fleets is strong, with expectations for deployment in customer locations soon [11] Company Strategy and Development Direction - The company aims to maintain a flexible approach to capital allocation, balancing shareholder returns with investments in growth opportunities [7][24] - Liberty is focused on technology innovation and vertical integration to enhance service quality and operational efficiency [10][12] - The company is investing in partnerships and technology developments, including a recent investment in Natron Energy for battery technology [11][57] Management's Comments on Operating Environment and Future Outlook - Management highlighted global macroeconomic concerns, including rising interest rates and inflation, but noted that oil and gas markets remained tight [13] - The outlook for oil demand continues to grow, with North America expected to be a leading supplier of incremental barrels [14] - Management expressed confidence in the company's ability to navigate challenges and capitalize on market opportunities [15] Other Important Information - The company announced a return of capital program, including a share repurchase of 2.5% of outstanding shares and the restoration of a quarterly cash dividend of $0.05 per share [7][24] - The company ended the quarter with a cash balance of $24 million and net debt of $230 million [22] Q&A Session Summary Question: Fleet count and incremental fleets - Management indicated that the current fleet count is in the low 40s and that additional fleets will only be added if compelling customer relationships exist [30] Question: CapEx expectations for next year - Management expects CapEx to be at or slightly below 2022 levels, with potential for some spending to shift into early 2023 due to supply chain delays [32] Question: Market tightness and budget exhaustion - Management noted that operators are more concerned about securing reliable crews than typical budget exhaustion, leading to less seasonal slowdown than in previous years [38][40] Question: Pricing and profitability expansion - Management discussed the potential for pricing resets and emphasized the importance of service quality and efficiency in driving profitability [42][44] Question: Vertical integration impact on earnings - Management stated that while frac remains the dominant segment, vertical integration helps ensure high-speed operations and reduces risks associated with supply [62] Question: Share buyback strategy - Management expressed interest in acquiring more shares at attractive valuations, emphasizing that buyback aggressiveness is price-dependent [66] Question: Frac sand capacity utilization - Management confirmed that frac sand capacity is running at 100% utilization, with the majority of sand supplied through Liberty's operations [69] Question: Future investments in technology - Management indicated a focus on technology investments that provide competitive advantages, with a modest investment in Natron Energy being a recent example [57][59]