Liberty Energy (US:LBRT)2022-04-21 17:22Financial Data and Key Metrics Changes - Revenue for Q1 2022 was $793 million, a 16% increase sequentially from $694 million in Q4 2021 [7][18] - Adjusted EBITDA rose to $92 million from $21 million in the previous quarter, reflecting solid incremental gains from increased activity and net service pricing [19][20] - Net loss after tax was $5 million in Q1 2022, compared to a loss of $250 million in Q4 2021, with fully diluted net loss per share at $0.03 [18][19] Business Line Data and Key Metrics Changes - The majority of revenue growth was driven by the frac business, with vertical integration in sand logistics enhancing efficiency [37] - The integration of acquisitions from 2021 is now yielding benefits, contributing to improved operational performance [6][20] Market Data and Key Metrics Changes - The frac services market is experiencing robust activity improvements, with tight supply-demand balance leading to increased pricing [14][15] - Labor shortages and logistics bottlenecks are significant challenges impacting operations across the industry [8][46] Company Strategy and Development Direction - The company is focused on vertical integration and technological advancements, including the deployment of the digiFrac electric fleet [6][11] - The strategy emphasizes partnerships and innovation to enhance operational efficiency and reduce costs [23][81] Management's Comments on Operating Environment and Future Outlook - Management highlighted the critical need for reliable energy infrastructure amid global energy crises and emphasized the importance of North American oil and gas supply [4][13] - The company expects approximately 10% sequential revenue growth in Q2 2022, driven by increased activity levels and modest service price increases [22][39] Other Important Information - The company ended Q1 2022 with a cash balance of $33 million and total liquidity of $222 million [20] - Capital expenditures totaled $90 million in Q1 2022, driven by upgrades and improvements in sand logistics [21] Q&A Session Summary Question: Path to mid-cycle fleet profitability target - Management indicated that achieving mid-cycle economics requires higher utilization and pricing, with current market conditions driving net service pricing upwards [28][30] Question: Drivers of Q1 performance - The majority of the Q1 performance beat was attributed to the frac business, with vertical integration playing a key role in efficiency [36][37] Question: Supply-demand balance in frac services - The market is tight, with limited spare capacity, and the company expects increased activity to drive revenue growth in Q2 [38][39] Question: Pricing dynamics and inflation - Pricing is expected to continue migrating higher due to inflationary pressures, with a partnership approach to pricing discussions with customers [44][45] Question: Impact of sand prices on profitability - Long-term sand prices are expected to be neutral for profitability, as costs are generally passed through to customers [58] Question: Competitive landscape changes - Industry consolidation has improved decision-making and structure within the market, with a few companies holding significant frac capacity [59] Question: Incremental pricing realization - Pricing changes generally occur annually, with some incremental adjustments throughout the year based on market conditions [63][64] Question: Demand pull from gas basins - There is an increase in activity in gas basins, particularly in response to higher natural gas prices [65] Question: Lead time for fleet contracts - New fleet contracts would likely see delivery in 2023 due to current demand and capacity constraints [89] Question: Free cash flow outlook - The company is focused on investing in new technologies while maintaining a commitment to returning cash through the cycle [75]