Liberty Energy (US:LBRT)2020-02-06 21:54Financial Data and Key Metrics Changes - For the full year 2019, revenue was $2.0 billion, an 8% decrease from $2.2 billion in 2018 [6][26] - Net income totaled $75 million for the full year, with adjusted EBITDA at $277 million, a 37% decline from $438 million in 2018 [7][26] - Annualized EBITDA per fleet was $12.2 million compared to $20.6 million in the prior year [7][26] - In Q4 2019, revenue decreased 23% to $398 million from $515 million in Q3 2019, with a net loss of $18 million compared to net income of $19 million in Q3 [12][31] - Q4 adjusted EBITDA decreased 57% to $30 million from $70 million in Q3, with annualized adjusted EBITDA per fleet at $5.2 million compared to $12.1 million in Q3 [12][32] Business Line Data and Key Metrics Changes - The average number of frac fleets deployed increased by 7% during the year, but this was offset by a challenging price environment [26] - The pricing dynamic entering 2020 is challenging, with total industry frac stages in North America up only marginally year-over-year in 2019 [13] - Efficiency gains across the industry have raised the number of frac stages completed by each fleet by 10% to 20%, implying a decrease of at least 10% in the active frac fleets needed to meet demand [13] Market Data and Key Metrics Changes - The substantial oversupply of frac equipment in the second half of 2019 created pricing pressure for services [14] - Future activity projections for the industry depend on multiple factors including commodity prices, availability of capital, and takeaway capacity in each basin [15] Company Strategy and Development Direction - The company employs a strategy of investing for the future based on long-term fundamentals, focusing on a competitively advantaged portfolio of efficient, environmentally friendly frac fleets [16] - Liberty is committed to advancing ESG solutions and has been a leader in environmentally conscious practices since its founding [17][18] - The company plans to continue developing next-generation frac fleets to reduce environmental impacts and customer costs [19] Management's Comments on Operating Environment and Future Outlook - Management noted that U.S. oil production growth has slowed and anticipates a reduction in EMP CapEx in 2020 [45] - The company expects significant progress in 2020 across all fronts, including customers, culture, operations, technology, and next-generation frac fleets [25] - Management expressed confidence in the long-term outlook despite current market challenges, emphasizing the importance of aligning with strong customers [99] Other Important Information - The company returned $41 million in cash to shareholders in 2019 through dividends and share repurchases [8][27] - Capital expenditures for 2020 are projected to be approximately $165 million, including $45 million for the completion of fleet 25 [40] Q&A Session Summary Question: Details on the 25th fleet - The 25th fleet is a new-built fleet, driven by strong customer demand for ESG fleets [50] Question: Investment justification for the 25th fleet - The EBITDA contribution from the 25th fleet is expected to be higher than the average, with a return profile improving over the next two years [60][62] Question: Comparison of the 24th fleet's return metrics - The return metrics for the 24th fleet are expected to be above average due to strategic customer relationships [63] Question: Pricing dynamics and revenue expectations - Spot pricing was very low in Q4 due to oversupply, but Q1 is expected to see a rebound in revenue by 10% to 15% [82][83] Question: Customer interest in new technologies - There is significant customer interest in next-generation fleets, but economic challenges make widespread adoption slow [138]