Release Date: October 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Liberty Energy Inc (LBRT, Financial) delivered a solid quarter with revenue of $1.1 billion and adjusted EBITDA of $248 million, despite a slowing demand environment.
- The company achieved record operational performance with its digiPrime fleet, setting a company record for hours pumped in a month.
- Liberty Energy Inc (LBRT) generated strong free cash flow, enabling a robust return of capital program, including $39 million in share repurchases.
- The company announced a 14% increase in its quarterly cash dividend to $0.08 per share, enhancing shareholder returns.
- Strategic investments in innovative businesses and leading-edge technologies are expected to expand Liberty Energy Inc (LBRT)'s competitive advantage and market opportunities.
Negative Points
- Liberty Energy Inc (LBRT) experienced a 2% sequential decline in revenue due to pricing headwinds.
- Net income after tax decreased to $74 million from $108 million in the prior quarter, reflecting a challenging market environment.
- The company anticipates a low double-digit percentage reduction in Q4 activity, more than the typical seasonal softening.
- Pricing pressures are inconsistent with anticipated market demand, leading to potential challenges in maintaining profitability.
- Liberty Energy Inc (LBRT) plans to temporarily reduce its deployed fleet count by approximately 5% due to near-term reductions in customer activity and market pressures.
Q & A Highlights
Q: What are Liberty Energy's plans for e-frac fleet additions and LPI investments in 2025?
A: Michael Stock, CFO, mentioned that Liberty Energy plans to bring four or five digi fleets into the market, which would represent about a 10% replacement. The company expects to have approximately 40% of its fleet with digi technologies by the end of next year. LPI investments are still in the early stages, with discussions ongoing, and more clarity is expected by the January call.
Q: How should we think about the pricing pressure dynamic in the market?
A: Chris Wright, CEO, stated that while there is some pricing pressure, particularly for extra pickup work, Liberty Energy is not willing to operate fleets at prices that do not justify their operation. He noted that the market is not in a typical downturn and believes pricing is near the bottom.
Q: What are the expectations for Liberty Energy's free cash flow in 2025?
A: Michael Stock, CFO, indicated that Liberty Energy expects to manage CapEx down in its completions business, with a focus on replacing four to five digi fleets. The company anticipates a slight increase in cash taxes and expects working capital to remain relatively flat. Overall, Liberty Energy expects to maintain strong free cash flow generation and continue its robust return of capital program.
Q: How is Liberty Energy addressing the current softness in the market and pricing pressures?
A: Chris Wright, CEO, explained that Liberty Energy is focusing on maintaining profitability by idling some capacity if necessary. The company is leveraging its competitive advantages, such as its deep customer relationships and leading-edge technologies, to navigate the current market conditions. Wright emphasized that the company is not willing to compromise on pricing that does not support investment.
Q: What are Liberty Energy's strategic priorities for 2025 and beyond?
A: Chris Wright, CEO, highlighted that Liberty Energy's strategic priorities include maintaining a disciplined investment approach, focusing on strategic investments in power generation services, and continuing to deliver strong free cash flow. The company is also committed to its return of capital program and aims to create long-term value for shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
