Liberty Energy Inc. Announces Second Quarter 2022 Financial and Operational Results
Liberty Energy Inc. (NYSE: LBRT) reported strong second-quarter 2022 results, with revenue of $943 million, a 19% sequential increase and 62% year-over-year growth. Net income reached $105 million ($0.55 EPS), and Adjusted EBITDA rose to $196 million. The company reinstated a $250 million share repurchase program and announced partnerships to deploy additional electric frac fleets. Liberty also invested $10 million in Fervo Energy to support geothermal technology. The firm aims to manage cash flow while navigating supply chain challenges and the current economic landscape.
- Revenue growth of 19% sequentially and 62% year-over-year to $943 million.
- Net income of $105 million compared to a net loss in the prior year.
- Adjusted EBITDA increased 114% from the previous quarter to $196 million.
- Reinstated $250 million share repurchase program to return capital to shareholders.
- Investment in Fervo Energy to expand into geothermal energy technology.
- Potential risk of a severe recession impacting oil and gas demand.
- Ongoing inflationary pressures and supply chain challenges affecting operations.
DENVERDENVER--(BUSINESS WIRE)--
Summary Results and Highlights
-
Revenue of
$943 million 19% sequentially and62% year-over-year
-
Net income1 was
$105 million $0.55
-
Adjusted EBITDA2 of
$196 million
-
Reinstated return of capital program with share repurchase authorization of up to
$250 million
-
Growing strategic partnerships with key customers to maximize our long-term returns:
- Multi-year agreements to deploy two additional Liberty digiFrac™ electric fleets in early 2023
- Announced 2022 fleet reactivations at compelling economics to support core customers’ development plans, while growing Liberty’s 2023 free cash flow generation
- Released 2022 Bettering Human Lives report, placing today’s global energy security crisis in proper context and showcasing Liberty’s leadership in clean energy technology innovation
- Announced investment in Fervo Energy, leveraging Liberty’s technologies and equipment to help enable next-generation low-carbon, reliable electricity from unconventional geothermal resources
“The second quarter was a busy and exciting time as the Liberty team continued to deliver differential quality services in today’s robust but operationally challenged environment. This translated into a notable milestone of fleet financial performance at levels that were last seen in 2018. The hard work and dedication of our employees combined with deep relationships with our partners across the value chain enabled us to achieve strong operational efficiency in an environment still impacted by supply chain challenges,” commented
“Liberty’s first half of 2022 is starting to reveal the value creation from our 2021 acquisitions and insistence upon getting the business integrations done right, consistent with our focus on long-term results. We’ve positioned the company to deliver top-tier performance through cycles with a focus on free cash flow generation and maximizing returns. We’re driving cash flow expansion that allows us to fund compelling organic investments to grow our competitive advantage, while also returning cash to shareholders. Our 2022 capital expenditures will now include investment in two additional digiFrac fleets supported by attractive dedicated customer agreements, accelerating wet sand handling technology, and the reactivation of fleets with long-term customers, all of which will drive incremental future cash flow generation,” continued
Outlook
While the global economic recovery outlook has softened on reverberating impacts from higher inflation, rising interest rates and the Russian invasion of
The greatest risk to our marketplace is a severe recession that leads to a drop in global demand for oil and natural gas. A moderate recession typically leads only to a slowing in the rate of demand growth for oil and natural gas, which would likely not be overly disruptive to our customers’ activity given today’s low inventory levels and tight supply and demand balances. The recovery in oil supply appears to be under greater threat than oil demand.
The frac market is near full utilization, and few service providers have the fleet capacity and supply chain reach to satisfy E&P operators’ goals. Liberty was disciplined in restraining fleet reactivations in the post-Covid era of muted returns. Pricing has now recovered to where Liberty, in support of our customers’ long-term development needs, is reactivating several of our recently acquired, available fleets. Importantly, these long-term, dedicated customers seek additional next generation fleets that are not available today in the market, and Liberty is providing an avenue to serve those customers and simultaneously driving free cash flow from these existing fleets to reinvest in our fleet modernization program. Liberty is also partnering with key customers on the deployment of two additional digiFrac electric fleets in 2023. Demand is very strong for the technically superior design Liberty developed throughout the downturn that drives better safety and efficiency, a rare commodity in a tight market.
“A strong frac market and specific conversations with our customers gives us confidence in the demand for Liberty services into the coming year,” commented
“The increased free cash flow generation capability of our expanded business underscores the benefit of our countercyclical investment philosophy, highlighted by the contributions gained from the OneStim acquisition. Our strategy remains unchanged since our company was founded: delivering superior returns and generating free cash flow, by balancing disciplined investment with maintaining a strong balance sheet and returning capital to shareholders,” continued
Share Repurchase Program
Liberty’s Board of Directors authorized a share repurchase program that allows the company to repurchase up to
The shares may be repurchased from time to time in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s common stock, the market price of the Company’s common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated over the next two years.
Liberty announced today a
“We chose this investment opportunity because of our belief in the concept viability, the quality of Fervo’s team, and the size of the potential resource already captured. We will work in collaboration with Fervo to solve similar challenges that we have seen with the shale revolution,” commented
2022 Bettering Human Lives Report
Liberty Energy has updated and expanded its Bettering Human Lives report. The report contains an in-depth look at the importance of oil and gas production in a global context, including its vital role in elevating people out of energy poverty and supplying the essential ingredients for modern living. The report is available on Liberty Energy’s website and provides Environmental, Social and Governance (ESG) data for 2021.
Second Quarter Results
For the second quarter of 2022, revenue grew to
Net income1 (after taxes) totaled
Adjusted EBITDA2 of
Fully diluted earnings per share was
Balance Sheet and Liquidity
As of
In
Conference Call
Liberty will host a conference call to discuss the results at
Individuals wishing to participate in the conference call should dial (833) 255-2827, or for international callers (412) 902-6704. Participants should ask to join the Liberty Energy call. A live webcast will be available at http://investors.libertyfrac.com. The webcast can be accessed for 90 days following the call. A telephone replay will be available shortly after the call and can be accessed by dialing (877) 344-7529, or for international callers (412) 317-0088. The passcode for the replay is 8163181. The replay will be available until
About Liberty
Liberty is a leading North American oilfield services firm that offers one of the most innovative suites of completion services and technologies to onshore oil and natural gas exploration and production companies. Liberty was founded in 2011 with a relentless focus on developing and delivering next generation technology for the sustainable development of unconventional energy resources in partnership with our customers. Liberty is headquartered in
1 |
|
Net income attributable to controlling and non-controlling interests. |
2 |
|
“Adjusted EBITDA” is not presented in accordance with generally accepted accounting principles in |
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and operational measures, including EBITDA, Adjusted EBITDA and Pre-Tax Return on Capital Employed. We believe that the presentation of these non-GAAP financial and operational measures provides useful information about our financial performance and results of operations. We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the loss or gain on remeasurement of liability under our tax receivable agreements and other non-recurring expenses that management does not consider in assessing ongoing performance.
Our board of directors, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion and amortization) and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP. Non-GAAP financial and operational measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial and operational measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included herein concerning, among other things, statements about our expected growth from recent acquisitions, expected performance, future operating results, oil and natural gas demand and prices and the outlook for the oil and gas industry, future global economic conditions, improvements in operating procedures and technology, our business strategy and the business strategies of our customers, the deployment of fleets in the future, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, return of capital to stockholders, business strategy and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “outlook,” “project,” “plan,” “position,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “likely,” “should,” “could,” and similar terms and phrases. However, the absence of these words does not mean that the statements are not forward-looking. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. The outlook presented herein is subject to change by Liberty without notice and Liberty has no obligation to affirm or update such information, except as required by law. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this earnings release will not be achieved. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in Liberty's filings with the
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for us to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended
Selected Financial Data (unaudited) |
|||||||||||||||||||
|
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Statement of Operations Data: |
|
(amounts in thousands, except for per share data) |
|||||||||||||||||
Revenue |
|
$ |
942,619 |
|
|
$ |
792,770 |
|
|
$ |
581,288 |
|
|
$ |
1,735,389 |
|
$ |
1,133,320 |
|
Costs of services, excluding depreciation and amortization shown separately |
|
|
713,718 |
|
|
|
670,019 |
|
|
|
521,956 |
|
|
|
1,383,737 |
|
|
1,020,891 |
|
General and administrative |
|
|
42,162 |
|
|
|
38,318 |
|
|
|
29,403 |
|
|
|
80,480 |
|
|
55,762 |
|
Transaction, severance and other costs |
|
|
2,192 |
|
|
|
1,334 |
|
|
|
2,996 |
|
|
|
3,526 |
|
|
10,617 |
|
Depreciation, depletion, and amortization |
|
|
77,379 |
|
|
|
74,588 |
|
|
|
63,214 |
|
|
|
151,967 |
|
|
125,270 |
|
(Gain) loss on disposal of assets |
|
|
(3,436 |
) |
|
|
4,672 |
|
|
|
(277 |
) |
|
|
1,236 |
|
|
(997 |
) |
Total operating expenses |
|
|
832,015 |
|
|
|
788,931 |
|
|
|
617,292 |
|
|
|
1,620,946 |
|
|
1,211,543 |
|
Operating income (loss) |
|
|
110,604 |
|
|
|
3,839 |
|
|
|
(36,004 |
) |
|
|
114,443 |
|
|
(78,223 |
) |
Loss (gain) on remeasurement of liability under tax receivable agreement (1) |
|
|
168 |
|
|
|
4,165 |
|
|
|
(3,305 |
) |
|
|
4,333 |
|
|
(3,305 |
) |
Interest expense, net |
|
|
4,862 |
|
|
|
4,324 |
|
|
|
3,767 |
|
|
|
9,186 |
|
|
7,521 |
|
Net income (loss) before taxes |
|
|
105,574 |
|
|
|
(4,650 |
) |
|
|
(36,466 |
) |
|
|
100,924 |
|
|
(82,439 |
) |
Income tax expense (1) |
|
|
235 |
|
|
|
830 |
|
|
|
16,006 |
|
|
|
1,065 |
|
|
8,649 |
|
Net income (loss) |
|
|
105,339 |
|
|
|
(5,480 |
) |
|
|
(52,472 |
) |
|
|
99,859 |
|
|
(91,088 |
) |
Less: Net income (loss) attributable to non-controlling interests |
|
|
183 |
|
|
|
(104 |
) |
|
|
(1,912 |
) |
|
|
79 |
|
|
(6,323 |
) |
Net income (loss) attributable to |
|
$ |
105,156 |
|
|
$ |
(5,376 |
) |
|
$ |
(50,560 |
) |
|
$ |
99,780 |
|
$ |
(84,765 |
) |
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic |
|
$ |
0.56 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.29 |
) |
|
$ |
0.54 |
|
$ |
(0.50 |
) |
Diluted |
|
$ |
0.55 |
|
|
$ |
(0.03 |
) |
|
$ |
(0.29 |
) |
|
$ |
0.52 |
|
$ |
(0.50 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic |
|
|
186,719 |
|
|
|
183,999 |
|
|
|
172,523 |
|
|
|
185,367 |
|
|
167,891 |
|
Diluted (2) |
|
|
190,441 |
|
|
|
183,999 |
|
|
|
172,523 |
|
|
|
190,623 |
|
|
167,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other Financial and Operational Data |
|
|
|
|
|
|
|
|
|||||||||||
Capital expenditures (3) |
|
$ |
127,045 |
|
|
$ |
90,062 |
|
|
$ |
37,666 |
|
|
$ |
217,107 |
$ |
79,604 |
||
Adjusted EBITDA (4) |
|
$ |
196,109 |
|
|
$ |
91,831 |
|
|
$ |
36,573 |
|
|
$ |
287,940 |
|
$ |
68,258 |
|
| ______________ | ||
(1) |
|
During the second quarter of 2021, the Company entered into a three-year cumulative pre-tax book loss driven primarily by Covid-19 which, applying the interpretive guidance to Accounting Standards Codification Topic 740 - Income Taxes, required the Company to recognize a valuation allowance against certain of the Company’s deferred tax assets. In connection with the recognition of a valuation allowance, the Company was also required to remeasure the liability under the tax receivable agreements. |
(2) |
|
In accordance with |
(3) |
|
Net capital expenditures presented above include investing cash flows from purchase of property and equipment, excluding acquisitions, net of proceeds from the sales of assets. |
(4) |
|
Adjusted EBITDA is a non-GAAP financial measure. See the tables entitled “Reconciliation and Calculation of Non-GAAP Financial and Operational Measures” below. |
|
|||||||
Condensed Consolidated Balance Sheets |
|||||||
(unaudited, amounts in thousands) |
|||||||
|
|
|
|
||||
|
|
2022 |
|
|
|
2021 |
|
Assets |
|
||||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
41,476 |
|
|
$ |
19,998 |
|
Accounts receivable and unbilled revenue |
|
564,039 |
|
|
|
407,454 |
|
Inventories |
|
163,652 |
|
|
|
134,593 |
|
Prepaids and other current assets |
|
71,757 |
|
|
|
68,332 |
|
Total current assets |
|
840,924 |
|
|
|
630,377 |
|
Property and equipment, net |
|
1,267,393 |
|
|
|
1,199,287 |
|
Operating and finance lease right-of-use assets |
|
133,612 |
|
|
|
128,100 |
|
Other assets |
|
92,924 |
|
|
|
82,289 |
|
Deferred tax asset |
|
280 |
|
|
|
607 |
|
Total assets |
$ |
2,335,133 |
|
|
$ |
2,040,660 |
|
Liabilities and Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued liabilities |
$ |
582,603 |
|
|
$ |
528,468 |
|
Current portion of operating and finance lease liabilities |
|
38,456 |
|
|
|
39,772 |
|
Current portion of long-term debt, net of discount |
|
1,013 |
|
|
|
1,007 |
|
Total current liabilities |
|
622,072 |
|
|
|
569,247 |
|
Long-term debt, net of discount |
|
252,937 |
|
|
|
121,445 |
|
Long-term operating and finance lease liabilities |
|
87,657 |
|
|
|
81,411 |
|
Deferred tax liability |
|
563 |
|
|
|
563 |
|
Payable pursuant to tax receivable agreements |
|
41,888 |
|
|
|
37,555 |
|
Total liabilities |
|
1,005,117 |
|
|
|
810,221 |
|
|
|
|
|
||||
Stockholders' equity: |
|
|
|
||||
Common Stock |
|
1,872 |
|
|
|
1,860 |
|
Additional paid in capital |
|
1,384,134 |
|
|
|
1,367,642 |
|
Accumulated deficit |
|
(56,174 |
) |
|
|
(155,954 |
) |
Accumulated other comprehensive loss |
|
(2,263 |
) |
|
|
(306 |
) |
Total stockholders’ equity |
|
1,327,569 |
|
|
|
1,213,242 |
|
Non-controlling interest |
|
2,447 |
|
|
|
17,197 |
|
Total equity |
|
1,330,016 |
|
|
|
1,230,439 |
|
Total liabilities and equity |
$ |
2,335,133 |
|
|
$ |
2,040,660 |
|
|
||||||||||||||||||
Reconciliation and Calculation of Non-GAAP Financial and Operational Measures |
||||||||||||||||||
(unaudited, amounts in thousands) |
||||||||||||||||||
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA |
||||||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Net income (loss) |
$ |
105,339 |
|
|
$ |
(5,480 |
) |
|
$ |
(52,472 |
) |
|
$ |
99,859 |
|
$ |
(91,088 |
) |
Depreciation, depletion, and amortization |
|
77,379 |
|
|
|
74,588 |
|
|
|
63,214 |
|
|
|
151,967 |
|
|
125,270 |
|
Interest expense, net |
|
4,862 |
|
|
|
4,324 |
|
|
|
3,767 |
|
|
|
9,186 |
|
|
7,521 |
|
Income tax expense |
|
235 |
|
|
|
830 |
|
|
|
16,006 |
|
|
|
1,065 |
|
|
8,649 |
|
EBITDA |
$ |
187,815 |
|
|
$ |
74,262 |
|
|
$ |
30,515 |
|
|
$ |
262,077 |
|
$ |
50,352 |
|
Stock based compensation expense |
|
4,201 |
|
|
|
6,813 |
|
|
|
5,899 |
|
|
|
11,014 |
|
|
10,846 |
|
Fleet start-up costs |
|
5,169 |
|
|
|
585 |
|
|
|
— |
|
|
|
5,754 |
|
|
— |
|
Transaction, severance and other costs |
|
2,192 |
|
|
|
1,334 |
|
|
|
2,996 |
|
|
|
3,526 |
|
|
10,617 |
|
(Gain) loss on disposal of assets |
|
(3,436 |
) |
|
|
4,672 |
|
|
|
(277 |
) |
|
|
1,236 |
|
|
(997 |
) |
Provision for credit losses |
|
— |
|
|
|
— |
|
|
|
745 |
|
|
|
— |
|
|
745 |
|
Loss (gain) on remeasurement of liability under tax receivable agreement |
|
168 |
|
|
|
4,165 |
|
|
|
(3,305 |
) |
|
|
4,333 |
|
|
(3,305 |
) |
Adjusted EBITDA |
$ |
196,109 |
|
|
$ |
91,831 |
|
|
$ |
36,573 |
|
|
$ |
287,940 |
|
$ |
68,258 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Calculation of Pre-Tax Return on Capital Employed |
||||||
|
Twelve Months Ended |
|||||
|
|
|||||
|
|
2022 |
|
|
|
2021 |
Net income |
$ |
3,943 |
|
|
|
|
Add back: Income tax expense |
|
1,632 |
|
|
|
|
Pre-tax net income |
$ |
5,575 |
|
|
|
|
Capital Employed |
|
|
|
|||
Total debt, net of discount |
$ |
253,950 |
|
|
$ |
105,596 |
Total equity |
|
1,330,016 |
|
|
|
1,229,434 |
Total Capital Employed |
$ |
1,583,966 |
|
|
$ |
1,335,030 |
|
|
|
|
|||
Average Capital Employed (1) |
$ |
1,459,498 |
|
|
|
|
Pre-Tax Return on Capital Employed (2) |
|
0 |
% |
|
|
|
(1) |
Average Capital Employed is the simple average of Total Capital Employed as of |
(2)
|
Pre-tax Return on Capital Employed is the ratio of pre-tax net income for the twelve months ended Employed. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220725005794/en/
Chief Financial Officer
303-515-2851
IR@libertyfrac.com
Source:
FAQ
What were Liberty Energy's Q2 2022 financial results?
What is Liberty Energy's stock symbol?
What is the share repurchase program announced by Liberty Energy?
How much did Liberty Energy invest in Fervo Energy?
What are the key challenges Liberty Energy faces in the market?
