Delivers revenue growth of 20% year-over-year
LandBridge Company LLC (NYSE: LB) (the “Company,” “LandBridge”
or “LB”) today announced its financial and operating results for
the second quarter of 2024.
Second Quarter 2024 Financial Highlights
- Revenues of $26.0 million, up 20% year-over-year
- Net loss of $57.7 million(1)
- Net loss margin of 222%(1)
- Adjusted EBITDA(2) of $23.4 million, up 24% year-over-year
- Adjusted EBITDA Margin(2) of 90%
- Cash flows from operating activities of $16.0 million
- Free Cash Flow(2) of $15.7 million
- Operating cash flow margin of 62%
- Free Cash Flow Margin(2) of 60%
(1) Net loss and net loss margin include a non-cash expense of
$71.8 million attributable to WaterBridge NDB LLC incentive units
that are accounted for as liability awards at WaterBridge NDB LLC.
Beginning on July 1, 2024, incentive units of LandBridge Holdings
LLC (the sole incentive units allocable to the Company following
the division of LandBridge Holdings LLC from WaterBridge NDB LLC)
will transition to equity award accounting. Any actual cash expense
associated with such incentive units will be borne solely by
LandBridge Holdings LLC and not the Company.
(2) Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and
Free Cash Flow Margin are non-GAAP financial measures. See
“Comparison of Non-GAAP Financial Measures” included within the
Appendix of this press release for related disclosures and
reconciliations to the most directly comparable financial measures
calculated and presented in accordance with GAAP.
Other Recent Events
- Closed the acquisitions of East Stateline Ranch and Speed
Ranch, adding an additional 103,000 and 34,000 surface acres,
respectively, growing the total surface owned by the Company to
approximately 220,000 acres
- Completed the Company’s initial public offering (inclusive of
the full exercise of the underwriter’s option to purchase
additional shares) and concurrent private placement
- Entered into a non-binding letter of intent (“LOI”) for the
development of a data center on our land in Reeves County,
Texas
Jason Long, Chief Executive Officer, stated, “Our land is
strategically located in the heart of the Permian Basin, ideally
situated to support energy production, digital infrastructure, and
broader industrial development. Through our active land management
strategy, we believe we can grow the long-term value of our more
than 220,000 surface acres and its resources, while generating
multiple fee- and royalty-based revenue streams. We look forward to
an exciting second half of the year.”
Scott McNeely, Chief Financial Officer of the Company, said, “In
the second quarter we demonstrated the advantages of our
capital-efficient and highly diversified business model by
delivering strong double-digit revenue growth and high margins. Our
recently completed IPO has strengthened LandBridge’s balance sheet,
enhanced our financial flexibility, and further differentiated our
platform as we accelerate our strategy to create compelling
long-term value for shareholders.”
Second Quarter 2024 Consolidated Financial
Information
Revenue for the second quarter of 2024 was $26.0 million as
compared to $19.0 million in the first quarter of 2024 and $21.7
million in the second quarter of 2023. The sequential increase was
primarily attributable to increases in easements and other
surface-related revenues of $2.3 million, surface use royalties of
$2.8 million, resource sales of $0.3 million, resource royalties of
$1.3 million and oil and gas royalties $0.3 million. Net loss for
the second quarter of 2024 was $57.7 million as compared to net
income of $10.8 million in the first quarter of 2024 and $44.7
million in the second quarter of 2023. (1)
Adjusted EBITDA was $23.4 million in the second quarter of 2024
as compared to $16.9 million in the first quarter of 2024 and $18.9
million in the second quarter of 2023. (2) Adjusted EBITDA during
the second quarter of 2024 was adjusted for $71.8 million of
non-cash charges related to share-based compensation and $0.8
million of transaction-related expenses. (1)
Net loss margin was 222% in the second quarter of 2024 as
compared to net income margin of 206% in the second quarter of
2023. (1) Adjusted EBITDA margin was 90% in the second quarter of
2024 as compared to 89% in the first quarter of 2024 and 87% in the
second quarter of 2023. (2)
Diversified Revenue Streams
Surface Use Royalties and Revenue: Generated revenues of
$14.4 million in the second quarter of 2024 as compared to $9.3
million in the first quarter of 2024 and $8.3 million in the second
quarter of 2023. Surface Use Royalties and Revenue increased 55%
sequentially, primarily driven by an increase in produced water
royalty volumes from 357 MBbls/d to 628 MBbls/d.
Resources Sales and Royalties: Generated revenues of $7.0
million in the second quarter of 2024 as compared to $5.5 million
in the first quarter of 2024 and $8.4 million in the second quarter
of 2023. Revenue from Resource Sales and Royalties increased 28%
sequentially, primarily driven by improved unit pricing on brackish
water sales and royalty volumes.
Oil and Gas Royalties: Generated revenues of $4.5 million
in the second quarter of 2024 as compared to $4.2 million in the
first quarter of 2024 and $5.0 million in the second quarter of
2023. Revenue from Oil and Gas Royalties increased 7% sequentially,
primarily driven by net royalty production of 983 boe/d at an
average realized price of $43.97 per boe and a one-time lease bonus
payment.
Robust Free Cash Flow Generation
Cash flow from operations for the second quarter of 2024 was
$16.0 million as compared to $17.2 million in the first quarter of
2024 and $12.4 million in the second quarter of 2023. Capital
expenditures for the second quarter of 2024 were $0.4 million. Free
cash flow during the second quarter of 2024 was $15.7
million.(2)
Net cash used in investing activities during the second quarter
of 2024 was $375.8 million, which included a $375.4 million outflow
primarily for the East Stateline Ranch and Speed Ranch
acquisitions.
Net cash from financing activities during the second quarter of
2024 included $375.5 million of net inflows consisting of $265.0
million of net borrowings on our term loan and a $120.0 million
equity injection, both of which were used to fund the East
Stateline Ranch and Speed Ranch acquisitions.
Strong Balance Sheet with Ample Liquidity
Total cash and cash equivalents were $24.6 million as of June
30, 2024 as compared to $8.9 million as of March 31, 2024. The
Company had $400.0 million of borrowings outstanding under its term
loan and revolving credit facility as of June 30, 2024 and $140.0
million outstanding as of March 31, 2024.
As of June 30, 2024, the Company had available borrowing
capacity under its revolving credit facility of approximately $25.0
million.
Total liquidity was $49.6 million as of June 30, 2024.
Ongoing Commercial Progress
On July 3, 2024, a subsidiary of the Company entered into the
non-binding LOI regarding a long-term ground lease on our land in
Reeves County, Texas, to facilitate the development of a data
center and related facilities. The counterparty to the LOI is a
to-be-formed joint venture between a third-party developer and
funds affiliated with our financial sponsor, Five Point Energy LLC.
The LOI contemplates, among other things, an $8.0 million fee that
would become payable in January 2025 upon the execution of a
mutually-acceptable long-term ground lease. We expect that the
final terms and conditions of the lease will be submitted for
approval to a Conflicts Committee of the Company’s Board of
Directors to be formed in connection with the approval of such
lease, although we can offer no assurance that we will be
successful in negotiating and entering into such lease
agreement.
Conference Call and Webcast Information
The Company will hold a conference call on Thursday, August 8,
2024 at 8:00 a.m. Central Time to discuss second quarter results. A
live webcast of the conference call will be available on the
Investors section of the Company’s website at
http://www.landbridgeco.com. To listen to the live broadcast, go to
the site at least 10-15 minutes prior to the scheduled start time
in order to register and install any necessary audio software.
The conference call can also be accessed by dialing (800)
715-9871 (or (646) 307-1963 for international participants) and
provide the Conference ID 4907698. The telephone replay can be
accessed by dialing (800) 770-2030 and providing the Conference ID
4907698. The telephone replay will be available starting shortly
after the call through August 22, 2024.
About LandBridge
LandBridge owns approximately 220,000 surface acres across Texas
and New Mexico, located primarily in the heart of the Delaware
sub-basin in the Permian Basin, the most active region for oil and
natural gas exploration and development in the United States.
LandBridge actively manages its land and resources to support and
encourage oil and natural gas production and broader industrial
development. Since its founding in 2021, LandBridge has served as
one of the leading land management businesses within the Delaware
Basin. LandBridge was formed by Five Point Energy LLC, an energy
private equity firm with a track record of investing in and
developing energy, environmental water management and sustainable
infrastructure companies within the Permian Basin.
Cautionary Statement Regarding Forward-Looking
Statements
This news release may contain 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, that are based on LB’s beliefs, as well as assumptions
made by, and information currently available to, LB, and therefore
involve risks and uncertainties that are difficult to predict.
Generally, future or conditional verbs such as “will,” “would,”
“should,” “could,” or “may” and the words “believe,” “anticipate,”
“continue,” “intend,” “expect” and similar expressions identify
forward-looking statements. Forward-looking statements include, but
are not limited to, references to the LOI and the completion of the
arrangements contemplated therein, strategies, plans, objectives,
expectations, intentions, assumptions, future operations and
prospects and other statements that are not historical facts. You
should not place undue reliance on forward-looking statements.
Although LB believes that plans, intentions and expectations
reflected in or suggested by any forward-looking statements made
herein are reasonable, LB may be unable to achieve such plans,
intentions or expectations and actual results, and performance or
achievements may vary materially and adversely from those envisaged
in this news release due to a number of factors including, but not
limited to: our customers’ demand for and use of our land and
resources; the success of our affiliates, WaterBridge and Desert
Environmental, in executing their business strategies, including
their ability to construct infrastructure, attract customers and
operate successfully on our land; our customers’ ability to develop
our land or any potential acquired acreage to accommodate any
future surface use developments; the domestic and foreign supply
of, and demand for, energy sources, including the impact of actions
relating to oil price and production controls by the members of the
Organization of Petroleum Exporting Countries, Russia and other
allied producing countries with respect to oil production levels
and announcements of potential changes to such levels; our ability
to enter into favorable contracts regarding surface uses, access
agreements and fee arrangements, such as the data center LOI,
including the prices we are able to charge and the margins we are
able to realize; the initiation or outcome of potential litigation;
and any changes in general economic and/or industry specific
conditions. These risks, as well as other risks associated with LB
are also more fully discussed in our final prospectus filed with
the U.S. Securities and Exchange Commission (“SEC”) on June 28,
2024, and any subsequently filed quarterly reports and current
reports. You can access LB’s filings with the SEC through the SEC's
website at http://www.sec.gov. Except as required by applicable
law, LB undertakes no obligation to update any forward-looking
statements or other statements herein for revisions or changes
after this communication is made.
The historical financial information presented below reflects
only the historical financial results of our predecessor, DBR Land
Holdings LLC, and does not give pro forma effect to the East
Stateline Ranch acquisition or the Speed Ranch acquisition. Each of
the East Stateline Ranch acquisition and the Speed Ranch
acquisition is reflected in the historical financial information
solely from and after its respective completion.
SECOND QUARTER 2024 RESULTS
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Revenues:
Oil and gas royalties
$
4,475
$
5,034
$
8,660
$
8,626
Resource sales
3,618
6,401
7,034
11,717
Resource sales - Related party (Note
8)
179
404
272
1,488
Easements and other surface-related
revenues
5,088
1,881
9,842
3,353
Easements and other surface-related
revenues - Related party (Note 8)
2,376
3,274
2,759
3,857
Surface use royalties
3,304
2,232
4,902
3,624
Surface use royalties - Related party
(Note 8)
3,667
895
6,275
1,774
Resource royalties
2,139
1,601
4,117
3,171
Resource royalties - Related party (Note
8)
1,107
-
1,107
-
Total revenues
25,953
21,722
44,968
37,610
Resource sales-related expense
643
999
1,316
2,079
Other operating and maintenance
expense
611
751
1,129
1,255
General and administrative expense
(income)
73,823
(27,459
)
75,983
(15,038
)
Depreciation, depletion, amortization and
accretion
2,112
2,109
4,256
3,833
Operating (loss) income
(51,236
)
45,322
(37,716
)
45,481
Interest expense, net
6,280
562
9,164
1,280
Other income
-
-
(241
)
(15
)
Income (loss) from operations before
taxes
(57,516
)
44,760
(46,639
)
44,216
Income tax expense
137
96
238
199
Net (loss) income
$
(57,653
)
$
44,664
$
(46,877
)
$
44,017
CONSOLIDATED BALANCE SHEETS
June 30,
March 31,
December 31,
2024
2024
2023
Current assets:
Cash and cash equivalents
$
24,646
$
8,892
$
37,823
Accounts receivable, net
13,441
8,452
12,383
Related party receivable
2,862
1,347
1,037
Prepaid expenses and other current
assets
594
685
1,035
Total current assets
41,543
19,376
52,278
Non-current assets:
Property, plant and equipment, net
629,812
256,612
203,018
Intangible assets, net
28,048
28,611
28,642
Other assets
11,060
5,758
5,011
Total non-current assets
668,920
290,981
236,671
Total assets
$
710,463
$
310,357
$
288,949
Liabilities and member's equity
Current liabilities:
Accounts payable
$
194
$
545
$
200
Related party payable
498
433
453
Accrued liabilities
12,984
4,343
4,945
Current portion of long-term debt
35,148
20,245
20,339
Other current liabilities
1,535
1,218
1,163
Total current liabilities
50,359
26,784
27,100
Non-current liabilities:
Long-term debt
360,845
118,452
108,343
Other long-term liabilities
2,817
2,788
2,759
Total non-current liabilities
363,662
121,240
111,102
Total liabilities
414,021
148,024
138,202
Commitments and contingencies
Member's equity
296,442
162,333
150,747
Total liabilities and member's
equity
$
710,463
$
310,357
$
288,949
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended,
Six Months Ended,
June 30, 2024
March 31, 2024
June 30, 2023
June 30, 2024
June 30, 2023
Cash flows from operating
activities
Net (loss) income
$
(57,653
)
$
10,776
$
44,664
$
(46,877
)
$
44,017
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation, depletion, amortization and
accretion
2,112
2,145
2,109
4,256
3,833
Amortization of deferred financing
fees
139
65
-
204
-
Amortization of debt issuance costs
390
129
-
519
-
Share-based compensation
71,762
810
(28,736
)
72,572
(17,501
)
Other
-
-
4
-
(18
)
Changes in operating assets and
liabilities:
Accounts receivable
(3,796
)
3,931
(5,838
)
136
(4,697
)
Related party receivable
(1,515
)
(310
)
1,408
(1,825
)
14
Prepaid expenses and other assets
159
323
(360
)
482
(292
)
Accounts payable
(413
)
407
176
(6
)
629
Related party payable
53
(20
)
12
33
(175
)
Other current liabilities
4,805
(1,041
)
(994
)
3,764
(1,460
)
Net cash provided by operating
activities
16,043
17,215
12,445
33,258
24,350
Cash flows from investing
activities
Acquisitions
(375,438
)
(55,072
)
-
(430,510
)
-
Capital expenditures
(369
)
(89
)
(780
)
(458
)
(2,400
)
Proceeds from disposal of assets
-
-
-
-
11
Net cash used in investing
activities
(375,807
)
(55,161
)
(780
)
(430,968
)
(2,389
)
Cash flows from financing
activities
Contributions from member
120,000
-
-
120,000
-
Distributions to member
-
-
(10,000
)
-
(23,000
)
Proceeds from term loan
265,000
-
-
265,000
-
Proceeds from revolver
-
15,000
-
15,000
-
Repayments on term loan
(5,000
)
(5,000
)
(6,625
)
(10,000
)
(8,250
)
Debt issuance costs
(3,404
)
-
-
(3,404
)
-
Deferred offering costs
(961
)
(870
)
-
(1,831
)
-
Other financing activities, net
(117
)
(115
)
(72
)
(232
)
(78
)
Net cash provided by (used in)
financing activities
375,518
9,015
(16,697
)
384,533
(31,328
)
Net decrease in cash and cash
equivalents
15,754
(28,931
)
(5,032
)
(13,177
)
(9,367
)
Cash and cash equivalents and restricted
cash - beginning of period
8,892
37,823
21,016
37,823
25,351
Cash and cash equivalents - end of
period
$
24,646
$
8,892
$
15,984
$
24,646
$
15,984
Comparison of Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Free
Cash Flow Margin are supplemental non-GAAP measures that we use to
evaluate current, past and expected future performance. Although
these non-GAAP financial measures are important factors in
assessing our operating results and cash flows, they should not be
considered in isolation or as a substitute for net income or gross
margin or any other measures presented under GAAP.
Adjusted EBITDA and Adjusted EBITDA Margin are used to assess
the financial performance of our assets over the long term to
generate sufficient cash to return capital to equity holders or
service indebtedness. We define Adjusted EBITDA as net income
(loss) before interest; taxes; depreciation, amortization,
depletion and accretion; share-based compensation; non-recurring
transaction-related expenses and other non-cash or non-recurring
expenses. We define Adjusted EBITDA Margin as Adjusted EBITDA
divided by total revenues.
We believe Adjusted EBITDA and Adjusted EBITDA Margin are useful
because they allow us to more effectively evaluate our operating
performance and compare the results of our operations from period
to period, and against our peers, without regard to our financing
methods or capital structure. We exclude the items listed above
from net income (loss) in arriving at Adjusted EBITDA and Adjusted
EBITDA Margin because these amounts can vary substantially from
company to company within our industry depending upon accounting
methods, book values of assets, capital structures and the method
by which the assets were acquired.
The following table sets forth a reconciliation of net income as
determined in accordance with GAAP to Adjusted EBITDA and Adjusted
EBITDA Margin for the periods indicated.
Three Months Ended,
June 30, 2024
March 31, 2024
June 30, 2023
(Unaudited)
(In thousands)
Net (loss) income
$
(57,653
)
$
10,776
$
44,664
Adjustments:
Depreciation, depletion, amortization and
accretion
2,112
2,145
2,109
Interest expense, net
6,280
2,884
562
Income tax expense
137
101
96
EBITDA
(49,124
)
15,906
47,431
Adjustments:
Share-based compensation (1)
71,762
810
(28,735
)
Transaction-related expenses (2)
774
191
230
Other (3)
-
-
3
Adjusted EBITDA
$
23,412
$
16,907
$
18,929
Net (loss) income margin
(222
%)
57
%
206
%
Adjusted EBITDA Margin
90
%
89
%
87
%
(1) Share-based compensation represents
the non-cash charge for the periodic fair market value changes
associated with liability awards for which the cumulative vested
amount is recognized ratably over the applicable vesting period.
Incentive units were issued to certain members of management by
WaterBridge NDB LLC , and changes to the incentive units’ fair
market values are driven by changes in period end valuations of
WaterBridge NDB LLC and its subsidiaries, the issuance of new
incentive units at WaterBridge NDB LLC, and the vesting of
previously issued incentive units. This expense is a non-cash
charge for DBR Land Holdings LLC and represents a liability at
WaterBridge NDB LLC that impacts WaterBridge NDB LLCs’ equity
ownership. It is neither a liability of DBR Land Holdings LLC nor
potentially dilutive to LandBridge equity owners. The allocation of
expense included in the consolidated results is recognized as a
deemed non-cash contribution to or distribution from member’s
equity of DBR Land Holdings LLC.
(2) Transaction-related expenses consists
of non-capitalizable transaction costs associated with both
completed or attempted acquisitions, debt amendments and entity
structuring charges.
(3) Other consists primarily of other
non-cash items.
Free Cash Flow and Free Cash Flow Margin are used to assess our
ability to repay our indebtedness, return capital to our
shareholders and fund potential acquisitions without access to
external sources of financing for such purposes. We define Free
Cash Flow as cash flow from operating activities less investment in
capital expenditures. We define Free Cash Flow Margin as Free Cash
Flow divided by total revenues.
We believe Free Cash Flow and Free Cash Flow Margin are useful
because they allow for an effective evaluation of both our
operating and financial performance, as well as the capital
intensity of our business, and subsequently the ability of our
operations to generate cash flow that is available to distribute to
our shareholders, reduce leverage or support acquisition
activities.
The following table sets forth a reconciliation of cash flows
from operating activities determined in accordance with GAAP to
Free Cash Flow and Free Cash Flow Margin, respectively, for the
periods indicated.
Three Months Ended,
June 30, 2024
March 31, 2024
June 30, 2023
(Unaudited)
(In thousands)
Net cash provided by operating
activities
$
16,043
$
17,215
$
12,445
Net cash used in investing activities
(375,807
)
(55,161
)
(780
)
Cash (used in) provided by operating and
investing activities
(359,764
)
(37,946
)
11,665
Adjustments:
Acquisitions
375,438
55,072
-
Proceeds from disposal of assets
-
-
-
Free Cash Flow
$
15,674
$
17,126
$
11,665
Operating cash flow margin (1)
62
%
91
%
57
%
Free Cash Flow Margin
60
%
90
%
54
%
(1) Operating cash flow data is calculated
by dividing net cash provided by operating activities by total
revenue.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240807971287/en/
Daniel Yunger / Nathaniel Shahan Kekst CNC
kekst-landbridge@kekstcnc.com Scott McNeely Chief Financial Officer
LandBridge Company LLC 832-703-1433
scott.mcneely@landbridgeco.com
LandBridge (NYSE:LB)
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