The second to last table entitled "Reconciliation and
Calculation of Non-GAAP Financial and Operational Measures" should
have the March 31 columns updated to read 2023 and 2022,
respectively (instead of 2022 and 2021).
The updated release reads:
LIBERTY ENERGY INC. ANNOUNCES FIRST QUARTER 2023 FINANCIAL
AND OPERATIONAL RESULTS
Liberty Energy Inc. (NYSE: LBRT; “Liberty” or the “Company”)
announced today first quarter 2023 financial and operational
results.
Summary Results and Highlights
- Revenue of $1.3 billion, a 59% increase over the prior year,
and net income1 of $163 million, or $0.90 fully diluted earnings
per share
- Adjusted EBITDA2 of $330 million
- Delivered strong first quarter free cash flow and returned $83
million to shareholders through a combination of share repurchases
and a quarterly cash dividend
- Repurchased 2.9% of shares outstanding in the quarter, and 7.1%
cumulatively of shares outstanding since reinstatement of the
repurchase program in July 2022
- Achieved a milestone of 1,291 minutes of plug and perf pumping
time in a single day with our first commercially deployed
digiFleet℠
- Launched Liberty Power Innovations (“LPI”), an integrated
alternative fuel and power solutions provider for remote
applications and acquired Siren Energy to accelerate LPI’s
expansion in the Permian
“Liberty delivered an outstanding first quarter, with Adjusted
EBITDA of $330 million and fully diluted earnings per share of
$0.90, navigating volatile oil prices that resulted from financial
sector stresses that sent ripples across the energy sector. This
was our fourth consecutive quarter of record profitability which is
reflected in our trailing 12-month Adjusted Pre-Tax Return on
Capital Employed3 of 43%,” commented Chris Wright, Chief Executive
Officer.
“Liberty has an 11-year track record of delivering significantly
higher average returns than our industry and the S&P 5004. Our
competitive advantage has never been larger, and our industry is
now investing with discipline. Supplying the world with oil and gas
is mission critical and spare production capacity today is quite
modest implying a positive outlook in the coming years for our
industry and company. Since July 2022, we have now returned $218
million to shareholders, through cash dividends and the retirement
of 7.1% of outstanding shares, while continuing to invest in our
long-term growth plans.”
“Three years from the onset of the global pandemic and severe
crash in energy markets, discipline is now widespread in the energy
sector. North American frac activity predominantly supports the
maintenance of today’s oil and gas production levels. The days of
breakneck oil and gas production growth are over, but simply
supporting today’s record high oil and gas production levels in the
U.S. and Canada requires a healthy level of frac activity. Service
sector margins are now at healthy levels, more in line with our
E&P customers that have been experiencing strong margins for
many quarters,” continued Mr. Wright. “In this longer, perhaps
steadier, cycle ahead there will be episodic challenges like we are
seeing today in natural gas markets and, of course, recessionary
risks. Today, we have excess demand for Liberty services as our
customers seek to align themselves with the top performers as part
of a broader industry ‘flight to quality’ trend. We will lead the
way in maintaining pricing and profitability as we invest in our
digiTechnologies℠ offering and retire older equipment. We believe
these actions will support strong, long-term returns for both
Liberty and our customers.”
Outlook
Tight frac markets persist in North America. Domestic natural
gas markets are now beginning to show signs of a widely anticipated
slowdown, but the softness is likely transitory ahead of a wave of
LNG and Mexico pipeline export growth. The vast majority of frac
services are weighted toward oilier basins and are working to
simply maintain production levels.
The fundamental outlook for North American hydrocarbons is
strong, as constrained global oil supply is confronted by rising
demand in emerging markets and a gradual recovery in China. North
American E&P companies have demonstrated strength and
discipline amidst economic turbulence. Development programs are
largely unchanged, as production has been roughly aligned with oil
demand in the years since the pandemic and E&P companies are
financially healthier relative to prior cycles.
In early spring, financial sector stresses and the heightened
perceived recessionary risk on global oil demand resulted in an
abrupt fall in oil prices. Concerns have since eased as markets
digested the news and economic data showed resiliency. A surprise
collective and proactive output cut from OPEC+ members coupled with
falling Russian supply drove oil prices back to pre-bank stress
levels.
“As we look ahead, early year strength continues into the second
quarter, where we are seeing stable pricing and normal
seasonality,” commented Mr. Wright. “Frac markets remain at high
utilization levels, and robust demand in larger, oilier basins
likely offsets softer conditions isolated to gas basins.”
“Liberty’s success is based on innovation, and today we are at
the forefront of a generational shift in frac technology. During
the first quarter, we deployed our first digiFleetSM comprising
digiFracSM electric pumps with no disruption to completions
operations. The crew quickly reached a milestone achievement of
1,291 minutes of pumping time in a day, or 90% of total available
minutes,” continued Mr. Wright. “With our revolutionary pump
technology, built for purpose mobile power generation, and fuel
supply, we are now seeing the early benefits of five years of
innovation and integration coming to fruition.”
“Liberty Power Innovations expands our vertical integration
strategy alongside our sand, logistics, manufacturing and design
capabilities. We launched LPI with the initial focus on compressed
natural gas (CNG) and field gas processing services that support
the secular demand shift towards natural gas as the primary fuel of
choice. Dependable access to fuel is critical to maintaining highly
efficient frac operations that drive Liberty’s industry-leading
performance and returns,” continued Mr. Wright. “We are confident
in our ability to generate strong returns, while balancing
investment in the future and a strong capital return program.”
Share Repurchase Program
During the quarter ended March 31, 2023, Liberty repurchased and
retired 5,166,730 shares of Class A common stock at $14.44 per
share, representing 2.9% of shares outstanding, for approximately
$75 million. Liberty has cumulatively repurchased and retired 7.1%
of shares outstanding at program commencement on July 25, 2022.
Total remaining authorization for future common share repurchases
is approximately $300 million.
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 through the authorization period.
Quarterly Cash Dividend
During the quarter ended March 31, 2023, the Company paid a
quarterly cash dividend of $0.05 per share of Class A common stock,
or approximately $9 million in aggregate to shareholders.
On April 18, 2023, the Board declared a cash dividend of $0.05
per share of Class A common stock, to be paid on June 20, 2023 to
holders of record as of June 6, 2023.
Future declarations of quarterly cash dividends are subject to
approval by the Board of Directors and to the Board’s continuing
determination that the declarations of dividends are in the best
interests of Liberty and its stockholders. Future dividends may be
adjusted at the Board’s discretion based on market conditions and
capital availability.
First Quarter Results
For the first quarter of 2023, revenue grew to $1.3 billion, an
increase of 59% from $793 million in the first quarter of 2022 and
3% from $1.2 billion in the fourth quarter of 2022.
Net income1 (after taxes) totaled $163 million for the first
quarter of 2023 compared to a loss of $5 million in the first
quarter of 2022 and income of $153 million in the fourth quarter of
2022.
Adjusted EBITDA2 of $330 million for the first quarter of 2023
increased 259% from $92 million in the first quarter of 2022 and
12% from $295 million in the fourth quarter of 2022. Please refer
to the reconciliation of Adjusted EBITDA (a non-GAAP measure) to
net income (a GAAP measure) in this earnings release.
Fully diluted earnings per share of $0.90 for the first quarter
of 2023 compared to a loss per share of $0.03 for the first quarter
of 2022 and fully diluted earnings per share of $0.82 for the
fourth quarter of 2022.
Balance Sheet and Liquidity
As of March 31, 2023, Liberty had cash on hand of $21 million, a
decrease from fourth quarter levels, and total debt of $210
million, drawn on the secured asset-based revolving credit facility
(“ABL Facility”). Total liquidity, including availability under the
credit facility, was $308 million as of March 31, 2023.
In January 2023, Liberty amended its ABL Facility to provide for
a $100 million increase in aggregate commitments to $525 million.
In conjunction with the credit facility amendment, Liberty retired
its $105 million term loan due September 2024, with cash and ABL
Facility availability.
Conference Call
Liberty will host a conference call to discuss the results at
8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday,
April 20, 2023. Presenting Liberty’s results will be Chris Wright,
Chief Executive Officer, Ron Gusek, President, and Michael Stock,
Chief Financial Officer.
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 1944606. The replay will
be available until April 27, 2023.
About Liberty
Liberty is a leading North American energy 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 Denver,
Colorado. For more information about Liberty, please contact
Investor Relations at IR@libertyenergy.com.
1
Net income attributable to controlling and
non-controlling interests.
2
“Adjusted EBITDA” is not presented in
accordance with generally accepted accounting principles in the
United States (“U.S. GAAP”). Please see the supplemental financial
information in the table under “Reconciliation of Net Income to
EBITDA and Adjusted EBITDA” at the end of this earnings release for
a reconciliation of the non-GAAP financial measure of Adjusted
EBITDA to its most directly comparable GAAP financial measure.
3
Adjusted Pre-Tax Return on Capital
Employed (“ROCE”) is a non-U.S. GAAP operational measure. Please
see the supplemental financial information in the table under
“Calculation of Adjusted Pre-Tax Return on Capital Employed” at the
end of this earnings release for a calculation of this measure.
4
S&P 500 excludes Financials and Real
Estate constituents.
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and
operational measures, including EBITDA, Adjusted EBITDA, and ROCE.
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, the gain on
investments, 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.
We define Adjusted Pre-Tax Return on Capital Employed (“ROCE”)
as the ratio of pre-tax net income (adding back income tax and tax
receivable agreement impacts) for the three months ended March 31,
2023 to Average Capital Employed. Average Capital Employed is the
simple average of total capital employed (both debt and equity) as
of March 31, 2023 and March 31, 2022. ROCE is presented based on
our management’s belief that these non-GAAP measures are useful
information to investors when evaluating our profitability and the
efficiency with which management has employed capital over time.
Our management uses ROCE for that purpose. ROCE is not a measure of
financial performance under U.S. GAAP and should not be considered
an alternative to net income, as defined by U.S. 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 U.S. GAAP. See the
tables entitled Reconciliation and Calculation of Non-GAAP
Financial and Operational Measures for a reconciliation or
calculation of the non-GAAP financial or operational measures to
the most directly comparable GAAP measure.
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 Securities and Exchange Commission. As a
result of these factors, actual results may differ materially from
those indicated or implied by such forward-looking statements.
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
December 31, 2022 as filed with the SEC on February 10, 2023 and in
our other public filings with the SEC. These and other factors
could cause our actual results to differ materially from those
contained in any forward-looking statements.
Liberty Energy Inc.
Selected Financial
Data
(unaudited)
Three Months Ended
March 31,
December 31,
March 31,
2023
2022
2022
Statement of Operations Data:
(amounts in thousands, except
for per share data)
Revenue
$
1,262,077
$
1,225,592
$
792,770
Costs of services, excluding depreciation,
depletion, and amortization shown separately
888,416
890,846
670,019
General and administrative
53,036
49,087
38,318
Transaction, severance, and other
costs
617
544
1,334
Depreciation, depletion, and
amortization
94,401
88,213
74,588
Loss (gain) on disposal of assets
487
(1,562
)
4,672
Total operating expenses
1,036,957
1,027,128
788,931
Operating income
225,120
198,464
3,839
Loss on remeasurement of liability under
tax receivable agreements (1)
—
42,958
4,165
Interest expense, net
7,891
6,756
4,324
Net income (loss) before taxes
217,229
148,750
(4,650
)
Income tax expense (benefit) (1)
54,483
(4,430
)
830
Net income (loss)
162,746
153,180
(5,480
)
Less: Net income (loss) attributable to
non-controlling interests
91
311
(104
)
Net income (loss) attributable to Liberty
Energy Inc. stockholders
$
162,655
$
152,869
$
(5,376
)
Net income (loss) attributable to Liberty
Energy Inc. stockholders per common share:
Basic
$
0.92
$
0.84
$
(0.03
)
Diluted
$
0.90
$
0.82
$
(0.03
)
Weighted average common shares
outstanding:
Basic
176,569
181,128
183,999
Diluted (2)
181,088
185,904
183,999
Other Financial and Operational
Data
Capital expenditures (3)
$
129,654
$
116,087
$
90,062
Adjusted EBITDA (4)
$
329,885
$
295,474
$
91,831
(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. During the year ended December 31,
2022, the Company achieved three years of cumulative pre-tax income
in the U.S. federal tax jurisdiction, management determined that
there is sufficient positive evidence to conclude that it is more
likely than not that the Company will realize the Company’s net
deferred tax assets in the foreseeable future. For the year ended
December 31, 2022 the Company recorded a release of the valuation
allowance. In connection with both the recognition and release of a
valuation allowance, the Company was also required to remeasure the
liability under the tax receivable agreements.
(2)
In accordance with U.S. GAAP, diluted weighted average common
shares outstanding for the three months ended December 31, 2022,
and March 31, 2022 exclude weighted average shares of Class B
common stock (38, and 2,092, respectively) and restricted stock
units (0, and 4,745, respectively) outstanding during the
period.
(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.
Liberty Energy Inc.
Condensed Consolidated Balance
Sheets
(unaudited, amounts in
thousands)
March 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
20,876
$
43,676
Accounts receivable and unbilled
revenue
732,671
586,012
Inventories
196,675
214,454
Prepaids and other current assets
119,970
112,531
Total current assets
1,070,192
956,673
Property and equipment, net
1,430,979
1,362,364
Operating and finance lease right-of-use
assets
134,305
139,003
Other assets
103,906
105,300
Deferred tax asset
21,240
12,592
Total assets
$
2,760,622
$
2,575,932
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
717,611
$
609,790
Current portion of operating and finance
lease liabilities
37,166
38,687
Current portion of long-term debt, net of
discount
—
1,020
Total current liabilities
754,777
649,497
Long-term debt, net of discount
210,000
217,426
Long-term operating and finance lease
liabilities
89,840
91,785
Deferred tax liability
1,044
1,044
Payable pursuant to tax receivable
agreements
114,842
118,874
Total liabilities
1,170,503
1,078,626
Stockholders’ equity:
Common Stock
1,739
1,791
Additional paid in capital
1,208,183
1,266,097
Retained earnings
388,064
234,525
Accumulated other comprehensive (loss)
(7,867
)
(7,396
)
Total stockholders’ equity
1,590,119
1,495,017
Non-controlling interest
—
2,289
Total equity
1,590,119
1,497,306
Total liabilities and equity
$
2,760,622
$
2,575,932
Liberty Energy Inc.
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
March 31,
December 31,
March 31,
2023
2022
2022
Net income (loss)
$
162,746
$
153,180
$
(5,480
)
Depreciation, depletion, and
amortization
94,401
88,213
74,588
Interest expense, net
7,891
6,756
4,324
Income tax expense (benefit)
54,483
(4,430
)
830
EBITDA
$
319,521
$
243,719
$
74,262
Stock based compensation expense
7,178
5,982
6,813
Fleet start-up costs
2,082
3,833
585
Transaction, severance, and other
costs
617
544
1,334
Loss (gain) on disposal of assets
487
(1,562
)
4,672
Loss on remeasurement of liability under
tax receivable agreements
—
42,958
4,165
Adjusted EBITDA
$
329,885
$
295,474
$
91,831
Calculation of Pre-Tax Return on
Capital Employed
Twelve Months Ended
March 31,
2023
2022
Net income
$
568,528
Add back: Income tax benefit
52,860
Add back: Loss on remeasurement of
liability under tax receivable agreements (1)
72,026
Adjusted Pre-tax net income
$
693,414
Capital Employed
Total debt, net of discount
$
210,000
$
212,202
Total equity
1,590,119
1,233,666
Total Capital Employed
$
1,800,119
$
1,445,868
Average Capital Employed (2)
$
1,622,994
Adjusted Pre-Tax Return on Capital
Employed (3)
43
%
(1)
Loss on remeasurement of the liability under tax receivable
agreements is a result of the release of the valuation allowance on
the Company’s deferred tax assets and should be excluded in the
determination of pre-tax return on capital employed.
(2)
Average Capital Employed is the simple average of Total Capital
Employed as of March 31, 2023 and 2022.
(3)
Adjusted Pre-tax Return on Capital Employed is the ratio of
pre-tax net income for the twelve months ended March 31, 2023 to
Average Capital Employed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230419005911/en/
Michael Stock Chief Financial Officer
Anjali Voria, CFA Strategic Finance & Investor
Relations Lead
303-515-2851 IR@libertyenergy.com
Liberty Energy (NYSE:LBRT)
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