Liberty Oilfield Services Inc. ((LBRT)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Despite facing revenue and adjusted EBITDA declines due to market headwinds, Liberty Energy showcased strong financial performance, technological advancements, and strategic expansion into power generation. The company maintained solid shareholder returns and set operational records, positioning itself for future growth. However, increased capital expenditures and market challenges present ongoing concerns.
Strong Financial Performance
Liberty Energy concluded the year with a commendable financial performance, reporting revenue of $4.3 billion, net income of $316 million, and adjusted EBITDA of $922 million. The company’s full-year return on capital employed was 17%, and the cash return on capital invested was 21%, surpassing the 13-year S&P average. These figures underscore Liberty’s robust financial health despite market challenges.
Technological Innovations
The company is making strides in technological advancement with the development of the digiPrime platform. This includes the industry’s first natural gas variable speed, large displacement engine in collaboration with Cummins. This innovation enhances the digiFleet offering by integrating high fuel efficiency with transient load management and precision rate control.
Record Operational Performance
Liberty’s operational prowess was evident as a digiPrime fleet set a company record of 7,143 hours pumped in a year. This achievement equates to nearly 600 hours per month, utilizing approximately 96% of available hours under normal dedicated fleet operations, highlighting Liberty’s operational efficiency.
Expansion into Power Generation
The company is expanding its power generation services to meet the rising energy demand. Liberty anticipates deploying an additional 400 megawatts of power generation by the end of 2026, with initial deployments set to begin late this year, marking a significant step in their strategic growth.
Shareholder Returns
Since July 2022, Liberty has returned $550 million to shareholders through share retirements and quarterly dividends. In the fourth quarter, the company repurchased approximately 1% of shares and increased dividends by 14%, demonstrating its commitment to delivering value to shareholders.
Revenue Decline
Liberty reported a full-year revenue decline of 9%, with revenue standing at $4.3 billion compared to $4.7 billion in 2023. The fourth quarter also saw a sequential revenue decline of 17%, reflecting the impact of market headwinds.
Adjusted EBITDA Decline
The company’s adjusted EBITDA for the full year was $922 million, down from $1.2 billion in the previous year. The fourth quarter adjusted EBITDA also declined to $156 million from $248 million in the prior quarter, indicating ongoing financial challenges.
Market Headwinds
The latter part of 2024 presented market headwinds, with a slowing pace of activity leading to near-term price pressure, particularly affecting conventional fleets. This environment resulted in a soft repricing as the company navigated into 2025.
Increased Capital Expenditures
Liberty’s capital expenditures for 2025 are projected to be approximately $650 million, with $450 million allocated to completions and $200 million to power generation. This significant investment may impact cash flow but underscores the company’s commitment to long-term growth.
Forward-Looking Guidance
Looking ahead, Liberty Energy has provided strategic guidance, forecasting a modest sequential increase in revenue and adjusted EBITDA in the first quarter of 2025, with full-year adjusted EBITDA anticipated between $700 million and $750 million. The company plans to moderate completions capital expenditures to about $450 million and invest around $200 million in power generation, aiming for significant expansion. Liberty has already deployed 130 megawatts for digiFleet applications and expects to add an incremental 400 megawatts by the end of 2026. Liberty remains dedicated to shareholder returns, having distributed $550 million since July 2022 through share buybacks and dividends.
In summary, Liberty Energy’s earnings call highlighted a resilient financial performance amidst market challenges, driven by technological advancements and strategic expansions into power generation. While revenue and EBITDA declines pose challenges, the company’s commitment to innovation, operational excellence, and shareholder returns positions it well for future growth. Increased capital expenditures reflect a strategic focus on long-term development, although market headwinds and financial pressures remain areas of concern.
