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Liberty Energy Q3 Earnings & Revenues Miss Estimates, Decline Y/Y
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Liberty Energy Inc. (LBRT - Free Report) reported a third-quarter 2024 adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services' execution, and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
The Denver, CO-based oil and gas equipment company's revenues totaled $1.14 billion, which missed the Zacks Consensus Estimate by 0.2%. The top line was 6.6% below the prior-year quarter’s $1.22 billion.
Liberty Energy Inc. Price, Consensus and EPS Surprise
The company’s adjusted EBITDA was $247.8 million compared with $319.2 million in the year-ago quarter. The figure also missed our projection of $255.9 million.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Ahead of the earnings release, Liberty’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20 to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share.
In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Liberty repurchased and retired 1,939,072 shares of Class A common stock at an average price of $20.27 per share, representing 1.2% of the total shares outstanding in the quarter ending Sept. 30. The buyback totaled approximately $39 million. Since the program's commencement on July 25, 2022, LBRT has cumulatively repurchased and retired 14.3% of the shares outstanding at that time. The company has around $323 million remaining under its authorization for future share repurchases.
Liberty Energy's multi-year fleet technology transition is on track, aiming to begin 2025 with 90% of its fleets primarily powered by natural gas. LBRT’s digiPrime fleet set a new company record by completing the highest number of monthly pumping hours in its history. The company achieved a quarterly record for pumping efficiency in the quarter and shipped a fleet to Australia, where completion activity is set to begin during the fourth quarter.
Costs & Expenses
Liberty reported total costs and expenses of $1031.3 million in the third quarter, increasing 2% from the year-ago quarter. The figure was also higher than our projection of $1015.8 million.
Balance Sheet & Capital Expenditure of LBRT
As of Sept. 30, Liberty had approximately $23 million in cash and cash equivalents. The pressure pumper’s long-term debt of $123 million represented a debt-to-capitalization of 5.9%. Further, the company’s liquidity, cash balance and revolving credit facility, amounted to $352 million.
In the reported quarter, LBRT spent $162.8 million in its capital program, higher than our projection of $136.6 million.
Outlook
The company projects a tax expense rate of approximately 23% to 24% of pre-tax income for 2024. LBRT also anticipates that cash taxes will be around 50% of its effective book tax rate for the year.
In the fourth quarter, capital expenditures are expected to total about $200 million, reflecting the anticipated timing of deliveries for digiTechnologies, the completion of dual fuel technology upgrades and demand for wet sand handling equipment.
Looking ahead, the company plans to increasingly focus its investments on expanding opportunities in power generation services.
While significant uncertainty is expected to persist in global oil markets, driven by OPEC+ production decisions, economic growth in China and geopolitical dynamics in the Middle East, global oil demand is projected to grow by approximately one million barrels per day this year with further increases anticipated next year. Despite a potential surplus in global oil production in 2025, the company expects oil prices to remain stable, supporting activity levels in North America.
The commissioning of new LNG export facilities in the United States and Canada is also anticipated to stimulate gas activity in 2025, contributing to sustained demand.
LBRT anticipates a slowdown in the frac market as E&P operators adjust its 2024 development programs, partly due to efficiency gains achieved in the first half of the year. Factors such as consolidation, longer laterals and a focus on high-graded acreage have driven these efficiencies. The elevated uncertainty across the energy sector has made operators hesitant to ramp up completions activity before the new year.
As a result, the company now expects a low double-digit percentage reduction in fourth-quarter activity, slightly higher than the typical year-end decline. However, Liberty anticipates a rebound in completions activity in early 2025 as E&P operators work to maintain steady production levels.
Overall, LBRT plans to maintain a disciplined approach to investment and asset deployment, aiming to achieve strong long-term financial results. Although recent reductions in customer activity have led to a modest decline in the company’s deployed fleet count, Liberty remains committed to supporting its long-term partners. Looking forward, LBRT expects healthy free cash flow generation in 2025 with a strategic focus on power generation services. This balanced approach positions the company well for growth.
Houston-based Archrock is valued at $3.63 billion. The oil and gas exploration and production company currently pays a dividend of 66 cents per share, or 2.66%, on an annual basis. AROC, together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services.
MPLX is valued at $45.39 billion. The company is a master limited partnership, engaged in providing a wide range of midstream energy services, including fuel distribution solutions. Apart from oil and natural gas gathering systems, the partnership's midstream assets comprise transportation pipelines for crude, natural gas and refined petroleum products.
Targa Resources is valued at $35.63 billion. In the past year, its shares have risen 84.6%. TRGP is a leading provider of midstream energy infrastructure services in the United States. It offers a wide range of services, including gathering, processing, transportation, storage, and marketing of natural gas and natural gas liquids.
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Liberty Energy Q3 Earnings & Revenues Miss Estimates, Decline Y/Y
Liberty Energy Inc. (LBRT - Free Report) reported a third-quarter 2024 adjusted net income of 45 cents per share, which missed the Zacks Consensus Estimate of 55 cents. This was primarily due to poor equipment and services' execution, and lower activity in the reported quarter. Additionally, the bottom line declined from the year-ago quarter’s reported figure of 86 cents due to a year-over-year increase in costs and expenses.
The Denver, CO-based oil and gas equipment company's revenues totaled $1.14 billion, which missed the Zacks Consensus Estimate by 0.2%. The top line was 6.6% below the prior-year quarter’s $1.22 billion.
Liberty Energy Inc. Price, Consensus and EPS Surprise
Liberty Energy Inc. price-consensus-eps-surprise-chart | Liberty Energy Inc. Quote
The company’s adjusted EBITDA was $247.8 million compared with $319.2 million in the year-ago quarter. The figure also missed our projection of $255.9 million.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Ahead of the earnings release, Liberty’s board of directors announced a dividend of 8 cents per common share payable on Dec. 20 to its stockholders of record as of Dec. 6. This dividend represents a 14% increase from the prior regular quarterly dividend of 7 cents per share.
In the quarter, Liberty returned $51 million to its shareholders through a combination of share repurchases and cash dividends.
Liberty repurchased and retired 1,939,072 shares of Class A common stock at an average price of $20.27 per share, representing 1.2% of the total shares outstanding in the quarter ending Sept. 30. The buyback totaled approximately $39 million. Since the program's commencement on July 25, 2022, LBRT has cumulatively repurchased and retired 14.3% of the shares outstanding at that time. The company has around $323 million remaining under its authorization for future share repurchases.
Liberty Energy's multi-year fleet technology transition is on track, aiming to begin 2025 with 90% of its fleets primarily powered by natural gas. LBRT’s digiPrime fleet set a new company record by completing the highest number of monthly pumping hours in its history. The company achieved a quarterly record for pumping efficiency in the quarter and shipped a fleet to Australia, where completion activity is set to begin during the fourth quarter.
Costs & Expenses
Liberty reported total costs and expenses of $1031.3 million in the third quarter, increasing 2% from the year-ago quarter. The figure was also higher than our projection of $1015.8 million.
Balance Sheet & Capital Expenditure of LBRT
As of Sept. 30, Liberty had approximately $23 million in cash and cash equivalents. The pressure pumper’s long-term debt of $123 million represented a debt-to-capitalization of 5.9%. Further, the company’s liquidity, cash balance and revolving credit facility, amounted to $352 million.
In the reported quarter, LBRT spent $162.8 million in its capital program, higher than our projection of $136.6 million.
Outlook
The company projects a tax expense rate of approximately 23% to 24% of pre-tax income for 2024. LBRT also anticipates that cash taxes will be around 50% of its effective book tax rate for the year.
In the fourth quarter, capital expenditures are expected to total about $200 million, reflecting the anticipated timing of deliveries for digiTechnologies, the completion of dual fuel technology upgrades and demand for wet sand handling equipment.
Looking ahead, the company plans to increasingly focus its investments on expanding opportunities in power generation services.
While significant uncertainty is expected to persist in global oil markets, driven by OPEC+ production decisions, economic growth in China and geopolitical dynamics in the Middle East, global oil demand is projected to grow by approximately one million barrels per day this year with further increases anticipated next year. Despite a potential surplus in global oil production in 2025, the company expects oil prices to remain stable, supporting activity levels in North America.
The commissioning of new LNG export facilities in the United States and Canada is also anticipated to stimulate gas activity in 2025, contributing to sustained demand.
LBRT anticipates a slowdown in the frac market as E&P operators adjust its 2024 development programs, partly due to efficiency gains achieved in the first half of the year. Factors such as consolidation, longer laterals and a focus on high-graded acreage have driven these efficiencies. The elevated uncertainty across the energy sector has made operators hesitant to ramp up completions activity before the new year.
As a result, the company now expects a low double-digit percentage reduction in fourth-quarter activity, slightly higher than the typical year-end decline. However, Liberty anticipates a rebound in completions activity in early 2025 as E&P operators work to maintain steady production levels.
Overall, LBRT plans to maintain a disciplined approach to investment and asset deployment, aiming to achieve strong long-term financial results. Although recent reductions in customer activity have led to a modest decline in the company’s deployed fleet count, Liberty remains committed to supporting its long-term partners. Looking forward, LBRT expects healthy free cash flow generation in 2025 with a strategic focus on power generation services. This balanced approach positions the company well for growth.
Zacks Rank & Stocks to Consider
Currently, LBRT has a Zacks Rank of #4 (Sell).
Investors interested in the energy sector might look at some better-ranked stocks like Archrock (AROC - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), and MPLX LP (MPLX - Free Report) and Targa Resources (TRGP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Houston-based Archrock is valued at $3.63 billion. The oil and gas exploration and production company currently pays a dividend of 66 cents per share, or 2.66%, on an annual basis. AROC, together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services.
MPLX is valued at $45.39 billion. The company is a master limited partnership, engaged in providing a wide range of midstream energy services, including fuel distribution solutions. Apart from oil and natural gas gathering systems, the partnership's midstream assets comprise transportation pipelines for crude, natural gas and refined petroleum products.
Targa Resources is valued at $35.63 billion. In the past year, its shares have risen 84.6%. TRGP is a leading provider of midstream energy infrastructure services in the United States. It offers a wide range of services, including gathering, processing, transportation, storage, and marketing of natural gas and natural gas liquids.