Outlook and key trends: After Q3, Liberty Energy’s management sees the demand-supply balance in the North American fracturing market steadying as underutilized frac fleets exit the market. In Q4, it expects activity to slow down “modestly” due to the adverse impact of seasonality. Also, the conflict in the Middle East and continued recessionary fears can increase energy price volatility. However, a higher energy price will drive a modest recovery in 2024. The company’s long-term outlook regarding North America “anchors a more durable cycle.” You may read more about the company in our previous article here.
Steady fundamentals metrics: LBRT’s revenues increased by 1.7% in Q3 quarter-over-quarter, while its adjusted EBITDA recorded a 2.5% rise. The company’s debt-to-equity remained low at 0.12x as of September 30. It also reduced debt by $65 million. Most notably, its dividends increased by 40% from Q2 following the EPS growth and cash-generating abilities from the business transformation over the past three years.
Frac spreads and technology: As the North American fracking market softened, LBRT idled one frac spread in Q3. It plans to operate four digiFleets by 2023-end and six by January 2024. Among its recent technological initiatives, thedigiFrac fleets maximized fuel efficiency with Liberty Power Innovations (acquired in Q1). Read more about LPI in our recent article here. In September, the deployment of its digiPrime units started.
Thanks for reading the LBRT take three, designed to give you three critical takeaways from LBRT’s earnings report. Soon, we will present a second update on LBRT’s earnings, highlighting its current strategy, news, and notes we extracted from our deeper dive.
