Outlook And Key Trends: Liberty Energy’s management sees a stable outlook for the frac industry in 2024. The supply of marketed fleets appears balanced in response to lower completion activity. LBRT, with its digiTechnologies and LPI business, is poised to benefit from operators’ increasing service demands. The industry needs higher-intensity fracs to offset the decline in reservoir quality. This will increase the demand for horsepower. In North America, crude oil production will likely increase, leading to a higher demand for fracking activity in 2024. You may read more about the company in our previous article here.
Depressed Fundamental Metrics But Renewed Share Buyback: LBRT’s revenues decreased by 11.6% in Q3 quarter-over-quarter, while its adjusted EBITDA recorded a 21% fall. The company’s debt-to-equity, however, improved to 0.08x as of December 31, 2023, from 0.15x a quarter earlier. It also reduced debt by $77 million in FY2023 compared to a year ago. Most notably, it increased share repurchase authorization to $750 million through July 2026.
Frac Spreads And Technology: In Q4, the company started to deploy its digiTechnologies natural gas frac engines commercially. Its acquisition of Liberty Power Innovations (during Q1) supports the increased natural gas usage across its frac spreads. By the end of 2024, it looks to convert 90% of the frac spreads to become primarily natural gas-powered.
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.
