Liberty Oilfield Services Inc. (NYSE: LBRT; “Liberty” or the
“Company”) announced today second quarter 2021 financial and
operational results.
Summary Results and Highlights
- Revenue of $581 million, representing a 5% sequential increase,
and net loss1 of $52 million, or $0.29 fully diluted loss per share
for the quarter ended June 30, 2021
- Adjusted EBITDA2 of $37 million, representing a 15% sequential
increase
- Results included the restoration of field personnel variable
compensation one quarter ahead of plan, resulting in an $8 million
increase to personnel costs. Excluding this cost, Adjusted EBITDA2
would have been $45 million, representing a 41% sequential
increase
- Completed successful field test of Liberty’s digiFrac™ pump,
the industry’s first purpose-built fully integrated electric frac
pump
- Released inaugural ESG report Bettering Human Lives
highlighting energy and its place in modern society and Liberty’s
ongoing industry leadership in developing technology solutions for
producing cleaner energy
- Held Liberty’s first investor day highlighting our culture,
technology, financial performance and strategic outlook
- Transitioned OneStim® acquisition from initial integration
focus to the next phase of raising operational and capital
efficiency through technology, integration and automation
“Liberty delivered another solid quarter of progress as we start
to exit the COVID downturn. We achieved a 5% sequential increase in
revenue, or a 9% increase when excluding the seasonal impact of the
Canadian spring breakup. We reported $37 million in adjusted
EBITDA2, representing a 15% sequential increase, despite our
decision to restore variable compensation plans for field personnel
one quarter ahead of schedule that accounted for an $8 million
increase to personnel costs. We are pleased with our initial
progress integrating the sizable legacy OneStim business, which we
expect to continue through the end of the year. Liberty continues
to maintain a disciplined approach toward the growing industry
activity levels,” commented Chris Wright, Chief Executive
Officer.
Mr. Wright continued, “The second quarter marks the anniversary
of the extraordinary events of a year ago where the collapse in oil
demand drove a near halt in frac activity. We are now seeing the
strength of our business one year out from the depths of the cycle
with the transformative actions we’ve taken over the past year,
including the OneStim acquisition. More broadly, we are also
navigating the macroeconomic supply and demand shocks triggered by
the pandemic and related re-openings that are creating supply chain
constraints and labor shortages. Effective completion scheduling
was challenging with producers and service companies dealing with
supply chain interruptions, staffing and transportation shortages.
Liberty was not immune from staffing issues and the industry’s
supply chain challenges. However, we believe these pandemic-driven
effects are transitory in nature, and our team is working
diligently with our customers and suppliers to streamline service
delivery in support of our increased activity levels. We believe
the third quarter will benefit from these actions with improved
effective utilization.”
Outlook
Global economic growth outlook continues to improve, albeit at a
moderating pace. Sentiment is based upon improving positive
economic data as countries reopen, partially offset by the impact
of global supply chain constraints and virus variant concerns.
Commodity markets remain constructive as sustained economic
expansion continues to drive rising energy demand while
underinvestment in the energy sector constrains supply. This is
evidenced by global oil inventory draws, that demonstrate the
growth in oil demand is higher than the increase in the oil supply.
Looking forward, the recent announcement by OPEC+ for a gradual
reinstatement of prior oil supply cuts through 2021 is expected to
be more than offset by projected increases in global oil demand.
This should support a continued increase in demand for North
American completion services.
Exploration and production (“E&P”) capital spending likely
increases in 2022 as operators work towards attaining modest oil
production growth. They will need to address both a decline in the
inventory of drilled but uncompleted wells and the impact of
decline curves on their production base. As a result, we anticipate
a modest increase in frac activity to support production growth in
2022.
The combined impact of improved E&P economics with greater
potential for free cash flow generation, increased completion
service activity demand and tightness in next generation frac
equipment is expected to underpin a more disciplined frac market
and an increase in service prices. The economic rebound across
North America has also led to a rise in inflation and wage growth.
It is important that service prices continue to rebound from
extreme pandemic lows, and the basis for discussions on service
pricing with E&P operators have strengthened throughout the
year. It is noteworthy that service prices tend to lag broader
inflationary increases across the value chain, but these increases
are necessary to facilitate the next phase of growth and
investment, especially as the service industry contends with
inflationary increases.
“As we look ahead, the opportunity excites us. As activity has
improved meaningfully over the last year, we are working diligently
to provide superior services to our customers, while balancing the
management of temporary pandemic-related challenges and the
recovery of returns to an acceptable level. We believe we are
significantly advantaged with our deep customer relationships,
comprehensive best-in-class service offering and a strong balance
sheet to navigate the near-term market into the mid-cycle,”
commented Mr. Wright.
Second Quarter Results
For the second quarter of 2021, revenue increased 5% to $581
million from $552 million in the first quarter of 2021.
Net loss before income taxes totaled $36 million for the second
quarter of 2021 compared to net loss before income taxes of $46
million for the first quarter of 2021.
Net loss1 (after taxes) totaled $52 million for the second
quarter of 2021 compared to net loss1 of $39 million in the first
quarter of 2021. Net loss1 (after tax) included the impacts of a
valuation allowance recorded against a portion of the Company’s
deferred tax assets and related remeasurement of the Company’s
liability under the tax receivable agreement.
Adjusted EBITDA2, increased 15% to $37 million from $32 million
in the first quarter. Adjusted EBITDA2 includes $8 million of
additional personnel costs related to the restoration of variable
compensation plans for field personnel that were temporarily halted
during the pandemic. Please refer to the reconciliation of Adjusted
EBITDA (a non-GAAP measure) to net loss (a GAAP measure) in this
earnings release.
Fully diluted loss per share was $0.29 for the second quarter of
2021 compared to $0.21 for the first quarter of 2021.
Balance Sheet and Liquidity
As of June 30, 2021, Liberty had cash on hand of $31 million, a
decrease from first quarter levels as working capital increased,
and total debt of $106 million, net of deferred financing costs and
original issue discount. The term loan requires only a 1% annual
amortization of principal, paid quarterly, with no substantial
payment due until maturity in September 2022, subject to mandatory
prepayments from excess cash flow. There were no borrowings drawn
on the ABL credit facility, and total liquidity, including
availability under the credit facility, was $277 million.
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 Wednesday,
July 28, 2021. 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 Oilfield Services 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 10148929. The replay will be available until
August 4, 2021.
About Liberty
Liberty is a leading North American oilfield 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@libertyfrac.com.
1
Net loss attributable to controlling and
non-controlling interests. Net loss during the three months
ended June 30, 2021 includes the establishment of a deferred tax
valuation allowance driven primarily by COVID-19 related
losses.
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 Loss 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.
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and
operational measures, including EBITDA, Adjusted EBITDA and Pre-Tax
Return on Capital Employed. We believe that the presentation of
these non-GAAP financial and operational measures provides useful
information about our financial performance and results of
operations. 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, 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,”
“believe,” “intend,” “achievable,” “anticipate,” “will,”
“continue,” “potential,” “likely,” “should,” “could,” and similar
terms and phrases. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, they
do involve certain assumptions, risks and uncertainties. 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, 2020 as filed with the SEC on February 24, 2021 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 Oilfield Services
Inc.
Selected Financial
Data
(unaudited)
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2021
2021
2020
2021
2020
Statement of Operations Data:
(amounts in thousands, except
for per share and fleet data)
Revenue
$
581,288
$
552,032
$
88,362
$
1,133,320
$
560,706
Costs of services, excluding depreciation
and amortization shown separately
521,956
498,935
89,518
1,020,891
482,234
General and administrative
29,403
26,359
18,064
55,762
46,677
Transaction, severance and other costs
2,996
7,621
9,057
10,617
9,057
Depreciation and amortization
63,214
62,056
44,931
125,270
89,762
(Gain) loss on disposal of assets
(277
)
(720
)
334
(997
)
232
Total operating expenses
617,292
594,251
161,904
1,211,543
627,962
Operating loss
(36,004
)
(42,219
)
(73,542
)
(78,223
)
(67,256
)
Gain on remeasurement of liability under
tax receivable agreement (1)
(3,305
)
—
—
(3,305
)
—
Interest expense, net
3,767
3,754
3,656
7,521
7,264
Net loss before taxes
(36,466
)
(45,973
)
(77,198
)
(82,439
)
(74,520
)
Income tax expense (benefit) (1)
16,006
(7,357
)
(11,363
)
8,649
(11,102
)
Net loss
(52,472
)
(38,616
)
(65,835
)
(91,088
)
(63,418
)
Less: Net loss attributable to
non-controlling interests
(1,912
)
(4,411
)
(20,064
)
(6,323
)
(19,367
)
Net loss attributable to Liberty Oilfield
Services Inc. stockholders
$
(50,560
)
$
(34,205
)
$
(45,771
)
$
(84,765
)
$
(44,051
)
Net loss attributable to Liberty Oilfield
Services Inc. stockholders per common share:
Basic
$
(0.29
)
$
(0.21
)
$
(0.55
)
$
(0.50
)
$
(0.53
)
Diluted
$
(0.29
)
$
(0.21
)
$
(0.55
)
$
(0.50
)
$
(0.53
)
Weighted average common shares
outstanding:
Basic
172,523
163,207
83,292
167,891
82,472
Diluted (2)
172,523
163,207
83,292
167,891
82,472
Other Financial and Operational
Data
Capital expenditures (3)
$
37,666
$
41,938
$
13,284
$
79,604
$
46,172
Adjusted EBITDA (4)
$
36,573
$
31,685
$
(8,283
)
$
68,258
$
49,379
(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. The Company
recorded a valuation allowance against certain deferred tax assets,
generating additional income tax expense in the three and six
months ended June 30, 2021. In connection with the recognition of a
valuation allowance, the Company was also required to remeasure the
liability under the tax receivable agreement resulting in a
gain.
(2)
In accordance with U.S. GAAP, diluted weighted average common
shares outstanding for the three months ended June 30, 2021, March
31, 2021 and June 30, 2020, exclude weighted average shares of
Class B common stock (7,641, 16,333 and 29,392, respectively),
restricted shares (0, 0 and 246, respectively) and restricted stock
units (4,107, 3,326 and 1,914, respectively) outstanding during the
period. Additionally, diluted weighted average common shares
outstanding for the six months ended June 30, 2021 and 2020,
exclude weighted average shares of Class B common stock (11,963 and
30,015, respectively), restricted shares (0 and 257, respectively)
and restricted stock units (3,700 and 2,124, respectively)
outstanding during the period.
(3)
Capital expenditures presented above are shown on an as incurred
basis, including capital expenditures in accounts payable and
accrued liabilities.
(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 Oilfield Services
Inc.
Condensed Consolidated Balance
Sheets
(unaudited, amounts in
thousands)
June 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
30,710
$
68,978
Accounts receivable and unbilled
revenue
455,249
313,949
Inventories
120,015
118,568
Prepaids and other current assets
62,717
65,638
Total current assets
668,691
567,133
Property and equipment, net
1,076,899
1,120,950
Operating and finance lease right-of-use
assets
154,392
114,611
Other assets
75,145
87,248
Total assets
$
1,975,127
$
1,889,942
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
439,558
$
311,721
Current portion of operating and finance
lease liabilities
51,211
44,061
Current portion of long-term debt, net of
discount
375
364
Total current liabilities
491,144
356,146
Long-term debt, net of discount
105,221
105,411
Long-term operating and finance lease
liabilities
95,275
61,748
Deferred tax liability
764
—
Payable pursuant to tax receivable
agreement
53,289
56,594
Total liabilities
745,693
579,899
Stockholders' equity:
Common Stock
1,802
1,795
Additional paid in capital
1,274,031
1,125,554
(Accumulated deficit) retained
earnings
(61,475
)
23,288
Accumulated other comprehensive income
2,454
—
Total stockholders’ equity
1,216,812
1,150,637
Non-controlling interest
12,622
159,406
Total equity
1,229,434
1,310,043
Total liabilities and equity
$
1,975,127
$
1,889,942
Liberty Oilfield Services
Inc.
Reconciliation and Calculation
of Non-GAAP Financial and Operational Measures
(unaudited, amounts in
thousands)
Reconciliation of Net Loss to EBITDA
and Adjusted EBITDA
Three Months Ended
Six Months Ended
June 30,
March 31,
June 30,
June 30,
2021
2021
2020
2021
2020
Net loss
$
(52,472
)
$
(38,616
)
$
(65,835
)
$
(91,088
)
$
(63,418
)
Depreciation and amortization
63,214
62,056
44,931
125,270
89,762
Interest expense, net
3,767
3,754
3,656
7,521
7,264
Income tax expense (benefit)
16,006
(7,357
)
(11,363
)
8,649
(11,102
)
EBITDA
$
30,515
$
19,837
$
(28,611
)
$
50,352
$
22,506
Stock based compensation expense
5,899
4,947
4,283
10,846
8,407
Fleet start-up and lay-down costs
—
—
4,499
—
4,499
Transaction, severance and other costs
2,996
7,621
9,057
10,617
9,057
(Gain) loss on disposal of assets
(277
)
(720
)
334
(997
)
232
Provision for credit losses
745
—
2,155
745
4,678
Gain on remeasurement of liability under
tax receivable agreement
(3,305
)
—
—
(3,305
)
—
Adjusted EBITDA
$
36,573
$
31,685
$
(8,283
)
$
68,258
$
49,379
Calculation of Pre-Tax Return on
Capital Employed
Twelve Months Ended
June 30, 2021
2021
2020
Net loss
$
(188,344
)
Add back: Income tax benefit
(11,106
)
Pre-tax net loss
$
(199,450
)
Capital Employed
Total debt, net of discount
$
105,596
$
105,949
Total equity
1,229,434
719,957
Total Capital Employed
$
1,335,030
$
825,906
Average Capital Employed (1)
$
1,080,468
Pre-Tax Return on Capital Employed (2)
(18
)%
(1)
Average Capital Employed is the simple
average of Total Capital Employed as of June 30, 2021 and 2020.
(2)
Pre-tax Return on Capital Employed is the
ratio of pre-tax net loss for the twelve months ended June 30, 2021
to Average Capital Employed.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727006180/en/
Michael Stock Chief Financial Officer 303-515-2851
IR@libertyfrac.com
Liberty Energy (NYSE:LBRT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Liberty Energy (NYSE:LBRT)
Historical Stock Chart
From Apr 2023 to Apr 2024