Liberty Oilfield Services Inc. Announces Fourth Quarter and Full Year 2018 Financial and Operational Results
Summary Results and Highlights
-
Revenue of
$2.155 billion and net income1 of$249 million , or$1.81 fully diluted earnings per share, for the year ended December 31, 2018 -
Adjusted EBITDA2 of
$438 million and Adjusted EBITDA per average active fleet of$20.6 million for the year ended December 31, 2018 -
Revenue of
$473 million and net income1 of$34 million , or$0.27 fully diluted earnings per share, for the quarter ended December 31, 2018 -
Adjusted EBITDA2 of
$72 million and annualized Adjusted EBITDA per average active fleet of$13.0 million for the quarter ended December 31, 2018
“We are very pleased with our strong 2018 results. We had significant
growth in all key metrics including revenue up 45% to
Outlook
Working in concert with customers, Liberty continues to drive innovation and operational efficiency across the entire fleet. This performance translates to strong demand for Liberty's high efficiency fleets that deliver differential frac services. Premium service quality, coupled with basin and customer diversity, provides the Company the opportunity to continue generating strong returns on capital employed regardless of how the market unfolds in 2019.
“The fourth quarter of 2018 was challenging from a fleet utilization perspective. A number of customers made last-minute decisions to defer completions in the fourth quarter due to a combination of capital budget and cash flow management decisions brought on in part by the rapid drop in the commodity price in November and December. While this was disruptive to our fourth quarter work calendar, we believe the focus on capital discipline by operators is ultimately a positive factor for the service industry as we move towards a sustainable production environment that could ultimately lead to less volatile activity levels and perhaps even a steadier commodity price,” commented Mr. Wright.
The rate of change of service pricing is driven by the speed at which fleets are pushed from actively working to searching for work. There was an oversupply of staffed frac fleets entering the fourth quarter which, combined with the additional reduction in customer activity, led to a reduction of pricing for frac services. We believe that approximately 20% of the frac fleets that were active in the summer of 2018 are now either idle or in the process of being idled.
The fourth quarter customer project deferrals provided Liberty a solid backdrop for utilization at the start of 2019. We are currently projecting sequential revenue growth in the first quarter in the single-digit percentage range and adjusted EBITDA to be approximately flat as increased utilization is offset by pricing decreases. Our customers are still finalizing budgets for 2019 due to the rapid commodity price decline at the end of 2018 and we expect to have a much clearer picture of full year 2019 completions demand by the end of the first quarter. Utilization of our frac fleets is expected to remain strong due to the partnerships we have forged with our customers, but the potential timing of price improvement is not clear at this point.
We are focused on generating strong returns on capital and free cash
flow in 2019, while continuing to invest in technology and growing our
competitive advantage. We expect capital expenditures in 2019 to be
approximately
“Liberty’s strong financial results, favorable long-term outlook and strong balance sheet, support our balanced strategy of growth and returning capital to our stockholders. Liberty is committed to creating long-term stockholder value via compounding shareholder value by reinvesting cash flow at high rates of return and returning cash to shareholders as appropriate. We are excited by the growth opportunities in front of us and the positive long-term outlook for the shale revolution and the benefits that this brings to our industry and the country as a whole,” concluded Mr. Wright.
2018 Full Year Results
For the year ended December 31, 2018, revenue grew 45% to
Net income1 totaled
Adjusted EBITDA2 increased 56% to
For the year ended December 31, 2018, ROCE was 39%. Please refer to the calculation of ROCE at the end of this earnings release.
Fourth Quarter Results
For the fourth quarter of 2018, revenue decreased 15% to
Net income1 totaled
Adjusted EBITDA2 decreased 39% to
Balance Sheet and Liquidity
As of December 31, 2018, Liberty had cash on hand of
Quarterly Cash Dividend
Commencing in the third quarter of 2018, Liberty paid a quarterly cash
dividend of
Liberty announced on January 22, 2019 a cash dividend of
Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board’s continuing determination that the declarations of dividends are in the best interests of Liberty and its stockholders. Future dividends may be adjusted at the Board’s discretion based on market conditions and capital availability.
Repurchase of Common Stock
On September 10, 2018 the Board approved a
On January 22, 2019 the Board approved an additional
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, February 6, 2019. 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 Liberty's 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 10127339. The replay will be available until February 13, 2019.
About Liberty
Liberty is an independent provider of hydraulic fracturing services to
onshore oil and natural gas exploration and production companies in
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
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,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “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, 2017 as filed with the SEC on March 23, 2018 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.
| 1 | Net income attributable to predecessor, controlling and noncontrolling interests. | |||||
| 2 |
“Adjusted EBITDA” is not presented in accordance with generally
accepted accounting principles in | |||||
| 3 | Pre-Tax Return on Capital Employed (“ROCE”) is an operational measure. Please see the supplemental financial information in the table under “Calculation of Pre-Tax Return on Capital Employed” at the end of this earnings release for a calculation of this measure. | |||||
| Liberty Oilfield Services Inc. | |||||||||||||||||||||||||
| Selected Financial Data | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||
| Statement of Income Data: | (amounts in thousands, except for per share and fleet data) | ||||||||||||||||||||||||
| Revenue | $ | 473,115 | $ | 558,777 | $ | 448,883 | $ | 2,155,136 | $ | 1,489,855 | |||||||||||||||
| Costs of services, excluding depreciation and amortization shown separately | 377,590 | 418,867 | 339,315 | 1,628,753 | 1,147,008 | ||||||||||||||||||||
| General and administrative | 25,403 | 24,659 | 20,738 | 99,052 | 80,089 | ||||||||||||||||||||
| Depreciation and amortization | 34,183 | 32,305 | 25,642 | 125,110 | 81,473 | ||||||||||||||||||||
| Loss (gain) on disposal of assets | (5,608 | ) | 701 | 160 | (4,342 | ) | 148 | ||||||||||||||||||
| Total operating expenses | 431,568 | 476,532 | 385,855 | 1,848,573 | 1,308,718 | ||||||||||||||||||||
| Operating income | 41,547 | 82,245 | 63,028 | 306,563 | 181,137 | ||||||||||||||||||||
| Interest expense | (3,463 | ) | (3,648 | ) | (5,347 | ) | (17,145 | ) | (12,636 | ) | |||||||||||||||
| Net income before taxes | 38,084 | 78,597 | 57,681 | 289,418 | 168,501 | ||||||||||||||||||||
| Income tax expense | 4,147 | 12,229 | — | 40,385 | — | ||||||||||||||||||||
| Net income | 33,937 | 66,368 | 57,681 | 249,033 | 168,501 | ||||||||||||||||||||
| Less: Net income attributable to predecessor, prior to Corporate Reorganization | — | — | 57,681 | 8,705 | 168,501 | ||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | 14,951 | 32,275 | — | 113,979 | — | ||||||||||||||||||||
| Net income attributable to Liberty Oilfield Services Inc. stockholders | $ | 18,986 | $ | 34,093 | $ | — | $ | 126,349 | $ | — | |||||||||||||||
| Net income attributable to Liberty Oilfield Services Inc. stockholders per common share (1): | |||||||||||||||||||||||||
| Basic | $ | 0.28 | $ | 0.50 | $ | 1.84 | |||||||||||||||||||
| Diluted | $ | 0.27 | $ | 0.49 | $ | 1.81 | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||
| Basic | 68,881 | 68,548 | 68,838 | ||||||||||||||||||||||
| Diluted | 116,109 | 118,470 | 117,838 | ||||||||||||||||||||||
| Other Financial and Operational Data | |||||||||||||||||||||||||
| Capital expenditures (2) | $ | 87,354 | $ | 56,054 | $ | 60,255 | $ | 271,851 | $ | 300,793 | |||||||||||||||
| Adjusted EBITDA (3) | $ | 71,984 | $ | 117,486 | $ | 91,753 | $ | 438,234 | $ | 280,728 | |||||||||||||||
| Total Fleets at beginning of period (4) | 22.0 | 22.0 | 17.0 | 19.0 | 10.0 | ||||||||||||||||||||
| Total Fleets at end of period (4) | 22.0 | 22.0 | 19.0 | 22.0 | 19.0 | ||||||||||||||||||||
| Average Active Fleets (5) | 22.0 | 22.0 | 18.0 | 21.3 | 15.1 | ||||||||||||||||||||
| Annualized Adjusted EBITDA per Average Active Fleet (6) | $ | 12,981 | $ | 21,187 | $ | 20,223 | $ | 20,574 | $ | 18,591 | |||||||||||||||
________________ | ||
| (1) | Net income attributable to Liberty Oilfield Services Inc. stockholders per common share for the year ended December 31, 2018 does not include net income attributable to our predecessor, prior to corporate reorganization. | |
| (2) | Capital expenditures presented above are shown on an as incurred basis, including capital expenditures in accounts payable and accrued liabilities. | |
| (3) | Adjusted EBITDA is a non-GAAP financial measure. See the tables entitled “Reconciliation and Calculation of Non-GAAP Financial and Operational Measures” below. | |
| (4) | Total Fleets represents the number of deployed and active fleets as of the designated date. | |
| (5) | Average Active Fleets is calculated as the daily average of the number of active fleets for the period presented. | |
| (6) | Annualized Adjusted EBITDA per Average Active Fleet is calculated as Adjusted EBITDA for the year, or the respective quarter annualized, divided by the Average Active Fleets, as defined above. | |
| Liberty Oilfield Services Inc. | |||||||||||
| Condensed Consolidated and Combined Balance Sheets | |||||||||||
| (unaudited, amounts in thousands) | |||||||||||
| December 31, | December 31, | ||||||||||
| 2018 | 2017 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 103,312 | $ | 16,321 | |||||||
| Accounts receivable and unbilled revenue | 247,961 | 258,788 | |||||||||
| Inventories | 60,024 | 55,524 | |||||||||
| Prepaids and other current assets | 49,924 | 21,396 | |||||||||
| Total current assets | 461,221 | 352,029 | |||||||||
| Property and equipment, net | 627,053 | 494,776 | |||||||||
| Other assets | 28,227 | 5,298 | |||||||||
| Total assets | $ | 1,116,501 | $ | 852,103 | |||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 80,490 | $ | 66,846 | |||||||
| Accrued liabilities | 138,861 | 153,648 | |||||||||
| Current portion of long-term debt, net of discount | 385 | 11 | |||||||||
| Total current liabilities | 219,736 | 220,505 | |||||||||
| Long-term debt, net of discount | 106,139 | 196,346 | |||||||||
| Deferred tax liability | 32,994 | — | |||||||||
| Payable pursuant to tax receivable agreement | 16,818 | — | |||||||||
| Total liabilities | 375,687 | 416,851 | |||||||||
| Redeemable common units | — | 42,486 | |||||||||
| Member equity | 392,766 | ||||||||||
| Stockholders' equity: | |||||||||||
| Common Stock | 1,136 | — | |||||||||
| Additional paid in capital | 312,659 | — | |||||||||
| Retained earnings | 119,274 | — | |||||||||
| Total stockholders' equity | 433,069 | — | |||||||||
| Noncontrolling interest | 307,745 | — | |||||||||
| Total Equity | 740,814 | 392,766 | |||||||||
| Total liabilities and equity | $ | 1,116,501 | $ | 852,103 | |||||||
| Liberty Oilfield Services Inc. | ||||||||||||||||||||||||
| Reconciliation and Calculation of Non-GAAP Financial and Operational Measures | ||||||||||||||||||||||||
| (unaudited, amounts in thousands) | ||||||||||||||||||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | |||||||||||||||||||||
| 2018 | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
| Net income | $ | 33,937 | $ | 66,368 | $ | 57,681 | $ | 249,033 | $ | 168,501 | ||||||||||||||
| Depreciation and amortization | 34,183 | 32,305 | 25,642 | 125,110 | 81,473 | |||||||||||||||||||
| Interest expense | 3,463 | 3,648 | 5,347 | 17,145 | 12,636 | |||||||||||||||||||
| Income tax expense | 4,147 | 12,229 | — | 40,385 | — | |||||||||||||||||||
| EBITDA | $ | 75,730 | $ | 114,550 | $ | 88,670 | $ | 431,673 | $ | 262,610 | ||||||||||||||
| Fleet start-up costs | 1,227 | 2,235 | 3,171 | 10,069 | 13,955 | |||||||||||||||||||
| Asset acquisition costs | 635 | — | (498 | ) | 632 | 2,470 | ||||||||||||||||||
| Loss (gain) on disposal of assets | (5,608 | ) | 701 | 160 | (4,342 | ) | 148 | |||||||||||||||||
| Advisory services fees | — | — | 250 | 202 | 1,545 | |||||||||||||||||||
| Adjusted EBITDA | $ | 71,984 | $ | 117,486 | $ | 91,753 | $ | 438,234 | $ | 280,728 | ||||||||||||||
| Calculation of Pre-Tax Return on Capital Employed | |||||||||||
| Twelve Months Ended | |||||||||||
December 31, 2018 | |||||||||||
| 2018 | 2017 | ||||||||||
| Net income | $ | 249,033 | |||||||||
| Add back: Income tax expense | 40,385 | ||||||||||
| Pre-tax net income | $ | 289,418 | |||||||||
| Capital Employed | |||||||||||
| Total debt, net of discount | $ | 106,524 | $ | 196,357 | |||||||
| Redeemable common units | — | 42,486 | |||||||||
| Total equity | 740,814 | 392,766 | |||||||||
| Total Capital Employed | $ | 847,338 | $ | 631,609 | |||||||
| Average Capital Employed (1) | $ | 739,474 | |||||||||
| Pre-Tax Return on Capital Employed (2) | 39 | % | |||||||||
| (1) | Average Capital Employed is the simple average of Total Capital Employed as of December 31, 2018 and 2017. | |
| (2) | Pre-tax Return on Capital Employed is the ratio of pre-tax net income for the twelve months ended December 31, 2018 to Average Capital Employed. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190205006004/en/
Liberty Oilfield Services Inc.
Michael
Stock
Chief Financial Officer
303-515-2851
[email protected]
Source: Liberty Oilfield Services Inc.