Liberty Oilfield Services Inc. Announces Third Quarter 2019 Financial and Operational Results
Summary Results and Highlights
-
Revenue of
$515 million and net income1 of$19 million , or$0.15 fully diluted earnings per share, for the quarter ended September 30, 2019 -
Adjusted EBITDA2 of
$70 million and annualized Adjusted EBITDA per average active fleet of$12.1 million for the quarter ended September 30, 2019 -
Revenue of
$1.6 billion and net income1 of$93 million , or$0.71 fully diluted earnings per share, for the nine months ended September 30, 2019 -
Adjusted EBITDA2 of
$247 million and annualized Adjusted EBITDA per average active fleet of$14.5 million for the nine months ended September 30, 2019
“We’re happy to have delivered another solid quarter of operational results in the face of macro headwinds that started to impact Liberty’s market mid-way through the quarter. The fully diluted earnings per share in the third quarter was
“With our focus on long-term success, we continue our commitment to achieve superior returns on invested capital, maintain a strong balance sheet and invest for the future. For the twelve months ended September 30, 2019 we achieved Pre-Tax Return on Capital Employed (“ROCE”)3 of 17%, generated significant free cash flow and returned approximately
Outlook
Our results for the first nine months of 2019 reflect the strong demand for Liberty’s differential frac services. We pumped similar sand volumes in the first nine months of 2019 as we did through the full year of 2018.
Total industry frac stages in
Future activity projections for the industry are dependent on multiple factors including commodity price, availability of capital, and takeaway capacity in each basin. Based on visibility into our customers’ initial plans for 2020, we believe demand for Liberty fleets will be strong at the start of the year as their budgets reset.
We are seeing reductions in the supply of staffed frac fleets in the market and announcements of permanent retirement of older equipment. This is helpful, but there continues to be an oversupply of frac fleets in the market which is holding down pricing. We would not expect pricing to improve until supply of actively staffed frac equipment better balances with demand.
We are focused on generating strong returns on capital and free cash flow in 2019, while we continue to invest in technology and growing our competitive advantages. Since inception, Liberty has invested in equipment and people that lead the industry in technology and efficiency. Liberty is a first mover in driving an Environmental, Social and Governance (“ESG”) conscious approach to hydraulic fracturing. We have partnered with our customers to advance ESG solutions since 2013, as demonstrated by our market leading low-emission Quiet Fleets®. Every Liberty new build fleet since 2013 has been either able to run on natural gas or is the latest generation Tier 4 engine, with dramatically reduced emissions. Being a leader in ESG goes beyond emissions and Liberty is focused on leading the industry in all aspects of frac operations. These include safe operations, dust and noise mitigation, traffic management, environmentally safe fluid systems and deep community engagement.
1 | Net income attributable to 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. |
Third Quarter Results
For the third quarter of 2019, revenue decreased 5% to
Net income before income taxes totaled
Net income1 (after taxes) totaled
Adjusted EBITDA2 decreased 24% to
Fully diluted earnings per share was
Balance Sheet and Liquidity
As of September 30, 2019, Liberty had cash on hand of
Stockholder Returns
Liberty’s financial results, favorable long-term outlook and strong balance sheet, support our balanced strategy of disciplined growth and returning capital to our stockholders. Liberty is committed to compounding stockholder value by reinvesting cash flow at high rates of return and returning cash to stockholders 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.
During the quarter ended September 30, 2019 the Company paid a quarterly cash dividend of
Liberty announced on October 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.
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, October 30, 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 10133476. The replay will be available until November 6, 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, 2018 as filed with the SEC on February 28, 2019 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 |
| Nine Months Ended | |||||||||||||||||||||||||
| September 30, | June 30, |
| September 30, |
| September 30, | ||||||||||||||||||||||
| 2019 | 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||||||||||||||
Statement of Income Data: | (amounts in thousands, except for per share and fleet data) | |||||||||||||||||||||||||||
Revenue | $ |
| 515,079 |
| $ |
| 542,147 |
| $ | 558,777 |
| $ |
|
|
| 1,592,374 |
| $ |
|
|
| 1,682,021 | ||||||
Costs of services, excluding depreciation and amortization shown separately |
| 421,007 |
|
| 426,444 |
|
| 418,867 |
|
| 1,276,750 |
|
| 1,251,163 | ||||||||||||||
General and administrative |
| 25,302 |
|
| 23,989 |
|
| 24,659 |
|
| 71,379 |
|
| 73,648 | ||||||||||||||
Depreciation and amortization |
| 42,324 |
|
| 40,368 |
|
| 32,305 |
|
| 121,079 |
|
| 90,927 | ||||||||||||||
(Gain) loss on disposal of assets |
| (124 | ) |
| 143 |
|
| 701 |
|
| 1,242 |
|
| 1,266 | ||||||||||||||
Total operating expenses |
| 488,509 |
|
| 490,944 |
|
| 476,532 |
|
| 1,470,450 |
|
| 1,417,004 | ||||||||||||||
Operating income |
| 26,570 |
|
| 51,203 |
|
| 82,245 |
|
| 121,924 |
|
| 265,017 | ||||||||||||||
Interest expense |
| 3,726 |
|
| 3,597 |
|
| 3,648 |
|
| 11,505 |
|
| 13,682 | ||||||||||||||
Net income before taxes |
| 22,844 |
|
| 47,606 |
|
| 78,597 |
|
| 110,419 |
|
| 251,335 | ||||||||||||||
Income tax expense |
| 4,004 |
|
| 7,083 |
|
| 12,229 |
|
| 17,147 |
|
| 36,238 | ||||||||||||||
Net income |
| 18,840 |
|
| 40,523 |
|
| 66,368 |
|
| 93,272 |
|
| 215,097 | ||||||||||||||
Less: Net income attributable to predecessor, prior to Corporate Reorganization | — | — |
| — |
| — |
|
| 8,705 | |||||||||||||||||||
Less: Net income attributable to noncontrolling interests |
| 7,842 |
|
| 18,491 |
|
| 32,275 |
|
| 42,121 |
|
| 99,028 | ||||||||||||||
Net income attributable to Liberty Oilfield Services Inc. stockholders | $ |
| 10,998 |
| $ |
| 22,032 |
| $ | 34,093 |
| $ |
|
|
| 51,151 |
| $ |
|
|
| 107,364 | ||||||
Net income attributable to Liberty Oilfield Services Inc. stockholders per common share (1): |
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic | $ |
| 0.15 |
| $ |
| 0.32 |
| $ | 0.50 |
| $ |
|
|
| 0.73 |
| $ |
|
|
| 1.56 | ||||||
Diluted | $ |
| 0.15 |
| $ |
| 0.32 |
| $ | 0.49 |
| $ |
|
|
| 0.71 |
| $ |
|
|
| 1.53 | ||||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
| ||||||||||||||||||||
Basic |
| 74,173 |
|
| 68,404 |
|
| 68,548 |
|
| 70,026 |
|
| 68,823 | ||||||||||||||
Diluted |
| 113,064 |
|
| 114,338 |
|
| 118,470 |
|
| 109,006 |
|
| 118,426 | ||||||||||||||
Other Financial and Operational Data |
|
|
|
|
| |||||||||||||||||||||||
Capital expenditures (2) | $ |
| 30,344 |
| $ |
| 43,950 | $ | 56,054 |
| $ |
|
| 125,402 |
| $ |
|
| 184,497 | |||||||||
Adjusted EBITDA (3) | $ |
| 70,043 |
| $ |
| 92,120 | $ | 117,486 |
| $ |
|
| 246,978 |
| $ |
|
| 366,254 | |||||||||
Total Fleets at beginning of period (4) |
| 23.0 |
|
| 23.0 | 22.0 |
|
| 22.0 |
|
| 19.0 | ||||||||||||||||
Total Fleets at end of period (4) |
| 23.0 |
|
| 23.0 | 22.0 |
|
| 23.0 |
|
| 22.0 | ||||||||||||||||
Average Active Fleets (5) |
| 23.0 |
|
| 23.0 | 22.0 |
|
| 22.8 |
|
| 21.1 | ||||||||||||||||
Annualized Adjusted EBITDA per Average Active Fleet (6) | $ |
| 12,082 |
| $ |
| 16,065 | $ | 21,187 |
| $ |
|
| 14,482 |
| $ |
|
| 23,208 |
______________ | ||
(1) | Net income attributable to Liberty Oilfield Services Inc. stockholders per common share for the nine months ended September 30, 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 respective quarter or nine month period annualized, divided by the Average Active Fleets, as defined above. |
Liberty Oilfield Services Inc. | |||||
Condensed Consolidated and Combined Balance Sheets | |||||
(unaudited, amounts in thousands) | |||||
| September 30, |
| December 31, | ||
| 2019 |
| 2018 | ||
Assets |
| ||||
Current assets: |
|
|
| ||
Cash and cash equivalents | $ | 139,995 |
| $ | 103,312 |
Accounts receivable and unbilled revenue | 246,344 |
| 247,961 | ||
Inventories | 86,985 |
| 60,024 | ||
Prepaids and other current assets | 23,015 |
| 49,924 | ||
Total current assets | 496,339 |
| 461,221 | ||
Property and equipment, net | 638,686 |
| 627,053 | ||
Operating and finance lease right-of-use assets | 115,242 |
| — | ||
Other assets | 44,963 |
| 28,227 | ||
Total assets | $ | 1,295,230 |
| $ | 1,116,501 |
Liabilities and Equity |
|
|
| ||
Current liabilities: |
|
|
| ||
Accounts payable | $ | 91,019 |
| $ | 80,490 |
Accrued liabilities | 125,581 |
| 138,861 | ||
Current portion of operating and finance lease liabilities | 36,979 |
| — | ||
Current portion of long-term debt, net of discount | 401 |
| 385 | ||
Total current liabilities | 253,980 |
| 219,736 | ||
Long-term debt, net of discount | 105,837 |
| 106,139 | ||
Long-term operating and finance lease liabilities | 72,082 |
| — | ||
Deferred tax liability | 19,560 |
| 32,994 | ||
Payable pursuant to tax receivable agreement | 40,306 |
| 16,818 | ||
Total liabilities | 491,765 |
| 375,687 | ||
|
|
|
| ||
Stockholders' equity: |
|
|
| ||
Common Stock | 1,126 |
| 1,136 | ||
Additional paid in capital | 368,502 |
| 312,659 | ||
Retained earnings | 159,448 |
| 119,274 | ||
Total stockholders’ equity | 529,076 |
| 433,069 | ||
Noncontrolling interest | 274,389 |
| 307,745 | ||
Total Equity | 803,465 |
| 740,814 | ||
Total liabilities and equity | $ | 1,295,230 |
| $ | 1,116,501 |
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 |
| Nine Months Ended | ||||||||||||
| September 30, |
| June 30, |
| September 30, |
| September 30, | ||||||||
| 2019 |
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||||
Net income | $ | 18,840 |
|
| $ | 40,523 |
| $ | 66,368 |
| $ | 93,272 |
| $ | 215,097 |
Depreciation and amortization | 42,324 |
|
| 40,368 |
| 32,305 |
| 121,079 |
| 90,927 | |||||
Interest expense | 3,726 |
|
| 3,597 |
| 3,648 |
| 11,505 |
| 13,682 | |||||
Income tax expense | 4,004 |
|
| 7,083 |
| 12,229 |
| 17,147 |
| 36,238 | |||||
EBITDA | $ | 68,894 |
|
| $ | 91,571 |
| $ | 114,550 |
| $ | 243,003 |
| $ | 355,944 |
Fleet start-up costs | 1,273 |
|
| 406 |
| 2,235 |
| 2,733 |
| 8,842 | |||||
(Gain) loss on disposal of assets | (124 | ) |
| 143 |
| 701 |
| 1,242 |
| 1,266 | |||||
Advisory services fees | — |
| — |
| — |
| — |
| 202 | ||||||
Adjusted EBITDA | $ | 70,043 |
|
| $ | 92,120 |
| $ | 117,486 |
| $ | 246,978 |
| $ | 366,254 |
Calculation of Pre-Tax Return on Capital Employed | ||||||
| Twelve Months Ended | |||||
| September 30, 2019 | |||||
| 2019 |
| 2018 | |||
Net income | $ | 127,208 |
|
| ||
Add back: Income tax expense | 21,294 |
|
| |||
Pre-tax net income | $ | 148,502 |
|
| ||
Capital Employed |
|
|
| |||
Total debt, net of discount | $ | 106,238 |
| $ | 107,084 | |
Total equity | 803,465 |
| 743,596 | |||
Total Capital Employed | $ | 909,703 |
| $ | 850,680 | |
|
|
|
| |||
Average Capital Employed (1) | $ | 880,192 |
|
| ||
Pre-Tax Return on Capital Employed (2) | 17 % |
|
| |||
(1) | Average Capital Employed is the simple average of Total Capital Employed as of September 30, 2019 and 2018. | |
(2) | Pre-tax Return on Capital Employed is the ratio of pre-tax net income for the twelve months ended September 30, 2019 to Average Capital Employed. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191029006120/en/
Michael Stock
Chief Financial Officer
303-515-2851
[email protected]
Source: Liberty Oilfield Services Inc.