Liberty Energy Inc. (NYSE: LBRT; “Liberty” or the “Company”)
announced today full year and fourth quarter 2023 financial and
operational results.
Summary Results and Highlights
- Revenue of $4.7 billion for the year ended December 31,
2023
- Net income1 of $556 million, or $3.15 fully diluted earnings
per share (“EPS”), for the year ended December 31, 2023, up 39% and
49%, respectively. EPS grew faster than net income due to reduced
share count
- Adjusted EBITDA2 of $1.2 billion, a 41% increase over the prior
year, for the year ended December 31, 2023
- Achieved 40% Adjusted Pre-Tax Return on Capital Employed
(“ROCE”)3 and 34% Cash Return on Capital Invested (“CROCI”)4 for
the year ended December 31, 2023
- Distributed $241 million to shareholders in 2023 through share
repurchases and the cash dividend fully funded from free cash
flow
- Fourth quarter 2023 revenue of $1.1 billion and net income1 of
$92 million, or $0.54 fully diluted earnings per share
- Fourth quarter 2023 Adjusted EBITDA2 of $253 million
- Repurchased and retired 1.2% of shares outstanding during the
fourth quarter, and a cumulative 11.7% of shares outstanding since
reinstating the repurchase program in July 2022
- Increased and extended share repurchase authorization to $750
million through July 2026 with $422 million of authorization
remaining
- Raised quarterly cash dividend by 40% to $0.07 per share
beginning in the fourth quarter of 2023
- Expanded digiTechnologies℠ commercial deployments with the most
efficient, lowest emissions natural gas frac engines that will
serve as the primary source of future horsepower
- Launched and rapidly expanded Liberty Power Innovations
(“LPI”), to support increased natural gas usage across Liberty frac
fleets
- Achieved four consecutive quarterly average daily pumping
efficiency records
- Announced partnership with Tamboran to develop the new Beetaloo
shale gas basin in Australia
- Launched Bettering Human Lives Foundation with early focus on
promoting clean cooking fuels, complementing company initiatives on
alleviating poverty
“Liberty delivered a second consecutive year of record earnings
per share. Our portfolio of advanced technology and vertical
integration enhanced our superior service quality and drove
record-breaking operational efficiencies. Full year Adjusted
Pre-Tax ROCE3 of 40% and CROCI4 of 34% both exceeded the prior
year,” commented Chris Wright, Chief Executive Officer. “Strong
free cash flow generation supported our leading return of capital
program. Since program reinstatement in July 2022, we have
distributed $375 million to shareholders through share buybacks and
cash dividends. We have now retired an equivalent of 33% of the
shares issued for the acquisition of SLB’s OneStim® business three
years ago.”
“A revolutionary shift towards next generation frac technologies
is at the core of our strategic plan in 2024. Liberty brings
together leading pump technology, mobile power generation, and CNG
fuel supply, a unique value proposition that offers the most
effective, reliable solution to maximize efficiency, reduce
emissions, and lower fuel costs. By the end of 2024, we expect 90%
of our fleets will be primarily powered by natural gas,” continued
Mr. Wright. “The success of our technology transition is buttressed
by dependable natural gas fuel supply through LPI. We plan to
double LPI’s capacity in 2024 to meet rising demand.”
“We are confident that our diversified and innovative business
enables strong future cash flow generation and supports capital
allocation priorities. The board-approved increase in our share
repurchase authorization to $750 million, coupled with last
quarter’s dividend payment increase, enhances our ability to return
capital to shareholders while maintaining flexibility to execute on
our long-term investment objectives.”
“As we look ahead, global energy demand continues to rise as the
world’s seven billion less fortunate aspire to attain the
energy-rich lifestyles of the lucky one billion. Liberty recently
invested in Oklo, a small modular nuclear reactor company, and
Fervo, enhanced geothermal technology, which have the potential to
provide reliable, affordable energy solutions to help meet these
demands,” continued Mr. Wright. “Earlier this month, we launched
the Bettering Human Lives Foundation to address the most urgent
challenges of energy access. The Foundation strives to increase
access to clean cooking fuels by supporting technology development
and entrepreneurs in Africa. We are excited by the prospect of
uplifting women, children and communities by improving health,
safety and quality of life.”
Outlook
Entering 2024, the fundamental outlook for the frac industry is
stable. Service prices remain relatively steady as the industry's
supply of marketed fleets was right sized in response to lower
completions activity. Many fleets exited the market both from
accelerated attrition of older equipment and the deliberate idling
of underutilized fleets to match customer demand. Operators
continue to demand technologies that provide significant emissions
reductions and fuel savings. Liberty’s digiTechnologies, LPI
business, integrated service offering and scale position us as the
provider of choice to support operators’ increasing service
demands. Against this backdrop, demand for Liberty services is
positioned to rise, albeit slowly, from current levels.
Today, E&P operators are better served with larger, well
capitalized integrated frac companies that can meet their technical
demands and more complex needs. Engineering and innovation have led
to rising shale productivity. Service companies have worked with
operators to drive efficiencies, including faster completions,
longer laterals and completion design optimization, helping to
offset the gradual decline in reservoir quality. The trend toward
higher intensity fracs raises demand for horsepower, serving to
keep frac assets well utilized and drive service company
returns.
Global oil and gas markets continue to contend with commodity
price fluctuations, owing to developments in geopolitics, interest
rates, and macroeconomic data. Range bound oil prices have not
meaningfully changed E&P operator plans to deliver flat to
modest production growth. Further, as North American oil production
continues to reach record levels, more frac activity will be
required to offset production decline. Near term natural gas
markets are under pressure, but domestic power demand growth and
increased LNG exports are expected to lead to a more robust 2025.
Long term demand for reliable, affordable energy continues to rise
with increasing global living standards, and North American
operators likely serve as the largest provider of incremental oil
and gas supply globally. These trends should support a durable,
multi-year cycle ahead for services.
“We enter 2024 with significant competitive advantages and the
flexibility to execute on our long-term strategic investments that
enhance our cash generation capabilities. Through cycles, we
achieved a 12-year average CROCI of 24% by offering a compelling,
differential service for our customers,” continued Mr. Wright.
“Looking to the first quarter, we anticipate flattish sequential
revenue and Adjusted EBITDA driven by seasonal trends and a
cautious start for E&P activity. This is expected to be
followed by a modest increase in our activity in subsequent
quarters. For the full year, we expect strong free cash flow
generation, with continued investment in digiTechnologies and LPI
business. We are confident that our technology transition better
positions us to deliver superior, durable returns over cycles.”
Share Repurchase Program
On January 23, 2024, the Board increased Liberty’s existing
share repurchase authorization announced July 25, 2022 to $750
million, a $250 million increase from the previously authorized and
upsized amount. The Board also extended the authorization through
July 31, 2026.
During the quarter ended December 31, 2023, Liberty repurchased
and retired 2,031,736 shares of Class A common stock at an average
of $19.21 per share, representing 1.2% of shares outstanding, for
approximately $39 million.
During the year ended December 31, 2023, Liberty repurchased and
retired 13,705,622 shares of Class A common stock at an average of
$14.80 per share, representing 7.7% of shares outstanding, for
approximately $203 million.
Liberty has cumulatively repurchased and retired 11.7% of shares
outstanding at program commencement on July 25, 2022. With the
program expansion, total remaining authorization for future common
share repurchases is approximately $422 million.
The shares may be repurchased from time to time in open market
transactions, through block trades, in privately negotiated
transactions, through derivative transactions or by other means in
accordance with federal securities laws. The timing, as well as the
number and value of shares repurchased under the program, will be
determined by the Company at its discretion and will depend on a
variety of factors, including management’s assessment of the
intrinsic value of the Company’s common stock, the market price of
the Company’s common stock, general market and economic conditions,
available liquidity, compliance with the Company’s debt and other
agreements, applicable legal requirements, and other
considerations. The exact number of shares to be repurchased by the
Company is not guaranteed, and the program may be suspended,
modified, or discontinued at any time without prior notice. The
Company expects to fund the repurchases by using cash on hand,
borrowings under its revolving credit facility and expected free
cash flow to be generated through the authorization period.
Cash Dividend
During the quarter ended December 31, 2023, Liberty paid a
quarterly cash dividend of $0.07 per share of Class A common stock,
or approximately $12 million in aggregate to shareholders. During
the year ended December 31, 2023, Liberty paid cash dividends of
$38 million in aggregate to shareholders.
On January 23, 2023, the Board declared a cash dividend of $0.07
per share of Class A common stock, to be paid on March 20, 2024 to
holders of record as of March 6, 2024.
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.
2023 Full Year Results
For the year ended December 31, 2023, revenue grew to $4.7
billion, an increase of 14% from $4.1 billion for the year ended
December 31, 2022.
Net income1 (after taxes) totaled $556 million for the year
ended December 31, 2023 compared to $400 million for the year ended
December 31, 2022.
Adjusted EBITDA2 of $1.2 billion for the year ended December 31,
2023, increased 41% from $860 million for the year ended December
31, 2022. Please refer to the reconciliation of Adjusted EBITDA (a
non-GAAP measure) to net income (a GAAP measure) in this earnings
release.
Fully diluted earnings per share was $3.15 for the year ended
December 31, 2023 compared to $2.11 for the year ended December 31,
2022.
Fourth Quarter Results
For the fourth quarter of 2023, revenue was $1.1 billion, a
decrease of 12% from $1.2 billion in the fourth quarter of 2022 and
a decrease of 12% from $1.2 billion in the third quarter of
2023.
Net income1 (after taxes) totaled $92 million for the fourth
quarter of 2023 compared to $153 million in the fourth quarter of
2022 and $149 million in the third quarter of 2023.
Adjusted EBITDA2 of $253 million for the fourth quarter of 2023
decreased 15% from $295 million in the fourth quarter of 2022 and
decreased 21% from $319 million in the third quarter of 2023.
Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP
measure) to net income (a GAAP measure) in this earnings
release.
Fully diluted earnings per share was $0.54 for the fourth
quarter of 2023 compared to $0.82 for the fourth quarter of 2022
and $0.85 for the third quarter of 2023.
Balance Sheet and Liquidity
As of December 31, 2023, Liberty had cash on hand of $37
million, an increase from third quarter levels, and total debt of
$140 million drawn on the secured asset-based revolving credit
facility (“ABL Facility”), an $83 million decrease from third
quarter. Total liquidity, including availability under the credit
facility, was $314 million as of December 31, 2023.
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 Thursday,
January 25, 2024. 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 Energy 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 7557611. The replay will
be available until February 1, 2024.
About Liberty
Liberty is a leading North American energy 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@libertyenergy.com.
_________________________
1 Net income attributable to controlling and non-controlling
interests. 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 Income 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. 3 Adjusted
Pre-Tax Return on Capital Employed (“ROCE”) is a non-U.S. GAAP
operational measure. Please see the supplemental financial
information in the table under “Calculation of Adjusted Pre-Tax
Return on Capital Employed” at the end of this earnings release for
a calculation of this measure. 4 Cash Return on Capital Invested
(“CROCI”) is a non-U.S. GAAP operational measure. Please see the
supplemental financial information in the table under “Calculation
of Cash Return on Capital Invested” at the end of this earnings
release.
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and
operational measures, including EBITDA, Adjusted EBITDA, Adjusted
Pre-Tax Return on Capital Employed (“ROCE”), and Cash Return on
Capital Invested (“CROCI”). We believe that the presentation of
these non-GAAP financial and operational measures provides useful
information about our financial performance and results of
operations. We define Adjusted EBITDA as EBITDA adjusted to
eliminate the effects of items such as non-cash stock-based
compensation, new fleet or new basin start-up costs, fleet lay-down
costs, costs of asset acquisitions, gain or loss on the disposal of
assets, bad debt reserves, transaction, severance, and other costs,
the loss or gain on remeasurement of liability under our tax
receivable agreements, the gain on investments, and other
non-recurring expenses that management does not consider in
assessing ongoing performance.
Our board of directors, management, investors, and lenders use
EBITDA and Adjusted EBITDA to assess our financial performance
because it allows them to compare our operating performance on a
consistent basis across periods by removing the effects of our
capital structure (such as varying levels of interest expense),
asset base (such as depreciation, depletion, and amortization) and
other items that impact the comparability of financial results from
period to period. We present EBITDA and Adjusted EBITDA because we
believe they provide useful information regarding the factors and
trends affecting our business in addition to measures calculated
under GAAP.
We define ROCE as the ratio of pre-tax net income (adding back
income tax and tax receivable agreement impacts) for the twelve
months ended December 31, 2023 to Average Capital Employed. Average
Capital Employed is the simple average of total capital employed
(both debt and equity) as of December 31, 2023 and December 31,
2022. CROCI is defined as the ratio of Adjusted EBITDA to the
average of the beginning and ending period Gross Capital Invested
(total assets plus accumulated depreciation and depletion less
non-interest bearing current liabilities). ROCE and CROCI are
presented based on our management’s belief that these non-GAAP
measures are useful information to investors when evaluating our
profitability and the efficiency with which management has employed
capital over time. Our management uses ROCE and CROCI for that
purpose. ROCE and CROCI are not a measure of financial performance
under U.S. GAAP and should not be considered an alternative to net
income, or any other financial measures reported in accordance with
U.S. GAAP.
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, statements about
our expected growth from recent acquisitions, expected performance,
future operating results, oil and natural gas demand and prices and
the outlook for the oil and gas industry, future global economic
conditions, improvements in operating procedures and technology,
our business strategy and the business strategies of our customers,
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,” “position,” “believe,” “intend,” “achievable,” “forecast,”
“assume,” “anticipate,” “will,” “continue,” “potential,” “likely,”
“should,” “could,” and similar terms and phrases. However, the
absence of these words does not mean that the statements are not
forward-looking. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, they
do involve certain assumptions, risks and uncertainties. The
outlook presented herein is subject to change by Liberty without
notice and Liberty has no obligation to affirm or update such
information, except as required by law. 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, 2022 as filed with the SEC on February 10, 2023 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 Energy Inc.
Selected Financial
Data
(unaudited)
Three Months Ended
Year Ended
December 31,
September 30,
December 31,
December 31,
2023
2023
2022
2023
2022
Statement of Operations Data:
(amounts in thousands, except
for per share data)
Revenue
$
1,074,958
$
1,215,905
$
1,225,592
$
4,747,928
$
4,149,228
Costs of services, excluding depreciation,
depletion, and amortization shown separately
777,251
850,247
890,846
3,349,370
3,149,036
General and administrative
55,296
55,040
49,087
221,406
180,040
Transaction, severance, and other
costs
249
202
544
2,053
5,837
Depreciation, depletion, and
amortization
118,421
108,997
88,213
421,514
323,028
Gain on disposal of assets
(13
)
(3,808
)
(1,562
)
(6,994
)
(4,603
)
Total operating expenses
951,204
1,010,678
1,027,128
3,987,349
3,653,338
Operating income
123,754
205,227
198,464
760,579
495,890
(Gain) loss on remeasurement of liability
under tax receivable agreements (1)
(1,817
)
—
42,958
(1,817
)
76,191
Gain on investments
—
—
—
—
(2,525
)
Interest expense, net
6,364
6,776
6,756
27,506
22,715
Net income before taxes
119,207
198,451
148,750
734,890
399,509
Income tax expense (benefit) (1)
26,824
49,843
(4,430
)
178,482
(793
)
Net income
92,383
148,608
153,180
556,408
400,302
Less: Net income attributable to
non-controlling interests
—
—
311
91
700
Net income attributable to Liberty Energy
Inc. stockholders
$
92,383
$
148,608
$
152,869
$
556,317
$
399,602
Net income attributable to Liberty Energy
Inc. stockholders per common share:
Basic
$
0.55
$
0.88
$
0.84
$
3.24
$
2.17
Diluted
$
0.54
$
0.85
$
0.82
$
3.15
$
2.11
Weighted average common shares
outstanding:
Basic
168,016
169,781
181,128
171,845
184,334
Diluted (2)
172,661
173,984
185,904
176,360
189,349
Other Financial and Operational
Data
Capital expenditures (3)
$
133,610
$
161,379
$
116,087
$
576,389
$
428,241
Adjusted EBITDA (4)
$
252,507
$
319,213
$
295,474
$
1,213,068
$
860,267
(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. During the
year ended December 31, 2022, the Company achieved three years of
cumulative pre-tax income in the U.S. federal tax jurisdiction,
management determined that there is sufficient positive evidence to
conclude that it is more likely than not that the Company will
realize the Company’s net deferred tax assets in the foreseeable
future. For the year ended December 31, 2022 the Company recorded a
release of the valuation allowance. In connection with both the
recognition and release of a valuation allowance, the Company was
also required to remeasure the liability under the tax receivable
agreements.
(2)
In accordance with U.S. GAAP, diluted
weighted average common shares outstanding for the three months
ended December 31, 2022 exclude 38 weighted average shares of Class
B common stock outstanding during the period. (share counts
presented in 000’s).
(3)
Net capital expenditures presented above
include investing cash flows from purchase of property and
equipment, excluding acquisitions, net of proceeds from the sales
of assets.
(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 Energy Inc.
Condensed Consolidated Balance
Sheets
(unaudited, amounts in
thousands)
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
36,784
$
43,676
Accounts receivable and unbilled
revenue
587,470
586,012
Inventories
205,865
214,454
Prepaids and other current assets
124,135
112,531
Total current assets
954,254
956,673
Property and equipment, net
1,645,368
1,362,364
Operating and finance lease right-of-use
assets
274,959
139,003
Other assets
158,976
105,300
Deferred tax asset
—
12,592
Total assets
$
3,033,557
$
2,575,932
Liabilities and Equity
Current liabilities:
Accounts payable and accrued
liabilities
$
572,029
$
609,790
Current portion of operating and finance
lease liabilities
67,395
38,687
Current portion of long-term debt, net of
discount
—
1,020
Total current liabilities
639,424
649,497
Long-term debt, net of discount
140,000
217,426
Long-term operating and finance lease
liabilities
197,914
91,785
Deferred tax liability
102,340
1,044
Payable pursuant to tax receivable
agreements
112,471
118,874
Total liabilities
1,192,149
1,078,626
Stockholders’ equity:
Common stock
1,666
1,791
Additional paid in capital
1,093,498
1,266,097
Retained earnings
752,328
234,525
Accumulated other comprehensive loss
(6,084
)
(7,396
)
Total stockholders’ equity
1,841,408
1,495,017
Non-controlling interest
—
2,289
Total equity
1,841,408
1,497,306
Total liabilities and equity
$
3,033,557
$
2,575,932
Liberty Energy 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
Year Ended
December 31,
September 30,
December 31,
December 31,
2023
2023
2022
2023
2022
Net income
$
92,383
$
148,608
$
153,180
$
556,408
$
400,302
Depreciation, depletion, and
amortization
118,421
108,997
88,213
421,514
323,028
Interest expense, net
6,364
6,776
6,756
27,506
22,715
Income tax expense (benefit)
26,824
49,843
(4,430
)
178,482
(793
)
EBITDA
$
243,992
$
314,224
$
243,719
$
1,183,910
$
745,252
Stock-based compensation expense
9,288
8,595
5,982
33,026
23,108
Fleet start-up costs
—
—
3,833
2,082
17,007
Transaction, severance, and other
costs
249
202
544
2,053
5,837
Gain on disposal of assets
(13
)
(3,808
)
(1,562
)
(6,994
)
(4,603
)
Provision for credit losses
808
—
—
808
—
(Gain) loss on remeasurement of liability
under tax receivable agreements
(1,817
)
—
42,958
(1,817
)
76,191
Gain on investments
—
—
—
—
(2,525
)
Adjusted EBITDA
$
252,507
$
319,213
$
295,474
$
1,213,068
$
860,267
Calculation of Cash Return on Capital
Invested
Twelve Months Ended
December 31,
2023
2022
Adjusted EBITDA (1)
$
1,213,068
Gross Capital Invested
Total assets
$
3,033,557
$
2,575,932
Add back: Accumulated depreciation,
depletion, and amortization
1,501,685
1,141,656
Less: Accounts payable and accrued
liabilities
572,029
609,790
Total Gross Capital Invested
$
3,963,213
$
3,107,798
Average Gross Capital Invested (2)
$
3,535,506
Cash Return on Capital Invested (3)
34
%
(1)
Adjusted EBITDA is a non-GAAP financial
measure. See the tables entitled “Reconciliation and Calculation of
Non-GAAP Financial and Operational Measures” above.
(2)
Average Gross Capital Invested is the
simple average of Gross Capital Invested as of December 31, 2023
and 2022.
(3)
Cash Return on Capital Invested is the
ratio of Adjusted EBITDA, as reconciled above, for the twelve
months ended December 31, 2023 to Average Gross Capital
Invested.
Calculation of Adjusted Pre-Tax Return
on Capital Employed
Twelve Months Ended
December 31,
2023
2022
Net income
$
556,408
Add back: Income tax expense
178,482
Less: Gain on remeasurement of liability
under tax receivable agreements (1)
(1,817
)
Adjusted Pre-tax net income
$
733,073
Capital Employed
Total debt, net of discount
$
140,000
$
218,446
Total equity
1,841,408
1,497,306
Total Capital Employed
$
1,981,408
$
1,715,752
Average Capital Employed (2)
$
1,848,580
Adjusted Pre-Tax Return on Capital
Employed (3)
40
%
(1)
Gain on remeasurement of the liability
under tax receivable agreements is a result of a change in the
estimated future effective tax rate and should be excluded in the
determination of pre-tax return on capital employed.
(2)
Average Capital Employed is the simple
average of Total Capital Employed as of December 31, 2023 and
2022.
(3)
Adjusted Pre-tax Return on Capital
Employed is the ratio of adjusted pre-tax net income for the twelve
months ended December 31, 2023 to Average Capital Employed.
Reconciliation of Historical Net Income
(Loss) to EBITDA and Adjusted EBITDA
Year Ended December
31,
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Net income (loss)
$
400,302
$
(187,004
)
$
(160,674
)
$
74,864
$
249,033
$
168,501
$
(60,560
)
$
(9,061
)
$
34,519
$
8,881
$
25,807
Depreciation, depletion, and
amortization
323,028
262,757
180,084
165,379
125,110
81,473
41,362
36,436
21,749
12,881
5,875
Interest expense, net
22,715
15,603
14,505
14,681
17,145
12,636
6,126
5,501
3,610
1,139
—
Income tax (benefit) expense
(793
)
9,216
(30,857
)
14,052
40,385
—
—
—
—
—
—
EBITDA
$
745,252
$
100,572
$
3,058
$
268,976
$
431,673
$
262,610
$
(13,072
)
$
32,876
$
59,878
$
22,901
$
31,682
Stock-based compensation expense
23,108
19,946
17,139
13,592
5,450
—
—
—
—
—
—
Fleet start-up costs
17,007
2,751
12,175
4,519
10,069
13,955
4,280
1,044
4,502
2,711
—
Transaction, severance, and other
costs
5,837
15,138
21,061
—
834
4,015
5,877
446
—
—
—
(Gain) loss on disposal of assets
(4,603
)
779
(411
)
2,601
(4,342
)
148
(2,673
)
423
494
—
—
Provision for credit losses
—
745
4,877
1,053
—
—
—
6,424
—
—
—
Loss (gain) on remeasurement of liability
under tax receivable agreements
76,191
(19,039
)
—
—
—
—
—
—
—
—
—
Gain on investments
(2,525
)
—
—
—
—
—
—
—
—
—
—
Adjusted EBITDA
$
860,267
$
120,892
$
57,899
$
290,741
$
443,684
$
280,728
$
(5,588
)
$
41,213
$
64,874
$
25,612
$
31,682
Calculation of Historical Cash Return
on Capital Invested
Year Ended December
31,
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
Adjusted EBITDA (1)
$
860,267
$
120,892
$
57,899
$
290,741
$
443,684
$
280,728
$
(5,588
)
$
41,213
$
64,874
$
25,612
$
31,682
Gross Capital Invested
Total assets
$
2,575,932
$
2,040,660
$
1,889,942
$
1,283,429
$
1,116,501
$
852,103
$
451,845
$
296,971
$
331,671
$
174,813
$
107,225
$
35,699
Add back: Accumulated depreciation,
depletion, and amortization
1,141,656
863,194
622,530
455,687
307,277
198,453
117,779
77,057
40,715
19,082
6,196
321
Less: Accounts payable and accrued
liabilities
609,790
528,468
311,721
226,567
219,351
220,494
118,949
52,688
99,005
26,600
13,275
1,718
Total Gross Capital Invested
$
3,107,798
$
2,375,386
$
2,200,751
$
1,512,549
$
1,204,427
$
830,062
$
450,675
$
321,340
$
273,381
$
167,295
$
100,146
$
34,302
Average Gross Capital Invested (2)
$
2,741,592
$
2,288,069
$
1,856,650
$
1,358,488
$
1,017,245
$
640,369
$
386,008
$
297,361
$
220,338
$
133,721
$
67,224
Cash Return on Capital Invested (3)
31
%
5
%
3
%
21
%
44
%
44
%
(1
)%
14
%
29
%
19
%
47
%
(1)
Adjusted EBITDA is a non-GAAP financial
measure. See the tables entitled “Reconciliation and Calculation of
Historical Non-GAAP Financial and Operational Measures” above.
(2)
Average Gross Capital Invested is the
simple average of Gross Capital Invested as of the end of the
current year and prior year.
(3)
Cash Return on Capital Invested is the
ratio of Adjusted EBITDA, as reconciled above, for the year then
ended to Average Gross Capital Invested.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240123883296/en/
Michael Stock Chief Financial Officer
Anjali Voria, CFA Strategic Finance & Investor
Relations Lead
303-515-2851 IR@libertyenergy.com
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