Strong free cash flow and strong dividend…

• Revenue: $1.1 billion for the third quarter of 2024.

• Adjusted EBITDA: $248 million for the third quarter of 2024.

• Net income: $74 million for the third quarter of 2024.

• Adjusted net income: $76 million for the third quarter of 2024.

• Net profit per share: $0.44 for Q3 2024.

• Adjusted net income per share: $0.45 for Q3 2024.

• General and administrative costs: $59 million for the third quarter of 2024.

• Net debt: $100 million at the end of the third quarter of 2024.

• Free cash flow: Strong generation in the third quarter of 2024.

• Share buybacks: $39 million in the third quarter of 2024.

• Quarterly cash dividend: Up 14% to $0.08 per share.

• Capital expenditure: $163 million in the third quarter of 2024.

• Total liquidity: $352 million at the end of the third quarter of 2024.

Release date: October 17, 2024

For the full transcript of the conference call, please see the full conference call minutes.

Positive points

• Liberty Energy Inc (NYSE:LBRT) delivered a solid quarter with revenue of $1.1 billion and adjusted EBITDA of $248 million despite a softening demand environment.

• The company achieved record operating performance with its digiPrime fleet and set a company record for pumping hours per month.

• Liberty Energy Inc (NYSE:LBRT) generated strong free cash flow and enabled a robust capital return program, including $39 million in share repurchases.

• The company announced a 14% increase in its quarterly cash dividend to $0.08 per share, boosting returns for shareholders.

• Strategic investments in innovative companies and cutting-edge technologies are expected to expand Liberty Energy Inc’s (NYSE:LBRT) competitive advantage and market opportunities.

Negative points

• Liberty Energy Inc (NYSE:LBRT) posted a 2% sequential sales decline due to pricing concerns.

• Net profit after tax fell to $74 million from $108 million in the previous quarter, reflecting a challenging market environment.

• The company expects fourth-quarter activity to decline by a low double-digit percentage, above the typical seasonal slowdown.

• Pricing pressures conflict with expected market demand, creating potential challenges in maintaining profitability.

• Liberty Energy Inc (NYSE:LBRT) plans to temporarily reduce the number of its deployed fleets by approximately 5% as customer activity declines in the near term and market pressures increase.

Q&A highlights

Q: What are Liberty Energy’s plans for e-frac fleet expansion and LPI investments in 2025? A: Michael Stock, CFO, mentioned that Liberty Energy plans to launch four or five digital fleets, which would represent about 10% replacement. The company expects about 40% of its fleet to be equipped with digital technologies by the end of next year. LPI investment is still in its early stages, discussions are ongoing and more clarity is expected from the January call.

Q: How should we think about the price pressure dynamics in the market? A: Chris Wright, CEO, explained that despite some pricing pressure, particularly with additional pickup work, Liberty Energy is unwilling to operate fleets at prices that do not justify their operation. He pointed out that the market is not in a typical downturn and that prices are close to bottom.

Q: What are Liberty Energy’s free cash flow expectations in 2025? A: Michael Stock, CFO, stated that Liberty Energy expects to reduce capital expenditures in its completions business, with a focus on replacing four to five digital fleets. The company expects cash taxes to increase slightly and expects working capital to remain relatively unchanged. Overall, Liberty Energy expects to continue to generate strong free cash flow and maintain its robust return on capital program.

Q: How is Liberty Energy dealing with the current market weakness and price pressure? A: Chris Wright, CEO, explained that Liberty Energy is focused on maintaining profitability by retiring some capacity as needed. The company leverages its competitive advantages, such as its close customer relationships and cutting-edge technologies, to address current market conditions. Wright emphasized that the company is unwilling to make compromises on pricing that do not support investments.

Q: What are Liberty Energy’s strategic priorities for 2025 and beyond? A: Chris Wright, CEO, emphasized that Liberty Energy’s strategic priorities include maintaining a disciplined investment approach, focusing on strategic investments in power generation services and continually generating strong free cash flow. The company is also committed to its capital return program and strives to create long-term value for shareholders.

For the full transcript of the conference call, please see the full conference call minutes.

This article first appeared on GuruFocus.