LBRT - Liberty Energy Inc. (LBRT) Q4 2023 Earnings Call Transcript

2024-01-25 18:24:05 ET

Liberty Energy Inc. (LBRT)

Q4 2023 Earnings Conference Call

January 25, 2024 12:00 PM ET

Company Participants

Anjali Voria - Strategic Finance and Investor Relations Lead

Chris Wright - Chief Executive Officer

Ron Gusek - President

Michael Stock - Chief Financial Officer

Conference Call Participants

Scott Gruber – Citigroup

Luke Lemoine – Piper Sandler

Atidrip Modak – Goldman Sachs

Stephen Gengaro – Stifel

Derek Podhaizer – Barclays

Marc Bianchi – TD Cowen

Waqar Syed – ATB Capital Markets

Keith MacKey – RBC Capital Markets

Dan Kutz – Morgan Stanley

Saurabh Pant – Bank of America

Tom Curran – Seaport Research Partners

Presentation

Operator

Welcome to the Liberty Energy Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Anjali Voria, Strategic Finance and Investor Relations Lead. Please go ahead.

Anjali Voria

Thank you, Ed. Good morning, and welcome to the Liberty Energy fourth quarter and full year 2023 earnings call. Joining us on the call are Chris Wright, Chief Executive Officer; Ron Gusek, President; and Michael Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements reflecting the company’s views about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These statements reflect the company’s beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings.

Our comments today also include non-GAAP financial and operational measures. These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted pre-tax return on capital employed and cash return on capital invested are not a substitute for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA and the calculations of adjusted pre-tax return on capital employed and cash return on capital invested as discussed on this call are included in our press release available on our Investor Relations website.

I would now like to turn the call over to Chris.

Chris Wright

Good morning, everyone, and thank you for joining us to discuss our full year and fourth quarter 2023 operational and financial results. 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. We delivered full year adjusted pre-tax return on capital employed of 40% and cash return on capital employed of 34%, both exceeding the prior year. Revenue was $4.7 billion in 2023. Net income of $556 million increased 39% year-over-year, and our fully diluted earnings per share rose by 49% year-over-year to $3.15. Our EPS grew faster than net income due to reduced share count, showcasing the power of our buyback program. We concluded the year with adjusted EBITDA of $1.2 billion at the high end of our midyear guidance range, and we significantly increased our cash flow.

We went public six years ago after a record year in 2017. Since then, we have tripled our revenue, quadrupled our EBITDA and more than quadrupled our pre-tax net income. These financial records were made possible by the simply outstanding operational performance of Team Liberty. Every quarter in 2023 set a new quarterly pumping efficiency record. I couldn’t be more proud to be on this team. 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 buybacks and cash dividends. We have already retired 12% of the shares outstanding when we announced the program in July 2022, equivalent to 33% of the shares issued for the acquisition of Schlumberger’s OneStim business three years ago. We also upsized our share repurchase authorization by 50% to $750 million and increased our quarterly dividend by 40% beginning in Q4 2023. Liberty brings together leading pump technology, mobile power generation and CNG fuel supply, a unique value proposition to maximize efficiency, reduce emissions and lower fuel costs....

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