LBRT - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to the Liberty Oilfield Services Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded.

Some of our comments today may include forward-looking statements, reflecting the company's view 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 the company's earnings release and other public filings.

include and also measures. today comments non-GAAP operational financial Our may and EBITDA, on substitute These to and including other EBITDA measures for be pre-tax of similar measures a non-GAAP measures, not adjusted return companies. comparable are capital GAAP not employed of call EBITDA and net which the earnings are calculation presented and adjusted as employed is to on its release, return in pre-tax capital income website. available discussed reconciliation EBITDA the A of on on this company's

the conference Please turn to I Liberty's Wright. would to now Chris over go CEO, like ahead.

Chris Wright

our joining Good quarter morning, you operational thank year everyone and full and us for today financial results. to discuss and XXXX fourth

delivered a are that as became to have in progressed. results challenging market solid We backdrop given XXXX more pleased year financial the

revenue from was X% XXXX an XXXX. year $X.X in billion decrease $X.X full the billion For

million in in increased to offset were million full Annualized $XX fleets of average income number adjusted frac million and challenging was the $XXX totaled Net deployed efficiency. that the from per a in EBITDA frac by in fleet improved EBITDA million Results $XX.X $XXX and the year decline environment in year $XX.X XX% price compared million, XXXX. prior year. full during year the was driven

XXXX. fleets end growing the investing to of cash repurchase market returned of from X.X% in invest distributions of form XXXX growing while the at and strong year fleets total cash us to in the fleet for in our XX enabled of the of our at the $XX outset outstanding to Continued generation XXXX growth, shareholders the XX in dividends, million of beginning and count shares our share at organically quarterly

for capital employed year was return full the on Pre-tax XX% XXXX.

fix our sequential as that period by of more was more some positive to this than sheet capital pronounced was managed constraints position The in at experienced All achieved a operators improving same capital in during the completions slowdown XXXX the expenditures of quarter end. and markets. year fourth to while completions net cash balance the

and negatively constraints position from the Despite fleet These fourth changes challenging these cash causes conditions achieved Liberty gaps utilization. workforce. structural without or fleet overall our the to operations affected schedule count completion during flow in quarter

into customer the had quarter a level differential of bit [hardening] fleet positioned us services our start We best interest moving for This XX testament a strong our for the in demand the at best-in-class into demand customer Liberty's first to fleets. visibility position commission ourselves to of January, XXXX. QX dedicated the

$XXX from or quarter. income the net the million to fourth to million quarter fourth quarter in Net after the in $XXX $XX of loss third in XX% quarter million of $XX of to decreased XXXX. compared decreased XXXX revenue million the third tax

adjusted third per Annualized in quarter. the EBITDA was the million decreased EBITDA million quarter in fourth from quarter $X.X XX% adjusted $XX third Fourth quarter. in the million to to $XX compared fleet $XX.X million

The marginally entering in Total pricing industry in only were year-over-year America frac XXXX. dynamic XXXX North challenging. up is stages

implies a stage pricing to needed fleet completed which of of frac least the led pace XX% for raised through the However, leads demand of meet leads demand. decrease resulting progressively second the to across active industry to of frac lower have efficiency is to the in by slowing XXXX activity frac in on The half services. pressure number at XX% each by frac XX% gains

XXXX in XXXX XXXX pricing fracturing industry improved in for is Without fleets pricing processes. technology, come the have for efficiency pricing long supported increased to of start second half term, of backdrop has from we dedicated yet oversupply believe supplies XXXX. trend the the at meaningfully in of will this equipment late increased was the impact fleet fell not helpful across attrition staffed of negotiations. The substantial in and while The the frac the improvement improvement of profitability services an

Future and each away prices, capital availability activity multiple of on including dependent commodity in industry the basin. capacity are take factors for projections

fleet For year this term part support demand to Liberty business as larger programs. growing of development fleets is our to with strong XX activate and customers we XXXX earlier their in chose long our

Liberty has based long-term always for on fundamentals. strategy employed a investing the of future

portfolio environmentally to favorable. Our us of take of competitively cycle turns advantaged when with friendly navigate highly markets strength coupled frac leads financial advantage and periods to the allows efficient our challenging

beneficial the A are of our employees. maximizing day governance ESG alignment. our industry since at focused advancing compensation customer always and practices stakeholders, on which concerns transparency all customers, Liberty ourselves that been and communities focused topic and Liberty is significant social forefront and investor have on solutions environmental, on one. within our Governance the to conversations is pride at We and

also approach is hydraulic in a socially driving Liberty an environmental first to and mover fracturing. conscious

diesel engines. in We fleets quiet fleets began both four deploying XXXX, frac early and dual-fuel test and dynamic blending our four on tier in XXXX game-changing gas tier partner an with Caterpillar introduced we're

aggressive frac and We developing next fleets displacing impacts fuel natural customer by reduce with environmental gas. both continue our our to diesel generation efforts costs in reduce

way term in circumstances today's We market terms Liberty. It an fleet to customer takes recently are such special a fleet Liberty's simply a for They capacity our view fleets ESG build quiet in many case. in check business. agreement. DNA. fleets. a about do We conversations They to not as but XX with are existing customers simply this tier just four for build box came are and embedded ESG to special we the are next-generation a under DGB fleets was long don't concerns

frac order capital future understand frac various OEM the dual under four fuel cons website. next-generation undertook As In preparing available Liberty our the a fleets it team white fleet in we and four tier compares electric is for partnership turbine continue download with and prepared paper diesel, to tier on we of and powered manufacturers next-generation fleets frac pros conditions. on that options operating review better the study outlay decisions comprehensive to

capital the most reduced tier three of both fuel for expect fuel with provides cost. emissions the each lowest emissions costs considerations results as at total fleets future. capital We options. combination emissions The savings, of generation of currently the dual comparison technology effective that deploy potentially our costs, electric dual to The operational efficiency fuel fleets scenarios operating field analysis dual fuel looked the four under profiles, Greenhouse term gas footprint, for fuel the emissions. the current next operational fleets are and was technologies and in overall and currently in near

improving technology, XXXX well of grew our played and culture. We market in and downturn During positioned market. were XXXX Liberty invested to take advantage our an systems We [indiscernible]. share to

time. following this same the strategy are We

next frac results of conditions to to discuss more uncertain, fleets. across in detail. market all will While in our now culture, improvement call over technology we generation XXXX progress timing the the in an operations, customers, our expect remains make and hand I to financial significant Michael CFO fronts; Stock,

Michael Stock

morning Good challenging We're pleased our backdrop. performance full team quarter everyone. XXXX fourth of amidst with in a the the market the year and

to deployed year X% and fleets per Annualized XXXX from classes X% were a driven EBITDA billion million relative million year. exchanges declined $XX per reported XX% adjusted a from year. revenue a diluted fleet than without the during environment shares have EBITDA million from quarterly B the $XX.X to to challenging to prior $XX.X which frac per Full than is we decline in earnings between $X.X billion of $X fully been by the due the offsetting the average in more shares. in price $XXX would in of two year totaled year timing share A the earnings full for calculated increase number to was accounting XXXX. exchanges For full compared The a Class XXXX. $X.XX Class million Results of related lower nuance performance million income $XXX and gap the the the

and As generation our of Chris cash shares growth $XX of shareholders the cash dividends, of at the of in X.X% and form the million XXXX repurchase the outstanding quarterly the continuation of to strong total in outset returned [indiscernible] pointed year. out distributions in

was full Pre-tax capital for the return employed on year. XX%

sheet while cash achieved of All to year-end. net a balance at our positive improving was this position

We capacity oversupply financial of the pricing operational very and resulting the the and the period solid year frac market a significant during with the are efficiencies pleased in pressures. of gained results

in capital markets. by fourth completions quarter managed the fix and operators disruptive were in The caused fleet capital some affected utilization. in to sequential as constraints constrained was and These gap negatively completions capital of slowdown overall expenditure scheduled completion budgets the

available related work at we customer during the frac due was had changes pricing spot of achieved positive to our demand operators gaps to Despite quarter fleet Liberty's scheduling differential of for flow services the in without negative operations challenging quarter. conditions count oversupply issues. to to for this structural the strong Further, Liberty the and visibility from fill start drag a fourth these on or fleet workforce cash dedicated

quarter the million XXXX from to million the to in in the to fourth net third share loss tax diluted revenue XXXX. XX% Fully after third in quarter ‘XX. decreased For Net diluted of quarter. third $XXX in the fourth net of income per in of the share decreased of fourth earnings $X.XX $X.XX fully the $XX quarter loss compared $XX million $XXX of to compared was quarter quarter per million

third in quarter to million was $XX third Fourth compared the fourth quarter. quarter fleet in quarter $XX.X per XX% to and adjusted EBITDA million in $XX adjusted from million million decreased annualized $X.X the

expense included G&A or compensation $X.X of non-cash and based the administrative stock $XX the year of revenues million quarter stock non-cash totaled of $XX based revenues $X.X XXXX expense expense and totaled or compensation General and full of for million for million. of included X% X% million.

year Net fourth tax the $XX.X million four expense interest Income million was $XX.X $X.X million year totaled fourth quarter. and XXXX associated for for totaled $X.X and million the for and quarter. expense benefit full the the for fees XXXX

no a and drawn the We’ve end $XXX was year million. credit of a position net available million. ended facility the At of balance the dollars ABL we total facility million cash liquidity $XXX credit under had at with year on borrowings million $XXX $X including cash

and results sheet our compounding appropriate. is rates at holders disciplined committed stockholders our strong high to return long-term outlook and as favorable that balance capital cash Liberty's to to value stock strategy flow support stockholder by of financial balanced growth cash returning reinvesting returning of

million. XX, ended and December paid the of dividends quarterly approximately holders year XXXX $XX company to and distributions stockholders cash unit the During

of XXXX announced A Liberty for record used the directors of dividend as of same on approved the XXXX $X.XX XX, holders which holders be paid unit has Class share been XXXX at units and also on March cash of common of of stock a January to per March board payment X, distribution $X.XX LLC of Our for a record per date. XX,

is being imbalance are the in affecting XXXX due time XXXX in XXXX. the As to but and market work by for of for year. challenging not imbalance reduction fixed dynamics the frac pricing Chris half is takes discussed the supply-demand this a This latter supply of in pricing

driver more per down with frac fall few active fleet positive in next current We this will see the per XXXX pricing the a at year we efficiencies frac be and projecting EBITDA years XXXX is when frac XXXX investment looks full year for the decisions. the environment compared In approximately market the million active over the fleet. current slightly to XX

projected XXXX fleet In the a levels customer. activation. January dedicated fleet delivery This in service held until and down in XX placed we was dedicated the the returns right mid of customer combination took and with for market about activity supported

fleets fuel also customer build XXth and we've these be announced to to of XXXX will the engines plans next-generation In X dual one to to XXXX. as fleet. strong upgrade engines these demand we purchase tier adjusted to set in commitment used Due

$XX of technology for in capital includes facilities improvements We efficiency million capital. million maintenance be $XXX $XX about approximately completion for fleet in expenditures to million for XXXX capital general the million expect $XX XX, fleet which

a a the highest with for Fleet the returns. be the term believe capital customer. We XXth long redirecting dedicated end for fleet before X fuel use example of XX dual of outlay of deployed will the tier second optimizing engines long-term the is quarter

shareholders balance commodity reward a sustained through stakeholders strong cycles. to combined and future enter a with We to value with cycles. efficient to highly in technology and believe innovation positions investing We a value the the XXXX alike shareholders designed for on clear that a proposition report, Liberty sheet through focus greater operations commitment as in

to back it we for turn now before will Chris I Q&A. open

Chris Wright

reduction now disrupt over slowed right with we and is growth oil has trend anticipated whether last corona growth XXXX meaningfully demand believe will this meaningfully U.S. CapEx. this the year It the continue production oil EMP the year. virus the in will unclear

demand balance companies market. frac increased to an improved In and and both the producers investment fleet by market in U.S. any frac should case restraint supply lead oil

subject ESG is a far discussed. broader often than

ESG like benefits be a broad has of any range considered. costs and Our should industry that industry

people still clean electricity and than alone over poverty example more reliable Malaria fuels. of lacking year Lack X access to every energy clean For to billion access suffer people combined. AIDS fuels and cooking kills cooking

and crop improve the with greatest petroleum fuels with remains pressure burning cleaner air scourges; our poverty is globe in deforestation gas. to lives motivated Energy poverty U.S. and also other progress part the in to wood humans and both reduced Liberty Poverty millions folks replaced clean are water. residue of the hunger, is The around access to a malnutrition to dramatically play global lack the major strongly the far environmental of to and at major together via like energy combating and environment. which cleaner as threat would liquid contributor the

in In of on founding addition energy mission the to practices reduce the continues in to Liberty Since energy and our leader push the forward. combating role nearby to a been production industry broader our ESG continue are committed poverty Liberty industry's impacts has contributing frac the and to conscious environment. communities to

the open for now questions. line will We

Operator

now Mulvehill Chase begin [Operator ahead. session. Bank from of first Instructions] Our will Please We from is America. question question-and-answer the go

Chase Mulvehill

that first want [indiscernible] make guess This squeeze the kind I I gentlemen. this fleet I able just right? out? make fleet just upgrading some So of actually getting fleet to to morning about good I or XXth was talk to of we sure pumps Hey, I'm new to sure if another right. a want you be you heard can the

Chris Wright

A customer that It pumps an fleet. is the going and new generation but to the our we're a built is base customers our fleet from existing fleet new-built We'd upgrade the and fleet. ordered fleet. interest decision. us This across ESG to demand additional significant led make new across

Chase Mulvehill

Okay.

you the that would pumps, plan CAT pumps still you new with upgrading replace as the On those to are well?

Chris Wright

set two, tier rather fleet X a upgrading one other Chase of the and than than we pumps its in rather then continue as just will be two one diesel. fleet will rotation

Chase Mulvehill

it. Got

Okay. And it XXth in the like XXth XQ. sounds XXth fleet the and fleet started

confirm the So then what's what And fleet basins? timing can then and XXth you the for that?

Chris Wright

Yes.

the end the at fleet come probably it's through started middle started did but… January will QX think I as probably XXth the starting We the I'd build when Chase say So clear middle XXth in cycle. of towards get QX the up. in fleet sort really of on the is be That'll comment QX we basin scheduled in moment. don't on the

Michael Stock

Yes.

capacity not a have to our general in grow are elsewhere shrinking We our the ads Permian. the Permian. We're necessarily migration in at but Liberty net

Chase Mulvehill

right. Got All it.

XX that the progression to you get quarter gradual above year? the or get in XQ about for million first of So getting of the of year. one fleet of is time this up EBITDA you the by you trajectory a you one get end quick the about this Do and talk this we XX how per million annualized Could there? you kind talked

Chris Wright

of of challenges slow little and year. or Yes beginning generally always bit a you the seasonal the at kind start have weak up of Chase

slightly QX QX say path under So run be that will that January rate over that and run rate. obviously

think have the the year. I few capital as that likely of we I system years. last way have will works a of two the around QX out sort seen this don't constraints for think challenges

sort QX. a lower small here to in the A some as QX bell of the middle and be be that'll think go. higher I far a in little of they slight little like bit year a So and bit the run as quarters, the rate curve

Michael Stock

Chase we think profile don't away. that going in drop And of QX, somewhat change bit that's, mitigate customer should that's although to a in little a

this QX I we We year for large this to as again should down of it as a be quite year not little be different but think had expect us last year. and year, this drop a

Chase Mulvehill

turn All I answers. will Okay. over. right. back it the Appreciate

Chris Wright

Thanks Chase. Have good a day.

Operator

ahead. AltaCorp from Waqar next is Capital. from Our Syed question Go

Waqar Syed

here. one net my of they your one add customer, or taking fleet you're XXth that is adding your for you fleets this questions Thank Couple of And of one competitors questions. cannibalizing a for the this number fleets? are

Chris Wright

it a Waqar net add. is

our this [indiscernible] now One work. specific some increasing customer of growing our things of for right is customers is that But we're larger share the a [indiscernible] the net actually doing just completion with add market gap.

Waqar Syed

$XX is then to from $XX for a normally are million EBITDA. very Are $XX of we the past range? that kind fleet same Okay. contribution In metrics million million million to is from return justify justify investment still generally be the hard And to fleet? the EBITDA to fleet. economics with different $XX Is required average the what the in per is new the EBITDA it's that the crew going

Michael Stock

per our we return but on no EBITDA will that be definitely will of average. yes over than the in that years fleets than We fleet different, fleet next deployed think The past Yes. specifics the higher fleet few for. yes disclose lower no the won't new I be

Chris Wright

that little which just don't really as we for oversupply really on is are is the year the return the market Waqar last year the at by commentary We color that think balanced affected one. where as profile far a this moment. really where was

that improve two at. that were we years say where just and changes we window. going return that's [indiscernible] We profile longer. look the or next other bit little the after yes So are sort to without those at in of We any look would a three at look

Waqar Syed

similar available was year picking to but Is the to fleet there. up. the just the metrics of fleet? pricing then fleet well And that This the XXth XXth return the applies for was not last to fleet the just as same question you kind also XXth the you

Michael Stock

it's so relationship strategic customer said of customer pricing of combination those which into yes the it. quite the but go is yes and and pricing what fleet will it We're excited or the as the our value be compelled won't a forward to us pricing and that and relationship XX combination of do above we the along it. is we details going all it's average Waqar, the about

Chris Wright

just another on Yes Waqar, of bit that. color

of in year the last drop-off was QX of this we said there year be we As a had we of XXXX. going [banking] last to view knew that

we that to the again see we going going to a was was year. challenge, steady be that more with So so that changing mix this customer little being a in knew

Waqar Syed

for detailed fleets you traditional electric and thank and very engines. comparison tier study between the the and dual then And the study fuel four -- first on Okay. diesel good

fuel the gas? CNG or use Now dramatically economics fleet for know the what gas. of whether the, use LNG fuel XXth you economics in of terms change Do you plans the to customer fuel

Chris Wright

It have being fuel out In possible we necessarily gas to and the using you going combination. be always worked but much as to will come fuel fuel of operate the out. gas. across migrate can't you're gate cases a That's all can as where a

Waqar Syed

Okay. have All for right. That's all now. you. I Thank

Chris Wright

day. a Thanks Waqar. Have nice

Operator

Stephen is Go Our next Stifel. question from from Gengaro ahead.

Stephen Gengaro

Thanks. Good morning.

Chris Wright

Morning Stephen.

Stephen Gengaro

if things don't some economics the table just to on arrangements the you're DGB a think the tier When of the follow term two still don't on by a to about some the mind to about let's four you mind on first fleets of share talk think prior there cost you fuel you particularly customer up is and the I these, or savings XXth just the from driven yet questions. efficiency? if the willingness longer bringing

Michael Stock

sense of One is drivers one of two That's these economics of it's and to is a that it why of There's to be deploy of us is fleets. absolutely independent sense achieve customers fixed is some us deployment. profile new the for the and and No emission for going to of also sharing part for almost driver them that why absolutely. lower lower us customer cost a one for operations a cleaner of capital other requires but is cost a it drivers. makes makes and the that for

not the the they [indiscernible] And fleets clarify just You are same are new actually right. more economic [indiscernible]. said have got fleets. efficiencies to are you to They old efficient Stephen

X there DGB. it's increase because adherent a tier no sort efficiency is of So in just

Stephen Gengaro

at the think color some chase you I progression Okay. on and One progression. is the provided two others. then Thank you you and when EBITDA look the

the Just XXXX? changes any so is in progression I'm in clear by price expected driven utilization not

Chris Wright

by Yes, a historically weather North year really because challenges. driven quarters. utilization of start significant slower QX summer QX slightly amount that so a have to Also have was your North. more the fleets a have we lower to the you little a than always

yes So that without pricing. was

pricing up So general increase the that goes would projections.

Stephen Gengaro

to and about back think yet Great conversations and understanding times you paper just when conversations customers sounds or with through for few emissions know and been you you gone? one but do it reasons I've put a just as and but the customers final how it yes the if guys profiles you and that it's have laid white your it's saying any you a few out, those get better electric out

Chris Wright

Yes. complicated Look equation. mathematical it a It a is equation. is just not

fuel, concerned actually there's not there's have and very of perception. supply there. numbers. They're those yes So of that's I about hadn't we would any been out good don't a say numbers there -- about concerned customer numbers

combination a wildly of I numbers I And more wouldn't different there, what's those wouldn't just take a say view got wild different. or a bit it's is say the So different but little there in than everybody's decisions. of

Stephen Gengaro

you thank answers. for the Great,

Chris Wright

Thanks. bet. You

Operator

ahead. Voie Chris from is question next from Wells Go Fargo. Our

Chris Voie

morning guys. Thank Good you.

Chris Wright

Morning Chris.

Chris Voie

first little just the pricing on So to if detail get more a possible.

the XX% down quarter-over-quarter were quarter. in revenues Your fourth

XQ if can terms you much a in pricing curious that Just bit average was give be expect a color that on if a of how in pricing then of to little you lower. and little impact

range on think X% give among curious in but pricing well? first the as quarter color the X% just to I little competitors a you can probably

Michael Stock

you can you with numbers. pricing and team amount the as we sort were about what that capital people plus did and talk is QX capital fleets Yes. of a talk because dedicated rough a XX% down pricing good utilization refilling that we've and Chris you had down Generally debt order constraints minus dedicated a of up so dedicated XXXX and like of great sales XXXX the like said we we on roll to finishing pricing or year-over-year job to works. talk Obviously then some issues when had as other spot of market people budgets off about

Now like pricing demand and of sort of wanted keep oversupply equipment sort very because to very, out was low working going QX of things the was to people be as where the in the spot in large of working XXXX.

really than it's we need in say to will compare I to much spot So QX. artificial hard when pricing up other be generally over constraints do but of pricing we Q-over-Q spot these happened QX QX work don't would very fill gaps because that

So we of on pricing. where that's sort are

Chris Voie

Okay. terms of then first the kind the That's on digits Thanks. consolidated tracking work the probably general have up And competitors your average quarter first most very and helpful. those in in in in fourth active quarter mid-single maybe of fewer quarter. to I'd they say fleets fleets but are of

give a have be of fleets a to You're Can fleet per expect and like sense you average in you revenue going XX% going much strong first first to higher color likely just that the maybe to XX% there? or be up? little how rebound efficiency a quarter. Is quarter to activity and

Chris Wright

fairly that's think I Yes, number reasonable Chris.

Michael Stock

[indiscernible]. you Thank

Chris Voie

I'll Thanks. back. it Great. turn

Chris Wright

Have day. you. good Thank a

Operator

is Evercore ahead. Go ISI. Our James from West next question from

James West

good Hey morning guys.

Chris Wright

James. morning Good

James West

big in like you out to talked efficiencies? new as warrants technologies some game about past. things there Do anything guys horizon the you curious about see be that here the on changer are and of a new frac lock could evaluating Chris these you’ve and

Chris Wright

and incremental would the about. We're other about there you have know we're some There's on improvement for say There's some improvements. things are in incremental but things game is looking talked don't efficiency, I cost I changer. I and safety. working of

we develop hit one that's that's frac some out our those great going or to of three on not and competitive out. will and like hit things good feel goal but are. it have the make but perfect roll we position about market only in work switch them then where a takes pretty mean and that with us of make flip time and now the and supply it some to months things from demand those, of we one about I may three going Some We're time will and itself two systems some frankly but the

that QX I and actually pretty all we Given say weird. right may good sound It about our top now. business feel

James West

hear. returns pricing balance And guys the in then you returns the under with pressure. nature the it the business? where good is on and focus you do are the how with current pricing strategic That's high business to Obviously Chris really have environment of

You did a job it's in like challenging with returns equipment XXXX seems great putting the but market. you're more the XXXX into like

I'm strategic the return so sacrifice because be capital? how see to that? earning on Are side bit you above And so cost think willing you a about or still better reasons for there curious you you out the a of future

Chris Wright

say, cyclical business. to Good it's look a

want few how over will years XXXX, few all we returns play took a or at we that strategy we quarter so for we look maximize returns coming to won't you the next hurt because times return years. if highest at last look for in no play XXXX this we but So decisions played quarter XXXX get make different the the returns for XXXX and we the example one earned positive but we didn't

a When that the commitment. when we people a is we fleet, build hire many year

profitable line on and whatever the the Our but maximize heads return and invested of in to time the game. does that game lay well least a goal is capital fleets maximize the six lay up max we off deployed and that bunch or down not with the just can We we on way that's our capital over or not that's want to the and same same returns numbers boost short play story. the term very

scrounging pricing customers, align we or XX to but had having an profitability end we I get decisions year. We could better mean no matters out for saw of only XX brought fruitful several find with through our approaching place returns Now had been right raise the XX same. and lots gains, to of we're fleet what place lot strategic efficiency we opportunities this but think fleets we understanding to where's It had just we to around and interest fleets today's that the for the of, where saying the this through strategically time. the to make just to just so on again they're we economically but and at those to not because what have. I will downturns the wasn't best with the the pricing no we've fleet a the dialogues unfold enough about right fleets customers employ of pathway way right

looked is capital So it's returns at. what and I've on look multi-year we at always it

James West

Chris. enough. Okay. Thanks Fair

Chris Wright

Thanks James.

Operator

question is Blake Research. from Our ahead. Wolfe Gendron Go next from

Blake Gendron

Hey morning. last questions. Thanks on wanted question. thanks. Good to follow-up my taking for I James's

in You ‘XX XX talked saw fairly here in in of offense market and activity a about out that a offense again regime. then the got playing we is easily in of difference took and would lot XX big between snap say back slack now and though I pricing the playing pumpers,

Now starting the see have spending out. you're trajectory to oil from price might more here kind an and activity flattest decouple of EMTs from moderated we a on

alignment at point you more putting in are your you are way supply pumps say some is and you guess stock lower share Or longer back kind price. that on I arrangements, guess of with dedicated in what term I in the that the and you're that better customer side getting a that stock more in technology defensible the that customers else given will different the investors somebody go for now sand push XXXX? a confidence putting gives So gaining attrition front? will

Chris Wright

is snap agree latter More no than growth your the We last This I downturn back expect huge the way do and former to with demand the at not and downturn. in like in in all. comments.

fleets that wouldn't not grow yes improved. we but of a fact still see are have number market demanded grow. surprised Not not be to In

price be are with we're for yours. the shows happening going that that there'd time, believe commodity right to do believe of align partners is thing us sand the we economic But strong the with now, continue bigger for list and buyers can are is the just So, current we guys not forward than attrition cheaper going pound that to us the conditions. you'd this be we seeing in will

come will There's maybe in and kinds there. of different back See future. customers the out all you later

that the through So, that and finding it's mutually partnership. beneficial for customers a are us strong want time

think for actually being a long-term cheapest short-term I of kind that not minimization strategy cost buyer is operators. by thing

everyone their done. economics how I'll biggest going we thing look, could role align them and a But and work forward to same the we people or for have thing a can us decisions. game not all different with make strategically so in strategy better right deliver them. the the customers plays growing different take Question to with to But and is

Blake Gendron

the on Okay, understood. a side. ESG here follow-up And then as

I the appreciate global commentary and across oil for all this really the is I is saw message and gas the groups. hope across peers the First, and that spread reach ESG a

do guys you whitepaper. what can to ESG the with as in field the relates with Specifically and it

is from that there read than competitive that in way standpoint and dual-fuel is ESG gas. on scenario it we frac is The fuel one which as potentially an if more electric that's not

is range dual-fuel standpoint better conditions. an and wider that is from know we operating return emission standpoint overall from thermal more efficiency competitive, of a across an So,

What's viability the gas. But on the is around operator and all ports And Permian, into your you what customers basin can conversation turbine then, any think every investing infrastructure. is entire across fuel in that something the buying specifically operate in conversation around fuel power gas the customers generation where with this.

economics well. as dual-fuel of versus would the you. improve Tier the greatly X Thank Because E-fleet that

Chris Wright

fuel there gas been seven have We've fuel business the gas. think last soon over But versus of a been case for and CNG the so, I will has duel-fuel No, week. moving in is now. that a dynamic the precious where will don’t years done Yes. little LNG be thing. everyone

amount but We've a It would supply, capital. done is use it grow, in example, fuel will on easy I the who we've gas industry. I the comment for been that's I little with of done the it a owned still growing it's the like the fair sounds. say done, disagree The probably bit it's as electric not as mean turbine

but book that's our it's in their Capital deployed. capital or capital book on

note, is on our So, to easy there fix an that.

technologies that. not We'd evaluated saying and happening are clear, profiles the for want and ever, what not the are would ever. of winner I to We one we're just today be what's

way work few We areas efforts things to the change have today. a different in

will the state that it stands a was will change. move yes, today. and play as forward report But that So, of that

Blake Gendron

fleet Got I it, mind from customer because you the a if understood. the will I'll Yes, talking that lot take commentary service I makes that appreciate company of more and the was that the sense cost. on perspective But time the in it turn back.

Chris Wright

Thanks.

Operator

is from ahead. Our Go Macpherson next Ian from question Simmons.

Ian Macpherson

worse XX and least XX of in it to is grow question your in if getting principle XX you based That's fleets share conditions is to this I and that on continue the the deploy here market the playbook. me. a conditions, seems and earn are XX today's if we have shrinking accepted ability outs to from pricing because still at that can efficiencies think weak. And Liberty

what into are and of whether on thoughts come the your view year? next that growth So, might leg this

Chris Wright

the relationship. in year short possibly the No mean combination in sense. but The I make very more Again, current that this in it compelling, if longer but the are are details. plans, will run the no of strategic conditions just was freights term, of it strategy, economics

is the a for there growing desire next fleets. generation But

dialogues. think I be compelling We're opportunities, beyond say partnership will is we're growth there we've in us for there to growth economic nothing and do announced in and for So, to if dialogues that. but what

markets check. we're supplied current check willing great not that But and are just a of the a well invest; large quite are to aware large over is economics or

Ian Macpherson

thank Got you. Chris. me, from it, it That's thanks

Chris Wright

thanks. Yes,

Michael Stock

you. Thanks, to

Operator

Gruber question Citi. next ahead. Our from is Go Scott from

Scott Gruber

good morning. yes Well,

Chris Wright

Hi there, Scott.

Michael Stock

Scott. Hello,

Scott Gruber

a I me one a think question have lot sort covered and advantage questioning. was more it ask, reflective tough of to strategy a time that good over your now, the your ground improves so competitive maybe of then of more belief, when just market previous It about offer your market. one and really of actually in But a strikes in to than then

in And want. a Which and you and in your customers that new others tough reinvest your make while people the in business market that's effectively partner can cant. then actually technology money

important underpinnings the strategies. seems the output is of minute, than like it customer of just the alignment For input but it's your an more in terms an on of

fair? Is that

Chris Wright

that's now fair now advantage. capital from assure We're build on the in a return and playing think competitive going in Yes, to a to from us, of now. but the ultimate the all for a high years I ultimate is XX things. statement way to the reasonably Right same year goal market. be

what to need So, quality. higher deliver able a be we able to be do is to

is price. Service our desirable and cost to Right, I mean it. the deliver more to loser us lower for customers

an do technologies, will what to to customer, us better So and to this than cost right right the our do a yes, help deliver build that's the it competitors. than efficiency, and scale, less ability investments competitors job us our

that you you well. it, yes, it said So said I think

Scott Gruber

was that it you. Thank good, And me. from

Chris Wright

Thanks, Scott.

Michael Stock

Scott. Thanks,

Operator

Our next Go from ahead. from O'Leary TPH. question George is

George O'Leary

Good morning, guys.

Chris Wright

Good morning, George.

George O'Leary

that the has of response and guys about helpful. you revenue given think was been of EBITDA and kind question then quarter Is on and Jason's XXXX have the first you helpful trajectory to also commentary targets annualized

little had But just season of the quarter, that to two the think winter a thinking last to fact bit is 'XX have the profitability more start of QX a first benign is improvement or possibly faster maybe about the than a analog in years. we've a decent about activity we

that they or as potentially was incremental higher QX Should than were where than 'XX something as 'XX pricing margins QX last more out it we the pronounced mitigate in being in there year? the that figure pressure

Michael Stock

and a point-of-view, last you we would it years. benign. quarter, came think was that for pretty been efficient the pronounced. five sort a pressure is little out QX I the than acre I Yes, price really average we more of was think -- last year quicker From

rate of every that would say make I Sort D/E year. I wouldn’t on

QX, between think I little QX but a and the and yes, the a It and across to maybe overall QX it board good going I 'XX rebound So makes than is think 'XX there QX averages for that one. But 'XX. difference wasn't QX maybe was be the little year. more

George O'Leary

And move the investments fleets, but from that your they a on your at potentially first that weren’t really also DGB an to the helpful. I positive you know cost X then, customers technology benefit that's testing would standpoint Tier in benefit from as well. are standpoint EVO looking and ESG end from guys Right, these or speak and

the from pumpers is much Tier new pressure it's or you pull was demand technologies of whether I how there DGB for implement much of its how E-fleets much Liberty, the curious it's customers offerings. How to just for the customer's? X these

Michael Stock

cleaner so the people anymore. from everybody a challenged economics you've want is want better to as all lot there do problem Having dialogue. the and that of the so But most where but heard and customers they business with fleet their others, economics are. pay is their But to the from better and and stuff a that that's for think in a wants is lot I get don’t

that's doesn’t And simply work.

bit. got is question the So, you have to that

a dialogues of So, upfront. eye an real is good in would where is the get customer chunk are the agreement areas Why is growing way capital the for interest the and out then interest have we front, in issue better public in in it's in is of customers there, that the or that it there is I bigger while more them. a plus players to good not not near, it's this majority everybody, balance to question do areas say in there for something

to together tough business, slowly. done like That some so And in this move goes fleets we're goes relatively into relatively market where frac in is there'll business a deals Probably next that probably slowly. or today. migration way their generation be

George O'Leary

That very Michael. makes sense. Chris, Thanks perfect thanks much

Michael Stock

I thanks, Okay it. appreciate

Operator

from is from ahead. Our Scotia next question Emily Howard Go Weil. Boltryk

Emily Boltryk

good Hey morning, guys.

Chris Wright

Emily. morning, Good

Emily Boltryk

Just I have in question commentary the a missed quick may it earlier.

XX work or could breakdown CapEx If there CapEx go any and with is again put that to incremental you to XXXX, just needed XX for if the matter? for

Michael Stock

improvements improvements. that. fleet the The there's working is more's finish slightly three CapEx -- extra technology XX, for no XX up full-year million XXX balance for fleet CapEx a XX maintenance of and which million Yes, in to the

and down slightly slightly. could would you be obviously as would just CapEx EBITDA So, be down see year-on-year

But free the it too dissimilar year-over-year cash generation. flow not generation. on We'll cash well flow actually be

Emily Boltryk

thanks. Perfect,

Operator

question ahead. is from Riley Go Our B. from next Thomas Curran FBR.

Thomas Curran

questions. my morning, thanks Good taking for

Chris Wright

Good morning, Thomas.

Michael Stock

Hi, Thomas.

Thomas Curran

for or start On included that I provider the series channel, you Liberty's or a VorTeq. recoveries Does the turn as explain in thinking VorTeq posted a videos you video update Ron YouTube to that of that on overview to in and premiere various a Would energy your noticed system. took latest can on on us introduce completion expect offer. expectations you which technologies

and introduced first commercially we to a deploy? system ultimately What's units many might VorTeq then how the earliest do you see plan

Chris Wright

about that any updated we're company little question. yet to as far I commentary. not so will That's what say is at have provided go is that say careful Force And always so this quarter a public a have and reported testing they Recovery Air as not Energy a good ongoing. well

We happy progress to and making that are in they their facility in the pump we test continue VorTeq continue there. be assembly with Katy to sand the through

point-in-time potential point to would So, at technology a go comment but not I'm that with our time across commercially fleets. we for to rapidly deploy say so we're will where commercialization to get a it happy certainly and on going when this as that far if

areas as Starting those quickly with benefits to be we realized possible. where feel the going as

Thomas Curran

more of be from gears you to And your retired. from do to Chris, are what construction expect horsepower estimate permanently shifting contrition fleet. withdrawn how That's helpful, thanks do here, how the And been marketed most much doing, Ron. industries horsepower from then, has and rivals you much

horsepower will next incremental put the six over nine the be you much to How past out months? do think

Chris Wright

insight to counts some could lot efficiency overseas, to know fleet incremental a what any keep they their up. has that Well, been fleet are has scrapped, has I been retired, I that lot some don’t and know know. been extra Clearly those bolster I shrinking a you and say has don’t I can have. don’t sent it using so horsepower

the if economic a you're half in lot in time player. something we're But tough and bottom fleets think special, it's unless I So, have return you grown. today, particularly of have conditions a

and efficacy right cycle supply necessary just think don’t the insight. part economic any cyclical the of particular the and market reduce the bring we'll this times what now, times for is a Whatever, This in business I tough necessary. is in is I These cyclical discipline pretty So, investing. our as good. have are is reason, place

aids is doing. work time building of fleets they're being on of and very a game Everyone makes But going what there of little sort and a decisions there's lot truck.

that is So, supply need. there around just as no way is what and we that's shrinking

Thomas Curran

guys. appreciate I the answers,

Chris Wright

you. thank Thanks,

Michael Stock

appreciate I Tom, it. Yes

Operator

Go is question next Fargo. Chris from Voie ahead. Our from Wells

Chris Voie

Hi, me in. guys for pulling back

Chris Wright

Welcome back, Chris.

Chris Voie

more of one competitors have some commented on Just this. your on calendar, your

I quarter do the what wanted get point? to quarter for terms calendar Should second visibility much just you extend we think first at visibility. is So, full to into of this the take in pretty have and your the

Chris Wright

Yes.

percent. larger dedicated We it's model been now even have are an our always and dedicated we've And that even percent fleets total than a larger fleet. single had. That's more customer

third calendar first yes, second full, So the full, the quarter calendar the quarter quarter is is is calendar full.

I a moving, they're there'll faster up nap, stuff issues guys the and will sale be wells This move gathering systems. we than like things customers tend race. doesn't a with happens, right, people catch it new or mean, mean have usually are taking the particularly happen we

other customers then, we with to talk in gas. sometimes step supplement are in have and to we So fill

Some is of to spot we're QX customers. the getting new meet work

So, for quarter things QX? us QX some financial positive was in poor happened or but pretty a in

But full. yes, calendars

that we to sure as in as to every as far can now their privates for could see, year the much later whenever and they try get some we're the some of working work have As schedule we're still concerns at year.

Chris Voie

got it. think correctly If Okay, then, And one this good that's it but and on helpful, everyone think appreciate right. more I I thanks. understood just for I to pricing be might it I've

the spot quarter. of the mix So, fourth getting pricing that from fact in the terrible you're rid

your average suggest than pricing first the fourth that realized in the that will be quarter Does quarter? higher actually

Michael Stock

that numbers yes. way got but probably got I've those

Chris Voie

make you, I'll I understood. turn Okay. to back. Thank just wanted sure I it Alright,

Operator

and our like Wright closing to I would now for turn concludes session. to This Chris the remarks. answer back question over conference

Chris Wright

our today day. listening proud happen for the to it thank passionate every in about everyone intriguing Thanks hour in make folks sincerely your every want your be I to partner. that team interest Liberty. I'm dialogue and and wonderful of Liberty

suppliers it wish Safety who single all possible. investors top-of-the-list also of nice a Have thank and to for us, us I day! is all our customers, day. every the make

Operator

Thank you concluded. now is conference presentation. The for attending today's

may disconnect. You now

Liberty Energy (LBRT) 6 Feb 202019 Q4 Earnings call transcript