LBRT - Earnings call transcript Q4 2021

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Operator

Good morning, and welcome to the Liberty Oilfield Services’ Fourth Quarter and Full Year 2021 Earnings Conference Call. All participants will be in listen-only mode. [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. and company’s certain on are risks the earnings the are conditions detailed reflect company’s to filings. subject and release statements beliefs current based that on These public other uncertainties that

EBITDA discussed net similar are of release, comments A employed, measures measures, the Wright. and the EBITDA, its to the capital return and pre-tax turn be non-GAAP income over employed may also calculation earnings to measures. return on a conference reconciliation not adjusted to and EBITDA including Chris on non-GAAP and not Please and to website. adjusted go on capital financial like Our operational measures CEO, I’d which today substitute companies. These company’s are pre-tax of presented EBITDA of ahead. other as on include is available for call now comparable this in Liberty’s GAAP

Chris Wright

for and today’s In and in we quality. we and discuss rising executed Sanjel’s asset have In XXXX and and customers to both to joining our tide into and thank recent today to in invested acquiring upgrading transformative morning, its and In results. downturns, which Liberty. integration our all transactions future them Liberty financial year aggressively, us we at X have Good them. full seen of the of on collapse, positions of XXXX, cycles. XXXX, bottom we COVID deep OneStim XX-year and the history, platform both through the acquired downturn, you and during the XXXX downturn, OneStim everyone, portfolio, for we the us strengthen recent focused quarter technology XXXX In well fourth our operational

always that time and integrations breakthrough chain time quite are COVID-impacted reached was These technology decisions we with the always supply We in returns outsized investments challenging, labor a this set are also and by at horizon. XXXX. years Liberty the Business the made Investment long-term difficult stage for ahead. launched in challenges. exacerbated our fleet

large, nearly into our service worked to both was the of bring deliver and team new overdrive members prize new. all to and to customers, in However, our performance OneStim legacy Liberty while superior continuing X,XXX

in our that top Liberty. a members record XXXX et frac stages, and sand of Our for performed by pumped, were our safety cetera. customers, XXXX then whether revenues, team touches year priorities Liberty of work pounds everyone measured was

in incidents XXXX. raised XX including We fleet also set a XXXX. in a pad. recordable operational continuous single times, many Record pumping pumped Zero wireline by OSHA several business, our records plug-and-perf of on January in was a of during and sand day again hours

of times, this executed achieved safety performance with was and challenging ever. in best our All

do employee integration ability. best to safety, are for results. financial short-term to long-term were critical with of us not once our still impacting We willing line it satisfaction and each financial only simply this success to to Integration-related of the are of are and do the right results. is bottom to today, costs our which sake customer sacrifice service, going going we We

accomplished several record rapidly and gas with demand and is likely global Oil third and of which transformative of begins the tightening global global for in oil will pandemic. quarter colliding The a of hand our to us our along X% liquids, driven over only of underinvestment XXXX But are in like million, well integration subdued prices. severe million, integration this production increase that activity, $XXX of than turning quarter quarter holiday of and significant record are markets on limits responding more reacting The was sit Europe this weather for more customers production very cost is robust tightness EBITDA will $X.X that results. oil down it’s demand oil central grew publics soon conditions. point very team gas in was are a these representative the our global later both EBITDA recovering in costs upstream in continued industry. million, of to was gas of work show months, from X maintaining behind doubling these demonstrates The growth We robustly sometime for billion global us. will crisis privates danger color natural very where year. Michael gas modest last to wracked Fourth by industry over January The and way upcycle $XXX to well price the commodity the on provide now nature year. years However, more much by million are was Fourth $XX moving that XXXX be revenue other the economy, behind pushed and energy our the still adjusted and positions cycle signals. offsetting has the on magnitude pressures natural XXXX revenue seasonality. today. and we sequential early E&P costs. and gas. over the of gas us. $XX oil as investment strong

shortages, to years finding in years returns the until on long-term towards next the for technologies Within the fleet strong. tightness frac are we market, and frac Liberty count very and led cannibalization our in and has partnerships frac holding supply plus coming steady a the frac secular focused been X has have limitations attrition generation fleet labor space. of from disciplined right shift

well and on capital the name continue all fleet historical technology, XXX are, We systems track Liberty our is record game. truly returns that average differential above build Competitive invested. investing however, to in of S&P to optimization, advantage to enable of advantages competitive logistics frac digital

years. our to returns investments We expect coming that today lead strong in the will

this focus fleets to maintenance last substitution the best early efficiency controls Tier this that Frac phase X absolutely deployment DGB remains fleet to elaborate cost me interest they we a our technology XXX% available Frac both compatible at of together brief performance, SPE little Liberty pump that gas our Liberty’s with Houston natural and allows complete and Liberty’s digiFrac QX. exceptionally digiFrac is reliability gas the talked efficiency. for with thermal are industry today. existing in new production a and the about quite I and a our resist very for investing cost automated digiFrac one. We deploying large digiFrac we fleet into industry where will superior X fleets area. least areas so of display are year. pumps maximize combining as be more start and fract fleets. IV are diesel We bar digiFrac plan regularly, to systems operational Let will a with high delivering services. about have will in set The frac Conference the frac week, bring gas the efficiency safe leader modularity lowest fleet emissions on to technologies our the in critical driver at been Repairs high. and has in high recip marketplace,

January ongoing team half going using efforts our controlled of an during significant stages together supervisors also performance. Success in our development will new The is members that by inefficiencies processes, dramatically legacy OneStim, early already improve lead and compressed Liberty and in bringing teamwork technology and across technologies combined are downsides the visible improvement maintenance of apparent and this for R&M The area systems the margins procedures in with different are operators, integrating mechanics However, by second team’s integration. in huge results. who OneStim But forward, readily of plus parts. XXXX. is were this from also

continuous our monitoring sensors enhanced failures equipment with optimal and have We maintenance. guide help reduced additional premature that program preventative

ownership helps cost pump, pump ownership data crews each of introducing We each virtual meaningful minimum and increased just model improvements. a for already reporting drive digital seen and are is all empowering of their twin every We’ve to equipment everyone work. across for Liberty frac take that

Although, not our at is levels the above rates back historical our perform across whole to our well level. we of historical company yet, goal are course, to

our operational safety pay logistics further of quick should last delivery, and driver optimization. with sand of transportation an model. initiative the efficiency significant to safety. of profit spend, the in and scale and of bring technologies are in-house in drive chain already into and PropX’s our We The the current mile PropConnect Management built of this transportation expanded efficiency, management and PropX availability Permian challenges improvement both sand addition We’ve link Liberty’s execution large begun critical highlight represent large planning Oracle recent Like around enable software improvements and to both route and importance integration also our has launching upgrades bottleneck large sand initiative. and our modernize mile that Center the last and Basin, to Logistics system the maintenance, cost. team a repairs

and XX-mile already footprint by cost moving drying the initiatives active maximize handling and Our game carry operations best to beneficial technologies long-term scale, a Liberty requirements key removing meaningfully doing in the trucking partners contracts local is XX% lower XXXX customers, enables sand, attract solution the of sand is all when highest is delivery multiple sand a about the over forecasting pay localized delivery and wet impact perhaps PropX eliminating XX changing haul. thereby environmental and our mines PropX of removes Wet and mile This smaller the the of the an developing support of reduce biggest step by trucking to that long-term to PropX. process processing returns sand at from and has could the needs. loyalty. and deploying sand further mini estimate excited emitting at mutually and smaller mining for total compared disruptive the hence, mine mine, we mines work quick in in wellhead. forefront we’re reduce distance that partnerships. a This of It at by basins. the We that technology the sand. processing to help help reducing should closer in legacy trucking the are dry need ESG-friendly pad to

on Let outlook. me touch our

margins growth costs sequentially integration revenue high-single-digit fade expect and in first quarter as to We start away. growth in the significant our

increased pricing from net benefiting in inflationary a are costs driven and higher of XXXX, by pass-through pricing. We service

continued We expect quarters. in pricing subsequent rises frac in

efficiency. as dividends cost pay efforts lowering also our of expect margin begin to new strategic growth increasing in We operations and our

compelling with that, we over together their We’ve improve That We tailwind Every high results more With ourselves, deliver a how ahead. detail. and macro for quality value discuss are a to customers our excited the commodity through operations to eager and call ask day financial is shareholders I’ll our customers we in ESG about profiles. the Michael turn cycles. proposition? opportunity to can

Michael Stock

morning. Good

customer and million, the supply introducing unprecedented advantage. for on runway us $X.XX the provider compared customers pandemic focus revenue second I the discuss that cost largest Full to totaled have lens the EBITDA diluted integration found long-term This the to million EBITDA future. per the adjusted date, technology results. over There’s $XXX share. million increases we this In and chain for relationships, that and them to to of was effects expand and of to that negative those added to any looking or executed expanded will growth we was of a historical an basins the maximum XXXX. decade. disruptions. use the downturn, to to it’s and Net shareholder through benefit wireline shareholder results opportunity was and in expansion year positions adjusted build difference. look at company, for year year we that of acquisitions during to unique family, businesses, fully OneStim returns that we $X.X cycle. platform that fixed XXXX scale the $XXX constraints, on loss financial legacy are OneStim through we $XXX competitive from them costs, points. the would the management new find a to of always good returns inflationary by is to completion year the definitely capture XXX that The for that And X opportunistic amplified costs equipment navigate $XX in sales we the strong sand the our next of We businesses create year, XXX% carrying the becoming contracts, in longer basis especially an with and PropX. bottom opportunities, added our invest it with increased margins OneStim vital once the labor with supply acquisitions, negatively environment. contracts equipment breadth costs higher impacted COVID sand As potential third-party At and through We good from manage always complementary cycle, start Liberty’s was full XXX but XXXX. estimate of from the technology first in and billion how the look mines, legacy detail of view already them customer OneStim was organic million a The benefit cost [indiscernible] impact returns. wants fixed customer and price integration by chain acquired to results and the

for initiative that grew crews to schedule high culture third ability at achieved uptick seasonal environment, net $XX unfavorable efficiencies. increase was business, keeping contracts stands at In million, employee the loss We third saw million advances a quarter crews basin of the lay while costs Fourth legacy were General service our diluted also and moved almost to expenses in included million Results $XXX $X.X stock $X.X Net in offsetting an share third Their $XX.X costs we our weather $XXX legacy million the million. down integration a impacts in million. Fully severance $X.XX including loss expenses, when and managing of fourth that quarter. to per all level million, once million. associated and EBITDA top-line loss through of was including while X% $X.X in quarter, transaction businesses. their million a quarter $XX the non-recurring weak totaled interest XXXX, loss other $XX here operations of $X.XX a $X.X and tax $X quarter fees other adjusted million non-cash headwinds, team’s a administrative Fleet and price of and the compared disposal Startup was out premium $XX compensation compared integration. the completed $X.X of million totaled assets based quarter reflecting by from in over million. all the fourth every to and for efficient good XXX showed the be basis and January. third the In equipment measures for chain support the schedule. engagement full to primary replacements, and that fourth news we points that The operations quarter, the the quarter. Christmas the fourth we in legacy grow despite in the in integration, quarter, that was long-term margins continued December already costs supply the at parts Net of and compared our improvement improved with in is the into inflation October of moving efficiency reduced base million criteria our fourth on over was loss handling seasonal integration quarter. instituted including offering further the cost estimate after elevated into OneStim true into and time revenue of

increased hand frac adding also similarly moved with and hand in XXXX to We drive be better historical crews final work dynamics for utilization which fostering the to our customers care in this life superior by into shift investment schedule, EBITDA wants by the impacted efficiency the an will legacy engagement them return balance, greater wireline. on additional of a returns Future our levels equipment. scheduled. our The moving and translates of change level still crew better to support and efficiency,

fixed Over to the us We inherited assess contracts pricing, margin. progressed. the our the as And months, also into opportunities a bottom some rising with we’re and past largely brings but losses on in – generating lens improvements, on some our for environment few line contracts in put inflationary customers. cases, our we’ve drag under which

of did higher due accounted customer quarter on additional for designs a not the $X in inflation, drag OneStim in or made. For reset EBITDA million instance, cost underlying equipment contracts a to one legacy fourth

million borrowers have The totaled win-win had for that both of a supply collaborative cash ABL to ultimately $XXX able finance OneStim a $XX million; GAAP $XXX engaged to planned put their find asset us synergies of However, the on customer that a We operations, of credit a from alongside million assets. $XX and partially on basis liquidity, cycle were XXXX $XXX for of dialogue, it’s offset was facility were our million equipment in balance next-generation the million. of to of to not and how work upcoming at capital We capital parties. the caught monetizing debt to investment legacy by sales were our lead assets better. sale primarily great of related Net catch million upgrade year opportunity both we the with year million $XX including been the of technology. all recalibrate of lifting under and in operations $XXX here. customers, $XX things chain to expenditures a consisting facility. end CapEx Tier with excited the we of of million, together investments for million capital to million we’re credit other Gross to availability maintenance and teams expenditures digitization, DGB by $XX the of net end, and providers, a do of Total approximately operations. integration IV $XXX and heavy their But majority our approximately way the digiFrac opportunity engineering, sales,

fleet For us] direction. of importantly, Pricing but service the the right and returns. that high environment prices we’re are quarter lower integration the increasing activity, here costs. the prices in restore with higher levels, coupled below on change been Frac prices the required understanding January. with pandemic related reasonable in moving costs, [ph] the of discounts and to and [fast service license] first meaningfully more of The roll much still customers by sequential those in is strong expecting have [received [ph] EBITDA improvements off and XXXX, meet to pre-pandemic

the impacts. to also had quarter QX seasonality anticipate in We better following fourth utilization

XXXX the side. in in reinvest the fleet, of tailwind with to of combination the to an ideal and logistics opportunity capital the this frac year. to free $XXX maintenance ahead. We the approximately million with early overall the XXXX that maximize expenditures million months optionality $XXX the sand. of In $XXX capital of over see maintenance be wireline to At cash targeted are to part the adjust range cycle the frac, midpoint is with Lastly, for flow includes range million to of agents

investments other equipment million. technology upgrades IV and once rationalizing approximately technology offset projected legacy Next pass generation engagement pad facilities and is generation with by driven $XXX customer with DGB systems, Tier including with $XX to approximately our handling footprint sand generating to million demand This mines be it. is digiFrac

have on our depending by spending expectations. We significantly advantage. be to in free adjusting targets both returns we capital And competitive in investing demand customer and positive cash flow plan long-term XXXX

excited sustained forward, a Looking technology we to focus differentiated a and the stakeholders years, and advantage portfolio. a we’re reward innovation, value side. questions. take move proposition a the XXXX site. build to This remarks competitively is recommitment shareholders truly enter through robust back with for investing business hand I’ll with alive to for as coming We Chris your foundational forward the on designed call we closing to a before

Chris Wright

over prices this reduced idle. The not see good. gas and last fertilization, right that further to and inevitably in year. fight. now also LNG This to years leads Most significant the in plants many see bring with Europe fields are energy under for later on that so which is many starting basic crop reduced yields, is high Global will the this foodstuff are oil crisis Fertilizer X prices Asia. fertilizer making pressure investment and elevated this in is we challenges via sit we prominently,

decade but read. We seen of the consumers. shale Yes, of a global But proud years pain going have and we for questions. long-term. years has energy than without hard amount energy that the be last industry gains returns, thrive for should to now pendulum now. cannot of can is The those disproportionate supplies. the industry, strong XX Society revolution the our a on benefits take consumers the last are focus brought more robust Operator, to especially that leaders is ready winning and have swinging gained, in remain poised the

Operator

Chase. Instructions] First Please begin We session. Jayaram go from question-and-answer question the Arun now ahead. [Operator comes from will JPMorgan

Arun Jayaram

some the question – think of X% that EBITDA to good the back integration some we through I My the wanted XXXX? you not Yeah, expenses if could If is of in to we morning. add in outlined in be first range. how XQ some you press release, will in walk margin And turn if trend see – margins provided your would color you’re give could wondering progression I’m the of this been color integration bit on peers the could low-double-digit year, your and you us you the still now range help probably maybe XQ who But with saw in EBITDA your think and us January. are how in about margins think of you little things? dealing a just

Michael Stock

Definitely, Arun.

see we roll go – set increases forward, I early them off second by the of costs through as relatively part think, improve we low integration there’ll QX, price will of margins we as QX. more we QX, sort through expect into we move a the of the as see half. QX be and is the will by To

I the and through of sort to yeah, stature get year. expect back we to increase So, a the go margins

Arun Jayaram

be more Michael, you just this percentages, the thoughts an on on to expect EBITDA margin in Any as year? double-digits color, do

Michael Stock

Yes.

Arun Jayaram

Okay.

updated to then $XXX on million released And for enough. just million capital, view an follow-up you guys $XXX Fair of Okay. my capital.

the million maintenance. fleets, some you the on I a CapEx, but CapEx us provide a details so digiFrac your bit heard growth and a us more $XXX million on just of growth of growth think year? I or that bit are $XXX of is assume plan give Can little that, you little this I color

Michael Stock

base the contract far of the is that the Correct. are customers. largest side digiFrac fleets to under By

on this with provide to and that adjust And us year, numbers look margins candidates clients, you through those returns look that as DGB for on Tier probably is customers that IV upgrades, is of of incremental into for and and be upgrade IV weighted, be itself are I’d We going will they year. any additional weighted front-end first at have which returns we’ll in we completions the some half want it’s the bottlenecks. returns going growth commitments the the Tier significantly if digiFrac front-end to make. they to side go say

Chris Wright

When that growth, are from premium These drive efficiency, an frac really products, is we better in incremental customers. incremental margin. upgraded things is committed fleet, growth see this this things that

doesn’t to frac fleet, means mean it So new our build technology new advantage. growth competitive

Arun Jayaram

Thanks Great. it. for Appreciate clarifying.

Operator

Thank you.

Our ahead. comes with next Please question from Piper Ian Sandler. go MacPherson

Ian MacPherson

Thanks. Good morning, and Michael. Chris

Chris Wright

Good morning.

Ian MacPherson

If QX, to on and which for your cost some EBITDA EBITDA fleets? cadence we CapEx plan did high-XXs active cash the up you flow the year. pieces get is we’re that you of solving mid the of that see what the had or a full throughout fleet Is from Or you other to could had as exit – into the year Do the free a startup talk component of expansion last you in year pretty most edges. ramp flat in outlook? and of of growth guidance fleet activity to on kind that that itemized level

Michael Stock

camp] significant QX The extra relatively was modest [ph], to in being moment, [satellite the staying actually cost at – upgrades plan to, that we’re and say, drive the point is fleet reactivating so driving was that the the idea margin on startup specific in this still fleet one time. the At with visions addition. one

Ian MacPherson

Okay.

of assume year-over-year. I great did correctly? net does So not the a degree fleet – Is framework got that activity it heard growth really you’ve that

Michael Stock

That’s the year. for That’s base That framework right. obvious… on the is

Ian MacPherson

helpful. question. Thanks. other that’s My Okay,

become pricing in encompassing else. spectrum everywhere moving has and from assets pricing the conventional is the full everything of along with tier frac that it’s hearing We’re broader that X even surge

surge of Given the you to that, what framework, you’re your if there’s at Can on to now I getting longer agreements. lock engage on also probably doing agreements, edge willing that and apart – to leading appetite digiFrac? from in the appetite term speak we’re customer you’re in on a in assume longer-term point side to pricing, contract the commercial

Chris Wright

start this is true. the with Look, the at And years, of tight pretty This strong. attrition customer over even is year, X last of we demand the have supply Chris. frac the And is market. today that a

contracts, So their your partner? are for longer-term more hugely. But right, matter, committing met, matters you your Who right are to with? you some point are but into long-term needs absolutely it’s to entering far make us, it’s we is just partner, and the are keen contract than contracts. people keen that Who sure is partnership have correct. the are There counterparty

those you generation implied for of as as are well not next equipment. And some

Ian MacPherson

Interesting. Chris. Thank over. I’ll it you, pass

Chris Wright

You you. bet. Thank

Michael Stock

you, Ian. Thank

Operator

our question And ahead. go Neil next Goldman you. from Thank with comes Mehta Please Sachs.

Neil Mehta

Good morning, the thanks And comments. for team.

carries the lot it’s of and And how because securing that compensating us versus couple that about one-time upside? for nature, you first the The is on was labor. really was in you been about quarters what us a to much specifically we’ve a $XX can the help is question what million costs? guessing in of and the forward now understand where side? And surprise happened quarter seen expense used as costs talk integration I’m

Michael Stock

everybody you’re business. integration enough, of definitely little So the of of how changing the equipment, Yeah, you’ve issues running with maintenance some the actually, works changing changing cost right? so you’re under QX. done the and ones, form that here X team in of of through together, QX, OneStim turns historical the months equipment. No the about in that thank not then integration the sieves moved related quick that around If a valves we systems probably and up side And $XX generally All back got we bit the was step beginning in million integration, the you’re that about you. discussing quarters umbrella problem. X the problem. or cost systems, The later,

the as efficiency up of September And in also is the for a now the the on of to November to timeframe. going almost the starting is in that next into amount QX and we two-in-two, through are started really are and working slide got are conflicts way kind September, of December definitely chunk smoother, slide good efficiency, year. those running cause teams time integration But October, and into So back receding. summer, board above Liberty we’re tuning and of that of got roll I – cost that. the of getting up a equipment that think contracts of significant is of over that was costs, right? continue So those those but There the the numbers was schedule January, off together, and that see teams those through and on couple difference traditional resetting those

on this returns and structure, return half We’re [personnel the provide cost was a going year. then into as to get drag a on personnel The extra we we’ll second engagement] [ph]. engagement big through an go year

see costs think the part of have I of contracts that in and was reshaped support yeah, – run becomes full personnel all rates QX, them. in current our effect most those But now efficiency So rates. we’ll of them to

So that’s that cost of the to the relates some the see R&M, we’ll of lives. I longer that start slog to is, where think

that was drawn, it. So fall, the was to of and equipment delivered part which latter in older especially the that on a is J of Slumber way drag early cost us, part structure, the the and

Neil Mehta

going quarter, quarter That in the if saw calibrate the minimal it be fourth million has released impact just in fair to integration? we say, $XX to is there’s models, first our says we assume here

Michael Stock

some have to going still we’re integration, costs. to regards In

that of QX see in run the of that As out that if we we’ll to effects, some stay costs $X there use well. Slumber from That’ll costs lease that passed quarter is equipment still see still here, no at costs. some million some J as million $X some of lease of end. will on wastages be in equipment And the some the sort

an where another incremental in I you’re think yeah, change step So, margins to improvement and in that’s QX, see in then QX. going

Neil Mehta

amount a and might on, obviously, shares. J around is, them of tough follow-up we’ve make Slumber substantial the one opine to this owns movements the And that monetization. start And be to seen Michael. Thanks, but is

strong a have cash to near on sheet monetize guys do extent the free the technical some flow can they offset to there’s is potential their positions? pressure you balance really to You that do anything recognizing in elect calls there term,

Chris Wright

decisions certainly certainly it. issue But, a comment come you’re Neil. evaluating is big Yeah, know yeah, decisions impact ahead tradeoffs in we with we’ve what we there. always in Capital provide Yes. a here. the or I on And today. allocation and those better and this the further Do very Good. wish at. decisions? as any been of look, cost we’re of we’re had guidance and And we we progressing can hinting some certainly through made a all – sit comfortable pleased feel crystal quite in integration. won’t I certainly But seeing ball issue made the And central about well, where

been different we last do confidence Would have the the Yes. over long-term us anything few No. We decisions? in in months? the

Neil Mehta

lot, Thanks Appreciate Chris. a it.

Chris Wright

Thanks, Neil.

Operator

you. Thank

ahead. with America. question, Next go Please Mulvehill Chase Bank of

Chase Mulvehill

everybody. morning, Good

Chris Wright

Chase. Hey,

Chase Mulvehill

Hi.

of Basin? obviously, so, the guess your much a to I you’re today. sand tonne in selling sand got or this prices fourth tightness are the sand what kind how sand using first the you into you’ve We’ve heard in of tightness in guess, of sand portfolio can that’s Permian hearing externally quarter impacting the talk or we’re I business? So, So, continuing $XX and question, maybe and year, and how internally,

Ron Gusek

into delve certainly I’ll Yeah, Ron. is that this a little Hey, bit.

standpoint, went available couple in we from our obviously, for a having there those of to benefit into business, mines us. was recognizing Liberty real sand think the I

some a amount some for working of fleet working. the remain of support that them. yes, customers fleets, that that for Liberty But capacity Liberty is may so those that are amount have sold sand mines on dedicated And to not to specifically we directly still customers of our and

some third relationships sides us having maybe past we So in capacity might of not we both that on had forward. us that additional That solely continue the has and parties. have expect to available says that to on support going relying provided have

of So of a through been still these chain partners have number how challenges. third-party that a manage it’s we’ve flexibility in more us been providers, have terms partners supply of our great little to We ours able I provided We on think – sand for critical for a the a us, to And long, those I long relationships best time strong on side. multiple are to change. stool expect that stability. the make legs don’t supply

the to we at it. that’s way So continue look

Chase Mulvehill

OneStim look legacy first, I’m that here. to this, try. and at fleets guess, if I’m between OneStim fleet going follow-up split going the I’m And not level look perfect. Liberty profitability, and But I and is but get with tell fleets. at get averages far to profitability? sure Okay, we it profitability the items very to are at you to that difference OneStim between in a is two? you the you and if lower? profitability there improve of the in need take the And action what look kind is if the Can there us

Chris Wright

was take I’ll something contracts. Chase, think there lot we really, yeah, look legacy Yeah, I this was And difference. a one this. last on Yeah, of back to a that year,

XX, for this Liberty closed year deal each remember deal been against You’ve and has other this Schlumberger right? So the got December Liberty announced. this season on to we

of not, back, to And the team, being work one had they we’re the the were talk, by Liberty. appear couldn’t behind so, sort knew obviously, And, the right? tied with that really up hand subsumed fill customers couldn’t sales we Schlumberger obviously,

of the So red that green get and mirror the of I year it we costs year. factors was blue of think part half blue having going a done operations biggest I air, then right? ready So in really into green cost fact And was slide was year don’t back maintenance, something think had fleets due deferred when the we a forward, was there of we – drag were look new going you’re versus that the middle it that’s this between But we the to came a relate of was of That would contracts not were fleets fleets higher right? last of hours to capitalized the the themselves, I they fairly on on maintenance that with, when high high high fleets the think operations were necessarily and rearview of legacy cost those numbers, the maintenance not The and higher with tech significantly. part status maintenance usage came I or the they and expect versus be level maintenance, go forward. through tech. that and there’s to sort as a our sale where and they the into Liberty transferring to had that historical deferred owner. those

was drive year. cost So, a yeah, well to drag as last there

see forward, we to though, we So technology. as difference, don’t and by expect really that driven go

Michael Stock

it it. back turn Thanks, over. it. All Michael. I’ll Got sense. Thanks, Ron. Got makes

Operator

Gruber question, the Thank Citig. And you. of ahead. next go Please Scott

Scott Gruber

morning. good Yes,

Chris Wright

morning, Scott. Good

Scott Gruber

now legacy terms the in that improvement. to similar we’re that rate lagging tier anecdotes Or of of pace traction, on kind broadening pricing of ESG-friendly? question X moving is rate change change? of in what equipment, The similar on of pricing is So a we’ve at one the of still seen today

Chris Wright

the yes, moving it Delta But fleets types change have is or I rate all now, portfolio. meaningfully. still that of pace Right a think similar up significant across at of moved

Scott Gruber

Got payback on current you you. And pricing, fleet? would then, the at expect of what type the DGB

Chris Wright

from processing substitution displacing of and lower diesel deals, whole just location. strong know higher well give quick, if deploy them we to get don’t colors also we gas, money and gas any our relative want been I than that, objectives It’s win-win have can capital, on it customers And with getting safer to capital. emissions. our bring to rates better for natural something about bring that. But we and we substitution – as more history it’s they for on we that that technology And that save get as we returns burning to deploy achieves

Michael Stock

of one, investments. look little a our have at lens the that bit say, I we of all of

returns we’ve that cyclical shareholders, average historically or lens the what provide new the and through technology done. historical at every better of values S&P returns same at of industry, And aim for target we and XXX. results, right, that you look to you the we’ve vision, If to averaged look need than to better provide those

So all metrics lens ion one. same investment I Tier the of I upgrade, through for control what a systems, new DGB cetera. the et thing whether with that’s key of vision IV think a or return need a of digiFrac, it, it’s go They financial

Scott Gruber

a of the one, think And working to you to conversion, about EBITDA line, Got then again, note capital the cash on just kind it. free if quick Michael? anything

Michael Stock

in really think, we’re with a line, we generally and But growth conjunction going to top-line slight headwind, I capital capital useful as Again, top-line be revenue see in that be working with working in mines. No, a growth expansion will go growth. with of there’ll top obviously, it. through, the moves the

Scott Gruber

improvement in of days or kind expect static days? we Should

Michael Stock

– Yeah, last the I think, know move have payables where numbers like accrued is X other mover, days at received depending generally days. the we about on end quarterly standard of quarter, can your relatively to years. Scott, a they anything are, can customers GAAP The don’t similar basis, but funding for I on around, generally only But the been the CapEx probably [indiscernible]. CapEx you there that the big wise, move

sheet you where that’s every would balance the So day. read

cash number yet. of have paid generation equipment So be like a received they of of sort last a large won’t the a week [ph]. there’ll we’ve of up sort been on the [BPO of bump March, day] And

around $XX easily. move million, quarter, every So they can $XX million,

business. So that actual will never change for the

Scott Gruber

it. color. Got you. Appreciate the Thank

Michael Stock

Scott. Thanks,

Operator

question Thank Waqar you. Please go Markets. Syed, And from comes next ATB Capital ahead.

Waqar Syed

for you question. Mike… my Thank taking

Michael Stock

morning. Good

Waqar Syed

all that the could the guidance? achieve provide timing And price as of move is that? some margins, achieve you’re forward of to given the kind expect could seeing of guidance still Yeah, When in same do that? the timeline increases you in normalized previous see it market? the that terms margins you strength to on you normalized in level or Do you the

Michael Stock

cost Again, I half we additional think guidance, get back the you’re the this through getting year. half of see And think to similar going second of system as more right? of think, first in this by an to you the normalized off It’s XX out they be the the roll process, sort margins month about of running will year. XH. to I if integration the

Waqar Syed

the see and expect Okay. what in terms the and you what care on of demand? And to dynamics? question. fleets coming Canada? comment quarters How is working And demand do many do supply Would the the in be trend you demand guys then, the just U.S. macro a currently you in are broader to

Michael Stock

Sure, Waqar, I’ll do that.

fleet frac we an bottom count. up So have internal

shared dialogues across a – the for us it for bases. but it count thing projection And great new to and are know count haven’t and numbers on of going it’s all also trailing detailed We what’s the yet, are. includes today, plans and up to what a spent what a customer

there’s in low At the XXXs, level growth, is production take production in numbers, active in frac now late growth fleet year. frac another leads growth probably meaningful. production gas, plans where today the in XX% this So meaningfully monstrous, to of right but we growth today, fleet And that of where production over frac natural are we’ll that to oil, growth not active know I’ll activity NGLs, in random from from in XXX. but fleet we

that impact meaningful. So of when upward relatively an tight you And new pressure, market, it’s will to it’s but the go work, in pricing fleets insignificant. little practice, not not into huge going be already

Waqar Syed

added? that adding But well is by met do being new that’s including that think some as is demand yourself, incremental internal being the supply incremental the industry capacity Delta you itself

Chris Wright

putting offsetting So is probably does not those optimistic got be thing But mean the year you’ve asset. count magnitudes. that of similar static an is frac running even XX a asset fleet an are may the Liberty no new up fleet

of XX% capacity So that to is every going year. disappear

even offsetting, shrinkage the fleet frac offsetting the we not of have they’re this frac the fleet. offsetting the making the additions So probably shrinkage even year, order of not frac fleet, probably

maybe you a is late today. capacity So flat higher where year at have it bit. down demand little probably is than best, And is a still

Waqar Syed

any just final Canadian thing, on one the market? Interesting. And commentary

Chris Wright

love and Ron… Canada Canadians like We

Ron Gusek

anything from I what similar comments field were Chris’s to a broad don’t just standpoint. think

I think in as we remain market optimistic well. the Canadian

that up up demand well. in conditions. I think And fleet our there I probably we’re supportive as going from market you’ve think there, frac to heard see and growth peers

as remain outlook So, north million yeah, the excited the $XX of about we well.

Waqar Syed

very you Thank much. Thanks, guys.

Chris Wright

Waqar. Thanks,

Ron Gusek

Thanks.

Operator

Thank you.

Next of Zurcher go Taylor Holt. Please question, Tudor, ahead. Pickering,

Taylor Zurcher

team, for budget million. capital taking on specifically wanted I $XXX first My the ones, just to growth you and Chris, back Hey, said question. circle thanks my piece, the think I CapEx

contracts you’ve already. today, got of of fleets as digiFrac, secured guess, long-term I full So X

me And have some $XXX maybe IV in some just relates XXXX. digiFrac the maybe Tier on budgeted to build you’ll growth could it blocks to that like, as budget, for more us So have side DGB. give building there. clearly, to hoping some obviously, the million you that’s feels enough But you in

So that $XXX thinking curious, you’re the building number. how million just behind blocks about

Michael Stock

and X large last to next is is tier the that portion of obviously, tier work X, portion upgrading that, IV was the portion fleets biggest the the Yeah, supporting Tier being of digiFrac, we’re suppliers. X and the great Wet some done PropX that significant which moving of sand growth of returns to on that that those their business be customers the chunk business going are technology did, is effects and things. doing. we’re there of to a that from quick so I another balls, payback of probably to model number short-term what a $XX little Everything of would lines have bit and big which million million fixed on are what margin key other There’s that’s very that just say a short-term projects, $XX items more sort chunk of item. That’s doing we’re enhancement margins. a

Taylor Zurcher

you just it. didn’t from to gave on in a it And have I anecdote the Got OneStim gleaned million QX. impact follow-up Okay. negative wanted a $X about in escalator contract legacy and what inflationary clauses resulted

for able contract, as look you’re here customer. you items as to are broad through that So moving portfolio we issue of legacy to forward? to that as input have And in legacy be some any Liberty items called outstanding OneStim, that do cost an on then cases where contracts, more whether forward of pass of your progress at you such QX you might that just similar reset the contract that inflationary you these sort out or clarify, to one,

Michael Stock

drag a fixed little So a bit in going a – even that, to one one of one we last little of left. be really that is and of still then be them will was really then after bit QX,

down again, and I of is some that needless market going in the we’re in a probably turned quite a think think, historical are down. really inflationary when than contracts things around, those, way became They’re they the I okay environment. contract some

So openness, on historically basically work flexible and yeah, generally, on sort the been little have down of more we contracts with up cycles. new customers

to that be through more historically overtime. established just were that in something nature. was We a had And have had a worked couple more fixed that

Taylor Zurcher

Thanks, Michael. Understood.

Operator

you. Thank

Tom question from Next Please Seaport Partners. Curran Research of ahead. go come

Tom Curran

morning. Good

Chris Wright

morning. Good

Tom Curran

XX%? time for for like fleets pumping would update us relative utilization, average you Ron, exit year and in year? you starting point to this end? to please did Where XQ that level on would time Where come Project what’s on of of act so XQ target of your project the XXXX, average pumping the

Ron Gusek

Chris’s won’t make into specifics you tremendous XX field. continue standpoint the there. continuous hours in look some hear latest of out an think so pumping, But I record, And get our, the to comments, headway additional did from of there. in progress Look, probably efficiency to we the forward

them year see successful, that have year, this focus We opportunities that Last ours. getting a across we more will initiatives contribute and finish of did it if other make a some to But remains the year, this we line. progress. know further that just certainly few underway we’re

Tom Curran

initiatives? upward Be and then, internally enduring the Liberty tightness expect in And are the a robotic it within the you industry expected startup here fleet you wages. associated elsewhere of or Are on given smart spread perhaps watching? automation seeing, labor acceleration or market pressure at that at any its you’re

Chris Wright

of – automation specific give for will there use is we a absolutely for Yeah, but focus Liberty. at operations efficiency safety, of labor for speed

Ron Gusek

I one fuel and certainly The opportunities the environment. excited the about forward dual level moving that we that the that the another installed attain about could with get would to quite opportunity we’re in digiFrac excited maybe of in it’s to those forward things most of the so field electric yet the come But towards world. with are opportunities to move as in automation that step move diesel only thing add fleet and digiFrac, insignificant is, not are we

Tom Curran

Got it.

transition more And So of okay. development, e-frac technology a then…

Ron Gusek

the it’s in the side, upside e-frac greatest but but across portfolio. – will It

Tom Curran

it. Got the questions X then just on Permian. And

by a size you replace district the its at starting a understand we have looking a spreads soon shot Do the footprint market expect or to their there seeing to yard two? shrink or on be of are that contract. those? may pull to closing you in any First, out then, of rivals perhaps some pioneer And

Chris Wright

are mean, detailed I those commercial things.

So, not to going on comment those. yeah, But… I’m

Tom Curran

Well, right. thanks… All

Chris Wright

bet. You

Tom Curran

Thanks my taking had questions. for to I try.

Operator

you. Thank

ahead. Energy will Our go John from come question Please next Partners. Daniel Daniel with

John Daniel

see how Hi, developing? that thanks see and you market how Can earlier you commentary about in mines squeezing you elaborate just gentlemen, game for on me Chris, changing. your you in. many many talked being

Chris Wright

now certainly opportunities that. ours. are operating for And few right customers a more that There’s of there’s

of explosion. So a sand and It’s mine combination it’s an transport not meeting the and technology technology. wet

So and differential geographically position. it’s an to ESG evolution that to willing think that and runway good advantages commitment a bring has costs to customers we make

John Daniel

mines developing see your own or the you do that? Do just mini yourself others let

Chris Wright

Yeah, the if many and wet to that. move way is technology going best the mines enable sand of we to have to growth say the we’re maybe partnerships,

John Daniel

Okay. on, contracts, questions on equipment? you term And the digiFrac’s longer then on cited response in Ian’s is to that just traditional out

Chris Wright

It’s on both?

John Daniel

any the you of greater Are year say? the traditional one terms on can than

Chris Wright

Yes.

John Daniel

And you. which congratulations and called record a and has also sharp the that ramp safety activity, is, a Thank then last integration. given performance, occurred the and light Yeah, on given out in okay. major one of you

pretty initiative you it’s what that to one if do light just like specific I’m lease? different impressive. you of So allows in curious attribute things that any to two of

Chris Wright

one there’s we out, call would that know John. don’t initiative I specific

we regular through came initiatives commitment the that year. personnel an back of to able safety provide customers ability had XXXX. number with to face teams a focus. as We there on those had together probably I one operational highlights then as basis last to two, And think for the to on, things get a X the did number of put very in out We, place going face We some initiative our that’s opportunities But is to to out from and possible. benefit put field this credit to strong initiatives great pre-COVID. some like to to to field. that out a in did were that that with trailer course, return teams our have there do of services to safely in come

but so us out think one got call that wouldn’t I that things I those thing always And to help, any spot.

John Daniel

Okay, letting fair me for ask questions. enough. Thank few you

Chris Wright

John. Thanks,

Operator

Thank you.

Markets. go Next with Please Keith question ahead. will Mackey be Capital from RBC

Keith Mackey

of Hi, taking my M&A good and bolted PropX a about deal initiatives thanks of the stuff. kind your well that have questions. control year with center through morning, See I big transformative on certainly as some as logistics and the for internal talked pretty gone and of

along you whether curious the if focus that on well organic other chain inorganic? to as areas feel Just where it you need any or there’s supply be

Ron Gusek

Yeah, this vertical. still I biggest year think be pump focus the will our in probably

and huge last specifically so So of [ph] a going It’s R&M seats, part fluid an certainly area power the has supply part our chain, side challenging pump been the specifically world] of year, to forward. valve [SPX be it’ll in. of a the obviously of and our that over maintenance focus span, things

be a would this area big focus so And that year. for of us

Keith Mackey

had And thank for Ron. have that and many you for Thanks, CapEx. how the you many at year digiFrac will of I missed include? you CapEx growth but it. Got the fleet field? put running if it, How end the guidance, apologies And the does those assuming the into then

Michael Stock

customers was and it. so kind are that we’re of two with going yeah, then under It to contract, currently committed, the discussions about

Keith Mackey

Okay, much. thanks very

Chris Wright

Thanks, Keith.

Operator

Thank you.

[ph] Morgan Gutz] of go ahead. [Libin Stanley. Please question Next

Unidentified Analyst

Good morning. Thanks.

of among ask, guys have wanted to – customer you you’re drive net on improvements pushing pricing a So of you been kind or And of just seeing customers to reposition I Thanks. pricing. about? largely have if customer pushing kind of pricing? to all amenable range kind at that you guys kind your talking to a your the base, increases follow-up pricing had of I guess, to customers fleets guys are receptivity that

Chris Wright

do side. that frac the try most him more programs, execute long-term strategic one of quite and with everything about are customers you is plans. the in if best worked a took to to respect. partnership how for good prices getting decisions is direction with good Okay. downturn, people want amenable, Most those the going that’s we direction do is customers but what we COVID I are get for is Look, keep operation’s for it our know in side, think operation’s work operation’s other our did – dialogues efficient; design; right one dialogues, We’ve if But I synergistic. one about partnership, planned; It’s don’t the word. safe; –

want But, things nowadays right that way. yes, but, customers partners. shifted the So other have the

Of course, everyone possible. most wants the right partner economical price the at

So for both is a industry gets our of necessary drivers I efficiency everyone returning we and there’s us. help to price help, part think that that. But us, do that can of

all So, kind step in of big the about pitiful. an yet, magnitude whether and more it’s lump whether or sum, the it’s And we’ve a dialogue it’s one ongoing up, price. gradual of

Unidentified Analyst

Investor I’m of kind can those we’re at question laid Thanks. the transition framework, And it then if at generation you last I through of guys capital you scenario is Day scenarios you kind faster next you’re between? out had wondering that sense. us on, year. up of Makes the guess, transition And thought that through your think XXXX. following in help about fleet you’ve kind transition laid scenarios? next closer XXXX how of the that on kind to gen you your more characterize higher Or of scenarios X Thanks. tracking where it to would versus somewhere slower one case out? in Is now of kind the

Chris Wright

it’s a of between, dialogue in number parties. with a active Somewhere very

it’s we sense It’s not for sense. of to for funding balance going how for something make win. with it. do make sheet, we’re got not returns it’s to corporate parties, them, just us, to it’s think yeah, But, I if got both

it’s got sense make that, For a new pretty not be to, frankly, rolling going a out we’re we’re in and think a big to technology customers, deal. we is to rush,

lot So But things I of planned. as a it’s a factors. of balance going say would are

Unidentified Analyst

Thanks Great. color. the for

Operator

go [Operator of Bianchi Instructions] comes you. question ahead. Please Cowen. Next from Marc Thank

Marc Bianchi

just Hey, thanks. about other the wanted Good ask cash building off to year. CapEx of for morning, guys. I items this

there kind of know EBITDA I’m missing like of over you free I kind $XXX have XX working million based to we high range $XXX maybe million it you that extra in cash mentioned of or if get appear to assume the I here, interest to on million don’t $XXX Is cash earlier, $XX million be positive. considering? need there for would the should So million the to million, that bridge, other to $XXX any in just anything items coming of cap

Michael Stock

I either use will or provider it think build tells or will think the of the a a of and become Yeah, cash. build majority a of I working really we that, – capital think, –

the free that sort really think fleet about cash we spoke right, to the flow that of numbers, building about everything covering with thinking I ain’t returns, characterize So class. really capital operational the CapEx when EBITDA this interest, for

Marc Bianchi

what of them we them be can what of that But I’m trajectory. may get curious ramp. know in now, just it stuff probably of have numbers, And tell in consensus, below confident first ramp, and I deliver to above half first the what Okay. if to the you first to the in talking the who wait disagree Are pretty kind And quarter you with don’t you here, based see the will from that evidence stands the when into with skeptical second right investors It’s sounds there. be like trajectory we ability we’re the and just those get results? integration year. any and on of and you’d till as on big second about the you half for second consensus, to of more going types that? to a quarter, half get to just the it type

Michael Stock

are. are Marc. right? I running, how consensus, a Yeah, of a your those comment models don’t and Not where copy sort guys you of on have

costs, it as yeah, year. think laid think mean, history I we see really go going a be in half long-term we’re integration our the if So, to I roll that’s think gave the they expectations can And half, think But for we’ve ramp of the up them. as to we’ll and I delivery. had I of what second of we out you the sort first see were that general, say, I off guidance your we’ve that’s,

Marc Bianchi

super. Okay,

mid-single-digit something number per if mid-teens it from looks second to of implied could, mid-double-digits, fleet one, a like annualized half. is by the I last or EBITDA one Just improving kind the

the So, call throughout it, $XX million year. of improvement

pricing further pricing in mentioned throughput I you need of more, in there’s the already set of market. throughput, earlier, think how a I from just much is versus sort how bit kind it half half that pricing, of is get and of improvement to little combination Could much in that of decomposed there. you kind contracts

Michael Stock

up are though. sure sure fleet All numbers time you’re but every not not not with I’m make, it. getting I’m you it agree we those. a probably giving do I Marc,

So we year, going force year-over-year change we an be won’t come say, comment on that. it’s when going you increase through to change. as price in and biggest in But is probably that’s the to go for I the look going as be to the activity

Marc Bianchi

much, Thanks back. Great. Turn so Michael. it

Michael Stock

Thanks.

Operator

This question-and-answer you. session. our Thank concludes

back turn over closing Please go remarks. Now I’ll call Mr. Wright to for the Chris ahead.

Chris Wright

today and we have appreciate feel for where We a you appreciate everyone Thanks joining day. good and interest, we are, partnership, comments. critical great the your understand about

Operator

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

disconnect. now may You

Liberty Energy (LBRT) 9 Feb 222021 Q4 Earnings call transcript