LBRT - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Liberty Energy Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Anjali Voria, Strategic Finance and Investor Relations Lead. ahead. go Please

Anjali Voria

Good Second Dave. welcome the to Thank XXXX morning. Earnings Energy Quarter Conference Liberty you, And Call.

Officer. Michael Joining us Officer; Chief and Executive Wright, Chris Financial Stock, on the Ron call Gusek, are Chief President;

that These differ Before subject we begin, other materially view statements, our in risks the from would These like and cause about forward-looking statements uncertainties future today include could the expenses actual statements. and current some are reflect release public beliefs forward-looking that uncertainties or matters results to on all based may and to our earnings profits. to detailed company’s comments reflecting of our remind risks I participants company’s filings. that prospects that revenues, involve conditions are certain

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

Chris Wright

you joining XXXX I us. for thank am discuss and everyone, financial and operational quarter morning, results. our to Good second Anjali. Thanks proud

the hard across the environment chain value translated operational EBITDA notable last our XXXX $XXX the XXX% million year-over-year quarter. first EBITDA as $X.XX of is and share. differential and for over Liberty was insistence quarter adjusted consistent services income value and half getting and but efficiency at right, with strong quarter, measured with on quality million, $XXX XX% partners free business seen enabled the done with tier long-term performance operationally deep still in environment. through The robust, per of second XX% cycles second a were exciting from the $XXX creation into supply challenges. diluted per impacted on was milestone results. as that our continued top our maximizing team focus in quarter XXXX returns. the relationships Adjusted prior starting million, was fully positioned a our chain, acquisition deliver to the in a In us annualized achieve reveal upon sequential We to our and Liberty’s with was to focus flow financial or and generation dedication fleet, This increase integrations deliver the a for performance of revenue employees cash combined work fleet Net increase. levels by busy today’s to XXXX time the company challenged quarter the

driving grow that expansion cash flow investments allows fund advantage, shareholders. us We to organic are returning also our cash competitive to while compelling to

million share our beginning of $XXX program. the Our support buyback strong and a reinstatement outlook financial return Board constructive capital the program with of approved results

market believe Our on act value to to dislocated by the the program is price, share. a repurchase guiding stock Liberty afforded ability opportunistically us principle We calibrated share the of business gives maximize the by conditions. flexibility and

the to and plus policy the inept Eight gas aimed constructive. fleet capacity priorities. limited increased operators demand growth chain production appears oil only demand greater for demand. and to supply America and a production, global gas, to recovery equipment, by in impacts oil be oil would largest gas Russian colliding from today’s and remaining opportunity limit spare to supply from incremental frac oil in modestly capital and deploy oil reactivations of E&P of in the strong. global uniquely service chain Oil reductions Ukraine, demand America exports, is in the travel, market production natural incremental provide demand. the typically integration post-COVID with companies post-pandemic global tight to OneStim of utilization, and for recession reach era Today, oil needs, pipeline higher Russian The is where that energy to tight gas economic has today’s OPEC is of fleet to and our constraints remain evaluating service created supply and exacerbated vertical oil from of providers markets while recently fleets fleet Moreover, imposed years potential supply. and development Liberty While severe emissions with the a Russia/Ukraine transaction. a are coming Europe. are the to and to call reactivating quality is of is recession and several investment capacity by support magnified all scale North leads transition The Supply available long-term low that be acquired, under refining rate to in large gas. satisfy the upstream invasion now inventory the technology, of COVID oil our activity China’s Russia’s gas for frac demand lockdowns, was our is and ESG-friendly has opportunity its in of threat inflation, for disruptive demand. interest and incentivizing recovery technology. customers’ Liberty, has overly on recovery an to inventories, full in Pricing labor mismatch and American restraining and frac E&P initiatives dearth A customers. muted not drop energy and which and supply of from to have North natural the sanctions our balances. demand. moderate supply provider at on low and on further conflict are a given fuel The is supply by focused and marketplace frac fundamental likely under positioned environment. exports disciplined Today, available availability operators’ levels grow greatest rising both capacity demand oil returns. reverberating coupled be market, frac recovered the and few global struggling to growth seasonal for than Many meet slowing near to desire goals. softened decision in the significant the outlook service savings. natural These customers’ execute emergence to natural demand technologies positioned on enforced oil gas historically with in rates North and shareholder a where is our best-in-class Liberty operators constrain The risk restricted gas gas fleet quality are leads a in

reinvest very and fleets Importantly, key pricing partnering to these avenue today dedicated in with customers fleet long-term, also serve from market conversations in a drives strong safety two and better fleets and our simultaneously driving for specific the cash that tight rare downturn design strong those developed customers available in flow digiFrac frac The and technically Liberty superior additional commodity of is cash efficiency, market. and gives next-generation the Liberty customers the that providing with a free on throughout are seek us net flow. an confidence driven coming quarter, Demand increases. not market to reactivations In early is electric free in fleets Liberty existing third is modest expect customers the XXXX. the fleet and modernization sequential for revenue year. services primarily additional demand these deployment the approximately program in our Liberty by the into XX% we growth,

and to for and price supply expected of to the chain, we pressures. improvements, to partially demand the We incremental got rising the are to restoring equipment downturn, the from of refrain fleets. we of reactivating and support Since economics fleets services. have Third the the associated the crew with in margins with operational modest ongoing a the equipment. offset from quarter the are made capital support boarding XXXX one inflationary contribution players the few on improve by frac Today, of and available longevity new market business decision

players fleet to these in materials as one the support supply. services sand other of also only is remain a capacity with Reactivating strategic long-term are We supply short chain and the decision.

program, go over We will are their spot operations crew, development and that interested supply to in dedicated not is quality, available customers to for a Today, frac to take short support the are time. future. in the rather solutions producer that are high equipment next-generation maintain in near foreseeable so fleets but fleets term. road seeking to remain equipment next-generation a To will willing

OneStim long-term, acquisition. favorable next-generation expansion support fleets and the increasing free are X fleets reactivated training cash diesel that coming equipment came the hiring Tier our online well prices While and maintain Liberty crew generation. with program our new are flow largely that for the the of technology at These

capital our minimal program. in fleets fleet for economics modernization of that these outlay, unit For free cash funding investment generate of the provide source flow

technologies. Over the long-term, will fleets next-generation replace older

have the in our economics. investments at right time. to fleets of Liberty not fuel right with the fleet by of reactivations increase share we our of The available, the but market driven one are While over stock decisions, in fleet evolve share next-generation entirely already dual an equipment a largest value will makeup driving investing time

Fervo viability, in part for geothermal a pragmatic We Fervo’s With power engineering in networks, announce we this geothermal low for low excited already of to into assets the develops and and the geothermal Unconventional size Energy, of intensity. that because carbon dense carbon the electricity more potential technology help $XX resource to electricity solution our production. a investment, chose leveraging the reliable combine development, applications in of concept opportunity investment with next-generation potential be are reliable, geothermal Liberty million expand offer underground assets supporting the of a of sub-surface source pressure are also that our earth’s heat investment belief pumping resource create dispatchable, expertise captured. and quality journey. extensive We team company the baseload grid excited a this

are diligently innovation. clean and report a energy security, Human is in XXXX world where affordability we we to our context in released Bettering to security technology Liberty global today’s in the Lives energy seeing greatest showcasing placing team decades. proper reliability energy prices and Our working threat leadership support Yesterday,

over energy all to the of modern and since Our by pillars and hydrocarbons. awareness fertilizer, importance the call and DNA day the and the into food been that, geopolitics, people drive technology, governance Michael our topics the is the has of and plastics our and digital cement, expanding discuss further supply like financial bring robust always that world, to turn enabled of chains, I’d our steel, and innovation as part the of us. bring our sand, one, logistics engine results. in investments culture focus critically security four to With we technology, assets, to ESG well as find Stock, to CFO, our

Michael Stock

everyone. morning, Good

We The are income provided for and with quarter our Liberty results. and entire adjusted family our exceptional deliver EBITDA. pleased execution second record net revenue, customers altogether

us year second over right right and into financial advantages, vertical work Day are accomplished OneStim transformative the our achieving and as Investor the integration momentum. by to positioned We we doing the and already with ago. half the out been the the generating faster of well key at one than to has team pace PropX to our navigating place a a little Successfully integration our see integration scale through projected performance at returns entering

per XXXX a only at than a fleet This today Liberty stages were believe integration EBITDA in quarter, in much Services we the of of scale are that we was Oilfield early we is company annualized reached cycle. we in the that last different levels XXXX. and up adjusted seen

evolved service lead our controls. We built and expand and stronger providing raises lowest automation Liberty’s frac the market the industry digiFrac with enhanced position technology superior are as to emission durability, to an best-in-class in technologies fleet reliability, even fleet have the on in that profitability quality, business and technology standard and to include the industry the

suppliers, and maximize gas Our growing chain significantly expanded supply to TFX pumps our arbitrage markets two automated feeling grilled over a an for fuel chain diesel operational controls with superior last an with fuel mine had global has We our own is from substitution cost is with environment that there of with savings us DGB supply with the restricted and execution. partnerships challenges. dual sand increased deliver allow deeper fleet It’s year.

are handling increasingly to a sand value PropX. a solutions have profit fundamentals of at market in also changes mile These We premium shareholder wet transformative delivery constructive technologies industry. time where are we make made Liberty critically and have and last for it drivers important through continue our

commensurate million Results first revenue million increased $XXX second growth of the by share the in primarily million. fleet due to the $X compensation, an quarter in in fleet per cost reactivation modest expense incurred included $XXX XX% in first was in platform growth associated increase million, in income income and the margin a achieved including totaled the for quarter. inflationary interest quarter. million after-tax topline increases million. other fleet from first deployed of debt balance with $XXX million, quarter. the G&A Adjusted our contribution $X.XX, ended We $XXX to and business $X diluted and from fleet the and driven process in of mix was of $XX reactivation $X.XX and $XXX million $XXX by net to net million, a for activity expansion fully a loss administrative totaled $XX $X third was IT increase cash pricing sequentially, gains. and activity, $XX driven working quarter doubling incremental Fully and second activities solid quarter net after-tax on in continued a to The million that Net primarily $XX Approximately first increase compensation million debt capital. improvements Net pricing. diluted in was million remainder support planned by performance-based XX% quarter from of first and quarter, million net EBITDA to million the XXXX our both from the expected and quarter. million, increase of or well loss expenses and $X stock-based showcasing quarter systems the Net to investment growth. General non-cash the the with deployments. compared increased $X fees

Total other $XXX basis was ABL $XXX to borrowings million million increasing was margin of the capitalized the in second our logistics XXXX. thereby maintenance remainder is expect quarter capacity digiFrac enhancing we on June from As Accordion TFX forma and borrowing facility upgrade driven approximately totaled second relating driven quarter million credit availability our of by facility. of primarily including $XXX spending quarter, the credit had This including projects of latter sand credit XX% capital sequential $XX quarter On ongoing and a on part the $XXX feature on In The liquidity XXth, contribution our fleet DGB price exercised revenue third $XX one by XXth, million July million, we and and the Net ABL GAAP we and million to full Accordion. reactivations $XXX for growth. CapEx increases. of one the from pro million. expenditures accrued modest the of deployed under for facility, speeding.

-- net primarily pressures, and in included including We increases, also modest and inflationary supply with chain, pricing of fleets raw operational materials of labor expect offset improvement margin integrated partially costs. by ongoing contribution and the commodities

global maximize flow our this improve of positioned needs early well As industry, to are over part invest cash continue support to we free continuing by in energy market to the cycle the fundamentals to long-term. for

in wet are expenditures and $XXX handling of approximately additional $XXX million full in relative to exceed and spending to investments, of sand in targeting year reactivation fleets year million, million the track well the adjusted We PropX in an increase with additional budget. investment The XXXX, capital the as half the spending, of XXXX incremental second the to our beginning reflects million capital fleet the the of balance to now digiFrac including $XX deployed than approximately achieve be sand we and next-generation as for incremental $XXX technology fleets million transaction second equipment, more will year. in of deployed to are is including far $XX on CapEx EBITDA expected one that quarter the the the additional frac

positive for to long-term be to investing cash free compared XXXX full result, of we the these past. year in expect a flow As after the

of XXXX expect to We expand Investments further an and potential with making XXs. modernization active expected continue plans in is will believe in and about in we or cash fleet earnings anticipate XXXX We limits these count profitability flow below capital low are enter spending in XXXX driven incremental is strong a likely XXXX XX%, XXXX. continued our to investments XXXX. free frac by both at conversion, to be the fleet from XXXX XXXX margin with expansion We initiatives.

enter latest as have be expect that prices. the planning of to we we we We a and technologies duration are a longer oil what gas fleet

of demand year, capital we the on our customer As economic spending beginning flexibility depend at returns adjusting we patterns in have expectations. significant stated the and conditions,

investments to capability meet integration, to per business, successful the With increased that, our look of now shareholders. expand future us balance it return share, for allocation allows before capital and disciplined to to of execution I OneStim Chris our operational and generation we Q&A. the earnings we outlook flow strength to sheet free As priorities open cash to over fundamental will of repositioned capital

Chris Wright

with to NGO simply have admirable driven for and our impediments better lobbying emotionally is in quality the equating so Thanks, modern Michael. of The that investment Wall too resources. of shortage in our and It industry often cleanliness the in to making. the is those otherwise barriers not and will calamitous very by for the investment on crisis not many who It that myriad falls will gas play is desiring a food for else simply all of investment admirable world is serious of energy growing not only due government with beginning gripped play the decisions and due then hydrocarbon hydrocarbons possible. must of along critically human in activists, join Street regulations, us to world hydrocarbon keen are damage in of The this investment crisis today The modern and our and it is and or the us a not a If also hydrocarbons. that role the It own entirely come modern lower world any see is anti-hydrocarbon immense from today. it academics industry to energy free current the is world litigation hydrocarbons activities. It certainly without available from role, loudly compliantly about in not to torch, today blame of the leaders, fact that candidly, speak endless honestly carry regulators celebrities, which it’s improve most to lack the for infrastructure has cases. fact political public we our greenhouse been going that to too is often fashion and crisis. be production the critical

was end, night. released strongly on over the are that their questions. to future we honest own Liberty’s Lives is be feedback opinions. Human many of Towards this must might our world encourage energized on Operator touches that all expanded everyone what now for all Moynihan. facts turn inevitable issues They not how their that critical entitled of entitled the to misunderstood set the energized website Patrick strive to brokers information are idea on today, I Individuals version trade-offs and or in welcome be will report, for on We Daniel it that from how ignored. the read either are simply own it I to be improved and as made. Bettering to last It overlooked,

Operator

question. first Our with comes Please with Instructions] from Bank America. go ahead of your [Operator Mulvehill Chase question

Chase Mulvehill

morning, thing… I Good everybody. guess, Hey. first

Chris Wright

Chase. Hi,

Chase Mulvehill

-- to you the incremental … here, of half digiFrac bump newbuilds first hey, the fleets year. I obviously, the the just have hit in newbuilds got next with on big CapEx, wanted -- a

to just CapEx the of versus newbuilds context going? up $XXX you $XXX million so is could kind the get the can CapEx So kind of upgrades kind of versus million maintenance, of to a between split and where reactivations and we

Michael Stock

there of got of Chase, think sort two maybe that was green change on about $XX to and additional piggyback some million XXX we million we beginning pricing. the that really at digiFrac some part newbuild with sand the projects with and announced fleets the lighted $XXX it, right, balances reactivations what Yes. we the the announced year, the improved some million, for to $XX make were probably, handling, technologies wet margin just the build

Chase Mulvehill

Okay.

the those are of spending back you half me this, those the just that reactivating those, Let upgrade, X year, the Tier ask are be fleets kind to are are upgrade you of you going to fleets? in

Michael Stock

-- to would Tier are we obviously X lemmatized They they degree be TFX the could. are some Liberty If that they to upgrading you are. not a where being they But fleet. price to ask DGB

a those the So will of cadence with those which they have generation fleets different them each that’s next-generation longevity lines. of kind to with long the with during of years. clients five move That support them, next then that every of one has

Chase Mulvehill

But you can can That how do cash point. kind of thinking think it bit evolves what And the sense. it versus know of are of I about Okay. based matching of to makes or I buybacks how of -- value $XXX kind little stock flow view I is free didn’t where -- kind think your more poke around on ask on how kind should kind about opportunistic you the at about if we of and it pace buyback, million. that trading? this intrinsic more to commit is about really of try on if kind this a we

Chris Wright

X, to us money opportunities. Yeah. going to Chase, sheet you is of the a them formulaic compelling you at intrinsic the which have a buybacks you large difference Entirely support value have When opportunistic, to between share price balance can buy the out flow at and and shares. are no

our back between magnitude and price. that market is buy dislocation value will we strongly dependent intrinsic which the of stock on in way the So

Chase Mulvehill

you it? ask or value I calculate intrinsic Could Okay. define how how you

Chris Wright

and flow to business. in it’s I share sensical going discounted our the Yeah. a cost scenarios range obviously, of weighted our won’t to but possible capital the cash out common I details, mean, future just incorporating average

Chase Mulvehill

I much thinks sense. will pretty about right. Chris. right. All it. everybody it over. Makes turn All help Thanks, That’s

Chris Wright

Thanks, Chase. bet. You

Operator

with from comes Stephen Please ahead. go Our question next Gengaro Stifel.

Stephen Gengaro

Thanks. Good morning, everybody.

Chris Wright

Hi, Steve.

Stephen Gengaro

don’t from things if mind. you two So me,

The back about you around you just about of I fleet the and the -- exiting off calibrate in plus. next trying the year, count starting reactivations -- year, think half think first, we next about year talked I with next year, are XX we when starting in the Are with coming are the I the am XX you quarter. fleets to third second of percentage should of entering digiFrac of XXXX. about how in base the in increase a quarter think seeing

Michael Stock

It’s are like, quite and XX Stephen, mid-XX we yeah, number-ish.

We are obviously then second the balance will activating quarter, but in be activated. run rate the

you the end the as quarter. So That’s of a… through through go year the fourth

Stephen Gengaro

Okay.

Michael Stock

…straight line of making model.

Stephen Gengaro

Okay.

when profitability about I I guess, fleet think in steep million EBITDA it’s second the to fleet. quarter And or but $XX two-part question, Okay. take, we up increase in the of then give think per per about,

is number? guidance, should sort from the we I that thing price aggressive? about bridge think. probably could business something assume -- too mean mean think or How given bridge could of high you go of the any XXXX the there quarter sort forward? as like is we and as go have us in evolves that parameters I the I from some around and did go where the first sand this to the So where its of that XXs that this I utilization You is value and potential

Michael Stock

on may how may dependent that Yeah. this present of year, going the how at numbers, think Generally XXX is kind for which any on equation, sort by year. I really will of in demand the go, affect oil could would point maybe we the see it side mostly next it my -- of to of kind as move demand from Where of the right? industry XXX from end supply/demand particular more late running point internal flat fleets, the recession QX of stay time. view around

and watch sort So, general pricing, frac be of market that on need it to lot see the seen, the definitely I -- of we go. in general, think fleets, but economy. kind still there there your But as we there’s is of a I to yeah, upside take obviously movement in you think of is

Chris Wright

don’t it’s said there margin Stephen, migrating pricing that and quality just pretty are how positive what operationally, factors. of perform and a but these some combination operations that the know still future, are obviously, trends in the of enhancement of right direction obviously, we our now, Michael the then there well positive also trends capital or we

figure more to out efficiently trying a get our safer business more run ambition how done cost lower our fashion. to are We -- to a in at

So of that. a lot in there is moving factors

margins conditions. a years of eventually we that shrinkage where the go cycle we but four return So a and this fact are based frac awful, supply and say shy alone on predicting that to will half and ago we future, shrinks the where grow, to are supply in all demand two we market year did just specific, going was economics fix mid just anything about or on marketplace it’s year that given two based years

Stephen Gengaro

Great. Very good.

reactivating higher the Do that Tier assets? one, view bridge evolves as a it’s couple quick of you sort the and market the one but Michael, over you and these end newer to are replacements of you the digiFrac Just ultimately next for years. Xs as mentioned this, upgrades

Michael Stock

should Generally announced market in what we this what be see what for about based attrition for frac is has among the on cycle been the newbuild. approximates thing It fleets.

the did very fleets, fleets, about I for diesel balanced be there the market for are frac overall. some a cetera, XX-year the same. think feel pretty still older that’s diesel, market ourselves approach good coming by We out, we numbers that that of you disciplined announced know are life that approximately and the et for think would If we

Stephen Gengaro

Thank good. you for color Very the gentlemen.

Chris Wright

Thanks.

Operator

your with Please Arun Our Jayaram. comes go ahead next question from question.

Arun Jayaram

and a million this CapEx the $XXX that what wondering bit of your to year trend Chris, of over Michael, good below kind expect you us bigger higher scope or you type do do the a could you and mentioned on little of picture fleet next couple $XXX program, you capacity or of give next year. I as long to more modernization million bit around was you the expect relative ambitions little continue maintenance the morning, how was wondering scope little Chris, at years. of CapEx a to us if give bit more if I

Chris Wright

have add capacity any per plans We don’t Okay. to se.

Our a of plan program. modernization and we a continued do plan gradual sort fleet have is on

actually happen pulls meaningfully also to The going it have But from burning say a going down, fuel in demand is fleets, better strongly. are performance. in be there, then stone. plan, Both Of very reliability, next-generation going large, deal. greater the course, put cost burning lower might slowed our migration to perspective, pretty the anything might going be the fleets just never to are is fleets diesel day if And it’s natural not accelerated and straight numbers I economics a we emissions. that gas be next-generation would to have to what’s higher big delta latest per generation the these safety, next pull between

the is just expanding, going not driver our to that cost in So, for economic our to driven simply likely have pull next-generation it’s disciplined pulled it’s it’s equipment. savings upgrade just continued fleets being is customers. return again fleet, fuel in growing by and will our But be of us, fleet customer a get not cycle

Arun Jayaram

were give if the the in to you perhaps, just us the to that put wondering for third terms builder this follow-up, the latest and us starting two deployed later field? Give deployments was quarter I in those contract going sense timing, you year. of terms two Great. your that that to the digiFrac just fleets sense a new relative plan to initial trending a of or be could for are in how how

Ron Gusek

we Obviously, customers to excited technology in Arun, field out are this Ron. excited are it and there. Yeah. the get to that deployed out see is

to continue strong see demand. We

side. so We supply chain are challenges, not navigating pump on the much some

schedule. pumps We have being delivered on

are We side. power bit struggling on little more a the generation

holding really you is about, as kind to-date. And market to about the you if next So that’s us in QX in expect deploy and year bit. back expectation to still over about this contracting business, think think first is our likely QX think two two fleets probably want time. you a fleets our We the evolved, of how the has evolved that how

think the those versus today, contracts has announced edge even diesel If ourselves been Tier bit about, we three for dramatically leading where a when X were a months. pretty over or environment you we there pricing fleet last first different little find we four in

where next $XX earlier, think fleets about leading so there million fuel we made is where massive, we think savings Tier capture as the we to edge Chris diesel want the opportunity maybe pricing our we and deploying. and generation course, next-generation $XX are fuel contracting of so meaningful and for set we there, are piece guidance pricing point well X as to then And savings annually we capacity as want is of provide that to to and to about some opportunity million the

Arun Jayaram

lot. a Great. Thanks

Operator

Our with question. next Neil with from Please ahead Mehta comes your question Sachs. Goldman go

Neil Mehta

the guess see I the it at add and quarter capacity congrats as expect you your you solid to with Chris see broadly speaking, to of But levels you set want on Michael, some competitor fading here. Great. I as current market build comments, about overall. your all? capacity. mentioned don’t are profitability on where going do you disciplined is, do we adding incentivizing

Chris Wright

Yeah, I there the little. the an know fleets the seen any stacks. but ESG built of equipment small, is, straight And builders. that the really great days. they and -- driven all not I by any any and to We sign property fleets. markets increasing are, couldn’t that up get to don’t are very think three I very it’s don’t I know being these of what’s if Certainly are want or marketplace months. close overbuilding it. more are yeah, appetite, haven’t players the or XX months you who adds, were don’t will from in There today, XX -- obviously burden like capacity bigger is redeploying for there’s the Well, among going and share The of market of you look probably any in people do them. idle are I think the be past. many But too equipment

we a as a fading dialog well. customers we have no, have where marketplace disciplined between we seen not our in customers fantastic behind us in moving So, still lagging a that are leasing, our are just rational returns that, and ways pretty direction but today a and of

Michael Stock

now at is the mean it the think right? really So but over long-term. at delayed to things year, very seems what about be that, think sort eventually of XX% attrition that you attrition look of got look I that’s on point to and it with a one we a in have when being Just strong built attrition be is comes, we it market, a is it can I have somewhat, balancing

Neil Mehta

around and are risks? time what calls, talk lot just now, labor, labor spending were some how you And still right of are you of the Good the about are year on just follow-up a and a these labor seeing is challenges about facing mitigating perspective. environment those we how tight ago talking you is

Chris Wright

I remain few into seeing would you a Labor labor Yeah. tight. say the force. more coming markets back people are

a it tight in or six So incrementally but still market, have XX nothing years. seen last better than very years we was ago, months like the labor XX

work we specific the So focused a right direction, great their we place turnover. while about incremental here Why on why have to jobs people what opportunities in Liberty improvement at is low love Liberty. it’s very

sign the somewhere it’s at Liberty to that’s NCAA whether join having is So, to and them right in ground ceremony or having people middle setting learning signing and that those not it Mississippi in are we of patch. oil groups into go the people effort may or be like at in welders schools trade Alabama but on do and electricians, on where are internships Liberty become the that

job, come an attract great you and and team in. and So if change I just had who here the this a to our bit people they find to HR treat to credit But people is come industry. give exciting huge have game a and well a recruiting to

solvable challenge and significant yeah, constraint. would So today. industry in as a everything still they it are probably all is most is but turnover short-handed whole. and say is say quite a it our a problems, in others high in I our industry would I

are get is doing they So job good labor problems, too the Liberty comfort to on much want that. navigating I don’t real, but pretty I a think

Neil Mehta

Okay.

Operator

comes from Please John next Energy Our Partners. ahead Daniel with question. go with question your Daniel

John Daniel

that Quick your better growth own of by access and that the quarter. sand sand to is guys. incremental Hey, industry to ability much driven Phenomenal Congratulations. How overall your versus fleets. on just demand? tie question

Chris Wright

But from If the Liberty either customers, it be them existing consistent if want would people They pull work of guys, somebody take the want -- split there they -- I are like get this we all deliver done that they know they right? a incremental -- economics get to to way bit is not you think activity and else do and you between getting and to can more… little to not throughput, little a struggling somebody almost is whatever or we else, are guys, getting you maybe done. things they you is, trust their and

John Daniel

Right.

Chris Wright

…. of that.

John Daniel

Yeah.

Chris Wright

of a of parties So course, we in from are it’s But Look, a bunch all buy of that John. lot different of package third as basins. well. sand we

to has the preferred would been it’s partner we to but so. our goal a just provider, say are that and in we preferred market. history well, as have not mines, I to not be it’s So be always tight have suppliers we sand that our the relationships but just procurement

Michael Stock

the color activation… little on mean I too. that A

John Daniel

Okay.

Michael Stock

pretty specific They … is are basins, it’s -- in which… not basin, right. one popular

John Daniel

Okay.

Michael Stock

in those fleets helps for and supply the degree to fleets. source support chain some to and those ability to … support labor

you point because a to a in you really and it’s revenue chain the source, is as key are fleet supply it’s fleet not work key support source is them direct event, the are So delayed putting in you time asking or you things at have labor, great… can issues, can can this present

John Daniel

Right.

Michael Stock

… improvement choice.

John Daniel

Okay. Got it.

backdrop, -- You take-or-pay mean transition are just to think Mike, finally dedicated would sight? to you there is me Chris, the line performing I up. arrangements we just that is some in an How clearly, asset for look one lock I well. transition at customer today what and obviously fleets, demand do you for with mean, is sort went other opportunity, happen that transition Ron to of if the The of good? something guys fleets do these the is we

Chris Wright

and fast to as where on need will and have Yeah. operations buyer economics. all a of protect I able there our like, something have that would as mean the they we struggle like move protections we that frac there guarantees today, deals some contract we our in are as economics have so pace

absolutely how we run about in exist for in today. industry together, them. the not, -- just they our if change So can in winning industry, us they if hey, exist -- -- those in exist But did That’s win those things are did long this not then the again win. that’s we you -- is engage generally that we -- even and always screwed

John Daniel

Okay.

Chris Wright

always will mentality. have a always We We partnership mentality. had a have partnership

Now all two I all now, similar eyes course, know right benefits a well, are harsh for are. going yes, bit Chris guys going of you was and your swing the and yes, to partnership years way or say, more are rolling that forward, three to the they last and that years in you they disproportionately

John Daniel

Okay.

Chris Wright

have comes. we with always to deal be what But prepared to got

John Daniel

Yeah.

in camera my truck. a have You got

Okay.

So, that can will XXs, the XXXX last year count two you just say in digiFrac fleet remind one Canada, a from the noted start many is one, you with is in me you assuming how to and this me? and low in best just hopefully fleets

Chris Wright

at by basin fleet all John. We breakdowns don’t give that,

always We about careful that. have been

of is will sort rolling to yeah, would low going and I of that So the vague, fourth that’s going taken XXs rolling be but, are in they -- are fleets digiFrac be couple say in to quarter. a be that

John Daniel

Thank Got Great it. Okay. guys. again. you, quarter

Michael Stock

Thanks.

Chris Wright

have I in John. appreciate Thanks, you do to that worry not truck.

Operator

go from comes Please your Fargo. question. question next Our with with ahead Roger Wells Read

Roger Read

don’t little you deeper some sort to have questions potential the reactivations terms Good that to your oil what Thank between a and of of exactly of new on seen coming what’s future who’s any about asked, are been to think for as seeing in a you digging guess morning. I as fleets maybe Yeah. are bit like difference gas disclose the seeing understanding these you. or you fleets bid side, But where bidding basins you from in on what customers. have going we you and are. just

Chris Wright

fleets moves sort from model there bit demand, start good, and fast end year till few we economics sector. XX%, pull now. end for year, are balanced they I is of pretty of simply of isn’t, strong the year demand. for of sort the simply the the it’s strong XX there the meaning don’t at Well, year, say today as little year The fleet next across of flattish think the the a people the probably very there. are pull is year, because a more next at here at is from wanted start this a but the percent would incremental that small I the of It’s little count maybe right growing incremental

active say, strong see the slow we incremental and we just you markets and with gas, everyone reasonably in And supply upwards would friends, in it to current across flattish add everyone continued mindset and is, sort be a oil it’s a of supply. balanced now. if frac gas if right production and all lot customer I end That’s incremental are and both the across pretty add But fleet in expect count. of our fleets. customers, hard good want wouldn’t creep oil So between both the markets to

it’s the So state affairs sober disciplined of pretty in a think today. industry I

Roger Read

that. Yeah. next that year. sort tie maybe of expectations way Thanks to look And then the a as we this production and of to as into for end year

for challenges industry. operating call the in earlier mentioned for efficiency You the

but production to want improvements, if it in relatively issues, if that and you with significant that XXXX? that think little the operating mean capacity labor we XXXX. hard to tie deliver more does be get I et in trained stable efficiency wells about imply bit more labor, Just cetera, in will a don’t

Chris Wright

based which U.S. biggest and and level, is drive. rate count, of We rig than the Well, like sort really pounds going important That’s happen for count, but predictions proxy activity more at way underground sand production going rig way of to oil are sand better the -- pounds the metric. production the frankly than going of, in gas it’s current the what’s underground. it’s

Now, going, growth natural it’s because how that, today driving activity modest level going is details the it both not is current is there some the in but is straight and production. gas there sand of simple as -- where around underground, oil is U.S.

growth or XXX,XXX said X have we oil beginning of think over in X year we I this year. XXX,XXX this production the expected

I we bit We think be that, that’s reasonable might might a a bit above that. but a be estimate. below

you are would that’s running we now a right at going reasonable current which next year. if at think similar the we rate growth see pace and keep rate, I a

again, million similar So I on level over think this you track U.S. X a barrels day year. a a less probably year, see, little rate of probably growth see will to production X oil next

and rate. year will and its next at next Now, also next is why million grow year probably. -- day more natural rate it growth to grow, to X current gas rate a growing X continues at based but And on over production that, a again will plans, a of here, X XXX even think, cautious continued rate barrels modest to activities be modest year’s I

Roger Read

you. Thank Great.

Ron Gusek

Roger. Thanks

Chris Wright

Roger. Thanks, Thanks.

Operator

next Scott Citigroup. Our ahead from go comes Gruber with question question. your with Please

Scott Gruber

morning. Good

Chris Wright

Scott. Hi,

Scott Gruber

it model is the decade million. alone cost from underlying saying for talked initially other we now or fleet fleet up look profitability many about $XX pushing got per the alone you you prevent cycle fleet or level weak the felt profitability the investors saw utilization to a general we towards as disconnect business cycle trajectory -- you that profitability quarters, million XXXX, possible a back frac to the level just of at current at appears closer to $XX a that for frac was up a XXXX of ago? last profitability between that partnership and Is that if frac market looked couple cycle we inflation, XXXX as per separate the comp businesses expectations this So a XXXX,

Chris Wright

that they look on think is get over there drift to it’s I equipment is whacky that does see and say, you But outrageously year. economics we it still to levels does. some of discipline, and that. goes. a the see doesn’t we lag now, pay maybe probably -- get for It’s activity the hard still certainly possible. it and higher, low It’s yeah, it in but whatever, now would are some for fleet awesome, still fleets, and it Look will $XX hope there, a But, doing to unwinding there profitability goes would where where to predict people to to can’t certainly offset will suspect restraint It’s these go course possible. people online risk, be likely start are a partially If incremental at when are. XXs supply that demand. million. yeah, really that it’s things but of high to we I willing wells deploy they need I

going how will in so, likely continue -- to the or -- the don’t see. fleet much we to know And we go, to drift coming in where is next yeah, quarters, profitably how far, the for how higher

Scott Gruber

Q. it. how think non-frac you Got we the a like about nice step-up it businesses, had in from it. Got in contribution contribution should the looked then And that

expand How and So line? the should we think profitability as we XQ a XQ faster about frac of business, would in the and contribution? that think the underlying pace than about at into businesses the XXXX, non-frac more contribution cadence

Chris Wright

-- quicker non-frac would up of, say, sort same sort sales from through picked to let’s really like, the a fleets, frac probably we small the are a frac sand, of the that’s the bit comes business mines OneStim, a of there. go think the I portion our expanded really additional majority go third-party rate. business of underlying one of The is little So steadier, frac

one half, So the faster of rate. expanding I the would underlying the say, that’s the frac kind first that’s

Scott Gruber

And half. that second to continue expected in would lead be to the

Chris Wright

I think assumption. fair a it’s

so. think I

Scott Gruber

Okay.

Chris Wright

Maybe relative to…

Scott Gruber

color. the Appreciate

Chris Wright

Scott. Thanks

Operator

with with Connor Stanley. Our your Lynagh from next question. comes Please Morgan question go ahead

Connor Lynagh

Yeah. Thanks.

CapEx around bit how but that? not you up just maintenance divert spend stock but here. allocation frankly little question into what’s your and these where the putting numbers relative Why a a is leading-edge and around the divert thinking your rest buybacks, and is level cheap -- capital that valuation to facetiously, the of I rest Just anything are asked of this given the

Chris Wright

always argument could much The we question you is, -- That I is much a could are playing make internally, have we an dialogue very make very that. and for think one are right? we success above for our Since business return on return employed. the industry, way capital S&P average cash XXX not tax on the just launched but Our invested. long-term, this

I customers. the They together want with to we They partnerships with us the with it’s make closely run. have want great long long-term tied decisions think our us. to work to for

our that way So available. returns partner keeps That us it’s definitely over this in we helps deliver keep E&Ps the run. for very that advantage the business long competitive business a important best run us elevated in to

where we we are were are But, But a valuations So compelling. always an today’s will that bit pretty the fortunately, cash approach. keep at stock pursue going all to of continue to to are invest a coming flow above today of a to competitive advantage. right, have free the into you yes, we attractiveness, place buybacks

Connor Lynagh

what of the the market duration are it sheet amount clarify executing strong about of And XXXX? here sounds and the at just Would for you bit you where remain think fair is and balance program. to to excess thinking for buyback. those up probably to free bit feel you you a you of the how order as cash comfortable levering got decent about Obviously, CapEx the is price a in like a of is on based flow execute year something share that little or use more trading going buybacks are that of

Chris Wright

No.

in free to will future quite confident -- we We very near the compelling. is opportunity flow of in. are give The cash the window

and buybacks So, tend invest People in hugely about time business and making no, it it then I investment. not that’s business in you timing in in best your matters. CapEx their the but and killing in -- same CapEx, invest get say buybacks thing just to buybacks. when to their the cash, CapEx business and can is

with you to a to be willing lag. have do no, So, those

talked always price are of share about IPO. the sheet invest buyback how be the to beginning CapEx is to cycle there. our in going no, balance cautious best this or be, of of to and long is things There right? But, We got business don’t have careful dislocated you time is time the not the the specifically to best risk, tied. timing At taking timing is since the you most know but these to you as the is the not tied do your flow the not of as very So start cash when downturn

Connor Lynagh

I the will turn back context. Appreciate it

Chris Wright

Thanks, Connor.

Operator

ahead Barclays. Our next with question with comes go question. from your Please Derek Podhaizer

Derek Podhaizer

priced talk the little guys. morning for the pricing next-gen year? the to are How now priced end re-priced this for does fleets XX the much Good and pricing more. Could raise Tier to and where bit diesel a of re-contracting you I year what about profitability last reactivated wanted Hi. at that on earlier in hit next-gen fleets relative you these next to six months? are the run this expansion months X rate bar have

Chris Wright

of And fuel huge re-pricing Yeah, if specific fleet we strong good got a value the and of fleets with But of are add and savings right is very I economics, impact fleets? Derek to be it at you to these market economics. always that course, will. Sure, next-generation cost will lower don’t be about That want exact let’s strong environment said, now future. and emissions. point same the we the projections, because hey, cautious, take know very enormous. And you not that obviously a make contracted reactivation giving Derek. careful

Derek Podhaizer

Got it. over the to That’s helpful. digiFrac. Switching

So have four early you next by fleets year. will

about you to grid Research battery you pressure MTU to or engines? those talked Gas or to with side, third-party would turbine you power power on power supplement where need with the help get the Natural You be providers

Ron Gusek

contemplate do of that the you put Look turbine. we as appropriate never a the in an out to I most above certainly solution We field. think listed don’t

with of us. of amount of So an is digiFrac think terms on But I some potential don’t in in that’s a terms hybrid we answer power, provided think use grid are it, bit of the the ultimately call on and conversation to opportunity the a that’s power approach I for of certainly how having table right some the customers, location. the

conclusion also the digiFrac are that they option us to profile as folks we the reset know and now deployment so there going would represent third-party from we same As in think about gas pace around potential have forward. to technology natural come business, have you for emissions for some have of the a those

Derek Podhaizer

if Got it. color. one I in. helpful Last That’s it squeeze could

investment. geothermal unconventional the on Just

next big to three could of for put that frame how about maybe talked years, be some us? years you this five and opportunity You around could over few an it the for years, you numbers

Chris Wright

but was would but foresaw reasonable be this chance, think early we obviously, because a the I investment, to meaningful there business. did do we too that,

that excited really yeah, we believe are to We we for not in -- early business. obviously window for about around scale. to give So we Too grow doing We some it opportunity. believe are can are dressing. numbers sure But, that. it that

Derek Podhaizer

I That’s it. turn will Got helpful. it guys. over. Thanks

Ron Gusek

Thanks.

Operator

question comes Keith with your next from Our ahead question. with RBC Capital Please Markets. Mackey go

Keith Mackey

and Hi. thanks. Good morning

XXs you fleet talk if can count would about be what portion which I is little Tier bit definition, curious more non-next-generation that a fleets plus? under think Just of low your X dual

Chris Wright

Yeah.

it’s half, numbers, half, definitely less a specific And less than so still it’s meaningful you meaningfully flex. we give maybe will but than

Keith Mackey

CapEx year’s you of close talk how that initial for digiFrac XXXX And about levels. might that. bit fleets at Can contemplate? it. Thanks many under Got look next Okay. a to more

Michael Stock

as maybe yeah, those complex. on at the majority But, The a at be look CapEx out moment one the go, kind maintenance that majority The those gave majority idea general give CapEx beyond plans, spent of actually where CapEx, of at that. time, soft we cycle the of numbers to a things will that or we the be digiFrac. we maintenance made -- above is will of we answer of majority to you I customer kind you could will obviously digiFrac go.

Keith Mackey

I will it much. back very Thanks Okay. turn

Chris Wright

Keith. Thanks,

Operator

go Please AltaCorp Syed comes question ahead with next your Waqar Our Capital. with question. from

Waqar Syed

questions, envision a quarter quick you just would housekeeping use Thank do number of be fleet half still you. be startup or QX, Congrats. all. so, and second costs in -- working of HX Gentlemen, from be source some great if cash the would cash? that that and Michael of first one, capital size what would

Michael Stock

were you while up broke you asking. Waqar, Sorry,

by think I you sense the question. can make

Waqar Syed

Yeah.

you size? what and any expect cost, fleet in QX so, So do if startup

Michael Stock

the between similar I QX was probably QX do think say. order it -- I to and We will Yes. be QX, and would

Waqar Syed

Okay.

Michael Stock

little. a And

Waqar Syed

capital source HX, that then be do second And working you half? in a expect to of cash

Michael Stock

slight cash. It will of a be use

Waqar Syed

cash. of use Slight

Michael Stock

QX will -- of it Yeah, rollover. cash benefit QX. use way the normal be QX. a in seasonal the a in more it have balances Probably possibly it Yeah, seasonal small role as seasonal and might in

Waqar Syed

of and just, reducing activity? you. with prices, any Chris, in -- Thank customers direction in me, that, terms or pricing pullback negative in of your with recent And pricing change just from have this you one oil way other discussions last any seen question to like about on anything leading-edge activity, anything concerns in the

Chris Wright

pull don’t significant there. been meaningful, enough the has Nothing yeah. out it’s No. years, changes, I no think back there’s not so in and

Waqar Syed

you Thank very all much. Okay. from me. That’s

Chris Wright

Waqar. Thanks,

Operator

with comes next ahead question. Our with Please from go your Instructions] Bianchi Marc question [Operator Cowen.

Marc Bianchi

that wanted I up flat back XXXX? is Michael, up, going down. want buckets Thanks. if it maintenance the slightly buckets, three is but you XXXX to level you describe assuming because Hi. fleet however the to to am on go active the or I the maybe could us CapEx, of it set number give the us for going just or counts just because just

Michael Stock

Marc. a It’s Yeah. circle, really soft

cetera. of best million improve our we $X.X on we scale, are have equipment have pressures -- that’s the offset you of sort got et your maintenance CapEx, as we fleet got got the XXs. at used thumb of as Obviously, that you to getting But of rough that. inflationary in think low rule I doing

I I if digiFrac. you for the check a customer-by-customer, on spent decisions really think on binders, majority made have think those we be balance will the circle soft is that

Marc Bianchi

Got you.

Okay. Great. And one other…

Michael Stock

change. could They

Marc Bianchi

go Pardon, ahead.

Michael Stock

could easily I changes. market mean They change,

change. in kind have CapEx, moving markets of CapEx a of as We adjusted lot flexibility

Marc Bianchi

a of be for you, cash book We this the XXXX am we I you is we other that I XXXX see? Yeah. right? give assuming and different taxes. what Can Michael, the quite that’s the assuming saw tax one guess us quarter, sense because bit any should there, from

Michael Stock

Well, minimal. relatively is tax Yeah. cash

large modeled and all related with out, the it the have million is as that in I protects probably million from that the of the a tax order that return there. not year of time of has taxes. on half we allowance too my about to Well, Obviously, Second mix, XXXX. been it very some it’s $XX $XX to book valuation probably had similar little probably, TRA interplay got

Marc Bianchi

perhaps, number, just the flow? a not But on are meaningfully Okay. half we as trying to triangulate different second cash in

Michael Stock

we I will tax Yeah. general, begin cash situation I think, payment would so next say, year. in

So I of, what sort think… again,

Marc Bianchi

Yeah.

Michael Stock

will drag to year yet. on extent flow the a haven’t that cash next modeled … be we

Marc Bianchi

Yes.

just you here. the the to there’s the And too year amount the then any plans have interplay absorbs not there of Super. seeing customers you of are they last lot how commitment a E&Ps of course seen budgets least of customer over and of level me Okay. a about the kind on inflation for I that at is one adjust activity higher for increased is Are because XXXX? publics inflation have CapEx and into thinking and that mean much.

Chris Wright

do They goals production. flat? production to say production on want to have they would want are their if based I growth. they Do with people what keep very modest

activity else, come efficiency they pricing, as that. targeted is levels savings greater. as can of the generally we book some is shift the obviously, onset that, to wells And piece, pricing, Liberty the piece higher that’s efficiently a pay of but and to can get they frac those cost sooner think in then I a work frac is There right? and levels on want versus You someone done. from activity operation the pricing

So, and no, keeping I think, is what producers activity plans. are anchored relatively their production

Marc Bianchi

Got you.

Thanks. back. Okay. it turn I will

Chris Wright

Marc. Thanks,

Michael Stock

you. Thank

Operator

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

Chris Wright

the go I energy and everyone’s our round. customers everyone. Yeah. business being everyone world Liberty to suppliers working and make XXxX Huge on and time for our business say for hard shout involved Thanks team to also thanks make out that want today just business. following for to is in and successful Liberty’s the to

you talk will We to next quarter.

Operator

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

may disconnect. You now

Liberty Energy (LBRT) 26 Jul 222022 Q2 Earnings call transcript