LBRT - Earnings call 3 2023 | Liberty Energy Inc.

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Operator

Good morning, and welcome to the Liberty Energy Earnings Conference Call. [Operator Instructions] 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.

Anjali Voria

Thank you, Gary. Good morning, and welcome to the Liberty Energy Third Quarter 2023 Earnings Conference Call.

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

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

These on including pretax may to are measures comments of EBITDA, adjusted not employed adjusted capital not non-GAAP GAAP comparable measures, on Our include a operational also today invested return EBITDA, and be cash non-GAAP reconciliation return other and of return financial of for return capital, companies. now and the A are measures section to substitute employed measures. similar on and I EBITDA website. over as capital on adjusted adjusted cash calculation available and of turn capital on the the this pretax invested Investors discussed Chris. call, net will call to our on EBITDA income and

Christopher Wright

for results, market pumping XXXX in while Thanks, Adjusted in across from frac market. operational Anj. outstanding agility services the earnings quarter while underutilized The results. fleets sequential the idle North share to fully efficiencies response and was market. remained steady American operational EBITDA electing withdrawing was revenue to Good and engagement EBITDA, while quarterly reflecting drove million, pricing fleet championing during growth third disciplined, adjusted the industry $X.XX. quality per frac diluted morning, $XXX quarter customer everyone, conditions. our financial financial and delivered softer to thank softer us you for Record execution, discuss joining a and Liberty focused excellent

our pretax capital Our in with of milestone on the team I'm return third operational daily achieved XX%. and vertical investments pumping efficiency. We of Liberty. sand consecutive driven a This culture and XX-month success safely delivered at expanded hours combined more than across our quarter execution, integration of by of fleet technology employed the tons ever pumping delivered excellence culminated in full achievement that efficiencies superior innovation average adjusted a before. record was and trailing proud unique

digi the say technology that it. on route best build the while understatement. the be with piece our by To commenced Today, Over to units value route the integration. truly commitment frac we part years, grown interest an operating industry. our Digi our of and fleet of Technology is took lowest records results. suite demonstrating creation is vertical have build frac a the decisions fleet, in location. in power late frac latest driving competitive a and digiPrime advantage was September, fleet. the the would commercial We the technology, proprietary represent our scale gas-powered investment through that deployment pump setting highest in have dam and The embarked easy quickly a years generation would operating that on to with existing whole natural where effort is partial to or technology high fleets performance envision, we worth We simply differential slate the from design next-gen didn't outsourced emission crew customers' improvement Well, the we fleets technology choose favorite frac delivering customer extrapolate step Today, enchilada a becoming technology. change the frac a in that blank efficiency, ago in impressive

division. by on-site compressed digiFleets delivered robust, Power We our with natural gas managed Innovations and supplying new reliable are Liberty

be to by the track year-end and end XXXX. on operating digiFleets are X of X digiFleets January by We

strong are digiFleets. our the pull excited customer by and benefits for We

our more to fuel fleets. we gas fleet we technologies, towards natural transition our natural continue diesel are gas across dual-fuel As displacement also with maximizing

have technology control and conjunction with our to to displacement. diesel significantly providers increase deploy in develop worked We software

in Our us to year's run and ranges preventative to long in achieve maintenance positioned maximum substitution. pumps gas our effort predictive and performance have availability, equipment programs operating optimize enabling us to optimal

operational There to and to higher reliability asset optimization is here. We of advantage Liberty's to run uptime each of LPI, pump, focus reliability frac the the are much driving also by the maximizes improving equipment reap our gas provided room vertical efficiency. supply integration on starting fleets. of

than enabling programs of business efficiency site delivering Liberty our we predictive minutes priorities By results. issues off our for oil and AI, these interactions A are machine crew in applying from of transaction, added and they minute into profitability before a crews shave knew real-time since asset benefit we improved barrel time. red of we processes customers goals Today, superior themselves our wireline for critical day. accountable frac analytical would into translates customers brought issues Liberty. and Wireline we tools our advanced continually the first to equipment execute wireline a ever to health paired frac this as to OneStim and we equals wireline the and streamlining producing shared the efficiency on fold. assessing on before, Every was realigned to and addressing the red in have maximizing learning in lower cost more greatly a optimizing new Our extra teams together become the on are seamlessly is and future. maintenance. better using data Today, and year prevent on ago, teams maintenance to in real work and such hold data operational

the survey proud abilities business are We the that to response to extensively We last cash independent industry. E&P by over growth XX% transformation quarterly from increased now Liberty service share industry that in our the significant the customers top ranks as our and the pulls years. per and according Kimberlite earnings Wireline X most recent dividend cash-generating in our provider research across

the in X% July reinstatement or since outstanding During our of repurchased buyback we quarter, our XXXX. a third XX% shares cumulative

the on are We buyback our strategy. opportunistic of focused execution

We more price up. pace move aggressively runs and will stock pullbacks when moderate stock the our during

to intrinsic what maximize large believe dislocation our we of value However, of our stock. to Liberty the value same: the see is continue goal we the relative price a a in returns stock The response each marketed balance share and higher in prior to the fleets supply-demand softness, across of industry as better idled cycles. compared total drive completions for come. Fleets years to supporting remains activity to were

disciplined consolidation, the at activity to customer adapted matures, and has revolution new frac technological era increasingly complex Frac investment largely serving stabilized shale process, the a in has needs. industry markets As quarter to through current demand seasonal of levels, will flattish operators representing levels. weather Fourth frac load winter needed softness, and a see disruptions. likely production trends E&P holiday base fleet sustain

commodity logistics small The positioned the and to celebrate America. more modest investments a are am to We Recognizing the cycle. beginning relatively quarter, activity quarter, Volatility related Liberty tilted of tighten demand seasonality in our shale. partner. and Global upside third is gas recessionary integrated Arabia's normal growth Liberty a fleets be outlook found I the performance resumption can operators value driving markets energy delicate amongst and uncertainty, footing unlock possibility future. services, efficiencies, softening frac markets demand just the has the outlook is diversity increase OPEC+ with to activity in strength escalating of smaller commodity customers' Liberty all in prices would crude in trends technology sand production further outperformed of modest to Liberty's service and We oil the significant impact in natural among integration and of superior given of recent fears. vertical North uniquely for and ambitions technologies. North durable American and XXXX. a oil of only willingness of fourth The to safety down needs. XXXX. investment for capacity the for expecting differential long-term E&P support The Record customer an efficiency. secure in natural on like of in teammates activity also demand operating long-term East and Today's improvement, scale. wireline, industry The X will industry producers. expected underpinning prices. infer is uniquely saw expect take our the and on and the into to firmer last global the footprint is modestly effort I several industry, oil the outstanding driving transformative our achieved to the and delivering returns. strengthening American prices, drive extension the creation. over oil an moment is gas internal emerged which conflict slow of positions and Middle face LPI And gas third complexity E&P in next-generation technologies, shows on and decisions, your view. positive result today. levered during commodity gas to attractive delivery customer on in industry support increase companies supply demonstrate now outstanding sustained a to In leading America's on private analysis North spare with a We including consolidation be long-term across gas elevated anchors renewed the X,XXX through stimulating the accomplished focused partners prices that quarter North to to North record is was team. the within of collective The our value and double oil of balance is markets from proud America higher address a team focused E&P the investments, frac years cuts treating Saudi work production

at of guidance XXXX, to over end XXXX. expect XX% be XX% the EBITDA For will full of high range growth year we adjusted our

our We a customers. continue deliver returns superior and differential for service to

us to commitment like over and to to compete come. LPI best our our and near-term Stock, yet both Digi outlook. term. results to to Our to and next-generation our focus and financial suite cycles company over that, positions turn Michael well I'd discuss long has The the in excellence CFO, culture, With Technology call the on

Michael Stock

ROCE we Liberty's that during XXX. the slightly Good the versus marked outstanding metric softening the ourselves been have industry from return year-to-date benchmark results earlier period activity in using trends, used Chris morning, a that by to mentioned different a S&P everyone.

capital return XXXX. Our invested is on increase XX% XX% from an annualized year-to-date, in cash

results one decrease from net quarter a financial and industry and increase in quarter notable, modest modest EBITDA the third idling of marking income in Our fleet. activity adjusted a were the slower despite prior

importance the to profitability, but those our the to service showcase only highlight our leading not results features of customers. also quality of technology and Our reliability, importance

year-over-year and X% the second the from and In a than of fleet Third billion, fewer product mix the quarter. quarter, one history Relative headwinds efficiencies a idling a company, third than record X% sand second quarter, offset increase services to increase and of revenue hours integrated quarter fleet, we more the the highest of with XXXX was the during pump $X.X quarter. the had prior fleet favorable across the in the pump even market of quarters. full

second quarter. totaled increase General $X.XX, for of Fully net decreased X% pretax $X.XX from XX% included prior of the not a $X diluted was the $X interest and repeat. share year, and million per a $X the million. per expenses for the expense sequentially income $XX quarter million the noncash tax Tax second the approximately million after million, decrease the Third G&A $XXX expenses share as of to income. share highlights from and fees modest our buyback third and totaled compensation compares Net prior quarter income the was increase administrative in program which stock-based quarter. benefits miscellaneous did million in year of of and a million associated $XX in represented XX% $XXX from second quarter. quarter quarter net

similar be rate the In approximately expense in we income. taxes for cash quarter, the year. tax effective be XXXX million Cash the XX% and XXXX, rate. full be tax rate of XX% approximately we XX% a the third book tax rate taxes effective of expect for to book $X tax our approximately expect pretax was and We cash expect to year to

quarter, third of the ended year-over-year cash Third flows EBITDA of cash related cash increased quarter debt $XXX million spending maintenance which were under included expenditures of million. $XX Net capital capitalized the with end Cash credit were buybacks digiFleet from of other to expenditures, million quarter. and and availability We including fund million share to million X% second quarter, at of the had a debt the Net quarter and dividends. the million adjusted liquidity construction, costs sales capital the was net $XXX $XXX facility, in balance was projects. decreased $X to of used quarter. Total end $XX $XX quarterly shareholders operations million. $XX $XXX to and the XX% the sequentially by approximately million the million. proceeds for $XX the with asset from $XXX Net We in for from quarter. returns of quarter million million and

and Our advantage capital January share on to as we of components certain fourth expenditures million July a In upsized program, XXXX, XXXX our XXXX remain $XXX repurchase then for in deliver expect we target the take and installed to digiFrac share quarter. prices. respectively, dislocated

X dividend We year also ago. quarterly our reinstated cash

cash quarterly reflecting to conviction per to We dividend generate strong XX% has share cash share ability flow our a $X.XX through quarter, this the free to our to are and our cycles. Board our pleased beginning approved increase

our repurchase third returns program which approximately for our with the shares the million beginning $XX of of total at a of million. to including continue X% shares represents buyback quarter also outstanding the quarter, of in X.X shareholderâ€™s program, We the the

a now X cumulative in to shareholders We the returned million past have $XXX quarters.

and industry-leading to an in flow. reinvesting of differentiate opportunities program cash while continue with return our capital ourselves free high-return We growing

seasonality activity on see we slow on in normal related ahead, American and to QX Looking completions North the impact efficiency. modestly

improving XXXX. our reduced quarter, by and X consolidating expect increase In fleet our our activity planned the We activity with active utilization. modestly fleets fleet, to third count high-efficiency in we

softness quarter, we additional idle demand fourth the in in due any QX not seasonal the of do we to normal XXXX. to expect plan While fleets

margin will As of now a we XXXX even driven outlook expenditures. growth. constructive end and outlook result, the the year and for our capital approximately more to anticipate incremental markets Liberty. by cash XX% a anticipate levels XXXX, from high EBITDA year continued full flow we expansion gas free reaching exceed our efficiency and current year-over-year oil initiatives XXXX of for profitability XX% continued and We In so adjusted will investments, see lower

well call. I have continue We sheet at position strong program, our it a to return differential now end to and continued closing that the operator including after turn investment us of Chris strategic in technologies some for will deliver priorities, back of balance comments the the in years. on will industry-leading will capital Q&A, our which, coming the

Operator

Our Stifel. the begin now will We Instructions] is question from question-and-answer with Stephen session. Gengaro, [Operator first

Stephen Gengaro

for me. things Two

great you're the you and The start any could the level down us range. of to start given hard third the And healthy but a some to not seasonality, just know and quarter quarter? fourth additional there's you on color through would feels at I of first, such a get I I'll it really be give think about kind have fleets more the ask It not how to any laying quarter, the with, this sort is quarters to guidance. guidance a had above year. I good X like mean, you're

Michael Stock

Yes, Stephen.

to guidance, the you where is our we've first very been close. seasonality, in. estimate going plans always, our fourth look X to We efficient we're come very, And if at quarters. through we've customers' as quarter be as want Our with of the best been

you they've to quicker expected. completed maintenance So a things they are bit than as little bit a going of little have would see budget

slowdowns seasonal management with going then as the QX. as see a see holidays again pick we through, little you'll And to so through I up of go year. budget bit think everything maintenance winter, you're go And and in we

Stephen Gengaro

will a any add to that EBITDA. next should flow your feels next capital flow? about think year percentage needs, about cash free think robust And we I can fall how it lead we you of it cash free like pretty think year? as as color spending for CapEx? And then that and on should And plans

Michael Stock

come situation Obviously, goals. balance that sure future. we any We very will continue weather the strong could in up manage for thing with to a stated is that first can very, our we sheet the make

We strong to as high have cash program. we technologies. a for And return very next-generation have you will see, our an of shareholders incredibly very, demand

with Liberty Innovations business interesting We opportunities our Power also business. have some

think I over last continue So we the will invested exactly have way the XX years. with we capital

Stephen Gengaro

for point? any And CapEx on next ballpark at this year

Michael Stock

No.

in give we to give it January like you our do as once you details we as will those call, We a always to year.

Christopher Wright

cash Lots flow. of free

significant agree As Stephen, cash very we you next free said, flow year.

Stephen Gengaro

I Yes. cash like it I strong. free flow the That's feels mean CapEx down comes is and question. pretty why asked

Operator

Read, Roger The question Wells with is next from Fargo.

Roger Read

up. to follow want Just

Chris, cetera. you customers things, of I think, to et more performance, was are the want better obviously efficiency, said One going

the E&P rather discuss, with can want what should us of for company As Can but the service insights typically to you we margins company the right give we here cheapest we any some talk 'XX? mean get.â€ of than single that power, companies, think right in about it we way how they pricing to â€œHey, of also about that pricing? the service is sort think relationship what We think to can as into

Christopher Wright

companies team started, Look, are that power I benefits diesel, in been bid whole cheapest in our same a bunch bids we as always fleets Liberty and and holds not norm who may a from of Liberty. I fleet commodity. say a have I gas we frac this chain we view just of broader line taken wells get And higher? more out you all gas. Today, done a That That versus talk differential norm lower and that of efficiently, efficiency, number wells, to those think about that on faster, norm we if customers is yes, Liberty the both emissions was item, have the our them. X our savings recovery industry. right? others. of on sees fleet it's But slip. shale. only views Well, or the execution a it burn have than pretty would the for between the burning people say And cost X not then cost of exists, a safer, arbitrage that of when the these have methane Well, huge things launched And it go some less design We get amount supply higher a out. when you would even they natural but is lot And is. fleets thermal natural natural maximize and help diesel power our the Liberty how opportunity and this us. cost turbine-driven next-generation but the fleet significant hey, in different now technology, with X rolling that That's to value, better one versus work, are with virtually fleet anymore. gas

cleaner, efficient. just they're cheaper, So more

We're technology XX% it But customers allows So But seeing â€œHey, ultimately, our customers. numbers dialogue like customers for a a our us. a that "Hey, is and win guys always softening. cheaper. for there's market win saying, to have these back-and-forth with be we don't this.â€ are

we So our the we held was long and business do generate And lead trust have can jacked get we our the ton to customers. Could But when I last and tight. our they're when that. of up partnerships That's We with didn't but people Sure, win, our partners with we're Liberty. have. could am still didn't smarter customers new the a more and prices most partnerships little together. long-term the developed. should the bit to stuff of huge better Like nipped and as jump that. market decision-making customers act benefits our work? long-term really our thrives long-term value up say ideas There's term, We relationship partners, the like that efficiency, working have fall then thrilled, innovations, could going our just over in a win, be and achievements, would look, everything not and I there.â€ we they with we over come you this with just that customers. do customers

Roger Read

you, for follow-up A Michael. question

is dividends combination is if that of kind to think about here? think getting up, shareholders, Stephen's repos, we free cash just Or the about return share we think versus to we returns incremental about framework overall there flow the question, As to of as earlier ways is to cash should should shareholders.

Christopher Wright

that's ago in always 'XX we strong we'll a it happen. generate that value been per generation profitability. year Roger. we to that's positioned now always a the time. a bumped and and and downturn, that's cash our that there. compelling sort to just to think know share it always you That's of cash, to year slowly be because we case had history, going there's balance And the of out recalibrating base a basis. small make compelling I'm we you CapEx, because we know Wow. believer or but know going years even what well. as happens. we very demand that's next CapEx, trickier 'XX we and have base generally of there, sure this than with than It's but cash that's biggest never has of look, And tough have. There for the that things, balancing technology-based we're last ability to we've obviously generation again, sort are able have ability will but our then then just modest. do But to Then a compelling A&D very generate critical per going buybacks. the And coming But if it's the the base we're because and there's piece and and go the percent larger new acquisitions been acquisitions. the grow how cash we small to that's on the that. were a ability, plan it, X case. return of much a decision cash year, the we probably the and of it in is Most do sheet piece, that additional tremendous. an steadily structure biggest grew those. invest We share not look, then balance dividend what it to COVID and we're investments And going for is use chunk half most That's have basically downturn greater today, just all the that's not what but I into We're keep top more And company, the that's to massively

So buybacks or don't still There for percent any are to formulaic. look short-term them. thing. you of the dominant not or time swings flow a But cash of a not I It's at us, frames. in quarter. profitability cash think it's should those things on are

So dislocation, Not a if if before, quickly And differential we're And buybacks, going that versus stock it stop take downward, what's on we're the a that. stock have to sure happening. going buybacks aggressive large on the still and our an to you've in price we're to breath window internal I'm just If reflect buybacks caution be. going pounce measured it we and moves intrinsic going more take more as and going longer-term moves is, the If there's value are price value on approach. wider heard our that. quickly. moves but to the upward, to we view be quickly a

Operator

Derek with Barclays. The Podhaizer, next question is from

Derek Podhaizer

want digiFleet. on I ask few a to questions your

the think and you about this versus how How of be of we And talked finally, replacement? fleet, should getting what year-end, high-grades to as X then think about So versus mix you the we digiFrac future end digiFleets going the to January. into And overall incremental do just far your the profitability? about XXXX as by over then do expanding by if how digiPrime? is we that think time? winner the look your And X

Christopher Wright

market the dependent. all, that's replacement versus First additional just of fleet,

year the X. market no horsepower it when shortage of probably I literally between the now. said will balance short was a There's think when we out we ago Look at equipment, marketplace there. talked a be the

state different more just digiPrime a a have it make the together, in digiFleet. equipment. for communicated was on of pumps of those different that change our all like than that fleets a bit There's maintenance -- fleet. and fleets replacement differential. was optimal the themselves of maybe X these cost depending is digiFrac the strategy. So There's to difference we're how a They're Ron we've I'm to different today, compelling replacement going built are or system There's perfectly and no not different and that the here. strengths needs. oldest And equipment, customer between expand we've fleet have you weaknesses The a market just less rolling reason lowest-quality pumps to just upon and frac configure that and little fleet that fleet the

Ron Gusek

think to as technologies. to like these I'd them and in Derek, that Yes, of not loser complementary, a a there's winner going be

remarks, electric so -- So components. for as pump Chris and digiFrac, opening noted us of that in his consists X the

First of all, power generation trailers.

electricity to efficient efficient sure was generation But that deploy location power to to to And included to power us of ground right the all have of from on back ultimately, generation effort as power table. up able power a then So that to benefits allowed available cylinder that with and electric customers extent customers that this. around pair we the as build itself we us part design ground-up with to the low pump capitally generation That to recognition energy. we of through make the into a to a then whole brings for grid our pump most are design fit-for-purpose Rolls-Royce deployment turns out generator. mechanical a amount the the electric And of adapt electric that we, began that system. incoming the had going think XX again, natural gas was that be of an engine around that needs our a driving could, we match to working in side host that both innovation to and to that the conversations deliver us was was grid not digiFrac emissions the modular use power to there X-year

more were system mechanical We back us yet, had that. conversion electrical to that say led and we further mechanical. efficient opportunity losses that recognize an energy the are we to There opportunity. so remove to this to make with of had from associated going And which is to to

more led you And a same as gas that's result, so modest accomplish little amount a And burn to to and more the have emissions a what digiPrime. thing.

in remove take So a a that efficient, that directly mechanism. same to profile incredibly find and conversion natural emissions lowest industry you digiPrime that pump. attach gas We just transmission engine, can and the

speed the on engine. a that Now only. there is speed digiPrime limitation is constant speed a and runs on engine in to It at

ability have that to change when you're that have, a ability fine-tuning with you want some rate version digiFrac, high-pressure but so get the against frac with amount the gears, limitations when get want to We don't might adjustment in that in of digiPrime. have working up have the electric that of We really the We we you pump. micro we control, that rate. some

so a X you'll call digiFleet. technologies see And these we'll together work as what different

not to so partner on function the And in of using it's going grid technologies operator, location to be ratio a ultimately power. this of X of our is going the a whether anticipates be X the those or combination our and different customer,

on expect digiPrime the XX we pumps on the X majority couple pumps, might have consist grid power, that partner to who of then then fine-tuning. of to power extent going and And is a megawatts E&P the access an have have won't to we to or electricity. access you of some that electric to location, extent digiFleet So grid digiFrac should to have top for we

that's depending we that to are little to is But at industry. end customer fleet-by-fleet, going in in going our of digiPrime the the vary see percentage find consumption the that.So you higher, and think emissions by to ultimately, lowest customer going we'll can lowest day, technology about to an situation the the electric the less that we unrivaled digiFrac, up forward. customer, You're It's with pump creep on field. and going deliver the fleet we'll how find fuel the a have profile of that on

Derek Podhaizer

on LPI, spend I cycle. you for is I should recent question, to Or integration scale it's that the call, maturing for time acquisition, how about define continue Second that Can third agree maybe your as the you know but it profitability a fleet? so quarter? being you think know winners a out a lever we it opening across I and going shale how in to it impactful XXXX about talked was some

Christopher Wright

service Look, us Yes. very there's today, with in that's the down of how gas, there's to of Liberty we solve options If that spotty. our to not of look quality historical at lot line natural other holding something delivered quality integration. a vertical it's of problem. get service, on-site is And the that slowing and back, delivery

it's Sometimes fine.

Sometimes it's enough gas. not

there's Sometimes but up that of can pumps, hook all some to the not manifolds pumps. the

these of hold natural just All things diesel. the of substitution gas into back

problem So blend fleets use a the that's or and we done of going via gas robust make gas, own CNG. of option, into site If process X if decided the there's that. hands, can that reliable, our gas out have technologies our taking process we to delivery. And We we're we're just that is gas and right all field sure to together. on pipeline have CNG to

stepping for it's It's the decided years just natural the back, been on source likely gas next XX be fastest-growing energy critical. will so the planet the has and we for XX years. look So and last is

So power gas. fleets. absolutely efficient many we of abundance for natural emissions, future cost, natural reasons, about specific using that application here talking gas are the Which frac of to is

get without just diesel, burn that don't more been. have you We're gas, dual Now a gas, delivery run, we're if need. our want natural they still expertise emissions should gas-powered run, moving to natural expensive, fleets, we higher also don't build starting pipelines, to more gas -- we than call them they of that you you and with virtual fleets, where digiFleets frac fuel

our process LPI generation, ahead, power having frac field. we're we're natural So thermal and and it's gas applications We're or to first building power of mobile expertise in on other move people's wheels rigs, is needed. other course, And gas there wherever deliver ultimately, Liberty needed natural to generating natural other at But however how the the to remotely to that. a expertise it's generating generating and gas on-site fleets. you highest efficiency to look oilfield in it's as There's also, is supply operations what expertise in. going

our grid XX% electricity of U.S. electricity and gas we driving natural So our prices generation. And are unfortunately, sadly, is but down. stability up grid

power going deploying is in generation only grow expertise and natural remote gas to So value. moving, in

Operator

question Luke is Piper The next Sandler. from with Lemoine,

Luke Lemoine

on And now guess, initiative since seems has been digi specifically field whole The the extremely of going well. September. months like a latest in I in it's was the just digiPrime, this a end ago few

But you've on maybe about feedback technology location? having talk maybe favorite being further and well on just little it you could well about this site. as customer's learned guys a live the the a You what about talked

Ron Gusek

day can, Luke. has Sure, been positive extremely Yes. since Feedback X.

not customers X DGB. of So to seeing terms talking only our team imagine Tier for our a they're is relative you X here. really to about power operations for but step in basically that's have forward We're what pretty what big density X also

replacing pump X single X in X those out XX this weâ€™re would gas hours So DGB got you barrels combined. delivering optimize goes a at less pressure-dependent, it's is burning day of see those, day engine, she out, on or but than minute. digiPrime XX a so, effectively substitution a doing day pumps maybe X so. obviously, there, pump delivering to Tier and have as that We've steady a barrels might minute a And

the So delivering the reduce remove and consumption, diesel and we're twice the gas rate.

control step with So forward. pump fully integrated an it truly is incredible platform. It's our

out goes, on it day been just steady plant has it as seamless there, operations she you it think our is it delivering once nuclear since could put we in like running, so our operation. team it and grid, out its is of And it up there. and out to is a day in But and power

and them that location. to some first The for of extremely customer cannot out more on is wait see excited

Luke Lemoine

I Chris, basins. year you early of disclose later and couple in And know then, in don't a but this Permian the next these or digi different want the remaining to customers, deployments

Christopher Wright

Starting is the in basins. biggest of basin. different a Permian couple

and certainly is in DG the digi basins, room got basins deploy the the basins. big be X running it. we've the grow got We've decide, X but will in majority of in questions the just one more basins. course, year, deployment timing Permian. to That's next than of But end year-end, So right X by requests to several those we'll our right and much be that at into of to to pull partners, continue of

Operator

The next question is ATB from Markets. with Waqar Capital Syed,

Waqar Syed

congrats on And on in how all, first active the were digiFleets quarter. during many like quarter is a average? question great QX of the results, My

Christopher Wright

estimate. close. weeds feather these digi. It's But the running feather across -- just we probably key Probably a in is running only originally, that the that into pumps a existing in things. to have fleet fleets recently X we It's reasonable we the like multiple one in X entirely keeps only That's in fleets. of data more fleets. more this technology. are The

Waqar Syed

And on margins these margin the other to the digiFleets, so get fleet? entirely when running would you those be start the that you accretive on

Christopher Wright

a are. digital our diesel displacement, to They a there's cost lower higher There's solution. customers and technology

yes, that well benefiting customer. our So Liberty as as benefits

Waqar Syed

in or EBITDA changes. XX.X% so else nothing margin. saw This QX, year, record margin that we high

QX higher next running margin higher QX be than year? could in You that or

Christopher Wright

job it self-improvement Liberty. It's that's we in absolutely internal possible Waqar. And the call

profitability efficiently more delivering where flat, a is market by have growing by things doing technologies. better, growing. be is the if We position our doing things by We're in to premium always

years, Liberty's market next for to the continue So the stayed yes, grow through if years, profitability X flat with absolutely. those X

Waqar Syed

that modestly higher right now So XXXX be saying could you're activity.

given you'll margins. contributing LPI translate XXXX? How Liberty's that that with be digiFleets higher see have EBITDA XXXX into on running do of we or when you EBITDA, could So more EBITDA, these that profitability given versus

Christopher Wright

much their last how of have does market market our And is what that. second profitability, does that a But think is can do, factor in have the market, in drivers the again, always how offset in soften? point X flat? the that market control But swings market as a in seen question what's Or stay on certainly strive is marketplace. flat you've that. does absolutely. it factor quarters, to actually or gradually flat softening self-improvement But I the I it think can. is we going rise. don't the in Look, is and market strengthen, bigger it that conditions, well will the But a we over much Waqar But will we taken increased the

You the conditions lower been to the next feeling than the market likely last in that years. that few years is be in it's in in the volatility get few

Operator

with JPMorgan. Arun from is Jayaram, question Next

Arun Jayaram

cited, recent Permian of in recovery thesis is Exxon's Chris, key to factors. start And of come synergies the Pioneer. the maybe resource and picture expected to X/X consolidation with I higher Exxon significantly raise bigger some with a wanted Basin seen they kind to factors, question. from We've and

So frac. by a driven lot of that is

in X your that a thoughts your would the maybe X, ability ability I recovery the for factors, of heard of factors your to So recently ability on some get raise get industry economics to wanted I to wells, I completion increase if kind and producers wanted which to and to have thoughts improve Tier implications we have on business? think recovery you of design. positive touting Tier new can the the And more

Christopher Wright

Yes.

the extreme limited first of maybe is has and was recovery. area. underground each Liberty say, of story revolution we continual of within publisher an this to get early shale more the design certainly that contact plumbing this frac the look, to mover So got certainly We been fracs stage innovation, entry. increase more

seen in So continual productivity. a recovery ultimately there up march innovation, well really in shale we've factors

slightly Now of last the years incremental masked quality this probably is recovery improvement what's over have been And drilled. location average being X that. offset then a of improvement, declining

per beginning, Towards the have foot. increasing slowly recoveries

anymore in the quality is in increases improvement generally are because average decrease not technology. Now happening rock this slightly outrunning overall those incremental

a is tremendous Exxon powerhouse. technological look, Now

game-changing are are views some more efforts, more their wouldn't bet ideas Exxon. recovery. have work for how investigating -- on Exxon a of recovery. if on We I So with some partners or to incremental, change than incremental maybe testing lot against

changes. bigger And be your next the could lot is forward picture question for industry in a there question few years. moving yes, a recovery is Exxon. in continue on. some going incremental But things will some technological obviously, exciting our really to. and continued to will will and of yes, So improvement see be that But from going wells some Yes, bigger be you're

Arun Jayaram

a sense we frac characterize if in I are having was gears balance season, us around to quite of talking a maybe last around bit. you the with tone operators year maybe the a was year XXXX how play pricing discussions, and tighter? supply/demand Chris, E&P will needs. wondering could shifting when little think my of And those give coverage you out discussions bit RFP this obviously, versus

Christopher Wright

our of in So We said, of bids submit I customers. wake whole and and we're ship ago market of Did Yes, next fleet composition? absolutely. look, continue That's Might been they where with to fleets. market continuing work our the what's bad business conditions Generally, December and to We existing in to up bigger marketplace all way Absolutely. on with Almost than don't we our as not. then Absolutely never and again, XX year. is Absolutely. dialogues their who condition find But a our months going partners, customers. reasonable responses Do is ones RFP? much existing are they the the to those are that. business for to less today, generally with Liberty be one-on-one stronger our our today? bunch going Absolutely. out works. what market tend get checks? work about have dialogues with working

of deliver steel down. going of is cost sand driving going price thought The technology Liberty pricing. frac As going you down. example. How isn't we to down down. design? together That's The results we price and change the can of pumping, we needed with How plugs Hey, that that How can our see design? innovations. well a well we is do are price the can about drive sand How our we're of line we right There's a Most partners. our out with item people with efficiently? much can change we It's so chemical more what and faster? where customers tubers we the costs. dialogue swap move want Does some down. can cheaper

So win, dedicated how market, Yes. we idle look, get as for is so dialogue broader of but is in white on of more it's price, but now efficient we like spot surplus and No. they improve bit always is both our black is of equipment? our look, And They're that? a soft little fleets, do is huge a stuff, But a dialogue there it and right the quality that, around kind of lose. this there not the economics.

I pricing will So XX hasn't a to continue a XX moved next lot think going over guess. move over to That's be probably not the boring. lot the last months It relatively probably and months. my

Operator

question Sachs. with Goldman next Mehta, Neil The from is

Neil Mehta

topic of the I Chris, macro. to And on want the stay

I think you've will into Is fleets about rig said feed that you demand X-quarter view signs are demand approximately expect as to for as well. that you counts showing some your so, if of at lag. how a still is rig stabilization, thinking that that frac recent count, your the parallel which the thinking? views but And around

Christopher Wright

Yes.

hear and no obviously customers, we secret. it's For do what from our

bottoming rig now. probably is think count I

rig economics our low see Drilling modestly. shale probably it's to the grow over plans XX quite to slower, new the disciplined in People too oil. industry, are in their deflate going ones. going good Privates you're much much. think reactive are more grow are much But next for Public today boring are months. more to change count I investments. X

have signals. going increase waiting Gas the to Natural people for to market we firmed in gas, Absolutely. are little in So But a more see going activity I we're an think there. see private growth bit. activity, right are wisely prices

demand Let's after Huge what years that through LNG the does. capacity. new couple of from next the starting see export late year winter

starts maybe is a be upward a in slow in definitely But gas that. in little than activity. rising low, probably and sooner pretty So winter gas, going private public the it But yes, steady. are and see bit upward and frac, warm QX. some be bit QX, could If that in could momentum little momentum of of little oil for a bit to

Neil Mehta

discipline What we've U.S. consolidation customer. industry. has ability macro, the softening the of meant We've on in the to market? of to pricing about in consolidation length staying hold that sort a for and your seen also frac And your talked

Christopher Wright

time It's a longer-term nature, absolutely helpful. The big companies have just by horizon.

generate the that they nothing. for get acquired bought they a they frac company a retire They spent and assets may get they my make equipment, just gross money acquired if if bigger And game. park in gosh, But They're them those So out they small that long struggling. to positive fleet fleet, buy margin, those company, by the already if there just assets. some they playing it's a those them. be

time So a longer-term more disciplined going horizon. more be they're with intelligently, managed just to and

and improvement, wants bigger it's commercial drive see. has So more absolutely, to the technology whole try invest few companies those and disciplined to arrangements, I disciplined the to future investment, think consolidation industry to in led more allowed the

Operator

is Marc next with The Cowen. from question Bianchi, TD

Marc Bianchi

for implied pricing guidance of boring, guess as year to pricing I I levels. like back quarter, all customer quarter guidance mean sounds EBITDA like budget on fourth seem decline is Would kind fourth your exhaustion. would another third is the first should quarter your it be with by the It commentary. to and one you say, for get quarter that? able agree you the

Michael Stock

market, quarter detail Obviously, But mean, have we your compared a the your some if had general, to effect quarters. don't upcoming. for guide weather in flat I first does summer quarter in you

is your slightly if a next your this had than total. to dead lower better where flat summer year going So slightly be quarters, than quarter in you think again, be would But but we that's first year are. market, I

Marc Bianchi

maybe of is to What supplying and spending third that Power perhaps the parties? supply XXXX anticipating we innovation. The own how the think on fleet And about over other versus was kind should efforts Liberty to your one in you're beyond?

Michael Stock

the do year our be party fleets. spending market But of will probably to usage exciting we'll our the as forward. first an the of rollout growth initial supporting third-party sort business, majority about they natural talk again, digi and point. bulk fleets and about our talk we'll our look call, have we more the So a of going in in support vast January our -- It's rest that worth it at the this be our of yearsâ€™ the, improvements deliveries will and of across we some in third LPI X.X here, gas but and expansion to

Marc Bianchi

to for people? Any early around spending set the maybe expectations bookends some just

Michael Stock

in No, chat about that January. put we'll

the best that's at Marc. that one, to think I way look

Operator

The Keith next question is from with RBC MacKey, Capital Markets.

Keith MacKey

Just fleet little or the contracts. on to follow digi bit up wanted electric a

contracts. Some those market as type talked in multiyear take-or-pay the being of have about sort

digiFleet, about the more learned if As multiyear those? with what of structure not, the of contract in agree you you fold so, And how the generally contract? for if contract Would the evolving? you structure have is type

Christopher Wright

that's deploy you're new if deploy capital, build equipment. existing new Look, going than fleet, to different a

So yes, those are multiyear agreements.

Keith MacKey

what if about maybe little the like well we example, buffer completion demand for But sand demand roughly other a And seeing trends could maybe intensity, come Permian, overall? sand Or off sand just a as count? you're on with seeing in talk commensurate levels. Things bit of are is have the peak for higher you market. acting

Michael Stock

Yes.

way aligned it's relatively think overall, count. well good about completion certainly, certainly think a to I with things. That's

of in the We a sand continue well. to in see movement pumped amount

current have We experimenting design. to are continue operators alternatives who to with

absolutely high level, about right you're the at But just implication. modest some well volume consumed. have it to thinking will that so And count

Operator

The Morgan next question Stanley. with is Dan from Kutz,

Daniel Kutz

to line broaden that a piggyback Maybe last little on but of out questioning, just it bit.

been of like of wireline, just So outside PropX, moving LPI, could what if the benefits appreciating on and you frac you business. earnings seen you've driver of you or that with anything moving on were and for of the outside could isolate kind earnings just the and of in integration, some also other a comment STX the comment LPI in there? that those of businesses, those directionally, other that overall consistent and vertical little sand frac businesses whether bit But maybe terms lower just to trends have

Christopher Wright

you Look, a made comment. key

they like I'll in isolate, we're Liberty a frac good businesses to more make our system the core own business work better. and those crew them have in crew we You right, that. wants more are we those When But their meaningfully have Liberty a they downtime could wireline. businesses Liberty They have because third-party any yes, frac businesses are if when isolate we actually lower fleet, see we comment wireline Michael, never on than because we in on he whole because efficiently. a a make

I service our mentioned in ranked customer quality. is number and the and release, look, we wireline now think So -- X it's by

deliver to add more in faster So and makes makes even its business Liberty and you right, a that own want to our wireline anything to but It customers the better. us. results efficiently, and that? operate good profitability better that whole Michael, frac on

Michael Stock

they're are and leaders. amount businesses leaders incredible business on those there's at And and across teams of And traveling all of decent about the between The focusing doing our say pace all line, neck say would business racing all neck, right? very, those very an same job. moment, the well. a I They're do the competition and kind I'd of

Daniel Kutz

slug. And then -- year continue the list. whether this out of or just ABL you in decent sized term guys third of the that knocking down terms a if just you that think pay chip the debt of balance there's off I know a how in you maybe there's the in to out big potential share you the you'll paid and knocked on priority wondering quarter. the anything the capital ranks for maybe revolver if just loan kind question chunk third of But earlier a away at in then ABL guys could

kind relative buybacks? Just capital stack that this to does and of in the CapEx priority how

Michael Stock

where this debt in are time. they very have with very, we're levels small at We leverage, very so present point net comfortable

ABL in So really floats capital our of given our quarter. with uses that -- level other

Operator

America. is of question next Pant, with Saurabh from Bank The

Saurabh Pant

I a guess over there's of side. with I'll bit digi Because demand color clearly, on there. start more strong little the

meet all you there. to by fleet disciplined in I'm that. a you of demand of be the CapEx mind not look right? much every to demand you mind, structure characterize were your there right, How sure and the trying you do demand. out the the trying at just out think How point, when out there, January. contract your the at to X you the sure right? by demand end if keep you're be that? Do be more is theory, right demand But how not end you You'd of year, just need keep might returns there I'm to potential see to need about would customers, I'm sent fixed that's

Christopher Wright

actually years uptime, burning services and higher with the I customers' top been Weâ€™ve gigantic, look, mean, of about. from all longer have frac the we quality right? natural higher demand fleets rank highest lifetimes, emission, been the the deliver. Think likely is lowest company performance. running, gas And X efficiency, now we've the we

look, there's yes, no the for So right? the it's that, cap on a us interest decision. in So always partnership question is

of to We partners lot. individually them that. been do XX have that could and that, for for. tomorrow. to will put built on wouldn't them remain We and have We be partners never under we a Like specific going work specific conditions customers do they're

Saurabh Pant

Right.

way there that a don't right that all Now demand, lot of again, to bad And not we makes sense because work. is do the right? to want satisfy you know points the that's

that. So I get

Just a quick follow-up.

that on how RFP that. question is Just going? asked on Arun think the follow-up a I a question season,

think Are have the of XXXX within resets you you terms differently quickly that right the that about about when for duration what XXXX? in contracting pricing In your now think portfolio how versus of thinking contract. you how you about contract,

Christopher Wright

Not long they general, builds, they last have year, different this customer new the a of in continue of makeup. term little Again, change no, we of year Liberty No. no, have customer But partnership base. than that and mindset a existing sort no sort and in just bit. structures lot different

Saurabh Pant

last And Awesome. just then just a clarification. Okay. one one, quick

that I question. Marc asked think

to EBITDA to than I slightly XXXX. you expect be I better that next think, comment? want Michael, be that. sure you just Was to of an said this year that year

Michael Stock

a be general expectation. That would

Operator

Daniel, John from question next is Energy. Daniel The with

John Daniel

just we I guess labor 'XX? concerns supply any the or chain head first as into one is

Christopher Wright

year that challenges a look No. ago don't big Those be months today. XX ago, to and were challenges

John Daniel

Got should then it. of cash market does And flow have free you a because Chris, boring your mature strategy how acquisition next year? the influence lot

Christopher Wright

uses. for I mean, competing just cash outlook yes, free flow, our it's and is of lot a

acquisitions yes, are certainly So possibility. a

is not highly compelling. if acquisitive, You've seen Sure. but we're something

John Daniel

Or And initial going higher the when the quality see operators all larger more any this the you for and Digi customers, technology? At the rollouts I possibly assuming guess forward? you're and to one inquiring do of learn the point, moving those Technology to you me. of E&P about I'm last if will. are smaller wishing folks

Christopher Wright

down are it. for up To they've just to or Absolutely. really X long have And do your fired of privates, a years It for something clear to They're that got X going gets plan deal about got the runway, right? to a what of you've bigger that. like next that, some pretty unfold.

deployment years that not away. So interest is as in yes, the to quite well. be not right, original yes, large you're that's But But is going the there sector.

Operator

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

Christopher Wright

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Operator

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

disconnect. now may You

Liberty Energy (LBRT) 19 Oct 232023 Q3 Earnings call transcript