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Liberty Oilfield Services Inc. Announces Fourth Quarter and Full Year 2017 Financial and Operational Results
DENVER, CO–(BUSINESS WIRE)–Liberty Oilfield Services Inc. (NYSE: LBRT; “Liberty”) announced today
fourth quarter and year ended December 31, 2017 financial and
operational results.
Summary Results and Highlights
-
Revenue of $1,490 million and net income of $169 million for the year
ended December 31, 2017 -
Adjusted EBITDA of $281 million and adjusted EBITDA per average active
fleet of $18.6 million for the year ended December 31, 20171 -
Revenue of $449 million and net income of $58 million for the fourth
quarter of 2017 -
Adjusted EBITDA of $92 million and annualized adjusted EBITDA per
average active fleet of $20.2 million for the fourth quarter of 20171
Message from Chris Wright, CEO
“We are proud of our fourth quarter and full year 2017 results. We
continue to execute on our strategy of driving differential financial
results through technology focused, long-term customer partnerships.
“Over the course of 2017, we nearly doubled our fleet count, expanded
our presence in the Permian, entered the Eagle Ford, and added over
1,000 new team members to the Liberty family. We did this all while
generating industry-leading returns and earnings per fleet.
“We are excited as we move into 2018. Although we experienced some
impediments to throughput in the first quarter arising from extreme and
unusual weather, strong demand for our differential frac services
coupled with supportive commodity prices and drilling activity leave us
confident in our expectations for the full year.”
Fleet Deployment Update
During the first quarter of 2018, Liberty deployed fleets 20 and 21
under dedicated arrangements with existing customers. As previously
announced, Liberty expects to deploy fleet 22 on a dedicated basis at
the end of the second quarter of 2018. In addition, based on ongoing
discussions with customers and a positive long-term view on the current
cycle, Liberty has placed orders for two additional customer-dedicated
fleets to be delivered in the third and fourth quarters of 2018.
Fourth Quarter and Full Year 2017 Results
Liberty completed its initial public offering of 14,640,755 shares of
its Class A common stock at a price of $17.00 per share on January 17,
2018. Liberty's pre-IPO predecessor companies, Liberty Oilfield Services
LLC and LOS Acquisition CO I LLC and its subsidiaries (collectively
"Liberty Predecessor"), were not subject to U.S. federal income tax at
an entity level. As a result, the combined net income in the historical
financial statements of Liberty Predecessor (including the year ended
December 31, 2017 and the fourth quarter of 2017) does not reflect
income tax expense. The following numbers have been adjusted to reflect
what the income tax expense and resulting net income would have been had
Liberty been a public company for the year ended December 31, 2017.
For the year ended December 31, 2017, pro forma net income totaled $130
million and generated pro forma diluted earnings of $0.88 per share.
Revenue for the year ended December 31, 2017 totaled $1,490 million and
generated adjusted EBITDA of $281 million. Liberty averaged 15.1 average
active fleets during 2017. Adjusted EBITDA per average active fleet
averaged $18.6 million for 2017. For the year ended December 31, 2017
the pre-tax return on capital employed (“ROCE”) was 35%. Please refer to
the reconciliation of adjusted EBITDA (a non-GAAP measure) to net income
(a GAAP measure) and the calculation of ROCE in this release.
For the fourth quarter of 2017, pro forma net income totaled $45
million, compared to $49 million in the third quarter. Pro forma diluted
earnings per share totaled $0.30 in the fourth quarter of 2017, compared
to $0.33 in the third quarter.
Adjusted EBITDA for the fourth quarter of 2017 totaled $92 million,
compared to $94 million in the third quarter. Annualized adjusted EBITDA
per average active fleet averaged $20.2 million in the fourth quarter of
2017, versus $22.3 million per fleet in the third quarter. Please refer
to the reconciliation of adjusted EBITDA (a non-GAAP measure) to net
income (a GAAP measure) in this release.
In 2017, fourth quarter revenue grew to $449 million, compared to $442
million in the third quarter.
Balance Sheet and IPO Proceeds
As of December 31, 2017, Liberty had cash on hand of $16 million and
total debt of $196 million, net of discount. On January 17, 2018,
Liberty completed its initial public offering of 14,640,755 shares of
its Class A common stock at a price of $17.00 per share. Net proceeds to
Liberty totaled approximately $220.4 million, which were used to repay
borrowings and accrued interest under our ABL credit facility ($30.1
million), pay off a portion of our term loan and accrued interest ($62.5
million), redeem interests held by certain of our pre-IPO investors
($25.9 million) and for general corporate purposes. Pro forma for the
initial public offering, Liberty’s cash balance at December 31, 2017
would have been $118 million and total debt would have been $107
million, net of discount.
Conference Call
Liberty will host a conference call to discuss the results at 8:00 a.m.
Mountain Time (10:00 a.m. Eastern Time) on Tuesday, March 13, 2018.
Presenting Liberty’s results will be Chris Wright, Chief Executive
Officer, Ron Gusek, President, and Michael Stock, Chief Financial
Officer.
Individuals wishing to participate in the conference call should dial
(866) 807-9684, or for international callers (412) 317-5415.
Participants should ask to join Liberty's call. A live webcast will be
available at http://investors.libertyfrac.com.
The webcast can be accessed for 90 days following the call. A telephone
replay will be available shortly after the call and can be accessed by
dialing (877) 344-7529, or for international callers (412) 317-0088. The
passcode for the replay is 10117847. The replay will be available until
March 20, 2018.
About Liberty
Liberty is an independent provider of hydraulic fracturing services to
onshore oil and natural gas exploration and production companies in
North America. Liberty was founded in 2011 with a relentless focus on
improving tight-oil completions, and an emphasis on customer
partnerships and technology to find innovative answers to frac
optimization. Liberty is headquartered in Denver, Colorado. For more
information about Liberty, please contact Investor Relations at [email protected].
Non-GAAP Financial Measures
This press release includes unaudited non-GAAP financial and
operational measures, including EBITDA, Adjusted EBITDA and ROCE. We
believe that the presentation of these non-GAAP financial and
operational measures provides useful information about our financial
performance and results of operations. Non-GAAP financial and
operational measures do not have any standardized meaning and are
therefore unlikely to be comparable to similar measures presented by
other companies. The presentation of non-GAAP financial and
operational measures is not intended to be a substitute for, and should
not be considered in isolation from, the financial measures reported in
accordance with U.S. GAAP. See the tables entitled
“Reconciliation and Calculation of Non-GAAP Financial and Operational
Measures” for a reconciliation or calculation of the non-GAAP financial
or operational measures to the most directly comparable GAAP measure.
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, included herein
concerning, among other things, the deployment of fleets in the future,
planned capital expenditures, future cash flows and borrowings, pursuit
of potential acquisition opportunities, our financial position, business
strategy and objectives for future operations, are forward-looking
statements. These forward-looking statements are identified by
their use of terms and phrases such as “may,” “expect,” “estimate,”
“project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,”
“will,” “continue,” “potential,” “should,” “could,” and similar terms
and phrases. Although we believe that the expectations reflected
in these forward-looking statements are reasonable, they do involve
certain assumptions, risks and uncertainties. These
forward-looking statements represent our expectations or beliefs
concerning future events, and it is possible that the results described
in this press release will not be achieved. These forward-looking
statements are subject to certain risks, uncertainties and assumptions
identified above or as disclosed from time to time in Liberty's filings
with the Securities and Exchange Commission. As a result of these
factors, actual results may differ materially from those indicated or
implied by such forward-looking statements.
Any forward-looking statement speaks only as of the date on which it
is made, and, except as required by law, we do not undertake any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. New
factors emerge from time to time, and it is not possible for us to
predict all such factors. When considering these forward-looking
statements, you should keep in mind the risk factors and other
cautionary statements in the “Risk Factors” section of the prospectus we
filed with the SEC on January 16, 2018 and in our other public filings.
These and other factors could cause our actual results to differ
materially from those contained in any forward-looking statements.
| 1 |
“Adjusted EBITDA” is not presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Please see the supplemental financial information in the table under “Reconciliation of Net Income to EBITDA and Adjusted EBITDA” at the end of this earnings release for a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to its most directly comparable GAAP financial measure. |
| Liberty Predecessor | |||||||||
|
Selected Financial Data |
|||||||||
|
(unaudited) |
|||||||||
| Year Ended | Three Months Ended | ||||||||
| December 31, | December 31, | September 30, | |||||||
| 2017 | 2016 | 2017 | 2017 | ||||||
|
(In thousands, except for share and per share data, and fleets) |
|||||||||
| Statement of Operations Data: | |||||||||
| Revenue | $ | 1,489,855 | $ | 374,773 | $ | 448,883 | $ | 441,853 | |
|
Costs of services, excluding depreciation and amortization shown separately |
1,147,008 | 354,729 | 339,315 | 328,434 | |||||
| General and administrative | 80,089 | 35,789 | 20,738 | 22,245 | |||||
| Depreciation and amortization | 81,473 | 41,362 | 25,642 | 24,164 | |||||
| (Gain) loss on disposal of assets | 148 | (2,673 | ) | 160 | 21 | ||||
| Total operating expenses | 1,308,718 | 429,207 | 385,855 | 374,864 | |||||
| Operating income (loss) | 181,137 | (54,434 | ) | 63,028 | 66,989 | ||||
| Interest expense, net | (12,636 | ) | (6,126 | ) | (5,347 | ) | (3,326 | ) | |
| Net income (loss) | $ | 168,501 | $ | (60,560 | ) | $ | 57,681 | $ | 63,663 |
| Pro Forma Income Tax and Net Income (1) (unaudited) | |||||||||
| Pro forma tax expense (benefit) | $ | 38,149 | $ | (13,138 | ) | $ | 13,061 | $ | 14,416 |
| Pro forma net income (loss) | $ | 130,352 | $ | (47,422 | ) | $ | 44,620 | $ | 49,247 |
| Pre tax income (loss) attributable to noncontrolling interests | $ | 68,782 | $ | (24,634 | ) | $ | 23,540 | $ | 25,980 |
| Pro forma tax expense attributable to noncontrolling interests | — | — | — | — | |||||
| Pro forma net income (loss) attributable to noncontrolling interests | $ | 68,782 | $ | (24,634 | ) | $ | 23,540 | $ | 25,980 |
| Pre tax income (loss) attributable to Liberty Inc. | $ | 99,719 | $ | (35,926 | ) | $ | 34,141 | $ | 37,683 |
| Pro forma tax expense (benefit) attributable to Liberty Inc. | 38,149 | (13,138 | ) | 13,061 | 14,416 | ||||
| Pro forma net income (loss) attributable to Liberty Inc. | $ | 61,570 | $ | (22,788 | ) | $ | 21,080 | $ | 23,267 |
| Pro Forma per Share Data (2) (unaudited) | |||||||||
| Pro forma net income (loss) per share | |||||||||
| Basic | $ | 0.90 | $ | (0.34 | ) | $ | 0.31 | $ | 0.34 |
| Diluted | $ | 0.88 | $ | (0.34 | ) | $ | 0.30 | $ | 0.33 |
| Pro forma weighted average shares outstanding | |||||||||
| Basic | 68,729,523 | 67,794,887 | 68,729,523 |
68,433,773 |
|||||
| Diluted | 117,713,945 | 67,794,887 | 117,713,945 | 117,600,802 | |||||
| Other Financial and Operational Data (unaudited) | |||||||||
| Capital expenditures | $ | 300,793 | $ | 102,428 | $ | 60,255 | $ | 35,387 | |
| EBITDA (3) | $ | 262,610 | $ | (13,072 | ) | $ | 88,670 | $ | 91,153 |
| Adjusted EBITDA (3) | $ | 280,728 | $ | (5,588 | ) | $ | 91,753 | $ | 93,745 |
| Total Fleets at beginning of period (4) | 10.0 | 6.0 | 17.0 | 16.0 | |||||
| Total Fleets at end of period (4) | 19.0 | 10.0 | 19.0 | 17.0 | |||||
| Average Active Fleets (5) | 15.1 | 7.4 | 18.0 | 16.7 | |||||
| Annualized Adjusted EBITDA per Average Active Fleet (6) | $ | 18,591 | $ | (755 | ) | $ | 20,223 | $ | 22,271 |
|
______________ |
|
| (1) |
Pro forma net income attributable to Liberty reflects the income tax effects of the corporate reorganization associated with our initial public offering as if such reorganization had occurred at the beginning of the period presented. Liberty Predecessor is not subject to U.S. federal income tax. As a result, the combined net income in the historical financial statements of Liberty Predecessor does not reflect the tax expense we would have incurred if we were subject to U.S. federal income tax during such periods. While Liberty is a corporation and is subject to U.S. federal income tax, such pro forma tax expense (benefit) is only reflected on the portion of pre tax income attributable to stockholders of Liberty and is estimated at 38.3% based on the federal and state rates in effect at December 31, 2017 (estimated to be 24.3% effective January 1, 2018 as result of recently enacted tax legislation). Accordingly, no pro forma tax expense (benefit) is reflected for noncontrolling interests which are not consolidated into Liberty's tax return until and unless such noncontrolling interests are redeemed and exchanged for Liberty Class A common stock. |
| (2) |
Pro forma net income (loss) per share, basic, and weighted average |
| For the year ended December 31, 2017 | ||||||
| (unaudited, amounts in thousands) | ||||||
|
Attributable to Liberty |
Pro forma effect of |
Attributable to Liberty |
||||
| Net income | $ | 99,719 | $ | 68,782 | $ | 168,501 |
| Pro forma tax expense | 38,149 | 26,314 | 64,463 | |||
| Pro forma net income | $ | 61,570 | $ | 42,468 | $ | 104,038 |
| (3) |
EBITDA and Adjusted EBITDA are non-GAAP financial measures. See the tables entitled "Reconciliation and Calculation of Non-GAAP Financial and Operational Measures" below. |
| (4) |
Total Fleets represents the number of deployed and active fleets as of the designated date. |
| (5) |
Average Active Fleets is calculated as the daily average of the number of active fleets for the period presented. |
| (6) |
Annualized Adjusted EBITDA per Average Active Fleet is calculated as Adjusted EBITDA for the year, or for the respective quarter annualized, divided by the Average Active Fleets, as defined above. |
| Liberty Predecessor | ||||
| Condensed Combined Balance Sheets | ||||
| (unaudited, amounts in thousands) | ||||
| December 31, | ||||
| 2017 | 2016 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 16,321 | $ | 11,484 |
| Accounts receivable and unbilled revenue | 258,788 | 128,560 | ||
| Inventories | 55,524 | 28,144 | ||
| Prepaids and other current assets | 21,396 | 5,903 | ||
| Total current assets | 352,029 | 174,091 | ||
| Property and equipment, net | 494,776 | 277,355 | ||
| Other assets | 5,298 | 399 | ||
| Total assets | $ | 852,103 | $ | 451,845 |
| Liabilities and Member Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 66,846 | $ | 42,862 |
| Accrued liabilities | 153,648 | 76,087 | ||
|
Current portion of long-term debt and capital lease obligations, net of discount |
11 | 12,846 | ||
| Total current liabilities | 220,505 | 131,795 | ||
| Long-term debt, net of discount | 196,346 | 91,078 | ||
| Total liabilities | 416,851 | 222,873 | ||
| Redeemable common units | 42,486 | — | ||
| Member equity | 392,766 | 228,972 | ||
| Total liabilities and member equity | $ | 852,103 | $ | 451,845 |
| Liberty Predecessor | |||||||||
|
Reconciliation and Calculation of Non-GAAP Financial and Operational Measures |
|||||||||
| (unaudited, amounts in thousands) | |||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | |||||||||
| Year Ended | Three Months Ended | ||||||||
| December 31, | December 31, | September 30, | |||||||
| 2017 | 2016 | 2017 | 2017 | ||||||
| Net income (loss) | $ | 168,501 | $ | (60,560 | ) | $ | 57,681 | $ | 63,663 |
| Depreciation and amortization | 81,473 | 41,362 | 25,642 | 24,164 | |||||
| Interest expense | 12,636 | 6,126 | 5,347 | 3,326 | |||||
| EBITDA | $ | 262,610 | $ | (13,072 | ) | $ | 88,670 | $ | 91,153 |
| Fleet start-up costs | 13,955 | 4,280 | 3,171 |
1,895 |
|||||
| Asset acquisition costs | 2,470 | 5,420 | (498 | ) | 426 | ||||
| (Gain) loss on disposal of assets | 148 | (2,673 | ) | 160 | 21 | ||||
| Advisory services fees | 1,545 | 457 | 250 | 250 | |||||
| Adjusted EBITDA | $ | 280,728 | $ | (5,588 | ) | $ | 91,753 | $ |
93,745 |
| Calculation of Return on Capital Employed | |||||||||
| Year Ended | |||||||||
| December 31, | |||||||||
| 2017 | 2016 | ||||||||
| Net income | $ | 168,501 | |||||||
| Capital Employed | |||||||||
| Total debt, net of discount | $ | 196,357 | $ | 103,805 | |||||
| Redeemable common units | 42,486 | — | |||||||
| Member equity | 392,766 | 228,972 | |||||||
| Total Capital Employed | $ | 631,609 | $ | 332,777 | |||||
| Average Capital Employed (1) | 482,193 | ||||||||
| Pre-tax Return on Capital Employed (2) | 35 | % |
| (1) |
Average Capital Employed is the simple average of Total Capital Employed as of December 31, 2017 and 2016. |
| (2) |
Pre-tax Return on Capital Employed is the ratio of net income for the year ended December 31, 2017 to Average Capital Employed. |
Contacts
Liberty Oilfield Services Inc.
Michael Stock,
303-515-2851
Chief Financial Officer
[email protected]
or
Damon
Overal, 303-515-2851
Head of Investor Relations
[email protected]
