Q1 2025 Liberty Energy Inc Earnings Call
Welcome to the Liberty Energy Arning's conference call.
At participants will be in listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero? [inaudible]
Speaker Change: After today's presentation, there will be an opportunity to ask questions. Please note that the event is being recorded. I would now like to turn the conference over to Anjali, Voria, Director of Investor Relations. Please go ahead. Thank you very much.
Anjali Voria: Thank you, Allison. Good morning and welcome to the Liberty Energy First Quarter 2025 earnings conference call.
Speaker Change: Joining us on the call are Ron Gusek, Chief Executive Officer, and Michael Stock, Chief Financial Officer.
Speaker Change: Revenue's expenses for profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statement.
Speaker Change: These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings.
Our comments today also include non-gapsonantial and operational measures. Thank you very much.
Speaker Change: These non-GAAP measures , including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income for distributed share, adjusted pre-tax return on capital employed, and cash return on capital investor, not a substitute for GAAP measures , may not be comparable to similar measures of other companies.
Speaker Change: A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income and adjusted net income per diluted chair and a calculation of adjusted pre-tax return on capital employed and cash return on capital invested as discussed on this call are available on our investor relations website.
I will now turn the call over to Ron.
Ron Gusek: Good morning, everyone, and thank you for joining us to discuss our first quarter 2025 operational and financial results.
Ron Gusek: Liberty delivered a solid first quarter, with revenue of $977 million, net income of $20 million, and adjusted EBITDA of $168 million, and distributed $37 million to shareholders through opportunistic share repurchases and dividends.
Ron Gusek: We saw strong sequential improvement in utilization across our fleet, reach new heights in operational efficiencies and safety performance, and set a new high watermark in asset lifespan for equipment components.
Ron Gusek: Our early-year results demonstrate a positive rebound from the fourth quarter of 2024, a trend that is continued into the second quarter. [inaudible]
Ron Gusek: In recent weeks, tariff announcements and a more aggressive OPEC-plus production strategy have sent ripples across the energy sector.
Ron Gusek: Today, we have excess demand for Liberty Services as our customers align themselves with top-tier providers in a clear industry flight to quality.
Ron Gusek: While North American producers have not yet meaningfully changed development plans, we expect our customers to assess a range of scenarios in anticipation of commodity price pressure, and we are staying close to our partners in this dynamic market.
Ron Gusek: As we all know well, the oil and gas industry is cyclical in nature. And periods of uncertainty test the strength and resilience of players across the value chain. [inaudible]
Ron Gusek: The outcome of tariff negotiations, as well as forward production plans for OPEC Plus, could yield a wide range of outcomes in the future.
Ron Gusek: In the face of these potential outcomes, we are applying our core tenants to guide our team in charting a course to meet any potential challenges, support our customers, suppliers and our employees, and build an even better business with enduring advantages.
Ron Gusek: Today we are better positioned than ever to navigate market uncertainties with greater scale, vertical integration, technological advancements and a fortress balance sheet. [inaudible]
Ron Gusek: Over the past few weeks, we have stayed in constant dialogue with our customers and suppliers, collaborating on ways to expand efficiencies and actively engaging on tariff mitigation strategies.
Ron Gusek: Our engineering teams are having more dialogue with customers on optimizing completion practices using our comprehensive completions and production database and multivariate analysis tools to make more informed decisions.
Ron Gusek: Our operations team is leveraging real time data analytics using over one billion data points collected daily to maximize efficiencies and drive lowest total cost of delivery.
Ron Gusek: These insights further extend to our ongoing collaboration with our supplier partners, and this visibility allows our collective teams to react quickly and decisively in a rapidly evolving environment.
Ron Gusek: Prior cycles have proved the resilience of our strategy of leading the industry with discipline while strategically enhancing our competitive edge.
Ron Gusek: As global oil markets contend with tariff impacts, geopolitical tensions, and oil supply concerns, North American producers are evaluating a range of macroeconomic scenarios.
Ron Gusek: The recent pause on tariffs has momentarily eased pressure on the global economy and in turn global oil demand concerns.
Ron Gusek: However, markets remain focused on supply side dynamics, including the evolving OPEC plus production strategy and potential constraints on Iranian, Russian and Venezuelan oil exports.
Ron Gusek: Natural Gas Fundamentals are more favorable on rising LNG export capacity demand in support of global energy security. [inaudible]
Ron Gusek: While the current tumult in commodity prices is not immediately driving changes in North American activity, we expect oil producers are evaluating a range of scenarios in anticipation of oil price pressure. Concurrently, gas producers could prove to be beneficiaries of potentially lower associated gas production in oily basins.
Ron Gusek: Today, we have not seen significant change in oily customer activity. However, we are optimizing our fleet schedule to accommodate additional activity for our gas customers.
Thank you.
Ron Gusek: In contrast to prior oil and gas cycles, recent years have seen steadier activity in both higher and lower commodity price environments.
Ron Gusek: Larger, well-capitalized producers that comprise a larger portion of shale production today are better able to withstand a broader range of commodity prices, while smaller producers may be more reactive to market swings. [inaudible]
Ron Gusek: Since the pandemic-driven downturn, the energy sector has seen significant consolidation, as well as a strong focus on capital discipline and balance sheet strength, and most producers have targeted flat to modest production growth. [inaudible]
Ron Gusek: Today's frack activity simply supports maintenance of current oil production levels, mitigating the possibility of steep decline to experience by the service industry in past cycles.
Ron Gusek: While macroeconomic risk could lead to lower oil production in North America, the industry is operating from a higher base of production today than in prior cycles, implying a decline in service activity would likely be less pronounced than in the past.
Ron Gusek: Liberty's differential service platform is stronger today than at any point in the last 14 years. Our unmatched scale, integrated services, robust supply chain, and advanced technology systems uniquely enable us to deliver more value, lowering the total cost to produce a barrel of oil.
Ron Gusek: Fleet modernization with advanced sensors, real-time data capture, and enhanced data visualization tools is driving tangible benefits and improving decision making, allowing our teams and customers to respond faster and more effectively in a dynamic market. [inaudible]
Ron Gusek: We are also working closely with our customers to bring innovative engineering and designs to their completion strategies. This integrated high performance model reinforces our position as the service provider of choice in a competitive market.
Ron Gusek: Strategic investments in equipment technology, digitization and power generation has positioned us to deliver safer and more efficient operations with reduced fuel and parts consumption and improved reliability. These advancements in equipment component longevity demonstrate these benefits.
Ron Gusek: In the last three years, the average life expectancy has increased 27% for engines, 40% for fluid ends, and an impressive 37% for power ends over the last two years.
Ron Gusek: In part, through the implementation of AI-driven predictive maintenance strategies and continuous machine learning.
Ron Gusek: Furthering these efforts, in the first quarter we launched the hive.
Ron Gusek: Our next-generation digital intelligence hub, a centralized platform right here in Colorado that monitors track operations with 24-7 oversight, enabling the high tech team to provide real-time solutions to the teams in the field.
Ron Gusek: These are only a few of many technology initiatives driving real tangible value to our operations and our customers alike.
Ron Gusek: As we look ahead, we are currently anticipating sequential growth in revenue and profitability in the second quarter from higher utilization. Thank you very much.
Ron Gusek: Our priority is to maintain a strong ballot sheet, which will allow us to navigate in any environment, while executing on our long-term strategic plan.
Ron Gusek: We are actively assessing the implication of tariffs across our business, and have already begun mitigation efforts. Michael will expand further on this.
Speaker Change: Strategic investment has allowed us to develop new markets and lead technology innovation and operational efficiency in the industry.
Speaker Change: Growing Power Demand from data centers, manufacturing, mining, and industrial electrification is enabling us to expand our power services beyond the oil field.
Speaker Change: The acquisition of IMG, a leader in distributed power systems opportunistically augments LPI with power plant EPC management and PGM utility market operations and expertise that we would otherwise have built over a period of time accelerating our entry into the PGM market.
Speaker Change: We also cultivated bench strength with T leadership in the first quarter. [inaudible]
Speaker Change: Our pipeline of power opportunities across North America continues to grow, including projects in oil and gas.
D. commercial and industrial space.
Speaker Change: and smaller data centers up to 250 megawatts in size. We recently announced an MOU with range resources and imperial land corporation for potential industrial development that would be anchored by a cutting edge LPI power generation facility. [inaudible]
Speaker Change: Conversations with two other partners for similar agreements are underway. We still anticipate delivery of our first generation capacity in the third quarter, with packaging to be completed in the fourth quarter and operations beginning in Q1 of 2026. We are excited by the opportunity ahead to expand in these key growth areas.
Speaker Change: Before I turn the call over to Michael, I want to highlight distinct advantages we have in a potentially changing market.
Speaker Change: Shopped-ear customers who are well capitalized and less sensitive to commodity swings.
Speaker Change: Oil and Committed Suppliers and Partners, a strong ballot sheet, technological achievements that place us in an even better position today than prior cycles, and a strong culture that binds our teams to deliver at a highest level.
Speaker Change: I will now turn the call over to Michael to discuss our financial results and outlook.
Michael Stock: Good morning, everyone. We kicked off 2025 with a solid start to the year. I'm proud of the team for executing at the highest levels especially coming off a challenging close to the 2024 year. Let's take a moment to celebrate the team's achievements. Thank you.
Michael Stock: In the first quarter of 2025, revenue was $977 million compared to $944 in the prior quarter. Our results increased 4% sequentially at higher activity levels, more than I've said, pricing everyone's.
We saw improvements across all of our businesses.
Michael Stock: from High Utilisation of Track and Wildlife fleets, Permian Sand Mines, who are fully utilized despite weather disruptions and an oversupply market conditions, additional next-gen sand systems that increase cymbal frack efficiency, anger growth and CNG fuel delivery.
Michael Stock: First quarter net income of $20 million compared to $52 million in the prior quarter, adjusted net income of $7 million compared to $17 million in the prior quarter and excludes $15 million of tax affected gains on investments.
Michael Stock: Full of elucid net income per share was 12 cents compared to 31 cents in the briar quarter and adjusted net income per elucid share was 4 cents compared to 10 cents in the briar quarter.
Fourth Court of Justice Evidah.
Michael Stock: First quarter dust theory of 168 million compared to 156 million in the triac water and 8% sequential increase.
Michael Stock: General Administrative Expenses, Total 66 Million, and the fourth quarter day. [inaudible]
Michael Stock: In the first quarter compared to 56 million in the prior quarter, it included non-cash stock-based compensation of $15 million. GNA increased 10 million, primary due to accelerated and modified stock-based compensation associated with crosses departure.
Michael Stock: Other income items total 10 million for the quarter, Inc. 19 million of gains on a distance and interest expense for approximately 10 million dollars.
Michael Stock: First quarter tax expense was $8 million, approximately 28% of pre-tax income and cash taxes were $9 million. We speak to tax expense rate in 2025 to be approximately 28% of pre-tax income.
Michael Stock: and Cash Taxes to be approximately half of their effective book tax rate.
Michael Stock: We enter the year with a cash balance of 24 million and net debt of 186 million net debt increased by 15 million from the pride quarter.
First quality uses of cash, including capital expenditures.
24 million in share by Vex.
Michael Stock: $13 million cash dividends. Total liquidity at the end of the quarter, including availability under the credit facility with $164 million. $13 million.
Michael Stock: Net capital expenditures were 119 million in the first quarter, which included investments in digitally, capitalised maintenance spending, LPI gas compression and delivery infrastructure and other projects.
Michael Stock: We had approximately 13 million proceeds from Atid sales in the quarter, and as a reminder, our 2025 plan cap completions business capics moderates, it's 450 million in the plan. That captures maintenance and digit technologies, and we have another $200 million allocated for power assets.
Michael Stock: We have significant flexibility in adjusting our capital spending, though, and a well-prepared to adjust these targets should the macro-economic environment meaningfully change
Michael Stock: In spite of the market turmoil, the strong momentum we exceeded the first quarter has continued into the second quarter. We are expecting sequential growth and revenue and EBITDA,
Michael Stock: Given the uncertain market backdrop, we are closely monitoring the market and are evaluating a range of macroeconomic scenarios to stay ahead of any potential changes in activity.
Michael Stock: Our teams have been working diligently to assess tariff implications and mitigation strategies for the benefit of both us and our customers.
Michael Stock: Carrefour announcements continue to evolve, which makes it a challenging exercise. Right now we're expecting modest, terrifrelated inflationary impacts on engines and other equipment components, some of which are being offset by lower prices or volume discounts.
Michael Stock: All said, we don't anticipate a significant direct impact from tariffs at the moment.
Michael Stock: Transformative work in the years since the pandemic of leading the industry with technology innovation, strengthening our customer and supply partnerships, and expanding the scale and integrative platform to deliver greater values for our customers, allows us to thrive in any demand environment.
Speaker Change: In a rapidly evolving market, our goal is to maintain margins, execute or discipline the capital deployment and protect our balance sheet against a certain backdrop.
Thank you. Thank you.
Speaker Change: Thank you. We will now begin the question and answer session to ask a question. You may press star, then one on your touch 10 phone. If you are using a speaker phone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Speaker Change: At this time, we will pause for a moment to assemble our roster.
Speaker Change: Our first question today will come from Stephen Gengaro of Steve Full, please go ahead.
Thanks, and good morning, everybody.
Thank you.
Speaker Change: You know, I've always kind of remembered like the larger company is talking about the flight to quality, but you know in years past they would have to give up. [inaudible]
Speaker Change: You know, material price, despite the demand staying high, utilization staying high. What are you seeing now in terms of sort of the fight the quality of the desire for the gas burning assets and kind of how how those price discussions go relative to sort of the demand for your assets? [inaudible]
Thank you. Bye.
Yes, Stephen, I would say that. [inaudible]
Speaker Change: Of course, we talked about on the fourth quarter call that downward trend that we had experienced in price through
Kind of though.
Speaker Change: Back half of 23 and all the way through 24 and certainly as we headed into RFP season we were...
Speaker Change: We were having price reset modestly lower again into 2025. But that's been the end of that price conversation, at least at this point in time. Utilization and the work that we are doing today is based on the pricing we set in RF PCs in there. This is the end of that price conversation, at least at this point in time, at this point in time, at this point in time.
Speaker Change: and I would say that the additional inbound inquiries we are getting are in most cases customers who already have Liberty working for them in some way, shape or form.
Speaker Change: And we're looking for additional liberty capacity. And to the extent we have white space on our calendar or are able to juggle things around, are working to accommodate that additional work now. But at the same pricing that we were, we entered into this year planning to do that work at. [inaudible]
Speaker Change: As for the next-generation assets, I would say that pricing remains very resilient there. Thank you very much.
Speaker Change: You know that we've announced CAPEX and a commitment to around building some additional VG fleets this year and those fleets are going to work under under pricing expectations that are in line with our requirements for deploying next generation technology to the field. [inaudible]
Speaker Change: Great. Thank you. And then the follow-up maybe from Michael, have you thought at all about kind of any impact on raw material costs, on sort of your ongoing maintenance cap acts for the years, it's still sort of too early to sort of think about any material changes to that?
Speaker Change: No, Stephen, yeah, I mean, that supply chain team is working with our suppliers on that, you know, as we speak, you know, for the moment, as I said, you know, we're not expecting to have significant amounts of...
Speaker Change: You know, change on that pricing, you know, some of it will be offset by volume discounts and supplies working on efficiency, moving some of the supply on shore to the US. Obviously there's, you know, kind of inflation re-pressure on some of the raw steel and iron that comes into the country. That was already in place up until this point. So we're not expecting to see particularly major changes in those prices at the moment. [inaudible]
Speaker Change: Thanks. It sounds like the longevity equipment that you mentioned earlier could also help mitigate that. Is that reasonable? Yeah, it's reasonable.
That's a very reasonable thought. [inaudible]
Okay, thank you both.
Speaker Change: Our next question today will come from the end boots of Morgan Stanley .
and Anjali Voria. Thank you. Thank you.
Please go ahead.
Hey, thanks the morning.
Speaker Change: So, I just wanted to check in on the power gen business, kind of from a contracting or a customer conversation perspective, so anything you could share.
in terms of the pipeline of opportunities.
for that business, you know, appreciating that. [inaudible]
Speaker Change: I'm sure you can't be too explicit, but just, you know, directly or broadly, it was hoping that you could kind of chair any updates or thoughts on the contracting efforts for those assets. Thank you.
Speaker Change: Yeah, Dan, to the extent we're prepared to talk about it today, I'd say we remain extremely excited about the opportunity quite positive on the outlook. I would tell you that our pipeline of opportunities. Thank you very much.
Speaker Change: today significantly exceeds the capacity that we have ordered or have announced. So, um...
Speaker Change: We continue to work on those conversations, and they're taking place in a number of areas that I identified in my opening remarks. We have some very advanced conversations with a number of our E&P partners around the electrification of their acreage.
Speaker Change: We have a number of conversations going on in the data center space and also along the lines of that MOU we announced where it would be a Greenfield development around effectively an industrial complex that would house a data center. [inaudible]
Speaker Change: I would tell you, we're quite excited about where those things are, in some cases, we're in the air permitting phase already, so we have some...
Some things moving along there but...
Speaker Change: Broad Guidance Week, Given Around, Contract Turn, Length End, and Return Profile
Speaker Change: Great, yeah, I understood it and that's all helpful. And I guess, you know, a prefeating that there's a lot of uncertainty and that you guys are mindful of.
Speaker Change: different macro scenarios, but it's kind of at this point to read that the full-year on.
Speaker Change: The four-year guidance, you guys laid out. I know Michael reiterated the capex guidance, but for, I think it was the seven to seven hundred fifty million of consolidated. Even out for the four-year is kind of. [inaudible]
Speaker Change: It's the way that that is still intact today, or are there any, you know, puts and takes there that you would kind of highlight at this point. Thanks.
Speaker Change: Again, I would say that at this point in time, certainly we're not going to make any changes to that. It's far too early to do so. As we've indicated, our outlook into Q2 is very, very strong. We have a great line of sight through the quarter, and it looks quite robust, and we expect it to be up over Q1.
Speaker Change: It's too early to say what the back half of the year holds. I think there's a range of possible outcomes there.
Speaker Change: As our customers begin to, maybe as the industry more broadly, begins to get some clarity around what the future holds from a tariff standpoint and OPEC Plus production strategy. We'll see our customers layout their plans for the back half of the year and we'll be able to adjust accordingly if that's necessary.
Thank you for watching!
Speaker Change: Yeah, very enough. It's helpful. Thanks guys. We'll turn it back.
Thank you.
Speaker Change: Our next question today will come from Arun Jayaram of JP Morgan. Please go ahead.
Yeah, good morning.
Speaker Change: Gentleman, you know, since 2018, you know, U.S. shale oil supplies up to an half million barrels looking at the 914 data.
So, one of the plausible scenarios is if OPEC brings...
Speaker Change: Back, you know, some of the two million barrels offline that, you know, we could see, you know, lower U.S. oil production as potentially folk back muscles in a little bit. So I wanted to get your thoughts on how you would view...
Speaker Change: A more normalized frack fleet count, I think we're roughly at 200 fleets today.
Speaker Change: If the US oil supply went down by a million barrels to call it, you know, the low 12 million barrel range, and how do you think about Liberty's earnings power in that type of scenario?
Speaker Change: Yeah, I guess I would say that if you thought about where production stands today and you probably want to be more specifically focused on unconventional production so the share of that 13 and a half million barrels that comes out of the tight oil world.
Speaker Change: If you thought about that world today, our active fractally count in the industry is basically focused on holding production flat.
Speaker Change: So we have a, we have a frack crew count to call it 220 crews today that are basically working to hold us out at 13 and a half million barrels and really the subset of that being...
Speaker Change: I think round numbers, 9 million barrels a day of unconventional production.
Speaker Change: a million barrels off, so a little more than ten percent.
Speaker Change: or something like that, but I don't think it would lead to a catastrophic situation in pressure pumping.
That's very helpful. Thanks for that.
And I wanted to, you made some interesting comments.
Speaker Change: on the gas side that you're gearing up, maybe to support a little bit more gas activity. Could you maybe just elaborate on some of the comments and what you're seeing in some of the natural gas basins?
and Anjali Voria.
Speaker Change: Sure, of course the gas market had been in a pretty challenge spot for the last couple of years. We've seen gas prices relatively depressed, but we've seen some real strength in them of late.
Speaker Change: supported by both reshoring of manufacturing and anticipated growth in power demand here on shore in North America and also more significantly LNG export capacity and even a bit of early growth in expectations around that.
Speaker Change: for the broader global market. And so we've got a situation now where even with a bit of volatility in gas prices,
Speaker Change: The prompt price and forward strip have been strong enough that we've seen people in the gas basins look to bring additional capital to bear, put incremental rigs to work, and ultimately, as a result, require additional frack equipment.
Speaker Change: And so for us, of course, we feel that primarily in the Haynesville, given that's where we have Fract Equipment-based.
Speaker Change: But we are actively working today with customers to fit additional work onto our calendar as we head through Q2 and out into Q3. So, I would say positive shoots there and we'll of course we never know what the future holds but it looks pretty good right now.
Great, thanks Ron!
Speaker Change: Our next question will come from Saurabh Pant of Bank of America, please go ahead.
Boards are up.
Speaker Change: Maybe I'm going to touch on the power side of the business a little bit around Michael especially the MOU you announced where the range and imperial just just help us think about how would that work commercially.
Speaker Change: Who is the contracting party, right? Where do we get the visibility on the earnings for liberty on the power side of things? So maybe just help us understand the contractual output as that MOU progress is. [inaudible]
Ron Gusek: Saurabh, I'm going to let Michael talk to that, but before he answers that question I want to give you a shout out for best title on on note yesterday. So I love that headline.
and Anjali Voria.
Yes, so that's a wrap, so there was a lot of...
This is a good example of partnerships that are...
Ron Gusek: You know, there's being drawn to Liberty. This is a well-known industrial developer in the Northeast looking to be looking to develop an industrial park on 875 acres of land, looking to anchor it with a data center in conjunction with Liberty building a power plant and range resources providing the gas. [inaudible]
Ron Gusek: Right, so we've got sort of fibre running nearby. We've got the ability to build it. So yeah, this is long-term development plans. This is part of what you think about the things that you will hear out of Washington about sort of reshoring of industry and the reshoring of industrial capacity into America and the combination of building that off of the backbone of the great natural gas resources that we have in conjunction with the right players, right? You know, sort of liberty on the
Ron Gusek: Paul Syed, Earrange being sort of a great gas provider on that side and then obviously industrial development. These are long hitting projects, these are things that are going to take a while. You're talking probably...
Ron Gusek: Long tenured projects that are going to support business, you know far into the future And so this is a great example of sort of the way that American business is coming back together to reshore Sort of industrial capacity into America
Ron Gusek: I maybe just add one thing to that, and it's this idea around confidence about the cost of energy. You know, of course...
Ron Gusek: People would always say that ideally they would be on the grid but the challenge with being on the grid is that you don't know what the power price is going to be next year or the year after that and I think if you look back in history, evidence would suggest the power prices on the grid continue to get more and more expensive on an annual basis.
Ron Gusek: It's differential to what the grid could possibly provide. And so these environments where we have that gas partner and power generation together offer a very, very unique and differential scenario for the end users that ultimately find themselves home in this data center.
Speaker Change: Right, right. Now, that makes sense. That's super useful, Ron. I know you talked about heat rate and obviously now that you have gas supply visibility, so that comment makes a lot of sense. [inaudible]
Speaker Change: And then just very quick follow-up on just that. I think, I suppose, John , maybe you are Michael Mehta, comment on focusing on smaller data centers up to 250 megawatt. Can you walk us through the rationale behind that? Why you focus on that? Is that because of the amount of capital in your willing to deploy or is there some other factors that are going to that decision?
Thank you. Thank you.
Speaker Change: I would say that it's really just a function of who we're talking with today. That's not to say that down the road we wouldn't be looking towards some larger projects.
Speaker Change: The capabilities and assets that we bring to the table and are focused on at least early on in our growth of LPI. But that's not to say that we wouldn't down the road have some conversations around much bigger data centers. That was more a comment around the current pipeline of opportunities that were focused on.
Speaker Change: It's also the customer base there are where you've got customers that are really looking for a time to market. They need that compute space relatively quickly. And so they are now looking at building out these data centers in a modular fashion. [inaudible]
Speaker Change: So whether or not we're building out sort of a, you know, a hundred, two hundred and fifty megawatts first or two hundred and fifty megawatts, the plans they have are to be able to expand that over time, but ideally what they're trying to do is then get sort of, you know, compute power to market as quickly as possible, you know, to make the demand of their customers.
Speaker Change: Okay, perfect, now that makes sense. And then one quick unrelated one, or, like you said, you've had a good start to the second quarter, right? I know the future events are uncertain at this point, but...
Speaker Change: How quickly do you think you would get visibility on that, Ron Michael, if I'm thinking about two cues specifically at this point, right? It seems like...
Speaker Change: The run rate you're at, you might be doing the comfortably better than consensus, Ibeda, Hoqqas right now, right? But how quickly can that change, how quickly do you get visibility whenever things change, if they change?
Speaker Change: So, I don't think things are going to change rapidly. I'm relatively confident that our Q2 will play out very close to how we see it today. I think it's unlikely that we're going to have any of our customers remove a pad in the next month or two. [inaudible]
Speaker Change: It's my expectation that to the extent we do see some changes that's going to be back half of the year weighted.
Speaker Change: As to when we find out, I think that ultimately depends on when people feel they have some clarity around what the future holds. We're in the middle of a 90-day pause for most of the world today. Of course, the back and forth with China continues on a baited, at least at this point in time. [inaudible]
Speaker Change: As we begin to get some confidence around how that plays out and what OPEC pluses strategy is going to be, I think you're going to see our customers, the ENPs, begin to settle in on their guidance. We're going to get WTI, settle in at a place that reflects what that global economic environment is going to look like. At that point, we'll have some clarity around what the future will hold, but there's still some moving pieces there yet, so I don't think it's happening in the next week or two.
Dr. Paret,
Speaker Change: Okay, perfect, now I've got it. The market is focusing on the present perfect right now, Ron, so with that, I'll turn it back around, Michael. Thank you. Thanks a lot.
Speaker Change: Our next question today will come from Scott Gruber of City Group. Please go ahead.
Speaker Change: Yes, good morning. Good morning, John . Good morning. I want to stand on that same line of questioning. So it's the second half activity is called modestly weaker. You know, would you look to adjust your Digicron deliveries this year? Are you able to defer some of those and what conditions are you looking to? What do you want?
Speaker Change: looking at to make that decision, or would you just simply take the livers this year and potentially look to adjust the 26th program? Yeah.
and Ron Gusek. Thank you. Thank you.
Speaker Change: Scott, we certainly have flexibility to make adjustments in the back half of the year if that became necessary. We're certainly in conversation with our suppliers around what.
Speaker Change: What adjustments we could make and what that would look like, how we might think about that headed out into...
Speaker Change: 2026, and certainly could make adjustments there as necessary as well.
Speaker Change: There is a counter piece to that as well, and that is the customer on the other side of that DIG fleet.
Speaker Change: We will deliver a Digi Fleet in the back half of this year that quite frankly the customer couldn't operate without and so
Speaker Change: I got it. And then thinking about buybacks from here, your stock is up nicely today, but it's still down here today along with everybody else. You know, would you be willing to use the revolver to continue buybacks or will pre-cash the really gathered, you know, the pace of buybacks from here. [inaudible]
Speaker Change: Yes, obviously we have what we would consider a very very depressed stock price today and as a result looks pretty opportunistic from a buyback standpoint and certainly we were active in Q1 as a result of that.
But as we look forward, of course, there...
Speaker Change: There are some storm clouds on the horizon. We don't know if that storm is going to roll in here or not, but I think a prune approach to the rest of the year would have us focused on...
Not only just...
Speaker Change: The by-back opportunity, but also the strength of the balance sheet and how that plays in. So if we think about
Speaker Change: If we think about best setting up liberty for whatever the future might hold, you can know that we will be keenly focused on a fortress-like balance sheet that will enable us to navigate. Whatever is coming our way. Thank you very much.
and put in consideration with that, of course.
Speaker Change: Our CAPEX expenditures and also share buybacks to the extent we think that makes sense.
Speaker Change: But know that with uncertainty in front of us priority number one will always be the balance sheet and so that would likely in fact also certainly preclude using debt for buybacks.
Speaker Change: I appreciate the call around. I'll turn it back. Thank you.
Speaker Change: Our next question will come from Waqar Syed of ATD Capital Markets. Please go ahead.
Thank you. Congress in a good quarter.
Laquara Syed: Rowan, if don't you think I stay at $60 a barrel or so this year and next? How do you see activity kind of trend both on the drilling side and the pumping side?
Laquara Syed: And then maybe if you could provide, you know, you've done sensitivity analysis, maybe, you know, if you could provide some guidance on like, you know, what a $5 move in either direction would enter on activity side and then perhaps maybe on surprising side as well.
Laquara Syed: Yeah, Waqar, I think if oil stayed in the low 60s, well that's not an exciting environment for us by any stretch of the imagination, I think at most we probably feel modest ripples in activity levels [inaudible]
We're going to see some smaller...
Laquara Syed: and likely private companies react to that with probably a pullback in activity.
Laquara Syed: But I think for the vast majority of folks, and certainly the larger public, they're going to carry through with their announced capex budget for the year in that environment. I don't think that's a low enough price to have them meaningfully change activity. And so I think for us, we would expect that, well, we maybe have...
Laquara Syed: Modest amount, more white space on the calendar, looking out through the rest of the year than we might have anticipated. It wouldn't be significant. [inaudible]
Laquara Syed: Now, if we saw to your point a $5 move on oil upwards, I don't think that changes things really at all.
Laquara Syed: As I indicated a little earlier, of course, basically our Red Counts and Fract Group Count today is working to hold production flat and so
Laquara Syed: You know, if you, any reduction for sure is going to result in, you know, with reduction in oil prices.
Laquara Syed: and or reduction in production level here. And so I just don't know how far we'd see that go. Again, I don't think we feel it's going to be huge. I think given...
Laquara Syed: Given I think bold in North America to hold production relatively flat over the long term, we probably see modest reduction in service activity, you know, maybe it's 10 or 15 percent, but I just can't see a path to something significantly greater than that, at least at this point in time. [inaudible]
Thank you.
Laquara Syed: Have you seen any impact of price declines that were implemented back in Q4? Have they all rolled through in Q1, or they're still to come in Q2 as well? [inaudible]
Laquara Syed: No, any price adjustments we have made are already in place today. They were all put in either right at the start of the year, part way into Q1, so we're already feeling the fully impact of those. [inaudible]
Thank you.
Speaker Change: Do you think they are okay with the private pricing that was settled back in Q4 or are they asking for additional cuts?
Speaker Change: I think our customers recognize that their service pricing has already gotten to a pretty good spot. It's been declining for a couple of years now, and I think they recognize that having a sustainable service platform is important to their activity levels, not only today, but also going forward. And so I think there's a recognition that
Speaker Change: You have to be careful about how far you ask a service provider to go.
Thank you very much, thank you very much, thank you very much.
Thank you.
Speaker Change: Our next question today will come from Adi Modak of Goldman Sachs. Please go ahead.
Speaker Change: Yeah, hi, good morning. Ron, you spoke about the DigiSleet Commitments and Michael, you talked about the flexibility in the capex. So maybe, can you provide a little bit more color around where the flexibility is more broadly and how you are thinking about the low end of capex? Should you need to re-change that floor? [inaudible]
Speaker Change: So Adi, we have a good amount of flexibility in delivery in the quarter and obviously a huge amount of flexibility in what we spend in the early part of 26 and the full part of 2026.
So I think that's where we can adjust.
Speaker Change: At that point, so we can delay some of the engine deliveries, we can delay some of the packaging, we can move that out, we can slip it out within a period of time and then offset what would have been new builds in 2026, so we have a lot of flexibility to manage cash flow as we get into the back after the year.
Speaker Change: Okay, and then anything incremental you can share on the power contract for a later in the year, around how those conversations are going, or strategy, anything you can share at this point. [inaudible]
Speaker Change: commercial industrial facility. There are a number of players at the table that you don't need to come together, you know, from, you know, sort of EPC, Piper scalers, the final customer, you know, the permitting around that, the air permitting around that etc. So there is a lot of moving parts as these projects move forward and they get to FID.
Great. Thank you.
Speaker Change: Our next question will come from Tom Curran of Seaport Research Partners. Please go ahead.
Speaker Change: Good morning. Two part question to start on the portfolio of it you've inherited with the IGM acquisition. First, I believe IGM had a pipeline of potential solar PV or solar PV plus thermal opportunities.
Speaker Change: You know, did Mike's team set up sort of expedited access or lock up?
Speaker Change: Certain interconnects, just wondering if that came into play, either with the range and imperial deal, or you know do you expect to have a certain advantage when it comes to
Speaker Change: accessing, securing interconnects as a result of, you know, the work IDM has already done.
Jonathan這個
Wright.
Speaker Change: That's to take a little bit of air, if you like. So I'm just the other way around. Sorry if you'd like a passing route, which is originally the original name. But I'm G the team. Yeah, there's got about 10 soul projects that are in that are being studied at the moment in the queue.
Speaker Change: These are historical from their sort of the pushing from their European back Pee Fund before. As we move forward, then those projects as they get reviewed will have some values and we will most likely either partner or sell those to another developer to develop those. And if we develop them with that into conjunction with them, we'll do the thermal generation. .
Speaker Change: So that is something that we will look at as we go through. As you know, the PJM interconnection queue, these are projects that were put in the queue I think probably nearly three years ago, some of them are just getting reviewed this year so it is a very, very slow process.
Speaker Change: Behind GT, you know, RRA Network Provider, and have a market provider into the PJN market, and at one point just over a year ago was selling power from 11 separate power plants into the PJN market, managed through the network operating control center in Pittsburgh, so they bring a lot of expertise in that part of the world and in that market, which I think is great.
Speaker Change: which is definitely something a market, you know, when, along with, if you think about us in our historical relationship with Texas and the Utacop market now, adding PJM and that sort of close relationship is a real benefit for us on that side of the world.
Michael Stock: Very helpful. Sorry about the temporary dyslexia there, Michael, and then I wanted to know where you're at with
from the latest update you gave us all for LPI.
Speaker Change: for the distributed power fleet. It still was entirely not for guest reciprocating
Speaker Change: Where are you on the timeline for ordering your first guest turbine package and when you do pull the trigger on that, what's the earliest delivery timeframe you think you could manage?
Speaker Change: We're definitely focused on the high, firmly efficient gas reciprocating engine for our production, for our power generation at the moment, whether that be Catapilla and inter-U partnerships, or our new partnerships with Ennio Youngbaka at the moment on that side of the world we think that has a...
Speaker Change: The modular reciprocating engines with their high thermal efficiency is a great product.
Speaker Change: Generally I would take sort of the smallest solar turbine to probably about a year-and-a-half, two years as the earliest delivery you can take. I'm getting guessed the aerosurribatives now are probably in the three plus years. [inaudible]
Speaker Change: is about to write deliveries. I think in general with the market, we are not looking at ordering any of those at this present point in time.
Good on it. I appreciate your taking my questions.
. . . . .
Speaker Change: Our next question today will come from Jeff LeBlanc of TPH. Please go ahead.
Thank you.
Jeff LeBlanc: Good morning, Ron and team. Thank you for taking my question. I wanted to see if you could talk about Liberty's attrition rate and what level of reinvestment is required to offset this attrition beyond normal maintenance. I guess phrase in other way, how long could you pause the Digi Fleet Newville program without impacting your deployable horsepower. Thank you.
Thank you for watching. Please subscribe to my channel.
Jeff LeBlanc: But it absolutely is possible. Could we, in the most extreme case, go through 2026 without building a single new pump and still be comfortable with the deployment of our fleet as it stands today? We certainly could.
Thank you.
and Ron Gusek.
Speaker Change: Thank you for the collar, I'll hand the call back to the operator.
Speaker Change: Our next question today will come from Marc Bianchi of PD Cowan. Please go ahead.
Mark Bianchi: Hi, thanks. I was hoping you could put some bookends around the magnitude of revenue increase that you're expecting for second quarter.
Speaker Change: So I think we're comfortable with the guys who have given out publicly at this present point in time and as you have seen positive momentum coming into the quarter. Obviously you're sort of given where we are in the market, you are not going to see a massive sort of hockey stick going into the quarter so it's slow as steady progress is what we speak to with you.
Speaker Change: Okay, thanks Michael and maybe within that as we think about the moving pieces that are driving the improvement I think there's
Speaker Change: Maybe some benefit from Australia in 2Q that wasn't present in 1Q but then you have Canada that that might be down a little bit in 2Q. Can you just sort of talk about the moving pieces because I'm really what I'm really curious about is
Speaker Change: Like, what's happening with the Frack service part of your business as we go from one Q to two Q, is that is that improving as well or is that maybe more flat with these other things taken into consideration?
and Anjali Voria.
Rawr!
Speaker Change: I think basically what we're feeling is pretty normal seasonality. Of course, as we progress through Q1 for, let's talk about our lower 48 fleet
Speaker Change: Well, some of the basins get out of the new year with a pretty quick start. The further north you get, kind of the slower that ramp is. And so if you looked at the progression through Q1,
Speaker Change: We came out in a very strong position. March from a utilization standpoint was the strongest month in the quarter and that carries on into Q2 for the most part across the board. To your point, Canada has a little bit of seasonality during the second quarter that just comes with break up there. Here.
Speaker Change: But even up there are operators, customers are getting better and better and better at. .
Speaker Change: at being able to work through that about getting assets out into the field.
Speaker Change: on a longer pad and working through most of breakups. So even there people are working hard to mitigate some of that seasonality effect. And so if you think about going from Q1 to Q2 in the crack business, it's not hugely different than we might have anticipated in a...
Speaker Change: Regular year-ats and all this background noise that we're dealing with today. You have a slightly less weather-thinkton Q2, slightly longer daylight hours, makes it easier to be a little bit efficient. So in general, that's why I'm always generally uptox. [inaudible]
Speaker Change: Yep. Yep. Great. Thanks for that color, guys. And then the other one I had was just on the...
Speaker Change: What does that look like? Are we talking about, you know, single-digit millions of EBITDA?
Speaker Change: kind of hit in the third or fourth quarter, or is it, is that not something that we should be trying to plug into our model?
Dispoint.
Speaker Change: Yeah, there we saw about the revenue sort of appearing from that from some of the equipment that we have on the ground. But yeah, you'll see
Speaker Change: Chevy equipment business, you're always going to see Catholics leading the power of earnings. [inaudible]
Speaker Change: Just as I say, pretty much exactly the same way you see it when we've called it DigiFeed, right? The DigiFeed Capix comes in the six months before that DigiFeed started. So it's really not a lot different to the historical trends that Liberty has or it had.
Speaker Change: And I would say that, you know, as you think about it from a people standpoint, of course, it's not near the same intensity as our frack businesses. You know, when we are, when we're preparing to stand up a frack crew, we've got a hundred people on board as part of that that takes. [inaudible]
Speaker Change: You know, the better part of a quarter to get through something like that, you're not going to see that same sort of upfront impact in this environment when we're going to be operating a power plant. We just don't have to attach the same sort of intensity to that from a personnel standpoint. We're going to be working on that.
Ron Gusek: Yep, that's a good point. Thanks for that Ron. Appreciate it guys.
Speaker Change: Our next question will come from Keith Mackey of RBC Capital Markets. Please go ahead.
Michael.
Hey, good morning and thanks.
Speaker Change: for the rest of the year that your guidance range of 700 to 750 should hold, but if we go below that then maybe there's some adjustments that that would need to be made, is that a fair way to think about it?
Speaker Change: I think that's a fair way to think about it as best as we can see today. Thank you.
Speaker Change: Yeah, got it. Thanks for that. And just on the on the buyback with the amount done in Q1 representative of what you think you'll do for the rest of the year or should we be, should we be lowering or raising that a little bit? [inaudible]
Ron Gusek: You know, it's wrong pointed out, you know, you know, we will be focused on the over the last two weeks, obviously we've had a significant amount of macro economic news that the industry is trying to do the
Ron Gusek: And as far as that goes, we are working in real time with our customers.
Ron Gusek: to see what effect that may have, if it has any effect. [inaudible]
Ron Gusek: So, I would say a little similar to your last question, if we have outlook into the steady oil price and where we put our plan together at the beginning of part of this year, as you said, sort of your mid-60s.
Ron Gusek: going forward, your assumption on buybacks would be correct. As we look at the macroeconomic outlook and we look at the clouds on the horizon, we will obviously take a very, very prudent approach to the balance sheet and spending money.
Okay, thanks very much. You'll turn it back. Okay.
Speaker Change: Our next question will come from Roger Read of Wells Fargo. Please go ahead.
Yeah, thanks. Good morning.
Thank you. Bye bye.
Speaker Change: Maybe come back to the power grid option or opportunity here, the collaboration in the early next year. What's the right way for us to think about the pace of cat-backs is there?
Speaker Change: You know, all the key items have already been ordered, is there anything that we do have to watch out here in terms of, you know, a critical item. Thank you, John .
Thank you for joining us.
Speaker Change: I was thinking of it slow and steady, as we think about this business, you know, we are going to build this business very much like we built the Frank Business, right?
Speaker Change: Right? And I think that's the way you look at it. We look upon this as a decade-long opportunity. And so building the right expertise.
Speaker Change: You know, getting the right partners, getting the right initial projects, doing that is going to be key. So slow and steady increase over the next, you know, three years, I think is the way you should think about it for us. [inaudible]
Speaker Change: Yeah, the only color I would add to that is probably certainly as you think about generator delivery, they come at a pretty steady cadence and we'll be packaging them at a pretty steady cadence.
Speaker Change: Ultimately, we'll get to a position where we have to deploy the balance of plant and you maybe see a modest uptick and capex there as we go through that construction phase on an individual project and then settled back down to that steady cadence that Michael alluded to.
Speaker Change: And very low maintenance capital after that. That's the other view of this business, right? Once the initial capital is in place, I'm like...
Speaker Change: You know, with the Frank Business, where you're running in very harsh conditions, where you're wearing your, you know, fluid ins, power ins, etc. That variety. The maintenance capital on the ongoing maintenance capital beyond the additional capital is relatively low. [inaudible]
A very low.
Speaker Change: Yeah, I appreciate that. And then as a follow-up to the earlier comments about maybe a little better activity or at least some signs that customers want to get more active in the
Speaker Change: Gas Areas. How does that affect how we should think about the cost structure?
Speaker Change: over the next two-quarter, Dr. Smith, pricing is relatively flat, activity, college seasonally, up a little bit, and most places would generally, you know, kind of help margins out, but if you are. . . . . . . . . .
Speaker Change: moving equipment around or doing some hiring in some local areas. What's the right way for us to think about that on a cost-lash margin structure? Sure.
Speaker Change: I would say that you're not going to see anything meaningful there at all. When I say we're optimizing the calendar it yes occasionally it might mean a fleet move but we aim to make sure that happens over. [inaudible]
Speaker Change: For a period of time, such as that's absorbed over a number of jobs, maybe a quarter or more. In terms of people, we're able to do that with the headcount that we have available today. So I don't think you're going to see anything there that would really show up.
Okay. Great. Thanks, guys.
Thanks, Roger.
Speaker Change: Our next question will come from Eddie Kim of Barclays. Please go ahead.
Speaker Change: Good morning, thanks for us, Glees & Meen here. I'll try to ask Marc's question a different way.
Speaker Change: But in terms of kind of the magnitude growth you're expecting and EBITDA in the second quarter, I mean if I took a look at last year, your second quarter EBITDA was up 12% sequentially.
Speaker Change: But obviously, you had a very strong quarter here in the first quarter. [inaudible]
It is mid-single digit.
Speaker Change: Growth in EBITDA, fair to assume from a modeling perspective, or would even that be a bit aggressive, just given the market uncertainty we're facing.
and Anjali Voria. Thank you.
Thank you.
Speaker Change: No, I think if we think about our stand all seasonality, a normal sort of activity, incremental coming on from there. So yeah, I think that's kind of a single digit as a safe number as we see it at the moment.
Okay, great. Thank you.
Speaker Change: I just want my follow-up is not on the CAPEX for the 400 megawatts powering the down, so $200 million this year on the 150 megawatts, but you did highlight some potential inflation due to terrorist. Is it fair to assume that the CAPEX on the remaining? [inaudible]
Speaker Change: 250 megawatts will be higher on a per megawatt basis as a result of the tariffs, or were those caused sort of locked in at the time that they were ordered.
Speaker Change: I mean, obviously it's a moving target at this pretty important time, right? You know, the tariffs are changing at the stroke of a pin.
Speaker Change: So, when we're talking about deliveries that are nine, six, nine months from now, we are managing that sort of on a day-to-day basis.
Speaker Change: Right, there are the vast majority of the Catholics that we have on order, so the fact generation is actually US content and US bases. There is some that is coming in from Europe and we will see how that plays out over the balance of the end. We will see how that plays out over the balance of the end.
Thank you.
and Ron Gusek. Thank you. Thank you.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Ron Gusek for any closing remarks.
Speaker Change: While we are experiencing some turbulence at present, it does not change the immutable fact that the world needs more energy, lots more energy. And so I remain incredibly bullish on the long-term outlook for oil and natural gas, and more specifically North American oil and natural gas. [inaudible]
Speaker Change: Over the past decade, our industry has gotten stronger. More resilient in the face of headwinds.
Speaker Change: This is in no small part due to the hard-working people in the oil field services sector.
Speaker Change: Driving up efficiency and driving down the cost of producing a barrel of oil or MCF of gas, helping ensure North America remains highly competitive in the global market. And so to all of you in the service sector, I say thank you.
Speaker Change: Thank you for the work you do that ensures even when we are staring into the face of uncertainty, we can do so confident in the fact that this two shall pass and our industry will come through it stronger than ever.
Speaker Change: Thank you all for joining us on the call this morning and enjoy the rest of your day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.