Liberty Energy Inc. Q3 FY2025 earnings call

Operational Results

• Liberty achieved revenue of $947 million and adjusted EBITDA of $128 million in the third quarter despite industry challenges.
• Team delivered highest combined average daily pumping efficiency and safety performance in Liberty's history.

Technology and Innovation

• Digi Prime fleets achieved outstanding performance, with several fleets deployed with large customers breaking records for pumping hours, horsepower hours, and proppant volumes pumped.
• StimCommander, an AI-driven automated and intelligent rate and pressure control software, enables faster stage execution, reduced time on location, fuel savings, lower emissions, and improved safety, driving significant efficiencies.
• Forge platform empowers StimCommander with intelligent asset orchestration through continuous AI optimization, turning raw data into predictive intelligence.

Power Business

• Structural demand for power continues to strengthen with large-scale long-duration power commitments, and AI compute load, electrification trends, and industrial reshoring drive demand. Liberty has a growing sales pipeline for power generation assets, with the sales pipeline more than doubling in the last ninety days.

Leadership

• Welcomed Alice Yake, an energy and infrastructure expert, to the Board to guide power services efforts.

In the third quarter, Liberty achieved revenue of $947 million and adjusted EBITDA of $128 million. For the completions segment, it was affected by a slowdown in industry completions activity and market pricing pressure. The power segment saw structural demand for power strengthening with large-scale long-duration power commitments across the industry, representing a meaningful long-term growth opportunity. Revenue contribution details weren't explicitly broken down by segment percentage in the transcript, but the completions segment faced challenges while the power segment showed growing potential.

Capital Expenditures

• 2025 capital expenditures are expected to be approximately $525 million to $550 million.
• 2026 capital expenditures are shifting towards growing power generation services, with an expectation of approximately 500 megawatts of generation delivered by the end of 2026 and another 1 gigawatt of cumulative power generation by the end of 2027.

Dividend

• Increased the quarterly cash dividend by 13% to reflect confidence in the future and commitment to delivering long-term value to shareholders.

Industry Challenges

• Slowdown in industry completions activity and market pricing pressure are headwinds for the completions segment.

Tariff Impact

• Punitive tariff policies are driving up the cost of energy production, impacting North America's competitiveness on the global stage, potentially leading to loss of market share.

Q: Stephen Gengaro with Stifel asked about visibility on demand for power generation assets over the next twenty-four months.

A: Ron Gusek responded that the sales pipeline has more than doubled in the last ninety days, urgency in the sales pipeline has increased meaningfully, they have paper for more than a few gigawatts of capacity needs, and it involves long-duration partnerships measured in fifteen plus years.

Q: Marc Bianchi with Cowen asked about financing of power generation capacity.

A: Michael Stock replied that power plants will be funded via ESA, PPA, with non-recourse debt for large projects, and smaller projects may be funded on the balance sheet, with a mix of debt and equity depending on the project.

Q: Adi Modak with Goldman Sachs asked about steps to sign power contracts.

A: Ron Gusek stated that signing big power contracts involves multiple pieces coming together, including land, air permitting, fuel source, and end-use contracts, and it's a process that takes time as it's a large investment.

Q: Saurabh Pant with Bank of America asked about risk protection for long-term power contracts.

A: Michael Stock said it involves choosing investment-grade counterparties, ensuring engineering and supply chain execution, and having a risk committee reviewing projects, with each large project in a separate project code with non-recourse debt.

Q: Thomas Patrick Curran with Seaport Research asked about sodium-ion technology for long-duration energy storage.

A: Ron Gusek mentioned being a fan of sodium-ion technology for its C rating and cycle count, but lithium-based technology is used in frac due to weight and size considerations in that space.