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Liberty Oilfield Services Fourth Quarter, Full Year 2021 Results

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Liberty Oilfield Services Inc. reported fourth quarter and full year 2021 financial and operational results.

Summary Results and Highlights:

• Revenue of $2.5 billion and net loss¹ of $187 million, or $1.03 fully diluted loss per share, for the year ended December 31, 2021
• Adjusted EBITDA² of $121 million for the year ended December 31, 2021
• Revenue of $684 million for the quarter ended December 31, 2021, a 5% increase from the third quarter
• Net loss¹ of $57 million, or $0.31 fully diluted loss per share, for the quarter ended December 31, 2021
• Adjusted EBITDA² of $21 million for the quarter ended December 31, 2021
• Acquisition and integration of OneStim® and PropX to optimize Liberty platform with enhanced technology and scale
• Record revenue, proppant and stages pumped in 2021
• Best safety performance in Company history in 2021

Chris Wright, Chief Executive Officer, commented: “2021 was a record year for Liberty work performed whether measured by revenues, frac stages or pounds of sand pumped. We also set many operational records during 2021. All of this was achieved in challenging times and executed with our best safety performance in Company history.

“In 2021, the focus was the integration of OneStim and its customers into Liberty. We acquired OneStim to strengthen our platform and technology portfolio during a downturn to position us for today’s rising tide and all future cycles. In our eleven-year history we have seen two deep downturns, 2015 to 2016 and the recent Covid-induced downturn, and we have executed transformative transactions during both. Investment decisions at Liberty are always made with a long-term time horizon,” continued Mr. Wright.

“Business integrations are always challenging, this time exacerbated by Covid-impacted supply chain and difficult labor challenges. However, the prize was large and our team worked in overdrive to bring nearly 2,000 new team members into Liberty while continuing to deliver superior service performance to all of our customers, both legacy and new. In the fourth quarter, we estimate integration and transition activities negatively impacted adjusted EBITDA by over $20 million. We were simply not willing to sacrifice customer service, employee satisfaction and safety, each of which is critical to long-term financial success, even though there was a financial cost to our 2021 financial results. Integration-related costs are still with us today, impacting our bottom-line results. However, January was a significant turning point in moving these cost pressures behind us,” continued Mr. Wright.

Outlook

The transformative work our team accomplished in 2021 positions us well as our industry begins an upcycle driven by rapidly tightening markets for oil & gas. Seven years of subdued global investment in upstream oil and gas production is now colliding with record global demand for natural gas and natural gas liquids today, and likely record global demand for oil later this year. Oil and gas are central to the global economy which is well along the way of recovering from the global pandemic. The severe energy crisis that has wracked Europe over the last several months demonstrates the danger of underinvestment in our industry.

E&P operators are responding to oil and gas price signals. The public operators are maintaining discipline and will show only modest production growth this year, while the private operators are reacting more robustly to strong commodity prices.

Within the frac market, two years of supply attrition and cannibalization plus constraints from labor shortages, and a secular shift towards next generation frac fleet technologies has led to tightness in the frac space. Liberty has focused on finding the right long-term partnerships for the coming years and has been very disciplined in holding our active frac fleet count steady until returns are strong.

“In the first quarter, we expect high single digit sequential revenue growth and strong improvement in our margins as integration costs start to fade away. We are benefiting from increased pricing in 2022, driven by a pass-through of inflationary costs and higher net service pricing. We expect continued modest rises in frac pricing in subsequent quarters. We also expect margin growth as our new strategic efforts begin to pay dividends in lowering our cost of operations and increasing efficiency,” commented Mr. Wright.

“We are excited for the opportunity ahead and are investing to build truly differential competitive advantages in frac fleet technology, digital systems, and logistics optimization bolstered by the PropX acquisition. We expect that our investments today will lead to strong returns in the coming years,” continued Mr. Wright.

2021 Full Year Results

For the year ended December 31, 2021, revenue increased 156% to $2.5 billion compared to $966 million in 2020.

Net loss before incomes taxes totaled $178 million for the year ended December 31, 2021 compared to $192 million for the year ended December 31, 2020. Net loss before income taxes for the year ended December 31, 2021 included non-recurring transaction, severance and other costs of $15.1 million compared to $21.1 million for the year ended December 31, 2020.

Net loss¹ (after taxes) totaled $187 million for the year ended December 31, 2021 compared to net loss¹ of $161 million for the year ended December 31, 2020.

Fully diluted loss per share was $1.03 for the year ended December 31, 2021 compared to a loss of $1.36 per share for the year ended December 31, 2020.

Fourth Quarter Results

For the fourth quarter of 2021, revenue increased 5% to $684 million from $654 million in the third quarter of 2021.

Net loss before income taxes totaled $57 million for the fourth quarter of 2021 compared to net loss before income taxes of $39 million for the third quarter of 2021. Net loss before income taxes for the fourth quarter of 2021 included non-recurring transaction, severance and other costs of $3.0 million compared to $1.6 million in the third quarter of 2021.

Net loss¹ (after taxes) totaled $57 million for the fourth quarter of 2021 compared to net loss¹ of $39 million in the third quarter of 2021.

Adjusted EBITDA² decreased to $21 million from $32 million in the third quarter.

Fully diluted loss per share was $0.31 for the fourth quarter of 2021, a decrease from $0.22 for the third quarter of 2021.

Balance Sheet and Liquidity

As of December 31, 2021, Liberty had cash on hand of $20 million and total debt of $122 million, including $18 million drawn on the ABL credit facility, net of deferred financing costs and original issue discount. The term loan requires only a 1% annual amortization of principal, paid quarterly. Total liquidity, including availability under the credit facility, was $269 million.