Liberty Energy Inc
For the period ended Sep 30, 2024. Filed Oct 17, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 17, 2024
LBRT$11.96+5.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-18.
0001694028-24-000082
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-17.
0001694028-24-000112
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 83 previous paragraphs and 84 current paragraphs.
46 unchanged; 31 reworded; 7 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
The oil markets reflect uncertainty across the global economy, OPEC+ production plans, Chinese economic growth, and Middle East geopolitical dynamics. However, global demand for oil is expected to grow by approximately one million barrels of oil per day in 2024 and is forecasted to do the same again in 2025. While global oil production may be in a surplus in 2025, oil prices are expected to remain relatively rangebound and supportive of North American E&P activity.
Current report
With respect to natural gas markets, producer curtailments and domestic power generation demand have led to recent increases in natural gas prices after storage congestion concerns eased. However, higher prices may not be sustained should they incentivize reversal of curtailments. The commissioning of LNG export facilities in the U.S. and Canada is expected to stimulate gas activity in 2025 and support natural gas demand.
Current report
Elevated uncertainty in energy markets has further left operators reluctant to accelerate completions activity in advance of the new year. Completions activity is expected to increase in early 2025 to support flattish E&P oil & gas production targets. Since late 2023, U.S. crude oil production has been relatively flat and would likely decline if current completions activity levels persist. Frac industry dynamics are poised to improve in 2025 from today’s levels.
Current report
Soft year end frac activity levels are pressuring prices in the near term to levels that are inconsistent with the anticipated market demand and supply of horsepower in 2025. It is important that service prices support investment, especially given aging equipment, industry underinvestment in next generation technologies, and growing fleet sizes.
Current report
General and administrative expenses increased$3.6 million, or 6.5%, to$58.6 million for the three months ended September 30, 2024 compared to $55.0 million for the three months ended September 30, 2023. The increase was primarily attributable to increased corporate costs to support our additional service offerings, partially offset by a decrease in cash incentive and stock-based compensation expense due to lower operating results compared to the prior year period.
Current report
Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023
Current report
General and administrative expenses increased $3.2 million, or 1.9%, to $169.3 million for the nine months ended September 30, 2024 compared to $166.1 million for the nine months ended September 30, 2023. The increase was primarily attributable to increased corporate costs to support our additional service offerings, partially offset by a decrease in cash incentive and stock-based compensation expense due to lower operating results compared to the prior year period.
Removed paragraphs (6)
Previous report
Global oil and gas markets are expected to remain constructive on favorable multi-year market fundamentals, despite near term volatility in commodity prices. In June 2024, a decision from OPEC+ to gradually unwind voluntary production cuts beginning in October drove oil prices lower. Even then, prices were well above those supportive of attractive E&P returns and have since recovered on relatively balanced supply and demand dynamics owing to resilient global economic growth and rising demand for transportation fuels with the summer travel season underway.
Previous report
Natural gas prices saw a resurgence from early spring lows on reduced drilling and completions activity and curtailed production. Recent reinstatement of some curtailed production has moved prices downward but still above recent cycle lows. The commissioning of new LNG export facilities and continued growth in power demand are expected to drive higher natural gas demand, and eventually firmer natural gas prices.
Previous report
Frac industry trends have moderated marginally in recent periods, on the heels of slightly softer drilling activity in both oil and gas basins during the first half of 2024. Industry-wide completions activity has declined to levels consistent with only flat oil and gas production, and we believe completions activity will need to increase from current levels in order for the U.S. to increase oil and gas production. We expect this to lead to a resurgence in demand for quality frac crews in 2025.
Previous report
General and administrative expenses were consistent between periods, decreasing$0.3 million, or 0.6%, to$57.7 million for the three months ended June 30, 2024 compared to $58.0 million for the three months ended June 30, 2023.
Previous report
Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023
Previous report
General and administrative expenses were consistent between periods, decreasing $0.4 million, or 0.3%, to $110.7 million for the six months ended June 30, 2024 compared to $111.1 million for the six months ended June 30, 2023.
Reworded paragraphs (31)
Previous wording
The Company, together with its subsidiaries, is a leading integrated energy services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas E&P companies in North America. We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies to facilitate lower emission completions, thereby helping our customers reduce their emissions profile. We have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of June 30, 2024. We provide our services primarily in the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the DJ Basin, and the Anadarko Basin. Our operations also extend to a few smaller shale basins, including the Uinta Basin, the Powder River Basin, and the San Juan Basin, as well as to two sand mines in the Permian Basin.
Current wording
The Company, together with its subsidiaries, is a leading integrated energy services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas E&P companies. We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies to facilitate lower emission completions, thereby helping our customers reduce their emissions profile. We have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of September 30, 2024. We provide our services primarily in the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the DJ Basin, and the Anadarko Basin. Our operations also extend to a few smaller shale basins, including the Uinta Basin, the Powder River Basin, and the San Juan Basin, as well as to two sand mines in the Permian Basin.
Previous wording
We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business. We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations. We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps, our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB; (vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; and (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield. In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers. In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate.
Current wording
We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business. We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations. We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps and other complementary equipment (together “digiTechnologies℠”), our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO 2 e emission profile than the Tier IV DGB; (vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; and (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield. In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers. In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate.
Previous wording
During the second quarter of 2024, the posted WTI price traded at an average of $81.81 per barrel (“Bbl”), as compared to the second quarter of 2023 average of $73.54 per Bbl, and the first quarter of 2024 average of $77.50 per Bbl. Subsequent to June 30, 2024, the WTI price traded at an average of $84.41 per Bbl through July 8, 2024. In addition, the average domestic onshore rig count for the United States and Canada was 716 rigs reported in the second quarter of 2024, down from the second quarter of 2023 of 815, and the first quarter of 2024 of 810, according to a report from Baker Hughes.
Current wording
During the third quarter of 2024, the posted WTI price traded at an average of $76.43 per barrel (“Bbl”), as compared to the third quarter of 2023 average of $82.25 per Bbl, and the second quarter of 2024 average of $81.81 per Bbl. In addition, the average domestic onshore rig count for the United States and Canada was 772 rigs reported in the third quarter of 2024, down from the third quarter of 2023 of 817, but up from the second quarter of 2024 of 716, according to a report from Baker Hughes.
Previous wording
Our revenue decreased$35.1 million, or 2.9%, to$1.2 billion for the three months ended June 30, 2024 compared to $1.2 billion for the three months ended June 30, 2023. The decrease in revenue was attributable to a decrease in materials pricing and slightly lower services prices, partially offset by higher activity levels. The impact of increased fleet efficiency more than exceeded a decrease in fleet utilization that resulted from lower industry demand for hydraulic fracturing services.
Current wording
Our revenue decreased $77.3 million, or 6.4%, to $1.1 billion for the three months ended September 30, 2024 compared to $1.2 billion for the three months ended September 30, 2023. The decrease in revenue was attributable to a decrease in service and materials pricing, partially offset by higher activity levels primarily from increased fleet efficiency.
Previous wording
Cost of services (excluding depreciation, depletion, and amortization) increased$2.3 million, or 0.3%, to$835.8 million for the three months ended June 30, 2024 compared to $833.5 million for the three months ended June 30, 2023. The increase in expense was primarily related to increased activity levels largely offset by decreases in materials pricing.
Current wording
Cost of services (excluding depreciation, depletion, and amortization) decreased $10.0 million, or 1.2%, to $840.3 million for the three months ended September 30, 2024 compared to $850.2 million for the three months ended September 30, 2023. The decrease in expense was primarily related to decreases in materials costs and lower repairs and maintenance costs, partially offset by increased personnel costs related to higher activity levels discussed above.
Previous wording
Transaction and other costs decreased $1.0 million, or 100.0%, to$0 million for the three months ended June 30, 2024 compared to$1.0 million for the three months ended June 30, 2023. The costs incurred during the three months ended June 30, 2023 primarily consisted of due diligence work for the Siren Acquisition. See Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
Current wording
Transaction and other costs decreased $0.2 million, or 100.0%, as the Company did not incur such costs for the three months ended September 30, 2024 compared to$0.2 million for the three months ended September 30, 2023. The costs incurred during the three months ended September 30, 2023 primarily consisted of due diligence work for the Siren Acquisition. See Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
Previous wording
Depreciation, depletion, and amortization expense increased$23.6 million, or 23.7%, to$123.3 million for the three months ended June 30, 2024 compared to $99.7 million for the three months ended June 30, 2023. The increase during the three months ended June 30, 2024 was due to additional equipment placed in service since the prior year quarter, including equipment related to the deployment of our digiTechnologies SM.
Current wording
Depreciation, depletion, and amortization expense increased$17.4 million, or 16.0%, to$126.4 million for the three months ended September 30, 2024 compared to $109.0 million for the three months ended September 30, 2023. The increase during the three months ended September 30, 2024 was due to additional equipment placed in service since the prior year period, including equipment related to the deployment of our digiTechnologies SM.
Previous wording
The Company recorded a loss on disposal of assets of $1.2 million for the three months ended June 30, 2024 compared to a gain of $3.7 million for the three months ended June 30, 2023, primarily related to sales of used field equipment and light duty trucks in a strong used vehicle and equipment market. All disposals were in the normal course of business.
Current wording
The Company recorded a loss on disposal of assets of $6.0 million for the three months ended September 30, 2024 compared to a gain of $3.8 million for the three months ended September 30, 2023. The loss for the three months ended September 30, 2024 related to the disposal of used older technology field equipment that was no longer operational. The gain for the three months ended September 30, 2023 primarily related to sales of used field equipment and light duty trucks in a strong used vehicle and equipment market.
Previous wording
Other expense, net decreased by $5.6 million, or 86.7%, to $0.9 million for the three months ended June 30, 2024 compared to $6.5 million for the three months ended June 30, 2023. Other expense, net is comprised of unrealized gain on investments, net, interest expense, net, and interest income—related party. The Company recorded an unrealized gain on investments, net of $7.2 million related to two equity investments measured at fair value during the three months ended June 30, 2024, compared to $0 for the three months ended June 30, 2023. Interest expense, net increased $1.2 million as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases. Additionally, interest income—related party decreased $0.4 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.
Current wording
Other expense, net increased by $4.5 million, or 67.0%, to $11.3 million for the three months ended September 30, 2024 compared to $6.8 million for the three months ended September 30, 2023. Other expense, net is comprised of unrealized loss on investments, net, interest expense, net, and interest income—related party. The Company recorded an unrealized loss on investments, net of $2.7 million related to two equity investments measured at fair value during the three months ended September 30, 2024, compared to $0 for the three months ended September 30, 2023. Interest expense, net increased $1.3 million as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases. Additionally, interest income—related party decreased $0.5 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.
Previous wording
The Company recognized income tax expense of $32.6 million for the three months ended June 30, 2024, an effective rate of 23.1%, compared to $47.3 million for the three months ended June 30, 2023, an effective rate of 23.7%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes.
Current wording
The Company recognized income tax expense of $22.2 million for the three months ended September 30, 2024, an effective rate of 23.1%, compared to $49.8 million for the three months ended September 30, 2023, an effective rate of 25.1%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes.
Previous wording
Our revenue decreased $224.1 million, or 9.1%, to $2.2 billion for the six months ended June 30, 2024 compared to $2.5 billion for the six months ended June 30, 2023. The decrease in revenue was primarily attributable to a decrease in materials pricing and slightly lower services prices, partially offset by higher activity levels. The impact of increased fleet efficiency more than exceeded a decrease in fleet utilization that resulted from lower industry demand for hydraulic fracturing services.
Current wording
Our revenue decreased $301.4 million, or 8.2%, to $3.4 billion for the nine months ended September 30, 2024 compared to $3.7 billion for the nine months ended September 30, 2023. The decrease in revenue was attributable to a decrease in service and materials pricing, partially offset by higher activity levels primarily from increased fleet efficiency.
Previous wording
Cost of services (excluding depreciation, depletion, and amortization) decreased $103.4 million, or 6.0%, to $1.6 billion for the six months ended June 30, 2024 compared to $1.7 billion for the six months ended June 30, 2023. The decrease in expense was primarily related to decreases in materials pricing and lower fleet utilization, partially offset by higher activity levels during the six months ended June 30, 2024.
Current wording
Cost of services (excluding depreciation, depletion, and amortization) decreased $113.4 million, or 4.4%, to $2.5 billion for the nine months ended September 30, 2024 compared to $2.6 billion for the nine months ended September 30, 2023. The decrease in expense was primarily related to decreases in materials costs and lower repairs and maintenance costs, partially offset by increased personnel costs related to higher activity levels discussed above.
Previous wording
Transaction and other costs decreased $1.6 million, or 100.0%, to $0.0 million for the six months ended June 30, 2024 compared to $1.6 million for the six months ended June 30, 2023. The costs incurred during the six months ended June 30, 2023 primarily consisted of due diligence work for the Siren Acquisition. See Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
Current wording
Transaction and other costs decreased $1.8 million, or 100.0%, as the Company did not incur such costs for the nine months ended September 30, 2024 compared to $1.8 million for the nine months ended September 30, 2023. The costs incurred during the nine months ended September 30, 2023 primarily consisted of due diligence work for the Siren Acquisition. See Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
Previous wording
Depreciation, depletion, and amortization expense increased $52.4 million, or 27.0%, to $246.5 million for the six months ended June 30, 2024 compared to $194.1 million for the six months ended June 30, 2023. The increase in 2024 was due to additional equipment placed in service since the prior year period, including equipment related to the deployment of our digiTechnologies SM.
Current wording
Depreciation, depletion, and amortization expense increased $69.8 million, or 23.0%, to $372.9 million for the nine months ended September 30, 2024 compared to $303.1 million for the nine months ended September 30, 2023. The increase in the nine months ended September 30, 2024 was due to additional equipment placed in service since the prior year period, including equipment related to the deployment of our digiTechnologies SM.
Previous wording
The Company recognized a loss on disposal of assets of $0.1 million for the six months ended June 30, 2024 compared to a gain of $3.2 million for the six months ended June 30, 2023, primarily related to sales of used field equipment and light duty trucks in a strong used vehicle and equipment market. All disposals were in the normal course of business.
Current wording
The Company recognized a loss on disposal of assets of $6.1 million for the nine months ended September 30, 2024 compared to a gain of $7.0 million for the nine months ended September 30, 2023. The loss for the nine months ended September 30, 2024 related to the disposal of used older technology field equipment that was no longer operational. The gain for the nine months ended September 30, 2023 primarily related to sales of used field equipment and light duty trucks in a strong used vehicle and equipment market.
Previous wording
Other expense, net decreased by $6.4 million to $7.9 million for the six months ended June 30, 2024 compared to $14.4 million for the six months ended June 30, 2023. Other expense, net is comprised of unrealized gain on investments, net, interest expense, net, and interest income—related party. The Company recorded an unrealized gain on investments, net of $7.2 million related to two equity investments measured at fair value during the six months ended June 30, 2024, compared to $0 for the six months ended June 30, 2023. Interest expense, net increased $0.5 million as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases. Additionally, interest income—related party decreased $0.2 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.
Current wording
Other expense, net decreased by $1.9 million to $19.2 million for the nine months ended September 30, 2024 compared to $21.1 million for the nine months ended September 30, 2023. Other expense, net is comprised of unrealized gain on investments, net, interest expense, net, and interest income—related party. The Company recorded an unrealized gain on investments, net of $4.5 million related to two equity investments measured at fair value during the nine months ended September 30, 2024, compared to $0 for the nine months ended September 30, 2023. Interest expense, net increased $1.8 million as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases. Additionally, interest income—related party decreased $0.8 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.
Previous wording
The Company recognized income tax expense of $59.0 million for the six months ended June 30, 2024, an effective rate of 23.7%, compared to $101.8 million for the six months ended June 30, 2023, an effective rate of 24.4%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes.
Current wording
The Company recognized income tax expense of $81.2 million for the nine months ended September 30, 2024, an effective rate of 23.5%, compared to $151.7 million for the nine months ended September 30, 2023, an effective rate of 24.6%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes.
Previous wording
We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization. We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, gain or loss on the disposal of assets, bad debt reserves, transaction and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, net, and other non-recurring expenses that management does not consider in assessing ongoing performance.
Current wording
We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization. We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, gain or loss on the disposal of assets, bad debt reserves, transaction and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the unrealized gain or loss on investments, net, and other non-recurring expenses that management does not consider in assessing ongoing performance.
Previous wording
Three and Six Months Ended June 30, 2024, Compared to Three and Six Months Ended June 30, 2023: EBITDA and Adjusted EBITDA
Current wording
Three and Nine Months Ended September 30, 2024, Compared to Three and Nine Months Ended September 30, 2023: EBITDA and Adjusted EBITDA
Previous wording
EBITDA was$272.3 million for the three months ended June 30, 2024 compared to $306.2 million for the three months ended June 30, 2023. Adjusted EBITDA was$273.3 million for the three months ended June 30, 2024 compared to $311.5 million for the three months ended June 30, 2023. The decreases in EBITDA and Adjusted EBITDA primarily resulted from modestly lower pricing and changes in activity levels as described above under the captions Revenue, Cost of Services, and General and Administrative for the Three Months Ended June 30, 2024, Compared to the Three Months Ended June 30, 2023.
Current wording
EBITDA was$230.9 million for the three months ended September 30, 2024 compared to $314.2 million for the three months ended September 30, 2023. Adjusted EBITDA was$247.8 million for the three months ended September 30, 2024 compared to $319.2 million for the three months ended September 30, 2023. The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and partially offset by changes in activity levels as described above under the captions Revenue, Cost of Services, and General and Administrative for the Three Months Ended September 30, 2024, Compared to the Three Months Ended September 30, 2023.
Previous wording
EBITDA was $511.0 million for the six months ended June 30, 2024 compared to $625.7 million for the six months ended June 30, 2023. Adjusted EBITDA was $518.0 million for the six months ended June 30, 2024 compared to $641.3 million for the six months ended June 30, 2023. The decreases in EBITDA and Adjusted EBITDA primarily resulted from modestly lower pricing and changes in activity levels as described above under the captions Revenue, Cost of Services, and General and Administrative for the Six Months Ended June 30, 2024, Compared to the Six Months Ended June 30, 2023.
Current wording
EBITDA was $741.9 million for the nine months ended September 30, 2024 compared to $939.9 million for the nine months ended September 30, 2023. Adjusted EBITDA was $765.9 million for the nine months ended September 30, 2024 compared to $960.6 million for the nine months ended September 30, 2023. The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and partially offset by changes in activity levels as described above under the captions Revenue, Cost of Services, and General and Administrative for the Nine Months Ended September 30, 2024, Compared to the Nine Months Ended September 30, 2023.
Previous wording
Our primary sources of liquidity consist of cash flows from operations and borrowings under our ABL Facility. We expect to fund operations and organic growth with these sources. We monitor the availability and cost of capital resources such as equity, debt, and lease financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements. We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition. Our primary uses of capital have been capital expenditures to support organic growth and funding ongoing operations, including maintenance and fleet upgrades, as well as the repurchases of, and dividends on, shares of our Class A Common Stock.
Current wording
Our primary sources of liquidity consist of cash flows from operations and borrowings under our ABL Facility (as defined below). We expect to fund operations and organic growth with these sources. We monitor the availability and cost of capital resources such as equity, debt, and lease financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements. We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition. Our primary uses of capital have been capital expenditures to support organic growth and funding ongoing operations, including maintenance and fleet upgrades, as well as the repurchases of, and dividends on, shares of our Class A Common Stock.
Previous wording
Cash and cash equivalents decreased by $6.8 million to $30.0 million as of June 30, 2024 compared to $36.8 million as of December 31, 2023, while working capital excluding cash and current liabilities under lease arrangements decreased $32.0 million.
Current wording
Cash and cash equivalents decreased by $13.8 million to $23.0 million as of September 30, 2024 compared to $36.8 million as of December 31, 2023, while working capital excluding cash and current liabilities under lease arrangements decreased $101.5 million.
Previous wording
As of June 30, 2024, the Company had one credit agreement outstanding, a revolving line of credit up to $525.0 million (the “ABL Facility”). The ABL Facility is subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs. As of June 30, 2024, the borrowing base was calculated to be $395.6 million, and the Company had $147.0 million outstanding, in addition to a letter of credit in the amount of $7.4 million, with $241.2 million of remaining availability.
Current wording
As of September 30, 2024, the Company had one credit agreement outstanding, a revolving line of credit up to $525.0 million (the “ABL Facility”). The ABL Facility is subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs. As of September 30, 2024, the borrowing base was calculated to be $459.7 million, and the Company had $123.0 million outstanding, in addition to letters of credit in the amount of $7.4 million, with $329.3 million of remaining availability.
Previous wording
Under our share repurchase program, the Company is authorized to repurchase up to $750.0 million of outstanding Class A Common Stock through and including July 31, 2026. Shares may be repurchased from time to time for cash in the open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with applicable federal securities laws. The timing and the amount of repurchases will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended or terminated at any time without prior notice. The Company expects to fund any repurchases by using cash on hand, borrowings under its revolving credit facility, and expected free cash flow to be generated through the duration of the share repurchase program. During the three and six months ended June 30, 2024, the Company repurchased and retired shares of Class A Common Stock for $29.6 million and $59.7 million, respectively, under the share repurchase program.
Current wording
Under our share repurchase program, the Company is authorized to repurchase up to $750.0 million of outstanding Class A Common Stock through and including July 31, 2026. Shares may be repurchased from time to time for cash in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions, or by other means in accordance with applicable federal securities laws. The timing and the amount of repurchases will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended or terminated at any time without prior notice. The Company expects to fund any repurchases by using cash on hand, borrowings under the ABL Facility, and expected free cash flow to be generated through the duration of the share repurchase program. During the three and nine months ended September 30, 2024, the Company repurchased and retired shares of Class A Common Stock for $39.4 million and $99.1 million, respectively, under the share repurchase program.
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Analysis of Cash Flow Changes Between the Six Months Ended June 30, 2024 and 2023
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Analysis of Cash Flow Changes Between the Nine Months Ended September 30, 2024 and 2023
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Operating Activities. Net cash provided by operating activities was$407.6 million for the six months ended June 30, 2024, compared to $444.4 million for the six months ended June 30, 2023. The $36.8 million decrease in cash from operating activities is primarily attributable to a$224.1 million decrease in revenues, offset by a $145.5 million decrease in cash operating expenses, interest expense, net, and income tax, and a$37.6 million decreasein cash from changes in working capital for the six months ended June 30, 2024, compared to a $79.4 million decrease in cash from changes in working capital for thesix months ended June 30, 2023.
Current wording
Operating Activities. Net cash provided by operating activities was$652.1 million for the nine months ended September 30, 2024, compared to $719.8 million for the nine months ended September 30, 2023. The $67.8 million decrease in cash from operating activities is primarily attributable to a$301.4 million decrease in revenues, offset by a $179.9 million decrease in cash operating expenses, interest expense, net, and income tax, and a$10.6 million decreasein cash from changes in working capital for the nine months ended September 30, 2024, compared to a $64.3 million decrease in cash from changes in working capital for thenine months ended September 30, 2023.
Previous wording
Investing Activities. Net cash used in investing activities was $292.1 million for the six months ended June 30, 2024, compared to $356.3 million for the six months ended June 30, 2023. Cash used in investing activities was lower during the six months ended June 30, 2024, compared to the six months ended June 30, 2023 primarily due to the Siren Acquisition and modestly higher capital spending in the prior year period, partially offset by equity investments in the current year period. The Company purchased Siren Energy for $74.9 million in cash, net of cash received, during the six months ended June 30, 2023. Refer to Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to the acquisition. Investments in equipment, including the new digiTechnologies SMsuite and capitalized maintenance of existing equipment decreased $11.3 million, from $292.3 million for the six months ended June 30, 2023 to $281.0 million for the six months ended June 30, 2024. Finally, during the three months ended June 30, 2024, the Company spent $16.1 million for equity investments in Tamboran Resources Corporation, Empire Energy Group Ltd., and Falcon Oil & Gas Ltd.
Current wording
Investing Activities. Net cash used in investing activities was $455.0 million for the nine months ended September 30, 2024, compared to $528.4 million for the nine months ended September 30, 2023. Cash used in investing activities was lower during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 primarily due to the Siren Acquisition, modestly higher capital spending in the prior year period, and lower proceeds from asset sales, partially offset by equity investments in the current year period. The Company purchased Siren Energy for $75.7 million in cash, net of cash received, during the nine months ended September 30, 2023. Refer to Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to the acquisition. Investments in equipment, including the new digiTechnologies SMsuite and capitalized maintenance of existing equipment decreased $17.7 million, from $465.2 million for the nine months ended September 30, 2023 to $447.5 million for the nine months ended September 30, 2024. Proceeds from asset sales decreased $13.8 million, from $22.4 million to $8.6 million as the Company benefited from strong used vehicle and equipment markets in the prior period. Finally, during the nine months ended September 30, 2024, the Company spent $16.1 million for equity investments in Tamboran Resources Corporation, Empire Energy Group Ltd., and Falcon Oil & Gas Ltd, compared to $10.0 million for an equity investment in Oklo Inc. during the nine months ended September 30, 2023.
Previous wording
Financing Activities. Net cash used in financing activities was $122.0 million for the six months ended June 30, 2024, compared to net cash used in financing activities of $100.2 million for the six months ended June 30, 2023. The $21.8 million increase in cash used in financing activities was primarily due to a $15.4 million increase in cash paid for finance leases, $10.4 million increase in cash tax withholding on restricted stock unit vestings, and a $6.3 million increase in dividends paid, combined with a $61.3 million decrease in net proceeds from borrowings, offset by a $75.0 million decrease in share repurchases for the six months ended June 30, 2024, compared to the six months ended June 30, 2023.
Current wording
Financing Activities. Net cash used in financing activities was $210.8 million for the nine months ended September 30, 2024, compared to net cash used in financing activities of $208.3 million for the nine months ended September 30, 2023. The $2.5 million increase in cash used in financing activities was primarily due to a $24.0 million increase in cash paid for finance leases, a $10.4 million increase in cash tax withholding on restricted stock unit vestings, and a $9.3 million increase in dividends paid, combined with net repayment of borrowings of $17.0 million during the current year period compared to $3.3 million in net borrowings during the prior year, offset by a $64.9 million decrease in share repurchases for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
Previous wording
Our material cash commitments consist primarily of obligations under long-term debt on the ABL Facility, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations. Certain amounts included in our contractual obligations as of June 30, 2024 are based on our estimates and assumptions about these obligations, including pricing, volumes, and duration. We have no material off balance sheet arrangements as of June 30, 2024, except for purchase commitments under supply agreements of $60.4 million payable within 2024, and $13.0 million payable thereafter. See Note 14—Commitments & Contingencies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for information regarding scheduled contractual obligations. During the three and six months ended June 30, 2024, the Company expanded its equipment lease facilities resulting in an increase in finance lease obligations of $51.4 million and $81.5 million, respectively. The term on these new leases range from three to five years.
Current wording
Our material cash commitments consist primarily of obligations under long-term debt on the ABL Facility, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations. Certain amounts included in our contractual obligations as of September 30, 2024 are based on our estimates and assumptions about these obligations, including pricing, volumes, and duration. We have no material off balance sheet arrangements as of September 30, 2024, except for purchase commitments under supply agreements of $36.6 million payable within 2024, and $13.0 million payable thereafter. See Note 14—Commitments & Contingencies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for information regarding scheduled contractual obligations. During the three and nine months ended September 30, 2024, the Company expanded its equipment lease facilities resulting in the addition of $47.5 million and $129.0 million, respectively, in new finance lease obligations. The term on these new leases range from three to five years.
Previous wording
The effective global income tax rate applicable to the Company for the six months ended June 30, 2024 was 23.7% compared to 24.4%, for the period ended June 30, 2023. The Company’s effective tax rate is greater than the statutory federal income tax rate of 21.0% due to the Company’s Canadian operations, state income taxes in the states the Company operates, as well as nondeductible executive compensation. The Company recognized an income tax expense of $32.6 million and $59.0 million during the three and six months ended June 30, 2024, respectively, and $47.3 million and $101.8 million for the three and six months ended June 30, 2023, respectively.
Current wording
The effective global income tax rate applicable to the Company for the nine months ended September 30, 2024 was 23.5% compared to 24.6%, for the period ended September 30, 2023. The Company’s effective tax rate is greater than the statutory federal income tax rate of 21.0% due to the Company’s Canadian operations, state income taxes in the states the Company operates, as well as nondeductible executive compensation. The Company recognized an income tax expense of $22.2 million and $81.2 million during the three and nine months ended September 30, 2024, respectively, and $49.8 million and $151.7 million for the three and nine months ended September 30, 2023, respectively.