UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2024
OR
Commission File No. 001-38081
| (Exact Name of Registrant as Specified in its Charter) | ||||||||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
( (Registrant’s Telephone Number, Including Area Code) | ||||||||||||||
| Securities registered pursuant to section 12(b) of the Act: | ||||||||||||||
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company | |||||||||
Emerging growth company ☐ (Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No
As of July 15, 2024, the registrant had 165,332,351 shares of Class A Common Stock and 0 shares of Class B Common Stock outstanding.
Our Class A Common Stock is traded on the New York Stock Exchange under the symbol “LBRT.” There is no public market for our Class B Common Stock.
TABLE OF CONTENTS
| Page No. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) and certain other communications made by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange of 1934, as amended (the “Exchange Act”), including, among others, expected performance, future operating results, oil and natural gas demand and prices and the outlook for the oil and gas industry, future global economic conditions, the impact of the Russian invasion of Ukraine, the impact of announcements and changes in oil production quotas by oil exporting countries, improvements in operating procedures and technology, our business strategy and the business strategies of our customers, in addition to other estimates, and beliefs. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We may use the words “estimate,” “outlook,” “project,” “forecast,” “position,” “potential,” “likely,” “believe,” “anticipate,” “assume,” “plan,” “expect,” “intend,” “achievable,” “may,” “will,” “continue,” “should,” “could” and similar expressions to help identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. We cannot assure you that our assumptions and expectations will prove to be correct. Important factors, many of which are beyond our control, could cause our actual results to differ materially from those indicated or implied by forward-looking statements, including but not limited to the risks and uncertainties described in our most recently filed Annual Report for the year ended December 31, 2023, this Quarterly Report, and other filings that we make with the U.S. Securities Exchange Commission (the “SEC”). We undertake no intention or obligation to update or revise any forward-looking statements, except as required by law, whether as a result of new information, future events or otherwise and readers should not rely on the forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
ii
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
LIBERTY ENERGY INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
| June 30, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable—trade, net of allowances for credit losses of $ | |||||||||||
| Accounts receivable—related party | |||||||||||
Unbilled revenue (including amounts from related parties of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Finance lease right-of-use assets | |||||||||||
| Operating lease right-of-use assets | |||||||||||
Other assets (including amounts from related parties of $ | |||||||||||
| Investment in Oklo Inc. | |||||||||||
| Investment in Tamboran Resources Corporation | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued liabilities | |||||||||||
| Income taxes payable | |||||||||||
| Current portion of payable pursuant to tax receivable agreements | |||||||||||
| Current portion of finance lease liabilities | |||||||||||
| Current portion of operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Deferred tax liability | |||||||||||
| Payable pursuant to tax receivable agreements | |||||||||||
| Noncurrent portion of finance lease liabilities | |||||||||||
| Noncurrent portion of operating lease liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments & contingencies (Note 14) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred Stock, $ | |||||||||||
| Common Stock: | |||||||||||
Class A, $ | |||||||||||
Class B, $ | |||||||||||
| Additional paid in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements.
1
LIBERTY ENERGY INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||||||||
| Revenue—related parties | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Operating costs and expenses: | |||||||||||||||||||||||
| Cost of services (exclusive of depreciation, depletion, and amortization shown separately below) | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Transaction and other costs | |||||||||||||||||||||||
| Depreciation, depletion, and amortization | |||||||||||||||||||||||
| Loss (gain) on disposal of assets | ( | ( | |||||||||||||||||||||
| Total operating costs and expenses | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other expense: | |||||||||||||||||||||||
| Unrealized gain on investments, net | ( | ( | |||||||||||||||||||||
| Interest income—related party | ( | ( | ( | ||||||||||||||||||||
| Interest expense, net | |||||||||||||||||||||||
| Total other expense, net | |||||||||||||||||||||||
| Net income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net income attributable to non-controlling interests | |||||||||||||||||||||||
| Net income attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Net income attributable to Liberty Energy Inc. stockholders per common share: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
2
LIBERTY ENERGY INC.
Condensed Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income | |||||||||||||||||||||||
| Foreign currency translation | ( | ( | |||||||||||||||||||||
| Comprehensive income | $ | $ | $ | $ | |||||||||||||||||||
| Comprehensive income attributable to non-controlling interest | |||||||||||||||||||||||
| Comprehensive income attributable to Liberty Energy Inc. | $ | $ | $ | $ | |||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
3
LIBERTY ENERGY INC.
Condensed Consolidated Statements of Changes in Equity
(In thousands, except per unit and per share data)
(Unaudited)
| Shares of Class A Common Stock | Shares of Class B Common Stock | Class A Common Stock, Par Value | Class B Common Stock, Par Value | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance—December 31, 2023 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
$ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Excise tax on share repurchases | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance—June 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
| Shares of Class A Common Stock | Shares of Class B Common Stock | Class A Common Stock, Par Value | Class B Common Stock, Par Value | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance—December 31, 2022 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchanges of Class B Common Stock for Class A Common Stock | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offering costs | — | — | — | — | ( | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred tax and tax receivable agreements impact of Liberty LLC merger into the Company | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
$ | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | ( | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Excise tax on share repurchases | — | — | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net | — | — | ( | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance—June 30, 2023 | $ | $ | $ | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
4
LIBERTY ENERGY INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, depletion, and amortization | |||||||||||
| Loss (gain) on disposal of assets | ( | ||||||||||
| Stock-based compensation expense | |||||||||||
| Unrealized gain on investments, net | ( | ||||||||||
| Cash return on equity method investment | |||||||||||
| Other non-cash items, net | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable and unbilled revenue | ( | ( | |||||||||
| Accounts receivable and unbilled revenue—related party | ( | ||||||||||
| Inventories | ( | ||||||||||
| Prepaid and other assets | ( | ( | |||||||||
| Accounts payable and accrued liabilities | |||||||||||
| Initial payment of operating lease liability | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment and construction in-progress | ( | ( | |||||||||
| Investment in Tamboran Resources Corporation, Empire Energy Group Ltd., and Falcon Oil & Gas Ltd. | ( | ||||||||||
| Acquisition of Siren Energy, net of cash received | ( | ||||||||||
| Proceeds from sale of assets | |||||||||||
Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from borrowings on line-of-credit | |||||||||||
| Repayments of borrowings on line-of-credit | ( | ( | |||||||||
| Repayments of borrowings on term loan | ( | ||||||||||
| Payments on finance lease obligations | ( | ( | |||||||||
| Class A Common Stock dividends and dividend equivalents upon restricted stock vesting | ( | ( | |||||||||
| Payments of payables pursuant to tax receivable agreements | ( | ||||||||||
| Share repurchases | ( | ( | |||||||||
| Tax withholding on restricted stock units | ( | ( | |||||||||
| Payments of equity issuance costs | ( | ||||||||||
| Payments of debt issuance costs | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
| Net decrease in cash and cash equivalents before translation effect | ( | ( | |||||||||
| Translation effect on cash | ( | ||||||||||
| Cash and cash equivalents—beginning of period | |||||||||||
| Cash and cash equivalents—end of period | $ | $ | |||||||||
5
LIBERTY ENERGY INC.
Condensed Consolidated Statements of Cash Flows (cont.)
(Dollars in thousands)
(Unaudited)
| Six Months Ended June 30, | |||||||||||
| 2024 | 2023 | ||||||||||
| Supplemental disclosure of cash flow information: | |||||||||||
| Net cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Capital expenditures included in accounts payable and accrued liabilities | $ | $ | |||||||||
| Capital expenditures reclassified from prepaid and other current assets | $ | $ | |||||||||
| Capital expenditures reclassified from finance lease right-of-use assets | $ | $ | |||||||||
See Notes to Condensed Consolidated Financial Statements.
6
Note 1—Organization and Basis of Presentation
Organization
Liberty Energy Inc., formerly known as Liberty Oilfield Services Inc. (the “Company”), was incorporated as a Delaware corporation on December 21, 2016, to become a holding corporation for Liberty Oilfield Services New HoldCo LLC (“Liberty LLC”) and its subsidiaries upon completion of a corporate reorganization (the “Corporate Reorganization”) and planned initial public offering of the Company (“IPO”). On April 19, 2022, the stockholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation for the purpose of changing the Company’s name from “Liberty Oilfield Services Inc.” to “Liberty Energy Inc.” and thereafter, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect the new name, effective April 25, 2022.
Effective January 31, 2023, Liberty LLC was merged into the Company, with the Company surviving the merger (the “Merger”). In connection with the Merger, all outstanding shares of the Company’s Class B Common Stock, par value $0.01 per share (the “Class B Common Stock”), were redeemed and exchanged for an equal number of shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”). The Company did not make any distributions or receive any proceeds in connection with this exchange. The Merger did not have a significant impact on the Company’s consolidated financial statements.
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 exploration and production (“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, compressed natural gas (“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.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the annual financial statements and notes thereto included in the Annual Report.
The accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of June 30, 2024 and December 31, 2023, the results of operations and equity of the Company as of and for the three and six months ended June 30, 2024 and 2023, and cash flows for the six months ended June 30, 2024 and 2023. The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2024. Further, these estimates and other factors, including those outside the Company’s control, such as the impact of sustained lower commodity prices, could have a significant adverse impact to the Company’s financial condition, results of operations, and cash flows.
All intercompany amounts have been eliminated in the presentation of the unaudited condensed consolidated financial statements of the Company. The Company’s operations are organized into a single reportable segment, which consists of hydraulic fracturing and related goods and services.
Note 2—Significant Accounting Policies
Recently Issued Accounting Standards
Segment Reporting: Improvements to Reportable Segment Disclosures
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting: Improvements to Reportable Segment Disclosures, which requires more detailed disclosures, on an annual and interim basis, related to the Company’s reportable segment. The guidance is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Although the Company has only one reportable segment, the Company is currently assessing the impact of this ASU on the Company’s financial statements.
7
Income Taxes: Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires disaggregation of certain components included in the Company’s effective tax rate and income taxes paid disclosures. The guidance is effective for annual periods beginning after December 15, 2024. The Company is currently assessing the impact of this ASU on the Company’s financial statements but does not expect it will have a material impact.
Siren Acquisition
On April 6, 2023, the Company completed the acquisition of a Permian focused integrated natural gas compression and compressed natural gas delivery business, Siren Energy & Logistics, LLC, for cash consideration of $75.7 million, after post-closing adjustments and net of cash received, (the “Siren Acquisition”). The Siren Acquisition was accounted for under the acquisition method of accounting for business combinations. Accordingly, the Company conducted assessments of the net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisition were expensed as incurred. In connection with the Siren Acquisition, the Company recorded goodwill of $42.0 million, property and equipment of $34.9 million, net working capital of $2.5 million, deferred revenue of $5.2 million, and other assets of $1.8 million. Goodwill is recorded in other assets and deferred revenue is recorded in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets. Due to the immateriality of the Siren Acquisition, the related revenue and earnings, supplemental pro forma financial information, and detailed purchase price allocation are not disclosed.
Reclassifications
Certain amounts in the prior period financial statements have been reclassified to conform to current period financial statement presentation. The Company combined amounts previously presented within “Effect of exchange on deferred tax asset, net of liability under tax receivable agreements” and “Deferred tax impact of ownership changes from issuance of Class A Common Stock” into “Deferred tax and tax receivable agreements impact of the Liberty LLC merger into the Company”. Additionally, amounts in the prior period financial statements have been reclassified from “Tax withheld on vesting of restricted stock units” into “Vesting of restricted stock units, net” in the accompanying unaudited condensed consolidated statements of changes in equity.
In the accompanying unaudited condensed consolidated statement of cash flows, amounts in the prior period financial statements have been reclassified from “Inventory write-down” and “Non-cash lease expense” into “Other non-cash items, net”. Additionally, amounts in the prior period financial statements have been reclassified from “Deferred revenue” into “Accounts payable and accrued liabilities”.
Additionally, in the accompanying unaudited condensed consolidated balance sheets, amounts in the prior period financial statements have been reclassified from “Other assets” into “Investment in Oklo Inc.” and “Investment in Tamboran Resources Corporation”.
Note 3—Inventories
Inventories consist of the following:
| June 30, | December 31, | ||||||||||
| ($ in thousands) | 2024 | 2023 | |||||||||
| Proppants | $ | $ | |||||||||
| Chemicals | |||||||||||
| Maintenance parts | |||||||||||
| $ | $ | ||||||||||
During the three and six months ended June 30, 2024, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to the inventory carrying value of $1.0 5.8 million.
8
Note 4—Property and Equipment
Property and equipment consist of the following:
| Estimated useful lives (in years) | June 30, | December 31, | |||||||||||||||
| ($ in thousands) | 2024 | 2023 | |||||||||||||||
| Land | N/A | $ | $ | ||||||||||||||
| Field services equipment | |||||||||||||||||
| Vehicles | |||||||||||||||||
| Lease equipment | |||||||||||||||||
| Buildings and facilities | |||||||||||||||||
| Mineral reserves | > | ||||||||||||||||
| Office equipment and furniture | |||||||||||||||||
| Less accumulated depreciation and depletion | ( | ( | |||||||||||||||
| Construction in-progress | N/A | ||||||||||||||||
| Property and equipment, net | $ | $ | |||||||||||||||
During the three months ended June 30, 2024 and 2023, the Company recognized depreciation expense of $110.0 million and $92.9 million, respectively. During the six months ended June 30, 2024 and 2023, the Company recognized depreciation expense of $220.9 million and $181.4 million, respectively. Depletion expense for the three months ended June 30, 2024 and 2023 was $0.3 0.6
As of June 30, 2024 and December 31, 2023, the Company concluded that no triggering events that could indicate possible impairment of property and equipment had occurred, other than related to the assets held for sale discussed below.
As of June 30, 2024, the Company classified $1.2 million of land and $2.8 million of buildings, net of accumulated depreciation, of two properties that it intends to sell within the next year, and that meet the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet. The Company estimates that the carrying value of the assets is equal to the fair value less the estimated costs to sell, net of write-downs taken in the prior period, and therefore no gain or loss was recorded during the six months ended June 30, 2024.
Additionally, as of December 31, 2023, the Company classified $0.7 million of land and $0.8 million of buildings, net of accumulated depreciation, of one property that it intends to sell within the next year, and that meets the held for sale criteria, as assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet.
As of June 30, 2023, the Company classified $0.7 million of land and $0.8 million of buildings, net of accumulated depreciation, of one property as assets held for sale. The Company estimated that carrying value of the assets was equal to the fair value less the estimated costs to sell, net of write-downs taken in the prior period ended March 31, 2023, and therefore no gain or loss was recorded during the six months ended June 30, 2023.
Note 5—Leases
The Company has operating and finance leases primarily for vehicles, equipment, railcars, office space, and facilities. The terms and conditions for these leases vary by the type of underlying asset.
Certain leases include variable lease payments for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Payments that vary based on an index or rate are included in the measurement of lease assets and liabilities at the rate as of the commencement date. All other variable lease payments are excluded from the measurement of lease assets and liabilities, and are recognized in the period in which the obligation for those payments is incurred.
9
The components of lease expense for the three and six months ended June 30, 2024 and 2023 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||
| Amortization of right-of-use assets | $ | $ | $ | $ | |||||||||||||||||||
| Interest on lease liabilities | |||||||||||||||||||||||
| Operating lease cost | |||||||||||||||||||||||
| Variable lease cost | |||||||||||||||||||||||
| Short-term lease cost | |||||||||||||||||||||||
| Total lease cost, net | $ | $ | $ | $ | |||||||||||||||||||
Supplemental cash flow and other information related to leases for the three and six months ended June 30, 2024 and 2023 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| ($ in thousands) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Cash paid for amounts included in measurement of liabilities: | |||||||||||||||||||||||
| Operating leases | $ | $ | $ | $ | |||||||||||||||||||
| Finance leases | |||||||||||||||||||||||
| Right-of-use assets obtained in exchange for new lease liabilities: | |||||||||||||||||||||||
| Operating leases | |||||||||||||||||||||||
| Finance leases | |||||||||||||||||||||||
During the three months ended June 30, 2024, the Company amended certain operating leases, the change in terms of which caused the leases to be reclassified as finance leases. In connection with the amendments, the Company wrote-off a de minimis amount of operating lease right-of-use assets and liabilities. Additionally, the Company recognized finance lease right-of-use assets of $3.8 million and liabilities of $3.8 million. There was no gain or loss recognized as a result of these amendments. During the three months ended June 30, 2023, the Company did not reclassify any operating or finance leases.
Lease terms and discount rates as of June 30, 2024 and December 31, 2023 were as follows:
| June 30, 2024 | December 31, 2023 | ||||||||||
| Weighted-average remaining lease term: | |||||||||||
| Operating leases | |||||||||||
| Finance leases | |||||||||||
| Weighted-average discount rate: | |||||||||||
| Operating leases | % | % | |||||||||
| Finance leases | % | % | |||||||||
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Future minimum lease commitments as of June 30, 2024 are as follows:
| ($ in thousands) | Finance | Operating | ||||||||||||
| Remainder of 2024 | $ | $ | ||||||||||||
| 2025 | ||||||||||||||
| 2026 | ||||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| Thereafter | ||||||||||||||
| Total lease payments | ||||||||||||||
| Less imputed interest | ( | ( | ||||||||||||
| Total | $ | $ | ||||||||||||
The Company’s vehicle leases typically include a residual value guarantee. For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of June 30, 2024 is $12.6 million; the payment is not probable and therefore has not been included in the measurement of the lease liability and right-of-use asset. For vehicle leases that are classified as finance leases, the Company includes the residual value guarantee, estimated in the lease agreement, in the financing lease liability.
Lessor Arrangements
The Company leases dry and wet sand containers and conveyor belts to customers through operating leases, where the lessor for tax purposes is considered to be the owner of the equipment during the term of the lease. The lease agreements do not include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value. However, some of the leases contain a termination clause in which the customer can cancel the contract. The leases can be subject to variable lease payments if the customer requests more units than what is agreed upon in the lease. The Company does not record any lease assets or liabilities related to these variable items.
The carrying amount of equipment leased to others, included in property, plant and equipment, under operating leases as of June 30, 2024 and December 31, 2023 were as follows:
| ($ in thousands) | June 30, 2024 | December 31, 2023 | ||||||||||||
| Equipment leased to others - at original cost | $ | $ | ||||||||||||
| Less: Accumulated depreciation | ( | ( | ||||||||||||
| Equipment leased to others - net | $ | $ | ||||||||||||
Future payments receivable for operating leases as of June 30, 2024 are as follows:
| ($ in thousands) | ||||||||
| Remainder of 2024 | $ | |||||||
| 2025 | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| Thereafter | ||||||||
| Total | $ | |||||||
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Note 6—Accrued Liabilities
Accrued liabilities consist of the following:
| ($ in thousands) | June 30, 2024 | December 31, 2023 | ||||||||||||
| Accrued vendor invoices | $ | $ | ||||||||||||
| Operations accruals | ||||||||||||||
| Accrued benefits and other | ||||||||||||||
| $ | $ | |||||||||||||
Note 7—Debt
Debt consists of the following:
| June 30, | December 31, | ||||||||||
| ($ in thousands) | 2024 | 2023 | |||||||||
| Revolving Line of Credit | $ | $ | |||||||||
On September 19, 2017, the Company entered into two credit agreements: (i) a revolving line of credit up to $250.0 million, subsequently increased to $525.0 million, see below, (the “ABL Facility”) and (ii) a $175.0 million term loan (the “Term Loan Facility”).
On January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and terminate the Term Loan Facility. The amount paid included the balance of the Term Loan Facility at pay off of $104.7 million, $0.9 million of accrued interest, and a $1.1 million prepayment premium.
The weighted average interest rate on all borrowings outstanding as of June 30, 2024 and December 31, 2023 was 7.6 % and 7.6 %, respectively.
ABL Facility
Under the terms of the ABL Facility, up to $525.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory. 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 letters of credit in the amount of $7.4 million, with $241.2 million of remaining availability. Borrowings under the ABL Facility bear interest at Secured Overnight Financing Rate (“SOFR”) or a base rate, plus an applicable SOFR margin of 1.5 % to 2.0 % or base rate margin of 0.5 % to 1.0 %, as described in the ABL Facility credit agreement (the “Credit Agreement”). Additionally, borrowings as of June 30, 2024 incurred interest at a weighted average rate of 7.6 %. The average monthly unused commitment is subject to an unused commitment fee of 0.25 % to 0.375 %. Interest and fees are payable in arrears at the end of each month, or, in the case of SOFR loans, at the end of each interest period. The ABL Facility matures on January 23, 2028. Borrowings under the ABL Facility are collateralized by accounts receivable and inventory, and further secured by the Company as parent guarantor.
The ABL Facility includes certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions. Moreover, the ability of the Company to incur additional debt and to make distributions is dependent on maintaining a maximum leverage ratio.
The ABL Facility is not subject to financial covenants unless liquidity, as defined in the Credit Agreement, drops below a specific level. The Company is required to maintain a minimum fixed charge coverage ratio, as defined in the Credit Agreement, of 1.0 to 1.0 for each period if excess availability is less than 10 % of the borrowing base or $52.5 million, whichever is greater.
The Company was in compliance with these covenants as of June 30, 2024.
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Maturities of debt are as follows:
| ($ in thousands) | |||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| $ | |||||
Note 8—Fair Value Measurements and Financial Instruments
The fair values of the Company’s assets and liabilities represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction on the reporting date. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability on the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. The Company discloses the fair values of its assets and liabilities according to the quality of valuation inputs under the following hierarchy:
•Level 1 Inputs: Quoted prices (unadjusted) in an active market for identical assets or liabilities.
•Level 2 Inputs: Inputs other than quoted prices that are directly or indirectly observable.
•Level 3 Inputs: Unobservable inputs that are significant to the fair value of assets or liabilities.
The classification of an asset or liability is based on the lowest level of input significant to its fair value. Those that are initially classified as Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is inconsequential to the overall fair value, or if corroborating market data becomes available. Assets and liabilities that are initially reported as Level 2 are subsequently reported as Level 3 if corroborating market data is no longer available. Transfers occur at the end of the reporting period. There were no transfers into or out of Levels 1, 2, and 3 during the six months ended June 30, 2024 and 2023.
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, investments in equity securities, accounts payable, accrued liabilities, long-term debt, and finance and operating lease obligations. These financial instruments do not require disclosure by level. The carrying values of all of the Company’s financial instruments included in the accompanying unaudited condensed consolidated balance sheets approximated or equaled their fair values on June 30, 2024 and December 31, 2023.
•The carrying values of cash and cash equivalents, accounts receivable, and accounts payable (including accrued liabilities) approximated fair value on June 30, 2024 and December 31, 2023, due to their short-term nature.
•The carrying value of investments in equity securities were measured at fair value on June 30, 2024 based on quoted prices in active markets.
•The carrying value of amounts outstanding under long-term debt agreements with variable rates approximated fair value on June 30, 2024 and December 31, 2023, as the effective interest rates approximated market rates.
•The carrying values of amounts outstanding under finance and operating lease obligations approximated fair value on June 30, 2024 and December 31, 2023, as the effective borrowing rates approximated market rates.
Nonrecurring Measurements
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances.
As of June 30, 2024, the Company recorded $1.2 million of land and $2.8 million of buildings, net of accumulated depreciation, of two properties that met the held for sale criteria, to assets held for sale at a total fair value of $3.4 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheets. The Company estimated the fair value of the properties based on the listed selling price for the two properties, which is a Level 3 input. The Company estimates that the carrying value of the assets is equal to the fair value less the estimated costs to sell, net of write-downs taken in the prior period, and therefore no gain or loss was recorded during the six months ended June 30, 2024.
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As of December 31, 2023, the Company recorded $0.7 million of land and $0.8 million of buildings, net of accumulated depreciation, of one property that met the held for sale criteria, to assets held for sale at a total fair value of $0.8 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheets. The Company estimated the fair value of the property based on a communicated selling price for one property, which is a Level 3 input.
Recurring Measurements
The fair values of the Company’s cash equivalents measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosures are carried at estimated fair value. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts. As of June 30, 2024 and December 31, 2023, the Company had cash equivalents, measured at fair value, of $0.3
The Company holds an investment in Oklo Inc. (“Oklo”) made during the three months ended September 30, 2023. In May 2024, Oklo was acquired by a publicly traded special purpose acquisition company which resulted in the conversion of the Company’s investment into common shares of Oklo, which are traded on the New York Stock Exchange. The Company measures this investment in equity securities at fair value using Level 1 inputs based on quoted prices in an active market. As of June 30, 2024, the fair value of the investment was estimated at $17.4 million. The change in Oklo’s fair value resulted in an unrealized gain of $7.4
Additionally, during the three months ended December 31, 2023, the Company purchased depository interests representing shares of common stock in Tamboran Resources Corporation (“Tamboran”). In June 2024, Tamboran executed an Initial Public Offering (“IPO”) and listed its common stock on the New York Stock Exchange. In addition to the prior purchase of depository interests, the Company participated in Tamboran’s IPO by purchasing an additional $10.0 million of Tamboran’s common stock. The Company measures this investment in equity securities at fair value using Level 1 inputs based on quoted prices in an active market. As of June 30, 2024, the fair value of the investment was estimated at $20.1 million. The change in Tamboran’s fair value resulted in an unrealized loss of $0.2
Nonfinancial assets
The Company estimates fair value to perform impairment tests as required on long-lived assets. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified within Level 3 in the event that such assets were required to be measured and recorded at fair value within the accompanying unaudited condensed consolidated financial statements. No such measurements were required as of June 30, 2024 and December 31, 2023 as no triggering event was identified.
Credit Risk
The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and trade receivables.
The Company’s cash and cash equivalent balances on deposit with financial institutions total $30.0 million and $36.8 million as of June 30, 2024 and December 31, 2023, respectively, which exceeded FDIC insured limits. The Company regularly monitors these institutions’ financial condition.
The majority of the Company’s customers have payment terms of 45 days or less.
As of June 30, 2024 and December 31, 2023, no customers accounted for more than 10% of total consolidated accounts receivable and unbilled revenue. During the three and six months ended June 30, 2024, customer A accounted for 12 % and 14 % of consolidated revenues, respectively. During the three and six months ended June 30, 2023, customer B accounted for 11
The Company mitigates the associated credit risk by performing credit evaluations and monitoring the payment patterns of its customers.
The Company applies historic loss factors to its receivable portfolio segments that are not expected to be further impacted by current economic developments, and an additional economic conditions factor to portfolio segments anticipated to experience greater losses in the current economic environment. While the Company has not experienced significant credit losses in the past and has not seen material changes to the payment patterns of its customers, the Company cannot predict with
14
any certainty the degree to which unforeseen events may affect the ability of its customers to timely pay receivables when due. Accordingly, in future periods, the Company may revise its estimates of expected credit losses.
As of June 30, 2024 and December 31, 2023, the Company had $0.9
| ($ in thousands) | ||||||||
| Provision for credit losses on December 31, 2023 | $ | |||||||
| Credit Losses: | ||||||||
| Current period provision | ||||||||
| Amounts written off | ||||||||
| Provision for credit losses on June 30, 2024 | $ | |||||||
Note 9—Equity
Restricted Stock Units
Restricted stock units (“RSUs”) granted pursuant to the Liberty Energy Inc. Amended and Restated Long Term Incentive Plan (“LTIP”), if they vest, will be settled in shares of the Company’s Class A Common Stock. RSUs were granted with vesting terms up to three years . Changes in non-vested RSUs outstanding under the LTIP during the six months ended June 30, 2024 were as follows:
| Number of Units | Weighted Average Grant Date Fair Value per Unit | ||||||||||
| Non-vested as of December 31, 2023 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | ( | ||||||||||
| Outstanding as of June 30, 2024 | $ | ||||||||||
Performance Restricted Stock Units
Performance restricted stock units (“PSUs”) granted pursuant to the LTIP, if they vest, will be settled in shares of the Company’s Class A Common Stock. PSUs were granted with a three-year cliff vesting and performance period, with the vesting percentage of the target award dependent on the satisfaction of the performance goals set forth in the applicable award agreement. The Company records compensation expense based on the Company’s best estimate of the number of PSUs that will vest at the end of the performance period. If such performance targets are not met, or are not expected to be met, no compensation expense is recognized and any recognized compensation expense is reversed. Changes in non-vested PSUs outstanding under the LTIP during the six months ended June 30, 2024 were as follows:
| Number of Units | Weighted Average Grant Date Fair Value per Unit | ||||||||||
| Non-vested as of December 31, 2023 | $ | ||||||||||
| Granted | |||||||||||
| Vested | ( | ||||||||||
| Forfeited | |||||||||||
| Outstanding as of June 30, 2024 | $ | ||||||||||
Stock-based compensation is included in cost of services and general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. The Company recognized stock-based compensation expense of $6.9 million and $14.2 million for the three and six months ended June 30, 2024, respectively. The Company recognized stock-based compensation of $8.0 million and $15.1 million for the three and six months ended June 30, 2023, respectively. There was approximately $55.7 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of June 30,
15
2024. The unrecognized compensation expense will be recognized on a straight-line basis over the weighted average remaining vesting period of two years .
Dividends
The Company paid cash dividends of $0.07 11.6 million and $23.2 million, respectively.
The Company paid cash dividends of $0.05 8.6 million and $17.4 million, respectively.
Additionally, the Company paid accrued dividend equivalents upon vesting for the RSUs and PSUs with a 2024 vesting date, which totaled $0.6 million for the six months ended June 30, 2024. The Company paid accrued dividend equivalents upon vesting for the RSUs and PSUs with a 2023 vesting date, which totaled $0.2 million for the six months ended June 30, 2023.
As of June 30, 2024 and December 31, 2023, the Company had $0.9 million and $1.0 million of dividend equivalents payable related to RSUs and PSUs to be paid upon vesting, respectively. Dividends are not paid on forfeited RSUs or PSUs..
Share Repurchase Program
On July 25, 2022, the Company’s board of directors authorized and the Company announced a share repurchase program that allowed the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through July 31, 2024. Additionally, on January 24, 2023 the Board authorized and the Company announced an increase of the cumulative repurchase authorization to $500.0 million. Furthermore, on January 23, 2024, the Board authorized and the Company announced an increase of the cumulative repurchase authorization to $750.0 million and extended the authorization through July 31, 2026. The shares may be repurchased from time to time in open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s Class A Common Stock, the market price of the Company’s Class A Common Stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund any repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated through the duration of the share repurchase program.
Share repurchases and retirements under the share repurchase program for the three and six months ended June 30, 2024 and 2023 were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| ($ in thousands, except share count and per share data) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Shares of Class A Common Stock | |||||||||||||||||
| Value of shares repurchased | $ | $ | $ | $ | |||||||||||||
| Average price per share including commissions | $ | $ | $ | $ | |||||||||||||
As of June 30, 2024, $362.2 million remained authorized for future repurchases of Class A Common Stock under the share repurchase program.
The Company accounts for the purchase price of repurchased common shares in excess of par value ($0.01 per share of Class A Common Stock) as a reduction of additional paid-in capital, and will continue to do so until additional paid-in capital is reduced to zero. Thereafter, any excess purchase price will be recorded as a reduction to retained earnings.
As enacted by the Inflation Reduction Act of 2022, the Company accrued stock repurchase excise tax of $0.3 million and $1.2 million, respectively, for the six months ended June 30, 2024 and 2023. As of June 30, 2024 and December 31, 2023, the Company had excise tax payables of $2.1 million and $1.9 million, respectively, in accrued liabilities in the accompanying unaudited condensed consolidated balance sheets.
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Note 10—Net Income per Share
Basic net income per share measures the performance of an entity over the reporting period. Diluted net income per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The Company uses the “if-converted” method to determine the potential dilutive effect of its Class B Common Stock and the treasury stock method to determine the potential dilutive effect of outstanding RSUs and PSUs.
The following table reflects the allocation of net income to common stockholders and net income per share computations for the periods indicated based on a weighted average number of shares of Class A Common Stock and Class B Common Stock outstanding:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| (In thousands, except per share data) | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||||||||
| Basic Net Income Per Share | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic weighted average common shares outstanding | |||||||||||||||||||||||
| Basic net income per share attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Diluted Net Income Per Share | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock | |||||||||||||||||||||||
| Diluted net income attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic weighted average shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Restricted stock units | |||||||||||||||||||||||
| Class B Common Stock | |||||||||||||||||||||||
| Diluted weighted average shares outstanding | |||||||||||||||||||||||
| Diluted net income per share attributable to Liberty Energy Inc. stockholders | $ | $ | $ | $ | |||||||||||||||||||
Note 11—Income Taxes
The Company is a corporation and is subject to taxation in the United States, Canada, Australia and various state, local and provincial jurisdictions. Historically, Liberty LLC was treated as a partnership, and its income was passed through to its owners for income tax purposes. Liberty LLC’s members, including the Company, were liable for federal, state and local income taxes based on their share of Liberty LLC’s pass-through taxable income.
Effective January 31, 2023, the Company adopted a plan of merger, pursuant to which Liberty LLC merged into the Company, ceasing the existence of Liberty LLC with the Company remaining as the surviving entity. Liberty LLC filed a final tax return during the 2023 calendar year. The Company is still party to the TRAs; the associated liabilities are discussed below.
On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released Pillar Two model rules defining a 15% global minimum tax rate for large multinational corporations (the “Pillar Two Framework”). On June 20, 2024, Canada enacted the Pillar Two global minimum tax regime, which is not expected to have a material impact on the Company’s financial statements for the fiscal year ended December 31, 2024. The OECD continues to release additional guidance and countries are implementing legislation, with widespread adoption of the Pillar Two Framework expected by 2025. The Company is
17
continuing to evaluate the Pillar Two Framework and its potential impact on future periods, including any legislation enacted in the jurisdictions in which the Company operates.
The Company may distribute cash from foreign subsidiaries to its U.S. parent as business needs arise. The Company has not provided for deferred income taxes on the undistributed earnings from certain foreign subsidiaries, as such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any income and/or withholding tax is not expected to be significant.
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 income tax expense of $32.6 million and $59.0 million during the three and six months ended June 30, 2024, respectively. The Company recognized income tax expense of $47.3 million and $101.8 million during the three and six months ended June 30, 2023, respectively.
As of June 30, 2024 and December 31, 2023, the Company recognized a net deferred tax liability in the amount of $102.3
Tax Receivable Agreements
In connection with the IPO, on January 17, 2018, the Company entered into two Tax Receivable Agreements (the “TRAs”) with R/C Energy IV Direct Partnership, L.P. and the then existing owners that continued to own units in Liberty LLC (“Liberty LLC Units”) (each such person and any permitted transferee, a “TRA Holder” and together, the “TRA Holders”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of redemption or call rights, (ii) any net operating losses available to the Company as a result of the Corporate Reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs.
On January 31, 2023, the last redemption of the Liberty LLC Units occurred. As such, the Company recorded an increase of $7.8 million of deferred tax assets for the impact of the adopted plan of merger of Liberty LLC into the Company. Additionally, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in a net increase of $0.7 million in deferred tax assets, and an increase of $0.6 million in amounts payable under the TRAs, all of which was recorded through equity during the six months ended June 30, 2023.
As of June 30, 2024, the Company’s liability under the TRAs was $112.4 million of which $37.4 million is payable within the next 12 months, and $75.0 million thereafter. The Company made TRA payments of $5.2 million for the six months ended June 30, 2024.
Note 12—Defined Contribution Plan
The Company sponsors a 401(k) defined contribution retirement plan covering eligible employees. The Company makes matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of 6 % of the employee’s salary and federal limits. Contributions made by the Company were $9.3 million and $8.6 million for the three months ended June 30, 2024 and 2023, respectively, and $18.0 million and $16.2 million for the six months ended June 30, 2024 and 2023, respectively.
Note 13—Related Party Transactions
Schlumberger Limited
During 2020, the Company acquired certain assets and liabilities of Schlumberger Technology Corporation (“Schlumberger”) in exchange for the issuance of shares of the Company’s Class A Common Stock amongst other
18
consideration. During the six months ended June 30, 2023, the Company repurchased and retired 3,000,000 shares of Class A Common Stock for $45.0 million or $15.00 average price per share from Schlumberger, under the share repurchase program. Effective January 31, 2023, after the repurchase and retirement, Schlumberger owns no shares of Class A Common Stock of the Company and no longer qualified as a related party.
Within the normal course of business, the Company purchased chemicals, proppant, other equipment, and maintenance parts from Schlumberger and its subsidiaries. During the period from January 1, 2023 until January 31, 2023, total purchases from Schlumberger were approximately $1.7 million. Although the Company continues to do business with Schlumberger, the Company no longer presents cash flows with Schlumberger as related party in the accompanying unaudited condensed consolidated statements of cash flows.
Franklin Mountain Energy, LLC
A member of the board of directors of the Company, Audrey Robertson, serves as Executive Vice President of Finance of Franklin Mountain Energy, LLC (“Franklin Mountain”). During the three and six months ended June 30, 2024, the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $41.6 million and $53.1 million, respectively. During the three and six months ended June 30, 2023, the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $43.5 million and $66.8 million, respectively.
Amounts included in unbilled revenue from Franklin Mountain as of June 30, 2024 and December 31, 2023 were $20.7 million and $13.4 million, respectively. Receivables from Franklin Mountain as of June 30, 2024 and December 31, 2023 were $0.0 million and $12.1 million, respectively.
Liberty Resources LLC
Liberty Resources LLC, an oil and gas exploration and production company, and its successor entity (collectively, the “Affiliate”) had certain common ownership and management with the Company. Effective March 14, 2024, the Affiliate was no longer a related party, following its acquisition by an unaffiliated party. The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the period January 1, 2024 through March 13, 2024, and the three and six months ended June 30, 2023, were $11.1 million, $8.7 million, and $15.2 million, respectively.
On December 28, 2022 (the “Agreement Date”), the Company entered into an agreement with the Affiliate to amend payment terms for outstanding invoices due as of the Agreement Date to be due on April 1, 2024. Additionally, on August 15, 2023, the agreement was further amended in order to extend the due dates for certain invoices to January 1, 2025. Amounts outstanding from the Affiliate as of December 31, 2023 were $14.8 million, included in other assets in the accompanying unaudited condensed consolidated balance sheet. All amounts outstanding with the Affiliate under the agreement were collected in full during the three months ended March 31, 2024.
Receivables from the Affiliate as of December 31, 2023 were $5.2 million, included in accounts receivable—related party.
During the period January 1, 2024 through March 13, 2024, and the three and six months ended June 30, 2023, interest income from the Affiliate was $0.5 million, $0.4 million, and $0.7 million, respectively.
Oklo Inc.
During the three months ended September 30, 2023, the Company invested $10.0 million in a fission power and nuclear fuel recycling company, Oklo. Effective May 10, 2024, through an acquisition by a special purpose acquisition company, the Company’s investment converted into shares traded on the New York Stock Exchange. Additionally, Chris Wright, the Company’s Chief Executive Officer and Chairman of the Board, was appointed to the Oklo board of directors. During the three months ended June 30, 2024, the Company recorded an unrealized gain of $7.4 million included in unrealized gain on investments, net in the accompanying unaudited condensed consolidated statements of operations. As of June 30, 2024, the fair value of the Company’s investment using Level 1 inputs was $17.4 million. The Company was not party to any other transactions with Oklo during the three and six months ended June 30, 2024, and 2023.
Note 14—Commitments & Contingencies
Purchase Commitments (tons and gallons are not in thousands)
The Company enters into purchase and supply agreements to secure supply and pricing of proppants, transload, and equipment. As of June 30, 2024 and December 31, 2023, the agreements provide pricing and committed supply sources for the Company to purchase 797,254 tons and 1,854,000 tons, respectively, of proppant through December 31, 2025. Amounts below also include commitments to pay for transport fees on minimum amounts of proppants. Additionally, related proppant transload service commitments run through 2024.
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Future proppant, transload, and equipment commitments are as follows:
| ($ in thousands) | |||||
| Remainder of 2024 | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| $ | |||||
Certain supply agreements contain a clause whereby in the event that the Company fails to purchase minimum volumes, as defined in the agreement, during a specific time period, a shortfall fee may apply. In circumstances where the Company does not make the minimum purchase required under the contract, the Company and its suppliers have a history of amending such minimum purchase contractual terms and in rare cases does the Company incur shortfall fees. If the Company were unable to make any of the minimum purchases and the Company and its suppliers cannot come to an agreement to avoid such fees, the Company could incur shortfall fees in the amounts of $8.9 million and $5.4 million for the remainder of 2024 and the year ended 2025, respectively. Based on forecasted levels of activity, the Company does not currently expect to incur significant shortfall fees.
Included in the commitments for the remainder of 2024 are $2.8 million of payments expected to be made in the third quarter of 2024 for the use of certain light duty trucks, heavy tractors, and field equipment used to various degrees in frac and wireline operations. The Company is in negotiations with the third-party owner of such equipment to lease or purchase some or all of such aforementioned vehicles and equipment, subject to agreement on terms and conditions. No gain or loss is expected upon consummation of any such agreement.
Litigation
From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions. The Company’s assessment of the likely outcome of litigation matters is based on its judgment of a number of factors including experience with similar matters, past history, precedents, relevant financial and other evidence and facts specific to the matter. Notwithstanding the uncertainty as to the final outcome, based upon the information currently available, management does not believe any matters, individually or in aggregate, will have a material adverse effect on the Company’s financial position or results of operations.
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Note 15—Selected Quarterly Financial Data
The following tables summarizes consolidated changes in equity for the three months ended June 30, 2024 and 2023:
| Shares of Class A Common Stock | Shares of Class B Common Stock | Class A Common Stock, Par Value | Class B Common Stock, Par Value | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance—March 31, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
| Offering Costs | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
$ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Excise tax on share repurchases | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance—June 30, 2024 | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
| Shares of Class A Common Stock | Shares of Class B Common Stock | Class A Common Stock, Par Value | Class B Common Stock, Par Value | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance—March 31, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
$ | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Share repurchases | ( | — | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Excise tax on share repurchases | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units, net | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance—June 30, 2023 | ( | $ | |||||||||||||||||||||||||||||||||||||||||||||
Note 16—Subsequent Events
On July 16, 2024, the Company’s board of directors approved a quarterly dividend of $0.07 per share of Class A Common Stock to be paid on September 20, 2024 to holders of record as of September 6, 2024.
No other significant subsequent events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements and notes thereto.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs, and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in “Cautionary Note Regarding Forward-Looking Statements,” the Annual Report under the heading “Item 1A. Risk Factors,” and in “Part II – Other Information, Item 1A. Risk Factors” included herein. We assume no obligation to update any of these forward-looking statements.
Overview
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.
In early 2023, the Company launched Liberty Power Innovations LLC (“LPI”), an integrated alternative fuel and power solutions provider for remote applications. LPI provides CNG supply, field gas processing and treating, and well site fueling and logistics. LPI was formed with the initial focus on supporting the Company’s transition towards our next generation digiFleets℠ and dual fuel fleets, as CNG fueling services are limited in the market, yet critical to maintaining highly efficient well site operations. Currently, LPI is primarily focused on supporting an industry transition to natural gas fueled technologies, serving as a key enabler of the next step of cost and emissions reductions in the oilfield.
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.
Recent Trends and Outlook
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.
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.
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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.
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.
Results of Operations
Three Months Ended June 30, 2024, Compared to Three Months Ended June 30, 2023
| Three months ended June 30, | |||||||||||||||||
| Description | 2024 | 2023 | Change | ||||||||||||||
| (in thousands) | |||||||||||||||||
| Revenue | $ | 1,159,884 | $ | 1,194,988 | $ | (35,104) | |||||||||||
| Cost of services, excluding depreciation, depletion, and amortization shown separately | 835,798 | 833,456 | 2,342 | ||||||||||||||
| General and administrative | 57,700 | 58,034 | (334) | ||||||||||||||
| Transaction and other costs | — | 985 | (985) | ||||||||||||||
| Depreciation, depletion, and amortization | 123,305 | 99,695 | 23,610 | ||||||||||||||
| Loss (gain) on disposal of assets | 1,248 | (3,660) | 4,908 | ||||||||||||||
| Operating income | 141,833 | 206,478 | (64,645) | ||||||||||||||
| Other expense, net | 862 | 6,475 | (5,613) | ||||||||||||||
| Net income before income taxes | 140,971 | 200,003 | (59,032) | ||||||||||||||
| Income tax expense | 32,550 | 47,332 | (14,782) | ||||||||||||||
| Net income | 108,421 | 152,671 | (44,250) | ||||||||||||||
Revenue
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.
Cost of Services
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.
General and Administrative
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.
Transaction and Other Costs
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.
Depreciation, Depletion, and Amortization
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 digiTechnologiesSM.
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Loss (gain) on Disposal of Assets
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.
Other Expense, net
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.
Income Tax Expense
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.
Six Months Ended June 30, 2024, Compared to Six Months Ended June 30, 2023
| Six months ended June 30, | |||||||||||||||||
| Description | 2024 | 2023 | Change | ||||||||||||||
| (in thousands) | |||||||||||||||||
| Revenue | $ | 2,233,009 | $ | 2,457,065 | $ | (224,056) | |||||||||||
| Cost of services, excluding depreciation, depletion, and amortization shown separately | 1,618,478 | 1,721,872 | (103,394) | ||||||||||||||
| General and administrative | 110,686 | 111,070 | (384) | ||||||||||||||
| Transaction and other costs | — | 1,602 | (1,602) | ||||||||||||||
| Depreciation, depletion, and amortization | 246,491 | 194,096 | 52,395 | ||||||||||||||
| Loss (gain) on disposal of assets | 88 | (3,173) | 3,261 | ||||||||||||||
| Operating income | 257,266 | 431,598 | (174,332) | ||||||||||||||
| Other expense, net | 7,925 | 14,366 | (6,441) | ||||||||||||||
| Net income before income taxes | 249,341 | 417,232 | (167,891) | ||||||||||||||
| Income tax expense | 59,028 | 101,815 | (42,787) | ||||||||||||||
| Net income | 190,313 | 315,417 | (125,104) | ||||||||||||||
| Less: Net income attributable to non-controlling interests | — | 91 | (91) | ||||||||||||||
| Net income attributable to Liberty Energy Inc. stockholders | $ | 190,313 | $ | 315,326 | $ | (125,013) | |||||||||||
Revenue
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.
Cost of Services
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.
General and Administrative
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.
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Transaction and Other Costs
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.
Depreciation, Depletion, and Amortization
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 digiTechnologiesSM.
Loss (gain) on disposal of assets
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.
Other Expense, net
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.
Income Tax Expense
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.
Comparison of Non-GAAP Financial Measures
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.
Our board of directors, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.
Note Regarding Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income is the GAAP financial measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
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The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP financial measure for the periods presented:
Three and Six Months Ended June 30, 2024, Compared to Three and Six Months Ended June 30, 2023: EBITDA and Adjusted EBITDA
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| Description | 2024 | 2023 | Change | 2024 | 2023 | Change | |||||||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||||||||||||
| Net income | $ | 108,421 | $ | 152,671 | $ | (44,250) | $ | 190,313 | $ | 315,417 | $ | (125,104) | |||||||||||||||||||||||
| Depreciation, depletion, and amortization | 123,305 | 99,695 | 23,610 | 246,491 | 194,096 | 52,395 | |||||||||||||||||||||||||||||
| Interest expense, net | 8,063 | 6,475 | 1,588 | 15,126 | 14,366 | 760 | |||||||||||||||||||||||||||||
| Income tax expense | 32,550 | 47,332 | (14,782) | 59,028 | 101,815 | (42,787) | |||||||||||||||||||||||||||||
| EBITDA | $ | 272,339 | $ | 306,173 | $ | (33,834) | $ | 510,958 | $ | 625,694 | $ | (114,736) | |||||||||||||||||||||||
| Stock-based compensation expense | 6,870 | 7,965 | (1,095) | 14,197 | 15,143 | (946) | |||||||||||||||||||||||||||||
| Loss (gain) on disposal of assets | 1,248 | (3,660) | 4,908 | 88 | (3,173) | 3,261 | |||||||||||||||||||||||||||||
| Unrealized gain on investments, net | (7,201) | — | (7,201) | (7,201) | — | (7,201) | |||||||||||||||||||||||||||||
| Transaction and other costs | — | 985 | (985) | — | 1,602 | (1,602) | |||||||||||||||||||||||||||||
| Fleet start-up and lay-down costs | — | — | — | — | 2,082 | (2,082) | |||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 273,256 | $ | 311,463 | $ | (38,207) | $ | 518,042 | $ | 641,348 | $ | (123,306) | |||||||||||||||||||||||
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.
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.
Liquidity and Capital Resources
Overview
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.
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.
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.
The ABL Facility contains covenants that restrict our ability to take certain actions. As of June 30, 2024, we were in compliance with all debt covenants.
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See Note 7—Debt to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
We have no material off balance sheet arrangements as of June 30, 2024, except for purchase commitments under supply agreements as disclosed above under Note 14—Commitments & Contingencies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report. As such, we are not materially exposed to any other financing, liquidity, market, or credit risk that could arise if we had engaged in such financing arrangements.
Share Repurchase Program
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.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Six Months Ended June 30, | |||||||||||||||||
| Description | 2024 | 2023 | Change | ||||||||||||||
| (in thousands) | |||||||||||||||||
Net cash provided by operating activities | $ | 407,587 | $ | 444,388 | $ | (36,801) | |||||||||||
Net cash used in investing activities | (292,130) | (356,296) | 64,166 | ||||||||||||||
Net cash used in financing activities | (121,988) | (100,207) | (21,781) | ||||||||||||||
Analysis of Cash Flow Changes Between the Six Months Ended June 30, 2024 and 2023
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 decrease in 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 the six months ended June 30, 2023.
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 digiTechnologiesSM suite 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.
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.
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Cash Requirements
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.
There have been no other material changes to cash requirements since the year ended December 31, 2023.
Income Taxes
The Company is a corporation and is subject to U.S. federal, state, and local income tax. The Company is also subject to Canada and Australia federal and provincial income tax on its foreign operations.
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.
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. As of June 30, 2024 and December 31, 2023, the Company’s net deferred tax liabilities were $102.3 million.
Refer to Note 11— Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to income tax expense.
Tax Receivable Agreements
Refer to Note 11— Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to tax receivable agreements.
Critical Accounting Estimates
The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report and Note 2—Significant Accounting Policies and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Annual Report). A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations. We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
There have been no material changes in our evaluation of our critical accounting policies and estimates since our Annual Report.
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Item 3. Quantitative and Qualitative Disclosure about Market Risk
Our consolidated financial statements are expressed in U.S. dollars, but, effective January 1, 2021, a portion of our operations is conducted in a currency other than U.S. dollars. The Canadian dollar is the functional currency of the Company’s foreign subsidiary as it is the primary currency within the economic environment in which the subsidiary operates. Changes in the exchange rate can affect our revenues, earnings, and the carrying value of our assets and liabilities in our consolidated balance sheet, either positively or negatively. Adjustments resulting from the translation of the subsidiary’s financial statements are reported in other comprehensive (loss) income. For the three and six months ended June 30, 2024, the Company recorded a foreign currency translation loss of $1.7 million and $5.4 million, respectively, to comprehensive income. For the three and six months ended June 30, 2023, the Company recorded foreign currency translation income of $2.0 million and $1.5 million, respectively, to comprehensive income.
During the six months ended June 30, 2024, the Company formed an entity in Australia, and will use the Australian dollar as the functional currency for the new entity’s operations. The Australian entity does not have any material assets or liabilities as of June 30, 2024, did not generate any revenue, and incurred only de minimis expenses during the six months ended June 30, 2024, as such there in no impact of changes in the Australian dollar to U.S. dollar exchange rate in the financial statements of Company as of and for the six months ended June 30, 2024.
Other exposures to market risk have not changed materially since December 31, 2023. For quantitative and qualitative disclosures about market risk, in addition to foreign currency translation, see Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report.
Item 4. Controls and Procedures
In accordance with Rules 13a-15 and 15d-15 of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of June 30, 2024 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
Information relating to legal proceedings is described in Note 14 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, and the information discussed therein is incorporated by reference into this Part II, Item 1.
Item 1A. Risk Factors
In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results.
No other risk factors were identified in addition to the risk factors set forth in the Annual Report. There have been no material changes to the risk factors in the Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share Repurchase Program
The following sets forth information with respect to our repurchases of shares of Class A Common Stock during the three months ended June 30, 2024:
| Period | Total number of shares purchased | Average price paid per share (2) | Total number of shares purchased as part of publicly announced plans or programs (1) | Approximate dollar value of shares that may yet be purchased under the plans or programs (1) | ||||||||||||||||||||||
| April 1, 2024 - April 30, 2024 | 59,650 | $ | 22.63 | 59,650 | $ | 390,443,226 | ||||||||||||||||||||
| May 1, 2024 - May 31, 2024 | 483,763 | $ | 22.68 | 483,763 | $ | 379,470,853 | ||||||||||||||||||||
| June 1, 2024 - June 30, 2024 | 776,472 | $ | 22.19 | 776,472 | $ | 362,241,909 | ||||||||||||||||||||
| Total | 1,319,885 | $ | 22.39 | 1,319,885 | $ | 362,241,909 | ||||||||||||||||||||
(1) On July 25, 2022, the Board authorized and the Company announced a share repurchase program that allowed the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through July 31, 2024. Additionally, on January 24, 2023, the Board authorized and the Company announced an increase of the cumulative repurchase authorization to $500.0 million. Furthermore, on January 23, 2024, the Board authorized and the Company announced an increase of the cumulative repurchase authorization to $750.0 million and extended the authorization through July 31, 2026. All amounts give effect to such increase. The shares may be repurchased from time to time in open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.
(2) The average price paid per share of $22.39 was calculated excluding commissions.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Our mining operations are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this report.
Item 5. Other Information
On June 13, 2024 , Chris Wright , our Chairman of the Board and Chief Executive Officer , adopted a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, providing for the potential sale of up to 240,000 shares of our Class A Common Stock between September 16, 2024 and February 21, 2025.
During the quarter ended June 30, 2024, none of our directors or executive officers, other than Mr. Wright, informed us of the adoption , modification, or termination
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Item 6. Exhibits
The exhibits required to be filed by Item 6 are set forth in the Exhibit Index included below.
INDEX TO EXHIBITS
Exhibit Number | Description | ||||||||||
| 3.1 | |||||||||||
| 3.2 | |||||||||||
| 3.3 | |||||||||||
| 10.1 | |||||||||||
| 10.2 | |||||||||||
| 10.3 | |||||||||||
| 10.4 | |||||||||||
| 31.1 | |||||||||||
| 31.2 | |||||||||||
| 32.1 | |||||||||||
| 32.2 | |||||||||||
| 95 | |||||||||||
| 101.INS | XBRL Instance Document * | ||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document * | ||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document * | ||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document * | ||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document * | ||||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document * | ||||||||||
| (1) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 18, 2018. | ||||||||||
| (2) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on April 21, 2022. | ||||||||||
| (3) | Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 26, 2023. | ||||||||||
| (4) | Incorporated by reference to Annex A of the registrant’s Definitive Proxy Statement on Schedule 14A, filed on March 7, 2024. | ||||||||||
| (5) | Incorporated by reference to the registrant’s Registration Statement on Form S-8, filed on May 17, 2024. | ||||||||||
| * | Filed herewith. | ||||||||||
| ** | Furnished herewith. | ||||||||||
| † | Denotes a management contract or compensatory plan or arrangement. | ||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | |||||||||||
| /s/ Christopher A. Wright | |||||||||||
| Date: | July 18, 2024 | By: | Christopher A. Wright | ||||||||
| Chief Executive Officer (Principal Executive Officer) | |||||||||||
| /s/ Michael Stock | |||||||||||
| Date: | July 18, 2024 | By: | Michael Stock | ||||||||
| Chief Financial Officer (Principal Financial Officer) | |||||||||||
| /s/ Ryan T. Gosney | |||||||||||
| Date: | July 18, 2024 | By: | Ryan T. Gosney | ||||||||
| Chief Accounting Officer (Principal Accounting Officer) | |||||||||||
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