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LC

LandBridge Co LLC (LB)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $36.5M, up 109% YoY; adjusted EBITDA was $31.7M with an 87% margin, and net income was $8.2M with a 22% net margin .
  • Management reaffirmed FY2025 adjusted EBITDA guidance of $170–$190M, citing incremental contributions from recent acquisitions, initial solar contributions, and higher produced water volumes as drivers .
  • Surface-use revenues surged 54% sequentially, driven by a non-refundable $8M data center option payment and produced water volumes rising to 831 MBbls/d; oil & gas royalties rose 54% sequentially on higher net royalty production (1,199 boe/d) .
  • Balance sheet/liquidity: year-end cash $37.0M, borrowings $385.0M, total liquidity $107.0M after debt amendments that removed quarterly amortization, supporting flexibility for M&A and development agreements .

What Went Well and What Went Wrong

What Went Well

  • Strong sequential growth: revenue up to $36.5M (from $28.5M), adjusted EBITDA up to $31.7M (from $25.0M), with adjusted EBITDA margin sustained at 87–88% .
  • Commercial milestones: executed Western Midstream (WES) produced water pathfinder agreement and DESRI solar project development agreements over ~6,700 acres (SPP interconnection submitted), expanding non-oil revenue streams .
  • Data center monetization: received a $8M non-refundable option deposit in December; lease payments expected to ratchet during construction with full $8M/year once construction begins on 2,000 acres, plus potential profit interests on power generation .

What Went Wrong

  • Resource sales/royalties declined 28% sequentially in Q4, primarily on lower brackish water sales and royalty volumes, partially offsetting strength elsewhere .
  • GAAP complexity and share-based comp: Q4 included $11.1M non-cash share-based comp; FY 2024 net loss reflects $95.3M of non-cash share-based compensation (IPO/post-IPO related awards) .
  • Elevated interest expense and higher borrowings ($385.0M at year-end) as acquisitions and facility amendments expanded the platform; though amortization removal improves cash flexibility, leverage increased sequentially .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$26.0 $28.5 $36.5
Adjusted EBITDA ($USD Millions)$23.4 $25.0 $31.7
Adjusted EBITDA Margin (%)90% 88% 87%
Net Income ($USD Millions)N/A($2.8) $8.2
Net Income Margin (%)N/A(10%) 22%
Cash from Operations ($USD Millions)N/A$7.5 $26.9
Free Cash Flow ($USD Millions)N/A$7.1 $26.7

Segment/Revenue Stream Breakdown (oldest → newest):

Revenue Stream ($USD Millions)Q4 2023Q3 2024Q4 2024
Surface Use Royalties & Revenues$7.7 $16.5 $25.5
Resources Sales & Royalties$3.9 $9.1 $6.6
Oil & Gas Royalties$5.8 $2.9 $4.5
Total Revenue$17.5 $28.5 $36.5

KPIs (oldest → newest):

KPIQ3 2024Q4 2024
Produced Water Royalty Volumes (MBbls/d)775 831
Net Royalty Production (boe/d)895 1,199
Operating Cash Flow Margin (%)26% 74%
Free Cash Flow Margin (%)25% 73%

Notes: EPS was not provided by the company in the filing/press release; Street consensus via S&P Global was unavailable due to access limits.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($USD Millions)FY 2025$140–$160 (introduced at Q3 call) $170–$190 (reaffirmed Q4) Raised
Revenue Drivers (qualitative)FY 2025Emphasis on produced water volumes; initial 250 MW solar contribution; acquisitions Incremental contributions from acquisitions; initial solar facility contributions; higher produced water volumes; updates to resource sales and commodity pricing Updated detail
DividendOngoingInaugural quarterly dividend $0.10/share (post-Q3) Similar $0.10/share dividend commentary reiterated on Q4 call Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Data center/AI & digital infrastructureLOI signed; lease development executed; $8M deposit due Dec; multiyear build; additive to cash flow over construction phase $8M deposit received; 2-year site selection then construction; $8M/year lease at construction initiation; potential profit interest in power; growing hyperscaler comfort with remote sites Strengthening; clearer monetization path
Produced water volumesCapacity step-up (~150Kbbl/d) driven by Devon and East Stateline Ranch; strong pipeline Volumes up to 831 MBbls/d; WES pathfinder deal; expecting step change in Q2–Q3’25 and low-to-mid double-digit growth through 2025 Positive acceleration
Solar/renewablesFirst 250 MW solar project anticipated; positioning for renewables DESRI development agreements over ~6,700 acres; upfront payments in 2025 expected ~$8–$10M depending on proposal mix Pipeline expanding
M&A/acreage expansionWinkler and Lea County additions (~$47M; ~$9M EBITDA; ~5x multiple) Wolf Bone Ranch (~46k acres) with $25M minimum annual revenue commitment for 5 years; added ~3k contiguous acres in Lea County; total ~276k acres Significant scale; contracted cash flows
Balance sheet/credit facilitiesDeleveraging post-IPO; revolver expanded; term loan increased; removed amortization payments Debt outstanding $385M; liquidity $107M; removed amortization improves flexibility; willing to raise equity for accretive opportunities Flexibility improved
Regulatory/water recyclingSurface enables water recycling centers; watching Texas legislative developments Actively monitoring Texas water legislation; see recycling as opportunity; pore space scarcity supports higher royalties Constructive policy backdrop

Management Commentary

  • “We tripled the size of our land holdings… and demonstrated our ability to deliver industry‑leading adjusted EBITDA and free cash flow margins.” — Jason Long, CEO .
  • “Our triple‑digit revenue growth during the fourth quarter is clear evidence of our momentum… For 2025, we anticipate another year of strong revenue growth and profitability.” — Scott McNeely, CFO .
  • “We remain confident that digital infrastructure will be an important growth driver… our acreage in West Texas is well positioned… we officially signed our first lease development agreement… received an $8 million payment.” — Jason Long .
  • “We are reaffirming our previously announced guidance for 2025… expect $170–$190 million of adjusted EBITDA driven by incremental contributions from acquisitions, initial solar facility contributions and growth of surface use royalties.” — Scott McNeely .

Q&A Highlights

  • Surface-use economic efficiency can reach “$3,000+ per acre,” with produced water facilities and solar layering per section, suggesting ample runway .
  • WES pathfinder produced water agreement: low single-digit millions in damages/easements over 12–18 months; once operational, high single-digit millions to low/mid‑teens royalties depending on volumes .
  • Data center roadmap: 12–18 months site selection, then construction; lease ramps during construction, $8M/year upon construction start; further upside from power profit interest and possible water sales .
  • Capital allocation: open to equity raises for high-quality, accretive acquisitions; priority on prudent leverage and strong coverage; continue focusing on acquisition pipeline .
  • 2025 produced water growth: starting “just over 1 million barrels/day,” step-change by Q2–Q3 as BPX Kraken line comes online and Devon shifts volumes; low‑to‑mid double-digit growth expected through ’25 .
  • Solar payments: 2025 upfront milestone payments expected at ~$8–$10M, but will optimize for lifetime value vs. maximizing upfront cash .
  • Texas water recycling: company sees opportunity to leverage contiguous surface for recycling ponds; pore space scarcity supports higher royalty rates over time .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to access limits. As a result, estimate comparisons are not included. Values from S&P Global were unavailable.

Key Takeaways for Investors

  • Business model durability: Asset‑light land platform continues to convert infrastructure demand into high-margin, high‑FCF cash flows; adjusted EBITDA margins ~87–90% sustained across quarters .
  • Non‑oil mix rising: Surface-use revenues and resource royalties are now the dominant revenue streams, insulating results from commodity price swings; Q4 non‑oil revenues drove sequential growth .
  • Near‑term catalysts: Produced water volumes likely step higher in Q2–Q3’25 as BPX Kraken and Devon shifts layer in; WES agreement adds incremental royalty visibility .
  • Medium‑term optionality: DESRI solar development and the data center lease development agreement create multi‑year monetization with ratcheting cash flows and potential power profit interests .
  • Balance sheet flexibility: Removal of amortization payments and $107M liquidity support M&A and development agreements; management remains opportunistic on equity if accretive .
  • Guidance raised and reaffirmed: FY2025 adjusted EBITDA guided to $170–$190M, up from $140–$160M previously; Street models should reflect stronger produced water volumes and alternative energy contributions .
  • Watch policy/regulatory developments: Texas water recycling initiatives could enhance demand for LandBridge’s contiguous surface/pore space; potential positive pricing dynamics for royalties .