Liberty Energy - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $0.98B and GAAP diluted EPS was $0.12; adjusted EBITDA was $168M, showing sequential improvement versus Q4 2024 as fleet utilization and efficiencies rose.
• Versus estimates, Liberty delivered a revenue beat ($977.5M vs $948.5M consensus) and a modest adjusted EPS beat ($0.04 vs $0.03 consensus); GAAP EPS of $0.12 reflects non-GAAP adjustments including $19.3M investment gains [GetEstimates: Q1 2025].
• Management expects sequential growth in revenue and EBITDA in Q2 on higher utilization; full-year consolidated EBITDA framework of $700–$750M was indicated as intact, contingent on WTI staying in the low $60s range.
• Capital allocation remained active: $37M returned to shareholders (1.0% shares retired, $0.08 dividend), liquidity was $164M with $210M debt drawn, and repurchase authorization remains ~$270M.
• Strategic catalysts: power generation expansion via IMG acquisition and an MOU to anchor industrial development with LPI generation capacity; technology differentiation (digiPrime, AI-driven predictive maintenance, “Hive” operations hub) supports the “flight to quality” narrative.

What Went Well and What Went Wrong

What Went Well

• Sequential improvement: revenue up 4% to $977M and adjusted EBITDA up 8% to $168M, driven by higher utilization and efficiency across frac, wireline, sand, and CNG delivery.
• Technology-led performance: successful test of the industry’s first natural gas variable-speed pump (digiPrime) and record component longevity via AI-driven predictive maintenance; launch of the “Hive” digital intelligence hub to monitor operations 24/7.
• Power platform expansion: acquisition of IMG Energy Solutions to accelerate LPI’s EPC and PJM market capabilities and an MOU to anchor an industrial development with LPI power generation, strengthening diversified growth opportunities.

What Went Wrong

• YoY compression: revenue declined vs Q1 2024 ($977M vs $1.073B), GAAP EPS fell ($0.12 vs $0.48), and adjusted EBITDA decreased 31% YoY as pricing headwinds persisted into 2025.
• Pricing pressure: conventional fleets experienced resets heading into 2025; management noted pricing was reset modestly lower through RFP season before stabilizing, reflecting a softer backdrop exiting 2024.
• Macro overhangs: tariff uncertainty and OPEC+ strategy introduced scenario risk; management is assessing mitigation efforts and highlighted that smaller/private E&Ps may pull back faster if WTI moves below $60.

Transcript

Operator (participant)

Welcome to the Liberty Energy Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Anjali Voria, Director of Investor Relations. Please go ahead.

Anjali Voria (Director of Investor Relations)

Thank you, Alison. Good morning and welcome to the Liberty Energy First Quarter 2025 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer, and Michael Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements reflecting the company's views about future prospects, revenues, expenses, or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings. Our comments today also include non-GAAP financial and operational measures.

These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pre-tax return on capital employed, and cash return on capital invested are not a substitute for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income, and adjusted net income per diluted share, and a calculation of adjusted pre-tax return on capital employed and cash return on capital invested, as discussed on this call, are available on our Investor Relations website. I will now turn the call over to Ron.

Ron Gusek (CEO)

Good morning, everyone, and thank you for joining us to discuss our First Quarter 2025 operational and financial results. Liberty delivered a solid first quarter with revenue of $977 million, net income of $20 million, and adjusted EBITDA of $168 million, and distributed $37 million to shareholders through opportunistic share repurchases and dividends. We saw strong sequential improvement in utilization across our fleet, reached new heights in operational efficiencies and safety performance, and set a new high watermark in asset lifespan for equipment components. Our early year results demonstrate a positive rebound from the fourth quarter of 2024, a trend that has continued into the second quarter. In recent weeks, tariff announcements and a more aggressive OPEC+ production strategy have sent ripples across the energy sector. Today, we have excess demand for Liberty services as our customers align themselves with top-tier providers in a clear industry flight to quality.

While North American producers have not yet meaningfully changed development plans, we expect our customers to assess a range of scenarios in anticipation of commodity price pressure, and we are staying close to our partners in this dynamic market. As we all know well, the oil and gas industry is cyclical in nature, and periods of uncertainty test the strength and resilience of players across the value chain. The outcome of tariff negotiations, as well as forward production plans for OPEC Plus, could yield a wide range of outcomes in the future. In the face of these potential outcomes, we are applying our core tenets to guide our team in charting a course to meet any potential challenges, support our customers, suppliers, and our employees, and build an even better business with enduring advantages.

Today, we are better positioned than ever to navigate market uncertainties with greater scale, vertical integration, technological advancements, and a fortress balance sheet. Over the past few weeks, we have stayed in constant dialogue with our customers and suppliers, collaborating on ways to expand efficiencies and actively engaging on tariff mitigation strategies. Our engineering teams are having more dialogue with customers on optimizing completion practices, using our comprehensive completions and production database and multivariate analysis tools to make more informed decisions. Our operations team is leveraging real-time data analytics, using over 1 billion data points collected daily to maximize efficiencies and drive lowest total cost of delivery. These insights further extend to our ongoing collaboration with our supplier partners, and this visibility allows our collective teams to react quickly and decisively in a rapidly evolving environment.

Prior cycles have proved the resilience of our strategy of leading the industry with discipline while strategically enhancing our competitive edge. As global oil markets contend with tariff impacts, geopolitical tensions, and oil supply concerns, North American producers are evaluating a range of macroeconomic scenarios. The recent pause on tariffs has momentarily eased pressure on the global economy and, in turn, global oil demand concerns. However, markets remain focused on supply-side dynamics, including the evolving OPEC Plus production strategy and potential constraints on Iranian, Russian, and Venezuelan oil exports. Natural gas fundamentals are more favorable on rising LNG export capacity demand in support of global energy security. While the current tumult in commodity prices is not immediately driving changes in North American activity, we expect oil producers are evaluating a range of scenarios in anticipation of oil price pressure.

Concurrently, gas producers could prove to be beneficiaries of potentially lower associated gas production in oily basins. Today, we have not seen significant change in oily customer activity; however, we are optimizing our fleet schedule to accommodate additional activity for our gas customers. In contrast to prior oil and gas cycles, recent years have seen steadier activity in both higher and lower commodity price environments. Larger, well-capitalized producers that comprise a larger portion of shale production today are better able to withstand a broader range of commodity prices, while smaller producers may be more reactive to market swings. Since the pandemic-driven downturn, the energy sector has seen significant consolidation as well as a strong focus on capital discipline and balance sheet strength, and most producers have targeted flat to modest production growth.

Today's frac activity simply supports maintenance of current oil production levels, mitigating the possibility of steep declines experienced by the service industry in past cycles. While macroeconomic risk could lead to lower oil production in North America, the industry is operating from a higher base of production today than in prior cycles, implying a decline in service activity would likely be less pronounced than in the past. Liberty's differential service platform is stronger today than at any point in the last 14 years. Our unmatched scale, integrated services, robust supply chain, and advanced technology systems uniquely enable us to deliver more value, lowering the total cost to produce a barrel of oil. Fleet modernization with advanced sensors, real-time data capture, and enhanced data visualization tools is driving tangible benefits and improving decision-making, allowing our teams and customers to respond faster and more effectively in a dynamic market.

We are also working closely with our customers to bring innovative engineering and designs to their completion strategies. This integrated high-performance model reinforces our position as the service provider of choice in a competitive market. Strategic investments in equipment technology, digitization, and power generation have positioned us to deliver safer and more efficient operations with reduced fuel and parts consumption and improved reliability. These advancements in equipment component longevity demonstrate these benefits. In the last three years, the average life expectancy has increased 27% for engines, 40% for fluid ends, and an impressive 37% for power ends over the last two years, in part through the implementation of AI-driven predictive maintenance strategies and continuous machine learning.

Furthering these efforts, in the first quarter, we launched the Hive, our next-generation digital intelligence hub, a centralized platform right here in Colorado that monitors frac operations with 24/7 oversight, enabling the Hive tech team to provide real-time solutions to the teams in the field. These are only a few of many technology initiatives driving real tangible value to our operations and our customers alike. As we look ahead, we are currently anticipating sequential growth in revenue and profitability in the second quarter from higher utilization. Our priority is to maintain a strong balance sheet, which will allow us to navigate in any environment while executing on our long-term strategic plan. We are actively assessing the implication of tariffs across our business and have already begun mitigation efforts. Michael will expand further on this.

Strategic investment has allowed us to develop new markets and lead technology innovation and operational efficiency in the industry. Growing power demand from data centers, manufacturing, mining, and industrial electrification is enabling us to expand our power services beyond the oil field. The acquisition of IMG, a leader in distributed power systems, opportunistically augments LPI with power plant EPC management and PJM utility market operations and expertise that we would otherwise have built over a period of time, accelerating our entry into the PJM market. We also cultivated bench strength with key leadership in the first quarter. Our pipeline of power opportunities across North America continues to grow, including projects in oil and gas, the commercial and industrial space, and smaller data centers up to 250 MW in size.

We recently announced an MOU with Range Resources and Imperial Land Corporation for potential industrial development that would be anchored by a cutting-edge LPI power generation facility. Conversations with two other partners for similar agreements are underway. We still anticipate delivery of our first-generation capacity in the third quarter, with packaging to be completed in the fourth quarter and operations beginning in Q1 of 2026. We are excited by the opportunity ahead to expand in these key growth areas. Before I turn the call over to Michael, I want to highlight distinct advantages we have in a potentially changing market: top-tier customers who are well-capitalized and less sensitive to commodity swings, loyal and committed suppliers and partners, a strong balance sheet, technological achievements that place us in an even better position today than prior cycles, and a strong culture that binds our teams to deliver at the highest level.

I will now turn the call over to Michael to discuss our financial results and outlook.

Michael Stock (CFO)

Good morning, everyone. We kicked off 2025 with a solid start to the year. I'm proud of the team for executing at the highest levels, especially coming off a challenging close to the 2024 year. Let's take a moment to celebrate the team's achievements. In the first quarter of 2025, revenue was $977 million compared to $944 million in the prior quarter. Our results increased 4% sequentially as higher activity levels more than offset pricing headwinds. We saw improvements across all of our businesses from high utilization of frac and wildland fleets, Permian sand mines that were fully utilized despite weather disruptions and oversupplied market conditions, additional next-gen sand systems that increased Simul-Frac efficiency, and growth in CNG fuel delivery.

First quarter net income of $20 million compared to $52 million in the prior quarter, adjusted net income of $7 million compared to $17 million in the prior quarter, and excludes $15 million of tax-affected gains on investments. Fully diluted net income per share was $0.12 compared to $0.31 in the prior quarter, and adjusted net income per diluted share was $0.04 compared to $0.10 in the prior quarter. First quarter adjusted EBITDA of $168 million compared to $156 million in the prior quarter, an 8% sequential increase. General administrative expenses totaled $66 million in the first quarter compared to $56 million in the prior quarter and included non-cash stock-based compensation of $15 million. G&A increased $10 million, primarily due to accelerated and modified stock-based compensation associated with Chris Wright's departure.

Other income items totaled $10 million for the quarter, inclusive of $19 million of gains on investments and interest expense of approximately $10 million. First quarter tax expense was $8 million, approximately 28% of pre-tax income, and cash taxes were $9 million. We expect the tax expense rate in 2025 to be approximately 28% of pre-tax income and cash taxes to be approximately half of our effective book tax rate. We ended the year with a cash balance of $24 million and net debt of $186 million. Net debt increased by $15 million from the prior quarter. First quarter uses of cash included capital expenditures, $24 million in share buybacks, $13 million of cash dividends. Total liquidity at the end of the quarter, including availability under the credit facility, was $164 million.

Net capital expenditures were $119 million in the first quarter, which included investments in digiFleets, capitalized maintenance spending, LPI gas compression and delivery infrastructure, and other projects. We had approximately $13 million of proceeds from asset sales in the quarter, and as a reminder, our 2025 plan completions business CapEx moderates to $450 million in the plan. That captures maintenance and digiTechnologies, and we have another $200 million allocated for power assets. We have significant flexibility in adjusting our capital spending, though, and are well prepared to adjust these targets should the macroeconomic environment meaningfully change. In spite of the market turmoil, the strong momentum we exited the first quarter has continued into the second quarter. We are expecting sequential growth in revenue and EBITDA, reflecting stronger utilization across all of our basins.

Given the uncertain market backdrop, we are closely monitoring the market and are evaluating a range of macroeconomic scenarios to stay ahead of any potential changes in activity. Our teams have been working diligently to assess tariff implications and mitigation strategies for the benefit of both us and our customers. Tariff announcements continue to evolve, which makes it a challenging exercise. Right now, we're expecting modest tariff-related inflationary impacts on engines and other equipment components, some of which are being offset by lower prices or volume discounts. We are also redirecting internationally sourced chemicals to either domestic sources or countries that are less impacted by global tariffs. All said, we do not anticipate a significant direct impact from tariffs at the moment.

Transformative work in the years since the pandemic of leading the industry with technology innovation, strengthening our customer and supplier partnerships, and expanding the scale and integrated platform to deliver greater value for our customers allows us to thrive in any demand environment. In a rapidly evolving market, our goal is to maintain margins, execute on disciplined capital deployment, and protect our balance sheet against an uncertain backdrop. I will now turn it back to the operator for Q&A, after which Ron will have closing comments at the end of the call.

Operator (participant)

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause for a moment to assemble our roster. Our first question today will come from Stephen Gengaro of Stifel. Please go ahead.

Stephen Gengaro (Managing Director of Oilfield Services)

Thanks and good morning, everybody.

Ron Gusek (CEO)

Hi.

Stephen Gengaro (Managing Director of Oilfield Services)

Good morning. Ron, you mentioned in the press release and on the call the sort of the high demand for your high-quality assets. When I think back historically over many years, I've always kind of remembered the larger companies talking about the fight to quality, but in years past, they would have to give up material price despite the demand staying high and utilization staying high. What are you seeing now in terms of sort of the fight to quality, the desire for the gas-burning assets, and kind of how those price discussions go relative to the demand for your assets?

Ron Gusek (CEO)

Stephen, I would say that, of course, we talked about on the fourth quarter call that downward trend that we had experienced in price through kind of the back half of 2023 and all the way through 2024. Certainly, as we headed into RFP season, we were having price reset modestly lower again into 2025. That has been the end of that price conversation, at least at this point in time. Utilization and the work that we are doing today is based on the pricing we set in RFP season there. I would say that the additional inbound inquiries we are getting are, in most cases, customers who already have Liberty working for them in some way, shape, or form, and we are looking for additional Liberty capacity.

To the extent we have white space on our calendar or are able to juggle things around, are working to accommodate that additional work now, but at the same pricing that we entered into this year planning to do that work at. As for the next-generation assets, I would say that pricing remains very resilient there. You know that we've announced CapEx and a commitment around building some additional digiFleets this year, and those fleets are going to work under pricing expectations that are in line with our requirements for deploying next-generation technology to the field.

Stephen Gengaro (Managing Director of Oilfield Services)

Great. Thank you. The follow-up maybe from Michael, have you thought at all about kind of any impact on raw material costs on sort of your ongoing maintenance CapEx for the year? Is it still sort of too early to sort of think about any material changes to that?

Michael Stock (CFO)

No, Stephen, yeah, I mean, our supply chain team is working with our suppliers on that as we speak. For the moment, as I said, we are not expecting to have significant amounts of change on that pricing. Some of it will be offset by volume discounts and suppliers working on efficiency, moving some of the supply onshore into the U.S. Obviously, there is kind of inflationary pressure on some of the raw steel and iron that comes into the country that was already in place up until this point. We are not expecting to see particularly major changes in those prices at the moment.

Stephen Gengaro (Managing Director of Oilfield Services)

Thanks. It sounds like the longevity of the equipment that you mentioned earlier could also help mitigate that. Is that reasonable?

Michael Stock (CFO)

That's a very reasonable thought.

Stephen Gengaro (Managing Director of Oilfield Services)

Okay. Thank you both.

Operator (participant)

Our next question today will come from Dan Kutz of Morgan Stanley. Please go ahead.

Dan Kutz (Vice President of Equity Analyst)

Hey, thanks. Good morning. I just wanted to check in on the power gen business kind of from a contracting or a customer conversation perspective. Is there anything that you could share in terms of the pipeline of opportunities for that business? Appreciating that I'm sure you can't be too explicit, but just directionally or broadly, was hoping that you could kind of share any updates or thoughts on the contracting efforts for those assets. Thank you.

Ron Gusek (CEO)

Yeah, Dan, to the extent we're prepared to talk about it today, I'd say we remain extremely excited about the opportunity, quite positive on the outlook. I would tell you that our pipeline of opportunities today significantly exceeds the capacity that we have ordered or have announced. We continue to work on those conversations, and they're taking place in a number of areas that I identified in my opening remarks. We have some very advanced conversations with a number of our E&P partners around the electrification of their acreage. We have a number of conversations going on in the data center space and also along the lines of that MOU we announced where it would be a greenfield development around effectively an industrial complex that would house a data center. Of course, some other commercial and industrial opportunities.

I would tell you we're quite excited about where those things are. In some cases, we're in the air permitting phase already, so we have some things moving along there, but at this point in time, not prepared to say too much more than that. Safe for saying that we remain very, very confident that as we deploy those assets in the first quarter of 2026 and put them to work, that that will be under contract and in line with the, I guess, broad guidance we've given around contract term length and return profile.

Dan Kutz (Vice President of Equity Analyst)

Great. Yeah, understood, and that's all helpful. I guess appreciating that there's a lot of uncertainty and that you guys are being mindful of different macro scenarios, but is kind of at this point the read that the full-year guidance that you guys laid out? I know Michael reiterated the CapEx guidance, but for, I think it was the $700 million-$750 million of consolidated EBITDA for the full year, is kind of the takeaway that that is still intact today, or are there any puts and takes there that you would kind of highlight at this point? Thanks.

Ron Gusek (CEO)

Dan, I would say that at this point in time, certainly, we're not going to make any changes to that. It's far too early to do so. As we've indicated, our outlook into Q2 is very, very strong. We have a great line of sight through the quarter, and it looks quite robust, and we expect it to be up over Q1. It's too early to say what the back half of the year holds. I think there's a range of possible outcomes there. As our customers begin to, maybe as the industry more broadly begins to get some clarity around what the future holds from a tariff standpoint and OPEC Plus production strategy, we'll see our customers lay out their plans for the back half of the year, and we'll be able to adjust accordingly if that's necessary.

Dan Kutz (Vice President of Equity Analyst)

Yeah, fair enough. That's helpful. Thanks, guys. I'll turn it back.

Ron Gusek (CEO)

Thanks, Dan.

Operator (participant)

Our next question today will come from Arun Jayaram of JPMorgan. Please go ahead.

Arun Jayaram (VP)

Yeah, good morning. Since 2018, U.S. shale oil supply is up two and a half million barrels, looking at the 914 data. One of the plausible scenarios is if OPEC brings back some of the two million barrels offline that we could see lower U.S. oil production as potentially if OPEC muscles in a little bit. I wanted to get your thoughts on how you would view a more normalized frac fleet count. I think we're roughly at 200 fleets today. If the U.S. oil supply went down by a million barrels, to call it the low 12 million barrel range, how do you think about Liberty's earnings power in that type of scenario?

Ron Gusek (CEO)

Yeah, I guess I would say that if you thought about where production stands today, and you probably want to be more specifically focused on unconventional production, so the share of that 13.5 million barrels that comes out of the tight oil world, if you thought about that world today, our active frac fleet count in the industry is basically focused on holding production flat. We have a frac crew count of, call it 220 crews today that are basically working to hold us flat at 13.5 million barrels, and really the subset of that being, I think, round numbers, 9 million barrels a day of unconventional production.

If you thought about a rough ratio there and you knocked a million barrels off, so a little more than 10% of the production in unconventional, you'd probably get approximate reset in frac crew count, needed frac crew count to sustain that production level. Maybe we come off from 220-190 or something like that, but I do not think it would lead to a catastrophic situation in pressure pumping.

Arun Jayaram (VP)

That's very helpful. Thanks for that. I wanted to—you made some interesting comments on the gas side that you're gearing up maybe to support a little bit more gas activity. Could you maybe just elaborate on some of the comments and what you're seeing in some of the natural gas basins?

Ron Gusek (CEO)

Sure. Of course, the gas market had been in a pretty challenged spot for the last couple of years. We'd seen gas prices relatively depressed, but we've seen some real strength in them of late, supported by both reshoring of manufacturing and anticipated growth in power demand here onshore North America, and also, more significantly, LNG export capacity and even a bit of early growth in expectations around that for the broader global market. We have a situation now where even with a bit of volatility in gas prices, the prompt price and forward strip have been strong enough that we've seen people in the gas basins look to bring additional capital to bear, put incremental rigs to work, and ultimately, as a result, require additional frac equipment.

For us, of course, we feel that primarily in the Haynesville, given that's where we have frac equipment based. We are actively working today with customers to fit additional work onto our calendar as we head through Q2 and out into Q3. I would say positive shoots there, and of course, we never know what the future holds, but it looks pretty good right now.

Arun Jayaram (VP)

Great. Thanks, Ron.

Operator (participant)

Our next question will come from Saurabh Pant of Bank of America. Please go ahead.

Saurabh Pant (Director of Equity Research Analyst)

Hi, good morning, Ron and Michael.

Ron Gusek (CEO)

Morning, Saurabh.

Saurabh Pant (Director of Equity Research Analyst)

Maybe I want to touch on the power side of the business a little bit, Ron and Michael, especially the MOU you announced with Range and Imperial. Just help us think about how would that work commercially. Who is the contracting party, right? I mean, where do we get the visibility on the earnings for Liberty on the power side of things, right? Maybe just help us understand the contractual output as that MOU progresses.

Ron Gusek (CEO)

Surabh, I'm going to let Michael talk to that, but before he answers that question, I want to give you a shout-out for Best Title on Note yesterday. I love the headline on that.

Michael Stock (CFO)

Yes. Surabh, there was a lot of—this is a good example of partnerships that are being drawn to Liberty. This is a well-known industrial developer in the Northeast looking to develop an industrial park on 875 acres of land, looking to anchor it with a data center in conjunction with Liberty building a power plant and Range Resources providing the gas, right? We have sort of fiber running nearby. We have the ability to build it. This is long-term development plans. This is part of when you think about the things that you will hear out of Washington about sort of reshoring of industry and the reshoring of sort of industrial capacity into America and the combination of building that off of the backbone of the great natural gas resources that we have in conjunction with the right players, right?

Sort of Liberty on the power side, Range being sort of a great gas provider on that side, and then obviously industrial development. Now, these are long-hitting projects. These are things that are going to take a while. You're talking probably two-plus years by the time you get through sort of your anchor tenants development, starting into construction, etc. This is where you're developing in this business a sort of pipeline of large, long-tenured projects that are going to support business far into the future. This is a great example of sort of the way that American business is coming back together to reshore sort of industrial capacity into America.

Ron Gusek (CEO)

I'd maybe just add one thing to that, and it's this idea around confidence about the cost of energy. Of course, people would always say that ideally they would be on the grid, but the challenge with being on the grid is that you don't know what the power price is going to be next year or the year after that. I think if you look back in history, evidence would suggest that power prices on the grid continue to get more and more expensive on an annual basis. In a situation like this where we have a strong partner on the gas side and LPI on the power generation side, our ability to provide confidence to the end user of that electricity around their long-term cost of energy in a facility like this is differential to what the grid could possibly provide.

These environments where we have that gas partner and power generation together offer a very, very unique and differential scenario for the end users that ultimately find themselves home in this data center.

Saurabh Pant (Director of Equity Research Analyst)

Right, right. No, that makes sense. That's super useful, Ron. I know you talked about heat rate and obviously now that you have gas supply visibility, so that comment makes a lot of sense. Just very quick follow-up on just that. I think I forgot, Ron, maybe you or Michael made the comment on focusing on smaller data centers up to 250 MW. Can you walk us through the rationale behind that? Why you focus on that? Is that because of the amount of capital you're willing to deploy, or is there some other factors that are going into that decision?

Ron Gusek (CEO)

I would say that it's really just a function of who we're talking with today. That's not to say that down the road we wouldn't be looking towards some larger projects, but the projects that are in our pipeline today are primarily on that smaller size. I think they represent a great opportunity and a strong fit for the capabilities and assets that we bring to the table and are focused on, at least early on in our growth of LPI. That's not to say that we wouldn't down the road have some conversations around much bigger data centers. That was more a comment around the current pipeline of opportunities that we're focused on.

Michael Stock (CFO)

It's also the customer base, Surabh, where you've got customers that are really looking for time to market. They need that compute space relatively quickly. They are now looking at building out these data centers in a modular fashion. Whether or not we're building out sort of 100-150 MW first or 250 MW, the plans they have are to be able to expand that over time. Ideally, what they're trying to do is then get sort of compute power to market as quickly as possible to meet the demand of their customers.

Saurabh Pant (Director of Equity Research Analyst)

Okay, perfect. No, that makes sense. One quick unrelated one on, like you said, you've had a good start to the second quarter, right? I know the future remains uncertain at this point, but how quickly do you think you would get visibility on that, Ron, Michael, right?

If I'm thinking about two Qs specifically at this point, right? It seems like the run rate you're at, you might be doing comfortably better than consensus EBITDA forecast right now, right? How quickly can that change? How quickly do you get visibility whenever things change, if they change?

Ron Gusek (CEO)

I don't think things are going to change rapidly. I'm relatively confident that our Q2 will play out very close to how we see it today. I think it's unlikely that we're going to have any of our customers remove a pad in the next month or two. It's my expectation that to the extent we do see some changes, that's going to be back half of the year weighted. As to when we find out, I think that ultimately depends on when people feel they have some clarity around what the future holds. We're in the middle of a 90-day pause for most of the world today. Of course, the back and forth with China continues unabated, at least at this point in time.

As we begin to get some confidence around how that plays out and what OPEC Plus's strategy is going to be, I think you're going to see our customers, the E&Ps, begin to settle in on their guidance. We're going to get WTI settle in at a place that reflects what that global economic environment is going to look like. At that point, we'll have some clarity around what the future will hold, but there's still some moving pieces there yet. I don't think it's happening in the next week or two.

Saurabh Pant (Director of Equity Research Analyst)

Okay, perfect. No, I got it. The market is focusing on the present perfect right now, Ron. With that, I'll turn it back, Ron, Michael. Thank you.

Ron Gusek (CEO)

Thanks so much.

Operator (participant)

Our next question today will come from Scott Gruber of Citigroup. Please go ahead.

Scott Gruber (Director of Oilfield Services & Equipment Research)

Yes, good morning.

Ron Gusek (CEO)

Morning, Scott.

Scott Gruber (Director of Oilfield Services & Equipment Research)

Good morning. Want to stay on that same line of questioning. If the second half activity is, call it modestly weaker, would you look to adjust your digiPrime deliveries this year? Are you able to defer some of those? What conditions are you looking at to make that decision? Would you just simply take deliveries this year and then potentially look to adjust the 2026 program?

Ron Gusek (CEO)

No, Scott, we certainly have flexibility to make adjustments in the back half of the year if that became necessary. We're certainly in conversation with our suppliers around what adjustments we could make and what that would look like, how we might think about that headed out into 2026, and certainly could make adjustments there as necessary as well. There is a counterpiece to that as well, and that is the customer on the other side of that digiFleet. We will deliver a digiFleet in the back half of this year that, quite frankly, the customer couldn't operate without. There are some puts and takes there for some of that capacity, but we do have flexibility there and are absolutely willing to make adjustments as necessary given a potential change in our outlook for the year.

Scott Gruber (Director of Oilfield Services & Equipment Research)

I got it. Then thinking about buybacks from here, your stock is up nicely today, but it's still down year to date along with everybody else. Would you be willing to use the revolver to continue buybacks, or will free cash flow really govern the pace of buybacks from here?

Ron Gusek (CEO)

Yes. Obviously, we have what we would consider a very, very depressed stock price today, and as a result, looks pretty opportunistic from a buyback standpoint. Certainly, we were active in Q1 as a result of that. As we look forward, of course, there are some storm clouds on the horizon. We do not know if that storm is going to roll in here or not, but I think a prudent approach to the rest of the year would have us focused on not only just the buyback opportunity, but also the strength of the balance sheet and how that plays in. If we think about best setting up Liberty for whatever the future might hold, you can know that we will be keenly focused on a fortress-like balance sheet that will enable us to navigate whatever is coming our way.

In consideration with that, of course, our CapEx expenditures and also share buybacks to the extent we think that makes sense. Know that with uncertainty in front of us, priority number one will always be the balance sheet. That would likely, in fact, I'll say certainly preclude using debt for buybacks.

Scott Gruber (Director of Oilfield Services & Equipment Research)

I appreciate the call, Ron. I'll turn it back. Thank you.

Operator (participant)

Our next question will come from Waqar Syed of ATB Capital Markets. Please go ahead.

Waqar Syed (Managing Director of Energy Technology & Services and Head of Research)

Thank you. Congrats on a good quarter. Ron, if WTI stays at, let's say, $60 a barrel or so this year and next, how do you see activity kind of trend both on the drilling side and the pumping side? Maybe if you could provide—you've done some sensitivity analysis—maybe if you could provide some guidance on what a $5 move in either direction would entail on activity side and then perhaps maybe on some pricing side as well.

Ron Gusek (CEO)

Yeah. Waqar, I think if oil stayed in the low $60s, that's not an exciting environment for us by any stretch of the imagination. I think at most we probably feel modest ripples in activity levels. We're going to see some smaller and likely private companies react to that with probably a pullback in activity. I think for the vast majority of folks and certainly the larger publics, they're going to carry through with their announced CapEx budget for the year in that environment. I don't think that's a low enough price to have them meaningfully change activity. I think for us, we would expect that while we maybe have a modest amount more white space on the calendar looking out through the rest of the year than we might have anticipated, it wouldn't be significant.

Now, if we saw, to your point, a $5 move on oil upwards, I don't think that changes things really at all. Downwards to the point where we get a five handle in front of WTI, I would certainly expect a pullback in rig count. I don't know exactly what that number would be. It would be speculation at best to tell you where I think that would have us head. As I indicated a little earlier, of course, basically our rig count and frac crew count today is working to hold production flat. If you—any reduction for sure is going to result in a reduction in oil prices or reduction in production level here. I just don't know how far we'd see that go. Again, I don't think we feel it's going to be huge.

I think given I think goals in North America to hold production relatively flat over the long term, we probably see a modest reduction in service activity. Maybe it's 10% or 15%, but I just can't see a path to something significantly greater than that, at least at this point in time.

Waqar Syed (Managing Director of Energy Technology & Services and Head of Research)

Sure. Is your Q2 guidance—are you seeing any impact of price declines that were implemented back in Q4? Have they all rolled through in Q1, or are they still to come in Q2 as well?

Ron Gusek (CEO)

No. Any price adjustments we have made are already in place today. They have all been—they were all put in either right at the start of the year or partway into Q1. We are already feeling the full impact of those.

Waqar Syed (Managing Director of Energy Technology & Services and Head of Research)

Yeah. And then just a quick follow-up on that. Your customers have seen almost a 15%-20% kind of cut in their cash revenues with this oil price change. Do you think they're okay with the pricing that was settled back in Q4, or are they asking for additional cuts?

Ron Gusek (CEO)

I think our customers recognize that their service pricing has already gotten to a pretty good spot. It's been declining for a couple of years now. I think they recognize that having a sustainable service platform is important to their activity levels, not only today, but also going forward. I think there's a recognition that you have to be careful about how far you ask a service provider to go.

Waqar Syed (Managing Director of Energy Technology & Services and Head of Research)

Sure. Thank you very much. Thanks for the cutter.

Operator (participant)

Our next question today will come from Ati Modak of Goldman Sachs. Please go ahead.

Ati Modak (VP of Energy Services and E&Ps)

Yeah. Hi, good morning. Ron, you spoke about the digiFleet commitments, and Michael, you talked about the flexibility in the CapEx. Maybe can you provide a little bit more color around where the flexibility is more broadly and how you are thinking about the low end of CapEx should you need to change that lower?

Michael Stock (CFO)

Ati, we have a good amount of flexibility in deliveries in the fourth quarter and obviously a huge amount of flexibility in what we spend in the early part of 2026 and the full part of 2026. I think that's where we can adjust at that point. Yeah, we can delay some of the engine deliveries. We can delay some of the packaging. We can move that out. We can slip it out within a period of time and then offset what would have been new builds in 2026. Yeah, we have a lot of flexibility to manage cash flow as we get into the back half of the year.

Ati Modak (VP of Energy Services and E&Ps)

Okay. Anything incremental you can share on the power contracts for later in the year around how those conversations are going or strategies? Anything you can share at this point?

Michael Stock (CFO)

No, I think Ron, I think, was very, very irritated about how he put it, and I think they're going very, very well. We're excited about where the business is going. As you know, with any sort of large commercial industrial facility, there are a number of players at the table that need to come together from sort of EPC, hyperscalers, the final customer, the permitting around that, the air permitting around that, etc. There is a lot of moving parts as these projects move forward and they get to FID.

Ati Modak (VP of Energy Services and E&Ps)

Great. Thank you.

Operator (participant)

Our next question will come from Tom Curran of Seaport Research Partners. Please go ahead.

Tom Curran (Senior Equity Analyst of Oilfield Services and Sustainable Energy Technology)

Good morning. Two-part question to start on the portfolio you've inherited with the IMG acquisition. First, I believe IMG had a pipeline of potential solar PV or solar PV plus thermal opportunities. Could you expound on that project set and whether we might see LPI move forward with any of those? Then, when it comes to IMG's position and advantages within PJM, did Mike's team set up sort of expedited access or lock up certain interconnects? Just wondering if that came into play either with the Range and Imperial deal, or do you expect to have a certain advantage when it comes to accessing securing interconnects as a result of the work IMG has already done?

Michael Stock (CFO)

Right. I have to take a little bit of that if you like. IMG, sort of just the other way around, is the International Marketing Group was originally the original name. IMG, the team, yeah, they've got about 10 sole projects that are being studied at the moment in the queue. These are historical from their sort of the pushing from the European-backed PE fund before. As we move forward with them, those projects, as they get reviewed, will have some value, and we will most likely either partner or sell those to another developer to develop those. If we develop them with that interconnect in conjunction with them, we'll do the thermal generation. That is something that we will look at as we go through.

As you know, the PJM Interconnection queue, these are projects that were put in the queue, I think, probably nearly three years ago. Some of them are just getting reviewed this year. It is a very, very slow process. The IMG team are a network provider and have a market provider into the PJM market. At one point, just over a year ago, they were selling power from 11 separate power plants into the PJM market managed through their network operating control center in Pittsburgh.

They bring a lot of expertise in that part of the world and in that market, which I think is great, which is definitely something a market when, along with, if you think about us and our historical relationship with Texas and the ERCOT market now, adding PJM and that sort of close relationship is a real benefit for us on that side of the world.

Tom Curran (Senior Equity Analyst of Oilfield Services and Sustainable Energy Technology)

Very helpful. Sorry about the temporary dyslexia there, Michael. I wanted to know where you're at with the latest update you gave us all for LPI for the distributed power fleet. It still was entirely natural gas reciprocating gensets. Where are you at on the timeline for ordering your first gas turbine package? When you do pull the trigger on that, what's the earliest delivery timeframe you think you could manage?

Michael Stock (CFO)

We're definitely focused on the high thermally efficient gas reciprocating engine for our power generation at the moment, whether that be our Caterpillar and MTU partnerships or our new partnerships with INNIO at the moment on that side of the world. We think that has the modular reciprocating engines with their high thermal efficiency is a great product. Obviously, if you have a space constraint, gas turbines make a lot of sense in certain areas and certain times. Depending on whether or not you're working in the oil and gas areas where you may or may not have gas quality issues, you may want to use a gas turbine. Generally, I would say sort of the smaller Solar turbines are probably about a year and a half, two years is the earliest delivery you can take.

I'd get a guess the aero derivatives now are probably in the three plus years. It's about where turbine delivery is, I think, in general in the market. We are not looking at ordering any of those at this present point in time.

Tom Curran (Senior Equity Analyst of Oilfield Services and Sustainable Energy Technology)

Got it. I appreciate your taking my questions.

Operator (participant)

Our next question today will come from Jeff LeBlanc of TPH. Please go ahead.

Jeff LeBlanc (Director of Equity Research)

Good morning, Ron and team. Thank you for taking my question. I wanted to see if you could talk about Liberty attrition rate and what level of reinvestment is required to offset this attrition beyond normal maintenance. I guess phrased another way, how long could you pause the digiFleet new build program without impacting your deployable horsepower? Thank you.

Ron Gusek (CEO)

Yeah. Jeff, while we use 10% as a round number on an annual basis, it's certainly possible to extend the life of a pump out beyond that. Adding two or three or four years is not an impossibility by any stretch of the imagination. There's a cost that comes with that, of course, from a maintenance CapEx standpoint, but it absolutely is possible. Could we, in the most extreme case, go through 2026 without building a single new pump and still be comfortable with the deployment of our fleet as it stands today? We certainly could.

Jeff LeBlanc (Director of Equity Research)

Thank you for the color. I'll hand the call back to the operator.

Operator (participant)

Our next question today will come from Mark Bianchi of TD Cowen. Please go ahead.

Marc Bianchi (Managing Director)

Hi, thanks. I was hoping you could put some bookends around the magnitude of revenue increase that you're expecting for second quarter.

Michael Stock (CFO)

I think we're comfortable with the guidance we've given out publicly at this present point in time, and we've seen positive momentum coming into the quarter. Obviously, sort of given where we are in the market, you are not going to see a massive sort of hockey stick going into the quarter. Slow, steady progress is what we expected for the year.

Marc Bianchi (Managing Director)

Okay. Thanks for that, Michael. Maybe within that, as we think about the moving pieces that are driving the improvement, I think there's maybe some benefit from Australia in 2Q that was not present in 1Q, but then you have Canada that might be down a little bit in 2Q. Can you just sort of talk about the moving pieces? What I'm really curious about is what's happening with the frac service part of your business as we go from 1Q- 2Q. Is that improving as well, or is that maybe more flat with these other things taken into consideration?

Ron Gusek (CEO)

I think basically what we're feeling is pretty normal seasonality. Of course, as we progress through Q1 for, let's talk about our Lower 48 fleet, while some of the basins get out of the new year with a pretty quick start, the further north you get, kind of the slower that ramp is. If you looked at the progression through Q1, we came out in a very strong position. March from a utilization standpoint was the strongest month in the quarter, and that carries on into Q2 for the most part across the board. To your point, Canada has a little bit of seasonality during the second quarter that just comes with breakup there.

Even up there, our operators, customers are getting better and better and better at being able to work through that, about getting assets out into the field on a longer pad and working through most of breakup. Even there, people are working hard to mitigate some of that seasonality effect. If you think about going from Q1-Q2 in the frac business, it is not hugely different than we might have anticipated in a regular year absent all this background noise that we are dealing with today.

Michael Stock (CFO)

Slightly less weather affecting Q2, slightly longer daylight hours, makes life easier to be a little bit efficient. In general, that is why it always generally uptakes.

Marc Bianchi (Managing Director)

Yep. Yep. Great. Thanks for that color, guys. The other one I had was just on the power business as you kind of prepare for the delivery of these gensets. Should we see some incremental cost creep in before you've got revenue? What does that look like? Are we talking about single-digit millions of EBITDA kind of hit in the third or fourth quarter, or is that not something that we should be trying to plug into our model at this point?

Michael Stock (CFO)

Yeah, there'll be small amounts of revenue sort of appearing from that from some of the equipment that we have on the ground. Yeah, you'll see CapEx starting to roll in at the back end of the year as we package these gensets and get them ready to go out for revenue generation at the beginning of first quarter. Yeah, you always see, as with any heavy equipment provider, sort of heavy equipment business, you're always going to see CapEx lead earnings. Just as I say, pretty much exactly the same way you see it when we build a digiFleet, right? The digiFleet CapEx comes in the six months before the digiFleet, that digiFleet starts to earn. It's really not a lot different to the historical trend that Liberty has always had.

Ron Gusek (CEO)

I would say that as you think about it from a people standpoint, of course, it's not near the same intensity as our frac business is. When we're preparing to stand up a frac crew, we've got 100 people to onboard as part of that. That takes the better part of a quarter to get through something like that. You're not going to see that same sort of upfront impact in this environment when we're going to be operating a power plant. We just don't have to attach the same sort of intensity to that from a personnel standpoint.

Marc Bianchi (Managing Director)

Yep. That's a good point. Thanks for that, Ron. Appreciate it, guys.

Operator (participant)

Our next question will come from Keith MacKey of RBC Capital Markets. Please go ahead.

Keith Mackey (Director of Global Equity Research and Oil & Gas Services)

Hey, good morning and thanks. Just maybe to try to summarize some of the other questions and answers around the outlook. Ron, Michael, would it be roughly fair to say that if we stay in this low $60 range for WTI for the rest of the year, that your guidance range of 700-750 should hold? If we go below that, then maybe there's some adjustments that would need to be made. Is that a fair way to think about it?

Ron Gusek (CEO)

I think that's a fair way to think about it as fast as we can see today.

Keith Mackey (Director of Global Equity Research and Oil & Gas Services)

Got it. Thanks for that. Just on the buyback, was the amount done in Q1 representative of what you think you'll do for the rest of the year, or should we be lowering or raising that a little bit?

Michael Stock (CFO)

As Ron pointed out, we will be focused on the over the last two weeks, obviously, we've had a significant amount of macroeconomic news that the industry is trying to digest. As far as that goes, we are working in real time with our customers to see what effect that may have, if it has any effect. I would say a little similar to your last question, if we had outlook into the steady oil price of where we put our plan together at the beginning of part of this year, as you said, sort of mid-60s, going forward, your assumption on buyback would be correct. As we look at the macroeconomic outlook and we look at the clouds on the horizon, we will obviously take a very, very prudent approach to the balance sheet and spending money.

Keith Mackey (Director of Global Equity Research and Oil & Gas Services)

Okay. Thanks very much. I'll turn it back.

Operator (participant)

Our next question will come from Roger Read of Wells Fargo. Please go ahead.

Roger Read (Senior Energy Analyst)

Yeah. Thanks. Good morning. Maybe come back to the power grid option or opportunity here, the collaboration in the early next year. What's the right way for us to think about the pace of CapEx? Is there all the key items have already been ordered? Is there anything that we do have to watch out here in terms of a critical item?

Michael Stock (CFO)

I would say it's slow and steady. As we think about this business, we are going to build this business very much like we built the frac business, right? Slowly, steadily, but organically, right? I think that's the way you look at it. We look upon this as a decades-long opportunity. Building the right expertise, getting the right partners, getting the right initial projects, doing that is going to be key. Slow and steady increase over the next three years, I think, is the way you should think about it for us.

Ron Gusek (CEO)

Yeah. The only color I would add to that is probably certainly as you think about generator delivery, they come at a pretty steady cadence, and we'll be packaging them at a pretty steady cadence. Ultimately, we'll get to a position where we have to deploy the balance of plant. You maybe see a modest uptick in CapEx there as we go through that construction phase on an individual project and then settle back down to that steady cadence that Michael alluded to.

Michael Stock (CFO)

Very low maintenance capital after that. That is the other view of this business, right? Once the initial capital is in place, unlike with the frac business where you are running in very harsh conditions, where you are wearing out fluid ends, power ends, etc., of that variety, the ongoing maintenance capital beyond the initial capital is relatively low, very low.

Roger Read (Senior Energy Analyst)

Yeah. I appreciate that. As a follow-up to the earlier comments about maybe a little better activity or at least some signs that customers want to get more active in the gas areas, how does that affect how we should think about the cost structure over the next two quarters, right? I mean, if pricing is relatively flat, activity, call it seasonally, up a little bit in most places would generally kind of help margins out. If you are moving equipment around or doing some hiring in some local areas, what's the right way for us to think about that on the cost/margin structure?

Ron Gusek (CEO)

I would say that you're not going to see anything meaningful there at all. When I say we're optimizing the calendar, yes, occasionally it might mean a fleet move, but we aim to make sure that happens for a period of time such that that's absorbed over a number of jobs, maybe a quarter or more. In terms of people, we're able to do that with the headcount that we have available today. I don't think you're going to see anything there that would really show up.

Roger Read (Senior Energy Analyst)

Okay. Great. Thanks, guys.

Michael Stock (CFO)

Thanks, Roger.

Operator (participant)

Our next question will come from Eddie Kim of Barclays. Please go ahead.

Eddie Kim (VP of Equity Research)

Hi, good morning. Thanks for squeezing me in here. I'll try to ask Marc's question a different way. In terms of kind of the magnitude growth you're expecting in EBITDA in the second quarter, I mean, if I take a look at last year, your second quarter EBITDA was up 12% sequentially. Obviously, you had a very strong quarter here in the first quarter. Is mid-single-digit growth in EBITDA fair to assume from a modeling perspective, or would even that be a bit aggressive just given the market uncertainty we're facing?

Michael Stock (CFO)

No, I think if we think about our standard seasonality, normal sort of activity incrementals coming on from there. Yeah, I mean, I think that kind of mid-single digits is a safe number as we see it most.

Eddie Kim (VP of Equity Research)

Okay. Great. Just my follow-up is on the CapEx for the 400 MW power down. It is $200 million this year on the 150 MW, but you did highlight some potential inflation due to tariffs. Is it fair to assume that the CapEx on the remaining 250 MW will be higher on a per MW basis as a result of the tariffs, or were those costs sort of locked in at the time that they were ordered?

Michael Stock (CFO)

Yeah, there is. I mean, obviously, Eddie, it's a moving target at this present point in time, right? The tariffs are changing at the stroke of a pen. When we're talking about deliveries that are nine, six, nine months from now, we are managing that sort of on a day-to-day basis, right? The vast majority of the CapEx that we have on order for the power generation is actually U.S. content and US-based. There is some that is coming in from Europe, and we will see how that plays out over the balance of the year.

Eddie Kim (VP of Equity Research)

Got it. Perfect. Thanks for that color. I'll turn it back.

Operator (participant)

This concludes our question and answer session. I would like to turn the conference back over to Ron Gusek for any closing remarks.

Ron Gusek (CEO)

While we are experiencing some turbulence at present, it does not change the immutable fact that the world needs more energy, lots more energy. I remain incredibly bullish on the long-term outlook for oil and natural gas, and more specifically, North American oil and natural gas. Over the past decade, our industry has gotten stronger, more resilient in the face of headwinds. This is in no small part due to the hardworking people in the oil field services sector. They have brought technology and innovation in all facets of drilling and completions, driving up efficiency and driving down the cost of producing a barrel of oil or MCF of gas, helping ensure North America remains highly competitive in the global market. To all of you in the service sector, I say thank you.

Thank you for the work you do that ensures even when we are staring into the face of uncertainty, we can do so confident in the fact that this too shall pass and our industry will come through it stronger than ever. Thank you all for joining us on the call this morning. Enjoy the rest of your day.

Operator (participant)

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.