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Liberty Energy Inc. (LBRT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue fell sequentially to $947.4M as completions activity slowed and pricing headwinds intensified; Adjusted EBITDA declined to $127.7M with GAAP diluted EPS of $0.26 and adjusted EPS of -$0.06 .
  • Versus Wall Street consensus (S&P Global), Liberty modestly beat adjusted EPS (-$0.06 vs -$0.0746*), missed revenue ($947.4M vs $964.8M*), and missed EBITDA ($127.7M vs $129.8M*). The miss was driven by weaker industry activity and pricing pressure; the adjusted EPS beat reflects smaller loss than expected even as GAAP EPS benefited from investment gains .
  • Guidance shifts: 2025 total CapEx lowered to ~$525–$550M (from ~$575M), Q4 cash taxes expected to be minimal, and tax rate maintained at ~25% .
  • Strategic catalysts: dividend raised 13% to $0.09/share , expansion of power generation plan to ~500MW by end-2026 and >1GW by 2027, and financing clarity (project-level, largely non-recourse debt backed by PPAs/ESAs) .
  • Notable clarification: management corrected the press release characterization of Forge as a “large language model,” stating it is a distributed agentic AI system powering automation and performance gains in the field .

What Went Well and What Went Wrong

What Went Well

  • Record operational efficiency: “highest combined average daily pumping efficiency and safety performance in Liberty’s history,” with quarterly records in pumping hours, horsepower hours, and proppant volumes .
  • Technology-driven cost savings: DigiPrime pumps showing >30% total maintenance cost savings; automation via STEM Commander reduced time to reach fluid injection rate by 65% and improved hydraulic efficiency by 5–10% .
  • Capital allocation and power growth: dividend lifted 13% to $0.09/share; power capacity targeting ~500MW delivered by end-2026 and >1GW by 2027 .

What Went Wrong

  • Pricing pressure and activity softness: sequential revenue -9% and adjusted EBITDA -29% as market-driven pricing headwinds and lower completions activity weighed; adjusted net loss of ~$10M .
  • YoY deterioration: revenue -17% YoY and adjusted EBITDA -48% YoY reflecting industry-wide slowdown and underutilized fleets, particularly for conventional equipment .
  • Leverage higher, liquidity lower: net debt rose by $99M sequentially to ~$240M; liquidity declined to $146M, with cash of ~$13M at quarter-end .

Financial Results

Core P&L metrics vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$977.5 $1,042.5 $947.4
Diluted EPS ($USD)$0.12 $0.43 $0.26
Adjusted EBITDA ($USD Millions)$168.2 $180.8 $127.7

Margins (EBITDA Margin %) vs prior quarters

MetricQ1 2025Q2 2025Q3 2025
EBITDA Margin %16.40%*16.51%*12.60%*

Values retrieved from S&P Global.*

Q3 results vs Wall Street consensus (S&P Global)

MetricActual Q3 2025Consensus Q3 2025Beat/Miss
Adjusted EPS (Diluted)-$0.06 -$0.0746*Beat
Revenue ($USD)$947.4M $964.8M*Miss
Adjusted EBITDA ($USD)$127.7M $129.8M*Miss

Values retrieved from S&P Global.*

Selected KPIs and balance items

KPIQ1 2025Q2 2025Q3 2025
Net Capital Expenditures ($USD Millions)$120.9 $134.0 $113.0
Cash & Equivalents ($USD Millions)$24.1 $19.6 $13.5
Net Debt ($USD Millions)—~$140 ~$240
Liquidity ($USD Millions)—$276 $146

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total CapEx ($USD)FY 2025~$575M (Q2 call) ~$525–$550M (Q3 call) Lowered
Tax Expense RateFY 2025~25% (2H 2025) ~25% (FY 2025) Maintained
Cash TaxesQ4 2025~No cash taxes in 2H 2025 Expect no significant cash taxes in Q4 Maintained
Dividend per ShareQ4 payout$0.08 (prior declaration) $0.09 (new) Raised
Power Generation Deliveries2026–2027Initial deployments in CO/TX begin in 2026; 3 sites targeted ~500MW delivered by end-2026; >1GW cumulative by end-2027 Raised/expanded

Earnings Call Themes & Trends

TopicQ1 2025 (Prior Mentions)Q2 2025 (Prior Mentions)Q3 2025 (Current Period)Trend
AI/tech initiativesVariable-speed natural gas reciprocating engine tested; predictive maintenance; asset lifespan improvements Two variable-speed DigiPrime units >1,700 hours; sand slurry pipe trial; digital twin monitoring STEM Commander automation: 65% faster injection, 5–10% hydraulic efficiency; Forge clarified as distributed agentic AI Accelerating
Supply chain/tariffs/macroTariff/OPEC+ uncertainties; customers evaluating scenarios Pricing headwinds; withdrew FY EBITDA target; activity moderation CEO: punitive tariffs hurt competitiveness and AI race; call for policy pivot Persistent headwind
Power business expansionAcquired IMG to expand LPI Alliances (Range/Imperial; AltitudeX) and Oklo; initial deployments planned; 3 sites (CO, TX) targeted Capacity plan raised to ~500MW (2026), >1GW (2027); capacity ordering advanced; LOIs and term sheets for “few gigawatts” Expanding rapidly
Pricing and simul-fracPlanning modest fleet reduction, redeploy to simul-frac Continued reallocation; white space emerging; pricing declines low single digits Reallocation for long-term partners; fully utilized; pricing pressure persists Soft market; share defense
Regulatory/air quality—Colorado Air & Space Port microgrid concept Non-attainment solutions: fuel cells + gas recips for emissions compliance Increasing focus
Regional mix—Overweight Haynesville as tailwind Industry frac activity below sustainment levels; oversupply to peak H1’26 Gas supportive; oil softer

Management Commentary

  • “Liberty achieved revenue of $947 million and Adjusted EBITDA of $128 million in the third quarter, despite a slowdown in industry completions activity and market pricing pressure.”
  • “Early indications show total maintenance cost savings are greater than 30% on DigiPrime pumps… Fleet automation is driving a 65% improvement in the time to deliver the desired fluid injection rate and a 5% to 10% improvement in hydraulic efficiency.”
  • “We mistakenly called [Forge] a large language model in our press release… it’s a distributed agentic intelligence system built for the field.”
  • “We now expect to have approximately 500 megawatts of generation delivered by the end of 2026 and over one gigawatt of cumulative power generation by the end of 2027.”
  • “As such, we increased our quarterly cash dividend by 13%…”

Q&A Highlights

  • Power demand visibility and contracts: Sales pipeline more than doubled in last 90 days; LOIs/term sheets for “more than a few gigawatts”; data centers likely comprise a higher mix of demand .
  • Financing structure: For large-load projects, ~70% project-level, non-recourse debt backed by PPAs/ESAs; remainder funded via corporate cash flow/debt and potential minority partners; smaller (<100MW) projects funded on balance sheet .
  • CapEx per MW and payback: Installed generation ~$1.5–$1.6M/MW; unlevered cash returns in high-teens; payback ~5+ years for 15+ year contracts and ~3 years for shorter 5–7-year contracts .
  • Capacity ordering/timing: Vast majority of incremental 600MW ordered; near-term generation capacity scarce; deployment timelines ~6 months for reciprocating packages and ~9 months for larger/turbine/power hall implementations .
  • Technology mix: Portfolio leans heavily to gas reciprocating engines for superior heat rate (~45% thermal efficiency simple cycle vs turbines); turbines used for density; future inclusion of SMRs (Oklo) and fuel cells in specific sites .

Estimates Context

  • Consensus (S&P Global) for Q3 2025: adjusted/primary EPS -$0.0746*, revenue $964.8M*, EBITDA $129.8M*; actuals: adjusted EPS -$0.06, revenue $947.4M, adjusted EBITDA $127.7M → EPS beat, revenue/EBITDA miss .
  • Number of estimates: EPS (6), revenue (9).
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term OFS cycle softness and pricing pressure compressed margins; EBITDA margin fell to ~12.6%* in Q3 from ~16.5%* in Q2, highlighting a more challenging price/volume mix . Values retrieved from S&P Global.*
  • Management is reallocating horsepower to simul-frac and prioritizing long-term customers to defend utilization and efficiency in a softer market .
  • Strategic pivot to power is accelerating: ~500MW by end-2026 and >1GW by 2027 with non-recourse project financing, positioning Liberty for multi-decade contracted cash flows .
  • Capital discipline intact: 2025 CapEx trimmed to ~$525–$550M; dividend lifted to $0.09; minimal Q4 cash taxes expected—supportive of FCF defensiveness through the trough .
  • Technology moat expanding: DigiPrime cost savings (>30%), automation gains, and the Forge agentic AI platform underpin cost/efficiency advantages likely to drive share gains as activity normalizes .
  • Macro watch: CEO’s explicit critique of tariffs underscores input-cost and equipment-availability risks, while management sees improving frac fundamentals later in 2026 as oversupply peaks and attrition tightens capacity .
  • Trading lens: In the short term, continued pricing pressure and seasonal Q4 patterns could weigh on results; medium-term thesis hinges on execution against power milestones, contract conversion, and maintenance of OFS efficiency advantages .