Liberty Energy Earnings: Efficiency Gains Yield Margin Expansion Despite Low Revenue Growth

Liberty Energy’s LBRT third-quarter earnings reflected the firm’s continued efficiency gains amid relatively stagnant frac activity throughout North America over the last few months. Management indicated full-year operating results will likely favor the high end of guidance, implying an adjusted EBITDA margin near 26% for fiscal 2023. We’re slightly raising our fair value estimate to $18 from $17 following the results, and we maintain our no-moat rating.

Third-quarter revenue was $1.2 billion, up 2% both annually and sequentially, while the firmwide adjusted EBITDA margin was 26%, a nearly 300-basis-point year-over-year improvement despite a lower average active fleet count. Liberty doesn’t explicitly disclose its quarterly fleet utilization, but data from Rystad Energy indicates the firm averaged about six to seven fewer operational fleets compared with the third quarter of 2022. The firm’s solid operating performance points to Liberty’s continued operating improvements—average daily pumping efficiency reached record levels for the third quarter straight.