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Liberty (LBRT) Shares Sink After Wider-Than-Expected Q4 Loss

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Shares of Liberty Oilfield Services Inc. LBRT fell almost 4% Wednesday after it reported a wider-than-expected fourth-quarter loss the day before. Investors were also spooked by the company’s capital spending guidance for 2022, which, in the range of $300 million to $350 million, came in well above analyst expectations.

Bucking the overall upward trend in the energy sector, the Denver-CO-based oil and gas equipment company posted loss per share of 30 cents, wider than the Zacks Consensus Estimate of a loss of 17 cents.

The underperformance reflects the impact of the ongoing logistics challenges, rising costs and acquisition integration expenses on account of the onshore hydraulic fracturing business in the United States and Canada that the company purchased in January 2021.

However, the bottom line compared favorably with the year-ago quarter’s loss of 41 cents due to
strong execution, higher activity and increased service pricing.

Total revenues came in at $683.7 million, ahead of the Zacks Consensus Estimate of $677 million and above the year-ago level of $257.6 million.

Meanwhile, the fourth-quarter adjusted EBITDA was $20.6 million against the prior-year quarter figure of $7.1 million.

Liberty Oilfield Services Inc. Price, Consensus and EPS Surprise

Liberty Oilfield Services Inc. Price, Consensus and EPS Surprise
Liberty Oilfield Services Inc. Price, Consensus and EPS Surprise

Liberty Oilfield Services Inc. price-consensus-eps-surprise-chart | Liberty Oilfield Services Inc. Quote

Balance Sheet & Capital Expenditure

As of Dec 31, Liberty had approximately $20 million in cash and cash equivalents. The pressure pumper’s long-term debt of $121.4 million represented a debt-to-capitalization of 9.1%. Further, the company’s liquidity — cash balance, plus revolving credit facility — amounted to $269 million.

In the reported quarter, the company spent $54.1 million on its capital program. Liberty’s full-year spending amounted to $173.4 million.

Guidance

Liberty management sees strong commodity prices driving frac service usage — especially by private upstream operators — this year. The ongoing growth momentum should benefit the company’s pricing and revenues in the first quarter. Success at lowering its operational expenses and the gradual decrease in integration costs amid increasing efficiency is likely to give a boost to margins. Liberty’s environmental-friendly and sophisticated offerings provide it with a comparative advantage. At the same time, the Zacks Rank #3 (Hold) company is not immune to macro issues like higher transportation costs, driver scarcity and labor shortages.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings Snapshot for Oilfield Service Providers

With Liberty belonging to the larger oilfield service industry, let’s see how some of the bigger well-known companies have performed so far this earnings season.

Schlumberger SLB, the largest oilfield contractor, announced fourth-quarter 2021 earnings of 41 cents per share (excluding charges and credits), which beat the Zacks Consensus Estimate of 39 cents. SLB recorded total revenues of $6.2 billion, outpacing the Zacks Consensus Estimate by 2.1%.

Schlumberger’s strong quarterly earnings resulted from higher contributions from Europe/CIS/Africa, strong North America rig activity and increased well construction activities in the U.S. Gulf of Mexico.

Smaller rival Halliburton HAL reported fourth-quarter 2021 adjusted net income per share of 36 cents, beating the Zacks Consensus Estimate of 34 cents. The company had reported a profit of 18 cents in the year-ago quarter. HAL’s outperformance reflects stronger-than-expected profit from its Drilling and Evaluation division.

In more good news for investors, Halliburton raised its quarterly dividend by 167% to 12 cents per share (or 48 cents per share annualized). Further, as part of its ongoing commitment to debt reduction, the company announced that it will partly redeem its $1 billion of senior notes due in 2025.

On the other hand, Baker Hughes BKR reported fourth-quarter 2021 adjusted earnings of 25 cents per share, missing the Zacks Consensus Estimate of 29 cents due to lower cost productivity in Digital Solutions.

However, BKR’s revenues for the October-December period totaled $5.5 billion, edging past the Zacks Consensus Estimate by 0.4%. The top-line beat was backed by better-than-expected sales from Baker Hughes’ ‘Oilfield Services’ unit.


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