LandBridge Company LLC

revenue figure. During the second quarter, total revenues grew 36% sequentially and 20% year-over-year to $26 million. The sequential growth was broad-based across revenue streams, as surface use royalties and revenues grew 55% sequentially, driven primarily by incremental royalties associated with the East Stateline Ranch acquisition. Resource sales and royalties increased 28% sequentially, also driven predominantly by the East Stateline Ranch acquisition. and revenue from oil and gas royalties increased 7% sequentially, largely as a result of mineral lease bonus income. We generated $114 of non-oil and gas royalty revenue per owned surface acre during the second quarter, which is down from $232 in the same period last year, reflecting our recent expansion through the acquisition of an additional 148,000 strategically located surface acres. Because this land has been historically underutilized, we see tremendous growth opportunities from applying our proven active land management strategy. As a result of our lean operating model, we delivered adjusted EBITDA at $23.4 million during the quarter, which represents a 90% adjusted EBITDA margin. SG&A expenses during the quarter were $2.1 million, which represent a step up from the first quarter and same quarter last year due to higher professional service fees primarily associated with amending our credit facilities and pre-IPO entity restructuring. We generated free cash flow of approximately $16 million and free cash flow margins of 60%. The sequential decrease in free cash flow margin was due to non-recurring costs associated with M&A activity during the quarter. As a reminder, we closed our IPO in early July, providing net proceeds of approximately $271 million, which were used to further strengthen our balance sheet and distribute a dividend to our legacy shareholders. We ended the quarter with total liquidity of approximately $50 million. We had $400 million of debt under our term loan and revolving credit facility, of which approximately $265 million was used to fund the East Stateline Ranch and Speed Ranch acquisitions during the quarter and ended the quarter with a net leverage ratio of 4.2 times. Subsequent to the end of the quarter, we paid down $100 million of debt with IPO proceeds and made a regular amortization payment, bringing our net leverage ratio down to 2.6 times. Turning to capital management, as Jason mentioned, we expect our high-margin business model to generate substantial free cash flow over time. As we continue to grow free cash flow, our capital allocation priorities are threefold. First, maintaining a strong balance sheet to ensure maximum financial flexibility over time. Deleveraging is an accretive use of our excess cash, and we will continue to pay down borrowings under our credit facility. Following our IPO, our leverage ratio was approximately 2.6 times adjusted EBITDA, and we expect to be around two times by the second quarter of 2025. We are also committed to returning capital to shareholders through dividends. Our board will be discussing our dividend policy during the second half of the year, and we anticipate introducing a quarterly dividend following Q3 earnings. Finally, we will continue to pursue value-enhancing land acquisitions. We operate in a fragmented market with significant opportunity to acquire underutilized and undercommercialized land. and we have proven our ability to create value through our active land management strategy. Before closing, I'd like to flag that we intend to provide annual guidance alongside Q3 earnings following our first full quarter as a public company. In conclusion, we are pleased with our second quarter results and we see significant opportunities ahead as we leverage our high margin, high capital efficient business to drive long term revenue and free cash flow growth, creating substantial value for our shareholders. With that operator, we are now ready for questions.

Thank you, we will now begin the question and answer session if you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your questions simply press star one again we'll take our first question from john mckay at Goldman Sachs.

hey good morning congrats on the first call and thanks for the time understand you guys aren't giving kind of formal guidance at this point for the year. But maybe if you could just talk a little bit about how you expect your overall EBITDA growth to look like on the base business, maybe, you know, for now, excluding the data center opportunity, etc.