Liberty Energy Inc.

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.

Thank you, Gary. Good morning, and welcome to the Liberty Energy second quarter 2024 earnings call. Joining us on the call are Chris Wright, Chief Executive Officer, Ron Gusick, President, 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 for diluted share, and adjusted pre-tax return on capital employed 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 the calculation of adjusted pre-tax return on capital employed, as discussed on this call, are available on our investor relations website. I will now turn the call over to Chris.

Thanks, Anjali. Good morning, everyone, and thank you for joining us to discuss our second quarter 2024 operational and financial results. Before we begin, I'd like to recognize our Houston-based colleagues that were impacted by Hurricane Beryl. Many were left for several days without power, but they rose to the occasion to meet the needs of our business and support each other and the broader community with remarkable resilience. I want to thank them for their exceptional efforts. In the second quarter, Liberty delivered strong operating and financial performance, demonstrating the value of Liberty's competitive advantage. Revenue of $1.2 billion and adjusted EBITDA of $273 million grew by 8% and 12% sequentially, respectively. while industry drilling and completions activity modestly softened over the same period. Record average daily pumping efficiencies and record safety performance coupled with increased utilization of our fleets underpinned the strong results. Our company culture, long-term customer partnerships, innovative technologies, scale, and vertical integration allowed us to deliver 28% adjusted pre-tax return on capital employed for the 12 months ended June 30, 2024. We generated strong cash flow and distributed $41 million to shareholders in the second quarter. Since the reinstatement of our capital return program two years ago, we have distributed $458 million of cash to shareholders through the retirement of 13.2% of shares outstanding plus quarterly cash dividends. We plan to continue strategically deploying capital to expand our competitive advantage and leadership position while returning capital to shareholders. Our culture of innovation and liberty developed technology are at the root of our success to date and the key to our future. This is reflected in today's highest ever operational execution and safety performance over our 12-year history. We are driving performance by harnessing data and software solutions throughout our organization. Three specific examples are, one, our record diesel displacement with data analytics driving enhanced gas substitution. Two, our preventative maintenance programs extending asset life, performance, and reliability, and third, Liberty's custom-built AI-empowered logistics software platform we call Sentinel. Before I highlight these three specific innovations, I want to remind everyone that Liberty alone has designed and deployed our own custom pump technologies and power generation technologies that allow us to optimize fleet archetype for performance and capital efficiency. Most importantly, we have built a culture of accountability and awareness around safety that we ceaselessly strive to improve. We have driven a 25% reduction in recordable incidents, TRIR, over the last one year alone, down to roughly 50% below industry averages. I'm very proud of this fact. I believe we are the most competitive, most efficient frac company in the sector. Let me add a few more comments on our recent technology-driven enhancements. Our diesel displacement is now at the highest level in company history from both the deployment of our natural gas-fueled digifleets and record gas substitution with our dual-fuel equipment. Over the past year, dual-fuel gas substitution levels have increased over 25% for three reasons. Investment in automated operating systems, increased expertise and visibility with real-time data on critical gas parameters, plus the coordination made possible by our addition of Liberty Power Innovations to supply onsite natural gas. Our predictive and preventative maintenance program coupled with data visibility and analytics allowed us to increase uptime and run assets at optimal operating ranges, both for frac performance and to achieve maximum gas substitution. We further enhanced our LPI portfolio with the commissioning of our operations in the DJ Basin, including compression capacity and logistics assets with first CNG sales in June. serving Liberty fleets and customer drilling rigs. Vertical integration drives efficiency. It is hard to overstate the impact of our advanced Sentinel logistics platform, harnessing real-time data and AI predictive analytics to both precisely forecast onsite profit demand and inventory, and then optimize transportation and logistics. Since inception, We have reduced our already very low downtime due to profit delivery by 90%. And we decreased the truck count and delivery time by approximately 35% each, improving collaboration with supply chain partners and ultimately lowering the total delivered costs for our customers. Less assets, less time, and improved performance. That is why we built the Sentinel system. We launched Sentinel in the Permian approximately a year ago and have now expanded to all U.S. basins. We will now focus on deploying Sentinel logistics solutions across our LPI CNG business. Sentinel is a key tool as we expand our business going forward. We strive to deploy the right technologies at the right time for the right reasons. AI is yet another tool that we are now utilizing to enhance our operations. AI comes full circle for us. The massive increase in data centers for AI and reshoring industry back to the US is inflecting upwards demand for electrical power and natural gas. AI is both enhancing our business and growing the demand for our services. We are excited by the potential opportunity to meet that demand through our LPI business. Our LPI business is starting in the oil field, where we are building assets and expertise to reliably deliver both natural gas and electricity 24-7 in remote areas. On frac locations, we rapidly construct a 25 to 35 megawatt power plant, fuel and operate and then tear it down roughly once a month and move that plant somewhere else. Our technology, assets, and expertise are positioning us very well to expand the playing field for LPI. Global oil and gas markets remain constructive on favorable multi-year market fundamentals, despite near-term volatility in commodity prices. In June, a decision from OPEC Plus to gradually unwind voluntary production cuts beginning in October drove oil prices lower. Even then, prices were well above those supportive of attractive E&P returns. Oil prices have since recovered on relatively balanced supply and demand dynamics, owing to relatively resilient global economic growth and a rising demand for transportation fuels with summer travel season underway. Natural gas prices saw a resurgence from early spring lows as gas producers reduced drilling and completions activity and curtailed production. Recent reinstatement of some curtailed production has moved prices downward, but still above recent cycle lows. The commissioning of new LNG export facilities and continued growth in power demand are expected to drive higher natural gas demand and eventually firmer natural gas prices than today's. Cracked industry trends have moderated marginally in recent periods on the heels of slightly softer drilling activity in both oil and gas basins during the first half of 2024. Industry-wide completions activity has declined to levels consistent with only roughly flat oil and gas production. For the U.S. to deliver rising oil and gas production levels, completion activity would need to rise. Signs of tightness for quality frac crews may emerge in 2025 on a demand pull for energy. The attrition of older equipment from higher intensity fracs with increased horsepower requirements is reducing the available horsepower to meet an eventual increase in frac fleet demand. As EMP operators continue to consolidate, their efforts are focused on efficiency gains through partnership with service companies that can deliver superior performance and provide technical solutions to drive value creation. Liberty's supply chain has continued to rapidly innovate and drive efficiencies in procurement, manufacture, and delivery of essential materials for frac operations. The resulting efficiencies benefit both our customers and our business. Liberty's Digi technologies, LPI services, top-notch supply chain, scale, and integrated services enable us to drive improvements across the board for our customers and grow our industry competitive advantage. As we continue to execute on our returns-focused value proposition, we are well-positioned to deliver strong financial and operational performance. Our strategic investments deepen our portfolio of natural gas fueled pumping and power generation technologies, driving higher earnings and cash flow generation potential. Industry conditions moderated through the first half of this year. We now anticipate that total North American completions activity will be modestly softer in the second half of the year. due to budget front loading by some operators. However, we expect Liberty Financial performance to be similar in the second half of the year compared to the first half. We expect to continue investing in our competitively advantaged portfolio, deliver healthy free cash flow, and return capital to our shareholders. We are committed to safely and responsibly creating long-term value for our partners and shareholders. With that, I'd like to turn the call over to Michael Stock, our CFO, to discuss our financial results and outlook.