Liberty CEO Reflects on 2021, Looks Ahead to 2022

Liberty’s chief executive officer commented on the company’s 2021 performance and looked ahead to 2022.

“2021 was a record year for Liberty, whether measured by revenues, frac stages or pounds of sand pumped. We also set many operational records during 2021. All of this was achieved in challenging times and executed with our best safety performance in company history,” said Chris Wright, chief executive officer.

“In 2021, the focus was the integration of OneStim and its customers into Liberty. We acquired OneStim to strengthen our platform and technology portfolio during a downturn to position us for today’s rising tide and all future cycles. In our eleven-year history we have seen two deep downturns, 2015 to 2016 and the recent Covid-induced downturn, and we have executed transformative transactions during both. Investment decisions at Liberty are always made with a long-term time horizon,” continued Wright.

“Business integrations are always challenging, this time exacerbated by Covid-impacted supply chain and difficult labor challenges. However, the prize was large and our team worked in overdrive to bring nearly 2,000 new team members into Liberty while continuing to deliver superior service performance to all of our customers, both legacy and new. In the fourth quarter, we estimate integration and transition activities negatively impacted adjusted EBITDA by more than $20 million. We were simply not willing to sacrifice customer service, employee satisfaction and safety, each of which is critical to long-term financial success, even though there was a financial cost to our 2021 financial results. Integration-related costs are still with us today, impacting our bottom-line results. However, January was a significant turning point in moving these cost pressures behind us,” Wright concluded.

Within the frac market, two years of supply attrition and cannibalization plus constraints from labor shortages, and a secular shift toward next generation frac fleet technologies has led to tightness in the frac space. Liberty has focused on finding the right long-term partnerships for the coming years and has been very disciplined in holding our active frac fleet count steady until returns are strong.

“In the first quarter, we expect high single digit sequential revenue growth and strong improvement in our margins as integration costs start to fade away. We are benefiting from increased pricing in 2022, driven by a pass-through of inflationary costs and higher net service pricing. We expect continued modest rises in frac pricing in subsequent quarters. We also expect margin growth as our new strategic efforts begin to pay dividends in lowering our cost of operations and increasing efficiency,” said Wright. “We are excited for the opportunity ahead and are investing to build truly differential competitive advantages in frac fleet technology, digital systems, and logistics optimization bolstered by the PropX acquisition. We expect that our investments today will lead to strong returns in the coming years.”

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