Liberty Energy Inc. Annual Report - Fiscal Year 2025 Review

For retail investors seeking a clear understanding of Liberty Energy Inc.'s (NYSE: LBRT) performance, this summary outlines the company's fiscal year 2025 results, which concluded on December 31, 2025. As of late January 2026, Liberty Energy had approximately 162 million Class A Common Stock shares outstanding, with a market capitalization for its publicly traded shares around $1.8 billion as of mid-2025.

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Business Overview

Liberty Energy Inc. stands as a leading provider of hydraulic fracturing services—a critical process for extracting oil and natural gas from underground rock formations. Beyond "fracking," the company supplies essential products and services, including specialized sand (proppants), chemicals, and maintenance parts. Liberty Energy primarily operates in the North American oil and gas sector, serving exploration and production (E&P) companies.

Financial Performance

Liberty Energy delivered impressive financial results in 2025:

• Revenue: Total revenue soared to $5.5 billion, an increase of 31% compared to $4.2 billion in 2024. Higher service intensity, increased fleet utilization, and contributions from strategic acquisitions drove this growth.
• Net Income: Net income rose to $600 million, up 71% from $350 million in 2024, reflecting improved operational efficiency and cost control.
• Earnings Per Share (EPS): Diluted EPS reached $3.70, a significant jump from $2.16 in the prior year, showcasing stronger per-share profitability.
• Gross Margin: The company maintained a healthy 22% gross margin, demonstrating efficient service delivery and cost control despite inflationary pressures.

Risk Factors

Key risks investors should consider include:

• Customer Concentration: Approximately 45% of Liberty Energy's revenue comes from its top three customers. Losing any of these key customers or a significant reduction in their activity could materially impact the company's financial performance.
• Commodity Price Volatility: Demand for Liberty Energy's services directly depends on oil and natural gas prices. Sharp price declines could reduce drilling activity and lower demand for their services.
• Regulatory and Environmental Changes: Evolving environmental regulations and permitting for hydraulic fracturing could increase operational costs or restrict activity in certain regions.
• Competition: The energy services market is highly competitive, with pricing pressures and technological advancements constantly shaping the landscape.
• Supply Chain Disruptions: Challenges in sourcing and the cost of components and raw materials, especially specialized sand (proppants) and chemicals, could impact operations and profitability.
• Labor Market Challenges: Difficulty attracting and retaining skilled labor could increase wage and benefit costs, affecting operational efficiency and margins.

Management Discussion (MD&A Highlights)

Fiscal year 2025 saw robust growth and strategic expansion. Liberty Energy capitalized on strong demand in the North American oil and gas sector, driven by favorable commodity prices and increased drilling activity. This positive market environment, coupled with operational efficiencies and strategic acquisitions, propelled significant financial and operational improvements.

Key Achievements:

• IMG Acquisition: Liberty Energy completed the significant strategic acquisition of IMG in March 2025. This acquisition immediately expanded the company's operational footprint, adding 5 new state-of-the-art hydraulic fracturing fleets. It enhanced service capacity and technological capabilities while diversifying the specialized sand (proppant) supply chain, strengthening Liberty Energy's competitive position.
• Operational Efficiency: The company optimized fleet deployment and logistics, achieving an average 90% fleet utilization rate across operations. This contributed to higher revenue per active fleet.
• Technological Advancement: Ongoing investment in proprietary technology, including next-generation electric frac fleets, improved fuel efficiency and reduced emissions, appealing to environmentally conscious clients.

Challenges:

• Supply Chain Volatility: The company faced ongoing challenges with the availability and cost of certain components and raw materials, particularly specialized sand (proppants) and chemicals.
• Labor Market: Competitive pressures in attracting and retaining skilled labor led to increased wage and benefit costs.

The stable leadership team continued executing a strategy focused on:

1. Operational Excellence: Driving efficiency and safety across all operations.
2. Technological Innovation: Investing in advanced frac technologies, including electric fleets and automation, to improve performance and reduce environmental footprint.
3. Strategic Growth: Pursuing accretive acquisitions and organic expansion in high-growth basins.
4. Shareholder Returns: Balancing growth investments with disciplined capital allocation and potential returns to shareholders.

Financial Health

Liberty Energy maintains a solid financial position, highlighted by:

• Cash and Equivalents: The company ended the year with $450 million in cash and cash equivalents, providing a strong liquidity buffer.
• Total Debt: Total long-term debt was $2.0 billion, primarily from a term loan facility and revolving credit lines.
• Liquidity: The company had $650 million available under its revolving credit facility at year-end, ensuring ample liquidity for ongoing operations and strategic initiatives.
• Cash Flow from Operations: It generated $850 million in cash flow from operations, demonstrating strong internal funding for capital expenditures and debt servicing.

Future Outlook

Management expresses optimism for 2026, projecting continued strong demand for Liberty Energy's services. Key expectations include:

• Revenue Growth: Revenue guidance for 2026 ranges from $6.0 billion to $6.3 billion, representing 9% to 15% growth.
• Capital Expenditures: Planned capital expenditures for 2026 are estimated at $400 million to $450 million, primarily for fleet upgrades, maintenance, and technology investments.
• Market Trends: This outlook is supported by expectations of stable to moderately increasing oil and gas prices, continued investment by North American exploration and production (E&P) companies, and a focus on energy security. Geopolitical events, global energy demand, and supply dynamics continue to influence the broader energy market.
• Strategic Focus: The company plans to further integrate the IMG acquisition, enhance its technological leadership, and explore opportunities in emerging energy transition services. Regulatory scrutiny on hydraulic fracturing and emissions remains a key factor, pushing the industry toward more sustainable and efficient practices. Liberty Energy actively adapts to these trends by investing in cleaner technologies and adhering to stringent environmental standards, positioning itself for long-term success in an evolving energy landscape.

Competitive Position

Liberty Energy distinguishes itself through advanced technology, operational excellence, and a strong commitment to customer service. The company is recognized as a leading provider in key North American basins. It leverages its proprietary "Liberty Quiet Fleet" technology for reduced noise and environmental impact, and its integrated specialized sand (proppant) supply chain for cost efficiency and reliability. Liberty Energy's scale and efficient execution enable it to compete effectively against both larger and smaller rivals, offering superior service quality, efficiency, and technological solutions that meet the evolving needs of its exploration and production (E&P) customers.