What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-06 compared with 2024-02-09 · 108 added, 115 removed, 239 unchanged (48% of the section changed)

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For discussion of year ended December 31, 2022, as well as the year ended 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7— Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report.

The Company, together with its subsidiaries, is a leading integrated energy services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas E&P companies in North America.

We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.

We have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of December 31, 2023.

We provide our services primarily in the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the DJ Basin, and the Anadarko Basin.

Our operations also extend to a few smaller shale basins, including the Uinta Basin, the Powder River Basin, and the San Juan Basin, as well as to two sand mines in the Permian Basin.

We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies to facilitate lower emission completions, thereby helping our customers reduce their emissions profile.

We have grown from one active hydraulic fracturing fleet in December 2011 to approximately 40 active fleets as of December 31, 2024.

We provide our services primarily in the Permian Basin, the Williston Basin, the Haynesville Shale, the Eagle Ford Shale, the Denver-Julesburg Basin (the “DJ Basin”), the Western Canadian Sedimentary Basin, the Powder River Basin, and the Appalachian Basin (Marcellus Shale and Utica Shale).

Our operations also extend to a few smaller shale basins, including the Anadarko Basin, the Uinta Basin, the San Juan Basin, and the Beetaloo Basin in Northern Territory, Australia, as well as to two sand mines in the Permian Basin.

In early 2023, the Company launched Liberty Power Innovations LLC (“LPI”), an integrated alternative fuel and power solutions provider for remote applications.

LPI provides CNG supply, field gas processing and treating, and well site fueling and logistics.

LPI was formed with the initial focus on supporting Liberty’s transition towards our next generation digiFleets℠ and dual fuel fleets, as CNG fueling services are limited in the market, yet critical to maintaining highly efficient well site operations.

Currently, LPI is primarily focused on supporting an industry transition to natural gas fueled technologies, serving as a key enabler of the next step of cost and emissions reductions in the oilfield.

LPI was formed with the initial focus on supporting the Company’s transition towards our next generation digiFleets℠ and dual fuel fleets, as CNG fueling services can be limited in the market, yet critical to maintaining highly efficient well site operations.

Through 2024, LPI was primarily focused on supporting an industry transition to natural gas fueled technologies, serving as a key enabler of the next step of cost and emissions reductions in the oilfield.

In January 2025, we announced LPI’s expansion into the distributed power business, where we expect to leverage our experience in providing electric power for our digiFrac pumps into other areas inside and outside of the oilfield.

We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business.

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(iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs;

(v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps, our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB;

(v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps and other complementary equipment, including power generation units (together “digiTechnologies℠”), our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO 2e emission profile than the Tier IV DGB;

(vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites;

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Recent Trends and Outlook

Entering 2024, we believe the fundamental outlook for the frac industry is stable.

Service prices remain relatively steady as the industry’s supply of marketed fleets was right sized in response to lower completions activity.

Many fleets exited the market both from accelerated attrition of older equipment and the deliberate idling of underutilized fleets to match customer demand.

Operators continue to demand technologies that provide significant emissions reductions and fuel savings.

We believe E&P operators are now better served with larger, well capitalized integrated frac companies that can meet their technical demands and more complex needs.

Engineering and innovation have led to rising shale productivity.

Service companies have worked with operators to drive efficiencies, including faster completions, longer laterals and completion design

optimization, helping to offset the gradual decline in reservoir quality.

The trend toward higher intensity fracs should raise demand for horsepower, which is expected to keep frac assets well utilized and drive service company returns during 2024.

Global oil and gas markets continue to contend with commodity price fluctuations, owing to developments in geopolitics, interest rates, and macroeconomic data.

Range bound oil prices have not meaningfully changed E&P operator plans to deliver flat to modest production growth for 2024.

Further, as North American oil production continues to reach record levels, more frac activity may be required during 2024 and future years to offset production decline.

Near term natural gas markets are under pressure, but domestic power demand growth and increased liquified natural gas exports are currently expected to lead to improved conditions in 2025.

Moderate declines in frac activity, that started in 2023, continued throughout 2024.

However, the market appears to have reached an inflection point in early 2025 as completions activity emerges from 2024 lows.

In 2025, E&P operators, especially those with an oil exploration focus, are working to maintain production levels from 2024.

Improving natural gas fundamentals are encouraging as well.

For the full year, industry-wide lateral footage completed is expected to be approximately flat with 2024.

The slowing pace of activity in late 2024 resulted in near term price pressure to start 2025, most notably impacting conventional fleets.

The fundamental outlook for next generation, higher quality fleets remains strong, as operators continue to demand technologies that provide significant emissions reductions, fuel savings, and operational efficiency advantages.

The growing complexities of E&P demands and the continued drive for efficiency gains promote continued investment in technology and partnering with high quality service companies.

Global oil markets reflect ongoing uncertainties in geopolitics, Chinese economic growth, OPEC+ production plans, and a change in the domestic political climate, but the resulting commodity price fluctuation has not led to a meaningful change in E&P activity plans.

Natural gas demand is supported by LNG export capacity expansion and a large projected multi-year increase in North American power consumption.

During the year 2024, the posted WTI price traded at an average of $76.63 per barrel (“Bbl”), as compared to the 2023 average of $77.58 per Bbl, and the 2022 average of $94.90 per Bbl.

In addition, the average domestic onshore rig count for the United States and Canada was 765 rigs reported in the fourth quarter of 2024, down from the average in the fourth quarter of 2023 of 781, according to a report from Baker Hughes.

On October 26, 2021, the Company acquired PropX in exchange for $11.9 million in cash, 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units, for total consideration of $103.0 million, based on the Class A Common Stock closing price of $15.58 on October 26, 2021, subject to customary post-closing adjustments.

The Liberty LLC Units were redeemable for an equivalent number of shares of Class A Common Stock at any time, at the election of the shareholder.

Founded in 2016, PropX is a leading provider of last-mile proppant delivery solutions including proppant handling equipment and logistics software across North America.

PropX offers innovative environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions.

We believe that PropX wet sand handling technology and logistics is a key enabler of the next step of cost and emissions reductions in the proppant industry.

PropX also offers customers the latest real-time logistics software, PropConnect, as a hosted software as a service.

On April 6, 2023, LPI accelerated its expansion by acquiring Siren, a Permian focused integrated natural gas compression and CNG delivery business with 16 MMcf per day of natural gas compression capacity at two expandable Permian sites and transportation, logistics, and pressure reduction services, for cash consideration of $75.7 million, after post-closing adjustments and net of cash received.

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Improved drilling economics from horizontal drilling and greater rig efficiencies .

Unconventional resources are increasingly being targeted through the use of horizontal drilling.

According to Baker Hughes, as reported on January 24, 2025, horizontal rigs accounted for approximately 90% of all rigs drilling in the United States and Canada, up from 77% as of December 26, 2014.

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To complete the well, hydraulic fracturing is applied in stages along the wellbore to break-up the resource so that oil and gas can be produced.

As wellbores have increased in length, the number of frac stages and/

or the number of perforation clusters (frac initiation points) has also increased.

As wellbores have increased in length, the number of frac stages and/or the number of perforation clusters (frac initiation points) has also increased.

Further, E&P companies have improved production from each stage by applying increasing amounts of proppant in each stage, which better connects the well to the resource.

The aggregate effect of increased number of stages and the increasing amount of proppant in each stage has greatly increased the total amount of proppant used in each well, according to Liberty’s FracTrends database, from six million pounds per well in 2014 to over 20 million pounds per well in 2023.

per well in 2014 to roughly 22 million pounds per well in 2024.

Further efficiency gains are being sought via the “simul-frac,” “trimul-frac,” and other techniques.

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Given the expected returns that E&P companies have reported for new well development activities due to improved rig efficiencies and increasing well completion complexity and intensity, we expect these industry trends to continue.

Recent Leadership Updates

On February 3, 2025, Christopher A.

Wright, our Chief Executive Officer and Chairman of the Board, was confirmed to the position of Secretary of Energy of the United States and resigned from his positions as Chairman of the Board, Director, and Chief Executive Officer of the Company.

Also, on February 3, 2025, in accordance with the Company’s succession plan, the Board appointed William Kimble as the non-executive Chairman of the Board and Ron Gusek as the Company’s Chief Executive Officer and Director.

Lastly, on January 22, 2025, the Board approved an increase to the size of the Board from nine to 10 directors and appointed Arjun Murti to fill the newly created vacancy.

How We Generate Revenue

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The estimated number of fracturing stages to be completed for a particular horizontal well is determined by the customer’s well completion design.

We recognize revenue for each fracturing stage completed, although our revenue per completed fracturing stage varies depending on the actual volumes and types of proppants, chemicals, and fluid utilized for each fracturing stage.

We primarily recognize revenue based on pump hours, fracturing stages, or days on location, although total revenue depends on the actual volumes and types of proppants, chemicals, and fluid utilized on each pad.

The number of fracturing stages that we are able to complete in a period is directly related to the number and utilization of our deployed fleets and size of stages.

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• Operating Income;

• Adjusted EBITDA;

• Net Income;

• Earnings per Share.

• Adjusted EBITDA;

We analyze our revenue by comparing actual revenue to our internal projections for a given period and to prior periods to assess our performance.

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We also compare operating income to our internal projections for a given period and to prior periods.

We analyze our net income, which we define as operating income adjusted for other income or expense, net, including interest expense, net, and income tax expense.

We analyze net income by comparing actual net income to our internal projections for a given period and to prior periods to assess our performance.

EBITDA and Adjusted EBITDA

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General and administrative 225,474 221,406 4,068

Transaction, severance, and other costs 2,053 5,837 (3,784)

Transaction and other costs — 2,053 (2,053)

Depreciation, depletion, and amortization 505,050 421,514 83,536

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Operating income 389,468 760,579 (371,111)

Other expense, net 25,689 96,381 (70,692)

Other (income) expense, net (13,803) 25,689 (39,492)

Net income before income taxes 403,271 734,890 (331,619)

Income tax expense (benefit) 178,482 (793) 179,275

Income tax expense 87,261 178,482 (91,221)

Net income 316,010 556,408 (240,398)

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stockholders $ 316,010 $ 556,317 $ (240,307)

Our revenue increased $598.7 million, or 14%, to $4.7 billion for the year ended December 31, 2023 compared to $4.1 billion for the year ended December 31, 2022.

The increase in revenue was primarily attributable to higher service pricing, the reactivation of several fleets not fully reflected in the prior year, and an activity-driven increase in fleet efficiency commensurate with consistent demand for hydraulic fracturing services.

Our revenue decreased $432.8 million, or 9%, to $4.3 billion for the year ended December 31, 2024 compared to $4.7 billion for the year ended December 31, 2023.

The decrease in revenue was primarily attributable to a decrease in service and materials pricing, partially offset by higher activity levels primarily from increased fleet efficiency.

Cost of Services

Cost of services (excluding depreciation, depletion, and amortization) increased $200.3 million, or 6%, to $3.3 billion for the year ended December 31, 2023 compared to $3.1 billion for the year ended December 31, 2022.

The increase in expense was primarily related to increases in materials and parts consumption and higher labor costs related to reactivated fleets and higher fleet efficiency during the year ended December 31, 2023.

Cost of services (excluding depreciation, depletion, and amortization) decreased $148.9 million, or 4%, to $3.2 billion for the year ended December 31, 2024 compared to $3.3 billion for the year ended December 31, 2023.

The decrease in expense was primarily related to decreases in materials costs and lower repairs and maintenance costs, partially offset by increased personnel costs related to higher activity levels discussed above, during the year ended December 31, 2024.

General and Administrative

General and administrative expenses increased $41.4 million, or 23%, to $221.4 million for the year ended December 31, 2023 compared to $180.0 million for the year ended December 31, 2022 primarily related to increases from labor cost inflation, various corporate costs related to increased levels of activity, and increased share-based compensation expense related to Company performance.

Transaction, Severance and Other Costs

Transaction, severance and other costs decreased $3.8 million, or 65%, to $2.1 million for the year ended December 31, 2023 compared to $5.8 million for the year ended December 31, 2022.

The costs incurred during the year ended December 31, 2023 primarily related to integration cost, legal, accounting, and other professional services provided in connection with the Siren Acquisition, while costs incurred during the year ended December 31, 2022 related to ongoing integration costs from prior period acquisitions.

General and administrative expenses increased $4.1 million, or 2%, to $225.5 million for the year ended December 31, 2024 compared to $221.4 million for the year ended December 31, 2023 primarily related to increased corporate costs to

support our additional service offerings, partially offset by a decrease in cash incentive and stock-based compensation expense due to lower operating results compared to the prior year period.

Transaction and Other Costs

Transaction and other costs decreased $2.1 million, or 100%, as the Company did not incur such costs for the year ended December 31, 2024 compared to $2.1 million for the year ended December 31, 2023.

The costs incurred during the year ended December 31, 2023 primarily consisted of due diligence and integration costs for the Siren Acquisition.

See Note 3—Acquisitions to the consolidated financial statements included in Part II, Item 8 of this Annual Report for further details.

Depreciation, Depletion, and Amortization

Depreciation, depletion, and amortization expense increased $83.5 million, or 20%, to $505.1 million for the year ended December 31, 2024 compared to $421.5 million for the year ended December 31, 2023.

The increase in 2023 was due to additional equipment placed in service not fully reflected in the prior year, including the deployment of our digiTechnologies SM .

The increase in 2024 was due to additional equipment placed in service since the prior year period, including equipment related to the deployment of our digiTechnologies SM .

Gain on Disposal of Assets, net

The Company recorded a gain on disposal of assets, net of $5.3 million for the year ended December 31, 2024 compared to $7.0 million for the year ended December 31, 2023.

The gain recognized in the year ended December 31, 2023 was primarily the result of the Company selling used field equipment and light duty trucks in a strong used vehicle and equipment market.

The gain recognized in the year ended December 31, 2022 was a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market offset by a loss on sale of two non-strategic facilities acquired in a previous acquisition and a loss on plan of sale for two other non-strategic facilities.

Operating Income

The Company recorded operating income of $760.6 million for the year ended December 31, 2023 compared to $495.9 million for the year ended December 31, 2022.

The change in operating income was primarily due to the $598.7 million, or 14%, increase in total revenue partially offset by a $334.0 million increase in total operating expenses, the significant components of which are discussed above.

Other Expense, net

Other expense, net decreased by $70.7 million to $25.7 million for the year ended December 31, 2023 compared to $96.4 million during the year ended December 31, 2022.

Other expense, net is comprised of (gain) loss on remeasurement of liability under the TRAs, gain on investments, interest income—related party, and interest expense, net.

As a result of the release of a valuation allowance on the U.S.

net deferred tax assets the Company remeasured the liability under the TRAs resulting in a loss of $76.2 million, offset by a $2.5 million gain on investments during the year ended December 31, 2022, compared to a $1.8 million gain on remeasurement of the liability under the TRAs, due to a change in the overall expected effective tax rate, during the year ended December 31, 2023.

Interest income—related party increased $2.0 million related to an extension of credit executed in December 2022 and extended in August 2023.

These decreases were partially offset by the $6.8 million increase in interest expense, net as a result of new finance leases added and higher interest rates under the ABL Facility during the year ended December 31, 2023 compared to the year ended December 31, 2022.

Net Income Before Income Taxes

The Company realized net income before income taxes of $734.9 million for the year ended December 31, 2023 compared to $399.5 million for the year ended December 31, 2022.

The increase in results was primarily attributable to the increase in revenues and the decrease in other expense, net, as noted above, partially offset by the increase in operating expenses discussed above.

Income Tax Expense (Benefit)

The Company recognized income tax expense of $178.5 million for the year ended December 31, 2023, an effective rate of 24.3%, compared to an income tax benefit of $0.8 million, an effective rate of (0.2)%, recognized for the year ended December 31, 2022.

The increase in income tax expense was primarily attributable to the Company recording taxes on the Company ’ s U.S.

activity during the year ended December 31, 2023, compared to the release of a valuation allowance on its U.S.

net deferred tax assets during the year ended December 31, 2022 largely offsetting taxes on 2022 activity.

The gain recognized in the year ended December 31, 2024 was primarily related to the disposal of used older technology field equipment that was no longer operational.

The gain recognized in the year ended December 31, 2023 was a result of the Company selling used field equipment and light duty trucks in a strong used vehicle and equipment market.

Other (Income) Expense, net

Other (income) expense, net changed by $39.5 million to $13.8 million income for the year ended December 31, 2024 compared to $25.7 million expense during the year ended December 31, 2023.

Other (income) expense, net is comprised of loss on remeasurement of liability under the TRAs of $3.2 million during the year ended December 31, 2024, compared to a gain of $1.8 million for the year ended December 31, 2023.

It also includes an unrealized gain on investments, net of $49.2 million related to investments in equity securities measured at fair value during the year ended December 31, 2024, compared to $0 for the year ended December 31, 2023.

Interest expense, net increased $3.2 million primarily as a result of the addition of finance lease liabilities, refer to “Liquidity and Capital Resources” below for further discussion of the Company’s finance leases.

Additionally, interest income—related party decreased $1.5 million related to a note receivable agreement executed in December 2022, amended in August 2023, and fully collected in March 2024.

Income Tax Expense

The Company recognized income tax expense of $87.3 million for the year ended December 31, 2024, an effective rate of 21.6%, compared to $178.5 million, for the year ended December 31, 2023, an effective rate of 24.3%.

The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes and increased U.S.

federal tax credits.

Comparison of Non-GAAP Financial Measures

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We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization.

We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, and other non-recurring expenses that management does not consider in assessing ongoing performance.

Our board of directors, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period.

We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, gain or loss on the disposal of assets, net, bad debt reserves, transaction and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the unrealized gain or loss on investments, net, and other non-recurring expenses that management does not consider in assessing ongoing performance.

Our Board, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period.

We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.

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We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations.

Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA.

Net income is the GAAP financial measure most directly comparable to EBITDA and Adjusted EBITDA.

Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure.

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Stock-based compensation expense 32,412 33,026 (614)

Fleet start-up and lay-down costs 2,082 17,007 (14,925)

Transaction, severance, and other costs 2,053 5,837 (3,784)

Gain on disposal of assets, net (5,337) (6,994) 1,657

Unrealized gain on investments, net (49,227) — (49,227)

Loss (gain) on remeasurement of liability under tax receivable agreements 3,210 (1,817) 5,027

Provision for credit losses — 808 (808)

(Gain) loss on remeasurement of liability under tax receivable agreements (1,817) 76,191 (78,008)

Gain on investments — (2,525) 2,525

Transaction and other costs — 2,053 (2,053)

Fleet start-up and lay-down costs — 2,082 (2,082)

Adjusted EBITDA $ 921,593 $ 1,213,068 $ (291,475)

EBITDA was $1.2 billion for the year ended December 31, 2023 compared to $745.3 million for the year ended December 31, 2022.

Adjusted EBITDA was $1.2 billion for the year ended December 31, 2023 compared to $860.3 million for the year ended December 31, 2022.

The increases in EBITDA and Adjusted EBITDA primarily resulted from increased activity levels in 2023 as described above under the captions Revenue , Cost of Services, and General and Administrative Expenses for the Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 .

EBITDA was $940.5 million for the year ended December 31, 2024 compared to $1.2 billion for the year ended December 31, 2023.

Adjusted EBITDA was $921.6 million for the year ended December 31, 2024 compared to $1.2 billion for the year ended December 31, 2023.

The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and partially offset by changes in activity levels in 2024 as described above under the captions Revenue , Cost of Services, and General and Administrative Expenses for the Year Ended December 31, 2024, Compared to Year Ended December 31, 2023 .

Liquidity and Capital Resources

Our primary sources of liquidity consist of cash flows from operations and borrowings under our ABL Facility.

We expect to fund operations and organic growth with these sources.

We monitor the availability and cost of capital resources such as equity and debt financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements.

We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition.

Our primary sources of liquidity consist of cash flows from operations and borrowings under our ABL Facility (as defined below).

We believe that we can fund operations and current organic growth plans with these sources.

We monitor the availability and cost of capital resources such as equity, debt, and lease financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements.

We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund organic and other growth opportunities that we pursue, including via acquisition.

Our primary uses of capital have been capital expenditures to support organic growth and funding ongoing operations, including maintenance and fleet upgrades, as well as the repurchases of, and dividends on, shares of our Class A Common Stock.

Cash and cash equivalent s decreased by $6.9 million to $36.8 million as of December 31, 2023 compared to $43.7 million as of December 31, 2022, while working capital excluding cash and current liabilities under debt and lease arrangements increased $42.2 million.

Cash and cash equivalent s decreased by $16.8 million to $20.0 million as of December 31, 2024 compared to $36.8 million as of December 31, 2023, while working capital excluding cash and current liabilities under debt and lease arrangements decreased $88.2 million.

On September 19, 2017, the Company entered into two credit agreements, (i) a revolving line of credit up to $250.0 million, subsequently increased to $525.0 million, see below, (the “ABL Facility”) and (ii) a $175.0 million term loan (the “Term Loan Facility”, and together with the ABL Facility the “Credit Facilities”).

As of December 31, 2023, we had $525.0 million committed under the ABL Facility, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs.

As of December 31, 2023, the borrowing base was calculated to be $420.3 million, and the Company had $140.0 million outstanding, in addition to a letter of credit in the amount of $2.6 million, with $277.7 million of remaining availability.

As of December 31, 2024, the Company had $525.0 million committed under the ABL Facility, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs.

As of December 31, 2024, the borrowing base was calculated to be $319.8 million, and the Company had $190.5 million outstanding, in addition to letters of credit totaling $14.0 million, with $115.3 million of remaining availability.

On January 23, 2023, the Company entered into an Eighth Amendment to the ABL Facility (the “Eighth ABL Amendment”).

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This release was completed during the three months ended June 30, 2023.

Additionally, on January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and and terminate the Term Loan Facility.

Additionally, on January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and terminate the Term Loan Facility.

The amount paid included the balance of the Term Loan Facility upon payoff of $104.7 million, $0.9 million of accrued interest, and a $1.1 million prepayment premium.

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Share Repurchase Program

Under our share repurchase program, the Company was initially authorized to repurchase up to $250.0 million of outstanding Class A Common Stock through and including July 31, 2024.

On January 24, 2023, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million.

Furthermore, on January 23, 2024, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $750.0 million and extended the authorization through July 31, 2026.

Shares may be repurchased from time to time for cash in the open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with applicable federal securities laws.

Under our share repurchase program, the Company is authorized to repurchase up to $750.0 million of outstanding Class A Common Stock through and including July 31, 2026.

Shares may be repurchased from time to time for cash in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions, or by other means in accordance with applicable federal securities laws.

The timing and the amount of repurchases will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors.

The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended or terminated at any time without prior notice.

The Company expects to fund any repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated through the duration of the share repurchase program.

The Company expects to fund any repurchases by using cash on hand, borrowings under the ABL Facility, and expected free cash flow to be generated through the duration of the share repurchase program.

During the year ended December 31, 2024, the Company repurchased and retired shares of Class A Common Stock for $127.4 million, under the share repurchase program.

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Operating Activities .

Net cash provided by operating activities was $1.0 billion for the year ended December 31, 2023, compared to $530.4 million for the year ended December 31, 2022.

The $484.2 million increase in cash from operating activities is primarily attributable to a $598.7 million increase in revenues, offset by a $280.7 million increase in cash operating expenses, interest expense, net, and income tax, and a $111.7 million decrease in cash from changes in working capital for the year ended December 31, 2023, compared to a $277.9 million decrease in cash from changes in working capital for the year ended December 31, 2022.

Net cash provided by operating activities was $829.4 million for the year ended December 31, 2024, compared to $1.0 billion for the year ended December 31, 2023.

The $185.2 million decrease in cash from operating activities is primarily attributable to a $432.8 million decrease in revenues, offset by a $145.3 million decrease in cash operating expenses, interest expense, net, and income tax expense, and a $9.4 million decrease in cash from changes in working capital for the year ended December 31, 2024, compared to a $111.7 million decrease in cash from changes in working capital for the year ended December 31, 2023.

Investing Activities .

Net cash used in investing activities was $643.1 million for the year ended December 31, 2024, compared to $672.3 million for the year ended December 31, 2023.

Cash used in investing activities was higher during the year ended December 31, 2023, compared to the year ended December 31, 2022 as the Company continued to invest in equipment, including the new digiTechnologies SM suite, to support increased customer demand in next generation equipment and technology.

Additionally, during the year ended December 31, 2023, the Company acquired Siren for $75.7 million in cash, net of cash received and normal post-closing matters, refer to Note 3—Acquisitions to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information related to the Siren Acquisition.

Cash used in investing activities was lower during the year ended December 31, 2024, compared to the year ended December 31, 2023 primarily due to the Siren Acquisition and higher equity investments in the prior year period, offset by higher capital spending in the current year period, and lower proceeds from asset sales.

The Company purchased Siren Energy for $75.7 million in cash, net of cash received, during the year ended December 31, 2023.

Refer to Note 3—Acquisitions to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information related to the Siren Acquisition.

Investments in equipment, including the new digiTechnologies SM suite and capitalized maintenance of existing equipment increased $47.7 million, from $603.3 million for the year ended December 31, 2023 to $651.0 million for the year ended December 31, 2024.

Proceeds from asset sales decreased $2.9 million, from $26.9 million to $24.0 million as the Company benefited from strong used vehicle and equipment markets in the prior period.

Finally, during the year ended December 31, 2024, the Company invested $16.1 million for equity investments in Tamboran Resources Corporation, Empire Energy Group Ltd., and Falcon Oil & Gas Ltd, compared to $20.3 million for equity investments in Tamboran Resources Corporation and Oklo Inc.

during the year ended December 31, 2023.

Financing Activities .

Net cash used in financing activities was $349.3 million for the year ended December 31, 2023, compared to net cash used in financing activities of $55.8 million for the year ended December 31, 2022.

The $293.5 million change in cash used in financing activities was primarily due to a $77.8 million increase in cash payments made in connection with share repurchases to $203.1 million for the year ended December 31, 2023, compared to $125.3 million for the year ended December 31, 2022.

Additionally, cash paid for quarterly dividends increased $28.5 million to $37.7 million for the year ended December 31, 2023, compared to $9.2 million for the year ended December 31, 2022.

Net pay down of $79.7 million on the Credit Facilities during the year ended December 31, 2023, including the $104.7 million pay off and termination of the Term Loan Facility, contributed to the financing cash outflow during the year ended December 31, 2023, compared to $95.3 million of net borrowings on the Credit Facilities for the year ended December 31, 2022.

Net cash used in financing activities was $202.7 million for the year ended December 31, 2024, compared to $349.3 million for the year ended December 31, 2023.

The $146.6 million decrease in cash used in financing activities was primarily due to net borrowings of $50.5 million during the current year period compared to $79.7 million in net repayment of borrowings during the prior year as well as a $73.9 million decrease in share repurchases for the year ended December 31, 2024, compared to the year ended December 31, 2023.

These decreases in cash used in financing activities were offset by a $32.9 million increase in cash paid for finance leases, a $10.5 million increase in cash tax withholding on restricted stock unit vestings, and a $10.6 million increase in dividends paid.

Cash Requirements

Our material cash commitments consist primarily of obligations under long-term debt, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations.

Our material cash commitments consist primarily of obligations under long-term debt on the ABL Facility, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations.

Certain amounts included in our contractual obligations as of December 31, 2024 are based on our estimates and assumptions about these obligations, including pricing, volumes, and duration.

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See Note 6 —Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information regarding scheduled maturities of finance and operating leases.

As of December 31, 2023, the Company had expected cash payments for estimated interest on our finance lease obligations of $12.2 million payable within the next twelve months and $16.9 million payable thereafter.

During the year ended December 31, 2024, the Company expanded its equipment lease facilities resulting in the addition of $149.0 million in new finance lease obligations.

The term on these new leases range from three to five years.

As of December 31, 2024, the Company had finance lease obligations of $87.5 million payable within the next twelve months and $222.5 million payable thereafter.

Included in those liabilities, the Company had expected cash payments for estimated interest on our finance lease obligations of $17.1 million payable within the next twelve months and $22.4 million payable thereafter.

On January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and terminate the Term Loan Facility.

The balance of the Term Loan Facility at pay off was $104.7 million and included $0.9 million of accrued interest, and a $1.1 million prepayment premium.

As such, the only outstanding debt facility as of December 31, 2023 was the ABL Facility.

As of December 31, 2023, the Company has purchase obligations of $143.9 million payable within the next twelve months and $13.0 million payable thereafter.

As such, the only outstanding debt facility as of December 31, 2024 and 2023 was the ABL Facility.

As of December 31, 2024, the Company has purchase obligations of $26.3 million payable within the next twelve months.

See Note 15 —Commitments & Contingencies to the consolidated financial statements in Part II, Item 8 of this Annual Report for information regarding scheduled contractual obligations.

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See No te 12 —Income Taxes to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information regarding the TRAs.

During the year ended December 31, 2023, the Company expanded certain equipment lease facilities and entered into a new equipment lease facility with an additional lessor resulting in new finance lease obligations of $160.5 million.

The term on these new leases range from two to five years.

The Company had finance lease obligations of $51.1 million payable within the next twelve months and $151.6 million payable thereafter.

There have been no other material changes to cash requirements during the year ended December 31, 2024.

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The Company is a corporation and is subject to U.S.

federal, state, and local income tax on its share of Liberty LLC’s taxable income.

The Company is also subject to Canada federal and provincial income tax on its foreign operations.

federal, state, and local income tax.

The Company is also subject to Canada and Australia federal and provincial income tax on its foreign operations.

The effective global income tax rate applicable to the Company for the year ended December 31, 2024 was 21.6% compared to 24.3% for the year ended December 31, 2023.

The Company’s effective tax rate is greater than the statutory federal income tax rate of 21.0% due to the Company’s Canadian operations, state income taxes in the states the Company operates, as well as nondeductible executive compensation.

For 2022, the Company’s effective tax rate was less than the statutory federal income tax rate due to the Company releasing the valuation allowance recorded in a previous year on its U.S.

net deferred tax assets as of December 31, 2022, primarily due to entering into a three-year cumulative pre-tax book income position and improved operating results.

The Company recognized income tax expense of $178.5 million and an income tax benefit of $0.8 million for the years ended December 31, 2023 and 2022, respectively.

The Company’s effective tax rate for both years is greater than the statutory federal income tax rate of 21.0% due to the Company’s Canadian operations, state income taxes in the states the Company operates, as well as nondeductible executive compensation, partially offset by U.S.

federal income tax credits.

The Company recognized income tax expense of $87.3 million and $178.5 million for the years ended December 31, 2024 and 2023, respectively.

The Company’s effective tax rate can be volatile and may change with, among other things, the amount of jurisdiction pre-tax income or loss, ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation and changes in tax laws in the jurisdictions that we operate.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

In the year ended December 31, 2023, the Company’s net deferred tax liabilities were $102.3 million.

The Company has not recorded a valuation allowance against the deferred tax assets for the year ended December 31, 2023.

In the year ended December 31, 2024, the Company’s U.S.

net deferred tax liabilities were $137.7 million and Canada net deferred tax assets were $1.5 million.

The Company has no valuation allowances recorded against the deferred tax assets for the year ended December 31, 2024 and 2023.

Refer to Note 12— Income Taxes to the consolidated financial statements in Part II, Item 8 of this Annual Report for additional information related to income tax expense.

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The Company elected to adopt a practical expedient available to lessors, which allows the Company to combine the lease and service component for certain of the Company’s service contracts when the service component is the predominant component and continues to account for the combined component under ASC Topic 606 - Revenue from Contracts with Customers .

Inventory consists of raw materials used in the hydraulic fracturing process, such as proppants, chemicals and field service equipment maintenance parts, and is stated at the lower of cost or net realizable value, determined using the

weighted average cost method.

Net realizable value is determined based on our estimates of selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation, each of which require us to apply judgment.

Net realizable value is determined based on our estimates of selling prices in the ordinary course

of business, less reasonably predictable cost of completion, disposal, and transportation, each of which require us to apply judgment.

Property and Equipment:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis