lbrt

The “bad news” in LBRT’s earnings: Its core business is deteriorating

Q3 results released after the market closed on October 20 were worse than expected:
• Revenue was $1.2 billion, up 26% year over year, but the company posted a net loss of $39 million, compared with a profit of $43 million in the same period last year.
• Adjusted EBITDA was just $142 million, down from $151 million in Q2.
• The loss per share was $0.24. Adjusted earnings per share were barely positive at $0.06, but profitability continues to shrink.
• Capital expenditures were as high as $622 million for the quarter, and free cash flow was negative.
This shows that its traditional frac services business is facing squeezed margins amid oil price volatility and cautious customers. The concern that its “core business would drag it down” has been confirmed by the results.

The “good news” in the earnings: AI power deals are picking up pace

The market didn’t keep selling off the stock because a major development was announced the same day:
• The company signed a 1.2 GW integrated power services agreement for a data center with “a leading AI lab.”
• The goal is to execute the first phase, an approximately 500 MW energy services agreement, by December 2026.
This means it has moved from “making promises” to “signing contracts.” Although the revenue won’t show up until 2027, the agreement gives the market a clear anchor: its power business isn’t just a concept—top-tier customers are paying for it.

What are you buying at today’s price?

You’re buying a transformation story: “bleeding through the traditional business to secure a foothold in the power business.” I think it could be worth a 20% portfolio allocation.
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