8-K
Liberty Energy Inc. (LBRT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 5, 2020
LIBERTY OILFIELD SERVICES INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-38081 | 81-4891595 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
950 17th Street, Suite 2400
Denver, Colorado 80202
(Address and Zip Code of Principal Executive Offices)
(303) 515-2800
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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|---|---|---|
| ☐ | ||
| ☐ | ||
| ☐ | ||
| Securities registered pursuant to section 12(b) of the Act | ||
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
| Class A Common Stock, par value 0.01 | LBRT | New York Stock Exchange |
All values are in US Dollars.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition
On February 5, 2020, Liberty Oilfield Services Inc., a Delaware corporation, issued a press release announcing its results for the fourth quarter and full year ended December 31, 2019. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The information in this Item 2.02 of Form 8-K and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits
(i)Exhibits.
| Exhibit<br>No. | Description |
|---|---|
| 99.1 | Earnings Press Release datedFebruary 5, 2020. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| LIBERTY OILFIELD SERVICES INC. | ||
|---|---|---|
| Dated: February 5, 2020 | By: | /s/ R. Sean Elliott |
| R. Sean Elliott | ||
| Vice President, General Counsel and Corporate Secretary |
Document
Liberty Oilfield Services Inc. Announces Fourth Quarter and Full Year 2019 Financial and Operational Results
February 5, 2020
Denver - (Business Wire) - Liberty Oilfield Services Inc. (NYSE: LBRT; “Liberty” or the “Company”) announced today fourth quarter and full year 2019 financial and operational results.
Summary Results and Highlights
•Revenue of $2.0 billion and net income^1^ of $75 million, or $0.53 fully diluted earnings per share, for the year ended December 31, 2019
•Adjusted EBITDA^2^ of $277 million and annualized Adjusted EBITDA per average active fleet of $12.2 million for the year ended December 31, 2019
•Revenue of $398 million and net loss^1^ of $18 million, or $0.15 fully diluted loss per share, for the quarter ended December 31, 2019
•Adjusted EBITDA^2^ of $30 million and annualized Adjusted EBITDA per average active fleet of $5.2 million for the quarter ended December 31, 2019
“We are pleased to have delivered solid financial results given a macroeconomic backdrop that became more challenging as the year progressed. The focus and ingenuity of our employees combined with deep relationships with our partners across the value chain enabled us to achieve record operational efficiency in 2019. The Liberty family’s accomplishments exemplify our ongoing commitment to executing a prudent strategy that has remained unchanged since our company was founded: delivering superior returns and generating free cash flow, by balancing disciplined investment with maintaining a strong balance sheet and returning capital to shareholders. We achieve this by focusing on a partnership with our customers that is designed to bring the most cost-effective barrel of oil to market. Liberty demonstrated this commitment by delivering a Pre-Tax Return on Capital Employed (“ROCE”)^3^ of 10% in 2019, despite the challenging macroeconomic environment. Solid cash generation allowed us to organically grow our fleet count from 22 fleets at the end of 2018 to 24 fleets at the beginning of 2020, while returning $41 million of cash to shareholders in the form of quarterly dividends, distributions and the repurchase of 1.2% of our total outstanding shares in 2019. Further, we moved to a positive net cash position at year end.
We enter 2020 with significant momentum and a clear commitment to a value proposition designed to reward our shareholders and stakeholders alike through commodity cycles. We believe that investing in the future and our sustained focus on technology innovation combined with highly efficient operations and our strong balance sheet positions Liberty to deliver greater value for our shareholders through cycles,” commented Chris Wright, Chief Executive Officer.
Outlook
Our full fleet utilization for 2019 reflected the strong demand for Liberty’s differential frac services. We continued to prudently grow market share and pumped record sand volumes in 2019.
The pricing dynamic entering into 2020 is challenging. Total industry frac stages in North America were up marginally year-over-year in 2019. However, efficiency gains across the industry have raised the number of frac stages completed by each fleet by 10% to 20%, which implies a decrease of at least 10% in the active frac fleets needed to meet demand. The slowing pace of frac activity led to progressively lower demand for frac fleets through
1 Net income/loss attributable to controlling and noncontrolling interests.
2 “Adjusted EBITDA” is not presented in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Please see the supplemental financial information in the table under “Reconciliation of Net Income to EBITDA and Adjusted EBITDA” at the end of this earnings release for a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to its most directly comparable GAAP financial measure.
3 Pre-Tax Return on Capital Employed (“ROCE”) is an operational measure. Please see the supplemental financial information in the table under “Calculation of Pre-Tax Return on Capital Employed” at the end of this earnings release for a calculation of this measure.
the second half of 2019, resulting in pricing pressure on services. The substantial oversupply of frac equipment in the second half of 2019 was the pricing backdrop for 2020 dedicated fleet negotiations.
The supply of staffed fracturing fleets across the industry fell meaningfully in late 2019. While this trend will be helpful in the long term, we believe the impact of attrition has not yet supported an improvement in pricing for services at the start of 2020. There remains an oversupply of frac fleets in the market and we do not expect pricing to improve materially until supply of actively staffed frac equipment better balances with demand. Increased profitability will have to come from technology, increased efficiency and improved processes.
Future activity projections for the industry are dependent on multiple factors including commodity prices, availability of capital, and takeaway capacity in each basin. For Liberty fleets, demand has been strong since the beginning of the year, and we chose to activate our 24^th^ frac fleet earlier this year as part of growing our business with larger customers to support their long-term development programs. Based on our current visibility into our customers’ plans for 2020, we believe this level of demand is likely to continue through the year.
Commenting on the outlook, Wright added, “During the 2015 to 2016 downturn, Liberty played offense. We grew our market share and invested in our technology systems and culture. We were well-positioned to take advantage of an improving market. We are following the same strategy this time. While the timing of an improvement in market conditions remains uncertain, we expect to make significant progress in 2020 across all fronts: customers, culture, operations, technology and next generation frac fleets.”
Since inception, Liberty has invested in equipment and people that lead the industry in technology and efficiency. Liberty is a first mover in driving an Environmental, Social and Governance (“ESG”) conscious approach to hydraulic fracturing. We have partnered with our customers to advance ESG solutions since inception, as demonstrated by our market leading low-emission Quiet Fleets®. Every Liberty new build fleet since 2013 has been either able to run on natural gas or is the latest generation Tier 4 engine, with dramatically reduced emissions. Being a leader in ESG goes beyond emissions and Liberty is focused on leading the industry in all aspects of frac operations. These include safe operations, dust and noise mitigation, traffic management, environmentally safe fluid systems and deep community engagement.
2019 Full Year Results
For the year ended December 31, 2019, revenue decreased 8% to $2.0 billion compared to $2.2 billion in 2018.
Net income^1^ totaled $75 million for the year ended December 31, 2019 compared to net income of $249 million for the year ended December 31, 2018. Current year results include income tax expense of $14 million, compared to $40 million for the year ended December 31, 2018.
Adjusted EBITDA^2^decreased^^37%^^to $277 million in the year ended December 31, 2019 compared to $438 million in 2018. Annualized Adjusted EBITDA per average active fleet decreased to $12.2 million for the year ended December 31, 2019, compared to $20.6 million for the year ended December 31, 2018. Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this earnings release.
For the year ended December 31, 2019, ROCE was 10%. Please refer to the calculation of ROCE at the end of this earnings release.
Fourth Quarter Results
The sequential slowdown of completions in the fourth quarter was more pronounced than that experienced during the same period in 2018, as operators managed completions to fixed capital expenditure budgets, and some were constrained by capital markets. These capital constraints caused gaps in the completions schedule and negatively affected overall fleet utilization. Further, the oversupply of frac fleets was a negative drag on pricing for spot work available to fill in gaps related to dedicated operators’ scheduling issues. Despite these challenging conditions during the fourth quarter, Liberty achieved positive cash flow from operations without structural changes to our fleet count or workforce, as visibility into early 2020 customer activity levels afforded us the opportunity to maintain our size and scale to meet strong customer demand for Liberty’s differential services. This demand has remained strong since the outset of the year, positioning us to commission our 24^th^ fleet last month, a testament to the high level of dedicated customer interest for our best-in-class fleets.
For the fourth quarter of 2019, revenue decreased 23% to $398 million from $515 million in the third quarter of 2019.
Net loss before income taxes totaled $22 million for the fourth quarter of 2019 compared to net income before income taxes of $23 million for the third quarter of 2019.
Net loss^1^ (after taxes) totaled $18 million for the fourth quarter of 2019 compared to net income^1^ of $19 million in the third quarter of 2019.
Adjusted EBITDA^2^ decreased 57% to $30 million from $70 million in the third quarter. Annualized Adjusted EBITDA per average active fleet decreased to $5.2 million in the fourth quarter compared to $12.1 million in the third quarter. Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this earnings release.
Fully diluted loss per share was $0.15 for the fourth quarter of 2019 compared to fully diluted earnings per share of $0.15 for the third quarter of 2019.
Balance Sheet and Liquidity
As of December 31, 2019, Liberty had cash on hand of $113 million and total debt of $106 million, net of deferred financing costs and original issue discount. There were no borrowings drawn on the ABL credit facility, and total liquidity, including availability under the credit facility, was $283 million.
Stockholder Returns
Liberty’s financial results, favorable long-term outlook and strong balance sheet, support our balanced strategy of disciplined growth and returning capital to our stockholders. Liberty is committed to compounding stockholder value by reinvesting cash flow at high rates of return and returning cash to stockholders as appropriate. We are excited by the growth opportunities in front of us and the positive long-term outlook for the shale revolution and the benefits that this brings to our industry and the country as a whole.
During the year ended December 31, 2019 the Company paid quarterly cash dividends of $0.05 per share of Class A common stock, or approximately $15 million in aggregate to stockholders. Liberty Oilfield Services New HoldCo LLC (Liberty LLC) also paid quarterly distributions of $0.05 per unit, for total dividends and distributions of approximately $23 million.
Liberty announced on January 22, 2020 a cash dividend of $0.05 per share of Class A common stock, to be paid on March 20, 2020 to holders of record as of March 6, 2020. A distribution of $0.05 per unit has also been approved for holders of units in Liberty LLC, which will use the same record and payment date.
Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board’s continuing determination that the declarations of dividends are in the best interests of Liberty and its
stockholders. Future dividends may be adjusted at the Board’s discretion based on market conditions and capital availability.
Conference Call
Liberty will host a conference call to discuss the results at 8:00 a.m. Mountain Time (10:00 a.m. Eastern Time) on Thursday, February 6, 2020. Presenting Liberty’s results will be Chris Wright, Chief Executive Officer, Ron Gusek, President, and Michael Stock, Chief Financial Officer.
Individuals wishing to participate in the conference call should dial (833) 255-2827, or for international callers (412) 902-6704. Participants should ask to join the Liberty Oilfield services call. A live webcast will be available at http://investors.libertyfrac.com. The webcast can be accessed for 90 days following the call. A telephone replay will be available shortly after the call and can be accessed by dialing (877) 344-7529, or for international callers (412) 317-0088. The passcode for the replay is 10133479. The replay will be available until February 13, 2020.
About Liberty
Liberty is an independent provider of hydraulic fracturing services to onshore oil and natural gas exploration and production companies in North America. Liberty was founded in 2011 with a relentless focus on improving tight-oil completions, and an emphasis on customer partnerships and technology to find innovative answers to frac optimization. Liberty is headquartered in Denver, Colorado. For more information about Liberty, please contact Investor Relations at [email protected].
Non-GAAP Financial Measures
This earnings release includes unaudited non-GAAP financial and operational measures, including EBITDA, Adjusted EBITDA and Pre-Tax Return on Capital Employed. We believe that the presentation of these non-GAAP financial and operational measures provides useful information about our financial performance and results of operations. Non-GAAP financial and operational measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial and operational measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with U.S. GAAP. See the tables entitled Reconciliation and Calculation of Non-GAAP Financial and Operational Measures for a reconciliation or calculation of the non-GAAP financial or operational measures to the most directly comparable GAAP measure.
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included herein concerning, among other things, the deployment of fleets in the future, planned capital expenditures, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, return of capital to stockholders, business strategy and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “outlook,” “project,” “plan,” “position,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. These forward-looking statements represent our expectations or beliefs concerning future events, and it is possible that the results described in this earnings release will not be achieved. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in Liberty's filings with the Securities and Exchange Commission. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for us to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in “Item 1A. Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the
SEC on February 28, 2019 and in our other public filings with the SEC. These and other factors could cause our actual results to differ materially from those contained in any forward-looking statements.
Contact:
Michael Stock
Chief Financial Officer
303-515-2851
Liberty Oilfield Services Inc.
Selected Financial Data
(unaudited)
| Three Months Ended | Year Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | December 31, | ||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||
| Statement of Income Data: | (amounts in thousands, except for per share and fleet data) | ||||||||||
| Revenue | $ | 397,971 | $ | 515,079 | $ | 473,115 | $ | 1,990,346 | $ | 2,155,136 | |
| Costs of services, excluding depreciation and amortization shown separately | 344,430 | 421,007 | 377,590 | 1,621,180 | 1,628,753 | ||||||
| General and administrative | 26,210 | 25,302 | 25,403 | 97,589 | 99,052 | ||||||
| Depreciation and amortization | 44,299 | 42,324 | 34,183 | 165,379 | 125,110 | ||||||
| Loss (gain) on disposal of assets | 1,359 | (124) | (5,608) | 2,601 | (4,342) | ||||||
| Total operating expenses | 416,298 | 488,509 | 431,568 | 1,886,749 | 1,848,573 | ||||||
| Operating (loss) income | (18,327) | 26,570 | 41,547 | 103,597 | 306,563 | ||||||
| Interest expense, net | 3,176 | 3,726 | 3,463 | 14,681 | 17,145 | ||||||
| Net (loss) income before taxes | (21,503) | 22,844 | 38,084 | 88,916 | 289,418 | ||||||
| Income tax (benefit) expense | (3,095) | 4,004 | 4,147 | 14,052 | 40,385 | ||||||
| Net (loss) income | (18,408) | 18,840 | 33,937 | 74,864 | 249,033 | ||||||
| Less: Net income attributable to predecessor, prior to Corporate Reorganization | — | — | — | — | 8,705 | ||||||
| Less: Net (loss) income attributable to noncontrolling interests | (6,260) | 7,842 | 14,951 | 35,861 | 113,979 | ||||||
| Net (loss) income attributable to Liberty Oilfield Services Inc. stockholders | $ | (12,148) | $ | 10,998 | $ | 18,986 | $ | 39,003 | $ | 126,349 | |
| Net (loss) income attributable to Liberty Oilfield Services Inc. stockholders per common share (1): | |||||||||||
| Basic | $ | (0.15) | $ | 0.15 | $ | 0.28 | $ | 0.54 | $ | 1.84 | |
| Diluted | $ | (0.15) | $ | 0.15 | $ | 0.27 | $ | 0.53 | $ | 1.81 | |
| Weighted average common shares outstanding: | |||||||||||
| Basic | 79,182 | 74,173 | 68,881 | 72,334 | 68,838 | ||||||
| Diluted (2) | 79,182 | 113,064 | 116,109 | 105,256 | 117,838 | ||||||
| Other Financial and Operational Data | |||||||||||
| Capital expenditures (3) | $ | 56,211 | $ | 30,344 | $ | 87,354 | $ | 181,613 | $ | 271,851 | |
| Adjusted EBITDA (4) | $ | 30,171 | $ | 70,043 | $ | 71,984 | $ | 277,149 | $ | 438,234 | |
| Total Fleets at beginning of period (5) | 23.0 | 23.0 | 22.0 | 22.0 | 19.0 | ||||||
| Total Fleets at end of period (5) | 23.0 | 23.0 | 22.0 | 23.0 | 22.0 | ||||||
| Average Active Fleets (6) | 23.0 | 23.0 | 22.0 | 22.8 | 21.3 | ||||||
| Annualized Adjusted EBITDA per Average Active Fleet (7) | $ | 5,204 | $ | 12,082 | $ | 12,981 | $ | 12,156 | $ | 20,574 |
(1)Net income attributable to Liberty Oilfield Services Inc. stockholders per common share for the year ended December 31, 2018 does not include net income attributable to our predecessor, prior to corporate reorganization.
(2)In accordance with U.S. GAAP, diluted weighted average common shares outstanding for the three months ended December 31, 2019, exclude weighted average shares of Class B common stock (32,993), restricted shares (349) and restricted stock units (2,066) outstanding during the period. For the three months ended September 30, 2019, diluted weighted average common shares outstanding excludes the weighted average shares of Class B common stock (1,152) exchanged during the period. For the year ended December 31, 2019, diluted weighted average common shares outstanding excludes the weighted average shares of Class B common stock (9,057) exchanged during the period (share counts presented in 000's).
(3)Capital expenditures presented above are shown on an as incurred basis, including capital expenditures in accounts payable and accrued liabilities.
(4)Adjusted EBITDA is a non-GAAP financial measure. See the tables entitled “Reconciliation and Calculation of Non-GAAP Financial and Operational Measures” below.
(5)Total Fleets represents the number of deployed and active fleets as of the designated date.
(6)Average Active Fleets is calculated as the daily average of the number of active fleets for the period presented.
(7)Annualized Adjusted EBITDA per Average Active Fleet is calculated as Adjusted EBITDA for the year, or respective quarter annualized, divided by the Average Active Fleets, as defined above.
| Liberty Oilfield Services Inc. | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated and Combined Balance Sheets | |||||||||||
| (unaudited, amounts in thousands) | |||||||||||
| December 31, | December 31, | ||||||||||
| 2019 | 2018 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 112,690 | $ | 103,312 | |||||||
| Accounts receivable and unbilled revenue | 252,910 | 247,961 | |||||||||
| Inventories | 88,547 | 60,024 | |||||||||
| Prepaids and other current assets | 34,827 | 49,924 | |||||||||
| Total current assets | 488,974 | 461,221 | |||||||||
| Property and equipment, net | 651,703 | 627,053 | |||||||||
| Operating and finance lease right-of-use assets | 108,413 | — | |||||||||
| Other assets | 34,339 | 28,227 | |||||||||
| Total assets | $ | 1,283,429 | $ | 1,116,501 | |||||||
| Liabilities and Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 117,613 | $ | 80,490 | |||||||
| Accrued liabilities | 108,954 | 138,861 | |||||||||
| Current portion of operating and finance lease liabilities | 39,519 | — | |||||||||
| Current portion of long-term debt, net of discount | 409 | 385 | |||||||||
| Total current liabilities | 266,495 | 219,736 | |||||||||
| Long-term debt, net of discount | 105,731 | 106,139 | |||||||||
| Long-term operating and finance lease liabilities | 61,571 | — | |||||||||
| Deferred tax liability | 19,659 | 32,994 | |||||||||
| Payable pursuant to tax receivable agreement | 48,481 | 16,818 | |||||||||
| Total liabilities | 501,937 | 375,687 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common Stock | 1,126 | 1,136 | |||||||||
| Additional paid in capital | 410,596 | 312,659 | |||||||||
| Retained earnings | 143,105 | 119,274 | |||||||||
| Total stockholders’ equity | 554,827 | 433,069 | |||||||||
| Noncontrolling interest | 226,665 | 307,745 | |||||||||
| Total Equity | 781,492 | 740,814 | |||||||||
| Total liabilities and equity | $ | 1,283,429 | $ | 1,116,501 | |||||||
| Liberty Oilfield Services Inc. | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Reconciliation and Calculation of Non-GAAP Financial and Operational Measures | |||||||||||
| (unaudited, amounts in thousands) | |||||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | |||||||||||
| Three Months Ended | Year Ended | ||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||
| Net (loss) income | $ | (18,408) | $ | 18,840 | $ | 33,937 | $ | 74,864 | $ | 249,033 | |
| Depreciation and amortization | 44,299 | 42,324 | 34,183 | 165,379 | 125,110 | ||||||
| Interest expense, net | 3,176 | 3,726 | 3,463 | 14,681 | 17,145 | ||||||
| Income tax (benefit) expense | (3,095) | 4,004 | 4,147 | 14,052 | 40,385 | ||||||
| EBITDA | $ | 25,972 | $ | 68,894 | $ | 75,730 | $ | 268,976 | $ | 431,673 | |
| Fleet start-up costs | 1,787 | 1,273 | 1,227 | 4,519 | 10,069 | ||||||
| Asset acquisition costs | — | — | 635 | — | 632 | ||||||
| Loss (gain) on disposal of assets | 1,359 | (124) | (5,608) | 2,601 | (4,342) | ||||||
| Bad debt reserve | 1,053 | — | — | 1,053 | — | ||||||
| Advisory services fees | — | — | — | — | 202 | ||||||
| Adjusted EBITDA | $ | 30,171 | $ | 70,043 | $ | 71,984 | $ | 277,149 | $ | 438,234 | |
| Calculation of Pre-Tax Return on Capital Employed | |||||||||||
| --- | --- | --- | --- | --- | --- | ||||||
| Twelve Months Ended | |||||||||||
| December 31, 2019 | |||||||||||
| 2019 | 2018 | ||||||||||
| Net income | $ | 74,864 | |||||||||
| Add back: Income tax expense | 14,052 | ||||||||||
| Pre-tax net income | $ | 88,916 | |||||||||
| Capital Employed | |||||||||||
| Total debt, net of discount | $ | 106,140 | $ | 106,524 | |||||||
| Total equity | 781,492 | 740,814 | |||||||||
| Total Capital Employed | $ | 887,632 | $ | 847,338 | |||||||
| Average Capital Employed (1) | $ | 867,485 | |||||||||
| Pre-Tax Return on Capital Employed (2) | 10 | % |
(1)Average Capital Employed is the simple average of Total Capital Employed as of December 31, 2019 and 2018.
(2)Pre-tax Return on Capital Employed is the ratio of pre-tax net income for the twelve months ended December 31, 2019 to Average Capital Employed.