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LandBridge Company LLC(LB) - 2024 Q3 - Earnings Call Transcript
LBLandBridge Company LLC(LB)2024-11-09 00:57
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Financial Data and Key Metrics Changes - The company reported a 60% year-over-year revenue growth, reaching 28.5million,anda6228.5 million, and a 62% year-over-year adjusted EBITDA growth with an adjusted EBITDA margin of 88% [3][11] - Free cash flow was approximately 7.1 million, with a free cash flow margin of 25%, although there was a sequential decrease due to nonrecurring IPO-related expenses [12] - The company ended the quarter with total liquidity of 74.4million,including74.4 million, including 14.4 million in cash and cash equivalents [13] Business Line Data and Key Metrics Changes - Non-oil and gas royalty revenue streams accounted for 90% of overall revenues, up from 83% last quarter and 65% in the same quarter last year [4] - Revenue from surface use royalties and resource sales grew 14% sequentially, while oil and gas royalties declined 35% sequentially due to decreased net royalty production and average realized pricing [11] Market Data and Key Metrics Changes - The company is strategically positioned in West Texas, an area increasingly popular for renewable energy and digital infrastructure development, which is expected to drive future growth [5][6] - The company executed a lease development agreement for a data center across approximately 2,000 acres in Reeves County, Texas, which includes an 8millionnonrefundabledeposit[7]CompanyStrategyandDevelopmentDirection−Thecompanyaimstodiversifyrevenuestreamsandreduceexposuretocommoditypricefluctuationsbyincreasingfee−basedarrangements[3]−Thefocusremainsonexpandinglandholdingsandpursuingvalue−enhancinglandacquisitions,withrecentacquisitionsinWinklerCounty,Texas,andLeaCounty,NewMexico[8][9]−Thecompanyintroducedannualguidance,expecting8 million nonrefundable deposit [7] Company Strategy and Development Direction - The company aims to diversify revenue streams and reduce exposure to commodity price fluctuations by increasing fee-based arrangements [3] - The focus remains on expanding land holdings and pursuing value-enhancing land acquisitions, with recent acquisitions in Winkler County, Texas, and Lea County, New Mexico [8][9] - The company introduced annual guidance, expecting 95 million to 100millionofEBITDAfor2024and100 million of EBITDA for 2024 and 140 million to 160millionfor2025,drivenbynewacquisitionsandincreasedsurfaceuseroyalties[18][19]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceinthegrowthtrajectory,citingongoingcommercialtractionandthepotentialfordouble−digitgrowthintheneartomediumterm[32]−ThecompanyisbenefitingfromincreaseddevelopmentinthePermianBasin,withafocusondrillingefficienciesamongproducers[25][44]OtherImportantInformation−Thecompanydeclareditsinauguralquarterlydividendof160 million for 2025, driven by new acquisitions and increased surface use royalties [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, citing ongoing commercial traction and the potential for double-digit growth in the near to medium term [32] - The company is benefiting from increased development in the Permian Basin, with a focus on drilling efficiencies among producers [25][44] Other Important Information - The company declared its inaugural quarterly dividend of 0.10 per share, marking a commitment to returning capital to shareholders [16] - The company paid down approximately 120 million in debt during the quarter, reducing the net leverage ratio to 2.8 times [14] Q&A Session Summary Question: Details on recent acquisitions - The two acquisitions totaled approximately 47 million and are generating about $9 million of EBITDA, tracking to just over a 5 times multiple, which is considered attractive [22] Question: Outlook on activity levels in the industry - Management noted that while there is a focus on drilling efficiencies, they are seeing continued opportunities for growth beyond traditional oil and gas activities, including solar and data center projects [26] Question: Timeline for commercial projects - Management indicated that while some projects may take time to develop, cash flow impacts could be realized before full operational status is achieved, particularly with the data center project [34] Question: Contribution of wind energy - Currently, there is no revenue from windmills, and the company is primarily focused on solar energy projects [37] Question: Performance of produced water business - The produced water business is benefiting from strong partnerships and increasing volumes, which are expected to drive higher EBITDA in the coming year [40]