Liberty Energy Lifts Its Debt Cap To 4.50 Times Earnings Days Before Posting A Loss
Lenders agreed to the looser leverage limit through March 2027, retroactive to September 30, as capital spending climbs.
Liberty Energy, the hydraulic fracturing company building a data-center power business, persuaded its bank lenders to raise its leverage cap to 4.50 times from 3.50, according to its quarterly report filed Thursday. The amendment was signed October 20 and applies retroactively to the September 30 quarter-end.
A looser covenant, then a step-down
Under the Second Amendment to the credit agreement, the leverage ceiling is 4.50-to-1.00 from the September 30, 2026 test through the March 31, 2027 test. It then steps down to 4.25 for the quarter ending June 30, 2027, 4.00 for September 30, 2027 and 3.75 for December 31, 2027, before returning to 3.50 for quarters ending on or after March 31, 2028.
The prior quarter's filing cited the 3.5 ceiling and said the company was in compliance. The new filing says Liberty complied as amended.
When no loans are outstanding, Liberty may now deduct all of its unrestricted cash in both leverage tests, because the amendment scrapped a $25.0 million cap on that deduction. Liberty reported $119.0 million of cash and no revolver borrowings at September 30.
A loss driven by investments
Liberty, which provides fracturing and related completions services and, through Liberty Power Innovations, distributed power for data center and industrial customers, reported a third-quarter net loss of $39.1 million. A $62.9 million loss on investments in equity securities drove it, against a $68.4 million gain a year earlier.
Revenue rose 26% to $1.2 billion. Adjusted EBITDA was $141.6 million, down from $151.1 million in the second quarter, the earnings release shows. Total debt was about $1.3 billion, mostly $1.295 billion of 0% convertible notes.
Spending on power equipment
Liberty spent the year swapping bank debt for convertible notes, issuing $770 million due 2031 and $525 million due 2032 to repay its revolver. The 2031 notes netted $746 million after discounts, commissions and expenses.
Capital deposits on equipment climbed to $651.6 million from $116.0 million at year-end, and the company has signed supply contracts for engines and balance-of-plant equipment for its power projects. It says it plans to raise project-specific financing to expand that business.
The release also cites an agreement with a frontier AI lab for 1.2 GW of power services, with a targeted first energy service agreement of about 500 megawatts by December 2026.
The next leverage test, against the amended 4.50 ceiling, comes at year-end on December 31, 2026.
Sources
- 10-Q Filing — Liberty Energy (LBRT) — SEC EDGAR
- 10-Q Filing — Liberty Energy (LBRT), Q2 FY2026 filed 2026-07-23 (comparison basis) — SEC EDGAR
- Earnings release (8-K Item 2.02, q32026-earningsrelease.htm) — Liberty Energy, filed 2026-10-21 — SEC EDGAR
- Liberty Energy Inc. Announces Third Quarter 2026 Financial and Operational Results – Company Announcement - FT.com — Financial Times
- Liberty Energy: Q3 Earnings Snapshot – WTOP News — wtop.com
- Liberty Energy (LBRT) Stock Looks Above Fair Value After Its 18% Five Year Return — Yahoo Finance
- Piper Sandler Maintains Overweight on Liberty... — benzinga.com
- Liberty Energy Inc. Announces 11% Increase in Quarterly Cash Dividend — businesswire.com
