LandBridge (LB) Reports
LandBridge (LB) reported today that Q4 revenue came in at $36.5 million (+109%), adjusted EPS was $0.31 (not really comparable as company wasn’t public last year) and adjusted EBITDA was $31.7 million (+108%). Revenue missed expectations by about $1 million.
The company has continued to shift its revenue mix toward non-oil and gas royalty-based arrangements (now 90% of revenue) to provide insulation from commodity price movements.
After the end of Q4, the company signed two meaningful agreements. The first is a development agreement with Western Midstream Partners, L.P., for a water pipeline and related produced water handling facilities. The second is a solar energy project development over 6,700 acres in Texas and New Mexico.
Speaking about these agreements on the call, management said it believes demand for digital infrastructure will continue to require access to cheap power and water for cooling, and that its acreage in West Texas is well suited to this (in November LandBridge signed its first lease development agreement for a data center and received a non-refundable $8 million deposit in December).
Management didn’t offer a lot that was new in terms of the 2025 outlook, choosing to reiterate its previous guidance for adjusted EBITDA of $170 - $190 million, up from adjusted EBITDA of $97.1 million (+55% over 2023) in 2024. The midpoint of that guidance implies 85% adjusted EBITDA growth.
There was a lot of talk on the conference call about how LandBridge can use its land, what type of M&A it is pursuing and what financing options look like (equity raise or debt) to fund future land acquisitions.
The bottom line is that the company considers a lot of things since it’s trying to build out a diversified land use business that throws off a lot of cash. Some projects are denser (like a powerplant, data center or sand pit), while others are more spread out (like a solar array).
The earnings release and conference call didn’t have any big surprises, either positive or negative. My outlook on the company is about the same as before. It’s a buy. That said, in this environment, we should heed the stock’s action and potentially let that guide our next move.
Today, LB was down about 6% and held at support (which is just below 60). Not the best post-earnings move, but not nearly as bad as many in the last month. And given the type of day this was, it was “fine.” Watching closely, keeping at buy. BUY
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