LandBridge Q2 Earnings Call Highlights

LandBridge reported revenue of $66.8 million, up 41% year over year, while adjusted EBITDA rose 41% to $59.8 million. The company reaffirmed its 2026 adjusted EBITDA guidance of $210 million to $230 million. The company is in advanced discussions with seven counterparties representing more than 10 gigawatts of potential power-generation and data-center capacity. LandBridge expects some projects could begin generating lease revenue by the end of 2027, subject to binding agreements. LandBridge increased its revolving credit facility to $375 million, reduced borrowing costs, and reported a lower net leverage ratio of 2.5 times. It also continues to pursue acquisitions, declared a $0.12 quarterly dividend, and approved conversion from an LLC to a Texas corporation to potentially broaden index eligibility and its investor base. LandBridge NYSE: LB reported record second-quarter revenue of $66.8 million, up 41% from a year earlier and 31% sequentially, as produced-water activity and commercial development across its Delaware Basin acreage increased. The company reaffirmed its full-year 2026 adjusted EBITDA guidance of $210 million to $230 million. Chief Executive Officer Jason Long said the company’s operating model centers on generating revenue from its more than 325,000 surface acres through land management, royalties, leases and other surface-related uses. He highlighted continued activity in oil and gas development, produced-water handling and disposal, industrial uses, power generation and potential digital infrastructure projects. "We are pleased to have delivered another strong quarter of operational and fiscal performance, featuring record-setting revenues and growth across key business categories,” Long said. Adjusted EBITDA was $59.8 million, rising 33% sequentially and 41% year over year, with an adjusted EBITDA margin of 89%. Cash flow from operations totaled $41.4 million, while free cash flow was $40.2 million, up 11% from the prior-year period. Free cash flow margin was 60%. Chief Financial Officer Scott McNeely said the company’s capital-light business model relies primarily on fee-based royalties, leases and surface-related revenue that require limited direct investment by LandBridge. Surface-use royalties and revenue increased 41% sequentially, driven by higher produced-water handling volumes and increased commercial activity. Resource sales and royalties increased 1%, supported by higher water sales on legacy acreage. Oil and gas royalties rose 20% sequentially, primarily due to higher oil prices. The segment represented about 5% of second-quarter revenue. Capital expenditures totaled $1.1 million during the quarter. Net cash used in investing activities was $11.3 million, including $10.2 million for bolt-on acquisitions. LandBridge ended the quarter with $269.8 million of total liquidity, including $39.8 million of cash and $230 million available under its revolving credit facility. Total borrowings were $545.2 million, nearly unchanged from the first quarter, and the company reported a net leverage ratio of 2.5 times, compared with 2.7 times in the prior quarter. After the quarter ended, LandBridge increased its revolving credit facility from $275 million to $375 million, with potential expansion to $475 million. The company also reduced borrowing costs by 25 basis points across the pricing group.