LandBridge Co LLC Q3 FY2024 earnings call

• The business model is characterized by diversified revenue streams, industry-leading margins, and low capital intensity.
• Strong Q3 results with 60% year-over-year revenue growth, 62% year-over-year adjusted EBITDA growth, and an 88% adjusted EBITDA margin.
• Signed a lease development agreement for a data center on approximately 2,000 acres in Reeves County, TX, with a $8 million deposit due in December 2024.
• Acquired 1,200 surface acres in Winkler County, TX and is under contract to acquire 5,800 acres in Lea County, NM.
• Capital allocation priorities include maintaining a strong balance sheet, returning capital to shareholders via a dividend, and pursuing value-enhancing land acquisitions.

Third quarter revenues increased to $28.5 million, up 9.8% sequentially and 60% year-over-year. Surface use royalties and revenue grew 14% sequentially, while resources sales and royalties increased 29% sequentially. Revenue from oil and gas royalties declined 35% sequentially. Adjusted EBITDA was $25 million, up 6.8% sequentially and 62% year-over-year, with an 88% adjusted EBITDA margin. Free cash flow was approximately $7.1 million, with a free cash flow margin of 25%. Non-oil and gas royalty revenue streams accounted for 90% of overall revenues in the third quarter, up from 83% last quarter and 65% in the same quarter last year.

• Full year 2024 EBITDA expected to be between $95 million and $100 million.
• Full year 2025 EBITDA expected to be between $140 million and $160 million, driven by new acquisitions, initial contribution of a 250-megawatt solar facility to surface use revenues, and higher produced water volumes.

Q: About the two acquisitions, what kind of multiple was paid and synergies?

A: The two acquisitions in aggregate were roughly $47 million, generating about $9 million of EBITDA today, tracking to just over a 5 times multiple. Synergies include with existing operations on the East Stateline Ranch and with the WaterBridge platform in New Mexico.

Q: Thoughts on data center timeline and alternative energy (windmills)?

A: Data center cash flow will phase in, with rent received during construction. No revenue from windmills today, and administration stance is constructive for the business.

Q: Produced water outperformance and basin efficiency gains?

A: WaterBridge's partnership with Devon and commercial traction, along with strategic acquisitions and geological location, driving produced water volumes. Basin efficiency gains lead to higher water cuts in deeper benches, benefiting LandBridge via higher royalties.

Q: Data center size?

A: Initial lease is for 2,000 acres for a one gigawatt data center, with ability to scale up to five to six gigawatts overtime.

Q: Where to find earnings reports?

A: Earnings reports should be posted in the IR portal on the lambridco.com website.