How Core Laboratories Is Bucking the Industry Trend
Core Laboratories’ dividend and dividend yield
Core Laboratories (CLB) increased its dividend from fiscal 2009 through fiscal 2015. In fiscal 2015, CLB’s dividend per share (or DPS) rose 10% to $2.20 compared to $2.00 per share dividend in fiscal 2014. Although Core Laboratories’ net income fell, the strong dividend reflects management’s confidence in the company’s balance sheet and growth prospects. CLB’s industry peer Diamond Offshore Drilling (DO) suspended its special dividend in February 2015. Core Laboratories makes up 0.3% of the ProShares Ultra Oil & Gas (DIG).
Dividend yield, or dividend per share relative to the share price, has generally been on the rise from fiscal 2011 to fiscal 2015. In the past five years, CLB’s share price fell 5% on average while its DPS rose 120% during the same period. CLB’s dividend yield rose from 0.88% in fiscal 2009 to 1.7% in fiscal 2015.
During 4Q15, Core Laboratories returned over $38 million to its shareholders via dividends and share buybacks. Shareholder equity at the end of fiscal 2015 was a deficit of $23.7 million, down from the balance of $94 million at the end of 2014. This was primarily due to share repurchases and dividends in excess of net income.
Will Core Laboratories continue to pay dividends?
In 1Q16, Core Laboratories’ management expects its free cash flow to exceed its dividend payment as a result of the company’s working capital management. This will provide liquidity and an opportunity to continue with CLB’s dividend payment and stock repurchase program.
Next, we will discuss Core Laboratories’ historical valuation multiples.
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