Liberty Energy Increases Share Repurchase Authorization to $750 Million and Announces Quarterly Cash Dividend
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Insights
The increase in share repurchase authorization by Liberty Energy Inc. to $750 million represents a significant commitment to capital return strategies, which could be indicative of the company's strong cash flow position and confidence in its intrinsic value. Share buybacks can be an effective way to return value to shareholders, as they often lead to an increase in earnings per share (EPS) by reducing the number of shares outstanding. This action, coupled with the dividend increase, suggests a dual approach to shareholder returns, balancing immediate income through dividends with potential share price appreciation.
However, the decision to allocate capital towards share repurchases rather than reinvestment into the business or debt reduction may raise questions about the company's growth opportunities and long-term strategic plans. Investors may also consider the impact of using debt facilities for repurchases, as this could affect the company's leverage ratios and financial flexibility. The repurchase program's extension through 2026 provides a long-term horizon for these buybacks, which may be seen as a commitment to sustained shareholder returns or a lack of immediate high-return investment opportunities.
Liberty Energy Inc.'s announcement of upsizing its share repurchase program and extending its duration could signal to the market that the company believes its stock is undervalued. This strategic move can also be interpreted as a message of financial strength and stability, which might positively influence investor sentiment. The repurchase of 11.7% of outstanding shares is a substantial reduction in share count, potentially improving financial metrics that are calculated on a per-share basis.
It is important to monitor the market's reaction to such announcements, as they can affect stock price both in the short-term, due to perceived shareholder value enhancement and in the long-term, through actual changes in the company's capital structure. The balance between returning capital to shareholders and retaining enough to fund operations and growth initiatives is crucial and the market's response will reflect its assessment of this balance.
From an economic perspective, the actions taken by Liberty Energy Inc. reflect broader trends in corporate finance where companies with excess cash flows opt for shareholder-friendly activities such as buybacks and dividends. These decisions are often influenced by the macroeconomic environment, including interest rates and corporate tax policies. The company's choice to fund repurchases through cash on hand, credit facilities and expected free cash flow suggests a forecast of continued financial health and a manageable debt load.
However, it's important to consider the opportunity cost of such buybacks. The funds used for share repurchases could alternatively be invested in projects with potential for higher returns or used to bolster the company's position against economic downturns. The economic implications of this decision also extend to market efficiency and capital distribution, as buybacks can sometimes be viewed as a means for companies to correct perceived market undervaluations.
Since the repurchase program commencement, Liberty has repurchased and retired 21,891,512 shares of Class A common stock, representing
The Board has also declared a quarterly dividend of
“Today’s announcement reflects our ongoing commitment to drive strong total return to Liberty shareholders by balancing highly accretive investment opportunities while delivering a meaningful return of capital program,” commented Chris Wright, Chief Executive Officer. “Last quarter, we increased our quarterly cash dividend by
Future declarations of quarterly cash dividends are subject to approval by the Board of Directors and to the Board’s continuing determination that the declarations of dividends are in the best interests of Liberty and its shareholders. Future dividends may be adjusted at the Board’s discretion based on market conditions and capital availability.
The shares may be repurchased from time to time in open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s common stock, the market price of the Company’s common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated through the authorization period.
About Liberty
Liberty is a leading North American energy services firm that offers one of the most innovative suites of completion services and technologies to onshore oil and natural gas exploration and production companies. Liberty was founded in 2011 with a relentless focus on developing and delivering next generation technology for the sustainable development of unconventional energy resources in partnership with our customers. Liberty is headquartered in
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts included herein are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “outlook,” “project,” “plan,” “position,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “likely,” “should,” “could,” and similar terms and phrases. However, the absence of these words does not mean that the statements are not forward-looking. These forward-looking statements are subject to certain risks, uncertainties and assumptions identified above or as disclosed from time to time in Liberty's filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. As a result of these factors, actual results may differ materially from those indicated or implied by such forward-looking statements.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240123767986/en/
Michael Stock
Chief Financial Officer
Anjali Voria, CFA
Strategic Finance & Investor Relations Lead
303-515-2851
IR@libertyenergy.com
Source: Liberty Energy Inc.
FAQ
What is the current share repurchase authorization amount for Liberty Energy Inc.?
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What is the CEO's comment on the announcement?
