The Daily Chase: Birchcliff cuts dividend as new CEO takes helm

Here are five things you need to know this morning.

Mishmash: Futures are mixed this morning, with tech poised to rebound. Tech is getting a helping hand from Taiwan Semiconductor (supplier to Nvidia) which reported better-than-expected results and rosier sales outlook driven by… guess what? If you didn’t guess AI by now, it’s time to move out from under that rock. Elsewhere, equity markets have been grappling with delayed rate cut probabilities. March is now a coin toss for the U.S. Federal Reserve. This morning’s jobless claims numbers in the U.S. added to the narrative that the economy is resilient. Jobless claims were the lowest since September 2022. 

Blink: Birchcliff finally announced it is cutting its dividend by 50 per cent yesterday. I say finally, because the dividend yield was screaming past 13 per cent with many calling that unsustainable. A dividend cut is not a total surprise, and even with the cut, the yield is still north of seven per cent. These are all moves taken by the new CEO, who took the helm at the beginning of the year. Long-time CEO and founder of the company Jeff Tonken stepped aside and made way for Christopher Carlsen. Natural gas prices have been a sore spot and Birchcliff is famously unhedged. Tonken once said to me, the road to hell is paved with hedging. Instead, the company says they can deal with lower commodity prices through cost cuts. Indeed they said they have the option to cut spending by $80-90 million this year if prices don’t recover. Carlsen took the opportunity as the new guy to make a real kitchen sink announcement. Not only was the dividend cut, the cash flow outlook was reduced and its product forecast was also lowered. Will this be enough for investors to believe Birchcliff is now on a sustainable path? I’ll put that to Christopher Carlsen this morning at 10 a.m. ET. Don’t miss it!

Feed the ducks: I’ll watch the uptake on Dye & Durham’s share sale. The legal software company announced plans to raise $126 million by selling stock at $12.10 per share. That’s about a seven per cent discount to yesterday’s close, but follows a near 70-per-cent rally in the shares since its October low. Clearly taking advantage of the momentum, but even shares at a 12-handle look like a steal considering the stock got as high as $50 per share when tech could do no wrong in 2021.