In the twilight trading hours of Thursday, the financial world experienced a slight stir in the form of an uptick in shares of Light & Wonder (NASDAQ: LNW). The fuss was sparked by the company, a stalwart player in the slot machine manufacturing industry, declaring a significant $1 billion share repurchase program.
Replacing a previously implemented $750 million buyback operation set to run out in the subsequent year, the current announcement broke new ground. To date, the firm has effectively utilized its prior share repurchase scheme, extinguishing the full $750 million allocation and securing 11.2 million of its common shares. This equates to an acquisition of 11.5% of the total outstanding shares right at the commencement of this endeavor. Looking at the mathematics of these transactions, the purchase price averaged at $66.72 for each share – a cool savings of 28% compared to the current closing price of $92.35, according to official word from the Las Vegas-based corporation.
Year-to-date, Light & Wonder have seen their shares rise by 12.47%, with a more significant 39.48% surge throughout the past year. It might be challenging to decisively credit these results to the previous $750 million buyback, but one can surmise that these ventures contributed in propelling Light & Wonder amongst the elite high-performing gaming equity firms during these specific timelines.
The stage is set for the recently announced $1 billion share repurchase program to create a meaningful impact. Although there is no legal obligation for firms to implement buyback declarations in full, Light & Wonder’s decision to conclude their previous buyback scheme nine months early reflects a staunch resolve towards reclaiming their own shares. CFO Oliver Chow emphasized this strategic move in his statement, extolling the past program’s value-creation success and predicting more rewards for shareholders and sustainable profitability under the new plan.
With a theoretical expenditure of $1 billion on repurchasing shares in one day, Light & Wonder could potentially retire over 10 million shares based on the closing price of $92.35 on Thursday.
Expectedly, Light & Wonder’s financial horizon appears robust. Reasserted in January, the projected 2025 consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rest at a handsome $1.4 billion – a goal backed by CEO Matt Wilson in the details of the buyback announcements.
The corporation’s leverage trimming efforts have echoed through their impressive share price achievements, granting them increased flexibility in reallocating capital to investors. Chow further accentuated this illustrious business trajectory, pointing with confidence to a net debt leverage ratio set comfortably at their 2.5 – 3.5x benchmark. This tangible success story in finance showcases the prudent capital allocation strategies pursued by Light & Wonder.
