Light & Wonder Unveils $1 Billion Share Buyback Plan

Posted on: June 13, 2024, 06:15h. 

Last updated on: June 14, 2024, 09:26h.

Shares of Light &Wonder (NASDAQ: LNW) perked up a bit during Thursday’s after-hours trading session after the slot machine manufacturer announced a $1 billion share repurchase program.

Light & Wonder
Light & Wonder CEO Matt Wilson. The company announced a $1 billion share buyback plan on Thursday. (Image: LinkedIn)

The newly announced buyback plan replaces a previously deployed $750 million repurchase effort that was scheduled to expire next February.

As of June 13, 2024, the Company has exhausted the full $750 million share repurchase authorization and purchased 11.2 million common shares, or 11.5% of shares outstanding at the inception of the program. The average purchase price of $66.72 per share represents a 28% discount to today’s closing price of $92.35,” according to a statement issued by the Las Vegas-based company.

Shares of Light & Wonder are higher by 12.47% year to date, and 39.5% over the past year. Whether or not those performances are the results of the $750 million buyback effort isn’t clear, but those repurchases likely helped the gaming device maker rank as one of the best-performing gaming equities over those periods.

Why Light & Wonder Buyback is Meaningful

Companies aren’t legally obligated to execute announced buyback schemes and they have the flexibility to repurchase some, but not all, of the announced dollar amount.

In the case of Light & Wonder, the freshly revealed $1 billion repurchase program could prove meaningful because the company exhausted the aforementioned buyback plan, and did so nine months before it expired, signaling a clear commitment to buying its own shares.

“Our prior program was an effective value creation tool and moving forward the new program will allow us to deliver further value to our shareholders while underscoring our commitment to driving profitable growth and upside beyond 2025,” said CFO Oliver Chow in the statement.

Companies execute share buybacks at various times on the open market, but in a hypothetical example, Light & Wonder could retire more than 10 million shares if it spent $1 billion on repurchases in a single day based on the stock’s Thursday closing price of $92.35.

Light & Wonder Financial Outlook Firm

In January, Light & Wonder reiterated a 2025 consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast of $1.4 billion, which CEO Matt Wilson reiterated in the press release detailing the buyback.

The company’s efforts to pare leverage have also been paying off as highlighted by the aforementioned share price performances. That provides flexibility regarding returning capital to investors.

“Given the continued momentum in the business, and our March 31, 2024, net debt leverage ratio at the middle of our target range of 2.5 – 3.5x, we have significant optionality with regards to capital allocation,” added Chow.