Light & Wonder Announces $1 Billion Stock Repurchase Program
The stock of Light & Wonder (NASDAQ: LNW) gained some traction during Thursday's evening trading session following the announcement of a $1 billion stock repurchase program by the slot machine producer.
This new buyback initiative replaces a previous $750 million repurchase program which was due to end in February next year. According to a statement from the company based in Las Vegas, as of June 13, 2024, they had used their full $750 million authorization to buy back 11.2 million common shares, that's around 11.5% of the shares initially existing in the company. The average price paid for those shares at $66.72 per unit is approximately 28% lower than the current closing price of $92.35.
Shares of Light & Wonder have seen a rise of 12.47% so far this year and a solid 39.48% over the last year. Though it isn't clear how much the $750 million buyback plan contributed to their strong results, the company has certainly stood out as one of the top-performing gaming equities in the industry.
Why This Light & Wonder Buyback is Significant
Unlike legal obligations, companies have the option not to execute their announced stock repurchase plans. They could elect to repurchase some or none of the designated amount.
With Light & Wonder, the recently unveiled $1 billion repurchase program could be significant as the firm has already exhausted its $750 million buyback plan, and did so nine months before its scheduled expiration. This indicates a strong commitment from the company to snatch up its own shares in the market.
"Our prior program was a valuable tool in creating value, and moving forward, the new program will allow us to deliver additional value to our shareholders while demonstrating our commitment to driving profitable growth beyond 2025," said CFO Oliver Chow in the statement.
To illustrate further, if Light & Wonder were to spend $1 billion in one day on share repurchases, they could potentially eliminate more than 10 million shares at the Thursday closing price of $92.35 per unit.
Light & Wonder's Financial Outlook Stays Steady
Light & Wonder reaffirmed its 2025 projected consolidated adjusted EBITDA of $1.4 billion in January, a figure echoed by CEO Matt Wilson in the press release detailing the buyback.
The company's efforts to reduce debt have been paying off as evidenced by the previously mentioned share price gains. This allows them more leeway in returning capital to shareholders.
"Due to the ongoing business momentum and our March 31, 2024 net debt leverage ratio placed right in the middle of our 2.5x to 3.5x target range, we have considerable flexibility in terms of capital allocation," added Chow.
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