Blackbaud to Repurchase 7% to 10% of Outstanding Shares Under $500 Million Stock Repurchase Program

Rhea-AI Summary

Blackbaud (BLKB) initiates a $200 million Accelerated Share Repurchase Plan to repurchase 7% to 10% of its common stock by the end of 2024. The Company has entered into an ASR agreement with Bank of America, N.A. to repurchase $200 million of its common stock, reflecting confidence in its operating plan and significant market opportunities.

Insights

Market Research Analyst

The initiation of a $200 million Accelerated Share Repurchase (ASR) plan by Blackbaud represents a strategic move to boost shareholder value and reflects management's confidence in the company's intrinsic value and future performance. This buyback plan, which involves repurchasing 7% to 10% of the company's common stock, signals to the market that the company believes its shares are undervalued. Share buybacks often result in a positive reaction in the stock market as they can lead to an increase in earnings per share (EPS) by reducing the number of outstanding shares, thus potentially driving up the stock price.

It is also indicative of strong free cash flow generation, allowing Blackbaud to return value to shareholders without compromising its financial stability. Investors might see this as a sign of robust financial health and a well-managed balance sheet. However, it is important to assess the opportunity cost of such a buyback; funds used for repurchasing shares could alternatively be invested in growth opportunities or used to pay down debt. The long-term benefits of this buyback will hinge on the company's ability to sustain its growth and profitability.

Financial Analyst

From a financial perspective, the execution of an ASR agreement with Bank of America to repurchase $200 million of Blackbaud's common stock is a significant allocation of capital. By examining the repurchase history—$77 million of stock repurchased since December 2023, with $41 million prior to the board's authorization expansion and the remaining $36 million against the current authorization—it's clear that Blackbaud is aggressively pursuing its buyback program. This could be a strategic decision to reduce the dilutive effect of stock compensation or a tactic to improve financial ratios.

Investors and analysts should consider the timing of the buyback and its impact on the company's valuation multiples. If the stock is truly undervalued, the repurchase should eventually result in accretion to the company's valuation. However, if the market's valuation of the company is accurate, the repurchase could represent a misallocation of resources. A critical examination of the company's valuation, market position and growth prospects is essential to determine the efficacy of the buyback plan.

Corporate Governance Expert

The announcement of an accelerated share repurchase plan also raises questions regarding corporate governance and the alignment of interests between management and shareholders. The board's decision to authorize such a substantial buyback suggests confidence in the company's future and a commitment to delivering shareholder value. However, it is crucial for shareholders to evaluate the transparency and rationale behind the repurchase decision. Are there alternative uses for the capital that could provide greater long-term value? Is the repurchase a response to external pressure from activist investors or a genuine belief in the company's undervaluation?

Furthermore, the impact of the repurchase on corporate control should be considered. By reducing the number of outstanding shares, the relative ownership stake of remaining shareholders increases, which could affect voting power and control dynamics within the company. Shareholders should assess whether this consolidation of ownership serves their best interests.

Initiates $200 Million Accelerated Share Repurchase Plan

CHARLESTON, S.C., March 4, 2024 /PRNewswire/ -- Blackbaud (NASDAQ: BLKB), the leading provider of software for powering social impact, today announced that it intends to repurchase 7% to 10% of the Company's common stock through the end of 2024. The repurchases will be made through a combination of accelerated share repurchase plans, block trades, and open market purchases as part of the Company's previously announced $500 million share repurchase authorization.

Consistent with this commitment, the Company has entered into an Accelerated Share Repurchase ("ASR") agreement with Bank of America, N.A., to repurchase $200 million of the Company's common stock. Since December 2023, the Company has repurchased approximately $77 million of Blackbaud common stock, excluding the ASR announced today. Of this $77 million, $41 million was repurchased prior to the expansion and replenishment of the board authorization on January 17^th, with the remaining $36 million counting against the current $500 million authorization.

"Our 5-point operating plan is driving meaningful improvements in our operating and financial results and fueling significant free cash flow. The execution on our increased share repurchase authorization reflects our confidence in Blackbaud and upside value creation ahead. We believe our stock is undervalued and does not represent Blackbaud's significant market opportunities. We are excited about Blackbaud's long-term growth prospects and committed to enhancing shareholder value," said Mike Gianoni, president, CEO and vice chairman of the board, Blackbaud. 

The ASR and subsequent repurchases under the $500 million stock repurchase authorization will be funded through cash on hand, operating cash flow, and to the extent needed, borrowings under the Company's existing credit facility.

In connection with the Company's participation at investor conferences on March 4 and 5, presentation materials have been posted to Blackbaud's investor webpage and filed as a Form 8-K with the Securities and Exchange Commission. The associated webcasts can also be accessed on the investor relations section of Blackbaud's website.

About Blackbaud
Blackbaud (NASDAQ: BLKB) is the leading software provider exclusively dedicated to powering social impact. Serving the nonprofit and education sectors, companies committed to social responsibility and individual change makers, Blackbaud's essential software is built to accelerate impact in fundraising, nonprofit financial management, digital giving, grantmaking, corporate social responsibility and education management. With millions of users and over $100 billion raised, granted or managed through Blackbaud platforms every year, Blackbaud's solutions are unleashing the potential of the people and organizations who change the world. Blackbaud has been named to Newsweek's list of America's Most Responsible Companies, Quartz's list of Best Companies for Remote Workers, and Forbes' list of America's Best Employers. A remote-first company, Blackbaud has operations in the United States, Australia, Canada, Costa Rica and the United Kingdom, supporting users in 100+ countries. Learn more at www.blackbaud.com or follow us on X/Twitter, LinkedIn, Instagram and Facebook.

Forward-looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this news release are forward-looking statements that involve a number of risks and uncertainties, including statements regarding expected benefits of products and product features. Although Blackbaud attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors that could cause results to differ materially include the following: general economic risks; uncertainty regarding increased business and renewals from existing customers; continued success in sales growth; management of integration of acquired companies and other risks associated with acquisitions; risks associated with successful implementation of multiple integrated software products; the ability to attract and retain key personnel; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks related to the implementation and ultimate success of our stock repurchase program; and the other risk factors set forth from time to time in the SEC filings for Blackbaud, copies of which are available free of charge at the SEC's website at www.sec.gov or upon request from Blackbaud's investor relations department. All Blackbaud product names appearing herein are trademarks or registered trademarks of Blackbaud, Inc.

Investor Contact
IR@blackbaud.com

Media Inquiries
media@blackbaud.com 

 

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SOURCE Blackbaud

FAQ

What is Blackbaud's (BLKB) Accelerated Share Repurchase Plan about?

Blackbaud (BLKB) has initiated a $200 million Accelerated Share Repurchase Plan to repurchase 7% to 10% of its common stock by the end of 2024.

Who has Blackbaud (BLKB) entered into an agreement with for the ASR plan?

Blackbaud (BLKB) has entered into an Accelerated Share Repurchase agreement with Bank of America, N.A. to repurchase $200 million of its common stock.

How much Blackbaud (BLKB) common stock has the Company repurchased so far?

Since December 2023, Blackbaud (BLKB) has repurchased approximately $77 million of its common stock, excluding the ASR announced today.

Why is Blackbaud (BLKB) executing an increased share repurchase authorization?

Blackbaud (BLKB) believes its stock is undervalued and wants to reflect confidence in its operating plan and significant market opportunities.