EXL Board Authorizes Significant Stock Repurchase Program

Rhea-AI Summary

ExlService Holdings, Inc. announces a $500 million common stock repurchase program, replacing the previous $300 million plan. The new program reflects confidence in growth prospects and generating free cash flow.

Insights

Financial Analyst

ExlService Holdings, Inc.'s announcement of a substantial $500 million stock repurchase program is a significant signal to the market regarding management's confidence in the company's financial health and future prospects. A repurchase program of this magnitude suggests that the company believes its shares are undervalued and that it is in a strong cash position to return value to shareholders. Share buybacks can often lead to a positive reevaluation of a stock as they reduce the number of shares outstanding, potentially increasing earnings per share (EPS) and the intrinsic value of remaining shares.

However, investors should also consider the opportunity cost of such a program. The capital allocated for stock repurchases is not being invested in the business or used for acquisitions, which may indicate a lack of viable growth opportunities or a strategic decision to enhance shareholder value through direct capital return mechanisms. It's also worth noting that the termination of the previous $300 million program coincides with the initiation of the new one, which may suggest a strategic shift in capital allocation policies.

Market Research Analyst

From a market perspective, ExlService Holdings' repurchase program could be interpreted as a bullish signal, potentially influencing investor sentiment and stock performance in the short term. The repurchase plan also reflects on the company's capital allocation strategy, which appears to prioritize shareholder returns over other uses of cash such as investment in growth or debt reduction. This could attract a certain class of investors, particularly those looking for companies with strong cash return policies.

It is important for the market to monitor the execution of this repurchase plan, as the methods used (open market purchases, block trades, etc.) and the timing can have varying impacts on the stock price. For example, 10b5-1 trading plans allow companies to buy back shares at pre-determined times, providing a systematic approach to repurchases that can reduce the potential for market speculation.

Legal Expert

The legal framework surrounding stock repurchases is critical for ensuring compliance with securities laws. ExlService Holdings' intention to structure open market repurchases in accordance with Rule 10b-18 under the Securities Exchange Act of 1934 is a prudent move. This rule provides a safe harbor for companies, specifying the conditions under which their stock buyback activities are not deemed to manipulate the market. These conditions include limitations on the timing, price and volume of repurchases, which are designed to minimize the potential impact on the stock's trading price.

Moreover, the flexibility of the repurchase program, which does not commit the company to buy a specific number of shares and allows for suspension, modification, or discontinuation at management's discretion, provides the company with the ability to adapt to changing market conditions and corporate needs. This level of flexibility is common in repurchase authorizations and is crucial for maintaining corporate governance standards and protecting shareholder interests.

NEW YORK, Feb. 29, 2024 (GLOBE NEWSWIRE) -- ExlService Holdings, Inc. (NASDAQ: EXLS), a leading global analytics and digital operations and solutions company, today announced that its Board of Directors has authorized a $500 million common stock repurchase program, effective March 1, 2024, for a two-year period, in line with our capital allocation strategy.

“During 2023, we repurchased approximately $125 million of our common stock,” said Maurizio Nicolelli, executive vice president and chief financial officer. “This new authorization of $500 million represents confidence in our ability to continue our growth trajectory and generate significant free cash flow.”

The current stock repurchase program previously announced on Nov. 2, 2021, for the repurchase of up to $300 million of common stock over three years, will be terminated on Feb. 29, 2024. As of Feb. 28, 2024, approximately $213 million of common stock has been repurchased under that plan. Under the authorization, the shares may be purchased by the company using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, and/or other privately negotiated transactions or non-discretionary trading plans, including through 10b5-1 trading plans, as determined by management as market conditions warrant. The company expects open market repurchases under the repurchase program will be structured to comply with Rule 10b-18 under the Securities Exchange Act of 1934, as amended, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases. The repurchase program does not require the company to acquire any specific number of shares, and the company may suspend, modify or discontinue repurchases at any time at management’s discretion. 

About ExlService Holdings, Inc.

EXL (NASDAQ: EXLS) is a leading data analytics and digital operations and solutions company. We partner with clients using a data and AI-led approach to reinvent business models, drive better business outcomes and unlock growth with speed. EXL harnesses the power of data, analytics, AI, and deep industry knowledge to transform operations for the world’s leading corporations in industries including insurance, healthcare, banking and financial services, media and retail, among others. EXL was founded in 1999 with the core values of innovation, collaboration, excellence, integrity and respect. We are headquartered in New York and have more than 54,000 employees spanning six continents. For more information, visit www.exlservice.com.

Contacts:
Investor Relations
John Kristoff
Vice President, Investor Relations
+1 212 209 4613
ir@exlservice.com

Media - US
Keith Little
Senior Manager, Media Relations
+1 703 598 0980
media.relations@exlservice.com

FAQ

What did ExlService Holdings, Inc. announce regarding a stock repurchase program?

ExlService Holdings, Inc. announced a $500 million common stock repurchase program, effective March 1, 2024, for a two-year period.

What was the previous stock repurchase program amount and duration?

The previous stock repurchase program was for up to $300 million of common stock over three years.

Who mentioned confidence in the ability to continue growth trajectory and generate free cash flow?

Maurizio Nicolelli, the executive vice president and chief financial officer, mentioned confidence in the ability to continue growth trajectory and generate free cash flow.

What methods can be used for purchasing shares under the authorization?

The shares may be purchased using a variety of methods, including open market purchases, block trades, accelerated share repurchase programs, and/or other privately negotiated transactions.

Is there a specific number of shares the company is required to acquire under the repurchase program?

The repurchase program does not require the company to acquire any specific number of shares.