Light & Wonder Announces Authorization of New $1 Billion Share Repurchase Program

Rhea-AI Summary

Light & Wonder (NASDAQ: LNW) announced a new three-year $1 billion share repurchase program, replacing a prior $750 million program that concluded on June 13, 2024. The new program will run through June 12, 2027, and reflects confidence in continued strong business performance. The previous program repurchased 11.2 million shares at an average price of $66.72, a 28% discount to the current price of $92.35. CEO Matt Wilson highlighted the company's ongoing growth strategy and AEBITDA target of $1.4 billion for 2025. CFO Oliver Chow emphasized the financial flexibility and value creation potential of the new repurchase program.

Positive

• New $1 billion share repurchase program indicates strong business confidence.
• Previous program repurchased 11.2 million shares at a 28% discount to current price.
• Company on track to achieve $1.4 billion AEBITDA target for 2025.
• Net debt leverage ratio within target range of 2.5-3.5x as of March 31, 2024.
• Strong operating performance continues across the business.
• New program underscores commitment to driving profitable growth and delivering value to shareholders.

Negative

• No obligation to repurchase shares under the new program, which can be suspended or discontinued at any time.
• Repurchase program contingent on market conditions, share price, and other factors.

Insights

Financial Analyst

Light & Wonder's announcement of a $1 billion share repurchase program is a strategic move that can significantly impact shareholders. The previous program, which successfully repurchased $750 million worth of shares, has been fully utilized, indicating a history of proactive capital management.

Share repurchase programs often signal that a company believes its shares are undervalued. With the average purchase price of $66.72 per share, juxtaposed against today's closing price of $92.35, this underlines management's confidence in the stock's intrinsic value. These repurchase activities reduce the number of outstanding shares, which can increase earnings per share (EPS) and potentially drive stock prices higher. In simpler terms, repurchasing shares can make each remaining share more valuable.

The firm's net debt leverage ratio of 2.5 - 3.5x suggests a balanced approach to debt management and capital allocation. This range shows the company is neither overly indebted nor overly conservative, allowing room for both growth investments and shareholder returns.

Finally, investors should note that share repurchases are subject to market conditions and other factors, meaning the actual execution may vary. While the program demonstrates strong financial health and a commitment to returning capital to shareholders, market conditions will ultimately influence its success.

Market Research Analyst

From a market perspective, Light & Wonder's new share repurchase program is poised to reinforce market confidence. The fact that the company has exhausted its previous $750 million program ahead of schedule highlights its robust cash flow and financial discipline. Investors often view such buybacks as positive signals because they suggest the company has excess cash and sees value in its own stock compared to other investment opportunities.

Additionally, the repurchase program's timing aligns with the company’s aim to achieve a $1.4 billion Consolidated AEBITDA target by 2025. This synergy between operational goals and capital allocation strategies is crucial. It reflects a coherent strategy focused on sustainable growth and value creation.

However, market participants should keep an eye on external factors like overall market conditions, interest rates and the economic environment that may influence the effectiveness of share repurchase programs. A volatile market might reduce the program's intended impact, making it essential for investors to consider broader economic signals alongside company-specific announcements.

LAS VEGAS--(BUSINESS WIRE)-- Light & Wonder, Inc. (NASDAQ and ASX: LNW) (together with its subsidiaries, “Light & Wonder,” “L&W” or the “Company”) today announced that its Board of Directors has approved a new three-year share repurchase program for the repurchase of up to $1 billion in the Company's outstanding common stock through June 12, 2027.

The prior share repurchase program authorized the Company to repurchase up to $750 million of its common shares and was set to expire on February 26, 2025.

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.

Matt Wilson, Chief Executive Officer of Light & Wonder, said, “I am pleased to announce that the Board has approved a new, upsized share repurchase program as we continue to successfully execute our growth strategy and return meaningful capital to our shareholders. With strong operating performance continuing across the business, we remain on track to achieve our $1.4 billion Consolidated AEBITDA⁽¹⁾ target for 2025 while continuing to invest for the future.”

Oliver Chow, Chief Financial Officer of Light & Wonder, said, “Given the continued momentum in the business, and our March 31, 2024 net debt leverage ratio⁽¹⁾ at the middle of our target range of 2.5 - 3.5x, we have significant optionality with regards to capital allocation. 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.”

The timing and amount of repurchases under the Company’s share repurchase program will be determined by the Company from time to time at its discretion based on its evaluation of market conditions, share price, and other factors including potential accretive opportunities for inorganic growth. Repurchases may be made in the open market or through private transactions, including under Rule 10b5-1 plans, subject to market conditions and applicable legal requirements. Light & Wonder has no obligation to repurchase shares, and the share repurchase program may be suspended or discontinued by the Company at any time.

(1) Denotes a non-GAAP financial measure, which is defined and reconciled to the most directly comparable GAAP measure in our earnings release furnished to the U.S. Securities and Exchange Commission on May 8, 2024. We are not providing a forward-looking quantitative reconciliation of targeted Consolidated AEBITDA or targeted net debt leverage ratio to the most directly comparable GAAP measure because we are unable to do so without unreasonable efforts or to reasonably estimate the projected outcome of certain significant items. These items are uncertain, depend on various factors out of our control and could have a material impact on the corresponding measures calculated in accordance with GAAP.

For more information, visit lnw.com.

About Light & Wonder, Inc.

Light & Wonder, Inc. is the leading cross-platform global games company. Through our three unique, yet highly complementary businesses, we deliver unforgettable experiences by combining the exceptional talents of our 6,000+ member team, with a deep understanding of our customers and players. We create immersive content that forges lasting connections with players, wherever they choose to engage. At Light & Wonder, it’s all about the games. The Company is committed to the highest standards of integrity, from promoting player responsibility to implementing sustainable practices. To learn more visit www.lnw.com.

Forward-Looking Statements

In this press release, Light & Wonder makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often by identified by the use of terminology such as "will," "may," “estimate,” “intend,” “plan,” “continue,” “believe,” “expect,” “anticipate,” “target,” "should," “could,” “potential,” “opportunity,” “goal,” or similar terminology. These statements are based upon current Company management expectations, assumptions and estimates and are not guarantees of timing, future results, or performance. Therefore, you should not rely on any of these forward-looking statements as predictions of future events. Actual results may differ materially from those contemplated in these statements due to a variety of risks, uncertainties and other factors, including those factors described in our filings with the Securities and Exchange Commission (the “SEC”). Additional information regarding risks and uncertainties and factors that could cause results to differ materially from those contemplated in forward-looking statements is included from time to time in our filings with the SEC, including the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K filed with the SEC for the year ended December 31, 2023 on February 27, 2024 (including under the headings "Forward-Looking Statements" and "Risk Factors"). Forward-looking statements speak only as of the date they are made and, except for our ongoing obligations under the U.S. federal securities laws, we undertake no and expressly disclaim any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240613181003/en/

Company Contacts:

Nick Zangari +1 702-301-4378

Senior Vice President, Investor Relations

ir@lnw.com



Andy Fouché +1 206-697-3678

Vice President, Corporate Communications

media@lnw.com

Source: Light & Wonder, Inc.

FAQ

What is the new share repurchase program for Light & Wonder (LNW)?

Light & Wonder announced a new three-year $1 billion share repurchase program running through June 12, 2027.

How did the previous share repurchase program for Light & Wonder (LNW) perform?

The previous program repurchased 11.2 million shares at an average price of $66.72, ending on June 13, 2024.

What is the current share price of Light & Wonder (LNW) in relation to the previous repurchase?

The average repurchase price under the prior program was $66.72, a 28% discount to the current price of $92.35.

What financial targets has Light & Wonder (LNW) set for 2025?

Light & Wonder aims to achieve a $1.4 billion AEBITDA target for 2025.

What is Light & Wonder's (LNW) net debt leverage ratio?

As of March 31, 2024, Light & Wonder's net debt leverage ratio is within the target range of 2.5-3.5x.