Tucows Announces $40 Million Stock Buyback Program

Rhea-AI Summary

Tucows (NASDAQ: TCX) has announced a new $40 million stock buyback program approved by its Board of Directors. The program will run from February 14, 2025, to February 13, 2026, replacing the previously announced $40 million buyback program that began February 23, 2024. Purchases will be made exclusively through the Nasdaq Capital Market.

The company will retire and return to treasury any shares purchased under this program. With 11,030,156 common shares outstanding as of February 12, 2025, Tucows maintains discretion over the timing and volume of purchases, which will depend on cash availability and market conditions. The buyback will be funded through working capital and existing credit facilities. The company has specified it won't purchase shares from management or insiders.

Positive

• Authorization of substantial $40 million share repurchase program
• Demonstrates company's confidence in financial position and commitment to shareholder value
• Potential reduction in share count could increase earnings per share

Negative

• Significant use of working capital and credit facilities for buyback could limit operational flexibility
• Early termination of previous buyback program might indicate execution challenges

Insights

Financial Analyst

The announcement of a $40 million stock buyback program by Tucows represents a remarkably aggressive capital return strategy, given it constitutes approximately 24% of the company's current market capitalization. This substantial commitment signals strong management confidence in the company's intrinsic value and future prospects.

The program's structure reveals several strategic elements worth noting:

• The immediate termination of the previous program and launch of a new one suggests a reset of purchasing parameters, potentially allowing for more advantageous execution in current market conditions.
• The decision to retire purchased shares rather than holding them in treasury indicates a permanent reduction in share count, which should enhance earnings per share and return on equity metrics.
• Funding through working capital and credit facilities, rather than purely cash reserves, indicates an optimized capital structure approach, though it warrants monitoring of the debt levels and interest coverage ratios.

The block purchase provision offers flexibility in execution, potentially reducing market impact costs while allowing for opportunistic buying during market volatility. However, investors should note that the company's relatively modest float and trading volume could mean the full program execution might face liquidity constraints.

The explicit exclusion of insider and management team purchases, combined with Rule 13e-3 considerations, demonstrates strong corporate governance and regulatory compliance focus. This structured approach to capital return, while significant in size, appears well-designed to balance shareholder returns with operational flexibility.

TORONTO, Feb. 13, 2025 /PRNewswire/ - Tucows Inc. (NASDAQ: TCX) (TSX: TC) announced today that its Board of Directors has approved a stock buyback program to repurchase, from time to time if and as appropriate, up to $40 million of its common stock in the open market.

The new $40 million buyback program will commence February 14, 2025 and will terminate on or before February 13, 2026. Purchases for the new buyback program will be made exclusively through the facilities of the Nasdaq Capital Market. The previously announced $40 million buyback program, which commenced February 23, 2024, has been terminated.

Any shares purchased by Tucows under the stock buyback program will be retired and returned to treasury.

The timing and exact number of common shares purchased will be at Tucows' discretion and will depend on available cash and market conditions. Tucows may suspend or discontinue the repurchases at any  time, including in the event Tucows would be deemed to be making an acquisition of its own shares under Rule 13e-3 of the Securities Exchange Act of 1934, as amended. Subject to applicable securities laws and stock exchange rules, all purchases will occur through the open market and may be in large block purchases. Tucows does not intend to purchase its shares from its management team or other insiders.

The purchase will be funded from available working capital and existing credit facilities. As of February 12, 2025, Tucows had 11,030,156 common shares outstanding.

NO STOCK EXCHANGE, SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE INFORMATION CONTAINED HEREIN.

About Tucows

Tucows helps connect more people to the benefit of internet access through communications service technology, domain services, and fiber-optic internet infrastructure. Ting (https://ting.com) delivers fixed fiber Internet access with outstanding customer support. Wavelo (https://wavelo.com) is a telecommunications software suite for service providers that simplifies the management of mobile and internet network access; provisioning, billing and subscription; developer tools; and more. Tucows Domains (https://tucowsdomains.com) manages approximately 25 million domain names and millions of value-added services through a global reseller network of over 35,000 web hosts and ISPs. Hover (https://hover.com) makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows' corporate website (https://tucows.com).

Tucows, Ting, Wavelo, and Hover are registered trademarks of Tucows Inc. or its subsidiaries.

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our expectations regarding our future financial results and, including, without limitation, our expectations regarding our ability to realize synergies from the Enom acquisition and our expectation for growth of Ting Internet. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Information about other potential factors that could affect Tucows' business, results of operations and financial condition is included in the Risk Factors sections of Tucows' filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made. Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.

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SOURCE Tucows Inc.

FAQ

What is the size and duration of Tucows' (TCX) new stock buyback program?

Tucows' new stock buyback program is for $40 million and will run from February 14, 2025, to February 13, 2026.

How will Tucows (TCX) fund the 2025 share repurchase program?

The buyback program will be funded through available working capital and existing credit facilities.

How many shares does Tucows (TCX) have outstanding before the 2025 buyback?

As of February 12, 2025, Tucows had 11,030,156 common shares outstanding.

Where will Tucows (TCX) execute its 2025 share buyback purchases?

Purchases will be made exclusively through the facilities of the Nasdaq Capital Market.

Can Tucows (TCX) management and insiders sell shares in the buyback program?

No, Tucows has explicitly stated it does not intend to purchase shares from its management team or other insiders.