Everi Scraps Buyback Plan, Could Pay Special Dividend

Posted on: May 6, 2024, 06:03h. 

Last updated on: May 7, 2024, 08:53h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Everi Holdings (NYSE: EVRI) announced Monday that it’s ending a previously announced $130 million share repurchase program and that it could consider paying a special dividend as a way of deploying the capital remaining on the buyback plan.

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The Everi logo. The company ended its share buyback plan and could pursue a special dividend. (Image: Everi)

About a year ago, the Las Vegas-based gaming device manufacturer said its board of directors approved a $180 million repurchase plan that was to run through Nov. 3, 2024. Under that program, the company bought back approximately $100 million worth of its shares as of the end of 2023, meaning there’s $80 million left on the now-terminated buyback program.

Everi is now mulling a special dividend. As a result, the company implemented a mandatory sell-to-cover policy pertaining to the tax obligations on restricted stock units (RSUs) and performance stock units (PSUs), which are often granted by corporations as a form of executive compensation.

The Company believes that the cash which may have otherwise been utilized under the Stock Repurchase Program or to facilitate the tax withholding obligations in connection with the settlement of RSUs and PSUs will be more appropriately allocated toward the Special Dividend,” according to a statement.

Everi didn’t disclose when a special dividend could be distributed or how much the payout will be.

Big Merger Could Be Impetus for Everi’s Special Dividend

In February, International Game Technology (NYSE: IGT) said it will merge its global gaming and PlayDigital units into Everi in a $6.2 billion transaction, one of the largest deals announced this year in the gaming industry.

At that time, the slot machine maker told investors it was possible a special dividend could be paid. Everi currently doesn’t issue a regular quarterly payout. While the stock rose in the weeks following the announcement of the IGT deal, the shares subsequently slumped and are now off 12% over the past month and almost 28% year to date.

“The Special Dividend is intended to reflect the cash flow generated by the Company through the merger date. The amount of the Special Dividend, if any, shall be calculated in accordance with the Separation Agreement, and shall be based on the Company’s cash and cash equivalents at closing in excess of a target of $30 million,” added Everi in a statement.

Everi has 83.47 million shares outstanding so if it funded a special payout with $30 million, the cost to the company would be relatively low.

Special Dividends Common in Gaming Industry

Should Everi proceed with delivering a special payout to shareholders, it would join a lengthy list of gaming companies that have recently done so.

In March, MGM China and Wynn Macau surprised investors with special dividend news. Since November 2021, Red Rock Resorts, Inc. (NASDAQ: RRR) has delivered three special dividends in addition to its quarterly payout.

Golden Entertainment (NASDAQ: GDEN), which like Everi and Red Rock is headquartered in Las Vegas, and Gaming and Leisure Properties (NASDAQ: GLPI) are also among the gaming firms that have paid special distributions in recent years.