How Expedia drives shareholder value via buybacks and dividends

Market Realist

Expedia: A must-know overview and key takeaways for investors (Part 7 of 8)

(Continued from Part 6)

Expedia’s buybacks

In 2012, Expedia’s (EXPE) board authorized a repurchase of up to 20 million outstanding shares of its common stock. During 2013, Expedia repurchased 9.3 million common shares for an aggregate purchase price of $515 million excluding transaction costs (an average of $55.59 per share). Subsequent to quarter end, it repurchased an additional 0.7 million shares for an aggregate purchase price of $46 million excluding transaction costs (an average of $66.68 per share), leaving approximately 8.1 million shares of common stock available for repurchase under its April 25, 2012, authorization.

On December 12, 2013, Expedia paid a quarterly dividend of $20 million ($0.15 per common share). Plus, on February 5, 2014, the Executive Committee of Expedia’s Board of Directors declared a cash dividend of $0.15 per share. Based on the current shares outstanding, the company estimated the total payment for the quarterly dividend will be approximately $19 million.

The management said on the fourth quarter 2013 earnings call, “We continue to drive incremental shareholder value through capital allocation decisions, and for full year 2013 we deployed over $1.1 billion towards a combination of acquisitions, our dividend and share repurchases, including the 9.3 million shares we repurchased over the course of the year for an average price of $55.59. It is also worth noting that since our Q3 conference call, we repurchased almost 2 million shares, a portion of which occurred in 2014.”

China-based peer Ctrip International (CTRP) recently said its board approved a new share repurchase program whereby Ctrip may purchase its own American depositary shares with an aggregate value of up to $600 million. The company expects to fund the repurchase out of its existing cash balance, including cash generated from operations and cash received from the convertible bonds issued in 2012, and 2013. Priceline (PCLN) plans to use net proceeds from a convertible notes offering to fund an additional $1 billion stock repurchase program.

Travelzoo (TZOO) said in January 2014, that its board has authorized the repurchase of up to 500,000 of the company’s outstanding common shares. During the three months ended March 31, 2014, the company repurchased 244,000 shares of common stock for an aggregate purchase price of $5.6 million, its filing said. TripAdvisor (TRIP) said in fiscal 2013, it repurchased 2,120,709 shares of outstanding common stock under the share repurchase program at an aggregate cost of $145.2 million. In February, 2013, its board had authorized a $250 million share repurchase program. The above-mentioned companies are yet to declare dividends.

Continue to Part 8

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