WASHINGTON - IBEX Limited (NASDAQ:IBEX), a global provider of BPO and AI-powered customer engagement solutions, has repurchased approximately 20% of its diluted shares outstanding from The Resource Group International, Limited (TRGI). The transaction involved 3,562,341 common shares, purchased at $19.65 per share, equating to the last closing price on the Nasdaq Global Market. The total consideration for the buyback was $70 million, with $45 million paid in cash and the remaining $25 million through seller financing.
This repurchase has altered IBEX's ownership structure, reducing TRGI's stake to 1.8 million shares and ending IBEX's status as a "controlled company" under Nasdaq rules. The company's board will now have a majority of independent directors, and one of the two current IBEX directors associated with TRGI is set to resign by year-end. Furthermore, IBEX retains the right to repurchase the remaining shares from TRGI within the next four years under certain conditions.
The move is part of IBEX's broader capital management strategy, which has seen over $27 million in share repurchases since September of the previous year. CEO Bob Dechant expressed that these actions reflect confidence in the company's growth and financial health. The transition to a board with independent directors is expected to align with Nasdaq's corporate governance standards and could potentially widen IBEX's shareholder base.
The agreement with TRGI was approved by a Special Transaction (JO:TCPJ) Committee of independent members and ratified by the board, with TRGI-employed members abstaining. The committee received independent legal and financial advice, and a fairness opinion was provided to support the transaction.
Following the share buyback, IBEX will suspend its current share repurchase program, with any future decisions on buybacks to be determined by an ongoing assessment of business capital needs and market conditions. The transaction is based on a press release statement from IBEX Limited.
In other recent news, IBEX Limited reported a strong start to fiscal year 2025 with record Q1 revenue of $129.7 million, a 4.1% increase from the previous year. The company's adjusted EBITDA rose to $15.6 million, and adjusted EPS increased by 30% to $0.52. These recent developments also include the company raising its full-year revenue guidance to between $515 million and $525 million, with adjusted EBITDA expected to reach $67 million to $69 million.
Additionally, IBEX expanded its higher-margin offshore and nearshore services, now comprising 76% of total revenue, and launched three new client relationships. The company also earned the 2024 Generative AI Product of the Year Award for AI Translate. However, analysts noted a slight decline in net cash from operating activities and an increase in Days Sales Outstanding. Despite these challenges, the company remains optimistic about its growth prospects.
InvestingPro Insights
IBEX Limited's recent share repurchase aligns with its aggressive buyback strategy, as highlighted by InvestingPro Tips. This move not only demonstrates management's confidence in the company's future but also contributes to a high shareholder yield, another key insight from InvestingPro.
The company's financial health appears robust, with InvestingPro Data showing a P/E ratio of 10.1, indicating that IBEX is trading at a relatively low earnings multiple. This valuation metric, combined with the InvestingPro Tip that IBEX is trading at a low P/E ratio relative to near-term earnings growth, suggests the stock may be undervalued.
IBEX's strong financial position is further underscored by its ability to cover interest payments with cash flows and maintain liquid assets exceeding short-term obligations, as noted in the InvestingPro Tips. These factors support the company's decision to allocate significant capital towards share repurchases.
The market seems to be recognizing IBEX's potential, with InvestingPro Data revealing a 26.94% price total return over the past six months. This performance aligns with the InvestingPro Tip highlighting IBEX's strong return over the last three months.
For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips for IBEX, providing a deeper understanding of the company's financial landscape and market position.
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