PTC Announces New Capital Allocation Strategy

NEEDHAM, Mass. — (BUSINESS WIRE) — August 4, 2014PTC (Nasdaq: PTC) today announced a new capital allocation strategy that further enhances the company’s focus on sustainable growth and shareholder value. As part of the new strategy, PTC has set a long-term goal to return approximately 40% of free cash flow to shareholders. This goal reflects PTC’s confidence in its ability to generate consistent free cash flow in the years ahead that will enable the company to continue investing in organic and inorganic growth, while enhancing the return of capital to shareholders.

As part of this strategy, PTC’s Board of Directors has authorized a new $600 million share repurchase program ending September 30, 2017. As part of this authorization, PTC expects to repurchase $125 million of its common stock by the end of fiscal 2014 using an accelerated stock repurchase (ASR) agreement. Future repurchases are expected to be carried out through open market share repurchases or privately negotiated transactions beginning in Q1’15. These share repurchases will be executed based on then-current business and market factors, so the actual return of capital in any single quarter may be significantly more or less than the long-term goal of 40% of free cash flow. PTC may use cash from operations or may borrow funds under its credit facility to make such repurchases. PTC expects to borrow $125 million under its existing credit facility for the ASR.

PTC also plans to enter into a new $1.5 billion credit facility, with a syndicate of existing and new banks. Upon closing, the new facility would replace the company’s existing $1.0 billion credit facility, which is scheduled to mature on January 30, 2019.

James Heppelmann, president and chief executive officer, commented, “This capital allocation strategy reflects our ongoing commitment at PTC to generate significant free cash flow on a consistent basis and drive value for our shareholders.”

Business Outlook

Jeff Glidden, chief financial officer, commented, “The net effect of today’s announcement will be to increase our target non-GAAP EPS growth in FY’15 to the mid-teens, from the low to mid-teens previously, assuming a stable macroeconomic environment and no significant currency fluctuations. Repurchases in accordance with our return of capital goal are also expected to result in a declining share count in FY’16 and beyond. We continue to target total revenue growth in the low to mid single digit range, including expected revenue from Atego and Axeda and plan to provide formal FY’15 guidance in conjunction with our Q4 earnings release later this year.”

Conference Call and Webcast

PTC is hosting a 30 minute investor call and webcast to discuss its new capital allocation strategy. Following introductory comments by James Heppelmann and Jeff Glidden, we will take Q&A.

     
What: PTC Capital Allocation Strategy Conference Call and Webcast
 
When: Tuesday August 5th, 2014 at 8:00am (ET)
 
Dial-in: 1-800-857-5592 or 1-773-799-3757

Call Leader: James Heppelmann

Passcode: PTC

 
Webcast:

www.ptc.com/for/investors.htm

 
Replay:

The audio replay of this event will be archived for public replay until 4:00 pm (CT) on August 15 th , 2014.

Dial-in: 1-866-501-7040 Passcode: 7649

To access the replay via webcast, please visit www.ptc.com/for/investors.htm .

 

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