What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) agreement is a contract where a company agrees to buy back a significant amount of its own stock from a financial institution, typically a bank. In this case, Arconic is repurchasing $200 million of its common stock. A key feature is that the company receives an initial delivery of shares quickly, and the final number of shares repurchased is determined later based on market prices.

Why is Arconic repurchasing its stock?

Share repurchases, like this ASR program, are generally seen as a way for companies to return capital to shareholders. It can signal management's confidence in the company's financial health and its stock valuation. It also reduces the number of outstanding shares, which can potentially increase earnings per share (EPS).

What is the impact of this ASR on the remaining share repurchase authorization?

This $200 million ASR is part of a larger share repurchase program. After this repurchase is completed, $100 million will still be available under the previously authorized program, which has a deadline of the end of 2020. This indicates a sustained commitment to shareholder returns beyond the current ASR.

When will the full impact of the share repurchase be known?

The ASR agreement is expected to be completed during the first half of 2019. The exact number of shares repurchased will be determined by the volume-weighted average price of Arconic’s common stock during the term of the transaction, less a discount. Investors will see the final impact reflected in future financial statements and share count adjustments.

HWM 8-K SEC Disclosure

Summary

Arconic Inc. (now Howmet Aerospace Inc.) announced on May 2, 2019, the initiation of a $200 million accelerated share repurchase (ASR) program. This move signifies the company's intent to return capital to shareholders, reflecting confidence in its financial position and future prospects. The ASR is expected to be completed in the first half of 2019, with an initial delivery of approximately 7.5 million shares. Following this repurchase, $100 million will remain available under a previously authorized share repurchase program, which extends through the end of 2020. This demonstrates a sustained commitment to capital return, providing investors with a clear signal of management's strategy to enhance shareholder value. The filing also includes standard forward-looking statements and an attached press release detailing the event.

Key Highlights

1Arconic Inc. entered into a $200 million Accelerated Share Repurchase (ASR) agreement.
2The ASR program is designed to repurchase Arconic's common stock.
3An initial delivery of approximately 7.5 million shares is expected on May 6, 2019.
4The final number of shares repurchased will be determined by the volume-weighted average price during the transaction period, less a discount.
5The ASR is anticipated to conclude within the first half of 2019.
6Approximately $100 million remains available under the existing share repurchase authorization, valid through the end of 2020.
7The filing indicates a continued focus on returning capital to shareholders.

Howmet Aerospace Inc. 8-K Report, Corporate Update (May 2, 2019)

Summary

Key Highlights

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