Hartmarx Corporation (NYSE:HMX) announced a new share repurchase program to acquire up to 3 million of the Company’s common shares. Repurchases will be made from time-to-time in the open market or in privately negotiated transactions based on prevailing market conditions and other factors. This authorization is in addition to the 2 million shares repurchase authorization approved by the Board of Directors in October 2005. As of October 18, 2007, 58,268 shares remain to be purchased under the 2005 authorization.
Hartmarx produces and markets business, casual and golf apparel.
PAYOUT YIELD ANALYSIS
The 3 million share repurchase represents 8% of the company’s current outstanding share count of 37 million. Based on the 2 years that it took the company to complete the last authorization and approximate annual operating cash flow of $20 – 25 million, we project that the company could comfortably complete this repurchase program at a rate of 1.5 million shares or approximately $7.5 million per year.
However, options and restricted stock grants have mostly offset the effect of previous repurchase programs. For example, despite near completion of the 2005 repurchase program, the average diluted share count for the third quarter of 2007 remained almost the same as the prior year count. (See the August 31, 2007 10Q at www.sec.gov)
Assuming no change in company practices and with no dividend in place, we project a Net Total Payout of $0 and Total Payout Yield of 0% over the next 4 quarters.
- Payout Yield Staff