The Doldrums Of Debt
The 10 most debt-laden solution providers in the top 50 of CRN's 2015 Solution Provider 500 had a combined $9.83 billion in debt at the end of first quarter 2015, down from $10.26 billion the quarter before. Although the companies at the top remain the same, a handful of solution providers swapped slots, including a new entry in the bronze position. Some companies have taken measures to improve their financial position: Unisys announced in April that it plans to lay off 1,840 employees as part of a plan to save $200 million annually. Here, the companies holding onto the most debt right now.
Methodology
To determine which of the 19 publicly traded companies appearing in the CRN Solution Provider 50 have the most debt, CRN pulled the total debt figures provided by Yahoo Finance. In instances where the numbers were not current, we took the formula used by Yahoo Finance and applied it to the company earnings for the most recent quarter.
10. Syntel
Total debt: $136.7 million
Top executive: Nitin Rakesh, president and CEO
Syntel reduced its debt by 1.4 percent from the previous quarter, from $138.6 million in December. The Troy, Mich.-based company -- No. 36 on the 2015 CRN SP 500 -- is reportedly on the selling block, with business process outsourcing firm Genpact and its principal shareholder, private equity giant Bain Capital, partaking in slowly progressing discussions. Syntel entered into a three-year credit agreement with Bank of America in May 2013, consisting of a $90 million revolving credit facility and a $60 million loan facility. Syntel is scheduled to pay back nearly $7 million of the loan this year.
9. Black Box Network Services
Total debt: $137.3 million
Top executive: Michael McAndrew, president and CEO
Black Box Network Services -- ranked No. 34 on the 2015 CRN SP 500 list -- decreased its debt the past quarter by 22.4 percent, from $177 million in the previous quarter. Executives from Black Box said the corporation allocated all of its free cash flow to debt reduction in the most recent quarter. Black Box also said it entered into a credit agreement in 2012 with Citizens Bank of Pennsylvania. Costs associated with the credit agreement have fallen with each subsequent year, though $206.9 million of outstanding debt is still associated with the deal.
8. ePlus
Total debt: $156 million
Top executive: Phillip Norton, president and CEO
Technology systems integrator ePlus cut its debt 15 percent from the $183 million it reported three months earlier. The Herndon, Va.-based company, No. 32 on the 2015 CRN SP 500, is obliged to pay $29.4 million of its loans back this year, with $24.7 million due in the following two years. The First Virginia Community Bank provided ePlus with a $500,000 credit facility, though no outstanding accounts receivable balance was due as of March 31. The $1.1 billion solution provider focuses most of its business in the state, local and education market in addition to telecom, financial services, health care and other technology.
7. Unisys
Total debt: $223.8 million
Top executive: Peter Altabef, president and CEO
Unisys reduced its debt by a negligible 0.1 percent from $224 million last quarter. The Blue Bell, Pa.-based company -- No. 19 on the 2015 CRN SP 500 list -- said it secured a revolving credit facility that provides letters of credit and loans up to an aggregate amount of $150 million. Unisys, however, said the deal has had no material impact on the company's business, properties, operations or financial condition.
6. Insight Enterprises
Total debt: $242 million
Top executive: Kenneth Lamneck, president and CEO
Insight's debt load has increased 30 percent over the past quarter, from $186.1 million in December. Some $95 million of that is long-term debt for the Tempe, Ariz.-based company -- No. 13 on the 2015 CRN SP 500 -- consisting of $75 million for an account receivable financing facility and $19.5 million for a revolving credit facility. Capital leasing obligations are a $2.2 million burden, while interest on the financing facilities cost $826,000. Cuts on Microsoft cloud sales commissions and Office 365 incentive fees are expected to take a $5 million to $10 million bite out of Insight's profits in 2015.
5. SS&C
Total debt: $595.3 million
Top executive: William Stone, CEO
The Windsor, Conn.-based company -- No. 38 on the 2015 CRN SP 500 -- reduced its debt by 6.8 percent from $638.9 million. SS&C said they will acquire Advent for about $2.7 billion in cash by the second or third quarter of 2015. The company plans to finance that acquisition along with the refinancing of existing debt through $3 billion of debt financing, cash on hand and $400 million of equity. SS&C reported that its net cash earnings fell in 2014, as the company used some of its cash to repay debt.
4. Cognizant
Total debt: $ 1.08 billion
Top executive: Francisco D'Souza, CEO
Cognizant saw its debt plummet 34 percent from $1.64 billion the previous quarter. The Teaneck, N.J.-based company -- No. 8 on the 2015 CRN SP 500 -- said it entered into a credit agreement last year that gave the company a $1 billion unsecured term loan as well as a $750 million unsecured revolving facility. That money helped fund Cognizant's $2.7 billion purchase of health-care IT provider TriZetto in September.
3. CACI
Total debt: $1.09 billion
Top executive: Kenneth Asbury, president and CEO
CACI, No. 16 on the 2015 CRN SP 500, cut its debt by just over 6 percent in the second quarter, down from $1.16 billion three months ago. The Arlington, Va.-based company has a five-year term loan where principal payments are due in quarterly installments of $10.4 million through Dec. 31, 2016, and $20.8 million following that date. The remaining amount is due in full Nov. 15, 2018. CACI has $779.3 million outstanding on the term loan as of March 31.
2. CSC
Total debt: $2.67 billion
Top executive: Mike Lawrie, president and CEO
CSC cut its debt by almost 2 percent, down from $2.72 billion three months before. The Falls Church, Va.-based company, No. 5 on the 2015 CRN SP 500, recently announced it will split the company into two separate publicly traded entities, one focused on its $8.1 billion commercial business, and the other focused on its $4.1 billion U.S. government offerings. The North American public sector segment will take on $1.5 billion in debt before the split. There are no outstanding balances due on CSC's $2.5 billion of long-term debt. CSC has $350 million in borrowing due in September, $371 million due in January, $917 million due in March 2018 and $451 million in September 2022.
1. CDW
Total debt: $3.5 billion
Top executive: Thomas Richards, chairman and CEO
Leading the league in debt once again is CDW, which saw its debt increase 9 percent from $3.19 billion in the quarter before. The debt for the Vernon Hills, Ill.-based company, No. 6 on the 2015 CRN SP 500, consists of more than $1.5 billion from a senior secured term loan facility, in addition to $1.7 billion in senior notes due from 2022 to 2024. In the company's most recent earnings call May 7, CDW's health-care business saw a 5.2 percent drop in revenue, to $373.6 million from $394.1 million in the year-ago quarter.