10 Solution Providers With The Most Debt
Doubling Down On Debt
While having some debt isn't necessarily a bad thing for a business, some have more debt than others. That debt can stem from a variety of places, such as previous acquisitions, investments or amounting company losses. Ranging from the hundreds of millions to billions of dollars, take a look at which solution providers at the top of the Solution Provider 500 are holding onto the most debt right now.
METHODOLOGY
To determine the companies with the most debt out of the public solution providers listed in the top 50 of CRN’s SP500 list, CRN pulled the total debt numbers determined by Yahoo Finance. In instances where the numbers were not current, we pulled the formula used by Yahoo Finance to determine what the equivalent number would be for the most recent quarter.
10. Syntel
Total Debt: $138,602,000
Starting off the list for solution providers with the most debt is Syntel, No. 40 on the CRN SP500, with $138,602,000 in total debt. While that might seem like a lot of debt, Syntel had one of the lowest debt-to-asset ratios, at 0.11. Over the past year, Syntel has made significant advancements in emerging technologies, including launching a new initiative to help clients undergo digital transformations and an integrated automation platform.
9. Black Box Network Services
Total Debt: $177,040,000
While only at No. 35 on the CRN SP500 list, Black Box Network Services has the 10th largest amount of debt of the top public solution providers. However, the company’s debt is only a smaller comparative portion of its overall total assets, with a 0.25 debt to asset ratio. In its most recent earnings report, Black Box CEO Michael McAndrew said the company, which focuses on communications systems integration, is planning to "direct all available free cash flow" to reduce the company’s leverage ratio over the next quarter.
8. ePlus
Total Debt: $183,125,000
ePlus is the smallest solution provider by revenue to appear on the list of public solution providers with the most debt, reporting $183,125,000 in total debt in its last earnings report. That being said, the company’s debt-to-asset ratio is 0.35, which is lower than some other companies on this list. In its last quarterly earnings report, ePlus showed strong revenue growth, up 14.6 percent year-over-year to $306.2 million, as the company saw increasing demand for its complex IT solutions, such as security, storage, cloud and infrastructure.
7. Insight Enterprises
Total Debt: $186,082,000
While Insight Enterprises ranked No. 8 on the list of public solution providers with the most debt, it had one of the lowest debt-to-asset ratios out of the bunch, at 0.10. In the company's most recent earnings call, CFO Glynis Bryan said the company has worked to lower its debt outstanding by $6 million over the past year.
6. Unisys
Total Debt: $224,000,000
Unisys reported a total debt of $224 million during its fourth-quarter earnings call in late January. During the call, company President and CEO Peter Altabef said the debt number "is comprised primarily of our $210 million 6.25 percent senior notes due in 2017, which were issued in the third quarter of 2013." He added the Blue Bell, Pa.-based company's cash balance at the end of 2014 was more than double its debt amount. Altabef was named to his position on Jan. 1 of this year.
5. SS&C
Total Debt: $638,910,000
In early February, SS&C reported over $638 million in debt, however, it has made great strides to reduce that number. SS&C founder and CEO, Bill Stone, said during the call that since the company’s major acquisitions of GlobeOp and Portia in 2012, it has paid down nearly $587 million of debt. The Windsor, Ct.-based company also noted during the call that it had paid down $212 million of debt over the course of 2014.
4. CACI
Total Debt: $1,165,385,000
CACI reported over $1.16 billion in debt during its fourth-quarter earnings call in late January.
The Middletown, R.I.-based company’s CFO Thomas Mutryn illustrated during the earnings call that its net debt 12-month EBITDA leverage ratio is at 3.7x, a metric, which investors may not want to see get much higher. With its financial assets dipping and debt staying similar to what was reported six months prior, CACI looks to turn that trend around going forward.
3. Cognizant
Total Debt: $1,637,502,000
A $6 billion lawsuit filed in January by solution provider rival Syntel threatens Cognizant's financial fortunes. The suit alleges that Cognizant's acquisition of TriZetto, which was announced in September and completed in November, resulted in the termination of a contract Syntel had with TriZetto. The suit also said that it mishandled confidential information. The Syntel unit is asking for $3.4 million in rebates from TriZetto, as well as $6.1 billion in punitive damages from Cognizant.
2. CSC
Total Debt: $2,724,000,000
Speculation around a Computer Sciences Corp. (CSC) buyout has persisted for months, with the latest reports claiming the Falls Church, Va.-based company, No. 4 on the CRN SP500, is considering a scenario where CSC’s North American public-sector division would be acquired by a private equity firm while the commercial sector would be sold to a strategic buyer. This follows reports in September that CSC was exploring leveraged buyout options with multiple private equity firms, including The Blackstone Group and Bain Capital.
1. CDW
Total Debt: $3,190,000,000
Despite more than $3 billion of debt, CDW spent $850 million in November to acquire a 35 percent stake Kelway, a London-based IT integrator with 900 employees. The Vernon Hills, Ill.-based company, No. 8 on the CRN SP500, has also been committed to consistently increasing its market share in a highly fragmented market dominated by smaller or regional VARs. CDW has decreased its interest expenses by more than $50 million in 2014, which helped it deliver a nearly 30 percent increase in earnings per share.