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How Tampa-St. Pete’s largest companies used their cash in 2018

Margie Manning

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Photo by rawpixel on Unsplash

The largest companies in the Tampa-St. Pete area put their cash to work buying back stock and making deals last year.

The 20 largest publicly reporting companies repurchased $1.26 billion of their own stock and spent about $3.6 billion on acquisitions, according to disclosures on their 2018 annual reports.

Buybacks and deals pushed cash on hand at many Tampa-St. Pete companies lower by the end of 2018 than it was at the start of the year.

The way companies spend their money is one of several issues investors watch closely at publicly traded companies. The St. Pete Catalyst is publishing a series of reports looking at some of those issues, including compensation and diversity, with a focus on companies headquartered in the Tampa-St. Pete metro area that publicly report their financial information, are traded on a major stock exchange and have a market capitalization of $100 million or more.

Stock buybacks

The Tax Cuts and Jobs Act, signed into law in late 2017, cut the corporate income tax rate from 35 percent to 21 percent and changed the way corporate profits earned overseas were taxed.

Backers of the tax changes said companies would have more cash for job creation and capital investments.

In the first half of 2018, companies used that cash to pay down their debt, then shifted to returning money to shareholders by buying back stock in the second half of the year, a May 1 report from Moody’s Investors Service said.

Moody’s looked at 100 companies with large cash holdings. Among Tampa-St. Pete companies there was a similar trend.

Tech Data Corp. (Nasdaq: TECD), a Clearwater-based IT distributor and the largest company in Florida based on revenue, generated $380 million in cash from operations in the 12 months that ended Jan. 31. The company paid down $200 million of debt and returned $107 million to shareholders through share repurchases, Rich Hume, CEO, told analysts on year-end conference call.

Here are the stock buybacks other Tampa-St. Pete companies reported in 2018.

Stock buybacks reduce the number of shares available, making each outstanding share more valuable. Supporters of buybacks say they make sense when a stock is undervalued. Critics of stock buybacks say they put more money in the pockets of corporate executives who generally have large holdings of their company’s stock.

M&A

The tax cut also drove an increase in mergers and acquisitions in 2018, CFO.com reported, citing a study by Deloitte.

More than half, or 53 percent, of companies that responded to a poll by Deloitte said the tax cut gave them more capital to make deals.

WellCare Health Plans Inc. (NYSE: WCG), a Tampa-based managed care plan, spent more than any other local company on acquisitions in 2018, largely driven by its $2.5 billion cash purchase of  rival health plan Meridian in September.

WellCare in turn agreed this year to be acquired by St. Louis-based Centene (NYSE: CNC) in a $17.3 billion cash and stock deal.

Here’s how much other Tampa-St. Pete companies reported spending on acquisitions in 2018.

Most Tampa-St. Pete were on the buying side of the M&A equation, but there were a couple of notable exceptions.

Cott Corp. (NYSE: COT) in Tampa sold its soft drink business for $1.25 billion in January 2018. Apyx Medical Corp. (Nasdaq: APYX) in Clearwater, sold its Bovie brand name and legacy electrosurgical business for $97 million in August.

Tampa-St. Pete companies as a group increased the number of workers on their payrolls by 6.7 percent, but it’s unclear from the regulatory filings how much of the increased staff was due to acquisitions.

WellCare’s workforce grew nearly 35 percent, to 12,000, while Jabil had 199,000 global workers as of Dec. 31, a 17 percent increase during 2018. Publix Super Markets added 9,000 workers during 2018 and had 202,000 employees as of Dec. 31.

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