News Flash


Posted on: January 30, 2019

Financial filings show that DFW companies are rolling in cash

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By   – National Digital Producer, The Business Journals,


Political uncertainty and trade tensions with China have prompted many businesses to take a conservative cash position in recent months, bucking predictions that last year's tax-reform law would spur U.S. companies to reinvest cash from abroad in jobs and expansion at home.

A Business Journals analysis of roughly 3,000 public companies across the country found total cash holdings declined on a year-over-year basis through the third quarter, with many companies using repatriated cash for stock buybacks, acquisitions and rainy-day reserves.

North Texas firms held about $61 billion in cash as of their latest financial filings, $37 billion less than the prior year. The analysis included publicly traded U.S. companies with a market capitalization of at least $100 million. The Business Journals excluded the banking sector due to its unique cash-holding requirements.

In North Texas, the largest companies are holding more cash than the same time they did last year. Exxon Mobil (NYSE: XOM) has 33 percent more cash than it did at the same time last year. Southwest Airlines (NYSE: LUV) had 26 percent more, and D.R. Horton (NYSE: DHI) had 46 percent more. Fourteen companies, including Pier 1 (NYSE: PIR) and the Match Group (Nasdaq: MTCH), had more than double the amount of cash on hand than they did last year.

Ajay Patel, chair of Wake Forest University’s finance department, cited the U.S.'s ongoing trade dispute with China as a prime source for the economic uncertainty creeping into corporate board rooms. Add in Democrats winning control of the U.S. House of Representatives in November, and companies might be hanging onto their liquid assets in case Congress pulls back on last year's corporate-tax overhaul, he said.

“Some companies are viewing the increased earnings they have seen under the tax reform law as a potentially temporary phenomenon, so they’re holding off on making any major moves,” Patel said.

The tax law also included incentives for U.S. companies to repatriate cash holdings from abroad at favorable tax rates. Since the tax law took effect in January, U.S. companies have brought roughly $300 billion back to the United States, or about a third of the $1 trillion in cash held overseas prior to the tax bill's passage, according to a September report from the Federal Reserve.

The economy's mounting uncertainty has prompted many companies to reinvest their cash in stock buybacks; a recent report by Goldman Sachs predicted stock buybacks to expand 46 percent to just over $1 trillion this year.

Companies are also putting cash to work in the M&A market.

During the first 11 months of this year, U.S. companies announced $1.7 trillion in deals, a 45 percent increase over last year, according to Dealogic.

For example, Plano-based Tyler Technologies (NYSE: TYL) recently made its fifth acquisition of the year and chief financial officer Brian Miller says the company is open to more deals in 2019.

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