Synchronoss Technologies Inc (NASDAQ:SNCR) CFO Lou Ferraro talked with Proactive about the company receiving a significant IRS refund through the CARES Act.
Ferraro explained that the company had originally filed for over $46 million in tax refunds in 2020.
After receiving an initial $18 million quickly, the remaining amount was subject to a lengthy IRS audit process. That process has now concluded, and the company recently received more than $30 million, including $5.3 million in interest.
Proactive: All right. Welcome back inside our Proactive newsroom. And joining me now is Lou Ferraro. He is the Chief Financial Officer for Synchronoss Technologies. And Lou, it's good to see you. How are you?
Lou Ferraro: I'm well. How are you today?
I'm doing very well. Thanks very much. Good to have you on. Because the company with some news recently on something that was expected—but it's always good when it happens—that is, you got some tax relief. So maybe you can kind of explain this. It's all part of a program, right?
Yes. So in March of 2020, the federal government enacted the CARES Act, which is the Coronavirus Aid, Relief, and Economic Security Act, and that enabled federal taxpayers to apply for refunds that were very advantageous to stimulate growth after the impacts of the pandemic.
And so you were able to do that and just completed… you got an initial tranche of it. Now you've got the rest of it. Correct?
Yeah. So, some brief history. We filed for just over $46 million of refunds in 2020. We very expeditiously got about $18 million. And then the government said they were going to audit any company that had received over $5 million—which we had—before paying the rest.
We were just notified by the IRS that we would be receiving the total refund still outstanding of $28 million plus applicable interest, which for us totaled $5.3 million. That has now come to fruition. We just received a little over $30 million, which we immediately put to use to pay down 75% of our term loan that we have with T.P. Birch Grove. That was a payment of just over $22.5 million.
We're also expecting another $3.7 million from the IRS, and we will use that to pay down another $2.8 million of the term loan.
And this is significant because not only are you getting that money in from the government, which is great—and when you get audited, you don't expect to get a lot of money back—but it's good to have that happen.
Absolutely.
You're also able to, per the stipulations of this deal, do some important things for rates and so on. Talk to me about the trickle-down effect here.
Absolutely. Excellent question. So, the first thing it does is improve the company's overall liquidity. Secondly, it immediately gives us an annual interest savings of about $2.9 million, which for a small microcap company like Synchronoss is a very significant amount.
It improves our debt to EBITDA ratio. And finally, it gives us and our shareholders the confidence that our overall debt structure is now in place to continue to decline over time from our normal operating results.
And that's obviously key because debt in a company can be a challenge. But with the growth you're seeing and now getting the financial balance sheet in order, it really puts the company on a strong foot heading forward.
Yes, it does. We've had a great relationship with T.P. Birch Grove. We did some refinancing with them in 2024. We refinanced the entire stack for the company this year in 2025. So we are really in a good place from an overall debt perspective and improving as we go forward, including on overall liquidity.
Quotes have been lightly edited for clarity and style