Research Update: The Ultimate Software Group Inc. Ratings Affirmed On Merger With Kronos Inc.; Outlook Stable

The Ultimate Software Group Inc., a human capital management solutions provider based in Weston, Fla., has merged with workforce management software provider Kronos Inc., both of which are portfolio companies of Hellman&Friedman, Blackstone, and other investors. We are affirming our 'B-' issuer credit rating on Ultimate. We are affirming our 'B' issue-level rating on the first-lien term loan; the '2' recovery rating is unchanged. The existing privately placed second-lien term loan remains unrated. Effective Apr. 1, 2020, Kronos has become a non-guarantor subsidiary of Ultimate. All our ratings on Kronos Inc. are unchanged. Our stable outlook on Ultimate reflects our view of its highly recurring revenue resulting from its SaaS business model (pro forma with Kronos), and our

...- The Ultimate Software Group Inc., a human capital management solutions provider based in Weston, Fla., has merged with workforce management software provider Kronos Inc., both of which are portfolio companies of Hellman & Friedman, Blackstone, and other investors. - We are affirming our 'B-' issuer credit rating on Ultimate. - We are affirming our 'B' issue-level rating on the first-lien term loan; the '2' recovery rating is unchanged. The existing privately placed second-lien term loan remains unrated. - Effective Apr. 1, 2020, Kronos has become a non-guarantor subsidiary of Ultimate. All our ratings on Kronos Inc. are unchanged. - Our stable outlook on Ultimate reflects our view of its highly recurring revenue resulting from its SaaS business model (pro forma with Kronos), and our expectation that the company will continue to grow its revenue base while modestly improving its EBITDA margins over the next 24 months. We expect minimal integration risk as there are no material headcount...

Research Update