Moody's pares HDT

Moody's Investors Service said it downgraded the ratings of HDT Holdco, Inc., including the corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and the company's senior secured bank credit facility to B2 from B1. The outlook was revised to negative from stable.

The downgrades reflect HDT’s substantial contraction in revenue and earnings in recent quarters, as well as negative free cash flow. Moody’s said it sees annual revenue in 2022 declining by more than 15% over 2021 due to lower defense department spending and weak operating results caused by staffing shortages and supply chain issues at a major production facility.

“The change in outlook to negative reflects the risk of further negative rating pressure if the company's financial performance does not significantly improve in the coming months. While bookings have improved since the defense budget passed in March 2022, uncertainty remains given the very recent improvement and an expected volatile recovery as labor shortages and supply chain constraints persist,” the agency said in a press release.

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