Moody's shifts pH Beauty view to stable

Moody's Investors Service said it changed the outlook to stable from negative and affirmed pH Beauty III Holdings Inc.'s Caa1 corporate family rating, Caa1-PD probability of default rating, B3 senior secured first-lien credit facility ratings and Caa3 second-lien term loan.

“The stable outlook reflects Moody's expectation for better top line and operating growth and gradual leverage improvement as the economic environment stabilizes and consumers return to their regular activities away from the home,” Moody’s said in a press release.

Moody's said it sees pH Beauty's generating positive free cash flow in full-year 2020 and in the next several years.

The ratings also indicate an expectation for improved leverage, although debt-to-EBITDA leverage remains high at around 7.8x as of the last 12 months ended September 2020 due to earnings weakness, in part reflecting specialty retail store, such as Sephora and Ulta, closures, the agency said.

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