Moody's downgrades Werner

Moody's Investor Service said it downgraded Werner FinCo LP’s ratings including its corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2-PD, its secured bank credit facility to B2 from B1 and the unsecured notes to Caa2 from Caa1. The outlook is negative.

"The ratings downgrade and negative outlook are driven by Werner's very high leverage as a result of margin pressure from elevated input costs including aluminum, steel and freight. Weaker than expected profitability and working capital use has meaningfully reduced liquidity," said Justin Remsen, a Moody’s assistant vice president, in a press release.

"Price increases and supply chain improvements will help, but sustained improvements in profitability and cash flow will be a challenge," added Remsen.

Moody’s said it forecasts Werner’s leverage will exceed the 6.25x downgrade guidance for a B2 rating over the next 12-18 months.

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