S&P upgrades Generac

S&P said it upgraded Generac Power Systems Inc.’s issuer rating to BB+ from BB and its senior secured term loan to BBB- from BB. The agency also revised the loan’s recovery rating to 2 from 3.

“We believe that Generac can sustain positive sales growth and solid EBITDA margins in the intermediate term, though organic top line growth will taper from 2021 levels. Over the past 12 months, the company has reduced its S&P Global Ratings-adjusted net debt leverage through strong cash flow generation, mainly reflecting a continuous sales mix shift toward higher-margin residential home standby generator sales,” S&P said in a press release.

The agency said it sees free operating cash flow generation to reach a new high of about $450 million in fiscal 2021.

The outlook is stable.

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