S&P downgrades MTS

S&P said it downgraded MTS Systems Corp.’s issuer rating to B+ from BB-, citing the effect of the pandemic-fueled global recession on the company’s business.

“We expect the broad economic recession to pressure MTS Systems’ operating performance over the next 12-18 months,” S&P said in a press release.

The agency said it expects MTS’ adjusted debt to EBITDA to be about 5x and view its path to deleveraging as uncertain.

“Given MTS’ depressed level of business activity and increased debt load stemming from the R&D acquisition (approximately $58 million purchase price with a potential $26 million of additional performance-based earn-outs), we now expect its debt leverage to be in the high-4x to low-5x range over the next 12 months,” S&P said.

The outlook is negative.

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