S&P shifts Highline view to negative

S&P said it changed Highline Aftermarket Acquisition Parent LLC’s outlook to negative from stable and affirmed the B ratings on the company and its $995 million of senior secured first-lien credit facilities. The 3 recovery rating on the loans is unchanged.

“The outlook revision reflects the deterioration in credit metrics and further risks due to raw material cost inflation and labor and supply chain challenges. Despite overall healthy demand, the company's year-to-date adjusted EBITDA was down double digits compared with 2020. This is primarily due to the rise in raw material costs; a price lag in its lubricant products; and labor and supply chain challenges, which continue to pose capacity and fulfillment constraints,” S&P said in a press release.

However, the agency noted Highline’s revenue growth is healthy, underpinned by the continuing increase in miles people are driving.

“The negative outlook reflects the potential for a lower rating over the next few quarters if the company's operating performance does not improve, such that we believe it is unable to improve adjusted debt to EBITDA below 7x,” S&P said.

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