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Moody's downgrades Conair
Moody's Investors Service said it downgraded Conair Holdings LLC's corporate family rating to B3 from B2, probability of default rating to B3-PD from B2-PD and senior secured debt rating to B3 from B1.
“The downgrades reflect Moody's expectation that high financial leverage and weaker than expected profitability over the next 12-18 months will continue as industry headwinds – elevated material and freight costs, supply chain disruptions, and softening consumer demand – are likely to extend beyond 2022. High retailer home appliance inventories are contributing to weaker orders that is reducing Conair's earnings,” the agency said in a press release.
Once inventory levels normalize, Moody’s said it sees earnings improving, but Conair's EBITDA margin is projected to be weaker mid-to-high single digits percentage by the end of 2022, relative to the agency’s prior expectations of low-to-mid teens.
Moody's said it forecasts debt/EBITDA leverage will remain elevated above 7x as of fiscal year end Dec. 31, 2022, up from 6x as of fiscal year 2021 and pro forma for the recapitalization transaction in 2021.
The rating outlook is stable.
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