Moody's downgrades Wahoo Fitness

Moody's Investors Service said it downgraded Wahoo Fitness Acquisition LLC's ratings, including its senior secured first-lien credit facility to B3 from B2. The first-lien credit facility consists of a $30 million revolver due 2026, and a $225 million original principal amount term loan due 2028. The outlook is negative.

“Today's downgrade and negative outlook reflects Moody's expectations that Wahoo's debt/EBITDA leverage will materially increase in fiscal 2022 and that liquidity is constrained due to lower revenue and earnings than Moody's previous expectations,” the agency said in a press release.

Wahoo started seeing a drop in sales of its trainer products during the start of fiscal year 2022. The previous year’s strong results were supported by the pandemic-driven demand for at-home fitness products, the agency said.

“Moody's projects Wahoo's revenue to decline in the mid-teens percentage and a meaningful decline in EBITDA of around 45% in fiscal 2022. Wahoo's debt/EBITDA leverage is expected to increase to 5.5x in fiscal 2022, up from 3.1x at the end of fiscal 2021. Moody's expects that debt/EBITDA leverage will be significantly higher during the second and third quarter periods of 2022, due to business seasonality,” the agency said.

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