Moody's upgrades Cengage's CFR to B3; outlook stable

Moody's upgrades Cengage's CFR to B2, affirms first lien term loan at B2; outlook stable - Rating Action – 2023/04/19 – US$ 180.00 – ...MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT...

Cengage Learning, Inc.: Update to credit analysis - Credit Opinion – 2022/12/19 – US$ 250.00 – ...Cengage Learning, Inc.'s (Cengage, B3 stable) credit profile reflects the company's high leverage in a highly cyclical and seasonal business, intense competition and execution risks associated with ongoing transition to a largely digital business model. Within its higher education business, the company's revenue growth continues to be pressured by secular industry trends, including declining enrollment, affordability-driven price compression and continued competition from open educational resources, rental and used textbooks. Nevertheless, Cengage's credit profile is supported by its well established brand, good market position, long-standing relationships with education institutions, proprietary content developed through long-term exclusive relationships with leading authors and broad range of product offerings in higher education publishing. The company's good liquidity position is supported by high cash balance and our expectation of positive free cash flow over the next 12-18 months,...

Cengage Learning, Inc.: Update to credit analysis - Credit Opinion – 2021/12/09 – US$ 250.00 – ...Cengage Learning, Inc.'s (Cengage, B3 stable) credit profile reflects the company's high leverage in a highly cyclical industry and intense competition. Within its higher education segment, the company's revenue growth continues to be pressured by secular industry challenges, including declining enrollment, affordability-driven price compression, and continued competition from open educational resources, rental and used textbooks. Nevertheless, Cengage's credit profile is supported by its well established brand, good market position, and long-standing relationships with education institutions, proprietary content developed through long-term exclusive relationships with leading authors and broad range of product offerings in higher education publishing. The company's good liquidity position is supported by high cash balance and our expectation of positive free cash flows over the next 12-18 months, with Moody's-adjusted FCF/Debt in the mid-single percentage range. The accelerated adoption...

Moody's rates Cengage's proposed term loan at B2 - Rating Action – 2021/06/16 – US$ 180.00 – ...MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT...

Cengage Learning, Inc.: Update following upgrade to B3: improving but still high leverage in a highly seasonal industry - Credit Opinion – 2020/12/16 – US$ 250.00 – ...Cengage Learning, Inc.'s ("Cengage", B3 stable) credit profile reflects the company's high leverage in a highly cyclical industry and intense competition among leading players especially as the market transitions to digital services from traditional learning materials. The company's business is highly seasonal with nearly three fourth of fiscal 2020 EBITDA generated in Q2 and Q4. Within its higher education segment, the company's revenue growth continues to be pressured by secular industry challenges, including affordability- driven price compression, open educational resources, rental and used textbooks. There is also a risk of delays in the K-12 state adoption spending because of budgetary constraints and the likely deferrals of purchasing decisions in the coming year. Nevertheless, Cengage's credit profile is supported by its well established brand, good market position, long-standing relationships with education institutions, proprietary content developed through long- term exclusive...

Cengage Learning, Inc.: Update following downgrade to Caa2: growing concern over sustainability of capital structure drives the credit view - Credit Opinion – 2020/08/20 – US$ 250.00 – ...Cengage Learning, Inc.'s ("Cengage", Caa2 negative) credit profile reflects continued secular challenges pressuring the higher education segment, including affordability-driven price compression, intensely competitive markets, rental and used textbooks and open educational resources. These secular challenges are further exacerbated by uncertain enrollment trends in higher education and the likely deferrals of purchasing decisions in the K-12 school business amid the coronavirus pandemic. The rating also reflects the company's earnings pressure over the next 12-18 months and high leverage that reduce flexibility to proactively address the $1.7 billion term loan maturity in June 2023. This raises concerns about sustainability of the company's capital structure and the risk of distressed exchange transactions given that the company has Board of Directors authorization for repurchase of up to $100 million debt. Cengage's rating continues to be supported by its well established brand, good market...

Moody's downgrades Cengage's CFR to Caa2; outlook negative - Rating Action – 2020/08/17 – US$ 180.00 – ...ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications. To the extent permitted by law, MOODY'S and its directors, officers,...

Cengage Learning, Inc.: Termination of McGraw-Hill and Cengage Merger Agreement has no immediate impact on the companies credit ratings - Issuer Comment – 2020/05/06 – US$ 200.00 – ...Cengage Learning Holdings II, Inc. ("Cengage") and McGraw-Hill Education, Inc. ("McGraw- Hill") terminated their previously announced merger agreement on May 3rd, 2020, following prolonged regulatory review of the competitive implications of the merger by various regulatory entities globally. Meaningful divestitures would have been required by the U.S. Department of Justice if the merger were to be approved by the regulator. Under the terms of the merger agreement, neither Cengage nor McGraw-Hill will be responsible for any payments to the other party as a result of the termination of the merger agreement. The termination of the merger agreement has no immediate impact to the companies' credit ratings. While the merger would have likely created substantial synergies across the portfolios of two publishers, with meaningful benefits in the higher education segment, each publisher has continued to operate independently during the merger review process and operating expenses were managed and...

Moody's says that termination of McGraw-Hill and Cengage Merger Agreement has no immediate impact on the companies' credit ratings - Announcement – 2020/05/06 – US$ 180.00

Cengage Learning, Inc.: Update to credit analysis - Credit Opinion – 2020/02/28 – US$ 250.00 – ...Cengage credit profile reflects Moody's expectation for low to mid single digit percentage declines in enrollment levels for U.S. institutions of higher education, increased competition among leading players as well as rental and used markets, and increased competitive risk arising from open educational resources. Cengage has successfully launched its Cengage Unlimited courseware subscription product and gained 1.6% in market share in higher education year over year as a result of increased sales of Cengage Unlimited. However, revenue continued to decline as a result of sustained weakness in print sales and reduced revenue from courseware (which may partly have been substituted by Cengage Unlimited). The company successfully managed its cost base, resulting in flat leverage year over year. We expect leverage to remain high near 8.5x over the next 12 months. Secular weakness in higher education revenue will partially offset by tight cost controls and market share gains from higher sell through...