NEP/NCP Holdco, Inc: Update following outlook change to stable from negative

NEP/NCP Holdco, Inc: Update following CFR upgrade to B3, term loan add-on issuance - Credit Opinion – 2021/11/03 – US$ 250.00 – ...NEP/NCP Holdco, Inc.'s (NEP, B3 stable) credit profile reflects the company's highly levered capital structure and highly capital-intensive business model that restrains free cash flow. The company has a moderately aggressive acquisition strategy which may prevent sustained deleveraging. We expect Moody's adjusted Debt/EBITDA to be high, in the 6x - 6.5x range over the next 12-18 months, despite earnings growth. The capital intensity of NEP's business combined with significant interest expense leaves it with limited, and historically negative, free cash flows and weak interest coverage. Given the sponsor ownership, the potential for future leveraging events are high, and this further constrains the rating. Nevertheless, NEP's ratings are supported by its strong global position in the niche video production industry and a diversified blue-chip customer base with long-standing relationships and low customer concentration. NEP's fleet of mobile broadcast trucks and engineering expertise provide...

NEP/NCP Holdco, Inc: Update following rating upgrade and outlook change - Credit Opinion – 2020/10/12 – US$ 250.00 – ...NEP/NCP Holdco, Inc.'s ("NEP") credit profile is constrained by: (1) the company's highly leveraged capital structure, with debt-to-EBITDA leverage (Moody's adjusted) of 11.2x for the LTM period ended June 30, 2020, which could considerably increase due to the significant EBITDA deterioration in the first half of FY 2020; (2) operating headwinds in the live events segment, including the risk for protracted revenue and earnings contraction due to the COVID-19 pandemic and uncertainties around the global macroeconomic outlook; (3) a highly capital intensive business model that restrains free cash flow driven by contract requirements and technology demands; (4) foreign currency exchange risk with about 50% of NEP's revenue generated from outside of the United States (5) moderate social and reputational risks; and (6) private equity ownership and an aggressive acquisition strategy which could lead to persistent elevated leverage levels. However, the company benefits from: (1) a strong global...

NEP/NCP Holdco, Inc: Update following incremental debt raise - Credit Opinion – 2020/06/15 – US$ 250.00 – ...NEP's credit profile reflects meaningful uncertainty regarding the company's earnings over the course of 2020 and 2021, as various sporting competitions and live event productions are considering reopening as social distancing requirements and the spread of coronavirus outbreak moderates. We anticipate that to the extent that sports and live events restart, NEP will be able to deliver its outsourced broadcasting services as contemplated under its contracts. However, we also expect that sporting and live events restart may be gradual and measured, with many events returning in modified format. In addition, the potential for recurrence of an outbreak may limit how quickly traditional live events restart and may also lead to some pauses in the competitive sports following a period of reopening. Though newly raised $125 million in incremental committed first lien term loans provide for improved liquidity for NEP, the incremental debt also increases leverage and interest expense during a period...

NEP/NCP Holdco, Inc: Update following downgrade of CFR to Caa2 and change in outlook to negative - Credit Opinion – 2020/04/01 – US$ 250.00 – ...NEP's credit profile reflects our expectation for significant earnings and liquidity deterioration due to event cancellations and postponements in NEP's outsourced broadcasting and live events business segments which have been impacted by the coronavirus outbreak and social distancing measures. We anticipate that NEP's liquidity will be substantially constrained. Many of the live sporting events, including the 2020 Olympics, have been canceled or postponed, impacting NEP's outsource broadcasting and live events business segments. The company's other business segment, Media Solutions, accounts for approximately 25% of its revenue. The company has taken steps to reduce its operating expenses and eliminated its capital expenditures during this period of reduced activity. NEP has also fully drawn down its revolving credit facility as a macro-environment cautionary measure, with cash held on the balance sheet to fund liquidity. To the extent that coronavirus outbreak and social distancing requirements...

NEP/NCP Holdco, Inc: Update following downgrade of CFR to B3 - Credit Opinion – 2019/08/12 – US$ 250.00 – ...NEP's credit profile reflects Moody's expectations for sustained leverage above 6x and no free cash flow until 2020 on an annual basis. Financial performance for the LTM period ending June 2019 was hampered by a miss in earnings from certain acquisitions that have not closed as planned by NEP at the time of its recapitalization in October 2018 as well as a miss on organic growth in Australia. Continued negative free cash flow in 2019 is driven by the substantial capital spending needed to maintain and win new contracts for NEP, mitigated by near-term earnings gains that will not fully offset investment needs required to grow and maintain NEP's business. Moody's expects that the company could be able to reduce some of its capital expenditure needs in an event that its revenue declines. Moody's believes that heavy investments to service existing and new contracts and an aggressive debt-funded growth strategy are ongoing credit concerns because it constrains the company's ability to reduce...

NEP/NCP Holdco, Inc: NEPs loan upsize is credit negative but will not impact the ratings - Issuer Comment – 2018/05/10 – US$ 200.00 – ...NEP/NCP Holdco, Inc.'s upsize of its B2 rated senior secured first lien term loan by $15 million to $837 million from $822 million will not affect the company's ratings including the B2 Corporate Family Rating assigned to the parent company NEP/NCP Holdco, Inc. (NEP). The $15 million upsize increases the company's previously announced proposed incremental term loan offering to $140 million from $125 million. The increased debt will be used for general corporate purposes that we believe will include capital investments and acquisitions. The change in the debt structure is modestly credit negative as it results in minimally higher pro forma debt-to-EBITDA leverage of 5.4x instead of 5.3x in the original structure without a specific identified use of proceeds. The upsize will also result in a less than $1 million increase in annual interest expense that is manageable relative to Moody's projection for approximately $20-$40 million of free cash flow in 2018 before growth capital expenditures....

NEP/NCP Holdco, Inc: Update to credit analysis - Credit Opinion – 2018/05/03 – US$ 250.00 – ...NEP's B2 CFR reflects the company's acquisitive debt-funded growth strategy, as high capital expenditure needs continue to drive negative free cash-flow generation. Though NEP has demonstrated its ability to grow organically or with selected equipment and contract purchases, while expanding its client base, Moody's views continued borrowings to fund depreciating equipment to be a risky strategy despite contractual agreements of varying lengths, particularly in the event of an economic downturn since its client's earnings are cyclical, and thus there may be more pricing pressure on its services. NEP remains highly levered, with debt-to-EBITDA leverage of 5.2x as of March 2018 LTM period (including Moody's standard adjustments and pro-forma for full year impact of 2017 acquisitions) and Moody's believes that ongoing heavy investments to service existing and new contracts and pursue acquisitions is an ongoing credit concern because it is leading to continued increases in debt and elevated...

NEP/NCP Holdco, Inc: Update to credit analysis - Credit Opinion – 2017/12/22 – US$ 250.00 – ...NEP/NCP Holdco, Inc's (NEP) B2 Corporate Family Rating (CFR) reflects the company's aggressive acquisition strategy and its heavy investment in capital spending ahead of new contracts that is negatively impacting free cash flow due to the lag between earnings and investment. The capital intensity of NEP's business combined with substantial interest expense related to the debt and capital leases provides for limited flexibility to withstand potential performance deterioration relative to management expectations. The company's weak capital structure, including leverage of approximately 5.8x debt-to-EBITDA as of September 2017 pro forma for recent acquisitions, poses significant risk for a company seeking to expand organically and through acquisitions in related segments and new geographies. NEP's continued international expansion increases its exposure to foreign currency, resulting in the potential for greater unexpected volatility in reported operating results, although euro-currency term...

NEP/NCP Holdco, Inc: Update following change to negative outlook - Credit Opinion – 2016/12/02 – US$ 250.00 – ...NEP/NCP Holdco, Inc's (NEP) B2 Corporate Family Rating (CFR) reflects the company's aggressive acquisition strategy and its heavy investment in capital spending ahead of new contracts impacting free cash flow performance due to lag between earnings and investment. The capital intensity of NEP's business combined with substantial interest expense related to the debt and capital leases provides for limited flexibility to withstand potential performance deterioration relative to management expectations. The company's weak capital structure, including leverage of approximately 5.6x debt-to-EBITDA pro forma for the proposed Avesco and other recent acquisitions and related financing, poses significant risk for a company seeking to expand organically and through acquisitions in related segments and new geographies. While NEP's organic revenue growth is benefitting from new contact wins after several years of relatively flat revenue performance excluding acquisitions, a majority of the company's...

NEP/NCP Holdco, Inc: Equity contribution, debt paydown and Broadcast Services acquisition are credit positive, no immediate impact on ratings - Issuer Comment – 2016/07/11 – US$ 200.00