Alchemy International Holdings LLC

The stable outlook on Alchemy International Holdings LLC (Kymera or Kymera International) reflects our view that Kymera will maintain EBITDA margins within a 150 basis point band over the next year, with limited liquidity demands due to modest capital spending. The company's products serve a broad spectrum of end markets that align overall operating performance closely with general economic activity. However, we expect negative growth in 2019 with company-specific factors exacerbating flagging demand. As a result, we expect leverage to tick up, but remain below 6x over the next year. We could lower our ratings on Kymera over the next 12 months if adjusted debt to EBITDA rises and we expect it to remain above 6x, or if interest coverage

...Geopolitical uncertainty has contributed to weakness in end markets, which we expect will suppress volumes sold. Our forecasts of slowing U.S. and Eurozone GDP growth rates, as well as contracting to flat automotive markets for the rest of 2019, portend upcoming difficulties. We forecast that copper volumes will be down 5%-10% because of the segment's exposure to weakened automotive end markets. However, we expect the aluminum segment to fare better given a slightly better outlook for general industrial applications. In both cases, we expect margins to stay relatively steady based on the company's markup driven pricing model, despite our assumption that copper and aluminum prices will fall 5% and 10%, respectively, for 2019. Nevertheless, we are forecasting modest margin deterioration as SG&A costs remain relatively steady relative to a smaller volume base. Customer concentration led to a sudden and significant decrease in sales expectations for 2019, although we do not anticipate that...

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