American Rock Salt Co. LLC

The positive outlook reflects our view that leverage could improve to below 4x over the next 12 months, assuming a normal winter weather season with average snowfall events in the company's served region. We also estimate EBITDA margins remaining above average compared to upstream metal and mining companies we rate. We could raise our rating on American Rock Salt if leverage improves to below 4x after a normal winter weather season, with above-average EBITDA margins (greater than 25%) over the next 12 months. This would provide cushion for leverage to remain below 5x even in the case of a warm winter. We could revise our outlook back to stable if during a normal winter season we expect leverage sustained above

...Outlook remains positive even though leverage has increased higher than prior expectations. S&P Global Ratings now expects debt to EBITDA to approach 5x in 2020 compared to prior expectations of below 4x. This is because we based our prior assumptions on expectations of normal winter weather, but the 2019-2020 winter season was unseasonably warm. American Rock Salt Co. LLC's top markets recorded an 18%-20% drop in snowfall events compared to the prior season, with below-average snowfall during the prime months of January and February. The warmer winter season resulted in lower demand as municipalities used less salt than normal. As a result, we expect about a 25%-30% decline in revenues in 2020 due to lower tons sold. Looking forward, we expect the number of snowfall events to revert to the mean. This would support leverage below 4x in 2021. American Rock Salt's variable cost structure and proximity to end markets provide strong margins. We expect American Rock Salt to maintain above-average...

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