FlexSys Inc.

Overview Key strengths Key risks Leading global market positions in vulcanizing agents and antidegradants. High concentration of revenues in the cyclical tire industry. Low availability of similarly-performing substitute products. High customer concentration, with roughly 45% of revenue coming from its top-three clients. Above-average EBITDA margins. Limited scale of operations with a narrow product focus. Potential challenges in its first few years as it establishes itself as a stand-alone entity. Highly leveraged financial risk profile with an adjusted debt to EBITDA ratio in excess of 6.0x on March 31, 2022. S&P Global Ratings now expects there is a 40% risk of recession (35%-45% band) over the next 12 months due to ongoing supply disruptions, price hikes, and tightening monetary policies. We

...The company's operational performance is susceptible to general macroeconomic downturns. S&P Global Ratings now expects there is a 40% risk of recession (35%-45% band) over the next 12 months due to ongoing supply disruptions, price hikes, and tightening monetary policies. We expect light vehicle sales to be slightly down to 14.9 million in 2022 from 15 million last year, though rebounding to 16.2 million in 2023. FlexSys provides vulcanizing agents, antidegradants, and stabilizers solely for the tire industry. We view the tire market as cyclical, but we note the company has a larger exposure to replacement tires than new auto tires, which...

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