Inmar Inc.

The stable outlook reflects that despite our expectations for Inmar's performance to improve in 2021, long-term adjusted leverage will likely remain above 7x. We expect revenue growth around 10% and gradual margin expansion. This should result in S&P Global Ratings' adjusted EBITDA margins in the low- to mid-20% and leverage declining to the high 7x in 2021, from 9.3x in 2020. We could lower our ratings if deteriorating operating performance resulted in: FOCF deficits; EBITDA to cash-interest coverage declining below 1.5x; or The cushion under the company's financial maintenance covenant tightens such that we believe a breach is inevitable. In this scenario, we would expect to see weaker-than-expected demand for coupons and promotional spending driving ongoing declines in organic growth

...Our rating on Inmar is constrained by its leverage above 7x and our expectations of modest free operating cash flow generation through 2022 Adjusted leverage deteriorated to 9.3x by year-end 2020. In 2021, we expect EBITDA margins expansion from an improvement in revenue mix, synergy realizations from recent acquisitions, and cost-saving initiatives. However, we still assume the higher margins in 2021 to be at a slower pace than we anticipated pre-pandemic, leading to higher leverage than we previously forecasted over the next 12 months. Rolling 12-month adjusted leverage has improved steadily over the past year to 7.9x at the end of the second quarter of 2021, down from a high of over 10x a year earlier. This improvement has been driven by a 35.7% year-over-year quarterly EBITDA increase spurred by cost-savings initiatives put in place during the pandemic and reduced sales, marketing, and customer support costs as a percentage of sales. In addition, general and administration costs decreased...

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