Mauser Packaging Solutions Holding Co.

The stable outlook reflects our expectation that despite declining sales volumes and a slowdown in the broader economy, Mauser will continue to generate strong free cash flows sufficient to manage its sizable debt load and maintain leverage in the mid-8x range over the next 12 months. We could lower our ratings on Mauser if deteriorating operating performance results in negative free cash flow or a constrained liquidity position, such that the springing fixed-charge coverage covenant on the company's asset-backed lending facility (ABL) goes into effect with no near-term remedy expected. Sharp increases in raw material and transportation costs, wage inflation, weaker demand trends in the company's key end markets, or the failure to execute on management's process improvement and integration

...S&P Global Ratings expects a sustained decline in sales volumes, in line with the broader economy. Mauser Packaging Solutions Holding Co.'s sales volumes have been down slightly year-to-date, and we expect this trend to continue given the company's broad exposure to cyclical end-markets. However, free cash flows should remain strong, despite muted sales volumes. Mauser's free cash flows have remained strong, despite declining sales volumes, and we expect this trend to continue, given the company's diverse end-market exposure and tight working capital management. Leverage remains very high and we don't expect any meaningful repayment in the near future.Despite its strong cash flows, we believe capital reinvestment will continue to take priority over any meaningful debt reduction over the next several years....

Full Report