NEWAsurion Corp.

The stable outlook reflects S&P Global Ratings' expectation that despite the economic downturn from the COVID-19 pandemic, NEWAsurion Corp. will maintain its dominant presence in the mobile protection industry. We expect stay-at-home mandates both domestically and internationally to result in revenue growth below 2% with EBITDA margins maintained at 21%-23% in 2020. Given a pending contract decision, the company is operating more conservatively this year, and we expect leverage to be approximately 4.5x with coverage above 3.0x. In our base-case forecast, if contracts are retained, we factor in the potential for additional opportunities to reduce private equity ownership and therefore expect the company to modestly increase debt to EBITDA to 5.0x-6.0x with EBITDA interest coverage remaining above 3.0x in 2021. We

...The COVID-19 pandemic proved to have a favorable impact on NEWAsurion Corp.'s earnings and margins through the third quarter of 2020. Although NEWAsurion's subscriber base is experiencing stagnant growth because of lower sales opportunities, due to stay-at-home mandates as well as the recent merger of T-Mobile and Sprint (Sprint is a top client of the company), both revenue and EBITDA have increased as of the last 12 months ended Sept. 30 2020, due in part to an increase in customers opting for bundled service offerings, resulting in higher revenue per subscriber as well as lower selling, general, and administrative (SG&A) expenses and lower claims rates. NEWAsurion demonstrates a significant client concentration and high dependence on contract renewals. The recent acquisition of Sprint by T-Mobile leaves the U.S. with three major wireless providers, Verizon, AT&T, and T-Mobile. NEWAsurion is therefore exposed to substantial client concentration risk, especially in the near term given this...

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