Outdoor Home Services Holdings LLC

The stable outlook reflects our expectation that TruGreen will sustain leverage below 6x during the next 12 months. Although its operations are not immune to disruptions across the U.S. economy, we believe its predominately consumer-facing residential business will be stable, resulting in low- to mid-single-digit percent revenue growth over the next 12 months. We could lower the rating if leverage increases above 7x, and we believe it will remain there, or EBITDA interest coverage weakens toward the mid-1x area. This could occur if: The company's customer base declines sharply due to competitive pressures or if its cost base expands significantly due to inflationary pressures, reducing EBITDA about 15%. This could also occur if the company pursues another debt-funded dividend. Given

...TruGreen performed well through the COVID-19 pandemic and we forecast it will further expand revenue over the next 12 months. We forecast total revenues up 3%-5% over the next 12 months driven by increased prices across services, higher customer additions, and incremental contributions from bolt-on acquisitions. Lawn care was classified as an essential service across most of the country, which minimized the disruption to operations from measures imposed to curb the spread of COVID-19. The company's revenue grew 3.1% for the nine months ended Oct. 2, 2021. Although revenues from residential volumes grew slower than customer additions, the company raised wages in second-quarter 2021 to deal with staffing constraints and maintain sufficient employees. We expect the company to make further increases in 2022 to meet required demand and reduce order cancellations. We believe that the company's efforts for favorable channel mix shift to digital, use of convenient payments methods like prepayments...

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