PMHC II Inc.

The positive outlook on PMHC II Inc. reflects S&P Global Ratings' expectation that the company''s increased exposure to higher-margin specialty chemicals products, coupled with robust steel and construction markets and a somewhat recovering oil and gas market (compared to a few years ago), should allow the company to reduce adjusted leverage to below 6.0x in 2019 with further improvement to maintain leverage below 6x by early 2020. At the same time, we expect adjusted FFO to debt to improve to nearly 11%, while maintaining EBITDA interest coverage of approximately 2.5x, over the next 12 months. We could raise our ratings over the next few months if PMHC II continues to execute its strategy to diversify its business and shift its

...We anticipate funds from operations (FFO) to total debt will remain below 12% on a weighted average basis over the next two years. In our base-case forecast, we believe that PMHC II Inc. will experience modest EBITDA growth, driven by the shift to higher-margin specialty products; however, metrics will remain highly leveraged. Sponsor American Securities continues to pursue tuck-in acquisitions. Based on its track record, the company will continue to expand product, geographic and end market diversity through incremental debt funded acquisitions. We continue to view the company's private equity ownership as very aggressive. We expect the company to focus on organic and acquisition growth, and thus do not expect significant debt reduction over the next one to two years...

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