Research Update: Albany Molecular Downgraded To 'B-' On Weaker Operating Performance And Elevated Leverage; Outlook Negative

Albany, N.Y.-based contract development and manufacturing organization (CDMO) Albany Molecular Research Inc. (AMRI) has materially underperformed our expectations primarily due to the loss of a significant pharma customer, higher-than-expected expenses, and plant shutdowns for maintenance. We now expect adjusted leverage of about 10x for 2019 and about 9.0x-9.5x for 2020, which is materially weaker than our previous forecast for leverage of approximately 7x in 2019. We are lowering the issuer credit rating to 'B-' from 'B'. We are also lowering our first-lien issue-level rating and second-lien issue-level rating to 'B-' and 'CCC+', from 'B' and 'B-', respectively. The negative outlook reflects downside risk to our base-case expectation that AMRI will generate positive free cash flow (before investment in growth capex)

...- Albany, N.Y.-based contract development and manufacturing organization (CDMO) Albany Molecular Research Inc. (AMRI) has materially underperformed our expectations primarily due to the loss of a significant pharma customer, higher-than-expected expenses, and plant shutdowns for maintenance. - We now expect adjusted leverage of about 10x for 2019 and about 9.0x-9.5x for 2020, which is materially weaker than our previous forecast for leverage of approximately 7x in 2019. - We are lowering the issuer credit rating to 'B-' from 'B'. - We are also lowering our first-lien issue-level rating and second-lien issue-level rating to 'B-' and '###+', from 'B' and 'B-', respectively. - The negative outlook reflects downside risk to our base-case expectation that AMRI will generate positive free cash flow (before investment in growth capex) and the company will succeed in its cost-reduction initiatives....

Research Update