Research Update: Array Midco Corp. Downgraded To ?CCC+? From ?B-? On Weaker-Than-Expected Operating Results; Outlook Negative

Toronto-based in-store marketing solutions provider Array Midco Corp.'s first-half 2022 operating results were weaker than our expectations due to higher-than-anticipated costs. We expect the company will continue to face cost headwinds due to high inflation for the remainder of 2022 that will keep EBITDA subdued and its debt-to-EBITDA ratio on an S&P Global Ratings-adjusted basis elevated (8.0x-9x area) relative to our previous forecasts of 6.0x-6.5x. Therefore, S&P Global Ratings lowered its issuer credit rating on Array to 'CCC+' from 'B-'. We also revised our liquidity assessment to less than adequate from adequate. At the same time, we lowered our issue-level rating on Array's term loan A to 'CCC+' from 'B-'. The '3' recovery rating on the debt is unchanged, reflecting

...- Toronto-based in-store marketing solutions provider Array Midco Corp.'s first-half 2022 operating results were weaker than our expectations due to higher-than-anticipated costs. - We expect the company will continue to face cost headwinds due to high inflation for the remainder of 2022 that will keep EBITDA subdued and its debt-to-EBITDA ratio on an S&P Global Ratings-adjusted basis elevated (8.0x-9x area) relative to our previous forecasts of 6.0x-6.5x. - Therefore, S&P Global Ratings lowered its issuer credit rating on Array to '###+' from 'B-'. We also revised our liquidity assessment to less than adequate from adequate. - At the same time, we lowered our issue-level rating on Array's term loan A to '###+' from 'B-'. The '3' recovery rating on the debt is unchanged, reflecting meaningful (50%-70%; rounded estimate: 50%) recovery in default. - The negative outlook reflects elevated risks that Array might face heightened cost pressures and that it might not be able to generate a level...

Research Update