Research Update: Chobani Global Holdings LLC's High Capex Sours Cash Flows; Downgraded To 'B-'; Outlook Stable

U.S. Greek yogurt producer Chobani Global Holdings LLC continues to make significant investments in its capacity and innovation, keeping free operating cash flow (FOCF) negative. Although these investments are leading to recent market share increases, input cost inflation remains a headwind that will keep EBITDA growth modest, and the lack of cash flow will keep the company from paying down debt. S&P Global Ratings has lowered our issuer credit rating on Chobani to 'B-' from 'B'. We have also lowered the ratings on their senior secured credit facilities to 'B-' from 'B', and the senior unsecured notes to 'CCC' from 'CCC+'. The stable outlook reflects our expectation that the company will begin generating positive free operating cash flow in fiscal

...- U.S. Greek yogurt producer Chobani Global Holdings LLC continues to make significant investments in its capacity and innovation, keeping free operating cash flow (FOCF) negative. - Although these investments are leading to recent market share increases, input cost inflation remains a headwind that will keep EBITDA growth modest, and the lack of cash flow will keep the company from paying down debt. - S&P Global Ratings has lowered our issuer credit rating on Chobani to 'B-' from 'B'. We have also lowered the ratings on their senior secured credit facilities to 'B-' from 'B', and the senior unsecured notes to '###' from '###+'. - The stable outlook reflects our expectation that the company will begin generating positive free operating cash flow in fiscal 2020. We expect debt leverage to remain between 7.0x and 7.5x (excluding convertible preferred equity) during the next year....

Research Update