Research Update: Cohu Inc. Upgraded To 'BB-' On Strong Operating Performance And Low Leverage; Outlook Stable

U.S.-based back-end semiconductor equipment and services provider Cohu Inc. reduced its S&P Global Ratings'-adjusted leverage to 0.7x at Dec. 31, 2022, through debt repayment and considerable revenue and margin expansion over the past two years. We expect the firm will be able to maintain leverage under 1.5x over the next year, even as the semiconductor and wafer fab equipment markets face a downturn in 2023. We raised our issuer credit rating on Cohu to 'BB-' from 'B+'. The outlook is stable. We also raised our rating on the company's first-lien term loan to 'BB-' from 'B+'. The '3' recovery rating is unchanged. The stable outlook reflects our view that S&P Global Ratings'-adjusted EBITDA margins in the high-teens percentage area should

...- U.S.-based back-end semiconductor equipment and services provider Cohu Inc. reduced its S&P Global Ratings'-adjusted leverage to 0.7x at Dec. 31, 2022, through debt repayment and considerable revenue and margin expansion over the past two years. - We expect the firm will be able to maintain leverage under 1.5x over the next year, even as the semiconductor and wafer fab equipment markets face a downturn in 2023. - We raised our issuer credit rating on Cohu to '##-' from 'B+'. The outlook is stable. We also raised our rating on the company's first-lien term loan to '##-' from 'B+'. The '3' recovery rating is unchanged. - The stable outlook reflects our view that S&P Global Ratings'-adjusted EBITDA margins in the high-teens percentage area should support the company's ability to generate sufficient free cash flow and maintain leverage under 3x through industry cycles....

Research Update