Research Update: GMS Inc. Outlook Revised To Stable From Negative, 'BB-' Rating Affirmed; Proposed Senior Unsecured Notes Rated 'B'

Strong tailwinds from residential construction are partially offsetting soft non-residential construction-driven demand for U.S.-based building products distributor GMS Inc. Strong cash flow generation prevented credit measures from weakening during the pandemic-driven recession, and we now expect adjusted leverage to remain between 3.5x and 4x over the next 12 months. Therefore, we revised our outlook to stable from negative and also affirmed our 'BB-' issuer credit rating on GMS Inc. At the same time, we assigned our 'B' issue-level rating and '6' recovery rating to GYP Holdings III Corp.'s proposed $300 million senior unsecured notes due 2029, the proceeds from which we expect it to use to prepay its term loan. Finally, we raised our issue-level rating on the first-lien term

...- Strong tailwinds from residential construction are partially offsetting soft non-residential construction-driven demand for U.S.-based building products distributor GMS Inc. - Strong cash flow generation prevented credit measures from weakening during the pandemic-driven recession, and we now expect adjusted leverage to remain between 3.5x and 4x over the next 12 months. - Therefore, we revised our outlook to stable from negative and also affirmed our '##-' issuer credit rating on GMS Inc. - At the same time, we assigned our 'B' issue-level rating and '6' recovery rating to GYP Holdings III Corp.'s proposed $300 million senior unsecured notes due 2029, the proceeds from which we expect it to use to prepay its term loan. - Finally, we raised our issue-level rating on the first-lien term loan to '##' from '##-' and revised our recovery rating on the debt to '2' from '3' because priority debt will comprise a smaller component of GMS' capital structure. - The stable outlook indicates our...

Research Update