Research Update: Harbor Freight Tools USA Inc. Outlook Revised To Negative On Rising Costs And Leverage; Ratings Affirmed

U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc.'s recent performance trends were weaker than we expected and outstanding debt was higher, which has pressured S&P Global Ratings-adjusted credit metrics. Therefore, we revised our outlook on the company to negative from stable and affirmed our 'BB-' issuer credit rating on Harbor Freight. We revised our recovery rating on the $3.0 billion term loan to '4' (30%-50% recovery; rounded estimate: 45%) from '3', and affirmed our 'BB-' issue-level rating. The negative outlook reflects the likelihood that we could lower our rating on Harbor Freight over the next 12 months if its leverage remains elevated or its operating results face greater pressure than we currently forecast. The negative outlook on

...- U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc.'s recent performance trends were weaker than we expected and outstanding debt was higher, which has pressured S&P Global Ratings-adjusted credit metrics. - Therefore, we revised our outlook on the company to negative from stable and affirmed our '##-' issuer credit rating on Harbor Freight. - We revised our recovery rating on the $3.0 billion term loan to '4' (30%-50% recovery; rounded estimate: 45%) from '3', and affirmed our '##-' issue-level rating. - The negative outlook reflects the likelihood that we could lower our rating on Harbor Freight over the next 12 months if its leverage remains elevated or its operating results face greater pressure than we currently forecast....

Research Update