U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc. sustained adjusted leverage of low-3x in the third quarter (ended on April 30, 2026) despite operating margin pressure from elevated tariffs. In addition, the company is strengthening its liquidity position in response to geopolitical uncertainties. We expect operating margin pressure and free operating cash flow (FOCF) volatility to subside as the company mitigates supply chain risks through geographic diversification. Therefore, we revised our outlook to positive from stable and affirmed our ratings on Harbor Freight, including the ?BB-? issuer credit rating. The positive outlook reflects the potential for a higher rating over the next 12 months if the company mitigates supply chain risks and sustains improved operating performance. It
