Research Update: Harbor Freight Tools USA Inc. Outlook Revised To Stable From Negative On Proposed Refinancing And Improved Leverage

U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc.'s credit metrics have improved this year amid significantly better operating margins and lower outstanding debt. We forecast S&P Global Ratings-adjusted leverage will improve to the low-4x area in fiscal 2024 from low-6x in 2023 given the company's more conservative financial policy. Therefore, we revised our rating outlook to stable from negative and affirmed our ratings on Harbor Freight, including the 'BB-' issuer credit rating. At the same time, we assigned our 'BB-' issue-level rating to the proposed $2.85 billion term loan due 2031, and a '4' recovery rating (30%-50%; rounded estimate: 40%) The stable outlook reflects our expectation that Harbor Freight will continue to expand its operations and EBITDA

...- U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc.'s credit metrics have improved this year amid significantly better operating margins and lower outstanding debt. - We forecast S&P Global Ratings-adjusted leverage will improve to the low-4x area in fiscal 2024 from low-6x in 2023 given the company's more conservative financial policy. - Therefore, we revised our rating outlook to stable from negative and affirmed our ratings on Harbor Freight, including the '##-' issuer credit rating. - At the same time, we assigned our '##-' issue-level rating to the proposed $2.85 billion term loan due 2031, and a '4' recovery rating (30%-50%; rounded estimate: 40%) - The stable outlook reflects our expectation that Harbor Freight will continue to expand its operations and EBITDA levels....

Research Update