Research Update: Howden Group Holdings Ltd. 'B' Ratings Affirmed On Strong Organic Growth; Outlook Remains Stable

Despite elevated S&P Global Ratings' leverage in fiscal year 2024 [ending Sept. 30, 2024], U.K.-based insurance broker Howden Group Holdings Ltd. (Howden)'s forecast credit measures remain in line with our expectations for a 'B' rating. While Howden continues to deliver strong topline growth of more than 20%, the group's S&P Global Ratings-adjusted EBITDA margins and cash flow in fiscal 2024 are affected due to higher interest and exceptional costs at the back of significant debt-funded acquisitions. While these acquisitions are margin accretive, our credit measures are affected by the absence of full-year EBITDA contribution from completed acquisitions in 2024. We forecast S&P Global Ratings-adjusted EBITDA margins to improve to about 25% from fiscal 2025 onward, compared with 17% in fiscal

...- Despite elevated S&P Global Ratings' leverage in fiscal year 2024 [ending Sept. 30, 2024], U.K.-based insurance broker Howden Group Holdings Ltd. (Howden)'s forecast credit measures remain in line with our expectations for a 'B' rating. - While Howden continues to deliver strong topline growth of more than 20%, the group's S&P Global Ratings-adjusted EBITDA margins and cash flow in fiscal 2024 are affected due to higher interest and exceptional costs at the back of significant debt-funded acquisitions. While these acquisitions are margin accretive, our credit measures are affected by the absence of full-year EBITDA contribution from completed acquisitions in 2024. - We forecast S&P Global Ratings-adjusted EBITDA margins to improve to about 25% from fiscal 2025 onward, compared with 17% in fiscal 2024. This will result in S&P Global Ratings-adjusted debt to EBITDA of about 8.4x (13.9x in fiscal 2024), along with free operating cash flow (FOCF) in the range of ú240 million-ú250 million...

Research Update