Research Update: Optiv Inc. Outlook Revised To Negative From Stable On Weaker Credit Measures; 'B-' Ratings Affirmed

We expect Optiv Inc.'s credit metrics to be weaker than our previous forecast because of lower demand for cybersecurity consulting services and higher expenses. We forecast S&P Global Ratings-adjusted debt leverage above 10x and minimal cash flow generation in 2023. We revised our outlook to negative from stable. We affirmed all ratings on the company, including our 'B-' issuer credit rating because of its ample liquidity (including nearly $40 million cash and $151 million available under its revolving credit facility), our forecast for positive free cash flow generation in 2024 and 2025, lack of near-term maturities, and long-term industry tailwinds for cyber security. We could lower the rating if we believed the company's capital structure was unsustainable. This could result

...- We expect Optiv Inc.'s credit metrics to be weaker than our previous forecast because of lower demand for cybersecurity consulting services and higher expenses. We forecast S&P Global Ratings-adjusted debt leverage above 10x and minimal cash flow generation in 2023. - We revised our outlook to negative from stable. - We affirmed all ratings on the company, including our 'B-' issuer credit rating because of its ample liquidity (including nearly $40 million cash and $151 million available under its revolving credit facility), our forecast for positive free cash flow generation in 2024 and 2025, lack of near-term maturities, and long-term industry tailwinds for cyber security. - We could lower the rating if we believed the company's capital structure was unsustainable. This could result from greater-than-expected declines in services, lower profitability due to an inefficient new sales force or the inability to manage costs and achieve cost-savings targets, or operating cash flow that significantly...

Research Update