Research Update: PMHC II Inc. Ratings Affirmed, Outlook Remains Negative On Continued Earnings Weakness

PMHC II Inc.'s (d/b/a Vibrantz Technologies Inc.) earnings have been weaker than we previously expected, largely due to sustained weakness in its end-market demand and prolonged customer de-stocking, which has impaired its leverage and cash flow metrics. While we expect the company's earnings will improve in 2024, predominantly due to its continued realization of synergies and the optimization of its cost base, we anticipate its revenues will remain relatively flat, leading to debt to EBITDA in the higher end of the 7x-8x range. We affirmed our 'B-' issuer credit rating on Vibrantz, our 'B-' issue-level rating on its senior secured debt, and our 'CCC+' issue-level rating on its senior unsecured debt. The outlook remains negative reflecting the potential for a

...- PMHC II Inc.'s (d/b/a Vibrantz Technologies Inc.) earnings have been weaker than we previously expected, largely due to sustained weakness in its end-market demand and prolonged customer de-stocking, which has impaired its leverage and cash flow metrics. - While we expect the company's earnings will improve in 2024, predominantly due to its continued realization of synergies and the optimization of its cost base, we anticipate its revenues will remain relatively flat, leading to debt to EBITDA in the higher end of the 7x-8x range. - We affirmed our 'B-' issuer credit rating on Vibrantz, our 'B-' issue-level rating on its senior secured debt, and our '###+' issue-level rating on its senior unsecured debt. - The outlook remains negative reflecting the potential for a lower rating on the company in the next 12 months if its operating performance continues to deteriorate such that its weighted-average credit metrics and liquidity weaken below appropriate levels for the current rating....

Research Update