Research Update: Rodan&Fields LLC Downgraded To 'B', Outlook Negative On Continued Weak Operating Performance And Elevated Investments

Rodan&Fields LLC's (R+F) continued weak operating performance and elevated investments in its business are hurting its cash flow generation. We are lowering our forecast for the company's performance and now project that it will generate marginally positive cash flow for 2019, which compared with our previous expectation for cash flow of more than $30 million. We are lowering our issuer credit rating on R+F to 'B' from 'B+', and revising the outlook to negative. At the same time, we are lowering our issue-level rating on the company's senior secured facility to 'B+' from 'BB-'. The '2' recovery rating remains unchanged. The negative outlook reflects the potential that we will lower rating on R+F in the next 12 months

...- Rodan & Fields LLC's (R+F) continued weak operating performance and elevated investments in its business are hurting its cash flow generation. We are lowering our forecast for the company's performance and now project that it will generate marginally positive cash flow for 2019, which compared with our previous expectation for cash flow of more than $30 million. - We are lowering our issuer credit rating on R+F to 'B' from 'B+', and revising the outlook to negative. - At the same time, we are lowering our issue-level rating on the company's senior secured facility to 'B+' from '##-'. The '2' recovery rating remains unchanged. - The negative outlook reflects the potential that we will lower rating on R+F in the next 12 months if its performance does not stabilize and the company fails to generate over $15 million of cash flow (after required tax distributions) on a sustained basis or if its adjusted leverage approaches 5x....

Research Update