Research Update: Spring Education Group Inc. Upgraded To 'B-' From 'CCC+' On Good Cash Flow And EBITDA Trends; Outlook Stable

Spring Education Group Inc. reported better-than-expected revenue and EBITDA during the first three quarters of fiscal 2022 (ended June 30). S&P Global Ratings believes demand will remain robust over the next 12 months, unemployment low, and the risk of significant operating disruptions from COVID-19 subsides. Therefore, we forecast EBITDA margin in 2022 and 2023 to improve to about 35%-37% and leverage to the low- to mid-8x area in fiscal years 2022 and 2023. As a result, we raised our issuer credit rating on Spring to 'B-' from 'CCC+'. At the same time, we raised our issue-level rating on the company's first-lien debt to 'B-' from 'CCC+' and on its second-lien debt to 'CCC' from 'CCC-'. The outlook is stable. The

...- Spring Education Group Inc. reported better-than-expected revenue and EBITDA during the first three quarters of fiscal 2022 (ended June 30). - S&P Global Ratings believes demand will remain robust over the next 12 months, unemployment low, and the risk of significant operating disruptions from COVID-19 subsides. Therefore, we forecast EBITDA margin in 2022 and 2023 to improve to about 35%-37% and leverage to the low- to mid-8x area in fiscal years 2022 and 2023. - As a result, we raised our issuer credit rating on Spring to 'B-' from '###+'. At the same time, we raised our issue-level rating on the company's first-lien debt to 'B-' from '###+' and on its second-lien debt to '###' from '###-'. The outlook is stable. - The stable outlook reflects our expectation that leverage is likely to be in the mid-8x area in fiscal 2022 and that Spring will continue to generate positive free operating cash flow (FOCF) over the next 12-24 months....

Research Update