Research Update: VeriFone Systems Inc. Downgraded To 'CCC+' From 'B-' On Weak Credit Metrics And Debt Maturity; Outlook Negative

We expect VeriFone Systems Inc.'s debt-to-EBITDA ratio to be elevated, and weak annual free operating cash flow generation to persist in fiscals 2024 and 2025 because of business headwinds, cost restructuring, and higher tax payments related to the Israeli Tax Settlement. Although VeriFone experienced nascent signs of a business recovery, it is reliant on the recovery of lumpy systems sales that represent more than half of its revenues, and sustainable cost savings to deleverage. Additionally, VeriFone needs to address its nearing debt maturity in August 2025 when about $2.1 billion of debt is due. We lowered our issuer credit rating on VeriFone to 'CCC+' from 'B-.' At the same time, we lowered our issue-level rating on VeriFone's secured debt to

...- We expect VeriFone Systems Inc.'s debt-to-EBITDA ratio to be elevated, and weak annual free operating cash flow generation to persist in fiscals 2024 and 2025 because of business headwinds, cost restructuring, and higher tax payments related to the Israeli Tax Settlement. - Although VeriFone experienced nascent signs of a business recovery, it is reliant on the recovery of lumpy systems sales that represent more than half of its revenues, and sustainable cost savings to deleverage. - Additionally, VeriFone needs to address its nearing debt maturity in August 2025 when about $2.1 billion of debt is due. - We lowered our issuer credit rating on VeriFone to '###+' from 'B-.' At the same time, we lowered our issue-level rating on VeriFone's secured debt to '###+' from 'B-'. The recovery rating remains '3.' - The negative outlook is based on VeriFone's approaching $2.1 billion debt maturity in August 2025. It also reflects our expectation for VeriFone's growth challenges will lead to an elevated...

Research Update