SRAM LLC

The stable outlook reflects our expectation that SRAM will grow EBITDA by around 10% in 2022 such that it ends the year with leverage of around 2x, which is a good cushion compared to our 4x downgrade threshold incorporating potential future operating volatility. We could lower the rating if the company pursues a large leveraging distribution or other transaction, or if revenue and EBITDA decreases, in a manner that causes the company to sustain leverage above 4x. Although unlikely, we would consider an upgrade if the company utilized significant excess free cash flow for voluntary debt repayment, if OEM and aftermarket volumes continue to grow, or we expect that revenue and EBITDA growth can keep lease-adjusted leverage comfortably below our

...We expect modest revenue and EBITDA growth in 2022 on product price increases, continued growth in ridership, and global e-bike sales growth. SRAM LLC's S&P Global Ratings-adjusted EBITDA grew by about 68% in 2021, as participation in bicycling as a social distancing compliant recreational activity spiked during the pandemic and led to a surge in demand for SRAM's bicycle components. EBITDA margin also benefited from curtailed corporate spending on travel, events, and racing, and from manufacturing efficiencies resulting from the company's ongoing operational improvement initiatives. Moreover, bike-component manufacturers have benefited from good ridership trends in the U.S and Europe over the past several years. Rapid urbanization and better economic conditions have increased demand for bicycles as personal transportation. Additionally, global e-bike sales now comprise a larger share of the total market than either road or terrain bike sales, and we expect that continued growth in this...

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