Sabre Industries Inc.

The stable outlook reflects our expectations that adjusted leverage will be 4.5x-5x over the next 12 months. Our forecast reflects the company's high contractual backlog, our view that utility and telecommunications companies will continue to invest in infrastructure improvements, and our expectation that its financial sponsor (The Jordan Co.) will not pursue more aggressive financial policies in the near term. We could downgrade Sabre if adjusted leverage increased and remained above 7x. For this to occur, we estimate revenue would have to be about 40% below our current expectations, or EBITDA margins would have to decline by about 400 basis points. We view these scenarios to be unlikely over the next year because of the contractual backlog and our broadly

...Sabre's ownership by private-equity firm The Jordan Co. is a limiting factor on our rating. The Jordan Co. purchased Sabre from its previous financial sponsor, Kohlberg & Co., in April 2019. The Jordan Co. has not indicated any plans to monetize its investment, either through a sale or a cash distribution. However, we generally view companies owned by financial sponsors as having more aggressive financial policies given the risk of large cash distributions, an increase in debt, or a leveraged buyout. However, we are not predicting this to occur in the near or intermediate term, as for now we view it more likely the Jordan Co. will reinvest Sabre's free cash flow to grow the business and gradually deleverage. The company is well positioned within an industry niche that has favorable demand characteristics.Improved EBITDA margins (not disclosed) and a strong backlog at the end of the fiscal first quarter (July 31, 2019) that has continued to grow for the last several years demonstrate the...

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