The rating reflects SRAM LLC's high debt leverage, limited liquidity, and risks relating to its sales concentration in the midrange to high-end bicycle market, which faces prospects of slowing growth. The company's good market positions in some segments of the bicycle components market and its long-term, nonexclusive relationships with the major bicycle original equipment manufacturers (OEMs) only partially offset these factors. The company is a distant second in the highly competitive bicycle components market. Market share is roughly one-third of market leader Shimano Inc., which has stronger brand recognition, product development ability, and profitability, as well as much lower financial leverage. Still, SRAM holds good competitive positions in four of its six product categories, accounting for about 80% of its
