Tear Sheet: Artera Services LLC

As of Dec. 31, 2022, Artera had S&P Global Ratings-adjusted leverage of about 12x. The company was successful in changing the terms of some of its contracts in 2022 to incorporate price escalators that together with planned cost-out initiatives and modest volume increase should improve margins in the gas distribution segment in 2023. We believe new installation work in the transmission segment, which has been declining recently, is exposed to federal funding and associated with cost overruns due to fixed-price contracts and overhead costs. As constraints of large fixed-price contracts start to roll off and Artera shifts its focus to maintenance work, we expect some margin improvement in the gas transmission segment. Under our base case, we anticipate EBITDA margins

...Artera Services LLC's performance in 2022 was relatively in line with our expectations. As of Dec. 31, 2022, Artera had S&P Global Ratings-adjusted leverage of about 12x. The company was successful in changing the terms of some of its contracts in 2022 to incorporate price escalators that together with planned cost-out initiatives and modest volume increase should improve margins in the gas distribution segment in 2023. We believe new installation work in the transmission segment, which has been declining recently, is exposed to federal funding and associated with cost overruns due to fixed-price contracts and overhead costs. As constraints of large fixed-price contracts start to roll off and Artera shifts its focus to maintenance work, we expect some margin improvement in the gas transmission segment. Under our base case, we anticipate EBITDA margins will improve 150-250 basis points in 2023 from 2022, leading to debt to EBITDA of 9x-10x. We forecast the company will generate minimal S&P...

Full Report