...November 13, 2023 Unsustainable capital structure despite improving operating performance. Arvos LuxCo S.a.r.l. (Arvos) posted a revenue increase of about 17.0% in the fiscal year 2023 and its S&P Global Ratings-adjusted EBITDA margin rose to 12.9% (compared with 10.9% in 2022). For fiscal 2024 (ending March 31, 2024), we forecast revenue growth of more than 20.0% due to record high intake in fiscal 2023. We anticipate revenues to stabilize in fiscal 2025 as we expect the order intake to moderate. In our view, higher volumes and better pricing will boost adjusted EBITDA margins to 15.0%-16.0% in fiscal 2024 before they moderate to 14.0%-15.0% in fiscal 2025. The company has reduced its debt to EBITDA to 12.7x in fiscal 2023 from 16.4x in fiscal 2022 and we expect this leverage metric to fall below 10x in fiscal 2024. Although Arvos can notably improve its adjusted EBITDA to more than 55 million in fiscal 2024 (from 39 million in fiscal 2023), we do not expect free operating cash flow (FOCF)...
