Tear Sheet: Epiroc AB

We project that an increase in debt, primarily due to significant spending on acquisitions and higher-than-expected margin deterioration in 2024, will result in funds from operations (FFO) to debt of about 60% this year. This represents a sharp decline from 115% at year-end 2023 and 225% at year-end 2022. In our updated base case, we assume an acquisition envelope of Swedish krona (SEK)9.4 billion (about €810 million), owing mainly to the debt-funded acquisition of U.S.-based Stanley Infrastructure, and anticipate a deterioration of the S&P Global Ratings-adjusted EBITDA margin by approximately 160 basis points to 23.8% in 2024, from 25.4% in 2023. This decline is mainly due to the dilutive effects of acquisitions, as well as transaction, integration, and restructuring costs.

...December 16, 2024 S&P Global Ratings believes Epiroc has materially reduced its financial flexibility at the '###+' rating level. We project that an increase in debt, primarily due to significant spending on acquisitions and higher-than-expected margin deterioration in 2024, will result in funds from operations (FFO) to debt of about 60% this year. This represents a sharp decline from 115% at year-end 2023 and 225% at year-end 2022. In our updated base case, we assume an acquisition envelope of Swedish krona (SEK)9.4 billion (about 810 million), owing mainly to the debt- funded acquisition of U.S.-based Stanley Infrastructure, and anticipate a deterioration of the S&P Global Ratings-adjusted EBITDA margin by approximately 160 basis points to 23.8% in 2024, from 25.4% in 2023. This decline is mainly due to the dilutive effects of acquisitions, as well as transaction, integration, and restructuring costs. Our leverage and EBITDA calculations take into account a nine-month contribution from...

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