Tear Sheet: Osmosis Holdings L.P.

Culligan continued to incur significant transaction costs through the third quarter of 2022 that weighed negatively on credit measures. We estimate S&P Global Ratings'-adjusted leverage (including preferred stock as debt) as of Sept. 30, 2022, was still above 8x. Notwithstanding the deleveraging nature of the Waterlogic acquisition (which closed in October 2022), we expect pro forma adjusted leverage will remain around or above 8x at Dec. 31, 2022, and that fourth-quarter free operating cash flow (FOCF) will be pressured primarily because of acquisition, transaction, and integration costs. Culligan?s aggressive acquisition strategy will also continue weighing on credit measures, as we expect it will maintain a steady pace of tuck-in acquisition activity. At the same time, we recognize the company generated

...Leverage remains elevated and Osmosis Holdings L.P.'s (d/b/a Culligan) ongoing cash flow generating ability is unclear after the closing of the Waterlogic acquisition. Culligan continued to incur significant transaction costs through the third quarter of 2022 that weighed negatively on credit measures. We estimate S&P Global Ratings'-adjusted leverage (including preferred stock as debt) as of Sept. 30, 2022, was still above 8x. Notwithstanding the deleveraging nature of the Waterlogic acquisition (which closed in October 2022), we expect pro forma adjusted leverage will remain around or above 8x at Dec. 31, 2022, and that fourth-quarter free operating cash flow (FOCF) will be pressured primarily because of acquisition, transaction, and integration costs. Culligan's aggressive acquisition strategy will also continue weighing on credit measures, as we expect it will maintain a steady pace of tuck-in acquisition activity. At the same time, we recognize the company generated about $30 million...

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