...TK Elevator's operating performance has been in line with our base-case expectations for fiscal year (FY) 2022 (ending Sept. 30) for revenue and margins, but weaker regarding credit metrics, but mainly due to foreign exchange (FX) effects on its U.S. dollar-denominated debt. The company reported revenue growth of 7.2% supported by FX effects and its solid Americas business. Due to strong cost headwinds, the S&P Global Ratings-adjusted EBITDA margin declined 100 basis points (bps) to 11.9% (forecast of about 12%). As a result, absolute EBITDA was stable. S&P Global Ratings-adjusted debt to EBITDA excluding payment-in-kind notes stood at 10.3x (versus a forecast of about 9.5x). We estimate 0.5x of deviation relates to the euro being close to its low point versus the U.S. dollar at FY2022, while U.S.-denominated revenue did not fully benefit from the sharp dollar appreciation (the average rate has been about $1.08 in FY2022). Free operating cash flow (FOCF) has been slightly stronger, at 115...
