Veregy Intermediate Inc.

Other factors that impacted costs were costs related to its expansion into Texas with headcount additions, investments in technology infrastructure, and increased labor costs for its highly skilled labor force. We now expect adjusted leverage to fall to the high-5x area in 2022. The stable outlook reflects our expectation for revenue growth in the 10%-12% area in 2022 and flat S&P Global Ratings-adjusted EBITDA margins around 11%, resulting in adjusted leverage in the high-5x area, down from the low-7x range at year-end 2021. Over the next 12 months, we forecast modest FOCF generation and expect Veregy to maintain an adequate liquidity profile. We could lower the ratings if we expect cash-flow deficits to result in total liquidity sources tightening below

...Veregy had underperformed our forecast. However, the company's credit metrics remain supportive of the rating. Adjusted leverage was 6.7x as of the last 12 months ended Sept. 30, 2021, higher than S&P Global Ratings' base-case adjusted leverage in the high-5x at deal origination. Project delays from the COVID-19 pandemic, cost pressures, and global supply chain constraints will likely result in adjusted EBITDA margins around 11%, compared to our previous expectation of about 14%. Other factors that impacted costs were costs related to its expansion into Texas with headcount additions, investments in technology infrastructure, and increased labor costs for its highly skilled labor force. We now expect adjusted leverage to fall to the high-5x area in 2022. The company benefits from favorable secular tailwinds. While the pandemic has slowed new project wins, we expect deferred projects to be converted into revenue contributions over the next 12 to 18 months. Additionally, we believe Veregy,...

Full Report