Overview Key strengths Key risks Leading position in electrical distribution market in the U.S. and Canada. Fragmented and competitive served market. Good diversity across its utility, communication, construction, industrial, and manufacturing end markets. Half of revenue driven by cyclical project and investment activity, which would likely decrease during a recession. Counter-cyclical cash flow generation. Risk of large acquisitions elevating leverage. The company lowered its target leverage to debt to EBITDA of 1.5x-2.5x from 2.0x-3.5x during its fourth quarter earnings call. However, we believe it could increase leverage significantly for an acquisition similar to Anixter Inc. which caused its S&P Global Ratings-adjusted debt to EBITDA to rise above 4x for about two years. To raise our rating, we would need to
