Moody's cuts Cabinetworks

Moody's Investors Service said it downgraded the corporate family rating of ACProducts Holdings, Inc. (Cabinetworks Group") to B3 from B2, the probability of default to B3-PD from B2-PD, the senior secured first-lien term loan to B2 from B1 and the senior unsecured rating to Caa2 from Caa1. The agency changed the outlook to negative from stable.

"The downgrade reflects our expectations of continued material, freight and labor cost inflation over the next 12 months that will negatively impact Cabinetworks' profitability," said Griselda Bisono, a Moody's vice president and senior analyst, in a press release.

"Since the initial rating in 2021 the company has underperformed relative to our initial expectations, resulting in significantly weaker credit metrics" added Bisono. Adjusted debt/ LTM EBITDA climbed to 9.6x as of Dec. 31, up from an 8.1x following the company's leveraged buy-out in Q2 2021.

The negative outlook indicates that adjusted debt/EBITDA will remain high at above 7x over the next 12 to 18 months and that price increases implemented in 2021 will not be sufficient to fully offset higher input costs, Moody’s said.

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