S&P turns Badger view to negative

S&P said it revised its outlook for Badger Finance LLC to negative from stable and affirmed the B- ratings on the company and its senior secured term loan. The loan’s 3 recovery rating is unchanged.

“High input cost inflation and lower volumes weakened year-to-date performance. Through the first half, revenues increased more than 15% versus the same prior-year period largely due to price and volume increases in the Horseshoe division (which primarily contracts to manufacture ready-to-drink beverages). This was partially offset by lower volumes in the Trilliant division (which largely manufactures private-label, single-serve coffee pods and bagged coffee). Planned volume increases at certain customers in both segments have not materialized,” S&P said in a press release.

The agency also noted that Badger's EBITDA margin retreated to about 13% for the 12 months ended June 30 compared to nearly 17% for the same period in 2021.

“The negative outlook reflects that we could lower our ratings over the next 12 months if profitability and cash flow deteriorate further, resulting in pressured liquidity or an unsustainable capital structure,” S&P said.

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