S&P dips Digital Media Solutions

S&P said it lowered its ratings on Digital Media Solutions Inc. and its senior secured debt to B- from B.

“The downgrade reflects our expectation for elevated leverage over the next 12 months, caused by a cyclical downturn in Digital Media Solutions' (DMS) insurance verticals because of high inflation and macroeconomic issues. We expect a material increase in S&P Global Ratings-adjusted gross leverage to about 13x in 2022 from 7x at year-end 2021, due to an expected decline in S&P Global Ratings-adjusted EBITDA of nearly 50% to about $15 million to $20 million in 2022 from about $35 million at year-end 2021,” the agency said in a press release.

S&P said it DMS will probably need a covenant waiver or another form of covenant relief within the next two quarters and expects its cash flow to be thin over the next 12 months.

The outlook is negative.

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