S&P turns Vectra view to negative

S&P said it changed its outlook for Vectra Co. to negative from stable and affirmed its B- ratings on the company and its first-lien debt. The agency also affirmed the issuer’s second-lien debt at CCC. The 3 recovery rating on the first-lien debt and the 6 rating on the second-lien debt are unchanged.

“We expect Vectra's revenue and EBITDA will be lower than our previous forecast due to internal and external factors. During the early part of 2022, the company struggled to implement its new enterprise resource planning software, resulting in higher-than-expected costs and weaker EBITDA margins. Externally, supply chain issues continue to disrupt its operations. Vectra's revenues are lower than we expected due to delays in filling orders because its suppliers have failed to deliver parts on time on multiple occasions,” S&P said in a press release.

However, the agency noted increased defense spending, partially due to the ongoing war between Russia and Ukraine, which is growing the company’s backlog and boosting revenue in 2023 and beyond.

The outlook remains negative.

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