Moody’s moves Veritas view to negative

Moody’s Investors Service said it changed its outlook for Veritas NL Intermediate Holdings BV to negative from stable and affirmed the company’s B3 ratings.

“The negative outlook reflects the challenges and costs the company faces revitalizing its product lineup in addition to the revenue and cash flow headwinds from a transition to a subscription model and rising interest rates,” Moody’s said in a press release.

Moody’s is forecasting declining revenue for the next two years. “The company is ramping up investment in R&D and sales which will drive a significant decline in EBITDA and cash flow over the next 12-24 months. While the goal of the investment is to modernize the portfolio and improve sales, financial metrics will weaken significantly during the investment period with leverage exceeding 10x and free cash flow trending significantly negative over the next 18-24 months.”

On the positive side, the agency noted that as of September, the company had $521 million in cash and equivalents and an undrawn revolver that should help fund most shortfalls while it revamps its product lineup and converts to the subscription model.

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