S&P revises Euramax view to negative

Standard & Poor's said it revised its outlook on Euramax International Inc. to negative from stable.

The agency also affirmed its B- corporate credit rating and B- senior secured debt rating on the company. The recovery rating on the senior secured debt remains 4.

S&P said the outlook revision reflects its view that weaker-than-expected U.S. residential and commercial construction and roof replacement activity in the first half of 2014 is likely to result in lower-than-forecast earnings for metal roofing product and recreational vehicle (RV) component manufacturer Euramax International Inc.

The agency originally targeted full year 2014 EBITDA of $60 million to $65 million. However, given current weak operating conditions in roofing markets, S&P said it thinks Euramax may be challenged to meet this estimate despite new cost reduction initiatives and recent reductions in its workforce.

As a result, Euramax is expected to remain very highly leveraged, with debt to EBITDA of more than 9 times and interest coverage slightly in excess of 1 time.

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