S&P rates American Woodmark notes BB

S&P said it assigned its BB corporate credit rating to American Woodmark Corp. The outlook is stable.

At the same time, S&P said it assigned a BB issue-level rating to the company's proposed $350 million senior unsecured notes. The recovery rating is 3, indicating an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery in the event of default.

S&P also withdrew the BB- corporate credit rating on RSI Home Products. American Woodmark is assuming RSI's $575 million of senior secured notes and paying them down with proceeds from its note offering and the $250 million delayed-draw term loan.

The BB corporate credit rating assigned to American Woodmark reflects the combined company's large market share (No. 2 overall at 10%) of the U.S. cabinet industry, good vertical integration, and a strategy well aligned with industry trends, S&P said in a news release.

“We also expect the company to benefit from continued growth in single-family housing starts, and stable repair and remodel markets.

“These positive business attributes are somewhat offset by the company's limited product diversity and high customer concentration,” S&P said in a news release.

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