Moody’s shifts Femur Buyer view to negative

Moody’s Investors Service said it changed Femur Buyer Inc.’s outlook to negative from stable.

The change of outlook to negative mirrors the erosion in earnings over the past year due to operating issues at its Santa Ana and Oregon production facilities and increased labor and compliance costs. “While Moody’s believes the company has largely addressed these issues, the pace of earnings improvement will depend on how quickly new business ramps up and productivity improvement initiatives take hold,” the agency said in a press release.

In the first quarter of 2019, the company’s Detroit facility received a Food and Drug Administration warning letter. The resolution of the warning letter and companywide compliance enhancement will require incremental costs. Further, any escalation of FDA findings could delay the ramp-up of new business from customers. In addition, the negative outlook reflects Moody’s view free cash flow will remain negative for at least another two to three quarters. This reflects significant investments the company is making in automation and growth capital expenditures.

Moody’s affirmed Femur Buyer’s B3 corporate family rating, B3-PD probability of default rating and the B2 rating of its senior secured first-lien credit facilities.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.