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S&P trims 24 Hour Fitness
S&P said it lowered 24 Hour Fitness Worldwide Inc.’s rating to B- from B, citing declining financial fitness.
The agency dropped the rating on the company’s senior secured credit facility to B from B+ and the senior secured notes to CCC from CCC+.
“The downgrade reflects increased business risks related to a material ongoing transformation in the company’s sales and operating model, a material decline in financial performance through the first three quarters of 2019, and our belief the company may not begin to improve operating performance until the second half of 2020. For 2019 through September, 24 Hour Fitness attrition rates increased, comparable-club revenue declines worsened, discretionary cash flow (DCF) was negative, and cash balances and liquidity deteriorated compared to 2018. As a result, 24 Hour Fitness will likely draw on its $120 million revolving credit facility with limited cash balances through 2020,” said S&P in a press release.
The outlook is negative.
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