Moody's changes Dole view to negative

Moody's Investors Service said it changed Dole plc's outlook to negative from stable and affirmed Dole's Ba3 ratings, including its corporate family rating and those on its $600 million senior secured first-lien revolving credit facility. Additionally, Moody's also affirmed the Ba3 rating on Finantic Ltd.'s $300 million senior secured first-lien term loan A and Total Produce USA Holdings Inc.'s $540 million senior secured first-lien term loan B. Moody's also downgraded Dole's speculative grade liquidity to SGL-3 from SGL-2.

“The outlook revision to negative from stable reflects Moody's expectation that Dole will continue to face inflationary headwinds, foreign-currency translation losses, and operational challenges in the next 12 months. These factors create challenges to improving the company's weak free cash flow and reducing leverage. As of September 2022, Dole's Moody's adjusted debt to EBITDA stood at 4.3x, which is a little above Moody's expectations for the Ba3 CFR given the company's operating profile.

Rising prices for materials such as fertilizers, as well as inflation pressures in labor and freight are increasing operating costs. Moody's believes that Dole has reasonably good pricing power to help pass along rising costs but that the low margin and free cash flow provide only modest flexibility to quickly reduce leverage,” the agency said in a press release.

The lower SGL rating reflects a forecast that Dole’s free cash flow will remain modest over the next 12 months, Moody’s said.

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