S&P switches Flynn Canada view to stable

S&P said it revised Flynn Canada Ltd.’s outlook to stable from positive and affirmed its ratings, including the B rating on the $75 million revolver due 2026.

“The outlook change primarily reflects the downward revision to our earnings estimates and credit measures this year. We no longer expect Flynn Canada Ltd. will generate and sustain credit measures commensurate with a higher rating, including adjusted debt to EBITDA (leverage) below 5x. Cost inflation and supply-chain disruptions contributed to lower-than-expected cash flows in 2021, and we believe these operating headwinds will persist at least through this year,” the agency said in a press release.

S&P said it forecasts adjusted EBITDA margins will retreat to about 6%-6.5% this year from 7.2% in 2021, which is under its previous estimates in the 8%-9% range.

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