![]() ![]() A downgrade could also occur should there be a decline in business prospects of Snap-on's client and franchise base that materially weakens its accounts receivables quality or should the company's liquidity weaken. #Snap on credit freeFurthermore, continued strength in market share, resilience to volatility in weak economic conditions and evidence of conservatism in its corporate financial policy and underwriting standards in its Financial Services segment would need to be demonstrated for a rating upgrade.The rating could be downgraded should the company's adjusted debt to EBITDA increase above 1.75x or adjusted free cash flow to debt is below 20% for an extended period of time. #Snap on credit upgradeThe stable outlook is also supported by Snap-on's strong EBITA margin, moderate growth in its Financial Services segment, and globally diverse customer base which provides it with consistent revenue and cash flow generation.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe rating could be upgraded if the company increased its scale (revenue) and end market diversity while maintaining its strong margins, adjusted free cash flow to debt was greater than 25%, and adjusted debt-to-EBITDA was below 1.0x, all on a sustainable basis. #Snap on credit fullThis level of board experience, independence and oversight should help minimize governance risks, including excessive leverage above target levels and aggressive acquisitions.Snap-on's excellent liquidity is supported by a large cash balance, full availability under an $800 million multi-currency revolver and projected strong free cash flow.Snap-on's stable outlook reflects sound business fundamentals, conservative financial policies, and robust liquidity. The board administers its strategic planning and risk oversight function as a whole and through its board committees, including an executive, audit, corporate governance, finance and pension, compensation and talent development committee. Board members are highly seasoned, with public company, risk management, capital allocation, manufacturing, logistics and supply chain experience. The company has ten directors on its board, all but one of which are independent. The ability to offer financing to franchisees and their customers is an important element of supporting the sales of the Tools Group as well as supporting franchisee sales of bigger ticket items.Snap-on's overall corporate governance risk is low, with Moody's view incorporating continued maintenance of a conservative financial policy. These strengths are offset by Snap-on's moderate use of cash flow to fund the company's Financial Services segment and the credit risks associated with its borrowers and franchisees, whose average FICO scores are below average. ![]() Moody's rating also reflects the company's modest financial leverage and strong adjusted EBITA margin. Moody's believes that the van channel operations remain well-managed, and that the company has adequate capacity to meet customer financing requirements while preserving prudent underwriting standards. Snap-on's success in part stems from the Tools Group's franchise van channel and the offering of customer credit. Commercial Paper, Affirmed P-1.Senior Unsecured Regular Bond/Debenture, Affirmed A2Outlook Actions.Issuer: Snap-on Incorporated.Outlook, Remains StableRATINGS RATIONALESnap-on's A2 senior unsecured rating reflects the company's relatively resilient operating performance, the ability to generate consistently strong cash flow from its core operations, and the company's robust liquidity. Free cash flow to debt is expected to decline to over 28.0% from 48.2% as pandemic related inventory liquidations reverse and working capital needs increase to support the projected : Snap-on Incorporated. Moody's expects Snap-on's adjusted debt to LTM EBITDA to decline to 1.2x by the end of 2022 from 1.5x at Apas the company benefits from strong economic growth, debt reduction and completed and ongoing cost cutting initiatives. ![]() Rating Action: Moody's affirms Snap-on's A2 senior unsecured rating outlook stableGlobal Credit Research - New York, Ap- Moody's Investors Service ("Moody's") affirmed Snap-on Incorporated's ("Snap-on") A2 senior unsecured rating and P-1 commercial paper rating. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |