August 21, 2019 — Moody’s Investors Service downgraded ratings today of CWGS Enterprises, LLC (“Camping World”), including the Corporate Family rating, which was downgraded to B2. The outlook is negative.
“Today’s rating action reflects the reduced prospects for meaningful debt reduction during 2019, which was a key factor for maintaining the B1 rating,” stated Moody’s Vice President Charlie O’Shea. “While Q2 operating performance generally met our expectations, Camping World’s downward revision of its 2H 2019 guidance indicates that improvements in operating performance will not occur sufficient to meaningfully improve leverage and interest coverage metrics.”
Camping World’s B2 rating considers its weak quantitative credit profile due to soft industry fundamentals that will likely persist throughout 2019 and the negative impact of the costs involved in the acquisition and integration of Gander Mountain locations, which were purchased out of bankruptcy, as well as late-2018 softening in the RV market. This combination of events has resulted in leverage of around 6 times and EBITA/interest of less than 2 times at the June 2019 LTM.
The negative outlook reflects Moody’s concerns that the downturn in RV sales could be more protracted given potential macroeconomic uncertainty, which could further weaken the quantitative profile.
EDITOR’S NOTE: Camping World’s stock closed at $7.90 a share on Friday. Its 52-week high was $23.60 on Oct. 17, 2018.
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