AMTROL Inc. Rtgs Affirmed by S&P;Outlk to Neg.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 8/21/97--Standard & Poor's today affirmed its single-'B'-plus corporate credit, double-'B'-minus bank loan and single-'B'-minus subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". ratings on AMTROL Inc. The ratings outlook was revised to negative from stable. The outlook revision reflects concerns that negative market developments and unexpected operating problems could continue to adversely impact earnings and cash flow. Competitive pricing in the chemical container business (with a trend to long-term single-source contracts), industrywide softness in water systems products, and increased raw material costs have caused operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. to slip significantly below 1996 levels. Also contributing to the weaker financial performance were higher-than-expected costs associated with AMTROL's new Singapore production facility, and product returns due to a manufacturing problem, which has been corrected. The ratings reflect AMTROL's leading positions in niche markets for water and heating, ventilating ventilating Natural or mechanically induced movement of fresh air into or through an enclosed space. The hazards of poor ventilation were not clearly understood until the early 20th century. Expired air may be laden with odors, heat, gases, or dust. , and air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. (HVAC (Heating Ventilation Air Conditioning) In the home or small office with a handful of computers, HVAC is more for human comfort than the machines. In large datacenters, a humidity-free room with a steady, cool temperature is essential for the trouble-free ) systems, and relatively stable operating margins, but also a modest revenue base and thin earnings and cash flow protection measures. Key products include well water accumulators, hot water expansion controls, indirect-fired water heaters, and cylinders to dispense refrigerant re·frig·er·ant adj. 1. Cooling or freezing; refrigerating. 2. Reducing fever. n. 1. A substance, such as air, ammonia, water, or carbon dioxide, used to provide cooling either as the working substance of gases. Support for the company's healthy market shares are provided by AMTROL's strong brand names, as well as distribution and manufacturing strengths. The company's cost position has benefited from a reduction in corporate overhead, and also will be positively affected by the recent sale of the American Granby subsidiary, historically a modest contributor to earnings, and facilities consolidation, including the recent Peru, Indiana plant closure. The acquisition of Petroleo Mecanica Alfa SA (a Portuguese manufacturer of reusable steel cylinders for heating and refrigerant gases) for $34.5 million (including assumed debt) will provide AMTROL with a low-cost European manufacturing base. While debt reduction is a goal of management, weaker-than-expected operating performance and plans to expand the geographic reach of products are likely to slow deleveraging of the aggressive capital structure. During the next few years, cash interest coverage and funds from operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. to debt are expected to remain low, averaging roughly 1.3 times (x)-1.5x and less than 10%, respectively. OUTLOOK: NEGATIVE Competitive market conditions and operating difficulties have hurt recent performance. If earnings and cash flow protection measures continue to deteriorate, ratings could be downgraded. -- CreditWire CONTACT: Cynthia Werneth, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1707 |
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