Moody's Downgrades Vista Outdoor Further Into Junk Territory

Moody's Investors Service downgraded Vista Outdoor Inc.'s rating to Ba3 from Ba2 on Tuesday, sending it further into junk territory, on concerns about the company's weak operating performance. The outlook on the rating is still negative, meaning Moody's could downgrade it again in the medium term. "A challenging retail market and weak demand for recreational firearms and accessories is pressuring revenue and margins," said Kevin Cassidy, senior credit officer at Moody's. The company's credit metrics have deteriorated as a result and debt/EBITDA is currently around 4 times, he said. Moody's is expecting leverage to increase to about 4.5 times by March of 2018 as revenue and earnings continue to falter. The negative outlook reflects "the uncertainty over when gun and ammunition demand trends will stabilize and when Vista's operating performance will improve," said Cassidy. Visto shares were down 1.4%, and have fallen 43% in 2017, while the S&P 500 has gained 8%.