S&P Global Ratings downgraded Weber Inc.’s WEBR, -2.75% credit ratings further into high-yield, or junk territory, on Friday, and placed them on CreditWatch negative, meaning they could downgrade them again in the medium term. The rating agency cut the grill maker’s issuer credit rating to CCC+ from B. The move came after Weber warned that sales and EBITDA for its third quarter to June 30 will be far weaker than previous estimates and withdrew its fiscal 2022 guidance. “We revised our fiscal 2022 forecast for Weber downward and believe the company may violate its springing first-lien leverage covenant in its first quarter of fiscal 2023, typically its peak working capital season, absent a waiver or amendment,” S&P said in a statement. “As a result of our expectation for minimal EBITDA and cash flow, we view Weber’s capital structure as unsustainable.” Weber is suffering from the same list of issues facing all companies at present, namely inflation, supply chain disruptions, changing consumer shopping behavior as people pay more for food and gas, higher freight cost increases, foreign currency headwinds, and the need for increased promotional activity to sell through inventory. The company may have a liquidity crisis if it cannot address its covenant issue and is in talks with lenders. Shares were flat premarket, but have fallen 49% in the year to date, while the S&P 500 SPX, +1.42% has fallen 15%.
