Oregon Tool reported first quarter earnings last month that showed the manufacturer of chainsaws and other cutters suffered declines in revenue and EBITDA, two sources familiar with the matter said.
For the quarter ended 31 March, revenue fell 18% to USD 200m compared to USD 245m for 1Q22, while adjusted EBITDA declined to USD 37m, a 5% fall from USD 39m in 1Q22, said two of the sources.
Trailing twelve months adjusted EBITDA stood at USD 128m, said one of the sources and an additional source familiar with the matter.
Liquidity at the Platinum Equity portfolio company remains adequate, the sources continued. Oregon Tool ended the quarter with USD 29m in cash, USD 55m available on its ABL lending facility and USD 30m on its revolver, said the first source.
To compare, cash on hand stood at USD 59m at the end of 3Q22, according to S&P Global Ratings and Moody’s Investors Service reports, with Moody’s reporting USD 100m available on the USD 150m ABL and the USD 50m revolver undrawn.
Since releasing 1Q23 earnings in mid-May, Oregon Tool’s USD 850m Libor+ 400bps term loan due 2028 has gained two points. The loan was last quoted 86.22/87.72, compared to 84.5/86 at the start of May, according to Markit. The USD 50m credit facility due 2026 was quoted 82.13/83.63.
The issuer’s USD 300m 7.875% senior unsecured notes due 2029 traded last week at 60.25 for a yield of 18.9%, largely unmoved from 59 on 1 May, according to MarketAxess.
Ratings agencies downgraded Oregon Tool in late winter due to high leverage and expected reduced demand for power equipment. S&P rated the company’s first lien term loan CC+ and senior unsecured notes to CCC, from B- and CCC+, respectively, while Moody’s rated the loan B3 and notes at Caa3, down from B2 and Caa2.
S&P said in a March report that it believes Oregon Tool’s capital structure is unstainable due in part to the company’s limited ability to generate free cash flow and higher interest expense.
The company also faces low growth in its forestry and agriculture end markets, though benefits from the sale of consumable products like chainsaw bars and lawnmower blades, Moody’s said in a February report.
Representatives for Platinum and Oregon Tool did not return requests for comment.
