New York, July 26, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 19 July 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for the rated entities listed below was Distribution & Supply Chain Services Industry published in June 2018. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Distribution & Supply Chain Services Industry
Scale: Larger scale can be an indicator of a company's ability to influence business trends and pricing within its service segments and to support a stable or growing market position. Scale also can be an indicator of greater resilience to changes in demand, geographic diversity, cost absorption, R&D capabilities and greater bargaining strength with customers, labor, and vendors. Scale is measured using total reported revenue and adjusted EBITA.
Business Profile: We consider the underlying demand characteristics of a company's service offerings and its relative breadth, strength, and durability of demand.
Profitability and Efficiency: Profitable returns matter because they are necessary to maintain a business' competitive position, including sufficient reinvestment in operations, marketing, research, facilities, and human capital. Sustained high profitability is generally a strong indicator of substantial competitive advantages, particularly if combined with evidence of a stable or rising market share. For issuers in the supply chain sector, working capital management matters, especially when considering the typically low operating margins that necessitate maintaining strong liquidity and low cash conversion cycles. The Operating margin and Return on Invested Capital are indicators of profitability and efficiency.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including their ability to adapt to changes in economic and business environment in the segments in which they operate. Among others, ratios such as Debt/ EBITDA, EBITA/ Interest Expense, and Retained Cash Flow/ Debt are indicators of leverage and coverage.
Financial Policy: We consider management and board tolerance for financial risk as it directly affects debt levels, credit quality and the risk of adverse changes in financing and capital structure. We assess the issuer's desired capital structure or targeted credit profile, history of prior actions and adherence to its commitments. Attention is paid to management's operating performance and use of cash flow through different phases of economic and industry cycles. Also of interest is the way in which management responds to key events, such as changes in the credit markets and liquidity environment, legal actions, competitive challenges, and regulatory pressures. Management's appetite for M&A activity is assessed, with a focus on the type of transactions and funding decisions.
Other Factors: Other factors may include, but are not limited to, our assessment of the quality of management, corporate governance, financial controls, liquidity management, event risk, and seasonality.
• Arrow Electronics, Inc.
• Avnet, Inc.
• CDW Corporation
• Flex Ltd.
• Ingram Micro Inc. (NEW)
• Jabil Inc.
• Sanmina Corporation
The principal methodology used for the rated entities listed below was Business and Consumer Services published in November 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Business and Consumer Services
Scale: Scale is considered because larger scale can be an indicator of a company's ability to influence business trends and pricing within its service segments and to support a stable or growing market position. Scale also can be an indicator of greater resilience to changes in demand, geographic diversity, cost absorption, R&D capabilities and of greater bargaining strength with customers, labor, and vendors. Revenue is an indicator of scale.
Business Profile: The business profile of a company is considered because it greatly influences its ability to generate sustainable earnings and operating cash flows. The business and consumer service industry comprises a vast array of business models encompassing a multitude of identifiable customer bases worldwide. We consider the underlying demand characteristics of a company's service offerings and their relative breadth, strength, and endurance of demand. Companies that have established a long history of strong demand for a diverse range of service offerings that are critical to customer needs generally entail lower risk compared to those that offer a single line of service which have less importance for customer needs or have a limited history of success.
Profitability: Profits matter because they are necessary to maintain a business's competitive position, including sufficient reinvestment in marketing, research, facilities, and human capital. Sustained high profitability is generally a strong indicator of substantial competitive advantages, particularly if combined with evidence of a stable or rising market share. EBITA Margin is an indicator of profitability.
Leverage and Coverage: Leverage and coverage measures are indicators of a company's financial flexibility and long-term viability, including its ability to adapt to changes in the economic and business environment within the segments in which it operates. Indicators of leverage and coverage include ratios such as: Debt / EBITDA, EBITA / Interest Expense, and Retained Cash Flow/ Net Debt.
Financial Policy: Management and board tolerance for financial risk is a consideration because it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Our assessment of financial policies includes the perceived tolerance of a company's governing board and management for financial risk and the future direction for the company's capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Rating Considerations: Other considerations may include but are not limited to financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends also affect ratings.
• AHEAD DB Holdings, LLC
• PUG LLC (Viagogo)
• Taboola, Inc.
The principal methodology used for the rated entities listed below was Diversified Technology published in February 2022. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Diversified Technology
Scale: Larger scale can be an indicator of a company's ability to influence business trends and pricing within the industry and to support a stable or growing market position. Scale also can be an indicator of greater resilience to changes in product demand, geographic diversity, cost absorption, R&D capabilities and bargaining strength with customers and suppliers. Total revenue and reported EBIT are indicators of scale.
Business Profile: Business profile provides an indication of the likely stability and sustainability of the company's cash flows. End-market diversification is viewed positively because it mitigates the risk that a change in any individual industry or vertical market will significantly impair profitability and cash flow. Market share is an important component of business profile as it can indicate the level of competitive success, the depth of customer relationships and likely prospects for future performance. We assess market position, product differentiation and expected volatility in results.
Profitability and Efficiency: This rating factor assesses the level of control that a company has over its profit margins and management's effectiveness in using the levers available to it to preserve competitive profit margins in a way that creates strong and sustainable relationships with customers and consumers. EBITDA margin and Operating Income Return on Assets are indicators of profitability and efficiency.
Leverage and Coverage: Leverage and cash flow coverage measures provide indications of how much financial risk a diversified technology company is willing to undertake. These metrics are also indicators of a company's ability to sustain its competitive position, invest in growth opportunities and service debt. Measures of leverage and coverage include Debt/EBITDA, EBIT/Interest and Free Cash Flow/Debt.
Financial Policy: Management and board tolerance for financial risk is a rating determinant as it directly affects debt levels, credit quality, and the risk of adverse changes in financing and capital structure. Considerations include a company's public commitments in this area, its track record for adhering to commitments, and our views on the ability for the company to achieve its targets. Financial risk tolerance serves as a guidepost to investment and capital allocation.
Other Rating Considerations: Other considerations may include but are not limited to financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends could also be considered.
• Casa Systems, Inc.
• International Business Machines Corporation
• Keysight Technologies, Inc.
• Pitney Bowes Inc.
• Viavi Solutions Inc.
• Xerox Holdings Corporation
• Zebra Technologies Corporation
The principal methodology used for the rated entities listed below was Manufacturing published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Manufacturing
Scale: Scale is a consideration because it is an indicator of the overall depth of a company's business and its success in attracting a variety of customers, as well as its resilience to shocks, such as sudden shifts in demand or rapid cost increases. Larger manufacturing companies typically attract a greater breadth of customers and can better withstand cyclicality resulting from economic conditions and product cycles. A larger revenue base also generally leads to important economies of scale in raw material purchases and corporate functions, particularly important given the need for global supply chain management to control costs for most manufacturing companies. Larger manufacturers also tend to generate higher cash flow for capital reinvestment and debt reduction. In addition, they generally have greater access to the capital markets, which can reduce the cost of capital. Revenue is an indicator of scale.
Business Profile: The business profile of a manufacturing company is important because it greatly influences its ability to generate sustainable earnings and operating cash flows. Core aspects of a manufacturing company's business profile are its market position, the breadth and stability of the end-markets it serves, the diversity of its product offerings, as well as the effectiveness of the company's cost structure.
Profitability and Efficiency: Profits are considered because they are needed to generate sustainable cash flow and maintain a competitive position, which includes an ability to invest in marketing, research, factories, and personnel. High profitability sustained over time is generally an indicator of operating efficiency and competitive advantage. EBITA Margin is an indicator of profitability and efficiency.
Leverage and Coverage: Leverage and cash flow coverage measures provide indications of a company's financial flexibility and ability to sustain its competitive position, as well as how much financial risk a manufacturer is willing to undertake. A manufacturer with strong financial flexibility is better able to invest in product innovation and adapt to changing customer preferences and competitive challenges than a manufacturer with a constrained capital structure. The capital intensity of the manufacturing sector also makes financial flexibility critical to absorbing unexpected costs and withstanding industry cyclicality. Indicators of leverage and coverage include ratios such as: Debt/ EBITDA, EBITA/ Interest Expense, Free Cash Flow/ Debt, and Retained Cash Flow/ Net Debt.
Financial Policy: Financial policy encompasses management and board tolerance for financial risk and commitment to a strong credit profile. It is an important rating determinant because it directly affects debt levels, credit quality, the future direction for the company and the risk of adverse changes in financing and capital structure. Financial risk tolerance serves as a guidepost to investment and capital allocation. Liquidity management is an important aspect of overall risk management and can provide insight into risk tolerance.
Other Rating Considerations: Other considerations may include but are not limited to: financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance, as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk, as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends, are also considered.
• MKS Instruments, Inc.
• TTM Technologies, Inc.
• Ultra Clean Holdings, Inc.
The principal methodology used for the rated entities listed below was Semiconductors published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Semiconductors
Scale: Scale is a consideration because it is an indicator of the overall breadth and depth of a company's business, its pricing power, and its success in attracting a variety of customers, as well as its resilience to shocks, such as sudden shifts in demand or rapid cost increases. Scale also can be an indicator of a semiconductor company's research and development capabilities and its negotiating leverage with customers and suppliers. Scale is measured using total reported revenue.
Business Profile: The business profile of a semiconductor company is considered because it greatly influences its ability to generate sustainable earnings and operating cash flows. Key aspects of a semiconductor company's business profile include its revenue stability and its visibility, or insight into demand; the diversity or concentration of its end markets, customers, and products; its market position; and barriers to entry into a market or a business segment.
Profitability: Profits are considered because they are needed to generate sustainable cash flow and maintain a competitive position, which includes making sufficient investment in research and development and in capital expenditures to maintain market position through ongoing technological shifts. A semiconductor company's level of profitability, and the sustainability of those profits, may also provide important indications about the value of its products. Indicators of profitability include EBITDA Margin and (EBITDA minus Capex) / Revenue.
Leverage and Coverage: Leverage and cash flow coverage measures provide important indications of financial flexibility and long-term viability, including a semiconductor company's ability to adapt to changes in the economic and business environment. Key metrics for leverage and coverage are Debt/ EBITDA, Free Cash Flow/ Debt and EBIT/ Interest Expense.
Financial Policy: Financial policy encompasses management and board tolerance for financial risk and commitment to a strong credit profile. It is an important rating determinant, because it directly affects debt levels, credit quality, the future direction for the company and the risk of adverse changes in financing and capital structure. Financial risk tolerance serves as a guidepost to investment and capital allocation. Liquidity management is an important aspect of overall risk management and can provide insight into risk tolerance.
Other Rating Considerations: Other considerations may include but are not limited to: financial controls and the quality of financial reporting; corporate legal structure; the quality and experience of management; assessments of corporate governance as well as environmental and social considerations; exposure to uncertain licensing regimes; and possible government interference in some countries. Regulatory, litigation, liquidity, technology, and reputational risk as well as changes to consumer and business spending patterns, competitor strategies and macroeconomic trends also affect ratings.
• Advanced Micro Devices, Inc.
• Allegro MicroSystems, Inc.
• Altar BidCo, Inc.
• Amkor Technology, Inc.
• Analog Devices, Inc.
• Applied Materials Inc.
• Broadcom Inc.
• Cohu, Inc.
• Entegris Inc.
• II-VI Incorporated
• Intel Corporation
• KLA Corporation
• Lam Research Corp.
• MACOM Technology Solutions Holdings, Inc.
• Marvell Technology, Inc.
• MaxLinear, Inc.
• Microchip Technology Inc.
• Micron Technology, Inc.
• NVIDIA Corporation
• NXP B.V.
• ON Semiconductor Corporation
• Qorvo, Inc.
• QUALCOMM Incorporated
• Skyworks Solutions, Inc.
• Synaptics, Inc.
• Texas Instruments, Incorporated
• Vishay Intertechnology Inc.
• Xilinx, Inc.
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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