New York, July 27, 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 20 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 Equipment and Transportation Rental 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.
Equipment and Transportation Rental
Scale: We consider scale 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 s, such as sudden shifts in demand or rapid cost increases Scale not only takes into account size, but also reflects customer and geographic diversification as well as equipment investment. Large rental companies, particularly those with contiguous operations, can share equipment and maintenance staff across a large area. This ability improves equipment utilization rates and allows companies to maintain their fleet more efficiently, as well as improve service to customers by providing greater equipment availability. Scale also often allows large rental companies enhanced purchasing power when buying equipment from Original Equipment Manufacturers, which can aid in their overall profitability. Scale is measured using total reported revenue.
Business Profile: We consider the business profile as relevant in assessing credit quality for companies in the equipment and transportation rental industry. Entry into this industry requires significant capital investment, the need for which can extend through the cycle. companies seek to efficiently manage their fleet with the goal of maximizing returns on the equipment over the long term. Companies with relatively stronger market positions generally have geographically diverse operations, a broader customer base and a range of well-maintained or newer equipment. Companies with these characteristics can also benefit from comparatively higher equipment utilization and lower maintenance costs. Such companies are in stronger positions to fund necessary investments, and often have a lower cost of capital. In our qualitative assessment, we consider the expected volatility of a company's results and the strength of its market position. In addition, we consider a company's fleet management and the level of its equipment utilization. Cost-effectiveness is also assessed.
Profitability: Profitability provides a measure of the company's ability to generate sustainable cash flow and maintain a c competitive position. Pretax Income as a percentage of Sales is an indicator of profitability and it provides an indication of the overall efficiency of a company's cost structure which is an important consideration in a capital intensive industry.
Leverage and Coverage: Leverage and coverage measures provide indications of a company's financial capacity and long-term viability... These metrics are indicators of a company's ability to sustain its competitive position, access capital to invest in its business and service debt through difference phases of the economic cycles. Among others, ratios such as Debt/EBITDA, EBITDA/ Interest Expense, and Funds from Operations/ Debt are indicators of leverage and coverage.
Financial Policy: Management and board tolerance for financial risk is considered as 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 of the company to achieve its targets.
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.
• Ahern Rentals Inc.
• Avis Budget Car Rental, LLC
• Electro Rent Corporation
• ERAC USA Finance LLC
• H&E Equipment Services, Inc.
• Herc Holdings Inc.
• Hertz Corporation (The)
• Maxim Crane Works Holdings Capital, LLC
• Nesco Holdings II, Inc.
• United Rentals (North America), Inc.
The principal methodology used for the rated entity 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.
• Alta Equipment Group Inc.
The principal methodology used for the rated entity listed below was Shipping published in June 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.
Shipping
Scale: Scale 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 shipping companies typically have greater capacity to offer more frequent and reliable services to a wider variety of customers. They generally benefit from important economies of scale, for example, from lower costs of port operations, cargo loading services, insurance, and funding. Fleet size generally corresponds to the type of business in which a shipping company operates. A larger fleet size may also indicate a greater diversification of a company's business segments, geographic footprint and client base. Scale is measured by the number of vessels in a company's fleet.
Business Profile: The business profile of a shipping company matters because it greatly influences its ability to generate sustainable earnings and operating cash flows. Core aspects of a shipping company's business profile are its revenue and margin stability and the extent to which the company benefits from contractual arrangements or barriers to entry.
Profitability and Efficiency: Profitability is a key indicator of a shipping company's operating efficiency and flexibility. The cost structure of a shipping company can be divided into two broad categories: (i) voyage expenses such as fuel costs, commissions and port or canal fees, and (ii) vessel operating expenses, which include the hiring of crews and the maintenance of vessels. The key determinants of a shipping company's profitability are the efficiency of its vessel management, including participation in shipping pools or vessel-share agreements, the quality of maintenance and the overall cost of funding. The EBIT margin is an indicator of profitability.
Leverage and Coverage: Leverage and cash flow coverage measures provide important indications of a company's financial flexibility and long-term viability. Measures of leverage and coverage include Debt/ EBITDA, Retained Cash Flow/ Net Debt, Funds from Operations plus Interest/ Interest Expense and Unencumbered Assets.
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 Considerations: Other considerations 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.
• Kirby Corporation
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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