A top US credit ratings agency has revised its debt outlook on Pure Fishing – the world’s largest supplier of fishing tackle – from negative to stable.
S&P Global Ratings also upgraded Pure Fishing’s 2021 revenue and EBITDA expectations because of the expected high demand for fishing products at least through the first half of the year.
In its lengthy determination it said: “The pandemic and social distancing measures increased participation in outdoor activities like fishing, driving strong demand for angling equipment and other outdoor products.
“We expect wholesale demand to continue into the second half of 2021. As a result of very high demand, Pure Fishing experienced revenue growth of 19.3% in 2020 and used excess cash in the second half of the year to pay down a substantial portion of its Asset Based Loan (ABL) borrowings to approximately $31m as of December 2020.
“In addition, the company had approximately $42m in cash. As a result, it has adequate liquidity over the next 12 to 24 months under our base-case operating performance assumptions and we believe a near-term default is unlikely given the company’s next debt maturity is 2025.”
It added that demand for Pure Fishing products, which include iconic brands like PENN, Shakespeare, Abu Garcia and Shakespeare continues to be strong, but added: “Widespread immunisation to COVID-19 could moderate or reduce consumer demand for outdoor recreational products starting in the second half of the year, possibly softening revenue trends.
“Our current expectation is for low-to-mid single digit revenue growth in 2021, but we assume revenue declines of approximately 10% in 2022. However, it is unclear to what extent, if any, consumer demand for fishing products will decline. If new anglers continue to participate in the sport, revenue could be higher than our 2022 forecast.”
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