Moody’s Investors Service revised Bass Pro Group, L.L.C’s outlook to stable from positive and affirmed the company’s Ba3 Corporate Family Rating, Ba3-PD Probability of Default rating and B1 senior secured rating.

“The outlook revision reflects revenue and earnings weakness relative to plan that has reduced the pace of debt reduction, and so leverage will not drop to the threshold for an upgrade in the near-term,” said Moody’s analyst Peggy Holloway in a statement. The affirmation of existing ratings reflects the company’s continued ability to exceed its cost synergy targets that has helped offset top line pressure and maintain credit metrics. Moody’s expects flat to modest EBITDA growth over the next 12-18 months and Moody’s adjusted debt/EBITDA to remain within a range of 5.2x-5.5x through 2020.

Affirmations:

Issuer: Bass Pro Group, L.L.C

  • Probability of Default Rating, Affirmed Ba3-PD
  • Corporate Family Rating, Affirmed Ba3
  • ….Senior Secured Term Loan B, Affirmed B1 (LGD4)

Outlook Actions:

Issuer: Bass Pro Group, L.L.C

  • Outlook, Revised To Stable From Positive

Ratings Rationale

Moody’s said Bass Pro’s rating “is supported by its well-recognized brand names in the outdoor recreational products market, very broad product offerings, and demonstrated ability to profitably grow its asset base. Bass Pro’s margins benefit from a significant number of private label brands across multiple outdoor product categories. The company’s business model as a destination experiential retailer sets it apart from other mass market competitors that do not carry the breathe of products nor the level of in-store customer service that is the foundation underpinning a loyal customer base. The integration of the September 2017 acquisition of Cabela’s Incorporated (“Cabela’s”) is largely complete, and the company can now focus more fully on initiatives to boost revenue and earnings of the combined companies. Bass Pro generates positive free cash flow and maintains good liquidity — a credit positive.

“Bass Pro’s credit profile is constrained by the discretionary nature and cyclical demand trends of many products, and by declining demand for lower margin hunting and shooting products. Negative trends in this segment continue but at a decelerating rate. The company is also constrained by its decision to divert cash flow from debt repayment to fund the redemption of preferred equity issued by Bass Pro’s parent which is evidence of an aggressive financial policy. Moody’s expects flat to modest EBITDA growth over the next 12-18 months with debt/EBITDA remaining within a range of 5.2x-5.5x through 2020.

“The outlook is stable reflecting Moody’s view that EBITDA will increase only modestly due to lingering demand weakness. Ratings could be upgraded if the company demonstrates the ability and willingness to reduce debt/EBITDA (on a Moody’s adjusted basis) to around 4.5x on a sustained basis while maintaining good liquidity. The ratings could be downgraded if operating performance materially deteriorates or if debt/EBITDA rises and is sustained above 5.5x.”

Bass Pro operates 170 stores. The company also manufactures and sells recreational boats and related marine products under the Tracker, Mako, Tahoe, Nitro, Ranger Boats, Stratos and Triton brand names. The company also owns the Big Cedar Lodge in Ridgedale, Missouri and Big Cypress Lodge in Memphis, Tennessee.

Photo courtesy Bass Pro