Default Risks Rising for Truck Parts Maker Accuride
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Commercial truck parts maker Accuride Corp. is burning cash in the wake of pricing actions and weaker-than-expected demand, raising debt default or restructuring risks within the next year, according to S&P Global Ratings.
The company had negative free operating cash flow of about $13.6 million in the first quarter and nearly $25 million of cash on hand after an infusion from its private equity sponsor, S&P said in a report July 1.
“Accuride could exhaust its available cash by the end of the year, particularly in the absence of asset sales, sale leaseback or external capital infusion,” it added while cutting its outlook on Accuride, which has a CCC+ rating, to negative from positive.
A representative for Accuride didn’t immediately reply to a request for comment July 2.
In light of the freight industry’s current recession, tractor and trailer demand will likely be limited into 2025, hurting sales of Accuride’s parts, S&P said. It now predicts Accuride’s 2024 revenue will fall about 10%, versus prior expectations of 2% growth. S&P also anticipates the firm’s adjusted debt-to-EBITDA ratio will rise to about 15, an “unsustainable” level.
Accuride’s term loan due 2026 is quoted at around 76.5 cents on the dollar, near record lows, according to data compiled by Bloomberg.
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