NEW YORK — Standard & Poor’s Ratings Services announced Aug. 19 that it has placed its single-”B”-plus corporate credit rating on American Plumbing & Mechanical on CreditWatch with negative implications following the company’s announcement that it will generate about $31 million in EBITDA in 2002, down from previous guidance of $46 million.
Similarly, on Aug. 21, Moody’s Investors Service placed its B1 rating on AMPAM on Watchlist status for a possible downgrade.
An AMPAM spokesman said the contracting consolidator would be meeting with both credit rating agencies in the near future to go over its second quarter results. Beyond that the company would have no other comment, he said.
Standard & Poor’s said it will meet with management to discuss initiatives to improve operating performance within the company’s commercial construction unit, the outlook for its key end markets, and the resulting financial and liquidity profile before taking a further ratings action.
Round Rock, Texas-based AMPAM is a leading provider of plumbing and mechanical contracting services in the United States. The rating action affects about $167 million in debt outstanding at June 30.
AMPAM ranked eighth in CONTRACTOR’s 2002 Book of Giants with annual revenue of $606.20 million, a 7% increase from the previous year (May, pg. 19). Of that total, AMPAM derived $509.21 million from plumbing work, making it the largest plumbing contractor in the country, according to the Book of Giants’ listing of the top 10 companies by type of work performed.
“The reduced EBITDA is due to weaker-than-expected profitability within the company’s commercial construction operations and intensified competition in many of its key end markets,” said Standard & Poor’s credit analyst Joel Levington.
As a result of the reduced cash generation and elevated debt levels, AMPAM was forced to obtain another amendment to its bank credit facility, including reducing the total facility size to $90 million from $95 million, further straining liquidity in the near term, with $18 million in availability at June 30.