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American Residential Services LLC
Standard & Poors, April 2011
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Full Analysis
Abstract
Highly variable expense structure; and Geographic diversity. Very aggressive financial policy; Highly leveraged capital structure; and Low margins. The ratings reflect Standard & Poor's Ratings Services' view that Memphis, Tenn.-based American Residential Services LLC's (ARS) very aggressive financial policy provides inadequate protection should operating performance deteriorate, even on a temporary basis. We estimate adjusted leverage is high, at about 4.6x for the trailing 12 months ended Dec. 31, 2010. In our assessment, the very aggressive financial policy overshadows the company's recent positive operating performance. In fiscal 2010 ARS' revenue increased more than 10% and EBITDA margin expanded about 90 basis points (bps). Still, ARS is narrowly focused in the highly fragmented and competitive HVAC and plumbing markets. The company is...
Companies mentioned in this report are: American Residential Services LLC,ARS Finance Inc
Action: Review
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