Moody’s Investors Service downgraded the corporate rating of Remington Outdoor Company, Inc. for weak performance and said that it expects that gun conglomerate won’t make meaningful improvements in the next year or two.
Remington’s rating went from B2 to a Caa1, meaning the company is now a “poor quality” investment and poses a “very high credit risk,” according to Moody’s report issued Nov. 19.
Remington’s revenue for the 12 months ending Sept. 30 totaled $815 million, according to financial filings. Despite positive earnings for 2015’s third quarter, the company still reported a net loss of $11.3 million, and a loss of $39.4 million for nine months into 2015.
Moody’s Senior Credit Officer Kevin Cassidy said operational costs and debt will likely to continue to outweigh earnings. “We think revenue will continue falling in Q4 2015 versus Q4 2014 and will remain below $850 million for the next couple of years,” he said.
Moody’s also raised the probability that Remington will default. The financial ratings firm identified two loans Remington may have trouble repaying if revenue steadies or takes a hit. The gun makers has a $580 million secured term loan due April 2019, and a $250 million due in May 2020.
Other factors into the rating include stability of the market and volatility in demand, narrow product focus, and commodity prices, according to the rating report.
Remington, headquartered in North Carolina, owns a slew of gun and gun-related companies that include Remington, Marlin, Bushmaster, and DPMS/Panther Arms.
Comparatively, other gun companies have reported positive earnings and profits…