KIK Custom Products debt buoyed by 28% rise in 2Q19 EBITDA

KIK Custom Products’ capital structure strengthened in secondary trading this week after the household and automotive products company reported a 28% year-on-year increase in EBITDA for 2Q19, according to four sources following the company.

The Centerbridge-backed company on Monday reported USD 89m of adjusted EBITDA for the quarter, up from roughly USD 69m a year prior, sources said. Quarterly revenue was USD 696.5m, up from USD 678.7m in 2Q18.

KIK’s USD 890m 9% senior unsecured bonds due 2023 traded as high as 86 yesterday to yield 13.658%, according to MarketAxess. That’s up from trades at 84, for a 14.394% yield, on 8 August.

The borrower’s USD 804m Libor+ 400bps first lien term loan due 2023 was quoted at 94.333/95.167 yesterday (13 August), up from 93.229/94.146 earlier this month, according to Markit. The facility settled at quotes of 93.792/94.875 today.

The latest earnings report puts KIK’s leverage at roughly 7.7x, based on USD 2.042bn of total debt and USD 263.8m of LTM adjusted EBITDA, sources said. Factoring in USD 24m of cash, net leverage is 7.65x.

The company reported USD 40.1m of cash from operations during the second quarter as well as USD 11.1m of capital expenditures, sources said. As of 30 June, liquidity totaled USD 268.5m based on USD 244.5m of availability under the company’s ABL and USD 24m of cash.

All four of KIK’s business divisions—personal care, household, pool and automotive—recorded YoY EBITDA growth in the second quarter to the tune of 27%, 30%, 14% and 55%, respectively, sources said.

The household segment contributed roughly 33% of total EBITDA during the quarter, while the pool segment contributed around 40%, two of the sources said.

Last December, KIK said it was buying NC Brands, a maker of specialty chemical products for pools, for USD 170m, funding the deal with a USD 170m incremental term loan. The acquisition included USD 55m of earn-out cash considerations until 2020 if certain targets are met.

Messages left with KIK were not returned.

2019 Debtwire

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