S&P downgrades Associated Materials

Standard & Poor's said it lowered its ratings on AMH Holdings Inc. and its operating subsidiary Associated Materials Inc. (AMI).

The corporate credit ratings were lowered to B- from B. The outlook is stable, the agency said.

The downgrade reflects S&P's concern that weak earnings could lead to thin levels of free operating cash flow and that, as a result, debt reduction will fall short of accreting interest and cause debt leverage to continue increasing.

The ratings on AMI and AMH reflect a highly leveraged financial profile, exposure to volatile raw-material costs, cyclical end markets and relatively high overhead costs, S&P said, adding these negatives overshadow the benefits provided by the company's position as a midsize manufacturer of exterior residential building products and by its company-owned distribution centers.

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