S&P lowers Leaf Home Solutions

S&P said it lowered its ratings for LHS Borrower LLC (Leaf Home Solutions) and its revolver and first-lien term loan to B- from B. The 3 recovery ratings on the loans indicate meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“Revenue growth has moderated over the past year and declined in the second quarter of 2023 following rapid growth in 2020, 2021, and the first half of 2022. We now forecast low-single-digit revenue growth in both 2023 and 2024. Our tempered expectations are partially a result of our view that consumers are adversely impacted by rising interest rates and inflation costs, which have slowed the rate at which people spend on discretionary items such as home improvement. Additionally, we believe the shift back to working in the office instead of remotely has softened demand for home improvement services as people spend more time away from the home,” the agency said in a press release.

Despite the higher leverage S&P said it estimates, it sees LHS delivering healthy cash flow.

The outlook is stable.

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