FleetPride Faces Financial Challenges
A drop in truck parts sales is hurting a highly-leveraged player in the parts business.
Hurt by decreased parts sales and revenue, large truck parts distributor FleetPride is struggling to generate enough cash flow to cover its debt obligations.
Major credit rating agency Moody's Ratings recently downgraded their debt ratings for the company from B3 to Caa1, citing concerns about the company's ability to turnaround this year.
A key driver of Moody's negative rating was "ongoing negative free cash flow" at FleetPride through the first quarter. Moody's reported that the company had "looming debt maturities" which were a result of "aggressive financial strategies and risk management practices."
Moody's said declining operating results and negative cash flow at FleetPride was making it difficult to support their existing capital structure. As of March 31, 2025, FleetPride had a debt-to-EBITDA ratio of 9.6x. Moody's expect this to "decline modestly" by the end of 2025 but that it would still remain "unsustainably high."
According to Moody's, FleetPride is relying on sales growth and cash flow improvement for the rest of the year with more smaller accounts, e-commerce and private label offerings.
FleetPride faces another downgrade if it can't improve liquidity and generate positive free cash flow or if the capital structure becomes untenable. The ratings could also be downgraded if the company can't refinance a $225 million second lien term loan before Nov. 5, 2026.
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