It’s Getting Tough in the Market

[TOXIC]

Pure Fishing is one of the largest ownership corporations in the fishing industry.

 

The financial rating of Pure Fishing has been downgraded as sales at the world’s largest supplier of fishing tackle declined by nearly 15% last year.

Moody’s Investment Services lowered Pure Fishing’s Corporate Family Rating – long-term ratings that reflect the likelihood of a default on a corporate family’s debt – and Probability of Default Rating both to Caa2 (very high risk).

“The rating downgrade and negative outlook reflects Pure Fishing’s unsustainable capital structure and the elevated risk of default over the next 12 to 18 months given its very high financial leverage,” said Oliver Alcantara, AVP-Analyst at Moody’s. “We expect that demand and industry headwinds will persist in 2023 and the company has limited financial flexibility to absorb prolonged revenue pressures given its constrained liquidity.

Pure Fishing reported ‘meaningfully lower operating results’ in fiscal 2022, with year-on-year revenue declining 14.6% as persistently high inflation and weakening macro-economic conditions pressurised consumer demand for its product.

In addition, said Moody’s, the elevated level of inventory has negatively impacted reorders.

The company’s debt balance sheet doubled over the past two years due, in part, to having to fund the acquisitions of Plano Synergy in April 2021 and Svendsen Sport in February this year, added the report. Since 2021, ongoing cash flow deficits also contributed to higher debt.

Moody’s noted that in late fiscal 2022 and early 2023, Pure Fishing completed a series of transactions to improve its liquidity, which included entering into a $60 million property loan due October 2024, secured by the company’s North American real estate and provided by its financial sponsors, Sycamore Partners. The company also obtained a $50 million promissory note due until February 2027 to fund working capital and for general corporate purposes. In addition, the company extended the maturity of its ABL revolving facility to March 2026.

Pure Fishing announced changes to its executive management team this month, with its CEO, Harlan Kent, stepping down but remaining on the Board and Dave Allen replacing him. The company has also implemented productivity improvements that include labour cost reduction and production efficiency improvements.

“The debt capital injection provides near-term financial flexibility to fund operations and working capital seasonality, particularly during the first quarter of 2023, ahead of the North American fishing season,” added Moody’s.

“The company anticipates cash flow generation will improve in the middle of this year as orders stabilise and excess inventory declines. Still, Pure Fishing will need to sustainably and meaningfully improve its profitability and cash flows to sustain its higher debt service requirements and fund business seasonality past 2023.”

 

[Darth-Baiter]

i'll save that for tonight, when i need to sleep. 

 

 

[MN Fisher]

Was the purchase of Plano 2 years ago during the COVID financial downturn the straw that broke the camel's back?

 

Inquiring minds want to know.

[TOXIC]

Since I’m not really an “insider” in the corporate side of the fishing industry, I can’t really give any insight.  But I did notice Pure Fishing was buying a lot of fishing related entities and it made me think that in the business world, an unusual amount of acquisitions can signal a “last grasp” of cornering the market and increasing the balance sheet.  Corporate economics is a lot different than just consumers buying baits.  

[bowhunter63]

Covid ruined everything. Rage Tail is still up so we’re still good 

[Darth-Baiter]

54 minutes ago, bowhunter63 said:

Covid ruined everything. Rage Tail is still up so we’re still good 

not everything.

 

the pharm industry is golden.

[Skunkmaster-k]

I don’t know what all that means, but it don’t sound good. 

[bowhunter63]

1 hour ago, Darth-Baiter said:

not everything.

 

the pharm industry is golden.

I know I help support My wife’s meds are out of this world 

[Captain Phil]

A well diversified portfolio of best in class companies is your best protection.  If a company is losing money on very deal, they can't make it up in quantity. 

[Tennessee Boy]

I know what it means.  The company will be sold (again) or broken up and sold to marketing gurus who will exploit the very valuable brands owned by Pure Fishing.  You will soon be able to buy Ugly Stick knives  (No wait they’ve already done that) , Trilene fishing scales,  Abu Garcia lure wraps.  All of these products will be designed and manufactured in China and will be exactly the same as the ones you can buy cheaper on Amazon and eBay.  We will buy them anyway because we trust the brand names we’ve known all our lives.

 

[TnRiver46]

14 minutes ago, Captain Phil said:

A well diversified portfolio of best in class companies is your best protection.  If a company is losing money on very deal, they can't make it up in quantity. 

Not that market 

[flyfisher]

2 hours ago, bowhunter63 said:

Covid ruined everything. Rage Tail is still up so we’re still good 

nah it merely exposed the false economy that has been going on for 15+ years and its lack of inflation, low interest rates... etc.  

[TnRiver46]

19 minutes ago, flyfisher said:

nah it merely exposed the false economy that has been going on for 15+ years and its lack of inflation, low interest rates... etc.  

fishing, please! 

[Captain Phil]

From what I can see, fishing is not losing in popularity.   Our boat ramp parking lots are maxed out on weekends and $100,000 bass boats are as common as ant hills.   I don't even launch my boat on the weekends.  Maybe what we need is a recession so I can get on the lake?  ?

[flyfisher]

43 minutes ago, Captain Phil said:

From what I can see, fishing is not losing in popularity.   Our boat ramp parking lots are maxed out on weekends and $100,000 bass boats are as common as ant hills.   I don't even launch my boat on the weekends.  Maybe what we need is a recession so I can get on the lake?  ?

catch 22...then people with those boats and no jobs will still be on the water until it gets repossessed lol

[Darth-Baiter]

34 minutes ago, flyfisher said:

catch 22...then people with those boats and no jobs will still be on the water until it gets repossessed lol

repo man prefers the boat on land?

[Captain Phil]

36 minutes ago, flyfisher said:

catch 22...then people with those boats and no jobs will still be on the water until it gets repossessed lol

 

I don't believe things will be that bad.  However, I do wonder what those folks will do with all those 300 h.p. motors when gas is $8 a gallon?

[MN Fisher]

6 minutes ago, Captain Phil said:

when gas is $8 a gallon?

You mean about what it would be if the price hadn't been artificially suppressed all these years?

 

I remember paying $1.37/gallon when I had my Cuda back in 1977 - as a high-school student working part-time, I didn't drive it very much. If gas had kept pace with inflation, it'd be $6.60 a gallon now.

[Captain Phil]

21 minutes ago, MN Fisher said:

You mean about what it would be if the price hadn't been artificially suppressed all these years?

 

I remember paying $1.37/gallon when I had my Cuda back in 1977 - as a high-school student working part-time, I didn't drive it very much. If gas had kept pace with inflation, it'd be $6.60 a gallon now.

 

When I was in high school regular gas reached 18 cents a gallon during a gas war.  I paid 30 cents a gallon for Sunoco 260.   Of course I was making $1.10 an hour bagging groceries. ?

[gim]

42 minutes ago, Captain Phil said:

However, I do wonder what those folks will do with all those 300 h.p. motors when gas is $8 a gallon?

Hasn’t seemed to slow down the wake boats yet. And they burn through more gas than any watercraft out there. A lot more.

[Big Rick]

5 hours ago, TnRiver46 said:

fishing, please! 

B-b-but we're in the Everything Else Threads......

[slonezp]

9 hours ago, bowhunter63 said:

Covid ruined everything. Rage Tail is still up so we’re still good 

Covid didn't ruin anything. The reaction to it did.

[throttleplate]

18 minutes ago, slonezp said:

Covid didn't ruin anything. The reaction to it did.

 

1 hour ago, Big Rick said:

B-b-but we're in the Everything Else Threads......

 

[slonezp]

5 hours ago, flyfisher said:

catch 22...then people with those boats and no jobs will still be on the water until it gets repossessed lol

Better for me