Canada-based Peak Achievement Athletics, the parent of Bauer, Cascade, and Maverick hockey and lacrosse brands, plans to issue C$250 million ($179 mm) of unsecured notes due August 2033, with proceeds used to repay a portion of its existing term loan.
News of the debt offering came from a debt ratings update from S&P Global Ratings, which assigned its 'BB-' issuer credit rating (ICR) to Peak, reflecting the 'b+' stand-alone credit profile (SACP) and one notch of uplift based on its assessment of Peak's moderate strategic importance to parent Fairfax Financial Holdings Ltd. (A-/Stable/-).
S&P also assigned a 'B+' issue-level rating and '5' recovery rating to the company's proposed unsecured debt. The '5' recovery rating reflects its expectation for modest (10 percent-30 percent; rounded estimate: 10 percent) recovery in the event of a default.
S&P said its stable outlook on Peak reflects its view that Peak will maintain its strong market share in its key hockey equipment category. The outlook also incorporates S&P's view that sustained pricing power and gradual market-share increases should result in EBITDA increasing over the next 12 months such that the company's S&P Global Ratings-adjusted leverage ratio improves to the 3x-4x area.
S&P said in its analysis, "Our rating on Peak reflects its leading market share in North America , but it's smaller than many of the other top sports equipment manufacturers. Its Bauer brand has a leading position in the niche hockey equipment market, covering the full breadth of hockey equipment products. It competes primarily with CCM Hockey. We estimate that Bauer leads the market in the skates, protective equipment, and goalie equipment categories. The customers for its core products are not only include amateur and recreational players but also elite and performance-focused athletes who tend to replace their equipment more frequently than casual players, supporting our view that the company has recurring revenue generation. However, the company has limited revenue diversity, as it manufactures and sells only hockey and lacrosse equipment and apparel. In addition, it generates about 70 percent of revenue in North America, further limiting diversity. Therefore, its scale of operations is smaller than that of other leading sports equipment manufacturers, such as Acushnet Holdings Corp. (over US$2 billion in annual revenue; BB/Stable/-) and Topgolf Callaway Brands Corp. (more than $4 billion; B/Developing/-). As a result, we assess Peak's business risk profiles as weak.
"We anticipate that Peak's leverage will improve to below 4.0x in F2026 as acquisition-related one-time charges roll off. The company plans to issue C$250 million (US$179 million) unsecured notes due August 2033, using the majority of the proceeds to pay-down existing US$339 million term loan due December 2027. Pro forma the transaction and based on S&P Global Ratings-adjusted EBITDA for the 12 months through June 30, 2025, the company's leverage will be about 5x. However, for the fiscal year ending March 31, 2025, there were significant one-time costs related to Fairfax acquiring Peak. As those one-time transaction-related charges phase out, we expect EBITDA margin to return to a more normal 19 percent-20 percent in F2026. As a result, we project S&P Global Ratings-adjusted leverage will improve to the 3.5x-4x area by year-end fiscal 2026.
"Our ratings incorporate a one-notch uplift for group support. Peak is 100 percent-owned by and fully consolidated with the financials of its parent, Fairfax, but it will operate as a stand-alone business. We view Peak as moderately strategic to Fairfax. Therefore, we don't expect any ongoing financial support from Fairfax, and only under extraordinary circumstances would we expect Fairfax to assist financially. We also believe Fairfax will be a long-term investor in Peak and maintain a prudent financial policy with respect to dividends. As a result, our 'b+' SACP on Peak receives a one-notch parental uplift, resulting in a 'BB-' ICR.
"Robust pricing power and solid demand for hockey equipment will support near-term growth. Q1 2026 sales growth stemmed primarily from price increases. It raised prices earlier this year due to tariffs, and there was minimal customer backlash. Hockey and lacrosse consumers generally have relatively high household incomes and tend to be more inclined to pay for quality and premium products. This and Peak's well-established brand equity give the company significant pricing power. Across all of its categories, the company offers products at multiple price tiers, broadening its potential customer base. And to better attract and support beginner players, it didn't raise the prices of entry-level products this year. We expect top-line growth of approximately 7.5 percent in 2026, primarily driven by price increases. The remainder will come from volume growth, bolstered by the launch of the Vapor FlyLite collection in June, contracts with the Professional Women's Hockey Leage and Hockey Canada, and the continued expansion of its custom products line.
"Even with tariffs, we believe the company's profitably will remain above the industry average. Absent one-time items related to sale to Fairfax, Peak's 2025 S&P Global Ratings-adjusted EBITDA margin was 19 percent-20 percent. This is above the 16 percent-17 percent generated by Topgolf and TaylorMade Holdings Inc. (B/Stable/-). With most of Peak's manufacturing based overseas and significant sales in the U.S., it remains highly exposed to tariffs; however, management has indicated that these costs have been passed on to customers through price increases. The company is also working with key suppliers to reduce its exposure to China by relocating production to elsewhere in the region. We expect Peak to maintain these margins in the near term, even when taking into account tariff-induced macroeconomic headwinds in Canada. However, the risk remains that a further increase in tariff rates could compress EBITDA margins and pressure the company's creditworthiness if EBITDA declines substantially.
"Given the maturity of the hockey market, growth depends on product innovation and expansion. The hockey equipment industry is expected to grow only modestly (about 1 percent-2 percent annually), with female and youth participation likely driving the growth. Therefore, we believe Peak's long-term growth will hinge on its ability to expand its market share through innovation and strategic marketing. Operating within a duopoly in its core markets (its main competitor is CCM), Peak's focus on R&D has resulted in market share expansion and our we expect it to outpace several smaller peers in terms of innovation. As part of its long-term strategy, the company expects to grow its high-margin direct-to-customer business significantly. This will be underpinned by the expansion of its custom-made products line and incremental and more targeted marketing spending.
"The business has sufficient liquidity to manage its seasonal working-capital swings. Generally, Peak's highest hockey revenues are in the summer and fall, and its lacrosse revenues peak in the fall and winter. As a result, its receivable balance increases significantly in the second quarter, leading it to use over $100 million in working capital. However, we believe the company's US$175 million revolving credit facility provides an adequate liquidity cushion to cover its seasonal working-capital needs.
"The stable outlook reflects our view that Peak will maintain its strong market share in key hockey equipment. The outlook also incorporates our view that sustained pricing power and gradual market-share increases should result in EBITDA increasing over the next 12 months such that the company's S&P Global Ratings-adjusted leverage ratio will improve in the 3x-4x area."