Industrial services giant BrandSafway, a subsidiary of Brand Industrial Services Inc., reported a significant decline in first-quarter earnings, driven by a combination of rising costs and increased investment in data center construction. This slump weighed on the price of its corporate bonds.
According to sources familiar with the matter, the company, which is controlled by private equity firm Clayton, Dubilier & Rice, saw its earnings before interest, taxes, depreciation, and amortization (EBITDA) fall 20% year-over-year to $71 million for the first quarter. The performance drop is attributed primarily to two factors: persistently higher overall operating costs and investment spending as the company expands its data center construction business.
The weak earnings directly impacted investor confidence in BrandSafway's corporate bonds. Data shows that since last December, the prices of BrandSafway's loans and bonds have steadily declined from previous levels above 90 cents on the dollar. Following the non-public release of the results last Friday, the price of its $1.5 billion term loan fell a further two points on Monday to approximately 79.625.
In response to investor concerns, BrandSafway informed creditors earlier this week that full-year 2026 profits could slightly exceed last year's levels as the company passes higher costs on to customers. However, the company's larger-than-expected cash burn and its continued spending on data center construction are keeping creditors closely focused on whether this expansion strategy can effectively offset recent margin pressures.
BrandSafway is a leading global provider of industrial services and access solutions, with operations spanning scaffolding, insulation, coatings, fireproofing, and industrial cleaning. It serves a range of end markets, including petrochemicals, power, infrastructure, and data centers. In recent years, the company has been actively expanding into the data center construction sector, aiming to capitalize on growth opportunities from the surge in digital infrastructure investment.
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