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Credit Agreements
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Credit Agreements

16. Credit Agreements

The Company was obligated under the following debt instruments (in millions):

 

 

December 31, 2023

 

 

 

Principal

 

 

Debt Issuance Costs

 

 

Debt, Net

 

4.600% Senior notes due May 2028

 

$

300.0

 

 

$

(1.7

)

 

$

298.3

 

3.100% Senior notes due March 2030

 

 

300.0

 

 

 

(2.5

)

 

 

297.5

 

Other long-term debt

 

 

1.7

 

 

 

—

 

 

 

1.7

 

 

$

601.7

 

 

$

(4.2

)

 

$

597.5

 

 

 

 

 

 

 

 

 

 

Revolving credit facilities

 

 

 

 

 

 

 

$

175.0

 

 

 

 

December 31, 2022

 

 

 

Principal

 

 

Debt Issuance Costs

 

 

Debt, Net

 

4.600% Senior notes due May 2028

 

 

300.0

 

 

 

(2.1

)

 

 

297.9

 

3.100% Senior notes due March 2030

 

 

300.0

 

 

 

(2.9

)

 

 

297.1

 

 

$

600.0

 

 

$

(5.0

)

 

$

595.0

 

 

 

 

 

 

 

 

 

 

Revolving credit facilities

 

 

 

 

 

 

 

$

9.7

 

On March 23, 2022, the Company entered into a Third Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement provides for an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in March 2027 with an initial maximum aggregate amount of availability of $1.1 billion. At December 31, 2023, borrowings under the Revolving Credit Facility of $175.0 million and outstanding letters of credit of $15.8 million reduced available capacity under the Revolving Credit Facility to $909.2 million.

Under the Credit Agreement, the Company is obligated to pay (i) an unused commitment fee ranging from 0.080% to 0.225% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.4375% to 1.500% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.

Borrowings under the Credit Agreement bear interest for dollar-denominated loans at a variable rate equal to (i) Term SOFR (the forward-looking secured overnight financing rate) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) the base rate (which is the highest of (x) Bank of America, N.A.’s prime rate, (y) the federal funds rate plus 0.50% or (z) the sum of 1.00% plus one-month Term SOFR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At December 31, 2023, the interest spread on the Revolving Credit Facility was 112.5 basis points, resulting in an interest rate of 6.6%.

The Credit Agreement contains various restrictions and covenants, including a requirement that the Company maintain a leverage ratio at certain levels, subject to certain exceptions, restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional subsidiary indebtedness and consummate acquisitions and a restriction on the disposition of all or substantially all of the assets of the Company and its subsidiaries taken as a whole.

The Credit Agreement requires the Company to maintain a maximum leverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated indebtedness to the Company’s consolidated net income for the previous four quarters before interest, taxes, depreciation, amortization, non-cash charges and certain other items (EBITDA)) as of the last day of any fiscal quarter of 3.75 to 1.00, subject to the Company’s right to temporarily increase the maximum leverage ratio to 4.25 to 1.00 in connection with certain material acquisitions. The Company was in compliance with the financial covenant contained in the Credit Agreement as of December 31, 2023.

In March 2022, the Company entered into an uncommitted line of credit to provide short-term finance support to operations in China. The line of credit carries a maximum availability of 70.0 million Chinese renminbi. There was no amount

outstanding on the line of credit as of December 31, 2023. There was 12.6 million Chinese renminbi ($1.8 million) outstanding on the line of credit as of December 31, 2022. The line of credit carries a variable interest rate that is set by the lender, which was 3.6% at December 31, 2023.

In September 2019, the Company entered into an uncommitted line of credit to provide short-term finance support to operations in China. The line of credit carries a maximum availability of 426.0 million Chinese renminbi. There was no amount outstanding on the line of credit as of December 31, 2023. There was 54.0 million Chinese renminbi ($7.8 million) outstanding on the line of credit as of December 31, 2022. The line of credit carries a variable interest rate that is set by the lender, which was 4.0% at December 31, 2023.

In conjunction with the Hinowa acquisition on January 31, 2023, the Company assumed €16.3 million ($17.7 million) of outstanding debt of the acquiree, of which €14.3 million ($15.5 million) was repaid in February 2023. As of December 31, 2023, €1.5 million ($1.7 million) of notes remained outstanding with a weighted average interest rate of 1.2%.

In May 2018, the Company issued $300.0 million of 4.600% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”). In February 2020, the Company issued $300.0 million of 3.100% unsecured senior notes due March 1, 2030 (the “2030 Senior Notes”). The 2028 Senior Notes and the 2030 Senior Notes were issued pursuant to an indenture (the “Indenture”) between the Company and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the 2028 and 2030 Senior Notes at any time for a premium.

The fair value of the long-term debt is estimated based upon Level 2 inputs to reflect the market rate of the Company’s debt. At December 31, 2023, the fair value of the 2028 Senior Notes and the 2030 Senior Notes was estimated to be $295 million ($285 million at December 31, 2022) and $269 million ($254 million at December 31, 2022), respectively. The fair values of the revolving credit facilities approximated their carrying values at December 31, 2023 and 2022. See Note 23 for the definition of a Level 2 input.