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Debt | 9 Months Ended
--- | ---
Sep. 30, 2024
Debt Disclosure [Abstract] |
Debt | Debt The components of debt consisted of the following:
(in millions) | September 30, 2024 |  | December 31, 2023
Equipment Financing due May 2024 | $ | — |  |  | $ | 2.7 |
Equipment Financing due November 2025 | 10.6 |  |  | 15.2 |
5.15% Mortgage due November 2025 | 61.5 |  |  | 63.3 |
0.375% Convertible Senior Notes due September 2026 | 800.0 |  |  | 800.0 |
Equipment Financing | 14.0 |  |  | 12.7 |
Term Loan due August 2031 | 483.7 |  |  | 487.5 |
Revolving Credit Facility expires June 2028 | — |  |  | — |
Equipment Financing due July 2028 | 24.8 |  |  | 29.0 |
Finance lease obligation | 18.7 |  |  | 22.9 |
Unamortized debt discount | (6.1) |  |  | (6.4) |
Debt issuance costs | (8.9) |  |  | (11.1) |
Total debt, net | 1,398.3 |  |  | 1,415.8 |
Less: current portion | 42.0 |  |  | 49.4 |
Total long-term debt, net | $ | 1,356.3 |  |  | $ | 1,366.4 |
0.375% Convertible Senior Notes The Company’s 0.375% Convertible Senior Notes due September 2026 (the “Convertible Notes”) have an effective interest rate of 0.76%. The components of interest expense related to the Convertible Notes for the were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in millions) | 2024 |  | 2023 |  | 2024 |  | 2023
Contractual interest expense | $ | 0.8 |  |  | $ | 0.8 |  |  | $ | 2.3 |  |  | $ | 2.3 |
Amortization of debt issuance costs | 0.7 |  |  | 0.7 |  |  | 2.2 |  |  | 2.2 |
Total interest recognized on the Convertible Notes | $ | 1.5 |  |  | $ | 1.5 |  |  | $ | 4.5 |  |  | $ | 4.5 |
As of September 30, 2024 and December 31, 2023, unamortized issuance costs associated with the Convertible Notes were $5.9 million and $8.2 million, respectively. The Convertible Notes are convertible into cash, shares of the Company’s common stock, or the combination of cash and shares of common stock, at the Company’s election, at an initial conversion rate of 4.4105 shares of common stock per $1,000 principal amount of the notes, which is equivalent to a conversion price of $226.73 per share, subject to adjustment under certain circumstances. The notes will be convertible at the holder’s election, from June 1, 2026 through August 28, 2026 and prior to then under certain circumstances as set forth in the agreement. Additionally, on or after September 6, 2023, the Company may redeem for cash all or a portion of the Convertible Notes, if its stock price has been equal to or greater than $294.75 for at least 20 of the prior 30 consecutive trading days including the date which the Company provides notice of redemption. Additional interest of 0.5% per annum is payable if the Company fails to timely file required documents or reports with the Securities and Exchange Commission (“SEC”). If the Company merges or consolidates with a foreign entity, the Company may be required to pay additional taxes. The Company determined that the higher interest payments and tax payments required in certain circumstances were embedded derivatives that should be bifurcated and accounted for at fair value. The Company assessed the value of the embedded derivatives at each balance sheet date and determined they had nominal value. In conjunction with the issuance of the Convertible Notes, the Company purchased Capped Calls on the Company’s common stock with certain counterparties to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) if, at the time of conversion, its stock price exceeds the conversion price under the Convertible Notes. The Capped Calls have an initial strike price of $335.90 per share, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $167.95 per share on the date of the transaction. The Capped Calls cover 3.5 million shares of common stock and are recorded within stockholders’ equity on the consolidated balance sheets. Equipment Financing In 2023, the Company entered into an arrangement under which the Company may obtain up to $24.0 million of financing for manufacturing equipment. The Company is involved in the construction of the manufacturing equipment; accordingly, it is included in property, plant and equipment on the consolidated balance sheet at both September 30, 2024 and December 31, 2023. The Company’s obligation reflects payments made to date by the third-party bank to the equipment manufacturer, net of discount and less repayment of principal. The financing obligation will mature 36 months following completion of construction. Senior Secured Credit Agreement In January 2024, the Company amended its Term Loan B (“Term Loa”) due May 2028 to bear interest at a rate of Secured Overnight Financing Rate (“SOFR”) plus 3.0%, with a 0% SOFR floor. At the same time, the Company amended its Revolving Credit Facility such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2.375% to 3.0% based on the Company’s net leverage ratio and credit rating. In August 2024, the Company amended its Term Loan to bear interest at a rate of SOFR plus 2.5% and extended the term to August 2031. At the same time, the Company amended its Revolving Credit Facility such that outstanding borrowings bear interest at a rate of SOFR plus an applicable margin of 2% to 2.5% based on the Company’s net leverage ratio. Carrying Value At the end of each period, the carrying value of the Company’s debt was comprised of the following:
(in millions) | September 30, 2024 |  | December 31, 2023
Term Loan | $ | 475.2 |  |  | $ | 479.2 |
Convertible Notes | 794.1 |  |  | 791.8 |
Equipment financings | 49.2 |  |  | 59.3 |
Mortgage | 61.1 |  |  | 62.6 |
Finance lease obligation | 18.7 |  |  | 22.9 |
Total debt, net | $ | 1,398.3 |  |  | $ | 1,415.8 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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