XML 35 R19.htm IDEA: XBRL DOCUMENT v3.22.4
Note 12 - Credit Agreements
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Debt Disclosure [Text Block]

12.

Credit Agreements

 

Short-term borrowings included in the consolidated balance sheets as of December 31, 2022 and 2021 consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $48,990 and $72,035, respectively.

 

Long-term borrowings are included in the consolidated balance sheets as follows:

 

  

December 31,

 
  

2022

  

2021

 

Tranche A Term Loan

 $750,000  $- 

Tranche B Term Loan

  530,000   780,000 

Original issue discount and deferred financing costs

  (16,568)  (13,214)

ABL facility

  -   100,000 

Revolver

  90,000   - 

Finance lease obligation

  27,420   39,175 

Other

  966   2,060 

Total

  1,381,818   908,021 

Less: current portion of debt

  10,083   1,721 

Less: current portion of finance lease obligation

  2,650   4,209 

Total

 $1,369,085  $902,091 

 

Maturities of long-term borrowings outstanding at December 31, 2022, excluding finance lease obligations as their maturities are disclosed in Note 10, “Leases,” and before considering original issue discount and deferred financing costs, are as follows:

 

  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolver and Other

  

Total

 

2023

 $9,375  $-  $708  $10,083 

2024

  28,125   -   53   28,178 

2025

  46,875   -   56   46,931 

2026

  65,625   530,000   86   595,711 

2027

  600,000   -   90,032   690,032 

After 2027

  -   -   31   31 

Total

 $750,000  $530,000  $90,966  $1,370,966 

 

The Tranche B Term Loan Facility matures on December 13, 2026, while the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility principal is repayable in quarterly installments beginning in September 2023.

 

The Company’s credit agreements originally provided for a $1,200,000 term loan B credit facility (Tranche B Term Loan Facility) and included a $300,000 uncommitted incremental term loan on that facility. The maturity date of the Tranche B Term Loan Facility is December 13, 2026. The Tranche B Term Loan Facility initially bore interest at rates based on either a base rate plus an applicable margin of 1.75% or adjusted LIBOR rate plus an applicable margin of 2.75%, subject to a LIBOR floor of 0.75%. After a number of amendments, as listed below, the Tranche B Term Loan Facility currently bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted Secured Overnight Financing Rate (SOFR) rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.00%. The interest rate for the Tranche B Term Loan Facility as of December 31, 2022 was 5.97%. 

 

The Tranche B Term Loan Facility does not require an Excess Cash Flow payment if the Company’s net secured leverage ratio is maintained below 3.75 to 1.00 times. As of December 31, 2022, the Company’s net secured leverage ratio was 1.55 to 1.00 times, and the Company was in compliance with all covenants of the Tranche B Term Loan Facility. There are no financial maintenance covenants on the Tranche B Term Loan Facility.

 

The Company’s credit agreements also originally provided for a senior secured ABL revolving credit facility (ABL Facility). ABL Facility borrowings initially bore interest at rates based on either a base rate plus an applicable margin of 1.00% or adjusted LIBOR rate plus an applicable margin of 2.00%, in each case, subject to adjustments based on average availability under the ABL Facility. 

 

In May 2021, the Company amended the ABL Facility, increasing its borrowing limit from $300,000 to $500,000, raising its incremental capacity from $100,000 to $200,000, and extending the maturity date from June 12, 2023 to May 27, 2026 (Amended ABL Facility). In addition, the Amended ABL Facility modified the pricing by reducing certain applicable interest rates to either a base rate plus an applicable margin of 0.00% to 0.25% or adjusted LIBOR rate plus an applicable margin of 1.00% to 1.25%, in each case, based on average availability under the Amended ABL Facility. In connection with this amendment, the Company capitalized $920 of new debt issuance costs as deferred financing costs on long-term borrowings in the second quarter of 2021. At the same time, the Company also amended its Tranche B Term Loan Facility agreement to reflect the same amendments made to the ABL Facility.

 

In May 2021, the Company borrowed $50,000 under the Amended ABL Facility, the proceeds of which were used as a voluntary prepayment of the Tranche B Term Loan Facility. As a result of this prepayment of the Tranche B Term Loan Facility, the Company wrote off $831 of original issue discount and capitalized debt issuance costs during the second quarter of 2021 as a loss on extinguishment of debt in the consolidated statements of comprehensive income.

 

In June 2022, the Company again amended and restated its existing credit agreements (Amended Credit Agreement) resulting in a new term loan facility in an aggregate principal amount of $750,000 (Tranche A Term Loan Facility), established a new revolving facility in an aggregate principal amount of $1,250,000 (Revolving Facility), terminated the ABL Facility, and replaced all LIBOR provisions to the existing Tranche B Term Loan Facility with SOFR provisions. The maturity date of the Tranche A Term Loan Facility and the Revolving Facility is June 29, 2027. Proceeds received by the Company from the Tranche A Term Loan Facility were used to repay the total existing outstanding balance on the Company's former ABL Facility, make a $250,000 voluntary prepayment on the Tranche B Term Loan Facility, with the remaining funds to be used for future general corporate purposes. As a result of these prepayments, the Company wrote off $3,546 of original issue discount and capitalized debt issuance costs during the second quarter of 2022 as a loss on extinguishment of debt in the consolidated statements of comprehensive income. The Revolving Facility was unfunded at closing.

 

The Tranche A Term Loan Facility and the Revolving Facility initially bear interest at a rate based on adjusted SOFR plus an applicable margin of 1.5% through December 31, 2022, subject to a SOFR floor of 0.0%. Beginning on January 1, 2023, the Tranche A Term Loan Facility and the Revolving Facility will bear interest at a rate based on adjusted SOFR plus an applicable margin between 1.25% and 1.75%, based on the Company's total leverage ratio and subject to a SOFR floor of 0.0%. The interest rate for the Tranche A Term Loan Facility as of December 31, 2022 was 5.72%. 

 

The Tranche A Term Loan Facility and the Revolving Facility added certain financial covenants that require the Company to maintain a total leverage ratio below 3.75 to 1.00 as well as an interest coverage ratio above 3.00 to 1.00. As of December 31, 2022, the Company’s total leverage ratio was 1.74 to 1.00 times, and the Company's interest coverage ratio was 14.81 to 1.00. The Company was in compliance with all other covenants of the Amended Credit Agreement as of December 31, 2022. 

 

The Tranche B Term Loan Facility, Tranche A Term Loan Facility and Revolving Facility are guaranteed by substantially all of the Company’s wholly-owned domestic restricted subsidiaries and are secured by associated collateral agreements which pledge a first priority lien on virtually all of the Company’s assets, including fixed assets and intangibles, cash, trade accounts receivable, inventory, and other current assets and proceeds thereof. 

 

In connection with the June 2022 refinancing and in accordance with ASC 470-50, the Company capitalized $10,330 of fees paid to creditors as deferred financing costs on long-term borrowings and expensed $800 of transaction fees. The Company evaluated on a lender-by-lender basis if the debt related to returning lenders on the Revolving Facility was significantly modified or not, resulting in the write-off of $197 in unamortized deferred financing costs related to the former ABL Facility as a loss on extinguishment of debt in the consolidated statements of comprehensive income. 

 

As of December 31, 2022, there was $90,000 outstanding under the Revolving Facility, leaving $1,158,725 of availability, net of outstanding letters of credit.