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Note 11 - Credit Agreements
 6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

11.   Credit Agreements

 

Short-term borrowings included in the condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $77,889 and $48,990, respectively.

 

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

 

  

June 30,

  

December 31,

 
  

2023

  

2022

 

Tranche A Term Loan

 $750,000  $750,000 

Tranche B Term Loan

  530,000   530,000 

Original issue discount and deferred financing costs

  (14,647)  (16,568)

Revolver

  250,000   90,000 

Finance lease obligation

  29,770   27,420 

Other

  256   966 

Total

  1,545,379   1,381,818 

Less: current portion of debt

  18,767   10,083 

Less: current portion of finance lease obligation

  3,302   2,650 

Total

 $1,523,310  $1,369,085 

 

Maturities of the Company's Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding at June 30, 2023 are as follows:

 

  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolver

  

Total

 

2023

 $9,375  $-  $-  $9,375 

2024

  28,125   -   -   28,125 

2025

  46,875   -   -   46,875 

2026

  65,625   530,000   -   595,625 

2027

  600,000   -   250,000   850,000 

Total

 $750,000  $530,000  $250,000  $1,530,000 

 

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, as noted in the table above. 

 

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 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, 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 June 30, 2023, was 7.01%. 

 

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 June 30, 2023, the Company’s net secured leverage ratio was 2.52 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.

 

In June 2022, the Company 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 with an available borrowing amount of $1,250,000 (Revolving Facility), terminated the ABL Facility, and replaced all LIBOR provisions in the existing Tranche B Term Loan Facility with SOFR provisions. 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 and to 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 condensed consolidated statements of comprehensive income. 

 

The Tranche A Term Loan Facility and the Revolving Facility initially bore 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 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 and the Revolving Facility as of June 30, 2023 was 6.49%. 

 

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 June 30, 2023, the Company’s total leverage ratio was2.66 to 1.00 times, and the Company's interest coverage ratio was 7.00 to 1.00. The Company was in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2023. 

 

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 condensed consolidated statements of comprehensive income. 

 

As of June 30, 2023, there was $250,000 outstanding under the Revolving Facility, leaving $999,945 of availability, net of outstanding letters of credit.

 

See Note 4, "Derivative Instruments and Hedging Activities" and Item 7A of the Annual Report on Form 10-K for further information on interest rate swaps that are currently outstanding and partially offset the above interest rate expense.