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Note 11 - Credit Agreements
 6 Months Ended
Jun. 30, 2024
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, 2024, and December 31, 2023, consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $66,407 and $81,769, respectively.

 

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

 

  

June 30,

  

December 31,

 
  

2024

  

2023

 

Tranche A Term Loan

 $735,938  $745,313 

Tranche B Term Loan

  530,000   530,000 

Original issue discount and deferred financing costs

  (10,735)  (12,685)

Revolving Facility

  150,000   150,000 

Finance lease obligation

  87,041   71,308 

Other

  2,880   9,512 

Total

  1,495,124   1,493,448 

Less: current portion of debt

  44,889   42,110 

Less: current portion of finance lease obligation

  5,539   3,785 

Total

 $1,444,696  $1,447,553 

 

Prior to the Tranche B Term Loan Facility extension discussed in Note 16, "Subsequent Events", as of June 30, 2024, 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 is repayable in installments due at the end of each quarter commencing September 2023. Maturities of the Company's Tranche A Term Loan Facility, Tranche B Term Loan Facility, and Revolving Facility outstanding on  June 30, 2024, are as follows:

 

  

Tranche A Term Loan

  

Tranche B Term Loan

  

Revolving Facility

  

Total

 

2024

 $23,438  $-  $-  $23,438 

2025

  46,875   -   -   46,875 

2026

  65,625   530,000   -   595,625 

2027

  600,000   -   150,000   750,000 

Total

 $735,938  $530,000  $150,000  $1,415,938 

 

On July 3, 2024, the Company extinguished its existing $530,000 Term Loan B Facility and replaced it with a $500,000 Term Loan B Facility maturing on July 3, 2031. The new Term Loan B Facility is now repayable in quarterly installments equal to 0.25% of the original principal amount beginning October 2024, with a lump sum due upon maturity

 

The Company’s credit agreements originally provided for a $1,200,000 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 and as of June 30, 2024, the Tranche B Term Loan Facility bears interest at rates based on either a base rate plus an applicable margin of 0.75% or adjusted SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%. The interest rate for the Tranche B Term Loan Facility as of June 30, 2024, was 7.18%. 

 

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. As of June 30, 2024, the Company’s net secured leverage ratio was 1.86 to 1.00, 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") that resulted in a new term loan facility in an aggregate principal amount of $750,000 ("Tranche A Term Loan Facility"), established a new $1,250,000 Revolving Facility, terminated the former asset-based lending facility ("ABL Facility"), and replaced all LIBOR provisions 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 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. 

 

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%. As of June 30, 2024, the interest rate for the Tranche A Term Loan Facility and Revolving Facility was 6.90%.

 

The Tranche A Term Loan Facility and the Revolving Facility contain 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, 2024, the Company’s total leverage ratio was 1.95 to 1.00, and the Company's interest coverage ratio was 7.97 to 1.00. The Company was also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2024. 

 

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. 

 

As of June 30, 2024, there was $150,000 outstanding under the Revolving Facility, leaving $1,099,203 of unused capacity, net of outstanding letters of credit. 

 

See Note 5, "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 expense on outstanding borrowings.