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Debt
 9 Months Ended
Sep. 27, 2025
Debt  
Debt

Note H – Debt

 

On June 16, 2023, the Company entered into a credit agreement with the lending institutions named therein, TD Bank, N.A., as an LC issuer, the swing line lender and as the administrative agent, TD Securities (USA) LLC, as sole arranger and sole bookrunner, and Bank of America, N.A. and Wells Fargo Bank, National Association, as co-syndication agents  (the “TD Bank Credit Agreement”), that included a $60 million term portion and a $30 million revolving commitment portion. In April 2025, the Company entered into an amendment to the Credit Agreement that increased the revolving commitment portion to $50 million.  The term loan portion of the credit facility required quarterly principal payments of (i) $750,000 beginning on September 30, 2023 through June 30, 2025, (ii) $1,125,000 beginning on September 30, 2025 through June 30, 2027, and (iii) $1,500,000 beginning on September 30, 2027 through March 31, 2028, with the balance of the term loan payable on the maturity date of June 16, 2028. Amounts outstanding under the revolving portion of the credit facility were generally due and payable on the expiration date of the TD Bank Credit Agreement (June 16, 2028). The Company could elect to prepay some or all of the outstanding balance from time to time without penalty. A commitment fee was payable on the unused portion of the revolving credit facility based on the Company’s consolidated ratio of net debt to adjusted EBITDA from time to time. The commitment fee was 0.25% as of September 27, 2025. The Company had no borrowings outstanding under the revolving commitment portion of the credit facility as of September 27, 2025.

The term loan bears interest at a variable rate based on the Term Secured Overnight Financing Rate (“SOFR”), plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, depending on the Company’s senior net leverage ratio. Borrowings under the revolving portion bore interest at a variable rate based on, at the Company’s election, a base rate plus an applicable margin of 0.875% to 1.625% or SOFR, plus an adjustment of ten basis points, plus an applicable margin of 1.875% to 2.625%, with such margins determined based on the Company’s senior net leverage ratio. The Company’s obligations under the TD Bank Credit Agreement were secured by a lien on certain of the Company’s and its subsidiaries’ assets pursuant to a Pledge and Security Agreement, dated as of June 16, 2023, with TD Bank N.A., as administrative agent.

 

The Company’s loan covenants under the TD Bank Credit Agreement required the Company to maintain a senior net leverage ratio not to exceed 3.5 to 1. In addition, the Company was required to maintain a fixed charge coverage ratio to be not less than 1.25 to 1. Following the end of the third quarter of 2025, the Company terminated the TD Bank Credit Agreement and entered into a new credit agreement, as discussed further below.  The Company was in compliance with all its covenants under the TD Bank Credit Agreement on September 27, 2025 and through the date of such termination.

 

New Credit Agreement

 

On October 28, 2025, the Company entered into a credit agreement with the lenders from time to time party thereto, and Citizens Bank, N.A., as the administrative agent, as an LC issuer, and as the swing line lender (the “Citizens Credit Agreement”).

 

The Citizens Credit Agreement provides for the extension of credit to the Company in the form of revolving loans, swing line loans and letters of credit, at any time and from time to time during the term of the Citizens Credit Agreement. The Citizens Credit Agreement provides the Company with a $100 million five-year senior secured revolving credit facility.

 

Revolving loans under the Citizens Credit Agreement bear interest, at the election of the Company, at (a) term SOFR for a tenor equivalent to the applicable interest period, subject to a 0% floor, plus an applicable margin varying from 1.375% to 2.125% based on the Company’s Senior Net Leverage Ratio (as defined in the Citizens Credit Agreement) from time to time (such loans being referred to as “SOFR Loans”), (b) an alternate base rate equal to the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50% per annum, and (iii) the daily term SOFR for a one-month interest period (“Daily SOFR”) plus 1.00%, in each case subject to a 0% floor, plus an applicable margin varying from 0.375% to 1.125% based on the Company’s Senior Net Leverage Ratio (such loans being referred to as “ABR Loans”), or (C) Daily SOFR, subject to a 0% floor, plus an applicable margin varying from 1.375% to 2.125% based on the Company’s Senior Net Leverage Ratio (such loans being referred to as “Daily SOFR Loans”). Swing line loans under the Citizens Credit Agreement bear interest at the alternate base rate plus the margin applicable to ABR Loans, as described above. Currently, the Company’s margin is 1.375% for SOFR Loans. Interest on SOFR Loans is payable on the last day of each interest period, and if the interest period is longer than three months, on each successive three-month anniversary of the commencement of the interest period. Interest on ABR Loans and Daily SOFR Loans is payable quarterly in arrears on the last business day of each of March, June, September and December.

 

Amounts outstanding under the Citizens Credit Agreement are generally due and payable on the expiration date of the Citizens Credit Agreement (October 28, 2030) or the earlier termination of the revolving commitments thereunder.  The Company can elect to prepay some or all of the outstanding balance from time to time without penalty.

 

The Citizens Credit Agreement requires the Company to comply with various covenants, including among other things, financial covenants to maintain a senior net leverage ratio not to exceed 3.50 to 1.00, subject to a temporary step-up to 4.00 to 1 upon consummation of a material acquisition, and an interest coverage ratio not less than 3.00 to 1.00. The Company was in compliance with all its covenants under the Citizens Credit Agreement at all times from entry into the Citizens Credit Agreement through the date of filing this Form 10-Q.

 

The Company’s obligations under the Citizens Credit Agreement are guaranteed by certain of the Company’s subsidiaries and are secured by a lien on substantially all assets of the Company and its subsidiaries. The Company has $64 million available on its line of credit under the Citizens Credit Agreement as of the date of filing this Form 10-Q.