Credit Agreement |
6 Months Ended | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 28, 2025 | |||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||
| Credit Agreement | Credit Agreement As of June 28, 2025, the Company’s credit facility had a total commitment amount of $673 million. The credit facility, as amended, is for general corporate purposes and to meet seasonal working capital requirements. The Amended and Restated Credit and Security Agreement, dated February 14, 2018, among the Company, U.S. Bank National Association and the several banks and other financial institutions from time to time party thereto (as amended, the Credit Agreement), includes an accordion feature which allows the Company to increase the amount of the credit facility from $673 million to $1.0 billion, subject to lenders’ approval. The Credit Agreement provides the lenders with a collateral security interest in substantially all of the Company’s assets and those of its subsidiaries and requires the Company to comply with, among other things, a maximum net leverage ratio and a minimum interest coverage ratio. The Company amended the Credit Agreement on March 3, 2025. The amendment, among other things: (a) adds a definition for "Liquidity" which means, on any date of determination, the sum of (x) Borrower's and its Subsidiaries' unrestricted cash that is free and clear of Liens (other than those in favor of the Administrative Agent) plus (y) the aggregate amount of unused Revolving Credit Commitments available for Credit Events on such date (including the Borrower's ability to satisfy the requirements of Section 4.1 on such date) (as each is defined in the Credit Agreement); (b) adds a Liquidity financial covenant wherein the Borrower shall cause the Liquidity to be equal or exceed $40 million as of the last day of each fiscal month; (c) deems our Net Leverage Ratio as greater than or equal to 4.50 to 1.00 as of the effective date to set pricing for the Applicable Commitment Fee Rate and Applicable Margin until receipt of the compliance certificate for the quarterly reporting period ending September 27, 2025, (d) adjusts the permissible maximum Net Leverage Ratio (as defined in the Credit Agreement) to (I) 4.75 to 1.00 for the quarterly reporting period ending June 28, 2025, (II) 4.50 to 1.00 for the quarterly reporting period ending September 27, 2025, (III) 4.35 to 1.00 for the quarterly reporting period ending January 3, 2026, and (IV) 4.00 to 1.00 for each quarterly reporting period occurring thereafter, and (e) adjusts the permissible minimum Interest Coverage Ratio (as defined in the Credit Agreement) to (I) 1.90 to 1.00 for the quarterly reporting periods ending June 28, 2025 and September 27, 2025, (II) 2.10 to 1.00 for the quarterly reporting period ending January 3, 2026, and (III) 3.00 to 1.00 for each quarterly reporting period occurring thereafter. A fee for the amendment was paid to the approving lenders in an amount equal to 20 basis points multiplied by the sum of such lender's Revolving Credit Commitment and outstanding Term Loans (as each is defined in the Credit Agreement). The carrying amount of the outstanding borrowings under the Credit Agreement approximates fair value because interest rates approximate the current rates available to the Company. Under the terms of the Credit Agreement, the Company pays a variable rate of interest and a commitment fee based on its leverage ratio. The Credit Agreement matures in December 2026. The Company was in compliance with all financial covenants as of June 28, 2025. The following table summarizes the Company’s borrowings under the credit facility ($ in thousands):
Subsequent to June 28, 2025, the Company’s outstanding letters of credit increased to $9 million.
|