Note 10 - Credit Agreements |
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| Debt Disclosure [Text Block] |
10. Credit Agreements
Short-term borrowings included in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024, consisted of borrowings by the Company’s foreign subsidiaries on local lines of credit totaling $54,264 and $55,848, respectively. As of June 30, 2025 and December 31, 2024, the weighted-average interest rates on the short-term borrowings were and 5.44%, respectively.
Long-term borrowings are included in the condensed consolidated balance sheets as follows:
Prior to the Tranche A Term Loan Facility and Revolving Facility amendments discussed below, as of June 30, 2025, the Tranche A Term Loan Facility and Revolving Facility mature on June 29, 2027. The Tranche A Term Loan Facility is repayable in quarterly installments which commenced September 2023, with a balloon payment due June 29, 2027. The Term Loan B Facility matures on July 3, 2031, and is repayable in quarterly installments which commenced September 2024, with a balloon payment due July 2031. Maturities of the Company's Tranche A Term Loan Facility, Term Loan B Facility and Revolving Facility outstanding on June 30, 2025, before considering original issue discount and deferred financing costs, are as follows:
The Company’s credit agreements originally provided for a
$1,200,000 Tranche B Term Loan Facility (Original Term Loan B Facility) and included a
$300,000 uncommitted incremental term loan on that facility. After several amendments, the Original Term Loan B Facility bore 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%, and was scheduled to mature on
December 13, 2026.
In July 2024, the Company extinguished the $530,000 balance then outstanding under the Original Term Loan B Facility and replaced it with a new $500,000 Tranche B Term Loan Facility maturing on July 3, 2031 (New Term Loan B Facility). The New Term Loan B Facility continues to include a $300,000 uncommitted incremental term loan on that facility. In accordance with ASC 470-50, the Company capitalized $2,991 of debt issuance costs related to this transaction. Additionally, the Company wrote-off the unamortized deferred financing costs related to the Original Term Loan B of $4,236 and expensed $625 of fees paid to creditors as a loss on extinguishment of debt. The New Term Loan B Facility bears interest at the SOFR rate plus an applicable margin of 1.75%, subject to a SOFR floor of 0.0%, resulting in a 6.07% combined rate as of June 30, 2025.
The New Term Loan B 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, 2025, the Company’s net secured leverage ratio was 1.37 to 1.00, and the Company was in compliance with all covenants under the Facility. There are no financial maintenance covenants on the Term Loan B 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 (Revolving Facility), and replaced all LIBOR provisions with SOFR provisions. 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, 2025, the interest rate for the Tranche A Term Loan Facility and the Revolving Facility is 5.92%.
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, 2025, the Company’s total leverage ratio was 1.44 to 1.00, and the Company's interest coverage ratio was 12.34 to 1.00. The Company was also in compliance with all other covenants of the Amended Credit Agreement as of June 30, 2025.
The New Term Loan B 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.
As of June 30, 2025, there was $90,000 outstanding under the Revolving Facility, leaving $1,159,250 of unused capacity, net of outstanding letters of credit.
See Item 7A of the Annual Report on Form 10-K for the year ended December 31, 2024, for further information on interest rate swaps that are currently outstanding and partially offset the above interest expense on outstanding borrowings.
On July 1, 2025, the Company amended its existing Tranche A Term Loan Facility and $1,250,000 Revolving Facility, extending the maturity of both to July 1, 2030, revising the Tranche A Term Loan Facility outstanding principal balance to $700,000, reducing the Revolving Facility borrowing capacity to $1,000,000, and removing the Credit Adjustment Spread (as defined in the Amended Credit Agreement) from each. The revised Tranche A Term Loan Facility is now repayable in increasing quarterly installments over time, equal to 0.625% to 2.50% of the original principal amount, beginning on October 1, 2026. The revised Tranche A Term Loan Facility and Revolving Facility will continue to bear interest at either a base rate plus an applicable margin between 0.25% and 0.75% or SOFR rate plus an applicable margin between 1.25% and 1.75%, both based on the Company’s total leverage ratio and subject to a SOFR floor of 0.0%.
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