v3.26.3
Long-Term Debt and Commitments Related to Letters of Credit
 9 Months Ended
Oct. 03, 2026
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block] Short and Long-Term Debt and Commitments Related to Letters of Credit
We have a short-term line of credit with one bank totaling $1,054. At October 3, 2026, we had $623 available under the lines of credit and $431 committed through issued letters of credit. Borrowings outstanding generally bear interest at the bank’s prime rate. Our long-term debt consisted of the following:
October 3,
2026		December 31,
2025
Revolving credit facility:
Swing-line borrowings$14,442 $5,431 
SOFR borrowings290,000 120,000 
304,442 125,431 
Senior unsecured notes:
3.99% Senior unsecured notes
20,000 30,000 
4.00% Senior unsecured notes
10,000 15,000 
6.19% Senior unsecured notes
75,000 75,000 
5.19% Senior unsecured notes
100,000 100,000 
205,000 220,000 
Term loans40,632 29,484 
Accounts receivable securitization facility loan50,000 55,000 
600,074 429,915 
Less debt issuance costs834 1,038 
Less current portion117,946 111,598 
$481,294 $317,279 
Revolving Credit Facility--In July 2024, the Company amended and restated its revolving credit facility with its existing bank group, which was amended in May 2025 to, among other things, allow for certain intercompany advances among the Company and its subsidiaries, in January 2026 to revise the definition of Consolidated Earnings Before Interest and Taxes and in May 2026 to revise certain pricing and financial covenant terms. The amended and restated credit agreement, as amended, which expires in July 2029, permits borrowings, as defined, of up to $400,000, including a combined term loan and letter of credit sublimit of $150,000 and a swing-line commitment of $50,000. Under certain circumstances, the Company may increase the revolving credit commitments and/or establish new incremental term loan commitments in an aggregate amount of up to $150,000. The revolving credit facility contains certain affirmative and negative covenants customary for this type of facility and includes financial covenant ratios with respect to a maximum leverage ratio (not to exceed 3.75 to 1.00) and a minimum interest coverage ratio (not less than 3.00 to 1.00), in each case subject to certain further restrictions as described in the credit agreement. The revolving credit facility allows for an adjustment to earnings before interest, taxes, depreciation and amortization of up to $55,000 for four quarters in the event certain legal claims are settled. As of October 3, 2026, we had unused commitments under the facility approximating $93,874, with $306,126 committed, which consisted of borrowings of $304,442 and issued letters of credit of $1,684.
Borrowings outstanding bear interest, at the Company’s option, of either (a) the base rate or (b) the Secured Overnight Financing Rate (“SOFR”) plus a margin adjustment ranging from .875% to 1.75%--with the margin adjustments based on the Company's leverage ratio at
the time of borrowing. As of October 3, 2026, the base rate was the greater of (i) the agent bank’s prime rate, (ii) Adjusted Term SOFR plus 1.75%, or (iii) the federal funds rate plus .50%. A commitment fee ranging from .10% to .25% is also required based on the average daily unborrowed commitment.
3.99% Senior Unsecured Notes--On September 21, 2018, we issued 3.99% Senior Notes, Series A (the “3.99% Senior Notes”), in the aggregate principal amount of $50,000. The 3.99% Senior Notes are due September 21, 2028.
The 3.99% Senior Notes were issued pursuant to a Note Purchase and Private Shelf Agreement (the “Note Purchase and Shelf Agreement”) between the Company, PGIM, Inc. and the purchasers of the 3.99% Senior Notes, which was amended in August 2024. Among other things, the amendment increased the total facility limit to $250,000 and extended the issuance period for subsequent series of promissory notes to be issued and sold pursuant to the Note Purchase and Shelf Agreement to August 2027. The amendment also amended certain provisions and covenants to generally conform them to the corresponding provisions and covenants in the amended and restated revolving credit agreement. In addition, the amendment and restatement of the revolving credit agreement in August 2024 provided that the Company is permitted to incur indebtedness arising under the Note Purchase and Shelf Agreement in an aggregate principal amount not to exceed $250,000. In May 2025, the Company further amended its Note Purchase and Shelf Agreement with its existing purchasers to, among other things, allow for certain intercompany advances among the Company and its subsidiaries, and in January 2026, the Company amended the Note Purchase and Shelf Agreement to revise the definition of Consolidated Earnings Before Interest and Taxes. In May 2026, the Note Purchase and Shelf Agreement was further amended to, among other things, revise the financial covenant relating to the leverage ratio to provide that the maximum ratio will not exceed 3.75 to 1.00. As the Company has previously issued notes with an aggregate amount outstanding of $205,000 under the Note Purchase and Shelf Agreement, as of October 3, 2026, it has the capacity to issue subsequent series of promissory notes pursuant to the Note Purchase and Shelf Agreement in the amount of $45,000.
The 3.99% Senior Notes are equal in right of payment with our revolving credit facility and all other senior unsecured obligations of the Company. Interest is payable semiannually and five equal, annual principal payments commenced on September 21, 2024 (the sixth anniversary of issuance). The Note Purchase and Shelf Agreement contains customary events of default and covenants related to limitations on indebtedness and transactions with affiliates and the maintenance of certain financial ratios. The Company may prepay at any time all, or from time to time any part of, the outstanding principal amount of the 3.99% Senior Notes, subject to the payment of a make-whole amount.
4.00% Senior Unsecured Notes--On February 5, 2019, we issued 4.00% Senior Notes, Series B (the “4.00% Senior Notes”) pursuant to the Note Purchase and Shelf Agreement in the aggregate principal amount of $25,000. The 4.00% Senior Notes are due September 21, 2028. The 4.00% Senior Notes are equal in right of payment with our revolving credit facility and all other senior unsecured obligations of the Company. Interest is payable semiannually and five equal, annual principal payments commenced on September 21, 2024.
6.19% Senior Unsecured Notes--On November 28, 2023, we issued 6.19% Senior Notes, Series C (the “6.19% Senior Notes”) pursuant to the Note Purchase and Shelf Agreement in the aggregate principal amount of $75,000. The 6.19% Senior Notes are due November 28, 2028. The 6.19% Senior Notes are equal in right of payment with our revolving credit facility and all other senior unsecured obligations of the Company. Interest is payable quarterly and three annual principal payments commence on November 28, 2026.
5.19% Senior Unsecured Notes--On September 22, 2025, we issued 5.19% Senior Notes, Series D (the “5.19% Senior Notes”) pursuant to the Note Purchase and Shelf Agreement in the aggregate principal amount of $100,000. The 5.19% Senior Notes are due September 22, 2030. The 5.19% Senior Notes are equal in right of payment with our revolving credit facility and all other senior unsecured obligations of the Company. Interest is payable quarterly in arrears, beginning December 22, 2025, with the principal due in full on September 22, 2030.
The net proceeds of all senior notes are generally used to pay down borrowings under our revolving credit facility and for general corporate purposes.
Term loans--Periodically, the Company will enter into term loans for the procurement of insurance or to finance acquisitions.
Aggregate Maturities of Long-Term Debt--Aggregate maturities of long-term debt for the five years subsequent to October 3, 2026 were as follows:
Amount
Remaining three months of 2026
$75,544 
202772,583 
202847,392 
2029304,555 
2030100,000 
$600,074 
Accounts Receivable Securitization Facility--In July 2026, the Company amended its Accounts Receivable Securitization Facility (as amended, the “AR Securitization program”) to, among other things, extend the scheduled termination date for an additional two-year period, to July 2028. This amendment also increased the letter of credit issuance fee from .90% to 1.00% per annum on the aggregate amount of all letters of credit outstanding plus any outstanding reimbursement obligations. The amendment also revised the interest rate applicable to outstanding reimbursement obligations eliminating the .10% credit spread adjustment previously applied to term SOFR, such that the applicable rate is now based on term SOFR without a credit spread adjustment, and added a financial covenant providing that the Company is required to maintain a maximum leverage ratio not to exceed 3.75 to 1.00.
The AR Securitization program has a limit of $175,000, of which $113,764 and $99,071 were issued for letters of credit (“LCs”) as of October 3, 2026 and December 31, 2025, respectively, and loans were issued in the amounts of $50,000 and $55,000 as of October 3, 2026 and December 31, 2025, respectively.
Under the AR Securitization program, Davey Tree transfers by selling or contributing current and future trade receivables to a wholly-owned, bankruptcy-remote financing subsidiary which pledges a perfected first priority security interest in the trade receivables--equal to the issued LCs as of October 3, 2026--to the bank in exchange for the bank issuing LCs.
Fees payable to the bank include: (a) an LC issuance fee, payable on each settlement date, in the amount of 1.00% per annum on the aggregate amount of all LCs outstanding plus outstanding reimbursement obligations (e.g., arising from drawn LCs), if any, and (b) an unused LC fee, payable monthly, equal to (i) .35% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligation is greater than or equal to 50% of the facility limit and (ii) .45% per annum for each day on which the sum of the total LCs outstanding plus any outstanding reimbursement obligation is less than 50% of the facility limit. If an LC is drawn
and the bank is not immediately reimbursed in full for the drawn amount, any outstanding reimbursement obligation will accrue interest at a per annum rate equal to the term SOFR or, in certain circumstances, a base rate equal to the greatest of (i) the bank’s prime rate, (ii) the federal funds rate plus .50% and (iii) 1.00% above the daily one-month SOFR and, following any default, 2.00% plus the greater of (a) the term SOFR and (b) a base rate equal to the greatest of (i), (ii) and (iii) above.
The agreements underlying the AR Securitization program contain various customary representations and warranties, covenants, and default provisions which provide for the termination and acceleration of the commitments under the AR Securitization program in circumstances including, but not limited to, failure to make payments when due, breach of a representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness. Additionally, the AR Securitization program contains certain covenants which include financial covenant ratios with respect to a maximum leverage ratio.
Total Commitments Related to Issued Letters of Credit--As of October 3, 2026, total commitments related to issued LCs were $115,879, of which $1,684 were issued under the revolving credit facility, $113,764 were issued under the AR Securitization program, and $431 was issued under a short-term line of credit. As of December 31, 2025, total commitments related to issued LCs were $101,659, of which $2,250 were issued under the revolving credit facility, $99,071 were issued under the AR Securitization program, and $338 were issued under short-term lines of credit. These issued LCs are primarily related to insurance coverage.
Debt Amendments Subsequent to October 3, 2026--On October 29, 2026, the Company entered into amendments to its revolving credit facility, Note Purchase and Private Shelf Agreement and Accounts Receivable Securitization Facility. Among other things, the amendments revised the financial leverage ratio covenants to provide that the maximum leverage ratio will not exceed 4.25 to 1.00 through June 30, 2027, 4.00 to 1.00 from July 1, 2027 through December 31, 2027 and 3.75 to 1.00 thereafter. The amendment to the revolving credit facility also increased the SOFR margin from a range of .875% to 1.75% to a range of .875% to 2.00% and increased the commitment fees on the average daily unused portion of the total revolving credit commitment from a range of .10% to .25% to a range of .10% to .275% in each case based on the Company’s leverage ratio at the time of borrowing. The amendment to the Note Purchase and Private Shelf Agreement also provides for an additional fee on the daily average outstanding principal amount of the Company’s private placement notes equal to .25% per annum if the Company’s leverage ratio exceeds 3.00 to 1.00 as of the end of a fiscal quarter, increasing to .50% per annum if the leverage ratio exceeds 3.50 to 1.00. The revolving credit facility and Note Purchase and Private Shelf Agreement amendments also modified certain acquisition and restricted payment covenant provisions.
As of October 3, 2026, we were in compliance with all debt covenants.