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Dec. 28, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Line of Credit | Line of Credit
Amendment No. 3 to the ABL Credit and Guarantee Agreement - On April 10, 2023, the Company entered into Amendment Number Three to ABL Credit and Guarantee Agreement (the “LOC Amendment No. 3”) to that certain ABL Credit and Guarantee Agreement, dated as of February 12, 2018 (the “LOC Agreement”). The LOC Amendment No. 3, among other things, (i) replaced the interest rate based on the LIBOR and related LIBOR-based mechanics applicable to borrowings under the LOC Agreement with an interest rate based on the Secured Overnight Financing Rate (“SOFR”) and related SOFR-based mechanics and (ii) updated certain other provisions of the LOC Agreement to reflect the transition from LIBOR to SOFR. The LOC Amendment provided for a revolving line of credit of $80.0 with interest payments due in arrears. The interest rate on the facility is based on a base rate, unless a SOFR Rate (as defined in the LOC Agreement) option is chosen by the Company. If the SOFR Rate is elected, the interest computation is equal to the SOFR Rate plus the SOFR Margin (as defined in the LOC Agreement) of either 1.25% or 1.50%. If the Base Rate (as defined in the LOC Agreement) is elected, the interest computation is equal to the Base Rate of the greatest of (a) the federal funds rate plus 0.50%, (b) the SOFR rate for a one month tenor plus 1.00%, (c) the floor (i.e., zero), or (d) the financial institution’s Prime Rate (as defined in the LOC Agreement), plus the Base Rate Margin (as defined in the LOC Agreement) of either 0.25% or 0.50%. As of December 30, 2023, the interest rate for the facility was 6.76%. At the beginning of each quarter, the applicable margin is set and determined based on the average net availability on the line of credit for the previous quarter.
2023 ABL Credit and Guarantee Agreement - On August 3, 2023, the Company refinanced the revolving credit facility, pursuant to a new ABL Credit and Guarantee Agreement (the “2023 LOC Agreement”). The 2023 LOC Agreement, among other things, (i) increased the previous aggregate commitments from $80.0 to $125.0 subject to eligible collateral, (ii) updated the manner in which the previous borrowing base under the 2023 LOC Agreement was determined, and (iii) replaced the administrative agent with a new administrative agent. Interest payments with respect to the 2023 LOC Agreement are due in arrears. The maturity date is August 3, 2028.
The interest rate on the facility is based on a base rate, unless an Adjusted Term SOFR Rate (as defined in the 2023 LOC Agreement) option is chosen by the Company. If the Adjusted Term SOFR Rate is elected, the interest rate is equal to the Adjusted Term SOFR Rate, which includes a 10bps flat CSA, plus the SOFR Margin (as defined in the 2023 LOC Agreement) of 1.25%, 1.50%, or 1.75%, based on the Average Excess Availability (as defined in the 2023 LOC Agreement). As of December 28, 2024, the SOFR Margin Rate was 1.25%. If the Alternate Base Rate (as defined in the 2023 LOC Agreement) is elected, the interest computation is equal to the Alternate Base Rate of the greatest of (a) the federal funds rate plus 0.50%, (b) the Adjusted Term SOFR Rate for a one month tenor plus 1.00%, or (c) the financial institution’s Prime Rate (as defined in the 2023 LOC Agreement), plus the Base Rate Margin (as defined in the 2023 LOC Agreement) of either 0.25%, 0.50%, or 0.75% (as of December 28, 2024, the Base Rate Margin was 0.25%). At the beginning of each quarter, the applicable margin is set and determined based on the average net availability on the line of credit for the previous quarter. As of December 28, 2024, the Adjusted Term SOFR interest rate for the facility was 5.92%. The line of credit is collateralized by accounts receivable and inventories. The Company accrues an unused commitment fee to the administrative agent at the varying rate of 0.25% to 0.38%, based on the unused portion of the maximum commitment, as defined in the 2023 LOC Agreement.
This refinancing amendment was accounted for as a debt extinguishment and a $0.2 loss on debt extinguishment was recognized for this transaction within Loss on extinguishment and modification of debt on the Consolidated Statement of Operations and Comprehensive Income. The Company incurred $1.3 of debt issuance costs, which were capitalized and are being amortized over the term of the facility that expires on August 3, 2028, using the straight-line method, and are presented as part of Other assets within our Consolidated Balance Sheet. The amortization of the deferred loan costs is included in Interest expense on the Consolidated Statements of Operations and Comprehensive Income.
Amortization of approximately $0.2, $0.3 and $0.2 was recognized for the years ended December 28, 2024, December 30, 2023 and December 31, 2022, respectively. The unamortized portion of the fees, included in Other assets, as of December 28, 2024 and December 30, 2023, was approximately $0.9 and $1.1, respectively. There were no borrowings outstanding on the line of credit as of December 28, 2024 and December 30, 2023.
As of December 28, 2024, and December 30, 2023, the Company’s borrowing base capacity was $82.4 and $125.0, respectively.
As of December 28, 2024, and December 30, 2023, the Company maintained one letter of credit totaling approximately $0.4. The amount available on the revolver as of December 28, 2024 and December 30, 2023, was approximately $82.0, and $124.6, respectively.
The Company has no outstanding balance as of December 28, 2024 and December 30, 2023, respectively. Long-Term DebtLong-term debt consists of the following:
Notes Payable - First Lien - On February 12, 2018, the Company entered into the First Lien Credit and Guarantee Agreement, dated as of February 12, 2018 (as amended to date, the “First Lien Term Loan”) comprised of a syndicate of lenders as amended from time to time. On February 5, 2021, the Company completed a repricing of its First Lien and First Lien B2 term loans and consolidated the prior two outstanding tranches into a single tranche of debt with Amendment No. 3. On August 18, 2021, the Company completed a refinancing of its Firs Lien Term Loan with Amendment No. 4, in which the principal terms of the amendment were used to fund the DBCI acquisition.
On June 20, 2023, the Company entered into Amendment No. 5 which replaced the prior interest rate based on LIBOR with an interest rate based on SOFR.On August 3, 2023, the Company refinanced its existing First Lien Term Loan pursuant to Amendment No. 6. As chosen by the Company, the amended loan bears interest at a floating rate per annum consisting of Adjusted Term SOFR plus an applicable margin. As a result, the Company wrote off a portion of unamortized debt financing costs associated with the prior First Lien Agreement, that was deemed extinguished and recognized a loss on debt extinguishment of $1.4 for the year ended December 30, 2023, recognized within Loss on extinguishment and modification of debt on the Consolidated Statement of Operations and Comprehensive Income. In conjunction with the Amendment No. 6, the Company incurred $2.3 of costs from third parties that did not qualify for capitalization of deferred finance costs, and were expensed within Loss on extinguishment and modification of debt on the Consolidated Statement of Operations and Comprehensive Income.
Notes Payable - Amendment No. 7 First Lien - As a result of a credit rating upgrade in March 2024, the First Lien Term Loan allowed the previous applicable margin rate to decrease from 3.25% to 3.00%. On April 18, 2024, the Company made a voluntary prepayment of $21.9 toward the First Lien Term Loan. As a result of the prepayment, the Company expensed an additional $0.4 for pro-ration of the unamortized debt issuance costs that was amortizing over the expected life of the borrowing. The Company used cash on hand to make the voluntary prepayment.
On April 30, 2024, the Company completed a repricing pursuant to the Repricing Amendment to the First Lien Term Loan. The Repricing Amendment reduced the applicable interest rate margins on the $600.0 First Lien Term Loan from 2.00% to 1.50% for the term loans bearing interest at rates based on the base rate, and from 3.00% to 2.50% for the term loans bearing interest at rates based on the secured overnight financing rate. In addition to the change in the applicable margin rate, the Company is no longer subject to a CSA rate of 0.1%. Interest is payable in arrears (with respect to Base Rate loans) or at the end of an interest period selected by the Company (with respect to SOFR loans). The outstanding loan balance is to be repaid on a quarterly basis in an amount equal to 0.25% of the original balance of the amended loan, with the remaining principal due on the maturity date of August 3, 2030. The debt was secured by substantially all of the Company’s business assets. The interest rate on the First Lien Term Loan as of December 28, 2024 was 7.07%, which is a variable rate based on Adjusted Term SOFR and includes an applicable margin of 2.50%.
The Repricing Amendment was accounted for in accordance with ASC 470-50, “Debt - Modification and Extinguishment.” The First Lien Term Loan consists of a syndicate of lenders which were evaluated, for accounting purposes, as individual lenders. Certain lenders exited the Term Loan credit facility in connection with the Repricing Amendment, which resulted in extinguishment accounting. There were $599.0 of borrowings held by lenders in the First Lien Term Loan as amended by the Repricing Amendment, that were also held by lenders in the First Lien Term Loan prior to the Repricing Amendment.
As a result, the Company wrote off an immaterial portion of unamortized debt financing costs associated with the First Lien Term Loan prior to the Repricing Agreement, that was deemed extinguished and recognized within “Loss on extinguishment and modification of debt” on the Consolidated Statement of Operations and Comprehensive Income. In conjunction with the Repricing Amendment, the Company incurred $1.7 of costs from third parties that did not qualify for capitalization of deferred finance costs, and were expensed within Loss on extinguishment and modification of debt on the Consolidated Statement of Operations and Comprehensive Income.
In conjunction with the Repricing Amendment, the Company incurred $0.2 of capitalizable deferred finance costs, which will be amortized over the remaining term of the modified loan. Amortization of deferred loan costs is included in interest expense on the Consolidated Statements of Operations and Comprehensive Income.
Amortization of approximately $2.2, $3.4, and $3.4 was recognized for the years ended December 28, 2024 and December 30, 2023, and December 31, 2022 respectively, as a component of interest expense. These amounts are inclusive of the additional costs affiliated with voluntary prepayment of principal balances.
During the year ended December 28, 2024, the Company’s finance lease obligation primarily consists of vehicle lease agreements. The leases expire at various dates through 2030 with terms between and five years.
Aggregate annual maturities of long-term debt and finance leases at December 28, 2024, are:
(dollar amounts in millions)
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