XML 26 R17.htm IDEA: XBRL DOCUMENT v3.23.3
Debt
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
The components of debt consisted of the following:
(in millions)
September 30, 2023December 31, 2022
Revolving Credit Facility expires June 2028$— $— 
Equipment Financing due May 20244.4 9.5 
Equipment Financing due November 202517.1 22.5 
5.15% Mortgage due November 2025
63.8 65.5 
0.375% Convertible Senior Notes due September 2026
800.0 800.0 
Equipment Financing12.7 — 
Term loan due May 2028488.7 492.5 
Equipment Financing due July 202830.4 34.4 
Finance lease obligation(1)
22.1 — 
Unamortized debt discount(6.8)(7.6)
Debt issuance costs(12.0)(15.0)
Total debt, net1,420.4 1,401.8 
Less: current portion49.8 27.5 
Total long-term debt, net$1,370.6 $1,374.3 
(1) Refer to Note 9 for information regarding our finance lease obligation.
0.375% Convertible Senior Notes
The Company’s 0.375% Convertible Senior Notes due September 2026 (the “Notes” or “Convertible Notes”) have an effective interest rate of 0.76%. The Notes are convertible into the Company’s common stock at an initial conversion rate of 4.4105 shares of common stock per $1,000 principal amount of the notes, which is equivalent to a conversion price of $226.73 per share, subject to adjustment under certain circumstances. The notes will be convertible June 1, 2026 through August 28, 2026 by its holders for any reason. Additionally, on or after September 6, 2023, the Company may redeem for cash all, or any portion of the Notes, if its stock price has been equal to or greater than $294.75 for at least 20 of the prior 30 consecutive trading days including the date which the Company provides notice of redemption.
Additional interest of 0.5% per annum is payable if the Company fails to timely file required documents or reports with the Securities and Exchange Commission (“SEC”). If the Company merges or consolidates with a foreign entity, the Company may be required to pay additional taxes. The Company determined that the higher interest payments and tax payments required in certain circumstances were embedded derivatives that should be bifurcated and accounted for at fair value. The Company assessed the value of the embedded derivatives at each balance sheet date and determined it had nominal value.
In conjunction with the issuance of the Notes, the Company purchased capped calls on the Company’s common stock with certain counterparties to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to provide a source of cash to settle a portion of its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the Notes. The capped calls have an initial strike price of $335.90 per share, which represents a premium of 100% over the last reported sale price of the Company’s common stock of $167.95 per share on the date of the transaction. The capped calls cover 3.5 million shares of common stock.
As of September 30, 2023 and December 31, 2022, the net carrying amount of the Notes was $791.1 million and $788.8 million, respectively, net of unamortized issuance costs of $8.9 million and $11.2 million, respectively.
The components of interest expense related to the Notes were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions)
2023202220232022
Contractual interest expense
$0.8 $0.8 $2.3 $2.3 
Amortization of debt issuance costs
0.7 0.7 2.2 2.2 
  Total interest recognized on the Convertible Notes
$1.5 $1.5 $4.5 $4.5 
Equipment Financing
In May 2023, the Company entered into an arrangement under which the Company may obtain up to $24.0 million of financing for manufacturing equipment. The Company is involved in the construction of the manufacturing equipment; accordingly, it is included in property, plant and equipment on the consolidated balance sheet at September 30, 2023. The Company’s obligation reflects payments
made to date by the third-party bank to the equipment manufacturer, net of discount and less repayment of principal. The financing obligation will mature 36 months following completion of construction and has an effective interest rate of approximately 9.4%.
Senior Secured Credit Agreement
In June 2023, the Company increased the size of its Revolving Credit Facility by $200.0 million bringing the total to $300.0 million and extended the maturity date of the revolving credit facility to the earlier of June 2028 or 91 days prior to the maturity date of the Company’s term loan if still outstanding. Under the amended credit agreement, outstanding borrowings bear interest at a rate of Secured Overnight Financing Rate plus an applicable margin of 2.625% to 3.25%, based on the Company's net leverage ratio and credit rating.
Fair Value of Debt
The carrying amount and the estimated fair value of the Company’s debt were as follows:
September 30, 2023December 31, 2022
(in millions)
Carrying
Value		Estimated
Fair Value		Carrying
Value
Estimated
Fair Value (1)
Term loan due May 2028(1)
$479.9 $487.5 $482.1 $485.1 
0.375% Convertible Senior Notes(2)
791.1 562.7 788.8 1,038.7 
Equipment financings(3)
64.2 64.2 66.4 66.4 
5.15% Mortgage(3)
63.1 63.1 64.5 64.5 
  Total$1,398.3 $1,177.5 $1,401.8 $1,654.7 
(1) Term debt is classified as Level 1 in the fair value hierarchy. Fair value was determined using quoted market prices.
(2) The Notes are classified as Level 2 in the fair value hierarchy. Fair value was determined using the Company’s quoted stock price and the contractual conversion rate.
(3) The equipment financings and mortgage are classified as Level 3 in the fair value hierarchy. The fair values of the financial liabilities approximate their carrying values and were determined using their cost bases.