Borrowings

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Borrowings

Borrowings

The following tables summarizes the Company’s debt position as of December 31, 2021 and 2020.

	As of December 31, 2021				As of December 31, 2020
	Revolving Credit Facility		Total		Revolving Credit Facility		Notes		Total
Current portion of long-term borrowings	$	260,016	$	260,016	$	25,000	$	—	$	25,000
Long-term borrowings	$	—	$	—	$	64,000	$	150,000	$	214,000
Unamortized debt discount	—		—		—		(11,236)		(11,236)
Unamortized debt issuance costs*	—		—		—		(803)		(803)
Long-term borrowings	$	—	$	—	$	64,000	$	137,961	$	201,961
Total borrowings	$	260,016	$	260,016	$	89,000	$	137,961	$	226,961

*Unamortized debt issuance costs for the Company’s revolving Credit Facility of $232 and $490 as of December 31, 2021 and 2020, respectively, are presented under “Other current assets” and “Other assets,” as applicable in the consolidated balance sheets.

Credit Agreement

On November 21, 2017, the Company and each of the Company’s wholly owned material domestic subsidiaries entered into a Credit Agreement with certain lenders, and Citibank, N.A. as Administrative Agent (the “Credit Agreement”). The Credit Agreement provides for a $200,000 revolving credit facility (the “Credit Facility”) with an option to increase the commitments by up to $100,000, subject to certain approvals and conditions as set forth in the Credit Agreement. The Credit Agreement also includes a letter of credit sub facility. The Credit Facility has a maturity date of November 21, 2022 and is voluntarily pre-payable from time to time without premium or penalty. Borrowings under the Credit Agreement may be used for working capital and general corporate purposes, including permitted acquisitions. On July 2, 2018, the Company exercised its option under the Credit Agreement to increase the commitments by $100,000 thereby utilizing the entire revolver under the Credit Facility of $300,000 to fund the Company’s July 2018 acquisition of SCIO.

Depending on the type of borrowing, loans under the Credit Agreement bear interest at a rate equal to the specified prime rate (alternate base rate) or adjusted LIBO rate, plus, in each case, an applicable margin. The applicable margin is tied to the Company’s total net leverage ratio and ranges from 0% to 0.75% per annum with respect to loans pegged to the specified prime rate, and 1.00% to 1.75% per annum on loans pegged to the adjusted LIBO rate. The revolving credit commitments under the Credit Agreement are subject to a commitment fee which is also tied to the Company’s total net leverage ratio, and ranges from 0.15% to 0.30% per annum on the average daily amount by which the aggregate revolving commitments exceed the sum of outstanding revolving loans and letter of credit obligations.

The revolving Credit Facility carried an effective interest rate as shown below.

	Year ended December 31,
	2021		2020		2019
Effective Interest Rate	1.7	%	2.3	%	4.0	%

Obligations under the Credit Agreement are guaranteed by the Company’s material domestic subsidiaries and are secured by all or substantially all of the assets of the Company and its material domestic subsidiaries. The Credit Agreement contains customary affirmative and negative covenants, including, but not limited to, restrictions on the ability to incur indebtedness, create liens, make certain investments, make certain dividends and related distributions, enter into, or undertake, certain liquidations, mergers, consolidations or acquisitions and dispose of assets or subsidiaries. In addition, the Credit Agreement contains a covenant to not permit the interest coverage ratio (the ratio of EBITDA to cash interest expense) or the total net leverage ratio (total funded indebtedness, less unrestricted domestic cash and cash equivalents not to exceed $50,000 to EBITDA) for the four consecutive quarter period ending on the last day of each fiscal quarter, to be less than 3.5 to 1.0 or more

than 3.0 to 1.0, respectively. As of December 31, 2021, the Company was in compliance with all financial and non-financial covenants listed under the Credit Agreement.

The Company entered into a second amendment and a third amendment (the “Amendments”) to its Credit Agreement, as amended, among the Company, as borrower, with certain lenders, and Citibank, N.A. as Administrative Agent to, among other things, permit the issuance by the Company of the convertible notes, and settlement upon maturity or conversion thereof, in accordance with the Investment Agreement, the indenture dated as of October 4, 2018 and the other documents entered into in connection therewith and the change in definition of restricted payments in connection with the Company’s share-buyback plan.

Convertible Senior Notes

On October 1, 2018, the Company entered into an investment agreement (the “Investment Agreement”) with Orogen Echo LLC (the “Purchaser”), an affiliate of The Orogen Group LLC, relating to the issuance to the Purchaser of $150,000, in an aggregate principal amount of the Notes. The transactions contemplated by the Investment Agreement, including the issuance of the Notes, closed on October 4, 2018. The Notes carried interest at a rate of 3.5% per annum, payable semi-annually in arrears in cash on April 1 and October 1 of each year. The Notes were convertible at an initial conversion rate of 13.3333 shares of the common stock per one thousand dollar principal amount of the Notes (which represented an initial conversion price of approximately $75 per share). The Company had the option to redeem the principal amount of the Notes, at its option, in whole but not in part, at a purchase price equal to the principal amount plus accrued and unpaid interest on or after October 1, 2021, if the closing sale price of the common stock exceeded 150% of the then-current conversion price for 20 or more trading days in the 30 consecutive trading day period preceding the Company’s exercise of this redemption right (including the trading day immediately prior to the date of the notice of redemption). The Company had the option to elect to settle conversions of the Notes by paying or delivering, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock.

The Notes carried an effective interest rate as shown below:

	Year ended December 31,
	2021		2020		2019
Effective Interest Rate	3.6	%	3.6	%	3.6	%

On August 27, 2021, the Company entered into a Payoff and Termination Agreement (the “Payoff and Termination Agreement”) with the Purchaser, pursuant to which the Company prepaid and settled its outstanding obligations under the Notes for an aggregate consideration of $236,742, excluding accrued and unpaid interest under the Notes calculated through, and including, August 26, 2021, in the form of a combination of cash and shares of the Company’s common stock. As a result, the Company made a cash payment of $200,000 to the Purchaser and satisfied the remainder of the obligation under the Notes by issuing to the Purchaser 310,394 shares of the Company’s common stock calculated at $118.37 per share based on a 20-day volume weighted average price ending on, and including, August 26, 2021. The Company satisfied the cash payment obligation under the Payoff and Termination Agreement by drawing $200,000 from its existing revolving Credit Facility, and the Company’s common stock was issued from its existing treasury shares. Refer to Note 18 - Capital Structure to the consolidated financial statements for further details.

The aggregate consideration of $236,742 was allocated between the debt and equity components in an amount of $152,742 and $84,000, respectively. The consideration was first allocated to the fair value of debt component and the remaining was allocated to the equity component. The fair value of the debt component was calculated using a discounted cash flow technique, which considered debt issuances with similar features of the Company’s debt, without the conversion feature. The resulting effective interest rate for the Notes was 2.9% per annum at the time of settlement. The portion allocated to the equity component was recorded as additional paid-in capital.

Immediately prior to the settlement of the Notes, the carrying amount of the debt component of the Notes, net of unamortized debt discount and issuance costs, was $139,897. During the year ended December 31, 2021, the Company recognized a loss on settlement of the Notes of $12,845, representing the difference between the fair value of the consideration allocated to the debt component and the carrying value of the debt component immediately before settlement, and is presented as “Loss on settlement of convertible notes,” in the Company’s consolidated statements of income.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized interest expense and amortization of debt discount on the Notes as below:

	Year ended December 31,
		2021		2020		2019
Interest expense on the Notes		$	3,442	$	5,250	$	5,206
Amortization of debt discount on the Notes		$	1,795	$	2,616	$	2,472

Expected payments for all of the Company's borrowings as of December 31, 2021 were as follows:

	Revolving Credit Facility		Interest payments
2022	$	260,016	$	2,510

Letters of Credit

In the ordinary course of business, the Company provides standby letters of credit to third parties primarily for facility leases. As of December 31, 2021 and 2020, the Company had outstanding letters of credit of $461, each, that were not recognized in the consolidated balance sheets.