Debt

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt

11.Debt

On May 15, 2023, the Company entered into a new Credit Agreement with White Oak ABL, LLC and White Oak Commercial Finance, LLC which includes a $65.0 million asset based revolving credit facility and a $38.0 million fixed asset term loan. The Company incurred debt issuance costs related to the Credit Agreement of $5.9 million which will be amortized over the life of the agreement. The Credit Facility has a maturity date of May 15, 2026. The Company used the proceeds of the new Credit Agreement to repay the $40.0 million outstanding on the Company’s prior credit facility. In connection, with the extinguishment of the prior credit facility the Company wrote off the remaining $0.1 million in debt issuance costs associated with the prior credit facility.

The Credit Agreement provides for borrowings under a revolving line of credit and a term loan (together, the “Credit Facility”). The Credit Facility is secured by substantially all of the assets of the Company and its subsidiaries, including fixed assets and account receivables and is used to finance general corporate and working capital purposes, to finance capital expenditures, to refinance existing indebtedness, to finance permitted acquisitions and associated fees, and to pay for all related expenses to the Credit Facility. Amounts repaid under the revolving line of credit can be re-borrowed.

The Revolver initially bears interest at a rate of the 30-day SOFR plus 5.5% and the Term Loan at a rate of the 30-day SOFR plus 8.0%, subject to a SOFR floor of 4.0%. The quarterly weighted average interest rate for the Credit Facility, inclusive of the Company’s prior credit facility as of June 30, 2023 was 11.64%.

The Company’s obligations under debt arrangements consisted of the following:

	June 30, 2023						December 31, 2022
			Debt Issuance						Debt Issuance
	Principal		Costs(1)		Total		Principal		Costs(1)		Total
Revolving line of credit	$	—	$	—	$	—	$	35,000	$	(327)	$	34,673
Term loan - current		15,000		(2,229)		12,771		—		—		—
Other debt		506		—		506		283		—		283
Total current debt		15,506		(2,229)		13,277		35,283		(327)		34,956
Term loan - long-term		23,000		(3,419)		19,581		—		—		—
Other debt		4,078		—		4,078		716		—		716
Total long-term debt		27,078		(3,419)		23,659		716		—		716
Total debt	$	42,584	$	(5,648)	$	36,936	$	35,999	$	(327)	$	35,672

(1) Total debt issuance costs include underwriter fees, legal fees, syndication fees and fees related to the execution of the Credit Agreement and the termination and repayment of the Company’s prior credit facility.

Provisions of the revolving line of credit

The Company has a maximum borrowing capacity under the revolving line of credit (as defined in the Credit Agreement) of $65.0 million. There is a letter of credit sublimit that is equal to the lesser of $5.0 million and the aggregate unused amount of the revolving commitments then in effect.

The Company is subject to a commitment fee for the unused portion of the maximum borrowing availability under the revolving line of credit. The revolving line of credit termination date is the earlier of the Credit Facility termination date, May 15, 2026, or the date the outstanding balance is permanently reduced to zero, in accordance with the terms of the Credit Facility.

As of June 30, 2023, the Company has no borrowings under the revolving line of credit. The Company’s borrowing availability under its revolving credit facility at June 30, 2023 was approximately $51.2 million.

During the six months ended June 30, 2023, the Company drew down $14.8 million on the revolver. During the six months ended June 30, 2023, the Company repaid the full $14.8 million outstanding on the revolver using proceeds from the sale- leasebacks discussed in Note 12.

Financial covenants

Restrictive financial covenants under the Credit Facility include:

● A Consolidated Fixed Charge Coverage Ratio to not be less than the following during each noted period:

- Fiscal Quarter Ending September 30, 2024 and each Fiscal Quarter thereafter, to not be less than 1.10 to 1.00.

● A Revolver Loan Turnover Ratio to not be less than the following during each noted period:

- Fiscal Quarter Ending June 30, 2023 and each Fiscal Quarter thereafter, to not be less than 2.50 to 1.00.

● A Term Loan Loan-to-Value Ratio to not be greater than the following during each noted period:

- Fiscal Quarter Ending June 30, 2023 and each Fiscal Quarter thereafter, to not be more than 60%.

● A Minimum EBITDA to not be less than the following during each noted period

- Quarterly Test Period Ended June 30, 2023 - $1,039,102

- Semi-Annual Test Period Ended September 30, 2023 - $8,657,960

- Tri-Quarterly Test Period Ended December 31, 2023 - $14,975,675

- Last-Twelve-Months Test Period Ended March 31, 2024 - $29,703,993

- Last-Twelve-Months Test Period Ended June 30, 2024 - $45,857,579

● The Company shall maintain Liquidity of greater than $15.0 million at all times.

In addition, the Credit Facility contains events of default that are usual and customary for similar arrangements, including non-payment of principal, interest or fees; breaches of representations and warranties that are not timely cured; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

The Company was in compliance with all financial covenants as of June 30, 2023.

Other debt

The Company has entered into debt agreements with De Lage Landen Financial Services, Inc. and Mobilease for the purpose of financing equipment purchased.  As of June 30, 2023 and December 31, 2022, the carrying value of this debt was $2.2 million and $1.0 million, respectively. The agreements are secured by the financed equipment assets and the debt is included as a component of current debt and long-term debt on the Condensed Consolidated Balance Sheets.

On June 23, 2023, the Company closed on a land-sale leaseback contract for the Company’s Port Lavaca South Yard property located in Port Lavaca, Texas for a purchase price of $12.0 million. A portion of the operating lease above the fair value of the land was financed by the Company. As of June 30, 2023, the carrying value of this debt was $2.4 million.