DEBT

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

Debt is presented net of debt discounts and issuance costs in the Company's balance sheets and consisted of the following (in thousands):

	September 30,		December 31,
	2022		2021
Credit Facility	$	75,672	$	83,319
Less current maturities	4,227		3,664
Long-term debt, net of current maturities	$	71,445	$	79,655

On May 31, 2022, the Company prepaid $5.0 million of indebtedness outstanding under its Credit Facility with no prepayment penalty. On September 30, 2022, June 30, 2022 and March 31, 2022, the Company made its required three principal payments of $1.1 million, respectively.

On May 31, 2022, the Company also amended the Credit Facility to increase the aggregate value of the Common Stock shares that can be repurchased by the Company to $50 million during the term of the Credit Facility.

Effective July 20, 2021, the Company received $89.3 million of net proceeds pursuant to the Credit Facility. The borrowings under the Credit Facility were incurred with an original discount of 0.375%. As part of the transaction, the Company incurred issuance costs of $4.2 million, which were capitalized and are being amortized over the term of the Credit Facility.

The Credit Facility bears interest at the London Interbank Offered Rate (“LIBOR”), plus a margin ranging from 1.75% to 2.50%. Effective April 1, 2022, the margin for the Credit Facility was decreased to 1.75% for the three months ended September 30, 2022. For the three months ended September 30, 2022, the interest rate on the Credit Facility was comprised of LIBOR was 2.5% and the margin was 1.75%.

On May 18, 2022, the Company entered into an interest rate swap agreement with a notional value of $40 million, with a fixed payer LIBOR rate of 2.9935% and an initial floating LIBOR rate of 0.93557%. The floating rate is reset at each month end and has an embedded floor rate of 0.0%. The term of the interest rate swap agreement coincides with that of the Credit Facility. See Note 12 for further information regarding the fair value accounting for the interest rate swap agreement.

The fair value of the Credit Facility was $79.8 million (Level 2 inputs) as of September 30, 2022 compared to the carrying value of $78.9 million as of September 30, 2022. The LIBOR rate as of December 31, 2021 was not materially different from the interest rate for the year ended December 31, 2021. Hence the fair value of the Credit Facility approximated the carrying value as of December 31, 2021.

The Credit Facility contains certain financial covenants, including a minimum fixed charge coverage ratio greater than 1.25, a total leverage ratio less than 3.75, and a minimum liquidity balance of at least $20 million in U.S. cash. Annual minimum principal payments over the five year term for the Credit Facility are 5%, 5%, 7.5%, 7.5%, and 10%, respectively, with the remaining balance due at the end of the term.

Pursuant to a Guaranty and Security Agreement, dated July 2, 2021 (the “Guaranty and Security Agreement”), among the Credit Parties and Capital One, National Association, as agent, the obligations under the Credit Facility are guaranteed by certain of the Company’s subsidiaries (the Company and the guarantors, collectively, the “Credit Parties”) and are secured, subject to customary permitted liens and exceptions, by a lien on substantially all assets of the Credit Parties.

The components of interest expense are presented below (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Credit Facility:
Interest expense	$	897	$	435	$	2,174	$	435
Accretion expense related to discount and issuance costs	245		196		728		196
Interest on finance leases	25		22		72		107
	$	1,167	$	653	$	2,974	$	738

For both the three months and nine months ended September 30, 2022, interest expense included interest rate swap expenses of $0.1 million and $0.2 million, respectively.