Debt Agreements

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Debt Agreements

Debt Agreements

On December 8, 2021, the Company entered into and became a party to a credit agreement by and between the Company, various financial institutions and Morgan Stanley Senior Funding, Inc., as administrative agent (the “Administrative Agent”) (as amended from time to time, the “Credit Agreement”) consisting of $465,000 in aggregate principal amount of senior secured term loans maturing in seven years (the “Term Loan”) and a $100,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) maturing in five years (the “Revolving Credit Facility”).

Additionally, on October 2, 2022, the Company became a party to an incremental agreement (the “Incremental Agreement”) with the lenders party thereto and the Administrative Agent to provide incremental term loans (the “Incremental Term Loan”) in an aggregate principal amount of $55,000. The Incremental Term Loan matures in three years. The Incremental Agreement amended the Credit Agreement (the Credit Agreement, as amended by the Incremental Agreement, the “Amended Credit Agreement”).

On October 26, 2022, the Company entered into an interest rate cap agreement on the floating rate component of interest (LIBOR, subsequently transitioned to SOFR) for the Term Loan, with Bank of America as the counterparty. The interest rate cap became effective December 31, 2022. The Company will pay a premium of $6,573 at the maturity date of December 31, 2025. For the period ended June 30, 2023, the notional amount of the interest rate cap is $349,300 of the Term Loan and has a strike rate of 5.00%, which effectively caps LIBOR (subsequently transitioned to SOFR) on the notional amount at 5.00%. As of June 30, 2023, the three-month LIBOR rate was 5.16%.

On April 17, 2023, the Company entered into an Amendment to the Credit Agreement (the “Amendment to the Credit Agreement”), further amending the Credit Agreement dated as of December 8, 2021 (as amended by the Amended Credit Agreement dated as of October 2, 2022). The Amendment to the Credit Agreement replaces LIBOR with SOFR as the interest rate benchmark for certain loans as provided thereunder along with other conforming changes. Other than the foregoing, the parties to the Credit Agreement continue to have the same obligations set forth in the Credit Agreement prior to the effectiveness of the Amendment to the Credit Agreement.

Borrowings under the Term Loan will bear interest at a rate per annum equal to, at the Company’s option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the federal funds effective rate, (b) the prime rate and (c) the eurocurrency rate determined by reference to the cost of funds for U.S. dollar deposits (subsequently changed to the forward-looking term rate based on SOFR for rates initiated after the effective date of the Amendment to the Credit Agreement) for an interest period of one month adjusted for certain additional costs, plus 1.00%; provided that such rate is not lower than a floor of 1.50% or (2) an applicable margin plus a eurocurrency rate determined by reference to the cost of funds for U.S. dollar deposits (subsequently changed to the forward-looking term rate based on SOFR for rates initiated after the effective date of the Amendment to the Credit Agreement) for the interest period relevant to such borrowing adjusted for certain additional costs; provided that such rate is not lower than a floor of 0.50%.

Borrowings under the Incremental Term Loan will bear interest at a rate per annum equal to, at the Company’s option, either (1) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the federal funds effective rate, (b) the prime rate and (c) the forward-looking term rate based on the SOFR for an interest period of one month plus 1.00%; provided that such rate is not lower than a floor of 1.00% or (2) an applicable margin plus

a forward-looking rate based on SOFR for the interest period relevant to such borrowing provided that such rate is not lower than a floor of 0.50%.

The interest rate for the Term Loan was 9.66% as of June 30, 2023 and 7.38% as of December 30, 2022. The interest rate for the Incremental Term Loan was 11.65% as of June 30, 2023 and 10.42% as of December 30, 2022.

Borrowings under the Revolving Credit Facility will bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at the Company’s option, either (1) a base rate determined by reference to the highest of (a) 0.50% per annum plus the federal funds effective rate, (b) the prime rate and (c) the eurocurrency rate determined by reference to the cost of funds adjusted for certain additional costs (subsequently changed to the forward-looking term rate based on SOFR for rates initiated after the effective date of the Amendment to the Credit Agreement) for an interest period of one month, plus 1.00%; provided such rate is not lower than a floor of 1.00% or (2) a eurocurrency rate determined by reference to the applicable cost of funds for such borrowing adjusted for certain additional costs (subsequently changed to the forward-looking term rate based on SOFR for rates initiated after the effective date of the Amendment to the Credit Agreement); provided such rate is not lower than a floor of zero, subsequently changed to 0.50% based on SOFR for rates initiated after the effective date of the Amendment to the Credit Agreement. The interest rate for the Revolving Credit Facility was 9.85% as of June 30, 2023 and 9.22% as of December 30, 2022.

The Term Loan amortizes in fixed equal quarterly installments in an amount equal to 1.00% per annum of the total aggregate principal amount thereof immediately after borrowing, with the balance due at maturity. The Company may voluntarily prepay loans or reduce commitments under the Credit Agreement, in whole or in part, subject to minimum amounts, with prior notice but without premium or penalty (subject to customary exceptions).

The Company’s outstanding debt as of June 30, 2023 and December 30, 2022 was as follows:

Instrument	Maturity Date	June 30, 2023		December 30, 2022
Credit Agreement
Term Loan	December 8, 2028	$	459,188	$	461,513
Incremental Term Loan	October 2, 2025	$	54,725	$	55,000
Revolving Credit Facility	December 8, 2026	$	28,000	$	12,000
Outstanding Letters of Credit	December 8, 2026	$	4,940	$	5,060

The amount available under the Revolving Credit Facility was $67,060 and $82,940 as of June 30, 2023 and December 30, 2022, respectively.

As of June 30, 2023, the future scheduled maturities of the above notes payable are as follows:

Remainder of 2023	$	2,600
2024	3,900
2025	58,688
2026	32,650
2027	5,813
Thereafter	438,262
Total future maturities of debt	541,913
Unamortized debt issuance costs	(14,299)
Total indebtedness	527,614
Less: Current maturities of long-term debt	5,200
Long-term debt and revolving credit facility	$	522,414

Unamortized costs related to the issuance of the Term Loan were $13,251 and $14,655 as of June 30, 2023 and December 30, 2022, respectively, and were presented as a direct deduction from the carrying amount of long-term debt.

Unamortized costs related to the issuance of the Revolving Credit Facility were $1,048 and $1,200 as of June 30, 2023 and December 30, 2022, respectively, and were presented as a direct deduction from the carrying amount of the revolving credit facility. The costs related to debt issuances are amortized to interest expense over the life of the related debt. As of June 30, 2023, the future amortization of debt issuance costs was as follows:

Remainder of 2023	$	1,611
2024	3,396
2025	3,374
2026	2,123
2027	1,918
Thereafter	1,877
Total	$	14,299

Debt Covenants and Default Provisions — There have been no changes to the debt covenants or default provisions related to the Company’s outstanding debt arrangements or other obligations during the current year. The Company was in compliance with all debt covenants as of June 30, 2023 and December 30, 2022. For additional information on the Company’s debt arrangements, debt covenants and default provisions, see Note 8 of the Notes to the Consolidated Financial Statements for the year ended December 30, 2022, in the Annual Report.

The Company may also be required to make additional payments under the financing agreement equal to a percentage of the Company’s annual excess cash flows or net proceeds from any non-ordinary course asset sales or certain debt issuances, if any. The lender has the option to decline the prepayment. As of December 30, 2022, the Company did not incur a required additional payment.