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Debt Agreements
 12 Months Ended
Dec. 29, 2023
Debt Disclosure [Abstract]  
Debt Agreements Debt Agreements
On August 4, 2017, the Company’s wholly owned subsidiary, Wirepath, LLC, (“Borrower”), entered into a credit agreement (as amended from time to time, “Old Credit Agreement”), consisting of a senior secured term loan (“Old Initial Term Loan”) and a senior secured revolving credit facility (“Old Revolving Credit Facility”). On August 1, 2019, the Borrower amended the Old Credit Agreement to borrow an additional senior secured term loan (“Old Incremental Term Loan” and, together with the Old Initial Term Loan, as amended, “Old Term Loans”) and increased the commitments under the Old Revolving Credit Facility.

On August 4, 2021, the Company used a portion of the net proceeds from the IPO to prepay $216,902 in aggregate of the amount of the Old Incremental Term Loan consisting of $215,874 in principal plus accrued interest of $1,028. In connection with the prepayment, the Company incurred a charge of $6,645 related to the write-off of the proportionate
amount of the unamortized debt issuance costs at the time of the prepayment which was recorded in loss on extinguishment of debt on the Company’s consolidated statement of operations for the year ended December 31, 2021. The unamortized debt issuance costs are allocated between the remaining original loan balance and the portion of the loan paid down on a pro-rata basis.

On December 8, 2021, the Company entered into and became a party to a credit agreement (the “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 seven years from the effective date (the “Term Loan”) and a $100,000 senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) maturing five years from the effective date (the “Revolving Credit Facility”).

In connection with the closing of the Credit Agreement, the Company repaid in full approximately $451,400 of existing borrowings, including accrued interest. The Old Term Loans and Old Revolving Credit Facility and related agreements and documents under the Old Credit Agreement were terminated upon the effectiveness of the Credit Agreement.

The issuance of the Credit Agreement and repayment of the Old Term Loans were evaluated in accordance with ASC 470-50-40 - Debt-Modifications and Extinguishments - Derecognition, to determine whether the refinancing transaction should be accounted for as a debt modification or extinguishment. Each lender involved in the refinancing transaction was analyzed to determine if its participation was a debt modification or an extinguishment. Debt issuance costs for exiting lenders who chose not to participate in the Term Loan were accounted for as extinguishments. Debt discounts and costs incurred with third parties for the issuance of the Term Loan totaling $9,079 were capitalized and amortized over the term of the Term Loan. These capitalized fees associated with new and continuing lenders are presented as cash flows from financing activities on the consolidated statements of cash flows. The Company wrote off $5,427 in debt issuance costs related to the extinguishment of the Old Term Loans which was recorded in loss on extinguishment of debt on our consolidated statement of operations for the year ended December 31, 2021.

On October 2, 2022, the Company became 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 three years from the effective date. 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 December 29, 2023, the notional amount of the interest rate cap is $347,800 of the Term Loan and has a strike rate of 4.79%, which effectively caps SOFR on the notional amount at 4.79%. As of December 29, 2023, the three-month SOFR rate was 5.39%.

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 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 in not lower than a floor of 0.50%.

The interest rate for the Term Loan was 10.04% as of December 29, 2023 and 7.38% as of December 30, 2022. The interest rate for the Incremental Term Loan was 12.14% as of December 29, 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. There were no borrowings under the Revolving Credit Facility as of December 29, 2023. The interest rate for the Revolving Credit Facility was 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 December 29, 2023 and December 30, 2022 was as follows:

Maturity Date
December 29, 2023
December 30, 2022
Credit Agreement
Term LoanDecember 8, 2028$456,863 $461,513 
Incremental Term LoanOctober 2, 2025$54,450 $55,000 
Revolving Credit FacilityDecember 8, 2026$— $12,000 
Outstanding letters of creditDecember 8, 2026$4,940 $5,060 

The amount available under the Revolving Credit Facility was $95,060 and $82,940 as of December 29, 2023 and December 30, 2022, respectively.

As of December 29, 2023, the future scheduled maturities of the above notes payable are as follows:

2024$3,900 
202558,688 
20264,650 
20275,813 
2028438,262 
Total future maturities of debt511,313 
Unamortized debt issuance costs(11,793)
Total indebtedness499,520 
Less: Current maturities of long-term debt3,900 
Long-term debt$495,620 

Unamortized costs related to the issuance of the Term Loan were $11,793 as of December 29, 2023 and $14,655 as of December 30, 2022, 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 $895 as of December 29, 2023, and were included in other assets in the consolidated balance sheet. Unamortized costs related to the issuance of the Revolving Credit Facility were $1,200 as of December 30, 2022 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 December 29, 2023, the future amortization of debt issuance costs was as follows:

2024$3,396 
20253,374 
20262,123 
20271,918 
20281,877 
Total$12,688 
Interest expense for the years ended December 29, 2023, December 30, 2022, and December 31, 2021 consisted of the following:

202320222021
Interest expense from Term Loan$51,383 $30,993 $1,485 
Interest expense from Revolving Credit Facility2,737 2,462 38 
Interest expense from Old Credit Agreement— — 26,586 
Interest expense, Other
976 238 — 
Amortization of debt issuance costs3,167 2,146 5,053 
Total interest expense
$58,263 $35,839 $33,162 

Debt Covenants and Default Provisions — The Credit Agreement contains various customary affirmative and negative covenants, including restrictive covenants that place restrictions on us and may limit our ability to, among other things, incur additional debt and liens, repurchase our securities, undertake transactions with affiliates, make other investments, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets, pay dividends or distribute excess cash flow. The Company was in compliance with all debt covenants as of December 29, 2023 and December 30, 2022.

In addition, the Revolving Credit Facility is subject to a first lien secured net leverage ratio of 7.50 to 1.00, tested quarterly commencing with the fiscal quarter ending on or about June 30, 2022, if, and only if, the aggregate principal amount from the Revolving Credit Facility loans, letters of credit (to the extent not cash collateralized or backstopped or, in the aggregate, not in excess of the greater of $10,000 and the stated face amount of letters of credit outstanding on the initial closing date of the Credit Agreement) and swingline loans outstanding and/or issued, as applicable, exceeds 35.0% of the total amount of the Revolving Credit Facility commitments.

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. The Company did not incur any expected mandatory excess cash flow payments for the years ended December 29, 2023 or December 30, 2022.