Long-Term Debt

9 Months Ended

Apr. 30, 2024

The components of long-term debt are as follows:


	April 30, 2024		July 31, 2023
Term loan	$	703,694	$	758,094

Senior unsecured notes	500,000		500,000
Unsecured notes	26,795		27,558
Other debt	33,306		41,753
Total long-term debt	1,263,795		1,327,405
Debt issuance costs, net of amortization	(19,250)		(24,726)
Total long-term debt, net of debt issuance costs	1,244,545		1,302,679
Less: Current portion of long-term debt	(35,491)		(11,368)
Total long-term debt, net, less current portion	$	1,209,054	$	1,291,311

As discussed in Note 13 to the Company’s Consolidated Financial Statements included in the Fiscal 2023 Form 10-K, the Company is a party to a term loan (“term loan”) agreement, which consists of a U.S. dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $1,000,000 revolving asset-based credit facility (“ABL”).

On November 15, 2023, the Company entered into amendments to both its term loan and ABL agreements to extend maturities and lower the applicable margins used to determine the interest rate on the U.S. dollar-denominated term loan tranche. Pursuant to the term loan amendments, the applicable margin used to determine the interest rate on U.S. dollar-denominated loans was reduced by 0.25% so that the applicable margin for Alternate Base Rate ("ABR")-based loans is 1.75% and 2.75% for Secured Overnight Financing Rate (“SOFR”)-based loans. The SOFR credit spread adjustment applicable to U.S. dollar-denominated SOFR-based loans was eliminated. The applicable margin for Euro-denominated EURIBOR-based loans was unchanged. The maturity date for the term loan was extended from February 1, 2026 to November 15, 2030. Covenants and other material provisions of the term loan agreement remain materially unchanged. Following the amendments, the principal amounts outstanding under the term loan agreement were $450,000 on the U.S. dollar-denominated term loan tranche and 330,000 Euro on the Euro-denominated term loan tranche. Under the provisions of the amended term loan, both the U.S. and Euro tranches require annual principal payments of 1.0% of the new term loan balance, payable quarterly in 0.25% installments starting on May 1, 2024. As of April 30, 2024, the Company had made sufficient payments on the U.S term loan tranche to satisfy all future annual principal payment requirements on the U.S. term loan over the term of the loan. Pursuant to the ABL amendment, the maturity date for loans under the ABL agreement was extended from September 1, 2026 to November 15, 2028. Maximum availability under the ABL remains at $1,000,000 and there were no borrowings outstanding as of the November 15, 2023 amendment date. The applicable margin, covenants and other material provisions of the ABL remain materially unchanged.

The November 15, 2023 debt amendments noted above were evaluated on a creditor-by-creditor basis pursuant to the requirements in ASC 470-50 related to syndicated loan arrangements. Extinguishment accounting was applied to the creditors that were deemed to have a substantial difference in terms based on an analysis of the present values of cash flows before and after the amendments. As a result of this analysis, the Company recorded expense of $14,741 in the second quarter of fiscal 2024. $7,566 of this $14,741 expense is classified as interest expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income and primarily represents extinguishment charges, while the remaining $7,175 is classified as administrative expense and primarily represents third-party costs attributed to the modified loans. In addition, during the second quarter of fiscal 2024 the Company capitalized qualifying financing-related costs of $10,480 related to these amendments which will be amortized over the remaining term of the amended agreements subject to acceleration for early term loan principal payments.

As of April 30, 2024, the outstanding U.S. term loan tranche balance of $350,000 was subject to a SOFR-based rate totaling 8.069%. As of July 31, 2023, the outstanding U.S. term loan tranche balance of $271,900 was subject to a SOFR-based rate totaling 8.433%. The interest rate on the April 30, 2024 outstanding Euro term loan tranche balance of $353,694 was 6.855%, and the interest rate on the July 31, 2023 outstanding Euro term loan tranche of $486,194 was 6.625%.

As of April 30, 2024 and July 31, 2023, there were no outstanding ABL borrowings. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without penalty or premium.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The unused availability under the ABL is generally available to the Company for general operating purposes and, based on April 30, 2024 eligible receivables and inventory balances, net of amounts drawn, totaled approximately $998,000.

As discussed in Note 13 to the Company’s Consolidated Financial Statements included in the Fiscal 2023 Form 10-K, on October 14, 2021, the Company issued an aggregate principal amount of $500,000 of 4.000% Senior Unsecured Notes (“Senior Unsecured Notes”) that will mature on October 15, 2029 unless redeemed or repurchased earlier. Interest on the Senior Unsecured Notes is payable in semi-annual installments on April 15 and October 15 of each year.

The unsecured notes of 25,000 Euro ($26,795) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($21,436) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($5,359) with an interest rate of 2.534% maturing in March 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from 2.38% to 2.87%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2024	$	4,605
For the fiscal year ending July 31, 2025	35,730
For the fiscal year ending July 31, 2026	6,628
For the fiscal year ending July 31, 2027	6,163
For the fiscal year ending July 31, 2028	11,586
For the fiscal year ending July 31, 2029 and thereafter	1,199,083
	$	1,263,795

For the three and nine months ended April 30, 2024, interest expense on total long-term debt was $24,366 and $78,113, respectively, which includes amortization of capitalized debt issuance costs in both periods, and the debt extinguishment charges noted above in the nine months ended April 30, 2024, totaling $3,036 and $14,900, respectively. For the three and nine months ended April 30, 2023, interest expense on total long-term debt was $24,994 and $69,237, respectively, which includes amortization of debt issuance costs of $2,872 and $8,569, respectively.

The fair value of the Company’s Senior Unsecured Notes at April 30, 2024 and July 31, 2023 was $433,600 and $430,650, respectively. The fair value of all other debt held by the Company approximates carrying value. The fair values of the Company’s long-term debt are primarily estimated using Level 2 inputs as defined by ASC 820, based on quoted prices in markets that are not active.

Subsequent to April 30, 2024, the Company made a payment of $27,110 against the principal balance of its Euro term loan. This payment was sufficient to satisfy all future annual principal payment requirements on the Euro term loan.