Debt

9 Months Ended

Sep. 28, 2024

The following table sets forth the components of long-term debt:


			September 28, 2024								December 31, 2023
	Effective Interest Rate		Principal Outstanding		Unamortized Fair Value Adjustment (1)		Unamortized Discount and Issuance Costs		Carrying Amount		Principal Outstanding		Unamortized Fair Value Adjustment(1)		Unamortized Discount and Issuance Costs		Carrying Amount
Term loan facility, due April 2028	8.57	%	$	2,515,500	$	(247,488)	$	—	$	2,268,012	$	2,528,500	$	(292,442)	$	—	$	2,236,058
Term loan facility, due August 2028	9.69	%	295,500		—		(15,817)		279,683		297,000		—		(18,370)		278,630
Term loan facility, due May 2031	10.04	%	500,000		—		(4,965)		495,035		—		—		—		—
6.125% senior notes, due January 2029	13.73	%	318,699		(77,013)		—		241,686		318,699		(87,050)		—		231,649
8.750% senior secured notes, due August 2028	10.61	%	710,000		—		(38,327)		671,673		710,000		—		(44,787)		665,213
9.500% senior secured notes, due August 2029	9.94	%	500,000		—		(6,943)		493,057		—		—		—		—
Total long-term debt			$	4,839,699	$	(324,501)	$	(66,052)	$	4,449,146	$	3,854,199	$	(379,492)	$	(63,157)	$	3,411,550
Reflected as:
Current liabilities - Current portion of long-term debt									$	34,000							$	29,000
Non-current liabilities - Long-term debt									4,415,146								3,382,550
Total long-term debt									$	4,449,146							$	3,411,550
Fair value - Senior notes - Level 1									$	1,507,131							$	988,702
Fair value - Term loans - Level 2									3,258,241								2,835,596
Total fair value									$	4,765,372							$	3,824,298

(1) In July 2022, as a result of the pushdown accounting related to the Merger, the carrying values of the term loan facility due April 2028 and the 6.125% senior notes were adjusted to fair value.

Issuance of 9.500% Senior Secured Notes due August 2029

On August 7, 2024, the Company issued $500.0 million in aggregate principal amount of 9.500% Senior Secured Notes (“9.500% Senior Secured Notes”) due August 2029. Interest is payable semi-annually in arrears on February 15 and August 15 of each year, commencing on February 15, 2025.

The 9.500% Senior Secured Notes are secured senior indebtedness and rank equal in right of payment with all existing and future senior indebtedness of the Company, and are senior in right of payment to all existing and future subordinated indebtedness of the Company.

The Company may redeem the 9.500% Senior Secured Notes in whole or in part, subject to certain prepayment premiums if the 9.500% Senior Secured Notes were to be redeemed prior to August 15, 2028.

Fifth Amendment to the Cash Flow Credit Agreement

On May 15, 2024, the Company entered into a Fifth Amendment to the Cash Flow Credit Agreement, dated as of April 12, 2018, to incur a new incremental term loan facility (the “Term Loan Facility, due May 2031”) in the aggregate principal amount of $500.0 million, maturing on May 15, 2031. The Term Loan Facility, due May 2031, amortizes in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon maturity.

The Term Loan Facility, due May 2031 bears annual interest at a floating rate measured by reference to, at the Company’s option, either (i) a Term SOFR rate (subject to a floor of 0.50%) plus an applicable margin of 4.50% per annum or (ii) an alternate base rate plus an applicable margin of 3.50% per annum.

The Term Loan Facility, due May 2031 and previous borrowings under the Cash Flow Credit Agreement may be prepaid at the Company’s option at any time, subject to minimum principal amount requirements. Prepayments of the Term Loan Facility, due May 2031 in connection with a repricing transaction on or prior to November 15, 2024, are subject to a 1.00% prepayment premium. Prepayments may otherwise be made without premium or penalty (other than customary breakage costs). The Cash Flow Revolver may be prepaid at the Company’s option at any time without premium or penalty (other than customary breakage costs), subject to minimum principal amount requirements.

Repurchase of 6.125% Senior Notes due January 2029

The Company repurchased an aggregate principal amount of $— million and $46.8 million of its 6.125% Senior Notes for $— million and $33.9 million in cash during the three and nine months ended September 30, 2023. The repurchases, which resulted in a write-off of associated unamortized debt discount and deferred financing costs, resulted in a loss of $0.2 million for the nine months ended September 30, 2023. There were no repurchases of the Company’s 6.125% Senior Notes during 2024.

Short-Term Borrowings

The following table sets forth the Company’s availability under its revolving credit facilities:


	September 28, 2024						December 31, 2023
	Authorized		Borrowings		Letters of Credit and Priority Payables		Authorized		Borrowings		Letters of Credit and Priority Payables
Asset-based lending facility, due May 2029(1)	$	850,000	$	65,000	$	56,000	$	850,000	$	—	$	47,000
Cash flow revolver(2)	92,000		45,000		—		92,000		—		—
First-in-last-out tranche asset-based lending facility, due May 2029(1)	95,000		95,000		—		95,000		—		—
Total	$	1,037,000	$	205,000	$	56,000	$	1,037,000	$	—	$	47,000

(1) As of September 28, 2024, borrowings on revolving credit facilities are included within short-term borrowings and classified as a current liability on the Condensed Consolidated Balance Sheets.

(2) Cash flow revolver commitment of $92.0 million will mature in May 2029.

Eighth Amendment to the ABL Credit Agreement

On May 15, 2024, the Company entered into Amendment No. 8 to the ABL Credit Agreement (“Amendment No. 8”), which amended the ABL Credit Agreement in order to terminate the existing revolving commitments of each of the Extending Revolving Credit Lenders originally maturing on July 25, 2027 (the “Existing ABL Commitments”), and replace such Existing ABL Commitments with an extended revolving commitment of $945.0 million maturing on May 15, 2029, subject to the outstanding aggregate principal amount. As of May 15, 2024, following consummation of Amendment No. 8, there were $55.0 million of revolving loans drawn and $43.3 million of letters of credit issued under the ABL Facility.

Borrowing availability under the ABL Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the value of eligible inventory, eligible accounts receivable and eligible credit card receivables, less certain reserves and subject to certain other adjustments as set forth in the ABL Credit Agreement. Availability is reduced by issuance of letters of credit as well as any borrowings.

Loans outstanding under the ABL Facility bear interest at a floating rate measured by reference to, at the Company’s option, either (i) a Term SOFR rate (subject to a SOFR floor of 0.00%) plus an applicable margin ranging from 1.25% to 1.75% per annum depending on the average daily excess availability under the ABL Facility or (ii) an alternate base rate plus an applicable margin ranging from 0.25% to 0.75% per annum depending on the average daily excess availability under the ABL Facility. Additionally, unused commitments under the ABL Facility are subject to a 0.25% per annum fee.

Covenant Compliance

The ABL Credit Agreement includes a minimum fixed charge coverage ratio of 1.00:1.00, which is tested only when specified availability is less than 10.0% of the lesser of (x) the then applicable borrowing base and (y) the then aggregate effective commitments under the ABL Facility and continuing until such time as specified availability has been in excess of such threshold for a period of 20 consecutive calendar days. The Cash Flow Credit Agreement includes a financial covenant set at a maximum secured leverage ratio of 7.75:1.00, which will apply if the outstanding amount of loans and drawings under letters of credit which have not then been reimbursed exceeds a specified threshold at the end of any fiscal quarter.

The Company’s debt agreements contain a number of covenants that, among other things, limit or restrict the ability of the Company and its subsidiaries to incur additional indebtedness; make dividends and other restricted payments; incur additional liens; consolidate, merge, sell or otherwise dispose of all or substantially all assets; make investments; transfer or sell assets; enter into restrictive agreements; change the nature of the business; and enter into certain transactions with affiliates. The Company is in compliance with all of its covenants as of September 28, 2024.

Interest Rate Swaps

The Company uses certain interest rate swaps to manage a portion of the interest rate risk on its term loans. The following table sets forth the terms of the Company’s interest rate swap agreements:


Notional amount	$	1,500,000
Forecasted term loan interest payments being hedged	1-month SOFR
Fixed rate paid	2.0038%
Origination date	April 17, 2023
Maturity date	April 15, 2026
Fair value at September 28, 2024 - Other assets, net	$	33,523
Fair value at December 31, 2023 - Other assets, net	$	64,704
Level in fair value hierarchy(1)	Level 2

(1)Interest rate swaps are based on cash flow hedge contracts that have fixed rate structures and are measured against market based SOFR yield curves. These interest rate swaps are classified within Level 2 of the fair value hierarchy because they are valued using alternative pricing sources or models that utilized market observable inputs, including current and forward interest rates.