Debt

9 Months Ended

Oct. 28, 2023

Debt Disclosure [Abstract]

Debt

Debt

The following table summarizes the net carrying value of our outstanding indebtedness (dollars in thousands):

	October 28, 2023		January 28, 2023
Credit agreement - Revolving facility (matures April 2026)	$	154,000	$	—
Credit agreement - Term loan facility, net (matures April 2026)	317,955		330,603
4.50% senior notes, net (mature April 2029)	494,951		494,264
	966,906		824,867
Less: current portion	(17,500)		(17,500)
Long-term debt	$	949,406	$	807,367

Credit Agreement

On April 1, 2021, the Company and certain of its subsidiaries amended its credit agreement, dated as of October 19, 2018, with the various lenders party thereto and Bank of America, N.A., as administrative agent (the “Credit Agreement”), to among other things, decrease the maximum revolver commitment to $650.0 million from $750.0 million and decrease the term loan facility to $350.0 million from $416.3 million. The Credit Agreement includes a $200.0 million sublimit for the issuance of letters of credit and a $50.0 million sublimit for swingline loans. As part of the amendment, the maturity of the Credit Agreement was extended to April 1, 2026.

The following table summarizes the net carrying value of the term loan as of October 28, 2023 and January 28, 2023 (dollars in thousands):

	October 28, 2023		January 28, 2023
Principal amount of term loan	$	319,375	$	332,500
Less: Debt issuance costs	(1,420)		(1,897)
Net carrying amount of term loan	$	317,955	$	330,603

Subject to certain conditions, the Credit Agreement provides us with the ability to enter into one or more incremental facilities either by increasing the revolving commitments under the Credit Agreement and/or by establishing one or more additional term loans, up to the sum of (i) $350.0 million and (ii) an aggregate amount such that, after giving effect to such incremental facilities on a pro forma basis (assuming that the amount of the incremental commitments are fully drawn and funded), the consolidated senior secured net leverage ratio does not exceed 2.25 to 1.00. The consolidated senior secured net leverage ratio is the ratio of our consolidated senior secured indebtedness reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined by the Credit Agreement. Borrowings under the Credit Agreement are guaranteed by substantially all of our domestic subsidiaries and secured by 100% of the equity interests of our direct and indirect domestic subsidiaries and 65% of the voting equity interests and 100% of the non-voting interests of our first-tier foreign subsidiaries (subject to customary exceptions).

Under our Credit Agreement, borrowings bear interest at the rates described below based upon our consolidated net leverage ratio, which is the ratio of our consolidated total funded debt reduced by unrestricted cash and equivalents in excess of $25.0 million to our trailing four-quarter consolidated EBITDA, as defined by our Credit Agreement. In addition, we incur certain fees for unused balances and letters of credit at the rates described below, also based upon our consolidated net leverage ratio.

Borrowings - Eurodollar Rate Loans	1.25% - 2.00% plus SOFR
Borrowings - Base Rate Loans	0.25% - 1.00% plus Base rate(1)
Unused Revolver Commitment	0.20% - 0.40%
Standby Letters of Credit	1.25% - 2.00%
Commercial Letters of Credit	0.625% -1.000%

(1) Base rate is described in the Credit Agreement as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the administrative agent’s prime rate, and (iii) the Eurodollar rate plus 1.00% and, if such rate is less than zero, such rate shall be deemed zero.

Standby letters of credit of approximately $47.5 million and $47.5 million issued as part of our insurance program, were outstanding under our Credit Agreement at each of October 28, 2023 and January 28, 2023, respectively.

The weighted average interest rates and fees for balances under our Credit Agreement as of October 28, 2023 and January 28, 2023 were as follows:

	Weighted Average Rate End of Period
	October 28, 2023	January 28, 2023
Borrowings - Term loan facility	6.93%	6.21%
Borrowings - Revolving facility(1)	7.56%	—%
Standby Letters of Credit	1.50%	1.75%
Unused Revolver Commitment	0.25%	0.35%

(1) There were no outstanding borrowings under our revolving facility as of January 28, 2023.

Our Credit Agreement contains a financial covenant that requires us to maintain a consolidated net leverage ratio of not greater than 3.50 to 1.00, as measured at the end of each fiscal quarter, and provides for certain increases to this ratio in connection with permitted acquisitions. The consolidated net leverage ratio is the ratio of our consolidated indebtedness reduced by unrestricted cash and cash equivalents in excess of $25.0 million to our trailing four-quarter consolidated earnings before interest, taxes, depreciation, and amortization as defined by our Credit Agreement. The Credit Agreement also contains a financial covenant that requires us to maintain a consolidated interest coverage ratio, which is the ratio of our trailing four-quarter consolidated EBITDA to our consolidated interest expense, each as defined by our Credit Agreement, of not less than 3.00 to 1.00, as measured at the end of each fiscal quarter. At each of October 28, 2023 and January 28, 2023, we were in compliance with the financial covenants of our Credit Agreement and had borrowing availability under the revolving facility of $448.5 million as determined by the most restrictive covenant. For calculation purposes, applicable cash on hand is netted against the funded debt amount as permitted in the Credit Agreement.

On May 9, 2023, the Company and certain of its subsidiaries amended the Credit Agreement to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”) and provides that term loans and revolving loans will bear interest at a rate per annum equal to, either term SOFR or the base rate, plus, in each case, an applicable margin that will be determined based on the Company’s consolidated net leverage ratio, as specified above. “Term SOFR” will be the published forward-looking SOFR rate for the applicable interest period plus a 0.10% spread adjustment.

4.50% Senior Notes Due 2029

On April 1, 2021, we issued $500.0 million aggregate principal amount of 4.50% senior notes due 2029 (the “2029 Notes”). The 2029 Notes are guaranteed on a senior unsecured basis, jointly and severally, by all of our domestic subsidiaries that guarantee the Credit Agreement.

The indenture governing the 2029 Notes contains certain covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to (i) incur additional debt and issue certain preferred stock, (ii) pay certain dividends on, repurchase, or make distributions in respect of, our and our subsidiaries’ capital stock or make other payments restricted by the indenture, (iii) enter into agreements that place limitations on distributions made from certain of our subsidiaries, (iv) guarantee certain debt, (v) make certain investments, (vi) sell or exchange certain assets, (vii) enter into transactions with affiliates, (viii) create certain liens, and (ix) consolidate, merge or transfer all or substantially all of our or our Subsidiaries’ assets. These covenants are subject to a number of exceptions, limitations and qualifications as set forth in the indenture governing the 2029 Notes.

The following table summarizes the net carrying value of the 2029 Notes as of October 28, 2023 and January 28, 2023 (dollars in thousands):

	October 28, 2023		January 28, 2023
Principal amount of 2029 Notes	$	500,000	$	500,000
Less: Debt issuance costs	(5,049)		(5,736)
Net carrying amount of 2029 Notes	$	494,951	$	494,264

The following table summarizes the fair value of the 2029 Notes, net of debt issuance costs. The fair value of the 2029 Notes is based on the closing trading price per $100 of the 2029 Notes as of the last day of trading (Level 2), which was $85.74 and $97.50 as of October 28, 2023 and January 28, 2023, respectively (dollars in thousands):

	October 28, 2023		January 28, 2023
Fair value of principal amount of 2029 Notes	$	428,700	$	451,250
Less: Debt issuance costs	(5,049)		(5,736)
Fair value of 2029 Notes	$	423,651	$	445,514