Note 4 - Bank Debt

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

(4)     BANK DEBT

On  March 25, 2022, we executed an amendment to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, “PNC”), administrative agent for its lenders under its credit agreement. The primary purpose of the amendment was to return the allowable leverage ratio and debt service coverage ratio to  December 31, 2021 levels through  September 30, 2022, with the debt service coverage waived for  March 31, 2022.

On  May 20, 2022, we executed an additional amendment to our credit agreement with PNC. The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through  June 30, 2022, to provide relief for current and anticipated covenant violations.

On  August 5, 2022, we executed an additional amendment to our credit agreement with PNC. The primary purpose of this amendment was to modify the allowable leverage ratio and debt service coverage ratio through  September 30, 2022, to provide relief for anticipated covenant violations.

On March 13, 2023, we executed an additional amendment to our credit agreement with PNC. The primary purpose of the amendment was to convert $35 million of the outstanding balance on the revolver into a new term loan with a maturity date of March 31, 2024, and extend the maturity date of the revolver to May 31, 2024. The amendment also reduced the total capacity under the revolver to $85 million and waived the maximum annual capital expenditure covenant for 2022 and increased the covenant for 2023 to $75 million. Subsequent to December 31, 2022, and prior to the effective date of this amendment, we had borrowed an additional $17 million under the revolver. Additionally, this amendment provided for the transition in interest rates from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”) based pricing with ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our leverage ratio.

On  August 2, 2023, we executed an additional amendment to our credit agreement with PNC, which was accounted for as a debt extinguishment. The primary purpose of the amendment was to convert $65 million of the outstanding funded debt into a new term loan with a maturity of  March 31, 2026, and enter into a revolver of $75 million with a maturity of  July 31, 2026. The amendment increased the maximum annual capital expenditure limit to $100 million.

Prior to the March 13, 2023 amendment, bank debt was comprised of term debt ($5.5 million as of December 31, 2022) and a $120 million revolver ($79.7 million borrowed as of December 31, 2022). The term debt amortization was to conclude with the final payment of $5.5 million in  March 2023. The revolver was to mature in  September 2023. Under the provision of the March 13, 2023 amendment, bank debt was comprised of term debt ($35.0 million as of March 13, 2023) and an $85 million revolver ($40.2 million borrowed as of March 13, 2023). The term debt required payment of $10 million in June 2023 each quarter thereafter in 2023 and $5.0 million by March 31, 2024. Under the August 2, 2023 amendment, bank debt was comprised of term debt ($58.5 million borrowed as of December 31, 2023) and a $75 million revolver ($33.0 million borrowed as of December 31, 2023. The term debt requires payments of $6.5 million beginning April 2024 through March 2026.

Bank debt increased by $6.3 million and was reduced by $26.5 million during the years ended December 31, 2023 and 2022, respectively.

Our debt is recorded at amortized cost, which approximates fair value due to the variable interest rates in the agreement and is collateralized primarily by our assets.

Liquidity

As of December 31, 2023, we had additional borrowing capacity of $23.4 million under the revolver and total liquidity of $26.2 million. Our additional borrowing capacity is net of $18.6 million in outstanding letters of credit as of December 31, 2023 that were required to maintain surety bonds. Liquidity consists of additional borrowing capacity and cash and cash equivalents.

Fees

Unamortized bank fees and other costs incurred in connection with the initial facility and subsequent amendments totaled $2.5 million as of December 31, 2022. Additional costs incurred with the March 13, 2023 and August 2, 2023 amendments totaled $1.6 million and $4.3 million, respectively. During 2023 we recognized a loss on extinguishment of debt of $1.5 million for the write-off of unamortized loan fees related to the August 2, 2023 amendment to our credit agreement, which was accounted for as a debt extinguishment. The remaining costs were deferred and are being amortized over the term of the loan. Unamortized costs as of December 31, 2023, and December 31, 2022 were $3.6 million and $2.5 million, respectively. 

Bank debt, less debt issuance costs, is presented below (in thousands):

	December 31,
	2023			2022
Current bank debt	$	26,000		$	35,500
Less unamortized debt issuance cost		(1,562	)		(2,469	)
Net current portion	$	24,438		$	33,031
Long-term bank debt	$	65,500		$	49,713
Less unamortized debt issuance cost		(2,047	)		—
Net long-term portion	$	63,453		$	49,713
Total bank debt	$	91,500		$	85,213
Less total unamortized debt issuance cost		(3,609	)		(2,469	)
Net bank debt	$	87,891		$	82,744

Covenants

The credit facility includes a Maximum Leverage Ratio (consolidated funded debt / trailing twelve months adjusted EBITDA), calculated as of the end of each fiscal quarter for the trailing twelve months, not to exceed 2.25 to 1.00.

As of December 31, 2023, our Leverage Ratio of 1.32 was in compliance with the requirements of the credit agreement.

Beginning December 31, 2022, the credit facility requires a Minimum Debt Service Coverage Ratio (consolidated adjusted EBITDA/annual debt service) calculated as of the end of each fiscal quarter for the trailing 12 months of 1.25 to 1.00 through the maturity of the credit facility.

As of December 31, 2023, our Debt Service Coverage Ratio of 3.30 was in compliance with the requirements of the credit agreement.

Interest Rate

The interest rate on the facility ranges from SOFR plus 4.00% to SOFR plus 5.00%, depending on our Leverage Ratio. As of  December 31, 2023, we were paying SOFR plus  4.25% on the outstanding bank debt.

Future Maturities (in thousands):
2024		26,000
2025		26,000
2026		39,500
Total	$	91,500