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Long-Term Debt
 12 Months Ended
Feb. 28, 2023
Debt Disclosure [Abstract]  
Long-Term Debt
Note 14 - Long-Term Debt

A summary of our long-term debt follows:

(in thousands)February 28, 2023February 28, 2022
Mississippi Business Finance Corporation Loan (the “MBFC Loan”)
$— $16,707 
Credit Agreement:
Revolving loans690,000 799,500 
Term loans246,875 — 
Total borrowings under Credit Agreement936,875 799,500 
Subtotal936,875 816,207 
Unamortized prepaid financing fees(2,463)(2,991)
Total long-term debt934,412 813,216 
Less: current maturities of long-term debt(6,064)(1,884)
Long-term debt, excluding current maturities$928,348 $811,332 
Aggregate annual maturities of our long-term debt as of February 28, 2023 were as follows:

(in thousands)
Fiscal 2024$6,250 
Fiscal 20256,250 
Fiscal 2026924,375 
Fiscal 2027— 
Fiscal 2028— 
Thereafter— 
Total$936,875 

Credit Agreement

We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $1.25 billion and matures on March 13, 2025. The Credit Agreement includes a $300 million accordion, which can be used for term loan commitments. The accordion permits the Company to request to increase its borrowing capacity, not to exceed the $300 million commitment in the aggregate, provided certain conditions are met, including lender approval. As described below, in June of 2022, we exercised $250 million of the $300 million accordion under the Credit Agreement and borrowed $250 million as term loans. Any increase to term loan commitments and revolving loan commitments must be made on terms identical to the revolving loans under the Credit Agreement and must have a maturity date of no earlier than March 13, 2025. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis. We are able to repay amounts borrowed at any time without penalty.

Borrowings accrue interest under one of two alternative methods pursuant to the Credit Agreement as described below. With each borrowing against our credit line, we can elect the interest rate method based on our funding needs at the time. We also incur loan commitment and letter of credit fees under the Credit Agreement. At February 28, 2022, the Credit Agreement bore floating interest at either the Base Rate or the London Interbank Offered Rate (“LIBOR”), plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0% for Base Rate and LIBOR borrowings, respectively.

On June 28, 2022, we entered into an amendment to the Credit Agreement to, among other things, replace LIBOR with Term SOFR (as defined in the Credit Agreement) as the reference interest rate. In connection with the amendment, we also (i) exercised the accordion under the Credit Agreement and borrowed $250 million as term loans, and (ii) provided a notice relating to a qualified acquisition, which triggered temporary adjustments to the maximum leverage ratio as further described below. The term loans are payable at the end of each fiscal quarter in equal installments of 0.625% of the term loans made, which began in the third quarter of fiscal 2023, with the remaining balance due at the maturity date. The maturity date of the term loans is March 13, 2025, which is the same maturity date as the revolving loans under the Credit Agreement. The proceeds from the term loans were used to repay revolving loans under the Credit Agreement. We may prepay the term loans, in whole or in part, at any time without premium or penalty. Following the amendment, borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR, plus a margin based on the Net Leverage Ratio (as defined in the Credit Agreement) of 0% to 1.0% and 1.0% to 2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term SOFR borrowings. As a result of the notice for the qualified acquisition, the maximum leverage ratio is 4.00 to 1.00 through February 28, 2023, 3.75 to 1.00 through May 31, 2023 and 3.50 to 1.00 thereafter.

As of February 28, 2023, the balance of outstanding letters of credit was $18.2 million and the amount available for revolving loans under the Credit Agreement was $541.8 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As a result of our exercise of the
qualified acquisition notice under the Credit Agreement, as of February 28, 2023, these covenants effectively limited our ability to incur more than $363.0 million of additional debt from all sources, including the Credit Agreement.

The floating interest rates on our borrowings under the Credit Agreement are hedged with interest rate swaps to effectively fix interest rates on $425 million and $125 million of the outstanding principal balance under the revolving loans as of February 28, 2023 and February 28, 2022, respectively. In connection with amending our Credit Agreement in June 2022, we updated our associated interest rate swap contracts to replace LIBOR with Term SOFR as the reference interest rate during the second quarter of fiscal 2023. In accordance with ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), we elected to apply the hedge accounting practical expedients related to changes to the critical terms of a hedging instrument, hedged item or forecasted transaction and changes in designated hedged interest rate risk. Application of these practical expedients allowed us to maintain hedge accounting for our interest rate swap contracts. See Notes 15, 16, and 17 for additional information regarding our interest rate swaps.

Other Debt Agreements

On February 28, 2023, we paid the remaining balance of $15.1 million, including principal and interest, outstanding under our unsecured loan agreement with the Mississippi Business Finance Corporation (the “MBFC”) without penalty. As a result, as of February 28, 2023, we no longer have outstanding debt related to the MBFC Loan and the MBFC Loan terminated pursuant to its terms. The loan agreement was entered into in connection with the issuance by MBFC of taxable industrial development revenue bonds. The borrowings were used to fund construction of our Olive Branch, Mississippi distribution facility. The maturity date of the MBFC Loan was March 1, 2023.

On August 26, 2022, we entered into an amendment to the loan agreement for the unsecured MBFC
Loan to, among other things, replace LIBOR with Term SOFR (as defined in the loan agreement) as the
reference interest rate. Following the effective date of the amendment, borrowings under the MBFC Loan
bore interest at either the Base Rate or Term SOFR (both as defined in the loan agreement), plus a
margin based on the Net Leverage Ratio (as defined in the loan agreement) of 0% to 1.0% and 1.0% to
2.0% for Base Rate and Term SOFR borrowings, respectively, plus a credit spread of 0.10% for Term
SOFR borrowings. Prior to the amendment, the MBFC Loan bore floating interest based on either LIBOR plus a margin of up to 2.0%, or a Base Rate plus a margin of up to 1.0%, as determined by the interest rate elected and the Net Leverage Ratio defined in loan agreement.

In connection with amending the Credit Agreement and the MBFC Loan to replace LIBOR with Term SOFR (as defined in the respective agreements), we elected to apply the contract modification practical expedient in accordance with ASU 2020-04. Application of this practical expedient provided relief from the requirement to evaluate whether the modification resulted in an extinguishment and allowed us to account for the modification by prospectively adjusting the effective interest rate in the agreements.

Debt Covenants

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our Credit Agreement requires the maintenance of certain key financial covenants, defined in the table below. Our Credit Agreement also contains other customary covenants, including, among other things, covenants restricting or limiting us, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on our properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends. Our Credit Agreement also contains customary events of default, including failure to pay principal or interest when due, among others. Upon an event of default under our Credit Agreement, the lenders may, among other things, accelerate the
maturity of any amounts outstanding. The commitments of the lenders to make loans to us under the Credit Agreement are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitments under the Credit Agreement.

As of February 28, 2023, we were in compliance with all covenants as defined under the terms of the Credit Agreement.

Interest and Capitalized Interest

During fiscal 2023, we incurred interest costs totaling $46.2 million, of which we capitalized $5.5 million as part of property and equipment in connection with the construction of a new distribution facility. During fiscal 2022 and 2021, we incurred interest costs totaling $12.8 million and $12.6 million, respectively, none of which was capitalized.

The following table contains information about interest rates and the related weighted average borrowings outstanding under our Credit Agreement and the MBFC Loan for the periods presented below:

 Fiscal Years Ended Last Day of February,
(in thousands)202320222021
Credit Agreement:
Average borrowings outstanding (1)$1,011,263$503,900$334,400
Average effective interest rate (2)4.3%1.1%1.7%
Interest rate range
1.1% - 8.6%
1.1% - 3.3%
1.1% - 4.8%
Weighted average interest rate on borrowings outstanding at year end6.6%1.2%1.1%
MBFC Loan:
Average borrowings outstanding (1)$12,226$17,087$18,987
Average effective interest rate (2)5.0%1.1%1.4%
Interest rate range
1.2% - 5.9%
1.1% - 1.2%
1.1% - 2.6%
Weighted average interest rate on borrowings outstanding at year end(3)1.2%1.1%

(1)Average borrowings outstanding is computed as the average of the current and four prior quarters ending balances outstanding.

(2)The average effective interest rate during each year is computed by dividing the total interest expense associated with the borrowing for a fiscal year by the average borrowings outstanding for the same fiscal year.

(3)As of February 28, 2023, we no longer had any outstanding borrowings on the MBFC Loan and the MBFC Loan terminated pursuant to its terms.