Long-Term Debt

6 Months Ended

Aug. 31, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Note 10 - Long-Term Debt

A summary of our long-term debt follows:

(in thousands)	August 31, 2023		February 28, 2023
Credit Agreement (1):
Revolving loans	603,000		690,000
Term loans	243,750		246,875
Total borrowings under Credit Agreement	846,750		936,875
Unamortized prepaid financing fees	(1,847)		(2,463)
Total long-term debt	844,903		934,412
Less: current maturities of long-term debt	(6,235)		(6,064)
Long-term debt, excluding current maturities	$	838,668	$	928,348

(1)The weighted average interest rates on borrowings outstanding under the Credit Agreement (defined below) as of August 31, 2023 and February 28, 2023 were 7.1% and 6.6%, respectively.

Capitalized Interest

During the three month period ended August 31, 2023, we incurred interest costs totaling $13.7 million, of which none was capitalized, compared to $10.1 million for the same period last year, of which we capitalized $0.9 million as part of property and equipment in connection with the construction of a new distribution facility. During the six month periods ended August 31, 2023 and August 31, 2022, we incurred interest costs totaling $28.6 million and $15.2 million, respectively, of which we capitalized $0.9 million and $1.6 million, respectively, in connection with the previously mentioned distribution facility.

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 a $300 million accordion, which can be used for term loan commitments. In June 2022, we exercised $250 million of the $300 million accordion under the Credit Agreement and borrowed $250 million as term loans. The proceeds from the term loans were used to repay revolving loans under the Credit Agreement. 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 and the revolving loans under the Credit Agreement is March 13, 2025. Borrowings under the Credit Agreement bear floating interest at either the Base Rate or Term SOFR (as defined in the Credit Agreement), 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.

The floating interest rates on our borrowings under the Credit Agreement are hedged with interest rate swaps to effectively fix interest rates on $625 million and $425 million of the outstanding principal balance under the revolving loans as of August 31, 2023 and February 28, 2023, respectively. See Notes 11, 12, and 13 for additional information regarding our interest rate swaps.

As of August 31, 2023, the balance of outstanding letters of credit was $17.8 million and the amount available for revolving loans under the Credit Agreement was $629.2 million. Covenants in the Credit Agreement limit the amount of total indebtedness we can incur. As of August 31, 2023, these covenants effectively limited our ability to incur more than $231.1 million of additional debt from all sources, including the Credit Agreement, or $465.8 million in the event a qualified acquisition is consummated.

Debt Covenants

As of August 31, 2023, we were in compliance with all covenants as defined under the terms of the Credit Agreement.