Financing Agreement

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Financing Agreement

Financing Agreement

The carrying value of debt, finance lease obligations, and notes payable and the average related interest rates were as follows (in millions):

	Average interest rate as of December 31, 2021	Maturity	December 31, 2021		December 31, 2020
Revolving loan facility	—	June 2026	$	—	$	—
Term loan facility	1.23%	June 2026	876.0		940.0
Incremental term loan	0.98%	December 2022	500.0		—
Senior notes—fixed rate	—	May 2021	—		75.0
Senior notes—fixed rate	4.23%	July 2028	350.0		350.0
Finance lease obligations	5.20%	Various through 2029	13.5		16.2
Notes payable and other	4.24%	Various through 2030	68.3		75.0
Debt issuance costs			(7.1)		(5.5)
Total debt, finance lease obligations, and notes payable			$	1,800.7	$	1,450.7
Less: current maturities			553.3		142.1
Total long-term debt, finance lease obligations, and notes payable			$	1,247.4	$	1,308.6

Bank financing. In December 2010, the Company entered an unsecured Master Note Purchase Agreement, which has been amended and supplemented, under which it has issued senior notes. In May 2011, the Company issued $75 million

of unsecured senior notes due May 2021. The senior notes were fully repaid in May 2021. In July 2018, the Company issued $350 million of unsecured senior notes due July 2028 which remain outstanding.

The Company maintains an unsecured credit facility which consists of a term loan facility (the “Term Loan Facility”) and a revolving loan facility (the “Revolving Loan Facility”). In July 2018, the Company amended its unsecured credit facility to increase its Term Loan Facility to $1,180 million, of which $876 million was outstanding as of December 31, 2021. In June 2021, the Company further amended its unsecured credit facility to increase its Revolving Loan Facility to $1,000 million and extend the maturity date to June 2026. Interest is charged at rates based on a LIBOR or “prime” base rate.

On December 17, 2021, the Company amended the credit facility to provide a new incremental 364-day term loan (the “Incremental Term Loan”) in the amount of $500 million. The new incremental term loan, which was fully drawn on closing, is unsecured and matures on December 16, 2022. There are no required principal payments prior to the maturity date. In addition to the payment of the $500 million Incremental Term Loan, the Company is required to make principal payments under the Term Loan Facility totaling $45 million over the next 12 months. These payments are classified as current maturities in the consolidated balance sheets.

The credit facility and the Master Note Purchase Agreement contain covenants that require the Company to maintain certain financial ratios, including minimum interest coverage and maximum leverage ratios. The agreements require the Company to maintain an interest coverage ratio of not less than 3.00 to 1.00 and a leverage ratio of not more than 3.50 to 1.00 on a rolling four quarter basis. The Company was in compliance with all such covenants as of December 31, 2021.

Debt issuance costs are recognized as a reduction in the carrying value of the related long-term debt in the consolidated balance sheets and are being amortized to interest expense in the consolidated statements of income over the expected remaining terms of the related debt.

As a component of the Boat Holdings merger agreement, the Company has committed to make a series of deferred payments to the former owners following the closing date of the merger through July 2030. The original discounted payable was for $76.7 million, of which $61.0 million was outstanding as of December 31, 2021. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets.

The Company has a mortgage note payable agreement for land, on which the Company built the Huntsville, Alabama manufacturing facility. The original mortgage note payable was for $14.5 million, of which $7.3 million was outstanding as of December 31, 2021. The outstanding balance is included in long-term debt and current portion of long-term debt in the consolidated balance sheets. The payment of principal and interest for the note payable is forgivable if the Company satisfies certain job commitments over the term of the note. The Company has met the required commitments to date.

The following summarizes activity under the Company’s credit arrangements (in millions):

	2021		2020		2019
Total borrowings as of December 31	$	1,726.0	$	1,365.0	$	1,600.1
Average outstanding borrowings during year	$	1,500.4	$	1,879.7	$	1,912.0
Maximum outstanding borrowings during year	$	1,903.0	$	2,370.6	$	2,127.9
Weighted-average interest rate as of December 31	1.77%		2.30%		3.29%

Letters of credit. As of December 31, 2021, the Company had open letters of credit totaling $32.1 million. The amounts are primarily related to inventory purchases and are reduced as the purchases are received.