What changed in this filing

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

2023-05-04 compared with 2022-11-03 · 15 added, 71 removed, 1 unchanged (99% of the section changed)

Quantitative and Qualitative Disclosures About Market

We have evaluated

the information required under this Item that was disclosed in Part II, Item 7A, of our Annual Report on

10-K for the year ended December 31, 2021, and we believe there has been

no material change to that information, except the interest

rate risk information noted below.

Quantitative and Qualitative Disclosures About Market Risk.

We have evaluated the information required under this Item that was disclosed in Part II, Item 7A, of our Annual Report on Form 10-K for the year ended December 31, 2022, and we believe there has been no material change to that information, except the interest rate risk noted below.

Interest Rate Risk.

The Company’s exposure to

interest rate risk relates primarily to its outstanding borrowings under its credit facility.

2022, the Company entered into an amendment to its primary credit facility

(the “Original Credit Facility”, or as amended, the

“Amended Credit Facility”).

See Note 14 of Notes to Condensed Consolidated

Financial Statements, which appears in Item 1 of this

As of September 30, 2022, borrowings under the Amended

Credit Facility bear interest at either term SOFR or a base rate, in

each case, plus an applicable margin based upon the Company’s

consolidated net leverage ratio, and, in the case of term SOFR, a

spread adjustment equal to 0.10% per annum.

As a result of the variable interest rates applicable

under the Amended Credit Facility,

interest rates rise significantly,

the cost of debt to the Company will increase.

This can have an adverse effect

on the Company,

depending on the extent of the Company’s

borrowings outstanding throughout a given year.

As of September 30, 2022, the Company

had outstanding borrowings under the Amended Credit Facility of approximately

$941.2 million.

The interest rate applicable on

outstanding borrowings under the Amended Credit Facility was approximately

3.8% as of September 30, 2022.

As of December 31,

2021, the Company had outstanding borrowings under the Original Credit

Facility of approximately $889.6 million.

interest rate incurred on the outstanding borrowings under the Original Credit

Facility during the year ended December 31, 2021 was

approximately 1.6%.

If interest rates had changed by 10% during 2021, the

Company’s interest expense for

the period ended

December 31, 2021 on its credit facilities, including the Original Credit Facility borrowings

outstanding post-closing of the

Combination, would have correspondingly increased or decreased by approximately

Likewise, if interest rates had changed

by 10% during the nine month period ended September 30, 2022, the Company’s

interest expense for the nine month period ended

September 30, 2022 on its credit facilities, including the Amended Credit

Facility borrowings outstanding, would have

correspondingly increased or decreased by approximately $2.2

The Original Credit Facility required the Company to fix its

variable interest rates on at least 20% of its total term loans.

In order to satisfy this requirement

as well as to manage the Company’s

exposure to variable interest rate risk associated with the Original Credit Facility,

in November 2019, the Company entered into

$170.0 million notional amounts of three year interest rate swaps at a base rate of 1.64%

plus an applicable margin as provided in the

Original Credit Facility, based

on the Company’s consolidated net

leverage ratio.

At the time the Company entered into the swaps, and

as of September 30, 2022, the aggregate interest rate on the swaps, including

the fixed base rate plus an applicable margin, was 3.1%.

In October 2022, the Company’s

interest rate swap contracts expired.

Upon expiration, the Company is entitled to a cash payment

from the counterparties, which is materially consistent with the fair value as of

September 30, 2022.

The Amended Credit Facility

does not require the Company to fix variable interest rates on any portion of its borrowings.

During June 2022, the Company entered into an amendment to its primary credit facility (the “Original Credit Facility”, or as amended, the “Credit Facility”).

See Note 20 of Notes to Consolidated Financial Statements included in Item 8 of our 2022 Form 10-K and Note 14 of Notes to Condensed Consolidated Financial Statements, which appears in Item 1 of this Report.

As of December 31, 2022, borrowings under the Credit Facility bear interest at either term Secured Overnight Financing Rate (“SOFR”) or a base rate, in each case, plus an applicable margin based upon the Company’s consolidated net leverage ratio, and, in the case of term SOFR, a spread adjustment equal to 0.10% per annum.

As a result of the variable interest rates applicable under the Credit Facility, if interest rates rise significantly, the cost of debt to the Company will increase.

This may have an adverse effect on the Company, depending on the extent of the Company’s borrowings outstanding throughout a given year.

As of December 31, 2022, and March 31, 2023, the Company had outstanding borrowings under the Credit Facility of approximately $943.5 million and $931.5 million, respectively.

The weighted average interest rate applicable on outstanding borrowings under the Credit Facility was approximately 4.9% and 5.9% as of December 31, 2022, and March 31, 2023, respectively.

The weighted average interest rate applicable on outstanding borrowings under the Original Credit Facility and the Credit Facility during the year ended December 31, 2022 was approximately 3.0% and the three months ended March 31, 2023 was approximately 5.8% .

An interest rate change of 100 basis points would result in an approximate $9.4 million and $9.3 million increase or decrease to interest expense for the year ended December 31, 2022 and the year ended December 31, 2023, respectively.

In order to manage the Company’s exposure to variable interest rate risk associated with the Credit Facility, in the first quarter of 2023, the Company entered into $300.0 million notional amounts of three year interest rate swaps to convert a portion of the Company’s variable rate borrowings into an average fixed rate obligation of 3.64% plus an applicable margin as provided in the Credit Facility based on the Company’s consolidated net leverage ratio.

As of March 31, 2023, the aggregate interest rate on the swaps, including the fixed base rate plus the applicable margin, was 5.2%.

These interest rate swaps are designated and qualify as cash flow hedges.

The Company has previously used derivative financial instruments primarily for the purpose of hedging exposures to fluctuations in interest rates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 3. Quantitative and Qualitative Disclosures About Market Risk