What changed in this filing

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Item 1. Financial Statements

2022-04-28 compared with 2021-10-28 · 63 added, 169 removed, 253 unchanged (48% of the section changed)

3 unchanged sentences

(In thousands, except per share data)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net sales $ 1,412,650 $ 1,060,745

2 unchanged sentences

Selling and administrative expenses 211,466 172,100

(Recovery) impairment of goodwill and other assets ( 1,400 ) — ( 1,400 ) 6,944

Operating income 235,723 129,031

Interest and other non-operating expenses, net 5,198 2,582

Income before income taxes and equity earnings 234,959 146,372 698,031 380,385

Income before income taxes and equity in earnings 230,525 126,449

Provision for income taxes 51,322 27,869

Equity earnings in unconsolidated investments, net 92 86 224 248

Equity in earnings of unconsolidated investments, net 58 75

Net income $ 179,261 $ 98,655

Earnings per share:

Earnings per share attributable to common stockholders:

Basic $ 4.46 $ 2.45

Diluted $ 4.41 $ 2.42

Weighted average shares outstanding:

Weighted average common shares outstanding:

Basic 39,932 40,215

5 unchanged sentences

(In thousands)

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Three Months Ended

Net income $ 179,261 $ 98,655

Other comprehensive (loss) income:

Foreign currency translation (losses) gains ( 3,555 ) 2,976 ( 3,522 ) ( 320 )

Change in unrealized gains (losses) on interest rate swaps, net of change in taxes of $( 491 ), $( 51 ), $( 2,818 ), and $ 3,641

1,473 154 8,453 ( 10,923 )

Total other comprehensive (loss) income ( 2,082 ) 3,130 4,931 ( 11,243 )

Foreign currency translation losses ( 214 ) ( 1,268 )

Change in unrealized gains on interest rate swaps, net of change in taxes of $( 3,866 ) and $( 3,046 )

Total other comprehensive income 11,384 7,869

Comprehensive income $ 190,645 $ 106,524

3 unchanged sentences

(In thousands, except share data)

September 30, September 30, December 31,

March 31, March 31, December 31,

2022 2021 2021 (1)

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40,110,126 , 40,086,256 and 40,192,901 shares issued and

outstanding at September 30, 2021, September 30, 2020 and

outstanding at March 31, 2022, March 31, 2021 and

December 31, 2021, respectively

1 unchanged sentence

Retained earnings 611,583 137,710 526,874

Accumulated other comprehensive loss ( 9,087 ) ( 21,602 ) ( 14,019 )

Accumulated other comprehensive income (loss) 3,900 ( 6,150 ) ( 7,484 )

Total stockholders’ equity 1,174,278 657,928 1,071,393

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(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities

Net income $ 179,261 $ 98,655

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation 7,663 6,884

1 unchanged sentence

Share-based compensation 3,657 3,837

Equity earnings in unconsolidated investments, net ( 224 ) ( 248 )

Impairment of goodwill and other assets — 6,944

Equity in earnings of unconsolidated investments, net ( 58 ) ( 75 )

Other 5,777 2,723

5 unchanged sentences

Accrued expenses and other current liabilities ( 60,738 ) 367

Net cash provided by operating activities 359,065 388,914

Net cash (used in) provided by operating activities ( 208,109 ) 77,113

Investing activities

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Payments on revolving line of credit ( 604,960 ) ( 308,656 )

Proceeds from term loan under credit facility 250,000 —

Proceeds from asset-backed financing 155,000 110,000

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Payments on short-term borrowings and current portion of long-term debt ( 784 ) ( 3,740 )

Payments of deferred financing costs ( 1,610 ) ( 12 )

Payments of deferred and contingent acquisition consideration ( 1,374 ) ( 362 )

2 unchanged sentences

Purchases of treasury stock ( 62,420 ) ( 71,516 )

Net cash used in financing activities ( 267,765 ) ( 300,161 )

Net cash provided by (used in) financing activities 228,717 ( 75,194 )

Effect of exchange rate changes on cash and cash equivalents ( 405 ) 553

9 unchanged sentences

Comprehensive

Shares Amount Capital Earnings Loss Total

Shares Amount Capital Earnings Income Total

Balance at December 31, 2021 40,193 $ 40 $ 551,963 $ 526,874 $ ( 7,484 ) $ 1,071,393

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Balance at March 31, 2022 40,110 $ 40 $ 558,755 $ 611,583 $ 3,900 $ 1,174,278

— — — 259,695 — 259,695

Foreign currency translation

— — — — 1,302 1,302

Interest rate swaps, net of the change in taxes of $ 719

— — — — ( 2,157 ) ( 2,157 )

Repurchases of common stock, net of retirements

( 45 ) — — ( 18,619 ) — ( 18,619 )

Share-based compensation

— — 3,712 — — 3,712

Issuance of stock under share-based compensation plans

90 — 5,006 — — 5,006

Declaration of cash dividends

— — — ( 32,119 ) — ( 32,119 )

Balance at June 30, 2021 40,131 40 535,046 346,667 ( 7,005 ) 874,748

— — — 184,665 — 184,665

Foreign currency translation

— — — — ( 3,555 ) ( 3,555 )

Interest rate swaps, net of the change in taxes of $( 491 )

— — — — 1,473 1,473

Repurchases of common stock, net of retirements

( 100 ) — — ( 47,840 ) — ( 47,840 )

Share-based compensation

— — 4,206 — — 4,206

Issuance of stock under share-based compensation plans

49 — 3,606 — — 3,606

Declaration of cash dividends

— — — ( 32,091 ) — ( 32,091 )

Balance at September 30, 2021 40,080 $ 40 $ 542,858 $ 451,401 $ ( 9,087 ) $ 985,212

Common Stock Additional

Paid-In Retained Earnings Accumulated

Paid-In Retained Accumulated

Comprehensive

Shares Amount Capital (Deficit) Loss Total

Shares Amount Capital Earnings Loss Total

Balance at December 31, 2020 40,232 $ 40 $ 519,579 $ 133,870 $ ( 14,019 ) $ 639,470

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Balance at March 31, 2021 40,086 $ 40 $ 526,328 $ 137,710 $ ( 6,150 ) $ 657,928

— — — 157,555 — 157,555

Foreign currency translation

— — — — 2,134 2,134

Interest rate swaps, net of the change in taxes of $ 855

— — — — ( 2,567 ) ( 2,567 )

Repurchases of common stock, net of retirements

( 19 ) — — ( 3,584 ) — ( 3,584 )

Share-based compensation

— — 3,567 — — 3,567

Issuance of stock under share-based compensation plans

130 — 4,453 — — 4,453

Declaration of cash dividends

— — — ( 23,165 ) — ( 23,165 )

Balance at June 30, 2020 40,042 40 503,271 8,212 ( 24,732 ) 486,791

— — — 119,098 — 119,098

Foreign currency translation

— — — — 2,976 2,976

Interest rate swaps, net of the change in taxes of $( 51 )

— — — — 154 154

Repurchases of common stock, net of retirements

( 20 ) — — ( 5,990 ) — ( 5,990 )

Share-based compensation

— — 3,874 — — 3,874

Issuance of stock under share-based compensation plans

131 — 5,885 — — 5,885

Declaration of cash dividends

— — — ( 23,287 ) — ( 23,287 )

Balance at September 30, 2020 40,153 $ 40 $ 513,030 $ 98,033 $ ( 21,602 ) $ 589,501

The accompanying Notes are an integral part of the Consolidated Financial Statements.

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You should read the interim Consolidated Financial Statements in conjunction with the Consolidated Financial Statements and accompanying notes in our 2021 Annual Report on Form 10-K.

The results for our three and nine month periods ended September 30, 2021 are not necessarily indicative of the expected results for our fiscal year ending December 31, 2021.

Newly Adopted Accounting Pronouncements

On January 1, 2021, we adopted Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes .

This new standard simplified the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

Most amendments were required to be applied on a prospective basis, while certain amendments were required to be applied on a retrospective or modified retrospective basis.

The adoption of this standard did not have a material impact on our consolidated financial statements or related disclosures, and we do not expect a material impact in future periods.

The results for our three-month period ended March 31, 2022, are not necessarily indicative of the expected results for our fiscal year ending December 31, 2022.

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards.

1 unchanged sentence

We record all excess tax benefits as a component of income tax benefit or expense on the Consolidated Statements of Income in the period in which stock options are exercised or restrictions on restricted stock awards lapse.

We recorded excess tax benefits of $ 4.2 million in the third quarter of 2021 compared to $ 8.5 million in the third quarter of 2020 and $ 15.9 million in the nine months ended September 30, 2021 compared to $ 22.6 million in the nine months ended September 30, 2020.

We recorded excess tax benefits of $ 7.3 million in the first quarter of 2022 compared to $ 4.0 million in the first quarter of 2021.

Retained Earnings

We account for the retirement of treasury shares as a reduction of Retained earnings.

As of September 30, 2021, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 1.7 billion and cumulative dividends of $ 758.3 million.

Accumulated Other Comprehensive Loss

The table below presents the components of our Accumulated other comprehensive loss balance (in thousands):

September 30, December 31,

As of March 31, 2022, the Retained earnings on our Consolidated Balance Sheets reflects cumulative net income, the cumulative impact of adjustments for changes in accounting pronouncements, treasury share retirements since the inception of our share repurchase programs of $ 1.7 billion and cumulative dividends of $ 822.5 million.

Accumulated Other Comprehensive Income (Loss)

The table below presents the components of our Accumulated other comprehensive income (loss) balance (in thousands):

March 31, December 31,

2022 2021 2021

Foreign currency translation adjustments $ ( 9,794 ) $ ( 6,185 ) $ ( 9,580 )

Unrealized losses on interest rate swaps, net of tax

Unrealized gains on interest rate swaps, net of tax

13,694 35 2,096

Accumulated other comprehensive loss $ ( 9,087 ) $ ( 21,602 ) $ ( 14,019 )

Accumulated other comprehensive income (loss) $ 3,900 $ ( 6,150 ) $ ( 7,484 )

Recent Accounting Pronouncements Pending Adoption

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The provisions of these updates are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed.

We are currently evaluating the effect these standards will have on our financial position, results of operations and related disclosures.

We do not expect that there will be a material impact to the financial statements as a result of adopting these ASUs.

Note 2 – Earnings Per Share

We calculate basic earnings per share (EPS) by dividing Net income by the weighted average number of common shares outstanding.

Diluted EPS reflects the dilutive effects of potentially dilutive securities, which include in-the-money outstanding stock options and shares to be purchased under our employee stock purchase plan.

Using the treasury stock method, the effect of dilutive securities includes these additional shares of common stock that would have been outstanding based on the assumption that these potentially dilutive securities had been issued.

Stock options with exercise prices that are higher than the average market prices of our common stock for the periods presented are excluded from the diluted EPS calculation because the effect is anti-dilutive.

The table below presents the computation of EPS, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except EPS):

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

We calculate basic and diluted earnings per share using the two-class method.

Earnings per share under the two-class method is calculated using net income attributable to common stockholders, which is net income reduced by the earnings allocated to participating securities.

Our participating securities include share-based payment awards that contain a non-forfeitable right to receive dividends and are considered to participate in undistributed earnings with common shareholders.

Participating securities excluded from weighted average common shares outstanding were 239,000 for the three months ended March 31, 2022.

The table below presents the computation of earnings per share, including the reconciliation of basic and diluted weighted average shares outstanding (in thousands, except per share data):

Three Months Ended

Net income $ 179,261 $ 98,655

Weighted average shares outstanding:

Amounts allocated to participating securities ( 1,051 ) —

Net income attributable to common stockholders $ 178,210 $ 98,655

Weighted average common shares outstanding:

Basic 39,932 40,215

2 unchanged sentences

Diluted 40,392 40,846

Earnings per share:

Earnings per share attributable to common stockholders:

Basic $ 4.46 $ 2.45

1 unchanged sentence

Anti-dilutive stock options excluded from diluted earnings per share computations (1)

(1) Since these options have exercise prices that are higher than the average market prices of our common stock, including them in the calculation would have an anti-dilutive effect on earnings per share.

Note 3 – Acquisitions

On December 16, 2021, we acquired Porpoise Pool & Patio, Inc.

(“Porpoise”) for $ 788.7 million, net of cash acquired, subject to certain customary closing adjustments.

The acquisition was funded with borrowings on our amended and restated revolving credit facility (the “Credit Facility”).

Porpoise’s primary operations, Sun Wholesale Supply, Inc., a wholesale distributor of swimming pool and outdoor-living products, added one distribution location in Florida.

It also services Pinch A Penny, Inc., a franchisor of independently owned and operated pool and outdoor living-related specialty retail stores.

We preliminarily recognized goodwill of $ 403.5 million, other intangible assets of $ 301.0 million and tangible assets of $ 84.2 million, which included $ 57.4 million of acquired land and buildings.

For additional discussion of goodwill and other intangible assets, see Note 3 of “Notes to Consolidated Financial Statements,” included in Part II, Item 8 of our 2021 Annual Report on Form 10-K.

The final allocation of the fair value of the Porpoise acquisition, including the allocation of goodwill and intangible assets, is not complete but will be finalized within the allowable measurement period.

We do not expect the future results of this acquisition to have a material impact on our financial position or results of operations.

In December 2021, we acquired the distribution assets of Wingate Supply, Inc., a wholesale distributor of irrigation and landscape maintenance products, adding one location in Florida.

In June 2021, we acquired the distribution assets of Vak Pak Builders Supply, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Florida.

In April 2021, we acquired Pool Source, LLC, a wholesale distributor of swimming pool equipment, chemicals and supplies, adding one location in Tennessee.

In December 2020, we acquired the distribution assets of TWC Distributors, Inc., a wholesale distributor of irrigation and landscape maintenance products, adding nine locations in Florida and one in Georgia.

In October 2020, we acquired Jet Line Products, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding three locations in New Jersey, three locations in New York, two locations in Texas and one location in Florida.

In September 2020, we acquired the distribution assets of Northeastern Swimming Pool Distributors, Inc., a wholesale distributor of swimming pool equipment, chemicals and supplies, adding two locations in Ontario, Canada.

In February 2020, we acquired the distribution assets of Master Tile Network LLC, a wholesale distributor of swimming pool tile and hardscape products, adding two locations in Texas, one location in Nevada and one location in Oklahoma.

We have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

These acquisitions did not have a material impact on our financial position or results of operations, either individually or in the aggregate.

Other than the Porpoise acquisition, we have completed our acquisition accounting for these acquisitions, subject to adjustments for standard holdback provisions per the terms of the purchase agreements, which are not material.

Note 4 – Fair Value Measurements and Interest Rate Swaps

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The table below presents the estimated fair values of our interest rate swap contracts, our forward-starting interest rate swap contracts and our contingent consideration liabilities (in thousands):

Fair Value at September 30,

Fair Value at March 31,

Unrealized gains on interest rate swaps $ 18,817 $ 8,180

7 unchanged sentences

We recognize any differences between the variable interest rate in effect and the fixed interest rates per our swap contracts as an adjustment to interest expense over the life of the swaps.

To the extent our derivatives are effective in offsetting the variability of the hedged cash flows, we record the changes in the estimated fair value of our interest rate swap contracts to Accumulated other comprehensive loss on the Consolidated Balance Sheets.

We currently have three interest rate swap contracts in place, two of which became effective on November 20, 2020, and terminate on September 29, 2022, and a third that became effective on February 26, 2021, and terminates on February 28, 2025.

1 unchanged sentence

Interest expense related to the notional amounts under these swap contracts is based on the fixed rates plus the applicable margin on our variable rate borrowings.

Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive loss on the Consolidated Balance Sheets.

Changes in the estimated fair value of these interest rate swap contracts are recorded to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The following table provides additional details related to these swap contracts:

4 unchanged sentences

Interest rate swap 3 February 5, 2020 February 26, 2021 February 28, 2025 $ 150.0 1.3800 %

For the interest rate swap contracts in effect at September 30, 2021, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive loss on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

This amount was not material in the nine-month period ended September 30, 2021.

For the interest rate swap contracts in effect at March 31, 2022, a portion of the change in the estimated fair value between periods relates to future interest expense.

Recognition of the change in fair value between periods attributable to accrued interest is reclassified from Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets to Interest and other non-operating expenses, net on the Consolidated Statements of Income.

This amount was not material in the three-month period ended March 31, 2022.

We have entered into forward-starting interest rate swap contracts to extend the hedged period for future interest payments on our variable rate borrowings.

These swap contracts will convert the variable interest rate to a fixed interest rate on our variable rate borrowings.

Changes in the estimated fair value of these forward-starting interest rate swap contracts are recorded to Accumulated other comprehensive loss on the Consolidated Balance Sheets.

Changes in the estimated fair value of these forward-starting interest rate swap contracts are recorded to Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets.

The following table provides details related to each of our forward-starting interest rate swap contracts:

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Generally, our assets, including long-lived assets, goodwill and intangible assets, are recorded at fair value on a nonrecurring basis as a result of impairment charges or business combinations.

In the nine months ended September 30, 2021, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

In the three months ended March 31, 2022, we did not record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The carrying values of cash, receivables, accounts payable and accrued liabilities approximate fair value due to the short maturity of those instruments.

3 unchanged sentences

The table below presents the components of our debt (in thousands):

September 30,

Variable rate debt

5 unchanged sentences

Revolving credit facility 532,253 142,868

Term loan under credit facility 500,000 —

Term facility 164,188 173,438

3 unchanged sentences

Total debt $ 1,505,073 $ 433,171

Revolving Credit Facility

On September 27, 2021, we entered into the Second Amended and Restated Credit Agreement (the “Credit Agreement”) among us, as U.S.

Borrower, SCP Distributors Canada Inc., as Canadian Borrower, SCP International, Inc., as Euro Borrower, Wells Fargo Bank, National Association, as Administrative Agent (the “Agent”), and certain other lenders party thereto.

The Credit Agreement amended and restated the predecessor senior credit facility (as amended, the “Credit Facility”) principally by increasing the total borrowing capacity from $750.0 million to $1.0 billion through the addition of a delayed-draw term loan facility of $250.0 million.

Under this term loan facility, we may draw term loans at any time prior to March 25, 2022.

Any such term loans would require quarterly amortization payments aggregating to 20% of the original principal amount of the loan during the third, fourth and fifth years of the loan, with all remaining principal due on September 25, 2026.

All other terms of any such term loans would be substantially similar to those governing revolving credit loans under the Credit Agreement.

In addition, the Credit Agreement further amended and restated the Credit Facility in the following ways:

• extending the maturity of the Credit Facility from September 29, 2022 to September 25, 2026;

• making available lower interest rates;

• increasing the amount of incremental facility commitments that we can request from $75.0 million to $250.0 million;

• providing additional capacity under certain negative covenants related to indebtedness, liens, investments, acquisitions, share repurchases and dividends.

All obligations under the Credit Agreement continue to be guaranteed on an unsecured basis by substantially all of our existing and future domestic subsidiaries.

The Credit Agreement also continues to contain various customary affirmative and negative covenants and events of default.

The occurrence of any of these events of default would permit the lenders to, among other things, require immediate payment of all amounts outstanding under the Credit Agreement.

Revolving borrowings under the Credit Facility bear interest, at our option, at either of the following and, in each case, plus an applicable margin:

a base rate, which is the highest of (i) the Agent's prime rate, (ii) the Federal Funds Rate plus 0.500% and (iii) (a) prior to the USD LIBOR Transition Date, the Adjusted Eurocurrency Rate for Dollars for a one-month term in effect on such day plus 1.00% and (b) on and after the USD LIBOR Transition Date, Daily Simple RFR for Dollars in effect on such day plus 1.00%;

(i) prior to the USD LIBOR Transition Date, the Eurocurrency Rate and (ii) on or after the USD LIBOR Transition Date or a Benchmark Transition Event, the applicable Benchmark Replacement.

Borrowings by the Canadian Borrower bear interest, at the Canadian Borrower’s option, at either of the following and, in each case, plus an applicable margin:

a base rate, which is the greatest of (i) the Canadian Reference Bank prime rate and (ii) the Canadian Dealer Offered Rate (“CDOR”) plus 1.00%;

Borrowings by the Euro Borrower bear interest at the Eurocurrency rate plus an applicable margin.

Borrowings under any swingline loans under the Credit Facility bear interest, at our option, at either of the following and, in each case, plus an applicable margin:

the LIBOR Market Index Rate;

The interest rate margins on borrowings and letters of credit issued under the Credit Agreement are based on our leverage ratio and will range from 0.000% to 0.425% on Base Rate and Canadian Base Rate loans and from 0.910% to 1.425% on CDOR, LIBOR and swingline loans (with all such rates being calculated in accordance with the terms and by reference to the definitions specified in the Credit Agreement).

We are also required to pay an annual facility fee with respect to the lenders' aggregate revolving credit commitment, the amount of which is based on our leverage ratio.

Term Facility

On October 12, 2021, we entered into the First Amendment to the Credit Agreement (as amended, the “Term Facility Agreement”) among us, as Borrower and Bank of America, N.A., as the Lender.

Among other items, the amendment provides additional capacity under certain negative covenants related to indebtedness, liens, investments, acquisitions, share repurchases and dividends.

All obligations under the Term Facility Agreement, which matures on December 30, 2026, continue to be guaranteed on an unsecured basis by substantially all of our existing and future domestic subsidiaries.

The Term Facility Agreement also continues to contain various customary affirmative and negative covenants and events of default.

The occurrence of any of these events of default would permit the lenders to, among other things, require immediate payment of all amounts outstanding under the Term Facility Agreement.

Borrowings under the term loan facility (the “Term Facility”) available under the Term Facility Agreement bear interest, at our option, at either of the following and, in each case, plus an applicable margin:

a base rate, which is the greatest of (i) the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the business day next succeeding such day plus 0.50%, (ii) Bank of America's prime rate, or (iii) the Eurodollar Rate (defined below) plus 1.00%;

the Eurodollar Rate, which is the greater of (i) the rate per annum equal to the USD LIBOR as administered by the ICE Benchmark Administration, or a comparable or successor administrator approved by the Lender or (ii) a floor rate specified in the Term Facility Agreement.

The interest rate margins on the borrowings under the Term Facility Agreement are based on our leverage ratio and will range from 0.000% to 0.625% on Base Rate borrowings and 1.000% to 1.625% on Eurodollar Rate borrowings (with all such rates being calculated in accordance with the terms and by reference to the definitions specified in the Term Facility Agreement).

Receivables Securitization Facility

On January 4, 2022, we drew the $ 250.0 million incremental term loan available under our December 30, 2021 amendment to our Second Amended and Restated Credit Agreement (the “Credit Facility”) and used the net proceeds to reduce our revolving borrowings under the Credit Facility.

At March 31, 2022, $ 500.0 million of term loans available under the Credit Facility were fully drawn.

Our accounts receivable securitization facility (the “Receivables Facility”) provides for the sale of certain of our receivables to a wholly owned subsidiary (the “Securitization Subsidiary”).

4 unchanged sentences

We present the receivables that collateralize the cash proceeds separately as Receivables pledged under receivables facility on our Consolidated Balance Sheets.

Financial Covenants

Following their recent amendments, the Credit Facility and Term Facility continue to require us to maintain a maximum average total leverage ratio and a minimum fixed charge coverage ratio consistent with the terms in effect prior to the amendment.

As amended, the Credit Facility and Term Facility limit the declaration and payment of dividends on our common stock to a manner consistent with past practice, provided no default or event of default has occurred and is continuing, or would result from the payment of dividends.

We may declare and pay quarterly dividends so long as (i) the amount per share of such dividends is not greater than the most recently publicly announced amount dividends per share and (ii) our Average Total Leverage Ratio is less than 3.25 to 1.00 both immediately before and after giving pro forma effect to such dividends.

Under the Credit Facility and Term Facility, we may repurchase shares of our common stock provided no default or event of default has occurred and is continuing, or would result from the repurchase of shares, and our maximum average total leverage ratio (determined on a pro forma basis) is less than 3.25 to 1.00.

Other covenants include restrictions on our ability to grant liens, incur indebtedness, make investments, merge or consolidate, and sell or transfer assets.

Failure to comply with any of our financial covenants or any other terms of any of our debt facilities could result in higher interest rates on our borrowings or the acceleration of the maturities of our outstanding debt.

As of September 30, 2021, we were in compliance with all material covenants and financial ratio requirements under our Credit Facility, our Term Facility and our Receivables Facility.

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 1. Financial Statements