Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt and Borrowing Arrangements

v3.24.3
Long-Term Debt and Borrowing Arrangements
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Long-Term Debt and Borrowing Arrangements
8. LONG-TERM DEBT AND BORROWING ARRANGEMENTS
The Company’s indebtedness consisted of:
September 30, 2024 December 31, 2023
Long-term debt: (a)
Amount
Weighted Average Rate (b)
Amount
Weighted Average Rate (b)
$750 million revolving credit facility (due April 2027)
 $ 69  7.17% $ 160  7.30%
$400 million term loan A (due April 2027)
 369  7.17% 384  6.82%
$1.5 billion term loan B (due May 2030)
1,518  4.42% 1,123  4.10%
$500 million 4.375% senior unsecured notes (due August 2028)
 496  4.38% 495  4.38%
Finance leases 35  4.50% 39  4.50%
Total long-term debt 2,487  5.02% 2,201  4.77%
Less: Current portion of long-term debt 47  37 
Long-term debt $ 2,440  $ 2,164 
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(a)    The carrying amount of the term loans and senior unsecured notes are net of deferred debt issuance costs of $13 million and $16 million as of September 30, 2024 and December 31, 2023, respectively. The carrying amount of the term loan B is net of unamortized discounts of $6 million and $5 million as of September 30, 2024 and December 31, 2023, respectively.
(b)    Weighted average interest rates are based on the stated interest rate for the year-to-date periods and include the effects of hedging.
Maturities and Capacity
The Company’s outstanding debt as of September 30, 2024 matures as follows:
Long-Term Debt
Within 1 year $ 47 
Between 1 and 2 years 52 
Between 2 and 3 years 406 
Between 3 and 4 years 519 
Between 4 and 5 years 23 
Thereafter 1,440 
Total $ 2,487 
As of September 30, 2024, the available capacity under the Company’s revolving credit facility was as follows:
Revolving Credit Facility
Total capacity $ 750 
Less: Borrowings 69 
Available capacity $ 681 
Revolving Credit Facility
The Company had $69 million and $160 million of outstanding borrowings on its revolving credit facility as of September 30, 2024 and December 31, 2023, respectively. Such borrowings were included within long-term debt on the Condensed Consolidated Balance Sheets.
Fifth Amendment to the Credit Agreement
In May 2024, the Company entered into a Fifth Amendment to its credit agreement dated May 30, 2018, in which the Company repriced all of its Term Loan B loans (“Prior Term Loan B Facility”) and borrowed an incremental $400 million. The new Senior Secured Term Loan B Facility (“New Term Loan B”) had an outstanding principal balance of $1.5 billion as of September 30, 2024. The incremental proceeds of the New Term B were used for general corporate purposes, including the repayment of outstanding balances under the Company’s revolving credit facility. The New Term Loan B has substantially the same terms as the Prior Term Loan B. The New Term Loan B bears interest at the Borrower’s option at a rate of (a) base rate, plus an applicable rate of 0.75% or (b) Term SOFR, plus an applicable rate of 1.75%. The New Term Loan B is subject to the same prepayment provisions and covenants applicable to the Prior Term Loan B facility and will be subject to equal quarterly amortization of principal of 0.25% of the initial principal amount, starting with the first full fiscal quarter after the closing date.
Deferred Debt Issuance Costs
The Company classifies deferred debt issuance costs related to its revolving credit facility within other non-current assets on the Condensed Consolidated Balance Sheets. Such deferred debt issuance costs were $2 million and $3 million as of September 30, 2024 and December 31, 2023, respectively.
Cash Flow Hedge
In January 2024, the Company entered into new pay-fixed/receive-variable interest rate swaps that hedge the interest rate exposure on $275 million of our variable-rate debt with an effective date in the fourth quarter of 2024 and an expiration date in the fourth quarter of 2027. The weighted average fixed rate associated with the new swaps is 3.37% (plus applicable spreads). In September 2024, the Company entered into new pay-fixed/receive-variable interest rate swaps that hedge the interest rate exposure on $350 million of its variable-rate debt with an effective date in the third quarter of 2024 and an expiration date in the third quarter of 2028. The weighted average fixed rate associated with these new swaps is 3.31% (plus applicable spreads).
As of September 30, 2024, the Company has pay-fixed/receive-variable interest rate swaps which hedge the interest rate exposure on $1.5 billion, effectively representing nearly all of the outstanding amount of its term loan B. The interest rate swaps have weighted average fixed rates (plus applicable spreads) ranging from 0.91% to 3.84% based on various effective dates for each of the swap agreements, with $475 million of swaps expiring in the fourth quarter of 2027, $600 million expiring in the second quarter of 2028, and $350 million expiring in the third quarter of 2028. For the nine months ended September 30,
2024 and 2023, the weighted average fixed rate (plus applicable spreads) for the swaps were 1.95% and 1.79%, respectively. The aggregate fair value of these interest rate swaps was a $14 million net liability and $13 million net asset as of September 30, 2024 and December 31, 2023, respectively, which was included within other non-current liabilities and other non-current assets on the Condensed Consolidated Balance Sheets, respectively. The effect of interest rate swaps on interest expense, net on the Condensed Consolidated Statements of Income was $8 million and $10 million of income for the three months ended September 30, 2024 and 2023, respectively, and $28 million and $26 million of income for the nine months ended September 30, 2024 and 2023, respectively.
There was no hedging ineffectiveness recognized in the nine months ended September 30, 2024 or 2023. The Company expects to reclassify $7 million of gains from accumulated other comprehensive income (“AOCI”) to interest expense during the next 12 months.
Interest Expense, Net
The Company incurred net interest expense of $34 million and $27 million for the three months ended September 30, 2024 and 2023, respectively, and $93 million and $73 million for the nine months ended September 30, 2024 and 2023, respectively. Cash paid related to such interest was $99 million and $80 million for the nine months ended September 30, 2024 and 2023, respectively.
Early Extinguishment of Debt
The Company incurred non-cash early extinguishment of debt costs of $3 million during both the nine months ended September 30, 2024 and 2023 relating to the repricing and refinancing of the Company's term loan B, respectively.