Financial Commitments |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Commitments |
(6)
Financial Commitments
The Company had $36.6 million and $32.5 million letters of credit at December 31, 2024 and 2023. Interest expense was $21.9 million, $22.4 million and $19.7 million for the years ended December 31, 2024, 2023 and 2022. The Company was in compliance with all financial covenants as of December 31, 2024. SHORT-TERM BORROWINGS
Revolving Credit Facilities The Company maintains a revolving credit facility with Bank of America, N.A. which allows for an unsecured credit facility to $750.0 million, which may be increased up to $250.0 million under certain conditions and provides for the issuance of letters of credit up to a maximum of $100.0 million and swingline loans up to a maximum of $50.0 million. The Company may use the proceeds for working capital and other lawful corporate purposes. Borrowings and letters of credit bear interest, at the Company’s option, at a rate equal to (a) Term Secured Overnight Financing Rate ("SOFR") plus an applicable margin between 1.000% and 1.500% based upon the Company’s Total Adjusted Net Leverage Ratio or (b) a base rate (defined as the highest of (i) the Federal Funds Rate plus 0.50%, (ii) the Bank of America prime rate, (iii) Term SOFR plus 1.00%, and (iv) 1.00%) plus an applicable margin between 0% and 0.500% based upon the Company’s Total Adjusted Net Leverage Ratio. The unused credit capacity was $745.4 million and $746.9 million as of December 31, 2024 and 2023. The Company is required to maintain a maximum total adjusted net leverage ratio of 3.75:1, except in the event of an acquisition in which case the ratio may be increased at the Company’s election to 4.25:1 for the quarter in which such acquisition occurs and for the next three quarters thereafter. The Company's subsidiary in India had various line of credits as of December 31, 2024 with unused capacity of $37.5 million and a weighted average interest rate of 7.80%. Borrowings on the line of credit are due in 180 days. Additionally, the Company maintains various credit facilities within its other international markets with an aggregate unused capacity of approximately $40.3 million that is available for working capital needs and issuance of letters of credit. LONG-TERM BORROWINGS
HF-T1 Distribution Center Loan To finance construction and improvements to the Company’s North American distribution center, the Company’s joint venture with HF Logistics I, LLC (“HF”), HF Logistics-SKX, LLC (the “JV”), through a wholly-owned subsidiary of the JV (“HF-T1”), entered into a $129.5 million construction loan agreement with interest of plus a margin of 1.75% per annum. HF-T1 also entered into an interest rate swap agreement with Bank of America with a maturity date of March 18, 2025, which fixed the effective interest rate on the loan at 2.55% per annum. During the second quarter of 2023, the Company amended certain terms of the loan agreement and the related interest rate swap to replace the London Interbank Offered Rate ("LIBOR") with the daily SOFR as part of the reference rate reform. The amended loan and interest rate swap agreements are subject to customary covenants and events of default. The obligations of the JV under this loan are guaranteed by HF. As of both December 31, 2024 and 2023, the interest rate swap had an aggregate notional amount of $129.5 million. Under the terms of the amended swap agreement, the Company will pay a weighted-average fixed rate of 0.778% on the notional amount and receive payments from the counterparty based on the 30-day SOFR rate, effectively modifying the Company’s exposure to interest rate risk by converting floating-rate debt to a fixed rate of 2.63%. HF-T2 Distribution Center Construction Loan On April 3, 2020, HF Logistics-SKX T2, LLC (“HF-T2”), a joint venture, entered into a construction loan agreement of up to $73.0 million with Bank of America to expand the North American distribution center. The interest rate is based on the Bloomberg Short-Term Bank Yield Index ("BSBY") Daily Floating Rate plus a margin of 190 basis points, reducing to 175 basis points upon substantial completion of the construction and certain other conditions being satisfied. In October 2024, the loan was amended to replace the BSBY rate with the SOFR rate. The weighted-average annual interest rate on borrowings was 6.94% during the year ended December 31, 2024. The obligations of the JV under this loan are guaranteed by TGD Holdings I, LLC, which is an affiliate of HF. China Distribution Center Expansion Construction Loan On October 18, 2022, the Company entered into a loan agreement for 1.1 billion yuan with Bank of China Co., Ltd to finance the construction of its distribution center expansion in China. Interest is paid quarterly. The interest rate at December 31, 2024 was 2.95% and may increase or decrease over the life of the loan, and is evaluated every 12 months. Beginning in 2026, the principal of the loan will be repaid in semi-annual installments of variable amounts. The obligations of this loan entered through the Company’s Taicang Subsidiary are jointly and severally guaranteed by the Company’s China joint venture. China Operational Loans The Company has certain secured credit facilities with an aggregate capacity of 1.75 billion yuan to support the operations of its China joint venture. As of December 31, 2024 and 2023, interest rates on outstanding borrowings ranged from 2.00% to 2.90% per annum. The following table presents the future principal payments required under the Company’s debt obligations, discussed above:
Other Financial Commitments As of December 31, 2024, the Company had remaining obligations totaling $75.0 million that will be contributed to the newly-formed joint venture, HF-T3, during the year ending December 31, 2025. |
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