JBT MAREL Corp

Previous wording

This Quarterly Report on Form 10-Q, our Annual Report on Form 10-K and other materials filed or to be filed by us with the Securities and Exchange Commission, as well as information in oral statements or other written statements made or to be made by us, contain statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements include, among others, statements relating to our business and our results of operations, a potential transaction with Marel hf. ("Marel"), our strategic plans, our restructuring plans and expected cost savings from those plans and our liquidity. The factors that could cause our actual results to differ materially from expectations include, but are not limited, to the following factors:

Current wording

This Quarterly Report on Form 10-Q, our Annual Report on Form 10-K and other materials filed or to be filed by us with the Securities and Exchange Commission, as well as information in oral statements or other written statements made or to be made by us, contain statements that are, or may be considered to be, forward-looking statements. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or the negative version of those words or other comparable words and phrases. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. These forward-looking statements include, among others, statements relating to our business and our results of operations, the benefits or results of the Marel Transaction, our strategic plans, our restructuring plans and expected cost savings from those plans and our liquidity. The factors that could cause our actual results to differ materially from expectations include, but are not limited, to the following factors:

Previous wording

Our Elevate 2.0 strategy capitalizes on favorable trends, as well as our leadership position in the food and beverage processing industry. This strategy is based on a four-pronged approach to deliver continued growth and margin expansion.

Current wording

Our strategy capitalizes on favorable trends, as well as our leadership position, in the food and beverage processing industry. This strategy is based on a five-pronged approach to deliver continued growth and margin expansion.

Previous wording

Our approach to Environmental, Social and Corporate Governance (ESG) builds on our culture and long tradition of concern for our employees’ health, safety, and well-being; partnering with our customers to find ways to make better use of the earth’s precious resources; and giving back to the communities where we live and work. Our equipment and technologies continue to deliver quality performance while striving to minimize food waste, extend food product life, support customer sustainability objectives, and maximize efficiency in order to create shared value for our food and beverage customers. While the majority of our impact lies within the solutions offered to our customers, our commitment to environmental responsibility extends to our own operations. We strive for our own facilities to operate efficiently and safely, much like the solutions we provide to our customers. We recognize our responsibility to make a positive impact on our shareholders, the environment and our communities in a manner that is consistent with our fiduciary duties. We have engaged in structured education for enhancing inclusive leadership skills in our organization designed to ensure more diversity in our leadership and hiring practices.

Current wording

Our approach to Environmental, Social and Corporate Governance (ESG) builds on our culture and long tradition of concern for our employees’ health, safety, and well-being; partnering with our customers to find ways to make better use of the earth’s precious resources; and giving back to the communities where we live and work. Our equipment and technologies continue to deliver quality performance while striving to minimize food waste, extend food product life, support customer sustainability objectives, and maximize efficiency in order to create shared value for our food and beverage customers. While the majority of our impact lies within the solutions offered to our customers, our commitment to environmental responsibility extends to our own operations. We strive for our own facilities to operate efficiently and safely, much like the solutions we provide to our customers. We recognize our responsibility to make a positive impact on our shareholders, the environment and our communities in a manner that is consistent with our fiduciary duties. We have engaged in structured education for enhancing inclusive leadership skills in our organization designed to ensure a broad range of perspectives and backgrounds in our leadership and hiring practices.

Previous wording

(1) The key measures reviewed by the CODM to evaluate our performance are most notably Adjusted EBITDA from continuing operations and Adjusted EBITDA margin from continuing operations. For additional information, refer to the 'Reconciliation of Non-GAAP Measures' section below.

Current wording

(1) Refer to the 'Reconciliation of Non-GAAP Measures' section below for additional information on Adjusted EBITDA from continuing operations.

Previous wording

Total revenue for the three months ended September 30, 2024 increased $50.2 million or 12.4% compared to the same period in 2023. Organic revenue increased $49.9 million and foreign currency translation was favorable by $0.3 million in the period compared to the prior year. The increase in organic revenue was the result of higher pricing as well as an increase in volume for both recurring and non-recurring revenue compared to the prior year.

Current wording

Total revenue for the three months ended March 31, 2025 increased $461.8 million or 117.7% compared to the same period in 2024. Organic revenue increased $23.0 million, the acquisition of Marel provided additional revenue of $445.3 million, and foreign currency translation was unfavorable by $6.5 million in the period compared to the prior year. The increase in organic revenue was primarily the result of an increase in volume for recurring revenue.

Previous wording

Total revenue for the nine months ended September 30, 2024 increased $28.6 million or 2.3% compared to the same period in 2023. Organic revenue increased $32.4 million and foreign currency translation was unfavorable by $3.8 million in the period compared to the prior year. The increase in organic revenue was primarily the result of higher pricing as well as an increase in volume for non-recurring revenue, partially offset by a decrease in volume for recurring revenue.

Current wording

•JBT revenue increased by $16.5 million or 4.2% during the three months ended March 31, 2025 compared to the same period in 2024. Organic revenue increased $23.0 million and foreign currency translation was unfavorable by $6.5 million in the quarter. The increase in organic revenue was primarily the result of an increase in volume for recurring revenue.

Previous wording

Selling, general and administrative expense increased $37.7 million compared to the same period in the prior year. Selling, general and administrative expense as a percentage of revenue increased 240 bps to 27.5% compared to 25.1% in the same period last year. This increase is primarily the result the result of M&A related costs specific to the Marel Transaction of $32.6 million and higher long term incentive compensation expense accruals. This increase was partially offset by savings from our restructuring program as well as a decrease in expenses related to the OmniBlu TMplatform year-over-year.

Current wording

Selling, general and administrative expense increased $178.0 million compared to the same period in the prior year. Selling, general and administrative expense as a percentage of revenue increased 660 bps to 33.0% compared to 26.4% in the same period last year. This increase is primarily driven by higher costs attributable to the recently acquired Marel business and year over year increase of $69.2 million in M&A related costs attributable to the acquisition of Marel.

Previous wording

Pension expense, other than service cost increased $0.8 million compared to the same period in the prior year. This increase was primarily due to lower expected return on pension assets in 2024 compared to prior year.

Current wording

Pension expense, other than service cost increased $145.8 million compared to the same period in the prior year. This increase was primarily due to the settlement charge of $146.9 million recognized in the first quarter of 2025 upon the termination of the U.S. qualified defined benefit pension plan.

Previous wording

Income from continuing operations and Adjusted EBITDA

Current wording

The Company's tax rate on the income from continuing operations was 26.2% for the three months ended March 31, 2024. The tax provision for the three months ended March 31, 2024 was increased by discrete items totaling $1.0 million, primarily driven by tax expense related to stock compensation and a valuation allowance increase.

Previous wording

The Organization for Economic Co-operation and Development has established a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar Two), with certain aspects of Pillar Two effective January 1, 2024 and other aspects effective January 1, 2025, depending on the jurisdictions in which the Company operates. The Company does not expect Pillar Two to have a material impact on the Company's effective tax rate, consolidated results of operation, financial position, or cash flows for the year ending December 31, 2024.

Current wording

The Organization for Economic Co-operation and Development established a framework to implement a global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (referred to as Pillar Two), with certain aspects of Pillar Two effective January 1, 2024 and other aspects effective January 1, 2025, depending on the jurisdictions in which the Company operates. While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two, certain countries in which the Company operates have enacted legislation, and other countries are in the process of introducing legislation, to implement Pillar Two. Pillar Two did not have a material impact on the Company's effective tax rate, consolidated results of operations, financial position, or cash flows for the three months ended March 31, 2025.

Previous wording

Income from continuing operations for the three months ended September 30, 2024 was $38.1 million compared to $31.1 million for the same period in 2023, representing an increase of $7.0 million. Adjusted EBITDA was $81.7 million for the three months ended September 30, 2024 compared to $66.3 million during the same period in 2023, representing an increase of $15.4 million. The increase in Adjusted EBITDA was primarily driven by higher gross profit, partially offset by higher selling, general and administrative expense, excluding the impacts of our depreciation, amortization, and acquisition, and integration costs.

Current wording

Loss from continuing operations for the three months ended March 31, 2025 was $173.0 million compared to income from continuing operations of $22.7 million for the same period in 2024, representing a decrease of $195.7 million. Adjusted EBITDA was $112.2 million for the three months ended March 31, 2025 compared to $57.4 million during the same period in 2024, representing an increase of $54.8 million. The increase in Adjusted EBITDA was primarily driven by incremental gross profit attributable to the recently acquired Marel business, partially offset by higher selling, general and administrative expense, excluding the impacts of our depreciation, amortization, and acquisition and integration costs.

Previous wording

Income from continuing operations for the nine months ended September 30, 2024 was $91.5 million compared to $76.6 million for the same period in 2023, representing an increase of $14.9 million. Adjusted EBITDA was $202.8 million for the nine months ended September 30, 2024 compared to $192.1 million during the same period in 2023, representing an increase of $10.7 million. The increase in Adjusted EBITDA was primarily driven by higher gross profit, partially offset by higher selling, general and administrative expense, excluding the impacts of our depreciation, amortization, and acquisition and integration costs.

Current wording

•JBT segment Adjusted EBITDA and Adjusted EBITDA margin was $60.8 million or 14.9% for the three months ended March 31, 2025 compared to $57.4 million or 14.6% for the same period in 2024. The increase of $3.4 million or 30 bps was primarily driven by an increase in gross profit from a favorable mix of higher recurring revenue compared to prior year, which tends to have higher margin than non-recurring revenue. Increase in the gross profit was partially offset by an increase in selling, general and administrative expense, excluding the impacts of our depreciation, amortization, and acquisition and integration costs.

Previous wording

We present non-GAAP financial measures in this quarterly report on Form 10-Q. These non-GAAP financial measures adjust for certain amounts that are otherwise included or excluded from a measure calculated under US GAAP. By adjusting for these items, we believe we provide greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance. Management uses these non-GAAP financial measures in financial and operational evaluation, planning and forecasting. We also believe that these non-GAAP measures are useful to investors as a way to evaluate and compare our operating performance against peers in the Company's industry. The adjustments generally fall within the following categories: restructuring costs, M&A related costs, pension-related costs, constant currency adjustments and other major items affecting comparability of our ongoing operating results.

Current wording

We present non-GAAP financial measures in this quarterly report on Form 10-Q. These non-GAAP financial measures adjust for certain amounts that are otherwise included or excluded from a measure calculated under U.S. GAAP. By adjusting for these items, we believe we provide greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results, consistent with how management evaluates performance. Management uses these non-GAAP financial measures in financial and operational evaluation, planning and forecasting. We also believe that these non-GAAP measures are useful to investors as a way to evaluate and compare our operating performance against peers in the Company's industry. The adjustments generally fall within the following categories: restructuring costs, M&A related costs, pension-related costs, constant currency adjustments and other major items affecting comparability of our ongoing operating results.

Previous wording

•EBITDA and Adjusted EBITDA: We define EBITDA as earnings before income taxes, interest expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA before restructuring, pension expense other than service cost, and M&A related costs.

Current wording

•Adjusted EBITDA: We define Adjusted EBITDA as earnings adjusted for income taxes, interest expense (income), net, other financing income, pension expense other than service cost, restructuring, M&A related costs and depreciation and amortization, including acquisition related depreciation and amortization.

Previous wording

•Adjusted income from continuing operations and Adjusted diluted earnings per share from continuing operations: We adjust earnings for restructuring expense, M&A related costs, which include integration costs and the amortization of inventory step-up from business combinations, advisory and transaction costs for both potential and completed M&A transactions and strategy (“M&A related costs”), amortization of debt issuance costs related to bridge financing for potential M&A transactions, and impact on tax provision from remeasurement of deferred taxes for material tax rate changes and internal reorganizations.

Current wording

•Adjusted income from continuing operations and Adjusted diluted earnings per share from continuing operations: We adjust earnings for restructuring expense, M&A related costs, which include integration costs, amortization of inventory step-up from business combinations, impacts of foreign currency derivatives and trades to hedge variability of exchange rates on the cash consideration paid for business combination, advisory and transaction costs for both potential and completed M&A transactions and strategy (“M&A related costs”), acquisition related amortization and depreciation, amortization of debt issuance costs related to bridge financing for potential M&A transactions, non-cash pension plan related settlement costs and the related tax impact.

Previous wording

•Constant currency measures: We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our financial results in local currency for a period using the average exchange rate for the prior period to which we are comparing.

Current wording

•Constant currency measures: We evaluate our results of operations on both an as reported and a constant currency basis as it provides greater transparency into our operating results and trends, and a more meaningful comparison of our ongoing operating results. The constant currency presentation excludes the impact of fluctuations in foreign currency exchange rates. We calculate constant currency percentages by converting our financial results in local currency for a period using the average exchange rate for the prior period to which we are comparing.

Previous wording

The following table presents a reconciliation of the Company's reported Income from continuing operations to Adjusted EBITDA.

Current wording

The following table presents a reconciliation of the Company's reported (Loss) income from continuing operations to Adjusted EBITDA from continuing operations.

Previous wording

(2) Pension expense, other than service cost is excluded as it represents all non service-related pension expense, which consists of non-cash interest cost, expected return on plan assets and amortization of actuarial gains and losses.

Current wording

(2) Pension expense, other than service cost is excluded as it represents all non service-related pension expense, which consists of non-cash interest cost, expected return on plan assets, amortization of actuarial gains and losses, and settlement charges.

Previous wording

(3) M&A related costs include integration costs, amortization of inventory step-up from business combinations, earn out adjustments to fair value, advisory and transaction costs for both potential and completed M&A transactions and strategy. M&A related costs are excluded as they are not part of the ongoing operations of our underlying business.

Current wording

(4) M&A related costs include integration costs, amortization of inventory step-up from business combinations, impacts of foreign currency derivatives and trades to hedge variability of exchange rates on the cash consideration paid for business combination, advisory and transaction costs for both potential and completed M&A transactions and strategy. M&A related costs are excluded as they are not part of the ongoing operations of our underlying business.

Previous wording

In the third quarter of 2022, the Company implemented a restructuring plan (the "2022/2023 restructuring plan") to optimize the overall cost structure for the Company on a global basis. The initiatives under this plan included streamlining operations and enhancing our general and administrative infrastructure. The Company recognized restructuring charges of $17.9 million, net of a cumulative release of the related liability of $7.5 million. The 2022/2023 restructuring plan was completed as of March 31, 2024.

Current wording

In the third quarter of 2022, the Company implemented a restructuring plan (the "2022/2023 restructuring plan") to optimize the overall cost structure for the Company on a global basis. The initiatives under this plan included streamlining operations and enhancing our general and administrative infrastructure. The 2022/2023 restructuring plan was completed as of March 31, 2024. The total cost in connection with this plan was $17.5 million.

Previous wording

Cumulative savings for the 2022/2023 restructuring plan is expected to be $20.0 million. Savings expected to be realized during the remainder of 2024 are approximately $1.0 million.

Current wording

Savings for the JBT Marel 2025 Integration restructuring plan during the quarter ended March 31, 2025 was approximately $2.0 million primarily in selling, general, and administrative expense. Cumulative cost savings for the JBT Marel 2025 Integration restructuring plan is expected to be between $50.0 million and $60.0 million. Savings expected to be realized during the remainder of 2025 are approximately $20.0 million.

Previous wording

Our primary sources of liquidity are cash flows provided by operating activities from our U.S. and foreign operations, borrowings from our revolving credit facility, and proceeds from the sale of the AeroTech business on August 1, 2023.

Current wording

Our primary sources of liquidity are cash flows provided by operating activities from our U.S. and foreign operations, our revolving credit facility, and our cash and cash equivalents on hand. In connection with the Marel Transaction, we drew an additional $604 million from our existing revolving credit facility on December 30, 2024. On January 2, 2025, we secured takeout financing comprised of the amended and restated 5-year, $1.8 billion revolving credit facility and $900 million in the Senior Secured Term Loan B ("Term Loan B"). The takeout financing resulted in the carryforward of the initial $604 million borrowing from our existing revolving credit facility and additional borrowings of $900 million drawn from the Term Loan B and $18.6 million from the amended credit facility to fund the Marel Transaction, subsequent acquisition of the non-controlling interest of Marel, and related expenditures.

Previous wording

For the nine months ended September 30, 2024, we had operating cash flows from continuing operations of $103.9 million. For full year 2024, we expect to generate positive cash flows. Our liquidity as of September 30, 2024, or cash plus borrowing ability under our existing revolving credit facilities, was $1.3 billion.

Current wording

For the three months ended March 31, 2025, we had total operating cash flows from continuing operations of $34.4 million. For full year 2025, we expect to generate positive cash flows. Our liquidity as of March 31, 2025, or cash plus borrowing ability under our existing revolving credit facilities, was $1.3 billion. The takeout financing includes a leverage holiday that permits a maximum secured leverage ratio of 5.0x for the initial 12-months after the Marel Transaction close date and a total leverage ratio of 5.75x.

Previous wording

Based on our current capital allocation objectives, during 2024, we anticipate capital expenditures to be between $40 million and $50 million. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions.

Current wording

Our liquidity is available to support the integration of JBT and Marel and our other capital allocation priorities. Based on our current capital allocation objectives, we anticipate capital expenditures to be between $90 million and $100 million during 2025. Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions. During 2025, we also expect to incur integration costs and other synergy-related costs in the range of $55 million to $65 million related to the acquisition of Marel.

Previous wording

The cash flows generated by our continuing operations are expected to be sufficient to satisfy our principal cash requirements that include our working capital needs, new product development, restructuring expenses, capital expenditures, income taxes, debt repayments, dividends, periodic pension contributions, and other financing arrangements.

Current wording

Additionally, the cash flows generated by our continuing operations are expected to be sufficient to satisfy our principal cash requirements that include our working capital needs, new product development, restructuring expenses, capital expenditures, income taxes, debt interest and repayments, dividends, and other financing arrangements.

Previous wording

As of September 30, 2024, we had $534.5 million of cash and cash equivalents, $44.5 million of which was held by our foreign subsidiaries. Although certain funds are considered permanently invested in our foreign subsidiaries, we are not presently aware of any restriction on the repatriation of these funds. We maintain significant operations outside of the U.S., and many of our uses of cash for working capital, capital expenditures and business acquisitions arise in these foreign jurisdictions. If these funds were needed to fund our operations or satisfy obligations in the U.S., they could be repatriated and their repatriation into the U.S. could cause us to incur additional U.S. income tax and foreign withholding taxes. The foreign withholding taxes on these repatriations to the U.S. would potentially be partially offset by U.S. foreign tax credits.

Current wording

As of March 31, 2025, we had $101.0 million of cash and cash equivalents, $41.3 million of which was held by our foreign subsidiaries. Although certain funds are considered permanently invested in our foreign subsidiaries, we are not presently aware of any restriction on the repatriation of these funds. We maintain significant operations outside of the U.S., and many of our uses of cash for working capital, capital expenditures and business acquisitions arise in these foreign jurisdictions. If these funds were needed to fund our operations or satisfy obligations in the U.S., they could be repatriated and their repatriation into the U.S. could cause us to incur additional U.S. income tax and foreign withholding taxes. The foreign withholding taxes on these repatriations to the U.S. would potentially be partially offset by U.S. foreign tax credits.

Previous wording

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and required taxpayers to amortize such expenditures in the U.S. over five years. As a result, we expect an adverse impact of approximately $9 million to our cash from continuing operations in 2024.

Current wording

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 eliminated the option to deduct research and development expenditures immediately in the year incurred and required taxpayers to amortize such expenditures in the U.S. over five years. As a result, we expect an adverse impact of approximately $7 million to our cash from continuing operations in 2025.

Previous wording

Cash flows for the nine months ended September 30, 2024 and 2023 were as follows:

Current wording

Cash flows for the three months ended March 31, 2025 and 2024 were as follows:

Previous wording

Cash provided by continuing operating activities during the nine months ended September 30, 2024 was $103.9 million, representing a $8.3 million increase compared to the same period in 2023. This increase was driven primarily by a higher income from continuing operations, lower payments as a result of improved vendor terms and lower contributions on our pension plans. These increases were partially offset by lower customer collections of advanced payments and trade receivables and higher inventory purchases during the period.

Current wording

Cash provided by continuing operating activities during the three months ended March 31, 2025 was $34.4 million, representing a $24.0 million increase compared to the same period in 2024. This increase was driven primarily by higher collections of customer advanced payments and trade receivables and lower payments of accounts payable, partially offset by higher purchases of inventory during the period.

Previous wording

Cash required by investing activities was $31.8 million during the nine months ended September 30, 2024, compared to cash provided of $612.7 million during the same period in 2023. The cash outflow during the period was driven primarily by spending on capital expenditures, which was lower compared to the prior period as we completed the initial development and deployment of our OmniBlu TM platform in 2023. The prior year cash provided was primarily comprised of the proceeds from the sale of AeroTech, partially offset by the purchase of marketable securities.

Current wording

Cash required by investing activities was $1,765.6 million during the three months ended March 31, 2025, compared to cash required of $7.2 million during the same period in 2024. The cash outflow during the period was primarily due to the acquisition of Marel.

Previous wording

Cash required by financing activities was $23.1 million during the nine months ended September 30, 2024, compared to cash required of $345.7 million during the same period in 2023. The decrease in cash outflow in the period was driven by the debt repayments for our revolving credit facility in the prior period that did not recur in 2024, partially offset by the payment of debt issuance costs related to the Bridge Credit Agreement entered into during the second quarter of 2024 and higher payment of taxes withheld on stock-based compensation awards.

Current wording

Cash provided by financing activities was $621.4 million during the three months ended March 31, 2025, compared to cash required of $6.1 million during the same period in 2024. The cash inflows during the period were the result of the draw on the revolving credit facility and funding of the Term Loan B, partially offset by the payment of debt issuance costs related to the Second A&R Credit Agreement.

Previous wording

As of September 30, 2024, we had $250.0 million drawn on and $1.0 billion of availability under the revolving credit facility. Our ability to use this revolving credit facility is limited by the leverage ratio covenant referenced below.

Current wording

As of March 31, 2025, we had $691.7 million drawn on and $1.1 billion of availability under the revolving credit facility.

Previous wording

Our credit agreement includes restrictive covenants that, if not met, could lead to a renegotiation of our credit lines, a requirement to repay our borrowings and/or a significant increase in our cost of financing. Restrictive covenants include a minimum interest coverage ratio, a maximum leverage ratio, as well as certain events of default. As of September 30, 2024, we were in compliance with all covenants in our credit agreement. We expect to remain in compliance with all covenants.

Current wording

Our Second A&R Credit Agreement includes restrictive covenants that, if not met, could lead to a renegotiation of our credit lines, a requirement to repay our borrowings and/or a significant increase in our cost of financing. Restrictive covenants include a minimum interest coverage ratio, a maximum leverage ratio, as well as certain events of default. As of March 31, 2025, we were in compliance with all covenants in the Second A&R Credit Agreement. We expect to remain in compliance with all covenants.

Previous wording

On May 28, 2021, we closed a private offering of $402.5 million aggregate principal amount of the Company's 0.25% Convertible Senior Notes due 2026 to qualified institutional buyers, resulting in net proceeds to us of approximately $392.2 million after deducting initial purchasers’ discounts. The convertible notes will mature on May 15, 2026 unless earlier converted, redeemed or repurchased. Concurrently with the issuance of the Notes, we entered into the convertible note hedge transactions that reduce potential dilution upon conversion of the Notes and entered into the warrant transactions to raise additional capital to partially offset the costs of entering into the Note hedge transactions.

Current wording

On May 28, 2021, we closed a private offering of $402.5 million aggregate principal amount of the Company's 0.25% Convertible Senior Notes due 2026 to qualified institutional buyers, resulting in net proceeds to us of approximately $392.2 million after deducting initial purchasers’ discounts. The Notes will mature on May 15, 2026 unless earlier converted, redeemed or repurchased. Concurrently with the issuance of the Notes, we entered into the convertible note hedge transactions that reduce potential dilution upon conversion of the Notes and entered into the warrant transactions to raise additional capital to partially offset the costs of entering into the Note hedge transactions.

Previous wording

As of September 30, 2024, we have four interest rate swaps executed in March 2020 with a combined notional amount of $200 million expiring in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025. We have designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in Accumulated other comprehensive income.

Current wording

As of March 31, 2025, we had four interest rate swaps executed in March 2020 with a combined notional amount of $200 million which expired in April 2025, and one interest rate swap executed in May 2020 with a notional amount of $50 million expiring in May 2025. We have designated these swaps as cash flow hedges and all changes in fair value of the swaps are recognized in Accumulated other comprehensive income.

Previous wording

As a result, as of September 30, 2024 all of our total outstanding debt of $652.5 million effectively remains fixed rate debt, with the Convertible Senior Notes subject to a fixed rate of 0.25% and all of the revolving credit facility subject to an average fixed rate of 0.76% in addition to the premium charged for the credit spread on our revolving credit facility.

Current wording

As a result, as of March 31, 2025, a portion of our total outstanding debt of $2,006.6 million effectively remained fixed rate debt, with the Convertible Senior Notes subject to a fixed rate of 0.25% and a portion of the revolving credit facility subject to an average fixed rate of 0.76%. Our revolving credit facility and Term Loan B are subject to floating, or market rates, in addition to a premium charged for their respective credit spreads. Approximately $1,341.7 million or 67% of the total debt balance as of March 31, 2025 was variable rate debt and subject to floating rates. As of the date of this filling, four of our interest rate swaps with a combined notional amount of $200 million have expired, resulting in $1,541.7 million or 77% of our outstanding debt being variable rate debt and subject to floating rates.

Previous wording

There were no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the period ended September 30, 2024. Refer to our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our critical accounting estimates.

Current wording

Other than discussed below, there have been no material changes in our judgments and assumptions associated with the development of our critical accounting estimates during the period ended March 31, 2025. Refer to our Annual Report on Form 10-K for the year ended December 31, 2024 for a discussion of our critical accounting estimates.