Charles River Laboratories International, Inc 10-Q for FY2023 Q1

Charles River Laboratories International, Inc. (CRL)

10-Q 2023-05-11 For: 2023-04-01

Added on April 06, 2026

About this 10-Q

Charles River Laboratories International, Inc filed this 10-Q on May 11, 2023, covering the quarter ended April 1, 2023 (FY2023 Q1).

Headline figures

Quarter ended April 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.03B; up 12.6% from $913.93M a year earlier
Net income: $103.13M; up 10.9% from net income of $93.02M a year earlier
Diluted EPS: $2.01; up 11.0% from $1.81 a year earlier

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FORM 10-Q
(Mark One)
☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Ticker symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	CRL	New York Stock Exchange


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Item		Page
PART I - FINANCIAL INFORMATION
1	Financial Statements
	Condensed Consolidated Statements of Income (Unaudited) for the three months ended April 1, 2023 and March 26, 2022	3
	Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended April 1, 2023 and March 26, 2022	4
	Condensed Consolidated Balance Sheets (Unaudited) as of April 1, 2023 and December 31, 2022	5
	Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended April 1, 2023 and March 26, 2022	6
	Condensed Consolidated Statements of Changes in Equity (Unaudited) for the three months ended April 1, 2023 and March 26, 2022	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
3	Quantitative and Qualitative Disclosure About Market Risk	29
4	Controls and Procedures	29
PART II - OTHER INFORMATION
1	Legal Proceedings	30
1A	Risk Factors	30
2	Unregistered Sales of Equity Securities and Use of Proceeds	30

6	Exhibits	31

Signatures		32


	Three Months Ended
		April 1, 2023		March 26, 2022
Service revenue		$	857,366	$	720,485
Product revenue		172,007		193,444
Total revenue		1,029,373		913,929
Costs and expenses:
Cost of services provided (excluding amortization of intangible assets)		565,477		486,864
Cost of products sold (excluding amortization of intangible assets)		86,242		90,247
Selling, general and administrative		174,846		150,033
Amortization of intangible assets		34,916		38,007
Operating income		167,892		148,778
Other income (expense):
Interest income		806		127
Interest expense		(34,380)		(9,434)
Other expense, net		(3,277)		(28,625)
Income before income taxes		131,041		110,846
Provision for income taxes		27,087		15,620
Net income		103,954		95,226
Less: Net income attributable to noncontrolling interests		823		2,204
Net income attributable to common shareholders		$	103,131	$	93,022

Earnings per common share
Net income attributable to common shareholders:
Basic		$	2.02	$	1.84
Diluted		$	2.01	$	1.81

Weighted-average number of common shares outstanding:
Basic		51,097		50,640
Diluted		51,428		51,325

See Notes to Unaudited Condensed Consolidated Financial Statements.


	April 1, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	201,587	$	233,912
Trade receivables and contract assets, net of allowances for credit losses of $16,694 and $11,278, respectively	788,309		752,390
Inventories	262,584		255,809
Prepaid assets	104,162		89,341
Other current assets	91,713		107,580
Total current assets	1,448,355		1,439,032
Property, plant and equipment, net	1,494,080		1,465,655
Venture capital and strategic equity investments	293,787		311,602
Operating lease right-of-use assets, net	408,464		391,762
Goodwill	2,901,627		2,849,903
Intangible assets, net	958,119		955,275
Deferred tax assets	41,017		41,262
Other assets	153,990		148,279
Total assets	$	7,699,439	$	7,602,770
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities:
Accounts payable	120,004		205,915
Accrued compensation	176,053		197,078
Deferred revenue	262,226		264,259
Accrued liabilities	221,370		219,758
Other current liabilities	201,739		204,575
Total current liabilities	981,392		1,091,585
Long-term debt, net and finance leases	2,743,774		2,707,531
Operating lease right-of-use liabilities	418,202		389,745
Deferred tax liabilities	212,278		215,582
Other long-term liabilities	186,975		174,822
Total liabilities	4,542,621		4,579,265
Commitments and contingencies (Notes 2, 8, 10, and 12)
Redeemable noncontrolling interest	42,935		42,427
Equity:
Preferred stock, $0.01 par value; 20,000 shares authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value; 120,000 shares authorized; 51,260 shares issued and 51,182 shares outstanding as of April 1, 2023, and 50,944 shares issued and outstanding as of December 31, 2022	512		509
Additional paid-in capital	1,830,189		1,804,940
Retained earnings	1,536,032		1,432,901
Treasury stock, at cost, 78 and zero shares, as of April 1, 2023 and December 31, 2022, respectively	(19,012)		—
Accumulated other comprehensive loss	(239,124)		(262,057)
Total equity attributable to common shareholders	3,108,597		2,976,293
Noncontrolling interests (nonredeemable)	5,286		4,785
Total equity	3,113,883		2,981,078
Total liabilities, redeemable noncontrolling interests and equity	$	7,699,439	$	7,602,770
See Notes to Unaudited Condensed Consolidated Financial Statements.


	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Equity Attributable to Common Shareholders		Noncontrolling Interest		Total Equity
	Shares	Amount								Shares	Amount
December 31, 2022	50,944	$	509	$	1,804,940	$	1,432,901	$	(262,057)	—	$	—	$	2,976,293	$	4,785	$	2,981,078
Net income	—	—		—		103,131		—		—	—		103,131		501		103,632
Other comprehensive income	—	—		—		—		22,933		—	—		22,933		—		22,933

Issuance of stock under employee compensation plans	316	3		11,789		—		—		—	—		11,792		—		11,792
Purchase of treasury shares	—	—		—		—		—		78	(19,012)		(19,012)		—		(19,012)
Stock-based compensation	—	—		13,460		—		—		—	—		13,460		—		13,460
April 1, 2023	51,260	512		1,830,189		1,536,032		(239,124)		78	(19,012)		3,108,597		5,286		3,113,883
















	Common Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Equity Attributable to Common Shareholders		Noncontrolling Interest		Total Equity
	Shares	Amount								Shares	Amount
December 25, 2021	50,480	$	505	$	1,718,304	$	980,751	$	(164,740)	—	$	—	$	2,534,820	$	4,162	$	2,538,982
Net income	—	—		—		93,022		—		—	—		93,022		560		93,582
Other comprehensive loss	—	—		—		—		(10,193)		—	—		(10,193)		—		(10,193)
Adjustment of redeemable noncontrolling interest to redemption value	—	—		(1,161)		—		—		—	—		(1,161)		—		(1,161)
Issuance of stock under employee compensation plans	431	4		13,067		—		—		—	—		13,071		—		13,071
Purchase of treasury shares	—	—		—		—		—		111	(33,994)		(33,994)		—		(33,994)
Stock-based compensation	—	—		14,619		—		—		—	—		14,619		—		14,619
March 26, 2022	50,911	509		1,744,829		1,073,773		(174,933)		111	(33,994)		2,610,184		4,722		2,614,906















See Notes to Unaudited Condensed Consolidated Financial Statements.


	SAMDI (1)		Explora BioLabs
	January 27, 2023		April 5, 2022
	(in thousands)
Trade receivables	$	513	$	7,679
Other current assets (excluding cash)	75		1,067
Property, plant and equipment	593		37,369
Operating lease right-of-use asset, net	—		48,613
Goodwill (2)	37,129		215,752
Definite-lived intangible assets	33,070		70,100
Other long-term assets	6		556
Deferred revenue	(43)		(3,507)
Other current liabilities	(351)		(15,507)
Operating lease right-of-use liabilities (Long-term)	—		(57,193)
Deferred tax liabilities	(8,191)		(18,601)
Other long-term liabilities	—		(1,807)
Total purchase price allocation	$	62,801	$	284,521

(1) Purchase price allocation is preliminary and subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed, including certain contracts and obligations. Any additional adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the date of acquisition.
(2) The goodwill resulting from these transactions is primarily attributable to the potential growth of the Company’s segments from new customers introduced to the acquired businesses and the assembled workforce of the acquirees, thus is not deductible for tax purposes. Explora BioLabs had $5.0 million of goodwill due to a prior asset acquisition that is deductible for tax purposes.


	SAMDI		Explora BioLabs
Definite-Lived Intangible Assets	(in thousands)
Client relationships	$	23,400	$	64,000
Other intangible assets	9,670		6,100
Total definite-lived intangible assets	$	33,070	$	70,100

Weighted Average Amortization Life	(in years)
Client relationships	15		13
Other intangible assets	7		4
Total definite-lived intangible assets	12		12


	December 19, 2022
	Avian
	(in thousands)
Assets
Current assets	$	30,545
Property, plant, and equipment, net	24,602
Operating lease right-of-use assets, net	611
Goodwill	3,168
Intangible assets, net	1,629
Other assets	10
Total assets	$	60,565

Liabilities
Current liabilities	$	8,139
Operating lease right-of-use liabilities	331
Total liabilities	$	8,470


	U.S.		Europe		Canada		Asia Pacific		Other		Consolidated
	(in thousands)




Three Months Ended:
April 1, 2023	$	605,441	$	267,703	$	110,606	$	42,813	$	2,810	$	1,029,373
March 26, 2022	526,549		251,087		85,246		48,946		2,101		913,929


	April 1, 2023
	Level 1		Level 2		Level 3		Total
Current assets measured at fair value:	(in thousands)
Cash equivalents	$	—	$	78	$	—	$	78
Other assets:
Life insurance policies	—		36,202		—		36,202
Total assets measured at fair value	$	—	$	36,280	$	—	$	36,280

Accrued liabilities measured at fair value:
Contingent consideration	$	—	$	—	$	10,543	$	10,543
Other long-term liabilities measured at fair value:
Interest rate swap	—		2,925		—		2,925
Total liabilities measured at fair value	$	—	$	2,925	$	10,543	$	13,468


	April 1, 2023				December 31, 2022
	Book Value		Fair Value		Book Value		Fair Value
	(in thousands)
4.25% Senior Notes due 2028	$	500,000	$	466,650	$	500,000	$	460,450
3.75% Senior Notes due 2029	500,000		443,750		500,000		442,200
4.00% Senior Notes due 2031	500,000		436,250		500,000		432,500


	RMS		DSA (1)		Manufacturing		Total
	(in thousands)
December 31, 2022	$	497,710	$	1,433,601	$	918,592	$	2,849,903
Acquisitions	—		37,129		—		37,129

Foreign exchange	131		8,016		6,448		14,595
April 1, 2023	$	497,841	$	1,478,746	$	925,040	$	2,901,627
(1) DSA includes accumulated impairment losses of $1 billion, which were recognized in fiscal years 2008 and 2010.


	Three Months Ended
		April 1, 2023		March 26, 2022
		(in thousands)
Timing of Revenue Recognition:
RMS
Services and products transferred over time		$	93,639	$	69,924
Services and products transferred at a point in time		106,127		106,618
Total RMS revenue		199,766		176,542
DSA
Services and products transferred over time		661,836		542,336
Services and products transferred at a point in time		517		1,923
Total DSA revenue		662,353		544,259
Manufacturing
Services and products transferred over time		86,086		95,009
Services and products transferred at a point in time		81,168		98,119
Total Manufacturing revenue		167,254		193,128
Total revenue		$	1,029,373	$	913,929


	Three Months Ended
		April 1, 2023		March 26, 2022
		(in thousands)
RMS
Revenue		$	199,766	$	176,542
Operating income		40,409		47,882
Depreciation and amortization		13,489		9,469
Capital expenditures		19,084		8,646
DSA
Revenue		$	662,353	$	544,259
Operating income		171,431		104,986
Depreciation and amortization		42,450		46,789
Capital expenditures		65,184		48,930
Manufacturing
Revenue		$	167,254	$	193,128
Operating income		2,106		46,368
Depreciation and amortization		20,084		18,482
Capital expenditures		21,738		22,828
Unallocated Corporate
Operating income (1)		$	(46,054)	$	(50,458)
Depreciation and amortization		1,046		559
Capital expenditures		869		60
Consolidated
Revenue		$	1,029,373	$	913,929
Operating income		167,892		148,778
Depreciation and amortization		77,069		75,299
Capital expenditures		106,875		80,464

(1) Operating income for unallocated corporate expense consists of costs associated with departments such as senior executives, corporate accounting, legal, tax, human resources, treasury, and investor relations.


	April 1, 2023		December 31, 2022
	(in thousands)
Raw materials and supplies	$	42,770	$	38,892
Work in process	34,830		48,367
Finished products	184,984		168,550
Inventories	$	262,584	$	255,809


	April 1, 2023		March 26, 2022
	(in thousands)
Beginning balance	$	129,012	$	149,640
Capital contributions	3,214		3,265
Distributions	(7,217)		(1,347)
Loss	(6,848)		(13,403)
Foreign currency translation	260		(463)
Ending balance	$	118,421	$	137,692


	April 1, 2023						December 31, 2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
	(in thousands)
Client relationships	$	1,523,373	$	(624,820)	$	898,553	$	1,491,926	$	(591,417)	$	900,509
Technology	140,448		(104,438)		36,010		129,626		(101,655)		27,971
Backlog	15,320		(13,474)		1,846		15,236		(12,512)		2,724
Trademarks and trade names	12,707		(4,704)		8,003		12,617		(4,410)		8,207
Other	38,007		(24,300)		13,707		37,985		(22,121)		15,864
Intangible assets	$	1,729,855	$	(771,736)	$	958,119	$	1,687,390	$	(732,115)	$	955,275


	Foreign Currency Translation Adjustment and Other		Pension and Other Post-Retirement Benefit Plans		Net Unrealized Loss on Cash Flow Hedge		Total
	(in thousands)
December 31, 2022	$	(217,785)	$	(43,114)	$	(1,158)	$	(262,057)
Other comprehensive loss before reclassifications	23,127		170		(1,402)		21,895

Net current period other comprehensive income (loss)	23,127		170		(1,402)		21,895
Income tax (benefit) expense	(834)		133		(337)		(1,038)
April 1, 2023	$	(193,824)	$	(43,077)	$	(2,223)	$	(239,124)


	April 1, 2023		December 31, 2022		Affected Line Item in the Unaudited Condensed Consolidated Balance Sheets
	(in thousands)
Prepaid income tax	$	71,382	$	88,550	Other current assets
Accrued income taxes	38,420		39,854		Other current liabilities


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
					(in thousands)
January 1, 2023 to January 28, 2023	62	$	244.29	—	$	129,105
January 29, 2023 to February 25, 2023	14	243.79		—	129,105
February 26, 2023 to April 1, 2023	2	221.52		—	129,105
Total	78			—


(a) Exhibits			Description of Exhibits
10.1+			Second Amendment to the Ninth Amended and Restated Credit Agreement, dated March 30, 2023, among Charles River Laboratories International, Inc., the Subsidiary Borrowers party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents party thereto
31.1+			Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2+			Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1+			Certification of the Principal Executive Officer and the Principal Financial Officer required by Rule 13a-14(a) of 15d-14(a) of the Exchange Act
101.INS			eXtensible Business Reporting Language (XBRL) Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Calculation Linkbase Document
101.DEF			XBRL Taxonomy Definition Linkbase Document
101.LAB			XBRL Taxonomy Label Linkbase Document
101.PRE			XBRL Taxonomy Presentation Linkbase Document

+ Furnished herein.


						CHARLES RIVER LABORATORIES INTERNATIONAL, INC.

			May 11, 2023			/s/ JAMES C. FOSTER
						James C. Foster Chairman, President and Chief Executive Officer

			May 11, 2023			/s/ FLAVIA H. PEASE
						Flavia H. Pease Corporate Executive Vice President and Chief Financial Officer


PARENT BORROWER:		CHARLES RIVER LABORATORIES INTERNATIONAL, INC.
	By:	/s/ Flavia Pease
		Flavia Pease Corporate Executive VP and CFO

SUBSIDIARY BORROWERS:		CHARLES RIVER NEDERLAND B.V.
	By:	/s/ Flavia Pease
		Flavia Pease A Manager

		CHARLES RIVER NEDERLAND B.V.
	By:	/s/ Jeroen de Groot
		Jeroen de Groot B Manager

		CHARLES RIVER LABORATORIES HOLDING LIMITED
	By:	/s/ Rushna Heneghan
		Rushna Heneghan Secretary and Director

		CHARLES RIVER LABORATORIES LUXEMBOURG S.À.R.L.
	By:	/s/ John Curtin
		John Curtin A Manager

		CHARLES RIVER LABORATORIES LUXEMBOURG S.À.R.L.
	By:	/s/ Harald Charbon
		Harald Charbon B Manager


ADMINISTRATIVE AGENT:		JPMORGAN CHASE BANK, N.A.
	By:	/s/ David Hyman
		David Hyman Executive Director

LENDERS:		JPMORGAN CHASE BANK, N.A.
	By:	/s/ David Hyman
		David Hyman Executive Director

		BANK OF AMERICA, N.A.
	By:	/s/ Irina Froment
		Irina Froment Senior Vice President

		Wells Fargo Bank N.A.
	By:	/s/ Lindsey Stuckey
		Lindsey Stuckey Director

		TD BANK, N.A.
	By:	/s/ Bernadette Collins
		Bernadette Collins Authorized Signatory

		MUFG Bank, Ltd.
	By:	/s/ Dominic Yung
		Dominic Yung Director

		CITIBANK, N.A.
	By:	/s/ Michael Chen
		Michael Chen Authorized Signer

		CITIZENS BANK, N.A.
	By:	/s/ John F. Kendrick
		John F. Kendrick Vice President

		U.S. Bank National Association
	By:	/s/ Maria Massimino
		Maria Massimino Senior Vice President

		DNB Capital LLC
	By:	/s/ Devan Patel
		Devan Patel Senior Vice President


						DNB Capital LLC
			By:			/s/ Dania Hinedi
						Dania Hinedi Senior Vice President

						KeyBank National Association
			By:			/s/ Alyssa Suckow
						Alyssa Suckow Vice President

						PNC Bank, National Association
			By:			/s/ Tyler Murphy
						Tyler Murphy Assistant Vice President

						TRUIST BANK
			By:			/s/ Jonathan Hart
						Jonathan Hart Director

						BMO Harris Bank N.A., successor in interest to Bank of the West
			By:			/s/ Jeff Toner
						Jeff Toner Director

						GOLDMAN SACHS BANK USA
			By:			/s/ Keshia Leday
						Keshia Leday Authorized Signatory

						M&T Bank
			By:			/s/ Darci Buchanan
						Darci Buchananx Senior Vice President


NINTH AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 21, 2021, as amended by Amendment No. 1, dated as of February 28, 2022 and Amendment No. 2, dated as of March 30, 2023 among CHARLES RIVER LABORATORIES INTERNATIONAL, INC., The Subsidiary Borrowers Party Hereto, The Lenders Party Hereto, JPMORGAN CHASE BANK, N.A., as Administrative Agent __________________________________ BANK OF AMERICA, N.A., CITIBANK, N.A., MUFG BANK, LTD., TD BANK, N.A. and WELLS FARGO BANK, NATIONAL ASSOCIATION as Co-Syndication Agents, CITIZENS BANK, N.A., DNB CAPITAL LLC and U.S. BANK NATIONAL ASSOCIATION as Co-Documentation Agents JPMORGAN CHASE BANK, N.A., BANK OF AMERICA, N.A., CITIBANK, N.A., MUFG BANK, LTD., TD SECURITIES (USA) LLC and WELLS FARGO SECURITIES, LLC as Joint Lead Arrangers and Joint Bookrunners


TABLE OF CONTENTS
ARTICLE I Definitions			5
SECTION 1.01. Defined Terms			5
SECTION 1.02. Classification of Loans and Borrowings			47
SECTION 1.03. Terms Generally			48
SECTION 1.04. Accounting Terms; GAAP			48
SECTION 1.05. Limited Condition Acquisitions			49
SECTION 1.06. Interest Rates; Benchmark Notification.			49
SECTION 1.07. Additional Currencies.			50
SECTION 1.08. Divisions.			50
ARTICLE II The Credits			50
SECTION 2.01. Term Commitments			50
SECTION 2.02. Procedure for Term Loan Borrowings			51
SECTION 2.03. [Reserved]			51
SECTION 2.04. Revolving Commitments			51
SECTION 2.05. Revolving Loans and Borrowings			52
SECTION 2.06. Requests for Revolving Borrowings			52
SECTION 2.07. Swingline Loans			53
SECTION 2.08. Letters of Credit			55
SECTION 2.09. Letters of Credit Issued for Account of Subsidiaries.			59
SECTION 2.10. Funding of Borrowings			60
SECTION 2.11. Interest Elections			60
SECTION 2.12. Termination and Reduction of Commitments			62
SECTION 2.13. Repayment of Revolving Loans; Evidence of Debt			63
SECTION 2.14. Optional Prepayments			64
SECTION 2.15. Mandatory Prepayments			64
SECTION 2.16. Fees			65
SECTION 2.17. Interest			66
SECTION 2.18. Alternate Rate of Interest			67
SECTION 2.19. Increased Costs			71
SECTION 2.20. Break Funding Payments			72
SECTION 2.21. Taxes			73
SECTION 2.22. Payments Generally; Pro Rata Treatment; Sharing of Set-offs			77
SECTION 2.23. Mitigation Obligations; Replacement of Lenders			79
SECTION 2.24. Prepayments Required Due to Currency Fluctuation			80
SECTION 2.25. [Reserved]			80
SECTION 2.26. Defaulting Lenders			80
SECTION 2.27. Existing Loans and Commitments			83
ARTICLE III Representations and Warranties			83
SECTION 3.01. Organization; Powers			84
SECTION 3.02. Authorization; Enforceability			84


SECTION 3.03. Governmental Approvals; No Conflicts			84
SECTION 3.04. Financial Condition; No Material Adverse Change			84
SECTION 3.05. Properties			85
SECTION 3.06. Litigation and Environmental Matters			85
SECTION 3.07. Compliance with Laws and Agreements			85
SECTION 3.08. Investment Company Status			86
SECTION 3.09. Taxes			86
SECTION 3.10. ERISA			86
SECTION 3.11. Disclosure			87
SECTION 3.12. Security Documents			87
SECTION 3.13. Federal Reserve Regulations			87
SECTION 3.14. Solvency			87
ARTICLE IV Conditions			88
SECTION 4.01. Ninth Amendment and Restatement Effective Date			88
SECTION 4.02. Each Credit Event			90
ARTICLE V Affirmative Covenants			90
SECTION 5.01. Financial Statements and Other Information			91
SECTION 5.02. Notices of Material Events			92
SECTION 5.03. Existence; Conduct of Business			92
SECTION 5.04. Payment of Obligations			93
SECTION 5.05. Maintenance of Properties; Insurance			93
SECTION 5.06. Books and Records; Inspection Rights			93
SECTION 5.07. Compliance			94
SECTION 5.08. Use of Proceeds and Letters of Credit			94
SECTION 5.09. Additional Material Subsidiaries; Additional Collateral			94
SECTION 5.10. [reserved]			95
SECTION 5.11. Environmental Laws			95
SECTION 5.12. Maintenance of Ratings			95
SECTION 5.13. Further Assurances			95
ARTICLE VI Negative Covenants			96
SECTION 6.01. Indebtedness			96
SECTION 6.02. Liens			97
SECTION 6.03. Fundamental Changes			98
SECTION 6.04. Investments, Loans, Advances, Guarantees and Acquisitions			98
SECTION 6.05. Hedging Agreements			100
SECTION 6.06. Disposition of Assets			100
SECTION 6.07. Transactions with Affiliates			100
SECTION 6.08. Restrictive Agreements			101
SECTION 6.09. Amendment of Material Documents			101
SECTION 6.10. Interest Coverage Ratio			102
SECTION 6.11. Leverage Ratio			102


ARTICLE VII Events of Default			102
ARTICLE VIII The Administrative Agent			105
SECTION 8.01. Authorization and Action			105
SECTION 8.02. Administrative Agent’s Reliance, Limitation of Liability, Etc.			108
SECTION 8.03. Posting of Communications.			109
SECTION 8.04. The Administrative Agent Individually.			111
SECTION 8.05. Successor Administrative Agent.			111
SECTION 8.06. Acknowledgements of Lenders and Issuing Banks.			112
SECTION 8.07. Collateral Matters.			114
SECTION 8.08. Credit Bidding.			115
SECTION 8.09. Certain ERISA Matters			116
ARTICLE IX Parent Borrower Guarantee			117
ARTICLE X Miscellaneous			120
SECTION 10.01. Notices			120
SECTION 10.02. Waivers; Amendments			122
SECTION 10.03. Expenses; Indemnity; Damage Waiver			124
SECTION 10.04. Successors and Assigns			125
SECTION 10.05. Survival			129
SECTION 10.06. Counterparts; Integration; Effectiveness			129
SECTION 10.07. Severability			131
SECTION 10.08. Right of Setoff			131
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process; Judgment Currency			131
SECTION 10.10. WAIVER OF JURY TRIAL			132
SECTION 10.11. Headings			132
SECTION 10.12. Confidentiality			132
SECTION 10.13. Interest Rate Limitation			133
SECTION 10.14. Joint Creditors			134
SECTION 10.15. Collateral Release			134
SECTION 10.16. USA PATRIOT Act			134
SECTION 10.17. No Advisory or Fiduciary Responsibility.			134
SECTION 10.18. No Novation			135
SECTION 10.19. Acknowledgement and Consent to Bail-In of EEA Financial Institutions			136
SECTION 10.20. Acknowledgement Regarding Any Supported QFCs.			136


	Leverage Ratio	Applicable Margin for Term Benchmark Loans	Applicable Margin for RFR Loans	Applicable Margin for ABR Loans	Commitment Fee
Level I	> 3.00:1.00	1.25%	1.25%	0.25%	0.20%
Level II	> 2.00:1.00 but ≤ 3.00:1.00	1.125%	1.125%	0.125%	0.15%
Level III	≤ 2.00:1.00	1.00%	1.00%	0%	0.125%