iaa-20210328

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 28, 2021


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

Commission File Number: 001-38580

IAA, Inc.

(Exact name of Registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)						83-1030538 (I.R.S. Employer Identification No.)

Two Westbrook Corporate Center, Suite 500, Westchester, Illinois, 60154

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (708) 492-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which registered

Common Stock, par value $0.01 per share

IAA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of April 27, 2021, 134,755,385 shares of the registrant's common stock, par value $0.01 per share, were outstanding.

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IAA, Inc.

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		Page
PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements

	Unaudited Consolidated Statements of Income	4

	Unaudited Consolidated Statements of Comprehensive Income	5

	Unaudited Consolidated Balance Sheets	6

	Unaudited Consolidated Statements of Stockholders' Equity (Deficit)	7

	Unaudited Consolidated Statements of Cash Flows	8

	Condensed Notes to Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sale s of Equity Securitie s and Use of Proceed s	27

Ite m 5.	Other Inf ormation	27

Item 6.	Exhibits	28

Signatures		29

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STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made in this report on Form 10-Q that are not historical facts may be forward-looking statements. Words such as "should," "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward- looking statements. Such statements include statements regarding the impact of COVID-19 on our business; our future growth; expectations regarding vehicle volume sales, results of operations and capital expenditures; strategic initiatives, greenfields and acquisitions; our competitive position and retention of customers; and our continued investment in information technology. Such statements are based on management’s current expectations, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: uncertainties regarding the duration and severity of the COVID-19 pandemic and measures intended to reduce its spread; the loss of one or more significant vehicle suppliers or a reduction in significant volume from such suppliers; our ability to meet or exceed customers’ demand and expectations; significant current competition and the introduction of new competitors or other disruptive entrants in our industry; the risk that our facilities lack the capacity to accept additional vehicles and our ability to obtain land or renew/enter into new leases at commercially reasonable rates; our ability to effectively maintain or update information and technology systems; our ability to implement and maintain measures to protect against cyberattacks and comply with applicable privacy and data security requirements; our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements, including from our margin expansion plan; business development activities, including acquisitions and integration of acquired businesses; our expansion into markets outside the U.S. and the operational, competitive and regulatory risks facing our non-U.S. based operations; our reliance on subhaulers and trucking fleet operations; changes in used-vehicle prices and the volume of damaged and total loss vehicles we purchase; economic conditions, including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations; trends in new- and used-vehicle sales and incentives; and other risks and uncertainties identified in our filings with the Securities and Exchange Commission (the “SEC”), including under Item 1A “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on February 22, 2021, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC, including subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Many of these risk factors are outside of our control, and as such, they involve risks which are not currently known that could cause actual results to differ materially from those discussed or implied herein. The forward-looking statements in this document are made as of the date on which they are made and we do not undertake to update our forward-looking statements.

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

IAA, Inc.

Consolidated Statements of Income

(In millions, except per share data)

(Unaudited)


	Three Months Ended
		March 28, 2021		March 29, 2020
Revenues:
Service revenues		$	360.4	$	334.0
Vehicle sales		63.1		32.6
Total revenues		423.5		366.6
Operating expenses:
Cost of services*		196.4		203.2
Cost of vehicle sales*		54.4		27.8
Selling, general and administrative		43.4		38.0
Depreciation and amortization		19.8		22.5
Total operating expenses		314.0		291.5
Operating profit		109.5		75.1
Interest expense, net		13.0		16.0
Other income, net		(0.4)		(0.7)
Income before income taxes		96.9		59.8
Income taxes		24.4		15.1
Net income		$	72.5	$	44.7
Net income per share:
Basic		$	0.54	$	0.33
Diluted		$	0.54	$	0.33

*Exclusive of depreciation and amortization

See accompanying condensed notes to consolidated financial statements

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IAA, Inc.

Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)


	Three Months Ended
		March 28, 2021		March 29, 2020
Net income		$	72.5	$	44.7
Other comprehensive income (loss):
Foreign currency translation gain (loss)		3.0		(7.6)
Comprehensive income		$	75.5	$	37.1

See accompanying condensed notes to consolidated financial statements

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IAA, Inc.

Consolidated Balance Sheets

(in millions, except per share amounts)


	March 28, 2021		December 27, 2020
	(Unaudited)		(Audited)
Assets
Current assets
Cash and cash equivalents	$	314.9	$	232.8
Accounts receivable, net of allowances of $8.3 and $8.0	366.9		374.8
Prepaid consigned vehicle charges	52.9		53.3
Other current assets	29.1		31.1
Total current assets	763.8		692.0
Non-current assets
Operating lease right-of-use assets, net of accumulated amortization of $186.5 and $163.9	879.3		866.8
Property and equipment, net of accumulated depreciation of $492.5 and $481.9	270.7		259.8
Goodwill	543.3		542.3
Intangible assets, net of accumulated amortization of $514.9 and $504.3	149.1		150.6
Other assets	19.6		17.4
Total non-current assets	1,862.0		1,836.9
Total assets	$	2,625.8	$	2,528.9

Liabilities and Stockholders' Deficit
Current liabilities
Accounts payable	$	100.4	$	122.6
Short-term right-of-use operating lease liability	80.2		78.1
Accrued employee benefits and compensation expenses	24.0		23.4
Current maturities of long-term debt	6.0		4.0
Other accrued expenses	83.5		54.4
Total current liabilities	294.1		282.5
Non-current liabilities
Long-term debt	1,247.1		1,248.0
Long-term right-of-use operating lease liability	848.8		836.6
Deferred income tax liabilities	69.0		65.7
Other liabilities	24.6		26.7
Total non-current liabilities	2,189.5		2,177.0
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.01 par value: authorized, 150.0 shares; issued and outstanding, none	—		—
Common stock, $0.01 par value: authorized, 750.0 shares; issued and outstanding, 134.8 shares at March 28, 2021 and 134.5 shares at December 27, 2020	1.3		1.3
Additional paid-in capital	9.3		12.0
Retained earnings	140.2		67.7
Accumulated other comprehensive loss	(8.6)		(11.6)
Total stockholders' equity	142.2		69.4
Total liabilities and stockholders' equity	$	2,625.8	$	2,528.9

See accompanying condensed notes to consolidated financial statements

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IAA, Inc.

Consolidated Statements of Stockholders' Equity (Deficit)

(In millions)

(Unaudited)


	Three Months Ended March 28, 2021
	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance at December 27, 2020	134.5	$	1.3	$	12.0	$	67.7	$	(11.6)	$	69.4
Net income	—	—		—		72.5		—		72.5
Foreign currency translation adjustments, net of tax	—	—		—		—		3.0		3.0
Stock-based compensation expense	—	—		2.8		—		—		2.8
Common stock issued for the exercise and vesting of stock-based awards	0.4	—		0.1		—		—		0.1
Common stock issued for employee stock purchase plan	—	—		0.4		—		—		0.4
Withholding taxes on stock-based awards	(0.1)	—		(6.0)		—		—		(6.0)
Balance at March 28, 2021	134.8	$	1.3	$	9.3	$	140.2	$	(8.6)	$	142.2


	Three Months Ended March 29, 2020
	Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Deficit
Balance at December 30, 2019	133.6	$	1.3	$	3.5	$	(127.1)	$	(14.9)	$	(137.2)
Net income	—	—		—		44.7		—		44.7
Foreign currency translation adjustments, net of tax	—	—		—		—		(7.6)		(7.6)
Stock-based compensation expense	—	—		2.1		—		—		2.1
Common stock issued for the exercise and vesting of stock-based awards	0.3	—		0.8		—		—		0.8
Withholding taxes on stock-based awards	—	—		(6.4)		—		—		(6.4)
Balance at March 29, 2020	133.9	$	1.3	$	—	$	(82.4)	$	(22.5)	$	(103.6)

See accompanying condensed notes to consolidated financial statements

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IAA, Inc.

Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Three Months Ended
	March 28, 2021		March 29, 2020
Operating activities
Net income	$	72.5	$	44.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	19.8		22.5
Operating lease expense	35.8		32.7
Stock-based compensation	2.8		2.1
Provision for credit losses	0.3		0.7
Amortization of debt issuance costs	1.1		1.0
Deferred income taxes	3.3		(0.3)
Gain on disposal of fixed assets	(0.2)		(0.1)

Changes in operating assets and liabilities, net of acquisitions:
Operating lease payments	(34.1)		(31.4)
Accounts receivable and other assets	8.1		16.0
Accounts payable and accrued expenses	11.9		9.4
Net cash provided by operating activities	121.3		97.3
Investing activities

Purchases of property, equipment and computer software	(30.3)		(10.6)
Proceeds from the sale of property and equipment	0.2		0.1
Other	(1.0)		—
Net cash used by investing activities	(31.1)		(10.5)
Financing activities
Net decrease in book overdrafts	—		(33.6)

Payments of long-term debt	—		(4.0)
Finance lease payments	(3.1)		(3.8)
Issuance of common stock under stock plans	0.1		0.8
Proceeds from issuance of employee stock purchase plan shares	0.4		—
Tax withholding payments for vested RSUs	(6.0)		(6.4)

Net cash used by financing activities	(8.6)		(47.0)
Effect of exchange rate changes on cash	0.5		(0.8)
Net increase in cash and cash equivalents	82.1		39.0
Cash and cash equivalents at beginning of period	232.8		47.1
Cash and cash equivalents at end of period	$	314.9	$	86.1
Cash paid for interest, net	$	5.1	$	8.3
Cash paid for taxes, net	$	1.0	$	4.0

See accompanying condensed notes to consolidated financial statements

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IAA, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

Note 1—Basis of Presentation and Nature of Operations

Description of Business

IAA, Inc., together with its subsidiaries (collectively referred to herein as “IAA” and "the Company") is a leading global digital marketplace connecting vehicle buyers and sellers. Leveraging leading-edge technology and focusing on innovation, IAA's unique platform facilitates the marketing and sale of total loss, damaged and low-value vehicles for a full spectrum of sellers. Headquartered in Westchester, Illinois, the Company has more than 200 facilities throughout the United States, Canada and the United Kingdom. The Company serves a global buyer base and a full spectrum of sellers, including insurance companies, dealerships, fleet lease and rental car companies, and charitable organizations. The Company offers sellers a comprehensive suite of services aimed at maximizing vehicle value, reducing administrative costs, shortening selling cycle time and delivering the highest economic returns. The Company's solutions provide global buyers with the vehicles they need to, among other things, fulfill their vehicle rebuild requirements, replacement part inventory or scrap demand. IAA provides global buyers multiple bidding/buying digital channels, innovative vehicle merchandising, efficient evaluation services and online bidding tools, enhancing the overall purchasing experience.

The Company operates in two reportable segments: United States and International. The Company earns fees for its services from both buyers and sellers of vehicles sold through its channels.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, generally consisting of normal recurring accruals, necessary for a fair statement of our financial results for the periods presented. Financial results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. These unaudited consolidated financial statements and condensed notes thereto are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 27, 2020 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 22, 2021.

The Company's fiscal year consists of 52 weeks with every fifth year consisting of 53 weeks and ending either the last Sunday in December or the first Sunday in January. Fiscal 2021 contains 53 weeks and fiscal 2020 contained 52 weeks.

Use of Estimates

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates based in part on assumptions about current, and for some estimates, future economic and market conditions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Although the current estimates contemplate current conditions and expected future changes, as appropriate, it is reasonably possible that future conditions could differ from these estimates, which could materially affect the Company's results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies.

Reclassification

"Revenues" reported in the consolidated statements of income and segment information footnote in the prior period financial statements for the three months ended March 29, 2020 has been reclassified between "Service revenues" and "Vehicle sales" to conform to the current year's presentation.

"Cost of services" reported in the consolidated statements of income and segment information footnote in the prior period financial statements for the three months ended March 29, 2020 has been reclassified between "Cost of services" and "Cost of vehicle sales" to conform to the current year's presentation.

Recent Accounting Pronouncements

Recently Issued and Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes in various areas. The adoption of ASU 2019-12 on December 28, 2020 did not have any impact on the Company's consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its unaudited consolidated financial statements or disclosures.

Note 2—Relationship with KAR and Related Entities

Prior to June 28, 2019, the Company was a subsidiary of KAR Auto Action Services, Inc. ("KAR"). On June 28, 2019, KAR completed the distribution of 100% of the issued and outstanding shares of common stock of IAA and IAA became an independent publicly-traded company.

In connection with the separation (the "Separation") from KAR on June 28, 2019, the Company entered into a non-compete and various other ancillary agreements to effect the Separation and provide a framework for the Company's relationship with KAR after the Separation, including a transition services agreement, a tax matters agreement and an employee matters agreement. See Note 3 - Relationship with KAR and Related Entities in the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 27, 2020 for additional information.

The Company purchases goods and services from KAR’s other businesses. The cost of products and services obtained from these other businesses was $0.2 million and $0.3 million for the three months ended March 28, 2021 and March 29, 2020, respectively.

Note 3—Stock-Based Compensation Plans

Prior to the Separation, KAR issued equity awards from time to time to select employees and non-employee directors

of IAA. In connection with the Separation, IAA created its own equity plan, the 2019 Omnibus Stock and Incentive Plan (as amended, the "2019 OSIP"), as described below under 2019 Omnibus Stock and Incentive Plan.

The employee matters agreement entered into with KAR in connection with the Separation required that the outstanding KAR equity awards held by IAA employees and non-employee directors be converted into adjusted awards of IAA pursuant to the 2019 OSIP. The awards were adjusted based on the following principles:

•For each award recipient, the intent was to maintain the economic value of those awards before and after June 28, 2019, the date of the Separation; and

•The terms of the equity awards, such as the vesting schedule, will generally continue unchanged, except that the performance criteria for certain performance-based restricted stock units ("PRSUs") granted in 2019 were subject to adjusted performance criteria. Such PRSUs were converted into time-based restricted stock units ("RSUs") with two-year cliff vesting in February 2020, since the adjusted performance criteria were determined to have been met.

2019 Omnibus Stock and Incentive Plan

On June 27, 2019, the Company's board of directors approved the 2019 OSIP. The purpose of the 2019 OSIP is to provide an additional incentive to selected management employees, directors, independent contractors, and consultants of the Company whose contributions are essential to the growth and success of the Company, in order to strengthen the commitment of such persons, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability for the Company.

Benefits granted under the 2019 OSIP may be granted in any one or a combination of (i) options to purchase IAA common stock; (ii) IAA share appreciation rights (“SARs”); (iii) restricted shares of IAA common stock; (iv) other IAA stock-based awards; or (v) other cash-based awards. Options, restricted shares, and other share-based awards or cash awards may constitute performance-based awards. The granting or vesting of any performance-based awards will be based on achievement of performance objectives that are based on one or more financial or business criteria, with respect to one or more business units

of IAA and its subsidiaries as a whole. Such financial or business criteria may be adjusted to account for unusual or infrequently occurring items or changes in accounting.

Participants include any employee, director, independent contractor or consultant of IAA or any affiliate of IAA selected to receive awards under the 2019 OSIP, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be. As of March 28, 2021, the number of common shares reserved and available for awards under the 2019 OSIP is 4,662,798, subject to adjustment made in accordance with the 2019 OSIP. Upon the occurrence of certain corporate events that affect the common stock, including but not limited to any extraordinary cash dividend, stock split, reorganization or other relevant change in capitalization, appropriate adjustments may be made with respect to the number of shares available for grants under the 2019 OSIP, the number of shares covered by outstanding awards and the maximum number of shares that may be granted to any participant.

The aggregate awards granted during any calendar year to any single individual will not exceed: (i) 1,000,000 shares subject to options or SARs, (ii) 500,000 shares subject to restricted shares or other share-based awards and (iii) $5,000,000 with respect to any cash-based award. A non-employee director of IAA may not be granted awards under the 2019 OSIP during any calendar year that, when aggregated with such non-employee director’s cash fees received with respect to such calendar year, exceed $750,000 in total value.

The following table summarizes the Company's stock-based compensation expense by type of award granted under both the KAR plans and the 2019 OSIP (in millions):


	Three Months Ended
		March 28, 2021		March 29, 2020
Performance-based Restricted Stock Units		$	0.4	$	0.2
Restricted Stock Units and Awards		2.2		1.7
Stock Options		0.2		0.2
Total Stock-based Compensation Expense		$	2.8	$	2.1

The following table summarizes the stock-based awards granted by the Company to certain employees and non-employee directors in accordance with the 2019 OSIP during the three months ended March 28, 2021:


	Three Months Ended March 28, 2021
		Number of Awards Granted	Weighted Average Grant Date Fair Value
Performance-based Restricted Stock Units		75,185	$	63.71

Restricted Stock Units		99,243	$	62.35

The PRSUs granted to certain executive officers and management of the Company vest at the end of a three-year performance period if and to the extent that the Company's three year average return on invested capital achieves certain specified goals. The RSUs granted to certain executive officers and management of the Company are contingent upon continued employment and vest in three equal annual installments.

Note 4—Net Income Per Share

Basic net income per share was calculated by dividing net income by the weighted average number of outstanding common shares for the period. Diluted net income per share was calculated consistent with basic net income per share including the effect of dilutive unissued common shares related to the Company's stock-based employee compensation program. The effect of stock options and RSUs on net income per share-diluted is determined through the application of the treasury stock method, whereby net proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company's common stock at the average market price during the period.

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The following table sets forth the computation of net income per share (in millions except per share amounts):


	Three Months Ended
		March 28, 2021		March 29, 2020
Net income		$	72.5	$	44.7
Weighted average common shares outstanding		134.6		133.7
Effect of dilutive stock awards		0.7		1.3
Weighted average common shares outstanding and potential common shares		135.3		135.0
Net income per share
Basic		$	0.54	$	0.33
Diluted		$	0.54	$	0.33

The weighted number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of the following anti-dilutive securities and awards subject to performance conditions which have not been fully satisfied at the end of the respective reporting periods:


	Three Months Ended
		March 28, 2021	March 29, 2020
Anti-dilutive awards		—	0.3
Awards subject to performance conditions not fully satisfied		0.1	—
Total		0.1	0.3

Note 5—Long-Term Debt

Long-term debt consisted of the following (in millions):


	March 28, 2021		December 27, 2020
Term Loan	$	774.0	$	774.0
Notes	500.0		500.0


Total debt	1,274.0		1,274.0
Unamortized debt issuance costs	(20.9)		(22.0)
Current maturities of long-term debt	(6.0)		(4.0)
Long-term debt	$	1,247.1	$	1,248.0

Credit Facility

On June 28, 2019, the Company entered into a credit agreement (the “Credit Agreement”), which provides for, among other things: (i) a seven-year senior secured term loan in an aggregate principal amount of $800 million (the “Term Loan”) and (ii) a five-year revolving credit facility in an aggregate principal amount of $225 million (the “Revolving Credit Facility,” and together with the Term Loan, the “Credit Facility”). On May 1, 2020, the Company entered into an amendment to its Credit Agreement to increase the aggregate principal amount able to be borrowed under the Revolving Credit Facility by $136.0 million to $361.0 million. The Revolving Credit Facility includes a $50 million sub-limit for issuance of letters of credit and a $50 million sublimit for swing line loans, which can be borrowed on same-day notice.

The Term Loan matures on June 28, 2026. As of March 28, 2021 and December 27, 2020, the interest rate per annum for the Term Loan was 2.4% and 2.4%, respectively. The Revolving Credit Facility matures on June 28, 2024. As of March 28, 2021, no amounts were outstanding under the Revolving Credit Facility.

The Credit Agreement contains affirmative and negative covenants that are usual and customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company's affiliates. The Credit Agreement also requires the Company to maintain a maximum Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement)

not to exceed 3.50 to 1.00 as of each test date on which any Revolving Loans (as defined in the Credit Agreement) are outstanding. The Company was in compliance with the covenants in the Credit Agreement at March 28, 2021.

Subsequent to March 28, 2021, the Company entered into a new credit agreement, the proceeds of which were used, along with cash on hand, to repay in full all outstanding borrowings under the Company's Term Loan. The Credit Agreement was terminated on April 30, 2021. See Note 11, Subsequent Events for additional information.

Notes

On June 6, 2019, the Company issued $500.0 million aggregate principal amount of 5.500% Senior Notes due 2027 (the “Notes”). The Notes mature on June 15, 2027. Interest on the Notes is due on June 15 and December 15 of each year and accrues at a rate of 5.500% per annum.

The Notes contain covenants which, among other things, limit the Company and its restricted subsidiaries’ ability to pay dividends on or make other distributions in respect of equity interests or make other restricted payments, make certain investments, incur liens on certain assets to secure debt, sell certain assets, consummate certain mergers or consolidations or sell all or substantially all assets, or designate subsidiaries as unrestricted. The Company was in compliance with the covenants at March 28, 2021.

Canadian Credit Facility

On July 7, 2020, the Company entered into a credit agreement which provides for a revolving credit facility in an aggregate principal amount of $10.0 million Canadian dollars (the "Canadian Credit Facility"). The Canadian Credit Facility matures on July 6, 2021 and is secured by certain of the Company's Canadian assets. The proceeds from the Canadian Credit Facility can be used by the Company's Canadian subsidiary for its working capital requirements, capital expenditures and general corporate purposes. Borrowings under this facility, based on the type of borrowing, bear interest at either (a) Bank of Montreal Prime Rate plus 1.00%; (b) Bankers Acceptance Rate plus 2.25%; or (c) Canadian Dollar Offered Rate (CDOR) plus 2.25%. As of March 28, 2021, no amounts were outstanding under the Canadian Credit Facility.

The Canadian Credit Facility contains affirmative and negative covenants which, among other things, put certain limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company's affiliates. The Canadian Credit Facility also requires the Company to maintain a Minimum Working Capital Ratio (as defined in the Canadian Credit Facility) of at least 1.00 to 1.00 and a Minimum Fixed Charge Coverage Ratio (as defined in the Canadian Credit Facility) of at least 1.25 to 1.00. The Company was in compliance with the covenants under the Canadian Credit Facility at March 28, 2021.

Other

At both March 28, 2021 and December 27, 2020, the Company had outstanding letters of credit in the aggregate amount of $6.1 million, all of which reduce the amount available for borrowings under its Revolving Credit Facility.

Fair Value of Debt

The estimated fair value of the Company's debt as of March 28, 2021 and December 27, 2020 was $1,293.1 million and $1,302.6 million, respectively. The estimates of fair value were based on broker-dealer quotes for the Company's debt as of the respective dates and are considered Level 2 fair value measurements in the fair value hierarchy.

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Note 6—Accounts Receivable

Components of accounts receivable, net were as follows (in millions):


	March 28, 2021		December 27, 2020
Advanced charges receivable	$	253.3	$	239.5
Trade accounts receivable	104.7		126.5
Other receivable	17.2		16.8
Accounts receivable, gross