At June 30, 2018 and September 30, 2017, the interest rate on outstanding borrowings under the
Term Loan and Revolving Credit Facility was 3.980% and 3.235%, respectively, before giving effect to the interest rate swap discussed below. At June 30, 2018 and September 30, 2017, we had availability of $25.0 million and
$20.0 million, respectively, under the Revolving Credit Facility, less amounts outstanding under letters of credit. Letters of credit outstanding at June 30, 2018 and September 30, 2017 were $9.5 million and $8.7 million,
respectively. In order to hedge against changes in interest rates, on June 30, 2017, we entered into an amortizing $25.0 million fair value interest rate swap agreement applicable to outstanding debt under the Term Loan, under which we pay
a fixed percentage rate of 2.015% and receive a credit based on the applicable LIBOR rate. At June 30, 2018 and September 30, 2017, the notional value of this interest rate swap agreement was $20.0 million and $23.8 million,
respectively, and the fair value was $0.3 million and $(0.2) million, respectively, which is included within other liabilities on our Consolidated Balance Sheets. In connection with the Compass Amendment and the additional borrowing on
May 15, 2018, we entered into an additional $11.0 million fair value interest rate swap agreement applicable to the $22.0 million additional debt under the Term Loan. Under this additional swap agreement, we pay a fixed percentage
rate of 3.01% and receive a credit based on the applicable LIBOR rate.
We must pay a commitment fee of 0.35% per annum on the aggregate unused revolving
commitments under the Compass Credit Agreement. We also must pay fees with respect to any letters of credit issued under the Compass Credit Agreement.
The Compass Credit Agreement contains usual and customary negative covenants for agreements of this type, including, but not limited to, restrictions on our
ability to make acquisitions, make loans or advances, make capital expenditures and investments, create or incur indebtedness, create liens, wind up or dissolve, consolidate, merge or liquidate, or sell, transfer or dispose of assets. The Compass
Credit Agreement requires us to satisfy certain financial covenants, including a minimum fixed charge coverage ratio of 1.20 to 1.00. At June 30, 2018 and September 30, 2017, our fixed charge ratio was 1.54 to 1.00 and 1.63 to 1.00,
respectively. The Compass Credit Agreement also requires us to maintain a consolidated leverage ratio not to exceed 2.00 to 1.00, subject to certain adjustments as further described in the Compass Credit Agreement. At June 30, 2018 and
September 30, 2017, our consolidated leverage ratio was 0.92 to 1.00 and 0.95 to 1.00, respectively. The Compass Credit Agreement includes customary events of default, including, among other things, payment default, covenant default, breach of
representation or warranty, bankruptcy, cross-default, material ERISA events, certain changes of control, material money judgments and failure to maintain subsidiary guarantees. The Compass Credit Agreement prevents us from paying dividends or
otherwise distributing cash to our stockholders unless, after giving effect to such dividend, we would be in compliance with the financial covenants and, at the time any such dividend is made, no default or event of default exists or would result
from the payment of such dividend.
At June 30, 2018 and September 30, 2017, we were in compliance with all covenants under the Compass Credit
Capital Requirements and Sources of Liquidity
During the nine months ended June 30, 2018 and 2017, our capital expenditures were approximately $33.5 million and $18.8 million, respectively.
Historically, we have made significant cash investments in order to organically expand our business into new geographic markets. Our cash investments
include increased capital expenditures, purchase of materials, production of materials and cash to fund our organic expansion. Our working capital needs are driven by the seasonality and growth of our business, with our cash requirements greater in
periods of growth. Additional cash requirements resulting from our growth include the costs of additional personnel, production and distribution facilities, enhancing our information systems and, in the future, our integration of any acquisitions
and our compliance with laws and rules applicable to being a public company. We expect our primary uses of cash will continue to be investing in property and equipment used to provide our services and funding organic and acquisitive growth
We have historically relied upon cash available through credit facilities, in addition to cash from operations, to finance our working
capital requirements and to support our growth. We regularly monitor potential capital sources, including equity and debt financings, in an effort to meet our planned capital expenditures and liquidity requirements. Our future success will be highly
dependent on our ability to access outside sources of capital.
We believe that our operating cash flow and available borrowings under the Revolving
Credit Facility are sufficient to fund our operations for at least the next twelve months. However, future cash flows are subject to a number of variables, and significant additional capital expenditures will be required to conduct our operations.
There can be no assurance that operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures. In the event we make one or more acquisitions and the amount of capital
required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital. If we seek additional capital, we may do so through
borrowings under the Revolving Credit Facility, joint ventures, asset sales, offerings of debt or equity securities or other means. We cannot guarantee that this additional capital will be available on acceptable terms or at all. If we are unable to
obtain the funds we need, we may not be able to complete acquisitions that may be favorable to us or finance the capital expenditures necessary to conduct our operations.