XML 29 R17.htm IDEA: XBRL DOCUMENT v3.24.1
Credit Facility
 6 Months Ended
Jan. 31, 2024
Line of Credit Facility [Abstract]  
Credit Facility Credit Facility
On October 31, 2018, we entered into a First Amended and Restated Credit Agreement with a syndicate of lenders. On November 30, 2022, we refinanced the amount of such debt outstanding by entering into a Second Amended and Restated Credit Agreement (the "Prior Credit Facility"). On November 7, 2023, in connection with the PST Divestiture, we entered into a Third Amended and Restated Credit Agreement (the “Credit Facility”), amending the Prior Credit Facility (collectively, the "Credit Facilities"), which provides for a senior secured loan facility of up to $200,000,000 consisting of: (i) a revolving loan facility (the “Revolving Loan Facility”) with an initial borrowing limit of $150,000,000, including a $20,000,000 letter of credit sublimit; and (ii) a $50,000,000 term loan A (the “Term Loan”). The Credit Facility, which has a maturity date of October 31, 2024 (the “Maturity Date”), was amended to (i) allow us to apply 50%, or $16,239,000, of the closing net cash proceeds from the PST Divestiture to repay a portion of the Revolving Loan Facility, instead of applying all closing net cash proceeds to repay a portion of the Term Loan. The Credit Facility, as amended, also provides for the following: (i) effective January 31, 2024, (a) our borrowing limit under the Revolving Loan Facility reduced to $140,000,000 (with two more reductions of $5,000,000 each on April 30, 2024 and July 31, 2024, respectively); (b) the Term Loan amortization increased from $1,250,000 to $1,875,000 per quarter, with the remaining balance due upon maturity; (c) the accordion and swingline loan features were both eliminated; (d) the Applicable Rate increased 0.25%; (e) cash in excess of $20,000,000 on the last day of any week is required to repay borrowings under the Revolving Loan Facility; and (f) financial covenants are measured on a monthly basis beginning February 2024. In connection with entering the Credit Facilities, we capitalized $5,941,000 of total financing costs and accounted for the amendments as debt modifications.

The amount outstanding under our Credit Facilities was as follows:
 January 31, 2024July 31, 2023
Term Loan$29,387,000 $48,125,000 
Less unamortized deferred financing costs related to Term Loan817,000 621,000 
     Term Loan, net28,570,000 47,504,000 
Revolving Loan Facility139,519,000 116,900,000 
Amount outstanding under Credit Facilities, net$168,089,000 $164,404,000 
Less current portion of long-term debt168,089,000 4,375,000 
Non-current portion of long-term debt$— $160,029,000 

At January 31, 2024, we had $481,000 of standby letters of credit outstanding under our Credit Facility related to guarantees of future performance on certain customer contracts and no outstanding commercial letters of credit. During the six months ended January 31, 2024, we had outstanding balances under the Credit Facility ranging from $164,323,000 to $196,800,000.

As of January 31, 2024, total net deferred financing costs related to the Credit Facility were $3,559,000 and being amortized over the term of our Credit Facility through the Maturity Date.

Interest expense related to our Credit Facilities, including amortization of deferred financing costs, recorded during the three months ended January 31, 2024 and 2023 was $5,246,000 and $3,761,000, respectively. Interest expense related to our Credit Facilities including amortization of deferred financing costs, recorded during the six months ended January 31, 2024 and 2023 was $10,157,000 and $6,001,000, respectively. Our blended interest rate approximated 11.34% and 8.80%, respectively, for the three months ended January 31, 2024 and 2023 and 10.94% and 7.40%, respectively, for the six months ended January 31, 2024 and 2023.
Borrowings under the Revolving Loan Facility and Term Loan are either: (i) Alternate Base Rate borrowings, which would bear interest from the applicable borrowing date at a rate per annum equal to (x) the highest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% and (c) the Adjusted Term SOFR for a one-month tenor in effect on such day (or, if such day is not a business day, the immediately preceding business day) plus 1.00%, plus (y) the Applicable Rate, or (ii) SOFR borrowings, which would bear interest from the applicable borrowing date at a rate per annum equal to (x) the Adjusted Term SOFR for such interest period plus (y) the Applicable Rate. Determination of the Applicable Rate is based on a pricing grid dependent upon our Leverage Ratio as of the end of each fiscal quarter for which consolidated financial statements have been most recently delivered.

The Credit Facility contains customary representations, warranties and affirmative covenants. The Credit Facility also contains customary conditions to drawing the Revolving Loan Facility and customary negative covenants, subject to negotiated exceptions, including but not limited to: (i) liens, (ii) investments, (iii) indebtedness, (iv) significant corporate changes, including mergers and acquisitions, (v) dispositions, including the disposition of assets by any Loan Party to any Subsidiary that is not a Subsidiary Loan Party, (vi) restricted payments, including stockholder dividends, (vii) distributions, including the repayment of subordinated intercompany and third party indebtedness, and (viii) certain other restrictive agreements. The Credit Facility also contains certain financial covenants and customary events of default (subject to grace periods, as appropriate), such as payment defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency, the occurrence of a defined change in control and the failure to observe the negative covenants and other covenants related to the operation of our business. In addition, under certain circumstances, we may be required to enter into amendments to the Credit Facility in connection with any further syndication of the Credit Facility.

As of January 31, 2024, our Secured Leverage Ratio was 3.07x trailing twelve months ("TTM") Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA"), compared to the maximum allowable Secured Leverage Ratio of 3.50x TTM Adjusted EBITDA as of January 31, 2024 and for the remaining term of the Credit Facility; our Interest Expense Coverage Ratio was 3.34x TTM Adjusted EBITDA, compared to the Minimum Interest Expense Coverage Ratio of 3.25x TTM Adjusted EBITDA as of January 31, 2024 and for the remaining term of the Credit Facility; and our Minimum Liquidity was $39,500,000, compared to the Minimum Liquidity requirement of $25,000,000 as of January 31, 2024 and for the remaining term of the Credit Facility.

The obligations under the Credit Facility are guaranteed by certain of our domestic and foreign subsidiaries (the “Guarantors”). As collateral security under the Credit Facility and the guarantees thereof, we and the Guarantors granted to the administrative agent, for the benefit of the lenders, a lien on, and first priority security interest in, substantially all of our tangible and intangible assets.

Capitalized terms used but not defined herein have the meanings set forth for such terms in the Credit Facility, which has been documented and filed with the SEC.

The Credit Facility Maturity Date is less than one year out from the balance sheet date and, because as of such date we have not entered into an agreement to extend the Maturity Date or refinance our existing Credit Facility, the outstanding amount of debt is classified as a current liability on our balance sheet as of January 31, 2024. In anticipation of the upcoming Maturity Date, we engaged third-party financial advisors to assist us with the refinancing of our existing Credit Facility and/or amending or restructuring our Series B Convertible Preferred Stock, seeking other sources of credit or outside capital and evaluating other capital structure-related alternatives and mitigating plans.