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Note 6 - Debt | 6 Months Ended
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Sep. 28, 2024
Notes to Financial Statements |
Long-Term Debt [Text Block] |
6. | Debt
Note Payable and Finance Obligation — During fiscal year 2024, the Company entered into an unsecured note payable with an individual lender for an interim financing arrangement associated with deposits paid to vendors for the installation of a new can manufacturing line located at one of the Company’s plant facilities. The note payable had a variable interest rate based upon the Secured Overnight Financing Rate (“SOFR”) plus 1.80% with interest payable monthly. Subsequent to the final installation of the can manufacturing line in September 2024, the Company took title and recorded an addition to property, plant and equipment of $21.3 million and a corresponding reduction of the vendor deposits which were recorded within other assets on the condensed consolidated balance sheet. After taking title to the equipment, the Company and the lender entered into a financing agreement for the can manufacturing line which commenced in September 2024 and is recorded as a finance obligation. The finance obligation has a maturity date of September 14, 2031. In connection with this transaction the note payable was cancelled. Future minimum payments under the finance obligation noted above as of September 28, 2024 are as follows (in thousands):
Years ending March 31: |  |  |
Balance of 2025 | $ | 2,047 |
2026 |  | 3,684 |
2027 |  | 3,684 |
2028 |  | 3,684 |
2029 |  | 3,684 |
2030 and thereafter |  | 9,003 |
Total minimum payments required |  | 25,786 |
Less interest |  | 4,466 |
Total finance obligation |  | 21,320 |
Amount due within one year |  | 2,490 |
Finance obligation, less current portion | $ | 18,830 |
As of September 28, 2024, the finance obligation had a remaining term of 6.9 years and a discount rate of 5.56%. No cash payments were made by the Company during the six month period ended September 28, 2024, and the fair value of the finance obligation approximated its carrying value as of September 28, 2024. Long-term debt is comprised of the following (in thousands):
|  | As of: |
|  | September 28, |  |  | September 30, |  |  | March 31, |
|  | 2024 |  |  | 2023 |  |  | 2024 |
Revolving credit facility |  | $ | 146,421 |  |  | $ | 134,757 |  |  | $ | 237,225 |
Term loans |  |  |  |  |  |  |  |  |  |  |  |
Term Loan A-1 |  |  |  |  |  |  |  |  |  |  |  |
Outstanding principal |  |  | 83,000 |  |  |  | 87,000 |  |  |  | 85,000 |
Unamortized debt issuance costs |  |  | (21 | ) |  |  | (53 | ) |  |  | (37 | )
Term Loan A-1, net |  |  | 82,979 |  |  |  | 86,947 |  |  |  | 84,963 |
Term Loan A-2 |  |  |  |  |  |  |  |  |  |  |  |
Outstanding principal |  |  | 276,000 |  |  |  | 291,000 |  |  |  | 283,500 |
Unamortized debt issuance costs |  |  | (788 | ) |  |  | (1,019 | ) |  |  | (902 | )
Term Loan A-2, net |  |  | 275,212 |  |  |  | 289,981 |  |  |  | 282,598 |
Other |  |  | - |  |  |  | 216 |  |  |  | - |
Total long-term debt |  |  | 504,612 |  |  |  | 511,901 |  |  |  | 604,786 |
Less current portion |  |  | 98,000 |  |  |  | 19,216 |  |  |  | 19,000 |
Long-term debt, less current portion |  | $ | 406,612 |  |  | $ | 492,685 |  |  | $ | 585,786 |
Revolving Credit Facility — On March 24, 2021, the Company entered into a Fourth Amended and Restated Loan and Security Agreement that provides for a senior revolving credit facility of up to $400.0 million that is seasonally adjusted (the “Revolver”). On September 14, 2022, the Company entered into a First Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “Revolver Amendment”) which amended several provisions to replace the London Interbank Offered Rate (“LIBOR”) with the SOFR plus a spread adjustment as the interest rate benchmark on the Revolver. The transition to SOFR did not materially impact the interest rates applied to the Company’s borrowings. No other material changes were made to the terms of the Company’s Revolver as a result of the Revolver Amendment. On May 5, 2023, the Company entered into a Second Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “2023 Revolver Amendment”) which updated certain provisions relating to permitted indebtedness. No other material changes were made as a result of the 2023 Revolver Amendment. On March 8, 2024, the Company entered into a Third Amendment to the Fourth Amended and Restated Loan and Security Agreement (the “2024 Revolver Amendment”) which increased the seasonal borrowing amount for the period from April through July by $50.0 million. No other material changes were made as a result of the 2024 Revolver Amendment. Maximum borrowing availability under the Revolver totals $350.0 million from April through July and $400.0 million from August through March. In order to maintain availability of funds under the facility, the Company pays a commitment fee on the unused portion of the Revolver, which as of September 28, 2024 was $246.6 million. The Revolver balance is included in Long-Term Debt in the accompanying condensed consolidated balance sheets due to the Revolver’s March 24, 2026 maturity. The Revolver is secured by substantially all of the Company’s accounts receivable and inventories and contains borrowing base requirements as well as a financial covenant, if certain circumstances apply. The Company utilizes its Revolver for general corporate purposes, including seasonal working capital needs, to pay debt principal and interest obligations, and to fund capital expenditures and acquisitions. Seasonal working capital needs are affected by the growing cycles of the vegetables the Company packages. The majority of vegetable inventories are produced during the months of June through November and are then sold over the following year. Payment terms for vegetable produce are generally three months but may vary and range from approximately one to seven months. Accordingly, the Company’s need to draw on the Revolver may fluctuate significantly throughout the year. The following table summarizes certain quantitative data for Revolver borrowings during fiscal year 2025 and fiscal year 2024 (in thousands):
|  | As of: |
|  | September 28, |  |  | September 30, |  |  | March 31, |
|  | 2024 |  |  | 2023 |  |  | 2024 |
Outstanding borrowings |  | $ | 146,421 |  |  | $ | 134,757 |  |  | $ | 237,225 |
Interest rate |  |  | 6.76 | % |  |  | 6.93 | % |  |  | 6.93 | %
|  | Three Months Ended |  |  | Six Months Ended |
|  | September 28, |  |  | September 30, |  |  | September 28, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Maximum amount of borrowings drawn during the period |  | $ | 209,189 |  |  | $ | 134,757 |  |  | $ | 233,063 |  |  | $ | 180,785 |
Average outstanding borrowings |  | $ | 172,039 |  |  | $ | 75,955 |  |  | $ | 194,398 |  |  | $ | 92,218 |
Weighted average interest rate |  |  | 7.02 | % |  |  | 6.95 | % |  |  | 7.02 | % |  |  | 6.67 | %
Term Loans — On May 28, 2020, the Company entered into an Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA that provides for a $100.0 million unsecured term loan (the “Term Loan”). The amended and restated agreement has a maturity date of June 1, 2025 and converted the Term Loan to a fixed interest rate of 3.3012% until maturity rather than a variable interest rate in addition to requiring quarterly principal payments of $1.0 million, which commenced during fiscal year 2021. This agreement contains certain covenants, including maintaining a minimum EBITDA and minimum tangible net worth. On January 20, 2023, the Company entered into a Second Amended and Restated Loan and Guaranty Agreement with Farm Credit East, ACA (the “Agreement”) which governs two term loans, as summarized below: Term Loan A-1: The Agreement continues certain aspects of the $100.0 million term loan described above, namely Term Loan A-1 will continue to bear interest at a fixed interest rate of 3.3012%, mature on June 1, 2025, and remain unsecured. The Company’s historical practice is to hold term debt until maturity. The Company expects to maintain or have access to sufficient liquidity to retire or refinance long-term debt at maturity or otherwise, from operating cash flows, access to the capital markets, and its Revolver. The Company continuously evaluates opportunities to refinance its debt; however, any refinancing is subject to market conditions and other factors, including financing options that may be available to the Company from time to time, and there can be no assurance that the Company will be able to successfully refinance any debt on commercially acceptable terms at all. Term Loan A-2: The Agreement adds an additional term loan in the amount of $175.0 million that will mature on January 20, 2028, and is secured by a portion of the Company’s property, plant and equipment. Term Loan A-2 bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Term Loan A-2 in the amount of $1.5 million commenced on March 1, 2023. On May 23, 2023, the Agreement was amended by the Second Amended and Restated Loan and Guaranty Agreement Amendment which amends, restates and replaces in its entirety Term Loan A-2 (the “Amendment”). The Amendment provides a single advance term facility in the principal amount of $125.0 million to be combined with the outstanding principal balance of $173.5 million on Term Loan A-2 into one single $298.5 million term loan (“Amended Term Loan A-2”). Amended Loan Term A-2 is secured by a portion of the Company’s property, plant and equipment and bears interest at a variable interest rate based upon SOFR plus an additional margin determined by the Company’s leverage ratio. Quarterly payments of principal outstanding on Amended Term Loan A-2 in the amount of $3.75 million commenced on June 1, 2023. The Amendment continues all aspects of Term Loan A-1 as defined in the Agreement. As of September 28, 2024, the interest rate on Amended Term Loan A-2 was 7.11%. The Amendment for Term Loan A-1 and Term Loan A-2 (collectively, the “Term Loans”) contains restrictive covenants usual and customary for loans of its type, in addition to financial covenants including minimum EBITDA and minimum tangible net worth which apply to both Terms Loans described above. In connection with the Amended Term Loan A-2, the Company incurred $1.1 million of financing costs which will be deferred and amortized over the life of the term loan. As of September 28, 2024, the Company was in compliance with all covenants for its revolving credit facility and term loan agreements. Standby Letters of Credit — The Company has standby letters of credit for certain insurance-related requirements. The majority of the Company’s standby letters of credit are automatically renewed annually, unless the issuer gives cancellation notice in advance. On September 28, 2024, the Company had $7.0 million in outstanding standby letters of credit. These standby letters of credit are supported by the Company’s Revolver and reduce borrowings available under the Revolver.

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