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Note 7 - Indebtedness
 3 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7. Indebtedness

 

Credit Facility

We maintain a senior credit facility (the “Credit Facility”) that includes 1) a revolving credit facility in an aggregate principal amount of up to $75,000, 2) a swingline loan in an aggregate principal amount not exceeding $5,000, and 3) letters of credit in an aggregate stated amount not exceeding $2,500. The Credit Facility matures in March 2025. The Credit Facility also provides for an incremental term loan or an increase in revolving commitments in an aggregate principal amount of at a minimum $25,000 and at a maximum $75,000, subject to the satisfaction of certain conditions and lender considerations. 

 

As of June 30, 2023, we had $5,000 outstanding under the Credit Facility. We paid an additional $3,500 on the outstanding Credit Facility balance in July 2023. 

 

Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate, plus an applicable spread. The interest rate on borrowings under our line of credit as of June 30, 2023 was 7.0%. We are obligated to pay quarterly unused commitment fees of between 0.15% and 0.35% of the Credit Facility’s aggregate principal amount, based on our leverage ratio. 

 

The financial covenants in the Credit Facility include a maximum leverage ratio of 5.0 to 1.0 for the period ended June 30, 2023, except that we  may have a leverage ratio of 5.75 to 1.0 for a period of four consecutive quarters following a permitted acquisition. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes, engage in certain transactions with affiliates, or conduct asset sales. As of  June 30, 2023, we were in compliance with all covenants.

 

Convertible Notes 

On August 12, 2019, we issued an aggregate principal amount of $172,500 of Notes. The net proceeds from the Notes, after deducting underwriting discounts and commissions and other related offering expenses payable by us, were approximately $167,056. The Notes mature on August 15, 2025, unless earlier repurchased or converted, and bear interest at a rate of 1.375% payable semi-annually in arrears on February 15 and August 15 each year. The Notes are initially convertible at a conversion rate of 3.5273 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $283.50 per share of common stock. 

 

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. The circumstances necessary for voluntary conversion were not met during the three months ended June 30, 2023. As of June 30, 2023, the Notes are classified as a long-term liability on our Condensed Consolidated Balance Sheets. The if-converted value of the Notes did not exceed the principal balance as of  June 30, 2023.

 

The net carrying amount of the Notes was as follows:

 

  

June 30, 2023

  

March 31, 2023

 

Principal outstanding

 $172,500  $172,500 

Unamortized debt issuance costs

  (1,998)  (2,228)

Net carrying value

 $170,502  $170,272 

 

We recognized interest expense on the Notes as follows:

 

  

Three Months Ended June 30

 
  

2023

  

2022

 

Coupon interest expense at 1.375%

 $593  $593 

Amortization of debt discounts and issuance costs

  230   225 

Total interest and amortization of debt issuance costs

 $823  $818 

 

The effective interest rate on the notes is approximately 1.9%.