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Note 7 - Indebtedness
 9 Months Ended
Dec. 31, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7. Indebtedness

 

Credit Facility

On October 5, 2023, we amended the terms of our four-year senior credit facility (the “Credit Facility”) to increase the maximum principal amount available to us from $75,000 to $125,000. As of  December 31, 2023, the Credit Facility includes 1) a revolving credit facility in an amended aggregate principal amount of up to $125,000, 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 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. The Credit Facility matures in March 2025.

 

The financial covenants in the Credit Facility include a maximum leverage ratio of 4.5 to 1.0 for the period ended December 31, 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, including the permitted GKE acquisition consummated during the three months ended December 31, 2023. 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  December 31, 2023, we were in compliance with all covenants.

 

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 December 31, 2023 was 7.2%. 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. 

 

During the three months ended December 31, 2023, we borrowed a total of $71,000 under the facility to fund the majority of the acquisition of GKE. See Note 2. "Significant Transactions" for further information. We paid $9,000 against the Credit Facility during our third fiscal quarter, and as of December 31, 2023, $62,000 remained outstanding. We paid an additional $4,000 on the outstanding balance in January 2024. 

 

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, subject to certain conditions, 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. The circumstances necessary for conversion were not met during the three and nine months ended December 31, 2023. As of December 31, 2023, the Notes were 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  December 31, 2023.

 

The net carrying amount of the Notes was as follows:

 

  

December 31, 2023

  

March 31, 2023

 

Principal outstanding

 $172,500  $172,500 

Unamortized debt issuance costs

  (1,535)  (2,228)

Net carrying value

 $170,965  $170,272 

 

We recognized interest expense on the Notes as follows:

 

  

Three Months Ended December 31,

  

Nine Months Ended December 31,

 
  

2023

  

2022

  

2023

  

2022

 

Coupon interest expense at 1.375%

 $593  $593  $1,779  $1,779 

Amortization of debt issuance costs

  231   227   692   679 

Total interest and amortization of debt issuance costs

 $824  $820  $2,471  $2,458 

 

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