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Note 7 - Indebtedness
 3 Months Ended
Jun. 30, 2024
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7. Indebtedness

 

Credit Facility

On  March 5, 2021, we entered into a four-year senior secured credit agreement that included 1) a revolving credit facility with an aggregate principal amount of up to $75,000 (the "Revolver"), 2) a swingline loan with an aggregate principal amount not exceeding $5,000, and 3) letters of credit with an aggregate stated amount not exceeding $2,500 at any time. The agreement also provided for an incremental term loan or an increase in revolving commitments with a minimum aggregate principal amount of $25,000 and a maximum amount of $75,000, subject to the satisfaction of certain conditions and lender considerations. We refer to the agreement in whole as the “Credit Facility.”

 

On  October 5, 2023, we amended the terms of the Credit Facility to increase the maximum principal amount available to us under the Revolver from $75,000 to $125,000. 

 

On  April 5, 2024, we further amended and restated the terms of the Credit Facility to:

 

(i)

Extend the maturity of the Credit Facility to  April 2029; 

(ii)

Allow proceeds from the Credit Facility to be used to redeem some or all of the Company’s 2025 Notes;

(iii)

Include a $75,000 senior secured term loan facility (the “Term Loan”), which is subject to principal amortization payments; and

(iv)

Make certain changes to the financial covenants.

 

In conjunction with the amendment and restatement of the Credit Facility during the three months ended June 30, 2024, we incurred $1,987 of customary lender fees and debt issuance costs paid to third parties, of which $1,242 is related to the Revolver and $745 is related to the Term Loan. The fees are being amortized to interest expense through maturity. 

 

Amounts borrowed under the Credit Facility bear interest at either a base rate or a SOFR rate plus an applicable spread ranging from 1.5% to 3.5%, depending on our total net leverage ratio. The interest rate on borrowings under our line of credit as of  June 30, 2024 was 8.4%.

 

The financial covenants in the Credit Facility as amended include a maximum leverage ratio of 4.50 to 1.00 for the first five testing dates on which amounts under the Revolver are outstanding; 4.0 to 1.0 on each of the sixth, seventh, eighth, and ninth testing dates; and 3.5 to 1.0 on each testing date following the ninth testing date. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0 and a minimum senior net leverage ratio of 3.5 to 1. 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, 2024, we were in compliance with all covenants under the Credit Facility.

 

Term Loan

We borrowed $75,000 under the Term Loan on  April 5, 2024, to fund the repurchase of a portion of the Notes (see “Convertible Notes” below). During the three months ended June 30, 2024, we made a required quarterly principal payment on the Term Loan of $937. 

 

We are required to make quarterly principal payments on the Term Loan. For the following fiscal years ending March 31, debt payments on the Term Loan are required as follows:

 

Fiscal Year

 

Amount

 

Remainder of 2025

 $2,813 

2026

  3,750 

2027

  5,625 

2028

  5,625 

2029

  7,500 

Thereafter

  48,750 

Total Principal Remaining

 $74,063 

 

The net carrying amount of the Term Loan was as follows:

 

  

June 30, 2024

  

March 31, 2024

 

Term Loan (8.4% as of June 30, 2024)

 $74,063  $- 

Less: discount and debt issuance costs

  (710)  - 

Less: current portion

  (3,750)  - 

Noncurrent portion

 $69,603  $- 


The effective interest rate on the Term Loan at the time of borrowing was 8.13%.

 

Revolver

As of  June 30, 2024, the outstanding balance under the Revolver was $42,000 and $83,000 was available for borrowing. Subsequent to  June 30, 2024, we repaid an additional $3,500 on the Revolver. 

 

We are obligated to pay quarterly unused commitment fees of between 0.20% and 0.35% of the Revolver’s aggregate principal amount, based on our leverage ratio.

 

The balance of unamortized customary lender fees, including fees related to the April 5, 2024 amendment and restatement, was $1,428 and $321 as of  June 30, 2024 and  March 31, 2024, respectively.

 

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. 

 

On April 5, 2024, we entered into separate, privately negotiated transactions with certain holders of the Notes to repurchase $75,000 aggregate principal amount of the Notes for an aggregate repurchase price of $71,250 in cash, plus accrued and unpaid interest of $160. We accounted for the partial repurchase of the Notes as a debt extinguishment, which resulted in the recognition of a gain on extinguishment of $3,197 in other income on the statements of operations during the three months ended June 30, 2024. As of June 30, 2024, $97,500 in aggregate principal amount of the Notes remained outstanding.

 

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 months ended June 30, 2024. As of June 30, 2024, the Notes were classified as a noncurrent liability on our Condensed Consolidated Balance Sheets. The if-converted value of the Notes did not exceed the principal balance as of  June 30, 2024.

 

The net carrying amount of the Notes was as follows:

 

  

June 30, 2024

  

March 31, 2024

 

Principal outstanding

 $97,500  $172,500 

Unamortized debt issuance costs

  (604)  (1,302)

Net carrying value

 $96,896  $171,198 

 

We recognized interest expense on the Notes as follows:

 

  

Three Months Ended June 30,

 
  

2024

  

2023

 

Coupon interest expense at 1.375%

 $367  $593 

Amortization of debt issuance costs

  145   230 

Total interest and amortization of debt issuance costs

 $512  $823 

 

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