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Note 8 - Indebtedness
 12 Months Ended
Mar. 31, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 8. Indebtedness

 

Credit Facility

On March 5, 2021, we entered into a senior secured credit agreement that included 1) a revolving credit facility in an aggregate principal amount of up to $75,000 (the "Revolver"), 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 at any time. The agreement also provided 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. 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 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 year ended March 31, 2025, we incurred $1,987 of customary lender fees and debt issuance costs paid to third parties, of which $1,242 relates to the Revolver and $745 relates to the Term Loan. The balance of unamortized fees and debt issuance costs related to the Credit Facility, including fees from the original debt issuance and all subsequent amendments and restatements, was $1,203 and $321 as of March 31, 2025 and 2024, respectively. Unamortized debt issuance costs related to the Term Loan are reflected in the debt’s carrying value as a discount in our Consolidated Balance Sheets. All such 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 weighted average interest rate on borrowings under the Credit Facility as of March 31, 2025 was 7.2%.

 

The financial covenants in the Credit Facility as amended include a maximum leverage ratio of 4.50 to 1.00 on each of the quarterly testing dates through  December 31, 2024; 4.0 to 1.0 on each of the testing dates between  March 31, 2025 and  March 31, 2026; and 3.5 to 1.0 on each testing date thereafter. The Credit Facility also stipulates a minimum fixed charge coverage ratio of 1.25 to 1.0 and a maximum senior net leverage ratio of 3.5 to 1. Other covenants include restrictions on our ability to incur debt, grant liens, make fundamental changes to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of  March 31, 2025, we were in compliance with all required covenants under the terms of the Credit Facility.

 

Term Loan

We borrowed $75,000 under the Term Loan on April 5, 2024, to fund privately negotiated repurchases of a portion of the Notes (see "Convertible Notes" below).

 

We are required to make quarterly principal payments on the Term Loan. During the year ended March 31, 2025, we made required quarterly principal payments on the Term Loan of $3,750. For the fiscal years ending March 31, required future principal debt payments on the Term Loan are as follows:

 

Fiscal Year

 

Amount

 

2026

 $3,750 

2027

  5,625 

2028

  5,625 

2029

  7,500 

2030

  48,750 

Total outstanding principal

 $71,250 

 

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

 

  

March 31, 2025

 

Term Loan (7.2% as of March 31, 2025)

 $71,250 

Less: discount and debt issuance costs

  (598)

Less: current portion

  (3,750)

Noncurrent portion

 $66,902 

 

There was no outstanding balance related to the Term Loan as of March 31, 2024. 

 

Revolver

As of  March 31, 2025, the outstanding balance under our Revolver was $10,000, and $115,000 was available for borrowing. 

 

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. We incurred unused commitment fees of $269 and $164 for the years ended March 31, 2025, 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 beginning on  February 15, 2020. 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. 

 

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 and fees paid to third parties of $310 directly related to the extinguishment. We accounted for the partial repurchase of the Notes as a debt extinguishment, which resulted in the recognition of a gain on extinguishment of $2,887 in other income on the Consolidated Statements of Operations during the year ended March 31, 2025. As of  March 31, 2025, $97,500 in aggregate principal amount of the Notes remained outstanding, which we intend to pay using a combination of cash on hand and a draw on our Revolver.

 

Noteholders  may convert their Notes at their option only in the following circumstances:

 

(i) 

during any calendar quarter commencing after the calendar quarter ended on December 31, 2019 (and only during such calendar quarter), if the last reported sale price per share of our common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(ii)

during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of our common stock on such trading day and the conversion rate on such trading day;

(iii)

upon the occurrence of certain corporate events or distributions on our common stock, including certain distributions, the occurrence of a fundamental change (as defined in the indenture governing the Notes) or a transaction resulting in the Company’s common stock converting into other securities or property or assets; and

(iv)

at any time from, and including,  April 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. 

 

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 fiscal year 2025. The if-converted value of the Notes did not exceed the principal balance as of  March 31, 2025.

 

Debt issuance costs related to the Notes remaining after the partial repurchase in fiscal year 2025 are comprised of commissions payable to the initial purchasers of $2,925 and third party offering costs of $152. The debt issuance costs are being amortized to interest expense using the effective interest method over the remaining contractual term of the Notes.

 

The net carrying amount of the 2025 was as follows:

 

  

March 31, 2025

  

March 31, 2024

 

Principal outstanding

 $97,500  $172,500 

Unamortized debt issuance costs

  (203)  (1,302)

Net carrying value

 $97,297  $171,198 

 

We recognized interest expense on the Notes as follows:

 

  

Year Ended March 31,

 
  

2025

  

2024

  

2023

 

Coupon interest expense at 1.375%

 $1,372  $2,372  $2,372 

Amortization of debt issuance costs

  546   926   907 

Total

 $1,918  $3,298  $3,279 

 

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

 

As of  March 31, 2025, the Notes, net of unamortized debt issuance costs, are classified as a current liability on our Consolidated Balance Sheets.