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Note 7 - Indebtedness
 9 Months Ended
Dec. 31, 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 nine months ended December 31, 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 weighted average interest rate on borrowings under the Credit Facility as of  December 31, 2024 was 7.5%.

 

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 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 to our business as defined in the contract, engage in certain transactions with affiliates, or conduct asset sales. As of  December 31, 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 privately negotiated repurchases of a portion of the Notes (see “Convertible Notes” below). During the three and nine months ended December 31, 2024, we made required quarterly principal payments on the Term Loan of $938 and $2,813, respectively. 

 

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

 

Fiscal Year

 

Amount

 

Remainder of 2025

 $937 

2026

  3,750 

2027

  5,625 

2028

  5,625 

2029

  7,500 

Thereafter

  48,750 

Total Principal Remaining

 $72,187 

 

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

 

  

December 31, 2024

  

March 31, 2024

 

Term Loan (7.5% as of December 31, 2024)

 $72,187  $- 

Less: discount and debt issuance costs

  (634)  - 

Less: current portion

  (3,750)  - 

Noncurrent portion

 $67,803  $- 

 

Revolver

As of  December 31, 2024, the outstanding balance under the Revolver was $27,000, and $98,000 was available for borrowing. Subsequent to  December 31, 2024, we repaid an additional $4,500 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 related to the Revolver, including fees from the original debt issuance and all subsequent amendments and restatements, was $1,278 and $321 as of  December 31, 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 $2,887 in other income on the unaudited Condensed Consolidated Statements of Operations during the nine months ended December 31, 2024. As of December 31, 2024, $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.

 

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 or nine months ended  December 31, 2024. The Notes will become convertible 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. As of December 31, 2024, the Notes were classified as a current liability on our unaudited Condensed Consolidated Balance Sheets. The if-converted value of the Notes did not exceed the principal balance as of  December 31, 2024. 

 

The net carrying amount of the Notes was as follows:

 

  

December 31, 2024

  

March 31, 2024

 

Principal outstanding

 $97,500  $172,500 

Unamortized debt issuance costs

  (337)  (1,302)

Net carrying value

 $97,163  $171,198 

 

We recognized interest expense on the Notes as follows:

 

  

Three Months Ended December 31,

  

Nine Months Ended December 31,

 
  

2024

  

2023

  

2024

  

2023

 

Coupon interest expense at 1.375%

 $335  $593  $1,037  $1,779 

Amortization of debt issuance costs

  134   231   412   692 

Total interest and amortization of debt issuance costs

 $469  $824  $1,449  $2,471 

 

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