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Note 6 - Indebtedness
 3 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 6. Indebtedness

 

Credit Facility

Our senior secured credit agreement, as previously amended, includes:

 

(i)

 A revolving credit facility with an aggregate principal amount of up to $125,000 (the "Revolver"),

(ii)

 A term loan with a maximum principal amount of $75,000, which is subject to escalating quarterly principal payments (the "Term Loan"),

(iii)

 A swingline loan with an aggregate principal amount not exceeding $5,000, and 

(iv)

 Letters of credit with an aggregate stated amount not exceeding $2,500 at any time. 

 

We refer to the agreement in whole as the “Credit Facility.” The Credit Facility matures in April 2029 and allows us to use proceeds from borrowings to redeem some or all of our Notes.

 

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  June 30, 2025 was 7.2%.

 

The financial covenants in the Credit Facility include a maximum leverage ratio of 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  June 30, 2025, 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 our Notes (see “Convertible Notes” below). During the three months ended June 30, 2025, we made required quarterly principal payments on the Term Loan of $938.

 

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 2026

 $2,813 

2027

  5,625 

2028

  5,625 

2029

  7,500 

2030

  48,750 

Total principal remaining

 $70,313 

 

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

 

  

June 30, 2025

  

March 31, 2025

 

Term Loan

 $70,313  $71,250 

Less: discount and debt issuance costs

  (561)  (598)

Less: current portion

  (4,219)  (3,750)

Noncurrent portion

 $65,533  $66,902 

 

We recognized interest expense on the Term Loan as follows:

 

  

Three Months Ended June 30,

 
  

2025

  

2024

 

Interest expense (7.2% and 8.4% as of June 30, 2025 and 2024, respectively)

 $1,292  $1,439 

Amortization of discount and debt issuance costs

  37   35 

Total interest and amortization of discount and debt issuance costs

 $1,329  $1,474 

 

Revolver

As of  June 30, 2025, the outstanding balance under the Revolver was $14,000, and $111,000 was available for borrowing. Subsequent to  June 30, 2025, we repaid an additional $3,000 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. In July 2025, we paid $77 in unused commitment fees for the three months ended June 30, 2025.

 

The balance of unamortized customary lender fees related to the Revolver was $1,128 and $1,203 as of  June 30, 2025 and  March 31, 2025, respectively.

 

Convertible Notes 

On August 12, 2019, we issued an aggregate principal amount of $172,500 of the 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 Income during the three months ended June 30, 2024. As of June 30, 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.

 

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of both. Under the terms of the indenture, the Notes became convertible April 15, 2025, and will remain convertible until the close of business on the second scheduled trading day immediately preceding the maturity date ( August 13, 2025). No Notes have been converted as of the date of this filing. As of June 30, 2025, 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  June 30, 2025. 

 

The net carrying amount of the Notes was as follows:

 

  

June 30, 2025

  

March 31, 2025

 

Principal outstanding

 $97,500  $97,500 

Unamortized debt issuance costs

  (68)  (203)

Net carrying value

 $97,432  $97,297 

 

We recognized interest expense on the Notes as follows:

 

  

Three Months Ended June 30,

 
  

2025

  

2024

 

Coupon interest expense at 1.375%

 $335  $367 

Amortization of debt issuance costs

  135   145 

Total interest and amortization of debt issuance costs

 $470  $512 

 

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